Kayak at 21: Why Booking Wrote Down $457 Million
An in-depth look at Kayak's $457M writedown by Booking Holdings amid rising acquisition costs and shifting AI search landscapes.
Stock photo for illustration only, not from the actual event
- Booking Holdings recorded a $457 million writedown against Kayak last October.
- Kayak's revenue has stalled around $500 million, down from ~$600 million pre-Covid.
- Google's AI answers have eroded free organic traffic, raising customer acquisition costs.
- Booking is backing a new AI travel startup, Lola, instead of using the Kayak brand.
For the past 21 years, travel search tool Kayak has remained the go-to starting point for trip planning. Launched in February 2005, the platform pioneered the interface allowing users to search broadly and filter results in real-time, setting an industry standard that endures today.
However, consumer demand stands in sharp contrast to recent financial adjustments. Last October, parent company Booking Holdings wrote down Kayak by $457 million, primarily impacting its trade name and goodwill. This followed the February departure of co-founder and CEO Steve Hafner after 22 years, and May reports that Booking's major conversational AI project is being built by Kayak's founders under a new brand, Lola.
Stock photo for illustration only, not from the actual event
The root challenge lies in changing acquisition channels. In 2012, direct traffic accounted for 75% of Kayak's queries. Over 13 years under Booking Holdings, the platform grew increasingly dependent on Google. As Google's AI-generated answers pushed down organic links, customer acquisition costs climbed significantly, triggering the asset writedown even though Kayak remains profitable.
Booking's writedown while keeping the underlying product profitable highlights a growing disconnect between outdated business models and modern consumer habits. As conversational AI reshapes online discovery, traditional metasearch platforms face mounting pressure to adapt to skyrocketing advertising expenses.
While Kayak's revenue has stalled around $500 million—down from approximately $600 million prior to the pandemic—competitors like Trivago and Skyscanner continue to grow, with Trivago posting a 19% revenue increase and Skyscanner hitting record highs, albeit through much higher advertising outlays.
Strategic questions remain regarding why Booking chose to channel its major conversational AI travel initiative into the new Lola brand led by Kayak's founders, rather than leveraging two decades of consumer recognition and user trust built by Kayak.
Source: Skift
Found something wrong in this article? Report an issue with this article
Comments
Leave a Comment