great takes on family travel in the U.S.

We launched UpTake to make the entire travel planning process easier and we started with the specific goal of improving the first step in the travel planning process - helping consumers decide where to go, where to stay and what to do. With our new Series B investment led by Trinity Ventures, we will build on the progress we achieved since our Series A investment from Shasta Ventures and accelerate our growth.

How do we plan to grow? First, we will expand our search offering beyond UpTake Hotels into new categories including: UpTake Lodging, UpTake Things to Do, UpTake Restaurants and UpTake Beaches. Second, we will improve our ability to deliver travel recommendations based on our analysis and filtering of collective intelligence and on consumers’ specific travel preferences. Lastly, when it makes sense, we will accelerate our growth through acquisitions.

We solve information overload to help you make decisions with confidence

We know from external research and internal consumer studies that the primary challenge for you (”you” being the quintessential consumer traveler more interested in your trip experience then the absolute lowest price) in deciding where to go, where to stay and what to do is that there is too much information scattered across too many sources. And when you can’t find a trusted friend who has been there before to give you advice, you turn to web search and swim through that ocean of unorganized, fragmented information to find the relevant bits of information you need. A Google study shows the average traveler completes 12 searches and visits 22 sites before booking. For every search for flights you might do, you will do ten more searches on what to do, where to stay, where to eat, etc. You also want much more then prices, you want photos, maps, descriptions, reviews et al. This translates to approximately 10 billion travel-related web searches annually.

At UpTake, we are solving this information overload problem. We have aggregated 20 million opinions and information from over 1,000 web sites on 400,000 products and organized it to help you find everything in one place.

We aren’t helping you ‘just’ with hotels, but also with campgrounds, beaches, museums, theme parks, spas and all the activities that make your trips memorable.

We recommend based on understanding collective intelligence

Our approach is unique. Like Google, we aggregate all the existing information we can find (but unlike Google, we just do travel).

However, we have a better understanding of the aggregated information so we can organize and present it better (e.g. romantic hotels, kid-friendly things to do).  How? That’s a long explanation. The short version is that we extract sentiments and metadata from reviews, descriptions, blogs, articles so we can recommend specific options tailored to your preferences - and explain why we are making the recommendation.

We are complementary to existing travel companies

We specifically built our product and our business to be complementary with the travel industry. We are an information search application that aggregates and analyzes travel information, displays the most relevant abstracts with the information provider’s brand displayed, and drives free, qualified leads to the information provider when the consumer wants more than we display. As a search company, we are not a content creator, a “destination site,” a community site, a content publisher, a trip organizing site, or a booking engine. We simply help people search existing travel information to make better decisions.

Because of our complementary approach, a number of information providers wanted us to display more of their information, faster. That’s why we created our Content Partner Program - so that you can send us feeds rather then wait for us to crawl your site. Let us know if you want to participate.

We are looking forward to improving travel search over the next few years, if you would like to partner with us, just have a few questions, or would like to send feedback please email me (yen at uptake.com).

p.s. we are looking to add a few, very talented data, search and application engineers to our team - please send along folks you think would be a good fit; thanks in advance!

Question: Why the new interest in online travel? Isn’t online travel “done”?

Based on the number of analyst and due diligence calls I received recently, it looks like there are a number of new travel sites looking to help consumers research and plan their trips. Is this the sign of a Web 2.0 Bubble in Travel?

My Answer: Yes and No. Online travel is only partially “done.”

After all, travel is the biggest e-commerce category at $91B. But, growth rates are slowing and price shopping and online bookings are increasingly concentrated at a few sites. Travel is partially “done” - for consumers who know what they want to book. There is little need for another travel offering of this type. The world doesn’t need another Expedia or Orbitz.

However, there remains a huge unaddressed consumer need–helping consumers decide what to book.

There is an increase in awareness of this unaddressed consumer need. When I ran Yahoo! Travel I saw clearly what consumers were searching for: information like things to do, places to stay, consumer advice, photos, locations, maps etc. Consumers have a lot of needs that are not being served by online travel agencies like Expedia or Travelocity. The “first click” doesn’t start at Expedia…it starts at Web search.

