Following Jenny Wu, chief strategy officer of Ctrip’s declarations of globalisation on stage at Phocuswright last week, this doesn’t come as a surprise but it’s a big deal – Ctrip acquiring Skyscanner for a valuation of £1.4b.
Edinburgh-based Skyscanner, which has built out a strong global business, was the last remaining global meta-search without a big travel parent. Trivago, which filed for IPO last week, is under Expedia while KAYAK is part of the Priceline group. During Phocuswright, Steve Hafner, CEO of KAYAK, had said in the world of meta-search, bigger is better and “five was too many” and at the WIT Conference in October, had referred to “those Skyscanner goons”.
This is Ctrip’s first play into the meta-search space outside China – it bought and now owns Qunar, which started as a meta-search and has now morphed into meta-search-plus. This gives it access to global customers at the upper funnel of search, and gives Skyscanner access to the massive Chinese market.
Going by this chart below, it means Ctrip now owns the two dominant players in meta-search in Asia.
This again puts the spotlight on the meta-search category and it will be interesting how middle-sized players thrive in a world of giants. Skyscanner, which is still run by one of its original co-founders, Gareth Williams, has raised a couple of rounds of funding and analysts said it was a clear target for acquisition in a world where size and scale rules.
It’s a great success story for a company with humble beginnings. It was started in 2001 by Williams and two fellow IT professionals, Barry Smith and Bonamy Grimes, after one of them was frustrated by the difficulties of finding cheap flights to ski resorts. Skyscanner version 1 was developed and released in 2002.
Today, the site offers flight searches in over 30 languages, including Chinese, Russian, Portuguese, Polish, Spanish and Japanese. It was the first global meta-search to open an office in Asia Pacific, in Singapore, in 2011 and since then, has expanded in Asia with the acquisition of Chinese search company, Youbibi, in 2014, and partnerships with Baidu as well as Yahoo! Japan. In January this year, it announced it had raised $192 million for international expansion.
It is said to receive over 60 million visitors per month and has an annual turnover of £120 million, according to its Wikipedia page.
Skyscanner has a reputation for solid execution and product innovation, led by Williams who’s first and foremost a product guy. Ctrip is big on product, innovation and customer service. It will be interesting to see how the blend of both cultures will work and what it will produce. The agreement states that Skyscanner will remain operationally independent.
About the acquisition:
The announcement by Ctrip.com International, Ltd. said it’s signed a definitive agreement with the majority shareholders of Skyscanner Holdings Limited, under which Ctrip will acquire all of such shareholders’ shares in Skyscanner and will offer to acquire shares from the remaining shareholders of Skyscanner. The terms of the acquisition value Skyscanner at approximately £1.4 billion.
The boards of directors of the Company and Skyscanner have approved the transaction, which is subject to customary closing conditions, and is expected to close by the end of 2016. Skyscanner’s current management team will continue to manage Skyscanner’s operations independently as part of the Ctrip group.
Gareth Williams: Skyscanner will remain operationally independent.
“Skyscanner is one of the largest travel search platforms in the world,” said James Jianzhang Liang, co-founder and Executive Chairman of Ctrip. “We are excited to welcome Skyscanner into the Ctrip group. Ctrip and Skyscanner share the same passion and dedication in providing travelers around the world with better services. This acquisition will strengthen long-term growth drivers for both companies. Skyscanner will complement our positioning at a global scale and Ctrip will leverage our experience, technology and booking capabilities to Skyscanner’s.”
“Ctrip is the clear market leader in China and a company we can learn a huge amount from,” said Gareth Williams, co-founder and Chief Executive Officer of Skyscanner.
“Today’s news takes Skyscanner one step closer to our goal of making travel search as simple as possible for travelers around the world. Ctrip and Skyscanner share a common view – that organizing travel has a long way to go to being solved. To do so requires powerful technology and a traveler-first approach. In taking the next step to achieving our goal, Skyscanner will remain operationally independent and our growing global team will continue to innovate and deliver the products travelers know and love. It’s an exciting time for our business, our partners and the travelers who use us.”
