The M&A strategy of the world’s most valuable travel company has shifted to looking for strategic opportunities to buy in capabilities it has not built itself, EyeforTavel Europe was told yesterday.
Todd Henrich, senior vice president of corporate development at Booking Holdings, the parent of Booking.com and KAYAK, cited the recent $50 million acquisition of FareHarbor as a good example.
Although Booking remains in the market for more spectacular deals, as last year’s $550 million buyout of Cheapflights parent Momondo Group showed, Henrich indicated it was more interested in “tucking opportunities” allowing specialist firms to scale globally within the larger group.
FareHarbor was a Hawaiian-based B2B platform for tours and activities which has been relocated to Amsterdam and now drives the firm’s activity in that sector for booking.com, said Henrich.
He said a decade ago as Booking was scaling it was looking for strong firms that could stand alone which he said “works to a certain point”, but you end up with a “loose affiliation of brands”.
He said today the focus had changed. “We are looking for capability that we do not have and it would be difficult for us to develop in-house,” he said adding Fare Harbour offered something it did not have the expertise in. “Over time you can do anything with enough time, money and people.”
One of the key attractions of FareHarbor was its people, added Henrich, with the management team sharing corporate values and being prepared to remain with the company, relocate themselves and their families to Amsterdam and seeing the opportunity to scale as part of Booking group.
“We are not afraid to pay a big number if we are confident of its ability to ramp and scale economically. We ultimately pursue profitable growth, so we want businesses that can grow profitably. If we find a business that can scale economically, that’s attractive to us.
“In 99.9% of cases it’s about the management team. It’s about retaining the management team. Even if the business is great but we do not feel the management team is aligned with us and our vision, we won’t pursue the acquisition.
“FareHarbor, we thought it was a great team. It was willing to move to Amsterdam because it wanted to be part of our organisation. Look at the people running our brands still to this day.
We have done a very good job of retaining senior management with attractive compensation packages which pays for performance.”