Web Travel Companies Soaring in Boston
TripAdvisor, ITA, Kayak Growing Up
By Jerry Kronenberg
Boston-based Web travel companies are hotter than $99 fares to London these days.
Expedia announced plans Thursday to spin off Newton’s TripAdvisor for as much as $4 billion, while Google won approval Friday to buy Cambridge-based ITA Software for $700 million.
Meanwhile, Kayak.com, which has a major presence in Concord, hopes to soon raise $50 million through an initial public offering.
“These businesses are probably all looking at having high demand for some time to come,” said Chris Anderson of the Massachusetts High Technology Council. “The travel industry should be on an upswing as long as the economy remains on an upswing.”
Experts say Boston has become an online-travel mecca because the Hub offers access to venture-capital firms, cutting-edge universities and lots of tech workers.
“These are companies that require highly skilled and educated employees, and Boston has some of the best universities in the world to provide them,” said Frederick Moran, Internet analyst at The Benchmark Co.
Here’s a look at three of the Hub’s hottest Web travel firms:
- TripAdvisor. The company operates 18 travel-related sites.
Its flagship TripAdvisor.com site carries more than 45 million consumer-written reviews of hotels, restaurants and other tourist attractions worldwide.
The company’s revenues rose 38 percent in 2010, and Moran expects sales to grow 25 to 30 percent annually for years to come.
That’s partly why analysts think TripAdvisor is worth $3 billion to $4 billion as a stand-alone firm — not bad considering Expedia’s former parent paid just $210 million for the company in 2004.
- ITA Software. Founded in 1996 by a Massachusetts Institute of Technology computer whiz, ITA creates algorithms many sites use to scour airlines’ databases for the best fares.
The company’s software currently powers about 65 percent of all airline websites in the United States. That’s why Google set off antitrust alarm bells last summer when it announced plans to buy ITA for $700 million.
TripAdvisor and other travel sites urged federal regulators to block the deal, fearing Google would cut access to ITA’s programs and monopolize the Web travel business.
However, Google and the U.S. Justice Department reached a deal Friday to let the merger go forward as long as ITA keeps selling software to rival sites.
Moran expects few changes at the company once the merger closes. “In fact, I’d expect there will be more money thrown into ITA,” he said.
- Kayak.com. This “metasearch engine” allows consumers to hunt for the best deals on Expedia.com, Priceline.com and other travel sites simultaneously.
Kayak has filed paperwork to launch an IPO, but Moran said the company could also attract buyout offers.
“If Google wants to complement its new ITA functionality with even more search capabilities, Kayak would definitely be a target for acquisition,” he said.