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This Acquisition Will Help Priceline Magnify Its Dominance

July 28, 2014 | About:
rusticnomad

rusticnomad

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Restaurant reservation specialist Opentable (OPEN) has been acquired by Priceline (PCLN). As a result of this merger, the likes of Groupon (GRPN) and Yelp (YELP) will now confront serious threats to their business. Give us a chance to see what Opentable will bring to Priceline's business, and why it is a smart acquisition.

The competition is warming up

Opentable is seeing great development in its business. At the point when the organization reported its first-quarter results in May, it uncovered a 18% bounce in revenue and a marginal increase in the net profit. Nonetheless, this change is nothing when contrasted with Yelp's impressive revenue hop of 66% in the first quarter. Presently that Yelp has reported that it will permit restaurants to take bookings without charging any expense through Yelp Reservations, Opentable is under risk.

Yelp had obtained restaurant reservation service Seatme last year for $12.7 million, and it is currently leveraging it to strengthen its presence in the business. Restaurants will need to just "claim" their Yelp profile page to use Yelp Reservations for nothing. Yelp believes that this will bring more restaurant partners into its overlap, and they will in the long run use different services.

Opentable has more than 31,000 restaurant partners across the globe, with the dominant part being in North America. Restaurant reservation accounts for around two-thirds of its aggregate revenue, so the move by Yelp looks like a huge danger. Furthermore, recently, Tripadvisor (TRIP) also made a huge move in restaurant reservations by getting European restaurant reservation service Lafourchette in an arrangement worth $140 million.

This acquisition brings a system of more than 12,000 restaurant partners across Europe to Tripadvisor's table. Moreover, Lafourchette will add new substance and features to Tripadvisor's stage and permit it to tap new markets. Tripadvisor has officially coordinated the acquisition into its stage by giving restaurant accessibility search in its city pages for destinations.

Why Opentable is a smart acquisition

So, Opentable will help Priceline grow its lead into another business sector. The organization seems to be doing great as of now as it seated 46.7 million diners in the first quarter, a 25% increase over last year.

To sustain this level of development, Opentable is focusing on including more features. In late February, it started selling Guest Center, its cutting edge cloud-based hospitality solution for restaurants. The organization says that this gimmick has gotten to be very prevalent among new and prospective customers, determined by an exquisite design as well as an adaptable structure to convey an instinctive, solid, and fast experience.

Also, Guest Center takes a fraction of the time to setup as contrasted with its other solution, Electronic Reservation Book ((ERB)). Opentable also says that Guest Center customers are a third less likely as new ERB customers to contact for extra support after the introductory setup. So, Opentable's cloud-based solution seems to have got off to a decent start and may help it contend adequately against Tripadvisor and Yelp.

Opentable is making strong moves in advertising. It has enlisted various space experts in the areas of acquisition, engagement, and mobile promoting. In the second a large portion of last year, Opentable started testing performance advertising push up its natural reservation development. Because of this activity, it has seen some strong improvements in effectiveness while steadily increasing the scale of its campaigns. For instance, it brought down its cost per booking by more than 20%. Opentable is also testing new acquisition channels such as re-focusing on and paid social advertising.

Groupon under danger

Groupon will now go under immediate rivalry with Priceline. Groupon had added restaurant reservations to its portfolio last year.

Henceforth, Groupon's restaurant reservation business will now confront danger because of Priceline's scale and size as it will have the capacity to power Opentable's engineering into it business. It provides online inn reservation services across the world with roughly 425,000 properties in 190 countries.

Conclusion

There is undoubtedly Opentable is doing great, and it is attempting to show signs of improvement with new features. The organization's focus on promoting and bringing about a noticeable improvement should assist Priceline increase its addressable business sector. Besides, Priceline's size and the scale of its operations will permit it to use Opentable's engineering further bolstering its good fortune, and damage Groupon going ahead.


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