Kayak Gets $7 Million Funding

Travel search engine Kayak.com said yesterday it closed a $7 million round of venture financing, bringing its total backing to $15.5 million.

Kayak, Norwalk, CT, said it would use the money for product development and marketing. The company is still developing its travel search technology, which was released in test form in October. It plans to launch the site officially in early 2005.

Founders of Travelocity, Orbitz and Expedia began Kayak in January 2004. Kayak, like competitors SideStep, Mobissimo and Travelzoo's SuperSearch, aims to build on the success of Web search by extending it into the travel category. Travel meta-search engines aggregate flight and hotel information from online travel agencies like Expedia and Travelocity as well as airline and hotel Web sites in an effort to let consumers compare travel options more easily. Kayak receives a referral fee each time a customer clicks through to book.

AOL gave Kayak a vote of confidence last month when it took a minority stake. AOL also inked a multiyear deal for Kayak to power a travel search site for AOL. General Catalyst Partners, a Cambridge, MA, venture firm, is also a Kayak backer.

Other big Internet names are ready to enter the travel search fray. Yahoo is testing its own travel search engine developed through its acquisition of FareChase. Industry executives at a Majestic Research conference last week said they expect Google also will offer a competitive product eventually.

Kayak CEO Steve Hafner told the Majestic conference that online travel is a “broken model,” citing research that consumers typically visit two or three sites prior to purchases.

Travel search sites have gotten a frosty reception from many agency sites and some airlines, which see meta-search engines as a threat that could further commoditize travel products. Kayak has agreements to pluck booking information from more than 60 air and hotel Web sites, as well as a relationship with Orbitz. Travelocity, Expedia and airlines like Southwest have asked Kayak to stop taking information from their sites.

Kayak thinks travel meta-search will evolve similarly to comparison-shopping sites, which retailers initially viewed warily before embracing them as an efficient distribution means.

According to a report released last month by Jupiter Research, the online travel market will generate $91 billion in sales in 2009. The researcher found that search is the No. 1 driver of traffic to booking Web sites.

Brian Morrissey covers search marketing for DM News.com. To keep up with the latest search marketing news subscribe to our free e-mail weekly newsletter Search Engine Marketing by visiting //www.dmnews.com/cgi-bin/newslettersub.cgi

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