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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
Speaker 1: I'm Charlie Pellett. Microsoft reports after the closing bell, mixed
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Speaker 1: W T I now forty four sixty nine barrel. I'm
Speaker 1: Charlie Pellett, and that's a Bloomberg Business Flash. Thank you,
Speaker 1: Charlie Pellett. The online travel business it generates more than
Speaker 1: five hundred billion dollars a year, and one of the
Speaker 1: largest of the online operators is Kayak. Earlier today, I
Speaker 1: got a chance to sit down with Steve Haffner. He's
Speaker 1: the chief executive and co founder of Kayak. We spoke
Speaker 1: about new technology innovations, terrorism, the zeke of virus, how
Speaker 1: they affect travel, and also why they chose the name
Speaker 1: Kayak when they began the company. Well, we were building
Speaker 1: a very different company when we started in two thousand four,
Speaker 1: so we wanted a very different name. So we we
Speaker 1: had a bunch of bunch of capitalists who were suggesting
Speaker 1: we should go by a name like Cheaper Travel or
Speaker 1: Cheaper flights or travel dot com, and my co founder,
Speaker 1: Paul English and I decided we wanted something different. So
Speaker 1: if you think about the research out in the web,
Speaker 1: there's a lot of studies of say that if you
Speaker 1: have six letters or fewer, you get more direct naff
Speaker 1: so people will type your name in direct navigation. Yeah,
Speaker 1: so I think Google, think Yahoo, think Amazon. So we
Speaker 1: wanted six letters or fewer. We liked Kayak because it's
Speaker 1: a palindrome. You can spell it backwards and forwards. It
Speaker 1: connotes being self powered and independent, and it just made
Speaker 1: a smile all right, it made you smile. I guess
Speaker 1: another thing that made you smile. Fast forward is the
Speaker 1: one point eight billion dollar acquisition in two thousand and
Speaker 1: thirteen by the price Line Groups. So right, so tell
Speaker 1: us about that. Yeah, it was interesting. We we had
Speaker 1: spent a number of years building the company and we
Speaker 1: finally had survived the Facebook I P O. Winter and
Speaker 1: taking Kayak public itself, and it had been public for
Speaker 1: about three months when Jeff Boyd, who was the CEO
Speaker 1: of price Line at that time, approach just over a
Speaker 1: labor day weekend and said, hey, you know we should
Speaker 1: we should put these two companies together. And that commenced
Speaker 1: a series of talks without investment bankers, and we wrapped
Speaker 1: up a deal a couple of days later, um for
Speaker 1: the list price as one point eight billion, but actually
Speaker 1: when the smoke all cleared as more electree and a
Speaker 1: half three and a half billion, because they assumed a
Speaker 1: lot of debt as well, I believe now we I
Speaker 1: mean they issued a lot of shares in order to
Speaker 1: be Yeah, we're fortunate that between the time we announced
Speaker 1: the deal and we actually closed it, price Line stock
Speaker 1: doubled in value and we have taken two thirds of
Speaker 1: the consideration in stock meta search. Whenever I look up
Speaker 1: Kayak and want to learn more about what the company
Speaker 1: does from a technical perspective, I keep hearing this term
Speaker 1: meta search. What does that mean? Sure, so Kayak is
Speaker 1: different than every other travel side or app out there,
Speaker 1: and that we're not actually a store. We're not selling
Speaker 1: you anything. What we do is we search everyone who
Speaker 1: does sell something. So we search all the airline sites,
Speaker 1: all the hotel sites, all the online traveling sites. Because
Speaker 1: what we're trying to do is for a consumer, is
Speaker 1: give you a complete picture of what's available out there,
Speaker 1: and once you find the trip that you want, we
Speaker 1: give you choice on where to buy it. If you
Speaker 1: want to buy it from American Airlines, will help you there.
Speaker 1: If you want to buy it from Expedia or Priceline,
Speaker 1: will help you get there too. You're engaging with a
Speaker 1: voice activated interface with Amazon's Alexa as well as the
Speaker 1: Facebook messenger app that that you're interfacing with him. You know,
Speaker 1: looking at you hear about the same demographic I am,
Speaker 1: which is you know, when we are coming off through
Speaker 1: the ranks, we would talk to an offline travel agent.
