KDS Raises Cash For International Market Expansion

Paris-based corporate booking tool provider KDS has taken on $13 million in venture financing to fund a push for new business in international markets. CEO Yves Weisselberger told BTN that the United Kingdom is KDS's number-one target for expansion, followed by the United States and Germany.

At present, only 15 of the company's claimed 4,000-plus clients use KDS in the United States, but Weisselberger believes the firm can make inroads in a market dominated by homegrown products. Earlier this year, Yahoo started using KDS on a worldwide basis, including at its California headquarters.

Weisselberger also is looking at building partnerships and did not rule out a merger or acquisition, although nothing is planned. "We do see a future for ourselves in the U.S., but we know we will need partnerships," he said.

European businesses have complained loudly over the years that U.S.-originating booking tools have not adapted sufficiently across the Atlantic. Weisselberger claimed the same problem does not hold true in reverse. "We have had to make a few adaptations for the U.S., but it is easier to do it this way than in the other direction," he said. "Europe has many more specificities."

He cited Shell, a longstanding client in Europe that in October 2004 introduced KDS in the United States, reaching an adoption rate of more than 50 percent in less than two months.

Tom Wilkinson, senior vice president of Partnership Travel Consulting, said he can see potential for KDS in the United States, provided it irons out one or two problems. "KDS certainly has the technical expertise to be a success in the U.S.," he said. "There is definitely room for new players and new innovations, particularly in content. Traditionally, KDS has been challenged by its pricing models. It favors upfront pricing, but that is not how U.S. buyers typically purchase online applications. There are problems to be addressed, but the market wants more competition provided they can look and feel more American."

The fresh round of KDS financing was injected by venture capital companies Accel Partners and Atlas Venture, which claimed stakes of 20 percent and 10 percent, respectively. Carlson Wagonlit Travel, which has a seat on the board but no active management role, will see its stake diluted by half to 10 percent, while four of the company's founders, including Weisselberger, retain more than 50 percent interest among them.

KDS claimed that its booking volumes are 300 percent higher than at the same stage in 2004. It also claimed to be the largest booking tool provider in Europe, followed by GetThere, although Weisselberger offered no figures to support this assertion. KDS is focusing expansion efforts primarily on the United Kingdom because it is Europe's largest market for self-booking tools and U.S.-based booking competition is greater there than in other countries. Weisselberger said new clients signed this year around Europe include WPP, Marsh & McLennan, Société Générale, Cap Gemini and ING Bank.

KDS's strategic priorities for the product include shifting content to alternate distribution channels and direct connections with suppliers. Weisselberger expects to sign an agreement with at least one alternative distributor in the next two months. Another priority is improving hotel content. Said Weisselberger, "Currently, none of the booking tools are good enough at this, including us."