The Priceline Group (NASDAQ:BKNG) founded in the late 1990s, may be one of the most venerable of Internet companies, but its $2.6 billion, all-cash bid for online restaurant service OpenTable, announced Friday, shows that it's still willing to make a reservation for growth. The acquisition follows TripAdvisor's (NASDAQ:TRIP) purchase of European restaurant reservation company LaFourchette last month. Terms were not disclosed in the LaFourchette deal, which gives TripAdvisor an entry into the reservations business on the European continent. 

Both companies are attempting to gain incremental revenue from the restaurant industry, which complements their current travel-based business models. But their plans for the acquisitions will likely diverge from one another. Priceline's global presence and experience will assist largely North American-based OpenTable in quickly cracking international expansion. LaFourchette, which at 13,000 restaurants is about about 40% of the size of OpenTable (boasting 31,000 restaurants in its system), is likely to grow more methodically, at least in the short run. 

The TripAdvisor model
If you get the urge to leaf through TripAdvisor's financials on the beach this summer, it's possible you'll miss the company's greatest asset, which in truth can't be found on its books. The TripAdvisor community, with a massive 150 million online reviews and opinions on destinations around the globe, provides the company with a recurring user base whose engagement doesn't end on the booking of a flight or hotel stay.

CEO Stephen Kaufer believes that the trend toward mobile content is highly advantageous to TripAdvisor, as members continue to use its services at various "touchpoints" during a trip via mobile devices. This higher engagement leverages what LaFourchette, whose English language version is known as "," can bring to TripAdvisor. When customers buy a ticket to travel to a city on one of Priceline's properties, the company will have numerous opportunities to market OpenTable, from the transaction itself to confirmation and follow-up emails. However, TripAdvisor has a potentially more powerful engagement tool, in that its members proactively visit its pages once they're in a city, hitting the numerous information categories that have been built by other members.

TripAdvisor's ever popular "Restaurants" tab now links to La Fourchette's system in various European destinations. So, travelers who alight in a city and turn to the aggregate wisdom of community reviews for restaurant advice now have a bright, yellow button to facilitate an evening out:


Source: TripAdvisor

The "Find a table" link leads to LaFourchette's reservation engine:


The intruiging utility in this model is seen in its simplicity: TripAdvisor afficianados won't have to leave its platform to reserve a table in cities in which LaFourchette operates.

In TripAdvisor's earnings call with analysts last month, Kaufer described an initial plan in which LaFourchette would expand its presence first in its home turf, and remarked that the parent company has "plenty of investment capital at our disposal to put more sales and marketing teams on the ground across the European continent."

OpenTable's probable strategy: a wider net
OpenTable's expansion is likely to follow a larger geographic footprint almost immediately. The company's first foray into Europe ended unsuccessfully at the hands of LaFourchette, and it shuttered operations in LaFourchette's home base countries of France and Spain in 2008. Thus, it will for the time being probably tread carefully in this same territory.  Yet integrating into Priceline's global system should quickly expand OpenTable's reach on other continents outside of Europe and its North American stronghold. Priceline can assist with the precise formula that has fueled OpenTable's 17% annual compounded revenue growth over the past three years:

Our growth depends in large part on increasing the number of our restaurant customers, increasing the number of users of our websites and mobile apps and then converting those persons into diners who use our websites and mobile apps to make restaurant reservations.

To do this, the company has spent ambitiously on marketing and promotions to land its service in preferred restaurants and on the right screens. Last year, the company spent $41.9 million on sales and marketing, out of revenue of $190 million; for every dollar in sales, OpenTable plowed back $0.22 into marketing. Using the larger company's cachet and resources in signing up restaurants and attracting customers reduces some of the marketing hurdle, providing a serious benefit to OpenTable.

A prediction of relatively peaceful co-existence for the present
It will take some time before each of these business, fueled by their well-resourced acquirers, engage in truly fierce competition. Priceline will most likely test OpenTable's potential across a wide swath of cities on more than one continent, while for now, TripAdvisor will implement LaFourchette's European ground game and shoot for organic growth within the TripAdvisor community.

Thus, for TripAdvisor shareholders who are convinced of the eventual power of the company's community-based business model, but are ever wary of a near-term threat that could jar its dizzying price (now at 72 times trailing 12 month earnings), competition in the restaurant space won't be the catalyst that throws TRIP's stock chart off course.