Priceline, the big Internet travel company, said Friday that it's buying OpenTable, the San Francisco-based restaurant reservation service, in a $2.6 billion deal that may herald further consolidation in the online hospitality sector.

And as more consumers use their mobile phones to book rooms, tables and other amenities, analysts said the newly combined companies could pose a growing competitive threat to Google, the current king of Internet search, which has been beefing up its own travel offerings.

"As people get more comfortable using mobile devices to search online, they're going to use more specialized services and apps," said Daniel Marcec of industry research firm eMarketer. That could draw users and advertisers away from Google's search service, he added.

Google, which had almost $60 billion in sales last year, dominates virtually every segment of the online advertising market. But with the proliferation of competing mobile services and apps, including Facebook and smaller companies, eMarketer projects Google's share of mobile search advertising dollars in the United States will fall from 83 percent in 2012 to about 67 percent this year.

Priceline Group, as it's officially known, has expanded its holdings in recent years while gaining pop-culture status for a goofy promotional campaign featuring actor William Shatner. It bought the hotel service Booking.com in 2005 and paid $1.8 billion last year for Kayak, a site that lets users search for flights, hotels and rental cars.


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OpenTable, founded in 1998, has also seen rapid growth in recent years, after its stock market debut in 2009. With revenue of $190 million last year, the company says it works with more than 31,000 restaurants and is used by 15 million people every month. The service is free to diners, while restaurants pay OpenTable a fee for bookings.

In a statement, OpenTable CEO Matt Roberts praised Priceline's online marketing expertise "across devices," and indicated the company hopes to expand further under new ownership.

Priceline boasts that a million people stay in accommodations booked through its services every night. In a statement, CEO Darren Huston said OpenTable represents "a natural extension into restaurant marketing services" for his company.

"Travelers are diners," Huston said on a conference call Friday, according to The Associated Press. "It's the same customers. There's opportunity to cross-promote brands."

OpenTable will keep its current management and remain headquartered in San Francisco, according to Priceline, which is based in Norwalk, Connecticut.

Priceline is paying $103 a share for OpenTable, in an all-cash deal scheduled to close later this year. That's a 46 percent premium over OpenTable's closing share price of $70.43 Thursday.

News of the deal caused OpenTable's stock to surge Friday. Shares closed at $104.48, prompting speculation that investors believe other suitors could emerge to bid even more for the company.

Analysts said Priceline rivals such as Expedia and Orbitz, or even Internet giants Google and Microsoft, could potentially be interested in OpenTable and similar companies. The online travel service TripAdvisor said last month that it's buying La Fourchette, a European restaurant booking site.

"We believe OpenTable has a treasure trove of data that could be used to better target consumers," analysts at Barclays said in a note to investors. Barclays also praised OpenTable's plans for a mobile payment system that lets restaurant patrons pay their tabs with their phones.

While Priceline makes most of its $7 billion in annual revenue from booking commissions and fees, the company also sells ads to hotels and other hospitality companies. Its advertising business provided $74 million in revenue for the first quarter of 2014, up from $3.5 million in the same period a year earlier, according to eMarketer.

"Companies like Priceline and its chief travel competitors, Expedia and TripAdvisor, have significant opportunities to increase their advertising revenues by expanding specialized search capabilities" for things like flights, package tours and restaurant bookings, Marcec said in an email.

Google is working to counter the appeal of rival services by making it easier for people to search for information on travel and related activities, using Google services. While it's also doing more with restaurant listings, it's not a major player among reservation services.

The company is enhancing its Android mobile software so users can search within independent apps that they have on their phones, which until recently wasn't possible. In a demonstration last fall, a company executive showed how he could use the Google search function on his phone to find a restaurant listing in the OpenTable app.

This week, Google announced new features on its own Flight Search service, which lets users search online for airline bargains. It also has begun showing hotel listings in response to voice searches on mobile phones.

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