Redmond, Washington-based Microsoft confirmed Thursday that it had acquired Seattle-based Internet travel  fare prediction firm Farecast, in a previously unannounced deal that closed on April 9. Farecast's Web site uses a search engine-like data-mining algorithm that attempts to predict whether airfares will rise or fall, and offers an accuracy guarantee service on certain fares. Financial terms of the deal were not disclosed, however the purchase price is believed to be $115 million, according to a Seattle Post Intelligencer report citing a person familiar with the acquisition. Farecast recently applied its technology to hotel rates in an effort to inform customers whether a room rate is a good deal. Existing Farecast Partnership Culminates With Purchase Farecast, which was founded using the name Hamlet in late 2003, began as an online service in 2006 and reached a distribution partnership with Microsoft's MSN subsidiary in July 2007 which saw Farecast's technology used on the MSN Travel Channel. That partnership grew into a full scale Microsoft purchase culminating with Thursday's acknowledgement coming after some three months of increasingly productive discussion. All 27 of Farecast's employees will keep their positions under new owner Microsoft, according to Whitney Burk, a spokeswoman with Microsoft's Online Services division, who commented on the deal in a statement to the Intelligencer. "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," said Burk. Microsoft Confirms Farecast Travel Search Firm Purchase The move to acquire Farecast is not the first travel venture for Microsoft, which founded its Expedia division in  October 1996, however some analysts see Farecast's prediction model as being useful to the world's biggest software maker in projects beyond the online travel market. Farecast was founded by University of Washington computer science professor Oren Etzioni, who has roots in the search engine world, having helped develop the original MetaCrawler in 1994, a tool that harnessed multiple search engines to provide query results. A report detailing some of the techniques Farecast may use to base its results on is available on the Intelligencer Web site, entitled "To Buy or Not to Buy: Mining Airfare Data to Minimize Ticket Purchase Price," which Etzioni helped author in July 2005. In spite of concerns from some that its forecasts may not always be entirely accurate, Farecast has said that its patented prediction methods successfully predict airfares about 70 percent of the time, and customers using the service are given a confidence level for each airline fare prediction. Customers can use Farecast's Fare Guard service to book certain air fares, which offers a refund guarantee should the price change. From Startup To Newest Microsoft Addition In a statement posted on the firm's blog, Farecast chief executive Hugh Crean commented on the Microsoft  purchase. "We’re excited to confirm that Farecast has been acquired by Microsoft, " said Crean. "This acquisition creates tremendous opportunities for the Farecast team and our customers. We look forward to sharing more details in the weeks to come," added Crean. Microsoft is expected to issue a statement regarding its purchase of Farecast. Farecast, which makes some of its money from sharing leads with airlines and hotels and from online advertising, brought in $20 million in venture capital from PAR Capital Management, Greylock Partners, Sutter Hill Ventures and Madrona Venture Group. Farecast had been the target of bidding from other firms besides Microsoft according to speculation. Related Links:
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9:25 pm on April 18, 2008 (utc 0)