Speaker 1: You know, you you meet with someone to plan your
Speaker 1: trip to go somewhere. And in our generation we saw
Speaker 1: all of that go onlines. We got used to using
Speaker 1: browsers and going to websites and filling out forms and
Speaker 1: getting our own requests. Well, increasingly you have this new
Speaker 1: generation of people and I see in my teenage girls
Speaker 1: who don't like going online at all. You know, they're
Speaker 1: they don't like voice actually, they like to talk to machines,
Speaker 1: not to other people. They like to text with folks.
Speaker 1: And what we're trying to do with Kayak is have
Speaker 1: an interface that speaks to that whole generation, so that
Speaker 1: if they're more comfortable asking Siri for a flight quote
Speaker 1: from l A to New York, that Kayak can provide
Speaker 1: that answer. If they're more comfortable during during their Facebook
Speaker 1: Messenger or um Slack, if they're in a business environment,
Speaker 1: Black is that online chat app for businesses exactly exactly
Speaker 1: that they can say, Hey, UM, can you give me
Speaker 1: a room tonight at the Ritz Carlton here in New
Speaker 1: York and we can fulfill that request in a very
Speaker 1: frictionless way. But what about the technology behind that? I
Speaker 1: mean this is not full proof. I mean, voice activated
Speaker 1: commands are relatively new for consumers there's a reason it
Speaker 1: hasn't been done until now, right because the technology wasn't there.
Speaker 1: And also you have to have tremendous scale in terms
Speaker 1: of consumer requests for information so that you can start
Speaker 1: building a machine learning platform that gives you accurate answers.
Speaker 1: So a Kayak, for example, we'll do over a billion
Speaker 1: requests for consumer travel information this year, and in that
Speaker 1: billion requests, we can start to ascertain patterns. Right. So
Speaker 1: if if someone says I'd like a hotel in New
Speaker 1: York tonight, we know that's New York City, not upstate
Speaker 1: New York. If they say Paris, we can look at
Speaker 1: their locations say are they meaning Paris, France or Paris, Texas.
Speaker 1: What would Kayak say if the user spoke to Amazon
Speaker 1: Alexa and maybe even went online and said I want
Speaker 1: a travel they ation, but I'm afraid of terrorism. What
Speaker 1: would it come back and say, it's been interesting after
Speaker 1: this interview, I'm gonna go ask and see what response
Speaker 1: we have at But you know, in general, no one
Speaker 1: in the travel business likes terrorism because it does two things.
Speaker 1: The first thing it does is it suppresses consumer demand
Speaker 1: because you're scared to go somewhere. Have you seen that
Speaker 1: in any we have seen that. We have seen that,
Speaker 1: particularly after the Paris attacks. The second thing it does
Speaker 1: is interduces more friction, more hassle into the actual travel experience,
Speaker 1: longer security lines, you no longer um checks, etcetera. So
Speaker 1: it's not something that that we like to see. Um.
Speaker 1: You know, I suspect I would hope if you ask
Speaker 1: that question into Kayak via Alexa, that we suggest some
Speaker 1: spots that are terror free. Alternative accommodations I'm thinking here
Speaker 1: of air B and B. On one of the price
Speaker 1: Line Group conference calls, chief executive talked about four hundred
Speaker 1: thousand alternative accommodations that were available. Do you see Kayak
Speaker 1: participating in this alternative accommodation world? Absolutely? You know, our
Speaker 1: mission is the show consumers a complete picture of everything's available,
Speaker 1: whether that's flights, hotels, non traditional accommodations, or rental cars.
Speaker 1: And we've got that content on Kayak. So we've got
Speaker 1: over a million options for places to stay, including people's
Speaker 1: apartments and trailer homes and all that kind of stuff.
Speaker 1: What about the restaurant, tour and activities comparison that has
Speaker 1: been introduced as a new feature for Kayak it's it's funny.
