Photo: Big C Harvey
Google just bought huge flight search engine ITA software for $700 million.There’s a chance the deal could blast a big hole in travel search engine Kayak’s business.
When Kayak started it out, it was screen-scraping airline sites.
But soon, it began using ITA’s data. This made it so Kayak could go without scraping and handle fully-structured data.
Kayak, based in Norwalk, Connecticut is worth about $800 million. It’s backed by investors AOL, Accel Partners, General Catalyst Partners, GoldHill Capital, Sequoia Capital, and others. (General Catalyst and Sequioa are also ITA investors.)
At least until today, we expected Kayak to IPO-soonish.
In our 2009 SAI 50, we wrote: “Kayak’s model, where it charges travel providers per click referral, is a high-margin business. The company saw traffic grow nicely in 2009, but given the economy, we believe some of this was likely window-shopping for good deals. We think the increased traffic coupled with a decrease in overall travel spending led to flat revenue growth to $100 million this year, the same as in 2008.
We’ve taken our multiple down to 8-times this year from 10-times last year due to overall multiple declines in the Internet industry, resulting in a $800 million valuation.”