WEBVTT - Kayak's Hafner on Tech Integrations, Terrorism Impact (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot com, the Radio plus Mobile Act and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie Pellett. Microsoft reports after the closing bell, mixed

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<v Speaker 1>picture for stocks. Right now, Right now, we have got

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<v Speaker 1>the Dow Jones Industrial Average hired by eight points, up

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<v Speaker 1>less than point one percent to eighteen thousand, five hundred

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<v Speaker 1>forty one, SMP five hundred index down five to sixty one,

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<v Speaker 1>a drop there of point two percent, and Nastacktown twenty

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<v Speaker 1>one points, a drop of four tenths of one percent.

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<v Speaker 1>The tenure of eight thirty seconds, the yield one point

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<v Speaker 1>five five percent. Gold up three twenty ounce thirteen thirty

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<v Speaker 1>two fifty on gold again there of two tenths of

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<v Speaker 1>one percent. West Texas Intermediate crewed down five tenths down

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<v Speaker 1>to fifty five cents. It is down one point two percent.

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<v Speaker 1>W T I now forty four sixty nine barrel. I'm

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<v Speaker 1>Charlie Pellett, and that's a Bloomberg Business Flash. Thank you,

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<v Speaker 1>Charlie Pellett. The online travel business it generates more than

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<v Speaker 1>five hundred billion dollars a year, and one of the

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<v Speaker 1>largest of the online operators is Kayak. Earlier today, I

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<v Speaker 1>got a chance to sit down with Steve Haffner. He's

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<v Speaker 1>the chief executive and co founder of Kayak. We spoke

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<v Speaker 1>about new technology innovations, terrorism, the zeke of virus, how

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<v Speaker 1>they affect travel, and also why they chose the name

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<v Speaker 1>Kayak when they began the company. Well, we were building

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<v Speaker 1>a very different company when we started in two thousand four,

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<v Speaker 1>so we wanted a very different name. So we we

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<v Speaker 1>had a bunch of bunch of capitalists who were suggesting

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<v Speaker 1>we should go by a name like Cheaper Travel or

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<v Speaker 1>Cheaper flights or travel dot com, and my co founder,

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<v Speaker 1>Paul English and I decided we wanted something different. So

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<v Speaker 1>if you think about the research out in the web,

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<v Speaker 1>there's a lot of studies of say that if you

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<v Speaker 1>have six letters or fewer, you get more direct naff

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<v Speaker 1>so people will type your name in direct navigation. Yeah,

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<v Speaker 1>so I think Google, think Yahoo, think Amazon. So we

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<v Speaker 1>wanted six letters or fewer. We liked Kayak because it's

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<v Speaker 1>a palindrome. You can spell it backwards and forwards. It

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<v Speaker 1>connotes being self powered and independent, and it just made

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<v Speaker 1>a smile all right, it made you smile. I guess

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<v Speaker 1>another thing that made you smile. Fast forward is the

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<v Speaker 1>one point eight billion dollar acquisition in two thousand and

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<v Speaker 1>thirteen by the price Line Groups. So right, so tell

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<v Speaker 1>us about that. Yeah, it was interesting. We we had

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<v Speaker 1>spent a number of years building the company and we

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<v Speaker 1>finally had survived the Facebook I P O. Winter and

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<v Speaker 1>taking Kayak public itself, and it had been public for

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<v Speaker 1>about three months when Jeff Boyd, who was the CEO

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<v Speaker 1>of price Line at that time, approach just over a

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<v Speaker 1>labor day weekend and said, hey, you know we should

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<v Speaker 1>we should put these two companies together. And that commenced

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<v Speaker 1>a series of talks without investment bankers, and we wrapped

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<v Speaker 1>up a deal a couple of days later, um for

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<v Speaker 1>the list price as one point eight billion, but actually

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<v Speaker 1>when the smoke all cleared as more electree and a

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<v Speaker 1>half three and a half billion, because they assumed a

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<v Speaker 1>lot of debt as well, I believe now we I

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<v Speaker 1>mean they issued a lot of shares in order to

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<v Speaker 1>be Yeah, we're fortunate that between the time we announced

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<v Speaker 1>the deal and we actually closed it, price Line stock

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<v Speaker 1>doubled in value and we have taken two thirds of

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<v Speaker 1>the consideration in stock meta search. Whenever I look up

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<v Speaker 1>Kayak and want to learn more about what the company

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<v Speaker 1>does from a technical perspective, I keep hearing this term

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<v Speaker 1>meta search. What does that mean? Sure, so Kayak is

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<v Speaker 1>different than every other travel side or app out there,

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<v Speaker 1>and that we're not actually a store. We're not selling

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<v Speaker 1>you anything. What we do is we search everyone who

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<v Speaker 1>does sell something. So we search all the airline sites,

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<v Speaker 1>all the hotel sites, all the online traveling sites. Because

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<v Speaker 1>what we're trying to do is for a consumer, is

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<v Speaker 1>give you a complete picture of what's available out there,

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<v Speaker 1>and once you find the trip that you want, we

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<v Speaker 1>give you choice on where to buy it. If you

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<v Speaker 1>want to buy it from American Airlines, will help you there.