Want to address this need? Make sure you meet these three criteria.

Based on our travel experience and consumer research, we believe three key criteria need to be met to address this “what to book” problem:

1. Offer comprehensive information - offer one stop shopping of places to stay, things to do and detailed information (e.g. descriptions, photos, maps, location, reviews, etc.) Consumers should not have to sift through multiple sites to find relevant bits of information on possible places to stay and things to do.

2. Provide filters and personalization - enable consumers to search based on who they are traveling with and why they are traveling and don’t assume they already know where and when they want to go. Give them the filters they need to get relevant results.

3. Make word of mouth easily available - people prefer information & feedback from other people (reviews, blogs, ratings, etc.) Unfortunately, most sites that have reviews, blogs etc. still force their visitors to browse to find the most relevant feedback and do not yet analyze that word of mouth to make specific recommendations.

The travel site that meets these three criteria will become the “first click.” Why? Because once these three criteria are met the “what to book” decision can be made easily and travel planning can be a more enjoyable and efficient experience. It is quite simple for a consumer to then move into the booking & price comparing phase of trip planning.

That’s how we think about it. How about you?

OK, so we put our cards on the table. What are other innovators in travel thinking? What problem are they trying to solve? What opportunity is there to go after where “travel” is not done? Is there solid consumer need out there (and for what) or is everything getting just a bit too frothy for your taste?

This $115M acquisition has journalists and travel insiders scratching their heads especially given how much smaller Farecast is than Sidestep, the $180M Kayak paid for Sidestep and because MSN hasn’t shown prior interest in travel. But the confusion about the rationale is because the strategic driver for the purchase likely isn’t about travel per se, it’s about something bigger, much bigger - search. Why search? Because travel is a huge category within web search and travel is an even bigger category for paid search. And the last time we checked, Microsoft is really, really serious about closing the very large gap between the MSN web and paid search offerings and those from Google and Yahoo. How should we quantify “huge”? Internal analysis at web/paid search companies indicate between 3-5% of web searches are travel related. Not surprisingly, perhaps, given 79% of travelers search before booking.

Travel paid search spend on just Google and Yahoo is over a billion dollars a year, again, not surprisingly given there is $8.7B spent annually on online marketing and over $90B booked online (U.S.).

So, let’s get back to Farecast/Microsoft. Farecast gives Microsoft an opportunity to slow, and then reverse market share losses in this critical category of search. How? Because Farecast’s “smart search” technology should enable Microsoft to deliver on the holy grail of paid and web search - ‘contextual targeting.’ By understanding more about what consumers are searching for (e.g. their dates of travel) and about the relevant pages (e.g. real time prices - or even better, price predictions), Microsoft should be able to offer a significantly more relevant set of results then Google can.

Google’s current SRP (search results page) for “flights to Boston” points to a bunch of pages all over the web where a consumer would type in their trip context on each.

Microsoft’s SRP (like Yahoo’s today) could offer consumers the ability to give more context like dates, number of folks traveling etc. With this context, Microsoft could return a much more relevant set of integrated results.

That’s a better consumer experience, but Microsoft has an even bigger opportunity around targeting paid search advertisements - especially given Farecast’s ability to predict prices. As Rick at Motley Fool points out, “there is no easier lay-up in the online advertising industry than serving sponsored leads to folks ready to spend money.” With Farecast, Microsoft can hyper target those ads to make it more compelling for consumers to click and make more money per click given Farecast’s existing relationships with travel advertisers.

Well done Steve Ballmer, well done Hugh Crean! Good luck executing on your vision - and good luck acquiring companies to enable your next vertical categories.

Note: This post is based on internal UpTake analysis, and does NOT include data or context from discussions with Hugh or anyone on the Farecast management team, nor Brad, Erick or anyone on the Farecast board.

