With all the buzz around mega-deals involving Kayak and Trivago, there is growing debate about the importance of meta-search to the travel industry. In this exclusive guest article, Hugo Burge, an investor in and chief executive of the Momondo Group, shares his insights into where this increasingly influential channel has come from and where it’s headed.

The history of meta-search has not always been glamorous or smooth. The concept is simple – compare a multitude of sources, in an independent way, to give consumers the best overview of a fragmented and sometimes confusing market. A lot of the early attempts were half-hearted and stymied by lack of data access from a sometimes conservative, generally unwilling and occasionally hostile industry.  

Sidestep pioneered the model in 1999 but at a tangent, limiting the opportunity with a downloadable widget initially. Then in the early noughties Stelios had a go with easyValue, but it was lost in a sea of other products.

The pure meta model operates with low revenues per user, requiring significant start-up funding/considerable sweat equity, a lean cost base and dedication. This combination makes it harder to make money in the short term. However, the model generates loyalty and profitability over time as you build brand and volumes. Yahoo was ahead of the game in 2004 when it purchased Farechase but failed to see it through and invest in its purchase.

Things really started to change in 2007, when Kayak’s purchase of Sidestep gave it the scale to break profitability. Microsoft boldly weighed in with its purchase of Farecast in 2008, and heavily-promoted its flight search as a major differentiator for Bing. In the following years, perhaps spurred on by these bold investments and acceptance that the model had come of age in the industry, the meta-pack started to break up and the meta-winners started to emerge.  

The winners tended to be focused, either geographically or on a single product (Trivago – hotels, Skyscanner – flights, momondo – Nordics and non-English speaking territories, Liligo – France, Kayak - USA), which allowed them to find the magic formula of being meaningful to the industry they played in. Each created relevance and consumer loyalty that allowed them to generate scale and profitability.   

The massive buzz perhaps wore off a little during 2008-2009, as Bing fizzled – lost in a bigger picture, Kayak’s IPO didn’t happen and the financial doldrums weighed on investment. However, during this time, and especially from 2010, meta-search quietly became more and more important and in some ways flew under the radar, gaining real scale and meaning to the travel industry in a way that was not widely reported on at the time. Commentators seemed focused on the imagined elephant in the room – Google surprised the industry by purchasing ITA in 2011 for its own flight search and probably discounted the value of the meta-businesses that flourished in the background. 

The heat is on

Meanwhile, at the smaller end of the market, there were signs that things were heating up with deals aplenty, increasing confidence in the model and a rush for scale: Kayak’s purchase of Swoodoo, SNCF’s purchase of Liligo, Tiger Global’s investment in Wego, Insight’s investment in Trivago and Cheapflights’ purchase of momondo. What perhaps the industry missed was that Google was building its own meta-search for a reason. It was a powerful product that engendered loyalty amongst consumers and arguably threatened its core business. This new model could underpin new trustworthy brands and generate businesses of real scale. By the end of 2011 there was the launch of Google’s Flight Search, in 2012 the Kayak’s IPO valued the company at $1bn and the big travel players were looking for the next big thing. Perhaps, with hindsight, it is possible to see why the time was right for the mega-meta purchases that we have witnessed. To cap it all, Tripadvisor awoke to the power of the channel by converting its global homepages to meta-search. Finally the promise that meta offered began to be more fully realised.

With the rise of meta there are a couple of other trends that I’ll highlight as they help define and shape the rapidly-changing landscape – and perhaps offer you something to ponder: 

·         With meta becoming mainstream and an exceptional business model, the battle is on for differentiation and dominance. How do meta competitors differentiate themselves? 

·         Who takes the booking is important, especially now that the ultimate owners of two of the largest meta-search are travel agents. How will this impact the industry? Will they use the leverage of ownership to subtly boost their own bookings on their own channels or try to undermine other platforms to enhance their own?

·         A number of parties, especially in hotels and holidays, are blending the meta and the OTA model. Does this enhance the user experience or undermine it?

·         Meta-search seems to have an early lead on mobile experience. Will this continue?

·         How will balance between supplier and OTA meta-partners play out? And who will be the winner? Will OTA’s remain ahead of the game?

·          Is consolidation inevitable as competition heats up or does independence give a long term advantage?

These are some of the challenges and opportunities that face the meta-model as it becomes increasingly influential and are some of the things my team and I think a lot about as we look to appeal to a broad range of potential customers and help guide users to find great flight deals and the best holiday bargains. At the same time, I think it’s important to focus on the meat and potatoes; whatever else happens in a rapidly-evolving market, those core aims - being close to customers and offering great deals and advice - underpin everything we do.

Just to clarify, I’m not including travel publishers and search tools like Cheapflights, Travelzoo, igoUgo, DealChecker and Shermans Travel in this meta-discussion – they have different dynamics and occupy a different space in the market.

Disclosure:  Hugo Burge is an investor in and CEO of Momondo Group, which operates both the deals publisher and search-engine Cheapflights – which pioneered UK flight search in 1996 and I have been involved with since March 2000 – and momondo, a European leader in travel meta-search, founded 10 years later in 2006. His views are his own.