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<v Speaker 1>If you want to buy it from Expedia or Priceline,

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<v Speaker 1>will help you get there too. You're engaging with a

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<v Speaker 1>voice activated interface with Amazon's Alexa as well as the

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<v Speaker 1>Facebook messenger app that that you're interfacing with him. You know,

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<v Speaker 1>looking at you hear about the same demographic I am,

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<v Speaker 1>which is you know, when we are coming off through

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<v Speaker 1>the ranks, we would talk to an offline travel agent.

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<v Speaker 1>You know, you you meet with someone to plan your

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<v Speaker 1>trip to go somewhere. And in our generation we saw

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<v Speaker 1>all of that go onlines. We got used to using

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<v Speaker 1>browsers and going to websites and filling out forms and

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<v Speaker 1>getting our own requests. Well, increasingly you have this new

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<v Speaker 1>generation of people and I see in my teenage girls

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<v Speaker 1>who don't like going online at all. You know, they're

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<v Speaker 1>they don't like voice actually, they like to talk to machines,

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<v Speaker 1>not to other people. They like to text with folks.

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<v Speaker 1>And what we're trying to do with Kayak is have

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<v Speaker 1>an interface that speaks to that whole generation, so that

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<v Speaker 1>if they're more comfortable asking Siri for a flight quote

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<v Speaker 1>from l A to New York, that Kayak can provide

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<v Speaker 1>that answer. If they're more comfortable during during their Facebook

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<v Speaker 1>Messenger or um Slack, if they're in a business environment,

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<v Speaker 1>Black is that online chat app for businesses exactly exactly

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<v Speaker 1>that they can say, Hey, UM, can you give me

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<v Speaker 1>a room tonight at the Ritz Carlton here in New

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<v Speaker 1>York and we can fulfill that request in a very

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<v Speaker 1>frictionless way. But what about the technology behind that? I

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<v Speaker 1>mean this is not full proof. I mean, voice activated

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<v Speaker 1>commands are relatively new for consumers there's a reason it

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<v Speaker 1>hasn't been done until now, right because the technology wasn't there.

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<v Speaker 1>And also you have to have tremendous scale in terms

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<v Speaker 1>of consumer requests for information so that you can start

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<v Speaker 1>building a machine learning platform that gives you accurate answers.

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<v Speaker 1>So a Kayak, for example, we'll do over a billion

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<v Speaker 1>requests for consumer travel information this year, and in that

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<v Speaker 1>billion requests, we can start to ascertain patterns. Right. So

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<v Speaker 1>if if someone says I'd like a hotel in New

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<v Speaker 1>York tonight, we know that's New York City, not upstate

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<v Speaker 1>New York. If they say Paris, we can look at

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<v Speaker 1>their locations say are they meaning Paris, France or Paris, Texas.

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<v Speaker 1>What would Kayak say if the user spoke to Amazon

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<v Speaker 1>Alexa and maybe even went online and said I want

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<v Speaker 1>a travel they ation, but I'm afraid of terrorism. What

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<v Speaker 1>would it come back and say, it's been interesting after

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<v Speaker 1>this interview, I'm gonna go ask and see what response

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<v Speaker 1>we have at But you know, in general, no one

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<v Speaker 1>in the travel business likes terrorism because it does two things.

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<v Speaker 1>The first thing it does is it suppresses consumer demand

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<v Speaker 1>because you're scared to go somewhere. Have you seen that

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<v Speaker 1>in any we have seen that. We have seen that,

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<v Speaker 1>particularly after the Paris attacks. The second thing it does

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<v Speaker 1>is interduces more friction, more hassle into the actual travel experience,

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<v Speaker 1>longer security lines, you no longer um checks, etcetera. So

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<v Speaker 1>it's not something that that we like to see. Um.

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<v Speaker 1>You know, I suspect I would hope if you ask

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<v Speaker 1>that question into Kayak via Alexa, that we suggest some

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<v Speaker 1>spots that are terror free. Alternative accommodations I'm thinking here

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<v Speaker 1>of air B and B. On one of the price

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<v Speaker 1>Line Group conference calls, chief executive talked about four hundred

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<v Speaker 1>thousand alternative accommodations that were available. Do you see Kayak

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<v Speaker 1>participating in this alternative accommodation world? Absolutely? You know, our

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<v Speaker 1>mission is the show consumers a complete picture of everything's available,

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<v Speaker 1>whether that's flights, hotels, non traditional accommodations, or rental cars.

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<v Speaker 1>And we've got that content on Kayak. So we've got

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<v Speaker 1>over a million options for places to stay, including people's

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<v Speaker 1>apartments and trailer homes and all that kind of stuff.

