Priceline OpenTable Deal Signals Travel Company Push Into Restaurants

Priceline Group Inc. (NASDAQ:PCLN) will buy OpenTable Inc. (NASDAQ:OPEN) in a $2.6 billion cash deal announced Friday, giving the budget travel booking site a seat at the restaurant business table and could be the boost OpenTable needs to go worldwide.

“Travelers are diners,” said Priceline chief executive Darren Huston in a conference call following the announcement.

“It’s all the same customers. There’s opportunity to cross-promote brands,” he added.

The Norwalk, Connecticut-based Priceline also owns the brands Kayak and Booking.com. The acquisitions helped it surpass competitor Expedia Inc. (NASDAQ:EXPE) in revenue last year.

“There’s a lot of greenfield in international. There’s no reason to believe that people in Dubai or people in Rio wouldn’t want to use a similar application when they go out to restaurants,” Huston said.

OpenTable started its service in 1998 with a small group of San Francisco restaurants, collecting a monthly fee in exchange for sending customers their way. In 2008 it introduced its mobile app, and today it has partnerships with more than 31,000 restaurants worldwide, seating more than 15 million diners every month through their online reservation system.

“We couldn’t be more excited to join a group of brands leading in their space, and we look forward to the next chapter of our own journey as we continue to enhance the dining experience for customers worldwide,” said OpenTable chief executive Matt Roberts in a statement.

They also have operations in the United Kingdom, Japan, Mexico and Germany but are now looking even further thanks to Priceline, which hopes to have its customers use their resources to book flights, rooms and dinner.

“We have thousands and thousands of travelers who are very Internet-savvy and who would love to use the application to book restaurants the way they book hotels,” Huston said.

The deal could signal a new direction for travel booking companies. In May, Newton, Massachusetts-based TripAdvisor (NASDAQ:TRIP) purchased the European reservation service LaFourchette, which operates in France, Spain and Switzerland through a network of 12,000 restaurant partners.

“This could be a potential tipping point,” said James Cakmak, analyst at Telsey Advisory Group.

He said that smaller companies such as LaForchette and OpenTable work well locally but don’t have the resources to expand on their own. As more travel companies look to get into the restaurant business things could change.

“A lot of these local platforms have been operating independently and Priceline is the first one to make a move to get one of them. It could create a sense of urgency with other large players,” he said, citing firms like Yelp and Grubhub as future possibilities for similar acquisitions.