UPDATE on 4/22: More coverage at WebWare on 4/17 by Ina Fried, the FareCast blog on 4/17 by Hugh Crean, the 4/17 SeattlePI post on Todd Bishop’s Microsoft Blog, John Cook’s original news break, Profy 4/17 post by Cyndy Aleo-Carreira, TechCrunch post on 4/17, Seattle Times on 4/17, CenterNetworks on Farcast acquired Microsoft, WebGuild on 4/18, PaidContent.org on 4/17, Venture Beat on 4/17, SearchEngineLand on 4/17, Rev2.0rg on 4/18.

We have been pleasantly surprised by the time and attention we received from analysts and bloggers given we started our private beta just before the holidays. There is consensus a clear strategic opportunity exists to address unmet consumer needs and initial testing is showing Kango can deliver against those needs. Here are a few comments from analysts and bloggers:

• Diane from Jupiter Research, “I’ve been talking for a long time about the need for online travel to better mimic the traditional travel agency experience of providing recommendations based on preferences. Kango is an exciting example of how this is possible, making travel planning easier and delivering qualified leads to travel providers”.

• Tim from Business of Online Travel talks about how Kango is the natural evolution of meta-search to solve the problem of too much information – Kayak aggregates price, Travelzoo aggregates deal and Kango aggregates content, reviews and travel information,”(Kango) takes all of the unstructured data out there from web based sources (TripAdvisor, Travelpost, Expedia, Orbitz, Travelocity, etc) and combines it into a structured data result…into a contextual summary”.

• Claude from Les Explorers remarked “Kango business is to simplify the research process by collecting everything you need to decide in one place”, Blog Search Engine, “Kango is targeted to your search results for a specific vacation place”, HotelMarketing.com believes “Travelers can now create a more satisfying vacation experience thanks to Kango”. Jens from Tourism Internet Marketing reports that Kango will “save me time, make it easier to travel, and lead to better trips….In my opinion…a site worth watching”.

If you haven’t received an invitation yet, or have lost your invitation, please sign up and let us know how to improve Kango!

It seems like just yesterday that the travel sector crowned Kayak the undisputed heavyweight champion of price comparison search following their acquisition of SideStep. But wait! It looks like Yahoo has (finally!) unveiled FareChase, the price search engine they acquired back in 2004. On the Yahoo Travel homepage, the Travelocity booking engine is no longer the default search option, it has been re-labeled ‘classic search’ and FareChase is the default search.

Yahoo is a formidable, albeit very delayed, entrant to the price search. It searches more supplier sites then Kayak directly, which presumably leads to better prices for consumers. And Yahoo is the fourth largest travel aggregator, behind only the ‘big three’ of Expedia, Travelocity and Orbitz. Greg at Compete.com estimates that the combined entity (Kayak-SideStep) will attract over 5 million monthly U.S. website (unique) visitors - about 60% of Yahoo’s footprint.

Presumably this brings a new competitive element that Kayak might not have expected (let’s be serious, four years after the acquisition, did ANYONE expect Yahoo to finally launch FareChase?). With their market share, Kayak is in a strong position as the suppliers perceive Kayak to be an important channel in the continued battle with aggregators for market share. But they aren’t the only player anymore, which as Tim at BOOT suggests, would have made it easier to move from a position of strength to an IPO. Perhaps, as Sramana at Seeking Alpha suggests, they might do additional roll-ups on their way to the IPO. On the other hand, Yahoo plunging into this price search is good validation to Wall Street that price search is still important.

Another implication is that a potential operating benefit from the acquisition might not fully accrue for Kayak. Both Kayak and SideStep depended heavily on acquiring consumers through online marketing. Buying SideStep should have allowed Kayak to acquire those consumers more cost efficiently, but having Yahoo-FareChase also competing might make the acquisition costs higher then anticipated.

Stay tuned, it should be an interesting year.

