A 2004 start-up from some of the minds behind Expedia, Travelocity and Orbitz, KAYAK leverages the data on other travel sites so users can go to a single place to find the lowest possible quotes on their travel plans. The bulk of the company’s earnings come from advertising and the rest is generated by referral fees for airline and hotel bookings. While I’m not particularly bullish on the company, here are three reasons to consider adding shares in KAYAK’s IPO to your portfolio:

1) Revenue growth. KAYAK’s been profitable since 2008, but numbers haven’t been mind-blowing. The company reports net income of $6.1 million for the nine months ended Sept. 30, 2010. That’s off 2009′s nine-month pace of $10.4 million. Revenues at the company paint a prettier picture, though. For the nine months ended September 30, 2010, Kayak generated $128 million in revenues. That was good for year-over-year growth of 48 percent. That growth was markedly higher in that last quarter (ended Sept. 30) with the rate kicking up to 80 percent year over year.

2) Growth potential. KAYAK currently reaches around 12 million unique visitors per month, according to CNN.com. In the nine months ended September 30, 2010, the company processed more than 469 million user queries for travel information – a growth rate of 37 percent year-over-year. With exposure in just 15 countries, the company’s now focusing on expanding its site into the international market. Part of their plan will, undoubtedly, involve acquisitions. The most recent competitor they gobbled up, Swoodoo AG, hails from Europe.

3) Mobile-ready. KAYAK’s moved aggressively into the mobile space since first launching apps in 2009. The company now claims four million downloads and counting. KAYAK’s mobile penetration appears to be accelerating rapidly, too. “For the quarter ended September 30, 2010, we had over one million downloads, representing growth of 152 percent compared to the same period in 2009,” the company writes in its S1 filing.

Despite all the good tidings, some analysts believe KAYAK’s business model could be at risk if Google, Inc.’s (NASDAQ:GOOG) plan to acquire ITA Software goes through. ITA provides airline fare quotes for KAYAK, and its software powers a good portion of the search results users ultimately see on kayak.com. With the current deal between ITA and KAYAK set to expire in 2013, KAYAK could get hit with much higher fees from the soon-to-be-Google-owned ITA, according to DailyFinance. Worse still, Google may roll out its own ticket fare search software and cut KAYAK (as well as other fare search companies) out of the loop entirely. KAYAK is, no doubt, exploring contingency plans already, and it’ll be interesting to see how the Google-ITA merger affects not just their site but the entire online travel industry as a whole.

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Tags: GOOG, KAYAK, travel stocks

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