Speaker 1: Every three years or so we look at expanding the
Speaker 1: scope of our activities to other verticals that are right
Speaker 1: for what you know we talked about earlier being meta
Speaker 1: search activities is something that I think is is ready.
Speaker 1: So we've we've launched that restaurants. We have a sister
Speaker 1: brand in the Pricelon group called open Table, which is
Speaker 1: very popular, and they've been kind enough to lend us
Speaker 1: some of their data and we're developed developing an interface
Speaker 1: on top of that which should debut shortly. So you know,
Speaker 1: in general, we we love to have users have Kayak
Speaker 1: on their phones and have that Kayak app, helping, book plainting,
Speaker 1: get some hotel rooms, give them things to do, suggestions
Speaker 1: on restaurants, et cetera, and also to comparison shop. Of course,
Speaker 1: that's where it all starts. You started a test. Maybe
Speaker 1: you can give us an update with something called blue
Speaker 1: kayak uh dot com and that was available to so
Speaker 1: far users and I'm wondering what that was all about
Speaker 1: and what you learned from it. That's interesting that you
Speaker 1: stumbled across that from good, good research. So look at Kayak.
Speaker 1: We are um experimenting with all kinds of different looking
Speaker 1: fuels of the West Side and features and blue Kayak
Speaker 1: was one of our tests. You know. What we did.
Speaker 1: We looked at a company called booking dot com, which
Speaker 1: is an online travel agency also and by the price
Speaker 1: Line Group, and we said, if we made our website
Speaker 1: look exactly like their's, um, what would the user engagement
Speaker 1: and interaction be? And what we found is that our
Speaker 1: version of kayak is superior to their version of kayak
Speaker 1: and when we retired that test. But you know, in general,
Speaker 1: anytime you go into kayak, there's gonna be a couple
Speaker 1: hundred different permutations of kayak running. So what you see
Speaker 1: today be very different from what you see tomorrow. Let's
Speaker 1: go back to travel trends for just a moment, because
Speaker 1: the Olympics is scheduled for Brazil. What if you've seen
Speaker 1: in terms of interest. It's funny. The interest is definitely
Speaker 1: definitely there to go to Brazil, but it's not the
Speaker 1: zeke of virus. Yeah, but it's not at the similar
Speaker 1: levels that we've seen in the past. Um. You know,
Speaker 1: it's the search query volume to Reel for example, it's
Speaker 1: up significantly year of year, but it's not up to
Speaker 1: the same level that we saw with the World Cup,
Speaker 1: which was in the same location. So I don't I
Speaker 1: don't know whether that's because of political turmoil they're there,
Speaker 1: or because of the Zeka virus, or because of concerns
Speaker 1: of infrastructure, but it's it's definitely not where we like
Speaker 1: it be. Steve Hafner is the chief executive and the
Speaker 1: co founder of a Kayak, talking about trends in the
Speaker 1: travel industry and worldwide online booking via these suppliers accounted
Speaker 1: for close to sixty percent of the total online bookings
Speaker 1: and markets such as ASA Pacific, Western Europe, and the
Speaker 1: United States. UH they account for about eight percent of
Speaker 1: the global online travel market. Price Line Group, the parent
Speaker 1: company of Kayak. The shares right now they are higher
Speaker 1: by four and a quarter percent so far this year.
Speaker 1: Today they're down nine dollars and eighty four cents trading
Speaker 1: a thirteen hundred and thirty one dollars a share. Coming
Speaker 1: up on taking stock, We're going to take stock of
Speaker 1: the Justice Department. It's close to challenging anthems proposed acquisition
Speaker 1: of Signal Corps and etna's planned combination with Humana. Anti
Speaker 1: trust lawsuits against the plan mergers would be the culmination
Speaker 1: of concerns that the Justice Department has about both deals
Speaker 1: that they set out from the onset. The year long
Speaker 1: review of the mergers, well, the department skepticism has yet
Speaker 1: to subside. You're listening to taking stock. I'm pim Fox
Speaker 1: right now SMP five hundred, down about a order of
Speaker 1: a percent, lower by four and a half points, trading
Speaker 1: at twenty one sixty two. This is Bloomberg h