Yahoo Finance Kayak CEO Says Online Travel ‘Still Sucks’ and He Wants to Stay ‘Until It’s Fixed’
The Kayak website launched to the public in May 2004 as a pioneer in travel metasearch.
When Kayak had its IPO in 2012, it was such a big deal in the travel and tech world that Skift published a live blog to follow every development.
A few months later, Priceline Group – now called Booking Holdings – announced a deal to scoop it up $2.1 billion.
We caught up with Steve Hafner, co-founder and CEO of Kayak and also OpenTable, on a Zoom call while he was in an Uber in Manhattan. We also exchanged emails with the other co-founder, serial entrepreneur Paul English about the 20th anniversary of Kayak’s launch.
The interview has been edited for clarity and brevity.
Dennis Schaal: So, Steve, why are you still here? Why are you still at Kayak?
Steve Hafner: Because online travel hasn’t been solved yet. So look, it’s come a long way in the last 20 years. I think when we started, online travel really sucked. It just made the transition from offline to online, but it was still like a sea of blue links and nine flight results. When you made a change, you had to wait for something to load.
It’s a lot better now. 20 years later, we have mobile apps, we have thousands of search results. It’s pretty easy to buy stuff now. But it still kind of sucks, because it’s overwhelming – the amount of information now.
I’m hopeful that 20 years from now, it’ll be a lot better. AI is a new technology everyone hopes will help it get there. But it still sucks. So until it’s fixed, I’m still going to be around.
Future at Booking Holdings?
Perhaps Glenn Fogel (CEO of Kayak’s parent company, Booking Holdings) will retire soon (or eventually). Most founders, after they sell the company, they’re gone in a year. But you landed in this gigantic company with a lot of opportunities. So what’s ahead for you at Booking holdings?
I have no idea. It’s never been about the job – it’s been about the product. We have this problem called online travel and we want to make it better. And we have a lot of unfinished business, so I’m delighted to still be with the company all this time.
I wish we had completed the job and actually solved it, but we haven’t. As long as Booking Holdings is willing to have me stick around and I can be helpful to our team, then I’ll be here. It has nothing to do with my role at the company.
Kayak’s Early Days
Any thoughts on the the early team that launched Kayak, and the process for launching Kayak? How you guys got started?
The alchemy of successful company is kind of hard to pin down but it starts with a good idea. A great team, sufficient capital, and then luck. And we got all those pieces put together at the right time.
So that original founding team was phenomenal: Paul English, Bill O’Donnell Paul Schwenk, Jeff Rago, but a bunch of guys. But I think the talent level now at Kayak is just as good as it was back then. If not better.
We emailed Kayak co-founder and former chief technology officer Paul English for his thoughts on Kayak after 20 years.
Paul, any thoughts on the 20th anniversary of the launch of Kayak?
Paul English: Hello from Rome. What strikes me most about the early years of Kayak is how lucky we were with the team we hired. It is not false modesty to say Kayak would never have been successful without the original team. I’m still a fan of Kayak. I use it all the time. If I were to work at Kayak again, I would turbo charge Trips. [For more about English’s career at Kayak, read this.]
Kayak vs. Google
Steve, I mentioned to somebody on my team that I’m interviewing you around the 20th anniversary of Kayak. And they said to me, ‘Look, Google is eating their lunch, and Open Table has been overtaken by Rezy and others.’ What would be your answer to that?
I’d say your colleague is misinformed. We have a very successful business, and OpenTable is a very successful business. Yeah, we’re not as big as Google is. But we never intended to be, and we’re having a lot of fun, we’re building great products.
And we’re very profitable. Not a lot of companies get to say that. I remember my first venture capital pitch when we started Kayak. Because Google existed when we started Kayak.
We said, this is what we’re going to do: We’re going to build this metaserarch site, it’s going to find travel search results from across the web, because there were no mobile apps then. We’re going to direct consumers to the place where they want to buy, and we’ll make money that way.
It’s a big enough category that we can be a very successful number two. And that’s kind of where we are. And it’s never been about being bigger than Google. It’s about being better than Google. And we are better than Google.
In what way?
If you come and do a search on Kayak as a consumer, you’re gonna get better search results than you are on Google – more options, better prices, more accuracy.
So, go to Google to snack in a lot of categories, not just travel. But go to Kayak when you’re ready to buy. And, by the way, just to shift to OpenTable. Tell your friend that OpenTable has 55,000-plus restaurants and we fill 1.7 billion seats per year. We have a very profitable business. So he’s mistaken.