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<v Speaker 1>What about the restaurant, tour and activities comparison that has

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<v Speaker 1>been introduced as a new feature for Kayak it's it's funny.

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<v Speaker 1>Every three years or so we look at expanding the

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<v Speaker 1>scope of our activities to other verticals that are right

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<v Speaker 1>for what you know we talked about earlier being meta

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<v Speaker 1>search activities is something that I think is is ready.

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<v Speaker 1>So we've we've launched that restaurants. We have a sister

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<v Speaker 1>brand in the Pricelon group called open Table, which is

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<v Speaker 1>very popular, and they've been kind enough to lend us

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<v Speaker 1>some of their data and we're developed developing an interface

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<v Speaker 1>on top of that which should debut shortly. So you know,

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<v Speaker 1>in general, we we love to have users have Kayak

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<v Speaker 1>on their phones and have that Kayak app, helping, book plainting,

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<v Speaker 1>get some hotel rooms, give them things to do, suggestions

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<v Speaker 1>on restaurants, et cetera, and also to comparison shop. Of course,

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<v Speaker 1>that's where it all starts. You started a test. Maybe

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<v Speaker 1>you can give us an update with something called blue

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<v Speaker 1>kayak uh dot com and that was available to so

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<v Speaker 1>far users and I'm wondering what that was all about

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<v Speaker 1>and what you learned from it. That's interesting that you

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<v Speaker 1>stumbled across that from good, good research. So look at Kayak.

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<v Speaker 1>We are um experimenting with all kinds of different looking

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<v Speaker 1>fuels of the West Side and features and blue Kayak

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<v Speaker 1>was one of our tests. You know. What we did.

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<v Speaker 1>We looked at a company called booking dot com, which

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<v Speaker 1>is an online travel agency also and by the price

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<v Speaker 1>Line Group, and we said, if we made our website

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<v Speaker 1>look exactly like their's, um, what would the user engagement

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<v Speaker 1>and interaction be? And what we found is that our

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<v Speaker 1>version of kayak is superior to their version of kayak

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<v Speaker 1>and when we retired that test. But you know, in general,

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<v Speaker 1>anytime you go into kayak, there's gonna be a couple

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<v Speaker 1>hundred different permutations of kayak running. So what you see

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<v Speaker 1>today be very different from what you see tomorrow. Let's

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<v Speaker 1>go back to travel trends for just a moment, because

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<v Speaker 1>the Olympics is scheduled for Brazil. What if you've seen

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<v Speaker 1>in terms of interest. It's funny. The interest is definitely

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<v Speaker 1>definitely there to go to Brazil, but it's not the

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<v Speaker 1>zeke of virus. Yeah, but it's not at the similar

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<v Speaker 1>levels that we've seen in the past. Um. You know,

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<v Speaker 1>it's the search query volume to Reel for example, it's

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<v Speaker 1>up significantly year of year, but it's not up to

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<v Speaker 1>the same level that we saw with the World Cup,

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<v Speaker 1>which was in the same location. So I don't I

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<v Speaker 1>don't know whether that's because of political turmoil they're there,

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<v Speaker 1>or because of the Zeka virus, or because of concerns

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<v Speaker 1>of infrastructure, but it's it's definitely not where we like

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<v Speaker 1>it be. Steve Hafner is the chief executive and the

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<v Speaker 1>co founder of a Kayak, talking about trends in the

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<v Speaker 1>travel industry and worldwide online booking via these suppliers accounted

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<v Speaker 1>for close to sixty percent of the total online bookings

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<v Speaker 1>and markets such as ASA Pacific, Western Europe, and the

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<v Speaker 1>United States. UH they account for about eight percent of

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<v Speaker 1>the global online travel market. Price Line Group, the parent

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<v Speaker 1>company of Kayak. The shares right now they are higher

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<v Speaker 1>by four and a quarter percent so far this year.

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<v Speaker 1>Today they're down nine dollars and eighty four cents trading

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<v Speaker 1>a thirteen hundred and thirty one dollars a share. Coming

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<v Speaker 1>up on taking stock, We're going to take stock of

0:10:29.360 --> 0:10:33.560
<v Speaker 1>the Justice Department. It's close to challenging anthems proposed acquisition

0:10:33.640 --> 0:10:38.679
<v Speaker 1>of Signal Corps and etna's planned combination with Humana. Anti

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<v Speaker 1>trust lawsuits against the plan mergers would be the culmination

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<v Speaker 1>of concerns that the Justice Department has about both deals

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<v Speaker 1>that they set out from the onset. The year long

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<v Speaker 1>review of the mergers, well, the department skepticism has yet

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<v Speaker 1>to subside. You're listening to taking stock. I'm pim Fox

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<v Speaker 1>right now SMP five hundred, down about a order of

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<v Speaker 1>a percent, lower by four and a half points, trading

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<v Speaker 1>at twenty one sixty two. This is Bloomberg h