Kayak Raises $196 Million and Buys Rival SideStep

Diane Clarkson | December 31, 2007, 05:23 PM

The two largest brands in travel search are now one. Last week, Kayak.com announced the completion of a $196 million financing round and a merger with SideStep.com.

SideStep.com will become a subsidiary of Kayak.com, while each site will remain a separate brand.

Kayak and SideStep have been the #1 and #2 in travel meta search. Up until now, the Kayak focusing more on search functionality and Sidestep adding travel planning functions such as UGC and city guides. They vary notably in several areas, including product mixes (Kayak is largely air while SideStep splits between air and hotel) and marketing (with Kayak generating visitors from other travel Web sites while SideStep has relied more heavily on search marketing)

In the analysts’ call, Kayak stated there was only a 9% overlap in users between the two sites with the main difference being a different psychology, suggesting little cannibalization and strong opportunity for growth.

In the coming weeks, Kayak's UI will be integrated on SideStep.com and Kayak will integrate the SideStep’s tool bar and add SideStep deals to the Kayak database. Eventually, travel content such as airport guides and hotel reviews will be added to Kayak.com results page.

International expansion will be among the first priorities in the upcoming year, along with a rumoured IPO. I’d guess other acquisition announcements may also lie ahead.

This story squeezed into the last days of 2007 but will surely be one of the most influential in 2008.