Travel insiders have known that major changes are inevitable for the online travel industry. While most assume that online travel is already “done” by Expedia and the likes, people who have been in travel like Henry Harteveldt, Gregg Brockway and I are more excited than ever before about future opportunities to improve the consumer travel planning experience online. The consumer travel planning process is usually broken down into four or five steps: 1. Research – learning more about their options for where to go, what to, and where to stay 2. Compare – checking prices and availability 3. Book – booking your flights, hotels and activities 4. Share – adding reviews, blogs etc. to share your experiences with others. and

It’s clear that the online booking sector, dominated by the suppliers and the “big 4” OTAs (2) is maturing. With the announcement of the Sidestep and Kayak merger, the comparison sector demonstrates it is starting to mature – with a couple of interesting caveats. First, the surprisingly low overlap in traffic between Kayak and Sidestep suggests that there is more growth possible; especially if the merger means they can increase investment in product and marketing to accelerate relatively slow growth. Second, there are new companies, e.g. Farecast, trying to drive further innovation in the comparison sector. Finally, rumor has it that in early 2008 Yahoo is planning to make some big, exciting and long overdue moves with its dormant FareChase price comparison product, a product that is actually more comprehensive then Kayak. With Yahoo Travel’s position as the fourth largest aggregator and their strong market share and growth in the critical hotel segment, this move could throw the comparison sector back into flux. [update: see the bottom of this post for additional notes]

The Web 2.0 trend has been very prevalent in travel with the explosion of consumer-generated reviews, blogs, photos, video etc. making it easier and more fun to share but also making it difficult for you to assess which sites and reviews are most useful and trustworthy. TripAdvisor is the most successful example of a hotel review site, but its very success leads to an overwhelming number of reviews to sort through.

Market surveys by industry analysts tell us that the first step of travel planning – research - is the hardest. According to a 2006 survey commissioned by MSN and conducted by Harris Interactive, approximately three-quarters of U.S. adult respondents who have ever taken a vacation say they visit three or more Web sites when researching and/or booking their vacation plans. “The fact that three out of four vacationers spread their online research across multiple Web sites—with some visiting 10 or more—points to the huge timesaving benefits that a truly full-featured online travel planning site can deliver,” said Jim Quilty, vice president of travel and tourism at Harris Interactive. The SideStep/Kayak merger will not solve the most frustrating and time consuming aspect of the online travel experience—researching a trip.

Before a customer can compare prices or book a flight they must decide where to go, what to do and where to stay. This is not a problem if someone needs a flight for a short business trip to Atlanta with a meeting in a hotel near the airport. But, if a customer is seeking a specific kind of experience - romantic things to do in San Francisco or family friendly hotel in San Francisco they still have had to find, collect and organize data from many sites to decide and plan a trip. As Henry Harteveldt of Forrester Research discusses in the Bob Tedeschi-written New York Times article and Diane Clarkson of Jupiter Research discusses in her blog, the online travel industry needs to improve the consumer shopping experience and enable you to get recommendations based on your preferences.

That’s what Kango is doing - simplifying that research process by collecting everything you need to decide in one place, enabling you to filter down to your most relevant options based on your preferences, and helping you decide what to price compare/book based on our natural language analysis of reviews from all over the web. Kayak and SideStep do meta-search for prices, we do smart meta-search for reviews and (non-price) travel information. There is over $700B spent annually on travel in the U.S. (3), and “only” $80 billion booked online…there is plenty of opportunity to do remarkable things to enable people to have better trips. And Kango’s mission is to be the first step to planning better trips.

Notes:

1. Gregg Brockway’s Tripit helps you organize your itineraries after you have booked.
2. Expedia, Orbitz, Travelocity and Priceline (and their respective sub-brands)
3. Travel Industry Association of America

Looking for more on this story? We have rounded up the news & blog coverage thus far:

Blog Highlights

• TechCrunch broke the story and did an excellent job of digging into the details of the deal, key operating metrics and the fate of the SideStep team
• Webpronews highlights the less than 10% overlap in visitors between the two company
• Searchengineland mentions the overall size of the online market at $80 billion according to Comscore
• Downloadsquad reevaluates their position that the online travel space will consolidate to only a few sites in travel
• JoeDuck is a fan of Kayak
• Les Explorers highlights non-American players and quotes Adam Healey’s blog
• GigaOM highlights pessimistic forecasts about the online travel market in 2008
• HotelMarketing highlights the turnaround aspect of the SideStep story
• VentureBeat brings together all the funding details in detail
• PaidContent highlights new players like Kango and Kosmix
• RedHerring covers the long period of courtship between the two companies
• Adam Healey of VibeAgent reviews the financial metrics and potential multiples at exit.

