Kayak Buys Sidestep (part 2)

So within a few hours of my last post in which I mentioned I thought the meta search market was small when you look at the revenue and the players, hotelmarketing.com puts out a positive spin on this news:

"The combined company will be profitable with $3.5 billion in transaction volumes and will be the fifth-largest online travel operator."

This echos Kayak's own release: "This transaction combines the two biggest brands in travel search, which would make Kayak.com and its affiliate sites the fifth largest travel brand, with more monthly unique visitors than Priceline, every airline except Southwest, and every hotel and rental car brand"

See full article here.

My first thought was "Wow! They do that much volume? I must really have misread this industry. I need to rethink what I said in my last post." But the more I thought about it, the more I stand by my initial opinion...

Yes the Kayak.com and Sidestep.com merged entity will have USD 3.5 billion in volume through their site per year. But their business model is primarily pay-per-click advertising plus some commission sharing deals with OTAs and travel suppliers. You can not compare that model to an "online travel operator". It is NOT an "apples-to-apples" comparison.

If you were to do that, then Google should also be an "online travel operator". Yes THE Google. The same Google that handles 60% of ALL searches worldwide.  So that would mean Google would have transaction volumes in the travel industry of something like USD 500 BILLION.   That's one hell of an online travel operator!

And consider the path of a user when making a booking via a metasearch:  Google to meta-search to OTA to supplier.  This same "volume" is counted two or three times.  Which is another problem.

We just need a reality check.  Meta-search engines are neither an OTA nor are they search engines.  They are just something in between.  So you can't throw out "Billion dollars in volume" and hope that people take that at face value.