£1.4B Skyscanner acquisition: a closer look
Chinese online travel agent CTrip acquired Skyscanner at a valuation of £1.4B, predominantly in cash. That’s roughly 12x 2015 revenues, 64x 2015 normalised EBITDA. We estimate that on an LTM basis (last twelve months) the multiples are around 10x LTM revenues and 50x LTM EBITDA; a great achievement for Skyscanner’s founders and investors.
How does this transaction compare with others in travel and in tech? Time for a closer look. Download the 3-page slide deck, or continue reading below for additional insights.
Report - £1.4B Skyscanner acquisition: a closer look
How do the multiples compare?
In November 2012, Priceline paid significantly less for closest peer Kayak: 23.8x LTM EBITDA and 5.7x LTM revenues. Kayak was at the time growing at a very similar growth rate of 30%.
In December 2012, Skyscanner’s valuation multiples are similar to Trivago’s multiples back in December 2012. Back then, Trivago had been growing much faster: at about 100% per year.
What is Skyscanner’s current growth rate? Last reported revenues were only growing at 28% from 2014 to 2015. However, Skyscanner’s gross bookings were still growing 49% in 2015. Therefore, if Skyscanner’s margins did not deteriorate in 2016, then revenue growth could well have accelerated again during 2016.
Upside potential
Meta-search continues to be a strong segment. Flight meta-search specifically is benefiting from regional fragmentation of flight OTAs (online travel agents). Skyscanner is testing a direct distribution model with airlines, thus becoming a quasi-OTA. An OTA’s take-rate adds up to 5-10%, whereas for Skyscanner the CPA is as low as 2%.
And no doubt, CTrip sees opportunities for revenue synergies (e.g. tapping into Asia growth, adding hotel inventory), thus justifying the seemingly high acquisition multiple.
Skyscanner is the seventh largest VC backed exit, providing super returns for it’s investors. Skyscanner also ranks 25th in term of European tech acquisitions (in total we counted 36 acquisitions above €1 billion).
Looking forward
Travel remains a very exciting space where plenty of strategic activity and disruptions will continue to take place. To get you started, here is a table of top funded travel companies.
As mentioned above, meta-search (aka comparison) continues to be a strong segment, in both flights and accommodations. Below is a list of leading travel comparison companies from seed stage to late growth stage.
Dealroom data used for this post
- Europe’s biggest VC backed exits
- European tech acquisitions above €1 billion
- Travel exits ranked by EBITDA multiple
- 85 travel comparison companies
- 23 top performing travel comparison companies (requires Premium account)
- Curated list of travel comparison companies to watch
Finally, check out our July 2016 Travel Research report with much, much more information.
Report - Online Travel: a Deep Dive (download)