Other blog coverage

• VijayDandapani quotes henry harteveldt that 12-15% of online leisure travelers use metasites
• Xconomy suggests “Kayak and Sidestep will travel together in rare east buys west acquisition.”
• Gadling is “concerned that their new powerhouse corporate entity will overshadow their original grassroots mentality.”

Additional coverage

• SearchEngineWatch
• TheAlarmClock
• 23Musings
• SiliconTap
• UndertheradarBlog
• Gigaom

News Reports

• Tjacobi
• InfectiousGreed
• TravelStuff
• Travolution
• Tim’s BOOT
• KelseyGroup

[update] What’s a few hundred million dollars between friends? Speculating about the Kayak & SideStep deal

Wow, did I ever get a torrent of calls from travel industry friends and colleagues and analysts wanting to discuss the Kayak acquisition on Thursday night and Friday. Life was a lot quieter when we were in stealth mode and folks didn’t know we were doing meta-search or we were in travel! We had conversations with two groups of folks about the deal.

The first were travel and search insiders and Yahoo alum I knew who wanted to get our take on the deal and its implications. I certainly have some opinions - see below for my unfounded speculations.

The second group were folks who made a connection between Kayak and Kango because we both do meta-search in our own fashion. Kayak searches many booking sources to help you find the lowest prices. Kango searches many review and information (e.g. descriptions, photos) sources directly to help you find the right hotel or activity (and soon, the right destination). Then you go to Kayak to price compare or Expedia, Hilton, Southwest etc. to book. At Kango, we don’t do the real-time meta-searches for price and availability that Kayak does. And Kayak doesn’t structure unstructured content (e.g. reviews, blogs) and extract meta-tags like we do. Oh, and they are a $500M company…and we’re not!

Those conversations above were based on facts. The rest of this post isn’t I have several opinions on the Kayak-SideStep deal below. I haven’t spoken w/Rob or Steve Hafner about the deal yet, so these are just conjecture.

First, assuming the comScore’s unique visitor tracking for Kayak and SideStep that TechCrunch showed is accurate, these are not two companies growing their user bases quickly. Eyeballing Nov YOY figures, it looks like YOY growth of 15, maybe 20%. hmmm…

This means revenue growth is being driven by generating more revenue per user…our second takeaway. Rob and SideStep have executed very well. It looks like he is monetizing as much as 75% better then Kayak. i.e. according to TechCrunch, SideStep is generating $35M in revenue from $1B in ticket sales and Kayak is generating $50M from $2.5B in ticket sales. Let’s assume there is some exaggerations in the Kayak ticket sale numbers. It still looks a significant positive delta. But the delta looks like it goes away on a revenue per unique visitor basis. hmmmm… But Kayak is keeping SideStep’s ad sales/monetization team, so there must be something worth going on?

Third, contrary to popular opinion, SideStep was doing price meta-search before Kayak was conceived. Rumor has it that SideStep has a patent or two that are potentially troublesome for other price meta-search players.

Finally, what range might Kayak’s IPO be at given the operating metrics reported? I have talked to a VC involved who says Kayak will do a “billion” dollar IPO in 2008. Well, that might be necessary for the VCs who invested in the last round assuming Kayak raised ~$150M in equity (and the remaining ~$45M in debt) for 25% of Kayak. Let’s do some back of the envelope analysis. The dominant online travel agency, Expedia (owner of Hotels.com, TripAdvisor, HotWire…) trades at 3X revenue. Assuming 40% growth on their current revenue of $85M and a multiple of 6 instead of 3 because of a faster growth/higher margin story, perhaps an IPO range of $700-800M?