Google declined to comment on whether Kayak is better than Google.
Selling to Priceline
Do you think Kayak would have done better if you had stayed independent? A lot of times brands get lost within larger companies. Do you think Kayak might have done better on its own?
Absolutely not. When when they bought us, we were in five countries and three languages. Now we’re in 60 countries and 25 languages that let us operate independently. We’ve done $700 million worth of acquisitions since then. We haven’t been distracted by public markets.
Just just take a look at Trivago or Tripadvisor? They’re independent — how well are they doing?
Being independent is overrated. We’ve been able to do anything we’ve wanted to do. Glenn and BHI (Booking Holdings Inc.) have been very supportive of our mission. And it’s been a pleasure being part of the bigger group.
Learnings From Kayak Hotels
How do you look back on your foray into Kayak Hotels at this point? [Kayak opened three Kayak-branded hotels but exited the business after around two years in late 2022.]
It was worth a try. One of the things that’s that’s a hallmark of Kayak is we’ve never shied away from being innovative and taking risks and Kayak Hotels was a big risk.
But at the time, you have to remember, Sonder and Selena and a bunch of other companies were pursuing this space. And so we thought we’d take a sniff, too.
And what we quickly learned is there’s a reason OpenTable doesn’t have restaurants, there’s a reason Kayak doesn’t have hotels. Because the actual guest experience involves a lot more than just great technology. And as we got into it — everything we do at Kayak is test, learn and then scale — Kayak Hotels never got past the learn scales. We quickly learned it’s not a great business to be in.
When you say OpenTable doesn’t have restaurants do you mean OpenTable doesn’t own restaurants?
OpenTable doesn’t operate restaurants. Its sweet-spot is software. And we learned that Kayak’s sweet-spot is software, as well.
Was OpenTable a Good Deal?
Do you think it was a mistake for Booking to buy OpenTable? Because at the time, everybody was talking about the synergy between travel and dining? It seems logical, but it hasn’t really worked out like that.
OpenTable was a great acquisition. It’s a phenomenal company. It hasn’t had the synergies that we had hoped with with Booking.com because dining and accommodations are fundamentally different. Most dining is local. It’s not travelers. You don’t use the Booking.com app to book a restaurant. You use the OpenTable app.
It’s been an accretive acquisition, let’s leave it at that. And, personally, I wish they hadn’t paid more for OpenTable [$2.6 billion in 2014] than they paid for Kayak [$2.1 billion in 2013] because Kayak’s a more profitable company. But it is what it is.
Accomplishments and Regrets
What would you say would be the three big accomplishments at Kayak and OpenTable over the last year?
On the Kayak side, we’ve always done the consumer site and meta really well. Since 2021, we’ve been working on Kayak Hotels, which didn’t pan out, but there’s also Kayak for Business.
I think Kayak for Business now is actually on a great track. So we’ve got three big enterprise clients: PricewaterhouseCoopers, Tripadvisor, and Diageo. And we’ve got more coming. And then we’ve got 30,000 small accounts that have self signed up and are using the site.
Are you doing managed travel?
Businesses can use us to see where all their employees are traveling. You can upload your own business travel policy and negotiated rates. And then the coolest thing is no expense reports need to be filed and no credit card that needs to be used.
You don’t need your own personal credit card; we have a virtual credit card. And then it’s direct billing via the blockchain right back to like American Airlines, for example. So they save the 2% processing charge on on credit cards.
And how’s the blockchain used?
So that’s the ledger for where a transaction happens and the last person to touch it. So if you’re a traveler, and you book on Kayak, you may [actually] be booking on AA.com. And if you use a corporate travel agency to change the itinerary that gets fed into the blockchain. There’s a digital ledger.
So any contact point knows exactly what’s happened throughout the the customers journey. It’s pretty cool stuff.
What are some of your biggest regrets about Kayak and some of the things that you’re most proud of about Kayak?
We had the opportunity to buy 25% of Uber early on, and we did not do that. Which is a pretty big regret. I think we might have sold a little too early. I’m glad we sold. But that’s turned out OK, as well.
And then an early days thing was we started the website with Adobe Flash? We shouldn’t have done that. That cost us about a year of development work.
But overall, we’ve been successful the last 20 years, I don’t have a lot of regrets. We’ve been extremely fortunate. We’ve had a great team, and had a great run. And I expect the next 20 years could be as good, if not better.
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