Seattle — Microsoft Corp. said Thursday it has secretly acquired Seattle-based travel website Farecast, for a rumored $115 million.
The Seattle startup’s technology is a pretty tempting target for acquisition, which tries to predict whether air fares for a given domestic and international routes will rise or fall, helping travelers decide when to buy plane tickets for upcoming trips.
“For example, Farecast recommended Thursday that travelers purchase now a Seattle to Cleveland flight for early July because prices will be rising over the next week. It offers a confidence level of 71 percent on that prediction.”
Its Fare Guard service allows travelers to lock in the prices on some flights and receive a refund if the predictions turn out to be wrong.
Reply to a query from the P-I today, Microsoft issued this statement from spokeswoman Whitney Burk:
“We are pleased to announce that we have acquired Farecast, a Seattle-based smart travel search engine, and we welcome them to the Microsoft family.”
“Farecast has been a partner of ours on MSN Travel and we look forward to working closely with the Farecast team to incorporate and apply its technology in new and interesting ways,” the statement added.
Apparently, the acquisition appears very strange, especially considering the relatively high reported purchase price, said Matt Rosoff, an analyst at Kirkland-based Directions on Microsoft. “Maybe there is some really interesting technology there, with price prediction, that they think they could apply to other types of businesses,” he speculated.
Lately, Farecast has a section that helps people find potential bargains on hotel rooms, and then informs Web surfers whether the price is a good deal or no deal at all.
“In addition, it also makes money through online advertising and by passing leads on to airlines or hotels.”
In a short blog post, Farecast Chief Executive Officer Hugh Crean said, “We are excited to confirm that Farecast has been acquired by Microsoft! This acquisition creates tremendous opportunities for the Farecast team and our customers. We look forward to sharing more details in the weeks to come.”
Farecast, formerly known as Hamlet Inc., was started by University of Washington computer scientist Oren Etzioni, initially backed with $20 million in venture funding from Madrona Venture Group, built with people from local companies such as Alaska Airlines and AdRelevance and, ultimately, acquired by Microsoft.
The acquisition closed April 9. Microsoft spokeswoman Burk said Farecast’s workers will become Microsoft employees; however, she declined to give further details about how the startup and its technology will fit into Microsoft’s existing organization.