Why Did Priceline Decide To Acquire The Momondo Group?

February 15th, 2017 by Trefis Team
PCLN: Priceline Group logo
PCLN
Priceline Group

While its peers have been busy with acquisitions, Priceline had been quiet for a while. Recently, it broke the silence with the announcement to acquire UK and Denmark based metasearch website, Momondo Group, for a cash sum of $550 million. The Momondo Group with its brands, Momondo and Cheapflights, will join forces with Priceline’s existing metasearch arm, Kayak. The acquisition will help Kayak in building its presence in geographies where it lags behind. This is the global OTA leader’s second biggest acquisition since it acquired Opentable in 2014 for $2.6 billion. Momondo Group’s net revenue reached $102 million in 2016 and the top line is expected to grow at 30% to 40% year over year in 2017.

What Are The Possible Reasons For this Acquisition?

  • Around a couple of years ago, Momondo Group’s brand Cheapflights underwent a transition from being a deal-publishing website to a metasearch platform and it is currently present in 20 markets while the Group is present in 35 markets across the globe. Cheapflights would be a good competition for Ctrip-acquired Skyscanner in the UK market, while Momondo is the leading metasearch player in the Nordic region.
  • The primary reason behind this acquisition might be to capture more markets and not any technological advantage that might help Kayak. Kayak has long struggled in the UK and doesn’t have a significant presence in the Nordics, while Momondo and Cheapflights have a stronghold in both these places.
  • Momondo’s strong flight metasearch arm is expected to complement Kayak’s services in markets where the latter lacks a significant presence. However, Momondo Group wouldn’t be able to help Kayak in competing with Trivago since it doesn’t have a strong hotel search option.
  • With its chief rival, Expedia, strengthening its metasearch arm Trivago for future growth, it seems like Priceline too wanted to strengthen its metasearch capabilities with the help of this acquisition. Though Momondo Group lacks hotel search options, its flight search capabilities might help it immensely in carving out a bigger portion of the air ticket booking market. Additionally, with Ctrip strengthening its flight search options with the acquisition of Skyscanner, Kayak’s backing might strengthen Cheapflights’ capabilities to give Skyscanner a stiff competition.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline

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