No Reservations About OpenTable


OpenTable went IPO on Thursday, running up nearly 60% in its first day of trading (NASDAQ: OPEN). It was a much-needed "green shoots" moment for Wall Street, but it also speaks to the current favor in which subscription-based data products are held.

Does it seem odd that I am describing OpenTable, a nationwide online reservation system for restaurants, as a data product? We had a lot of discussion around that when we gave an InfoCommerce Model of Excellence award to Open Table in 2006. What swayed us in the end was its incredible workflow integration characteristics, coupled with all its data potential, much of it still unleashed.

Nobody could ask for tighter workflow integration. Restaurants that sign up for OpenTable have no choice but to make a total commitment to letting OpenTable manage all their reservations -- online and offline. You simply can't use it effectively otherwise. And once a restaurant has accustomed itself to OpenTable, enjoyed its convenience and seen the power of the online reservations pouring in through the OpenTable booking website, there's no turning back. Restaurants turn off OpenTable at their own peril!

But what about the data? Well, it starts with the fact that OpenTable is building a huge experiential database of dining activity. Registered users of the system even supply demographics, and OpenTable can easily overlay more. That means OpenTable knows with incredible precision, who eats where and when and how often. Think about an analytics and advisory business based on that data, much like MasterCard created MasterCard Advisors to leverage it analgous base of transaction data.

OpenTable is also well positioned to track no-show reservations, the bane of every restaurant. OpenTable could create a no-show score, much like a credit score. This would permits restaurants the option to either defensively overbook or perhaps demand a credit card in advance from such diners.

Open Table could help restaurants understand how they are doing versus their peers and competitors. It could help them learn how they are being discovered on the web. It could create customized promotion codes of landing page URLs that restaurants could use in their advertising to track response rates. It could tie into mapping data for site selection research. And the more it does, the smarter it gets, and the more valuable it becomes.

Intriguingly, Zagat Surveys was an early investor in Open Table, a relationship (presuming it still exists) that has been woefully underexploited. Tie the leading online reservation system to the leading rating system and an incredible number of opportunities emerge.

The key to OpenTable is that it successfully injected itself into an industry's order flow. Act One was to perfect the technology to make that possible. Act Two will be mining the rich data that results. From there, the future is OPEN.
(Since this may read as if I am playing stock tout this week, it seems right to mention that we have no business relationship or financial interest in any of the companies mentioned here.)

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