Kayak Takes on the Big Guys

Kayak recently launched an updated version of its popular iPhone app. However, it is not the new app that has created a buzz around Kayak, it is the meta-morphosis of their business model the app signifies.

Kayak plans to offer booking facilitation via mobile device, and eventually the Web site as well (Private Sale has already launched with this feature). Consumer information will be collected and passed to the chosen site, which will process the booking. The goal is to improve the otherwise shaky meta-to-booking mobile experience.

The leader in travel metasearch may not technically be making any bookings, but what difference is there to the consumer? Can we even call Kayak "meta" anymore?

Phocuswright director, research, Carroll Rheem explains, "Kayak is not really becoming an OTA, but they are going to try to compete with them head-to-head to gain consumer traffic. According to Kayak co-founder and CEO, Steve Hafner, they intend to become a more full service travel planning site, but will retain 'media company' status."

Kayak's new positioning efforts are not limited to just booking facilitation. "Kayak is close to saturating the organic meta audience; now it needs to focus on growing the pie," says Rheem. "The launch of Private Sale is another poignant example of the new direction, and its effort to crack into hotels."

It may seem risky to take on the powerful OTAs given that they are important partners for any metasearch company. "Kayak never did grow to rival Google or Expedia as it may have intended," says Lorraine Sileo, Phocuswright vice president, research. "Kayak has become another intermediary or layer that never replaced any of the other steps in the search, shop, buy process. This move is important to their long-term success."

Kayak has been a major name for so long now that it is easy to underestimate their scrappy innovative nature. The mobile platform has disrupted the way consumers book travel and Kayak is smart to get out in front and provide new solutions for this game changing medium.

The new strategy could have its drawbacks says Ms. Sileo. "Kayak is the leader in the metasearch category and a great brand that will benefit from the US$60M TV ad campaign. Still, their beauty has always been their low overhead. Adding this cost into Kayak is only worth it if there's a huge uptake in traffic."

The recent changes at Kayak and in the metasearch segment in general are detailed in "Growing Pains Prompt Meta-Morphosis," one of the Nine Things (Not 10) That Will Drive Travel Distribution in 2010, recently released by Phocuswright.

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