What’s a couple of hundred million dollars between friends?

Kango just announced the launch of our private beta yesterday morning and we would like to know what you think of our site. Please sign up for a private beta invitation and let us know what you like and what we can improve.

We recognize we have a long way to go to achieve our vision of becoming your first step for planning your trip. We look forward to your feedback.

In the meantime, the blogosphere has started giving us their candid opinions:

• Dan Kaplan at VentureBeat says, we have built “a technology with a refreshing spin on travel search…so someone looking for a family vacation in, say, Big Sur will see a different set of results than someone seeking romance or adventure. Kango’s technology extracts the sentiment from the postings it indexes and only shows results for locations that get positive buzz. If you’re looking for activities, you can filter using a number of criteria, including theme parks, playgrounds, wineries and breweries, and spas.”

• Erick Schonfeld at TechCrunch highlights that Kango “looks at travel reviews and other information across the Web and automatically generates tags so it can categorize results by how “kid friendly” or “romantic” they may be.”

• Andy Beal of Marketing Pilgrim says ”if you have been waiting for social media to take on the travel industry, your wait is over” with Kango’s debut.

• Rafe Needleman of Webware (CNET) “found the search results page excellent” and that “the product philosophy makes sense.”

• Anne Zelenka from GigaOm says, “Kango could eliminate some of the multi-web site research that many vacationers undertake.”

But it’s not all rosy of course (otherwise we wouldn’t be in private beta!). Rafe points out that our search experience isn’t quite there, for example, we don’t cover surfing in Hawaii. Most bloggers commented that they would like Kango to cover more than California and Hawaii.

How do we do what the bloggers are talking about? We have aggregated and analyzed more than 20 million traveler opinions from more than 1,000 sites across the Web. We use natural language analysis and travel-specific term mapping to deliver reliable, relevant recommendations for you. This means you can now include subjective criteria like ‘romantic’ or objective criteria like price and ‘internet access’ and get relevant results.

With Kango, if you are looking for a romantic getaway in San Francisco, you will get different hotel and activity recommendations than if you are looking for a family vacation in San Francisco. We try to deliver search results by understanding your intention, so ‘good for kids’ is interpreted the same way as ‘child friendly’ or ‘family vacation’. The result of all this is Kango - a travel search application that helps you discover new travel choices and make better decisions.For more details about how and what we do, read more here.

We look forward to getting your feedback about how we can improve Kango.

Gene & I founded Kango to make it easy and fun for you to discover information about your travel options and to make better travel decisions. Our mission is for Kango to be your first step to a great trip.

Travel is the largest e-commerce category on the internet with almost $90 billion booked online in 2007. But you still have to buy travel online largely on the basis of “facts”, such as travel dates and price. However, you probably make many your decisions about where to go, where to stay and what to do based on “feelings” –subjective criteria for the kind of experience you wish to have. At Kango, you can discover the right options based on facts and feelings.

Unlike today’s travel sites, we allow you to shop for things to do as well as for lodging - for well-known attractions like the Monterey Bay Aquarium and for hidden gems that locals know about like Dennis the Menace Park. We enable you to get filtered recommendations for things to do and for lodging based on your subjective themes (e.g. romantic San Francisco hotels or family friendly things to do in San Francisco) rather than having to pick through a one-size-fits-all top 10 list.

Unlike web search engines like Google and Yahoo, we do “entity extraction” to organize structured information around specific activity and lodging products. For example, when you type in “Hotel Vitale Embarcadero,” Google returns 12,700 links to different pages on different sites. We return an integrated snapshot of the Hotel Vitale Embarcadero that include descriptions, photos, over 200 reviews, amenities, address and phone number from over 12 sources as well as the official hotel site.

We have a lofty vision about helping you discover the trip that is right for you. This can be a difficult task, like finding a (your) needle in the haystack. We realize we are just getting started. With this in mind, we welcome your feedback. Please sign up for private beta and let us know what you like and more importantly, what we can improve.