Breaking Up Is Hard to Do: Yelp and OpenTable End Long Partnership

In 2010, Yelp and OpenTable — then already at the top of their respective games in user generated reviews, business listings, and restaurant reservations — announced a partnership. Yelp would begin offering users the ability to search for and make restaurant reservations through OpenTable directly within its site. This week, the two companies confirmed they had quietly ended their relationship earlier this year, according to a report on Reuters.

Under the original integration, users without an OpenTable account could search for available tables and confirm reservations directly through Yelp. The two companies claimed at the time the partnership was in response to user demand; in fact, the two companies were trying to edge out competitor UrbanSpoon.

Five years ago, UrbanSpoon and its proprietary Rez reservation system looked like valid competition. Three years later, OpenTable up and bought Rez; the system is now obsolete. Earlier this year, a little-known start up called Zomato acquired UrbanSpoon for a reported $60 million. Its restaurant pages do not include an option to make a reservation through OpenTable or any reservations application.

Last year, in what many in the industry saw as a passive aggressive move, Yelp purchased SeatMe and launched its own (free) system for restaurant reservations called Yelp Reservations. Yelp released a statement at the time meant perhaps to calm OpenTable's worries: "Yelp already offers the opportunity to book reservations through Yelp SeatMe and OpenTable, but Yelp Reservations is a great option for businesses that aren't big or busy enough yet to need the robust functionality of Yelp SeatMe."

Inset, OpenTable's functionality was available on Yelp in 2010; Today, a Yelp page includes no mention of OpenTable

It appears as though Yelp's own reservations service is now meeting its needs and that it wishes to distance itself from OpenTable's growth. Ben Bajarin, an analyst with Creative Strategies told Reuters the split makes sense from a business growth perspective: "Both companies are trying to take charge of the entire customer experience. If they have to share that customer with someone else, it threatens their long-term viability."

Today, Yelp Reservations services 18,000 restaurants; OpenTable is used by over 30,000 restaurants. Priceline purchased OpenTable for $2.6 billion in cash last June. Yelp is worth somewhere in the neighborhood of $3.5 billion according to recent estimates.

A former OpenTable employee confirmed that the 2010 deal helped drive traffic to OpenTable from Yelp; anecdotal evidence suggests that Yelp users liked the one stop shop experience of making a reservation directly through a Yelp page. Yelp declined to comment on the news. OpenTable responded with a statement: "We discontinued our integration with Yelp in April. This did not have a material impact on our business or the hundreds of millions of diners who find and book great restaurants on OpenTable." OpenTable maintains a partnership with Facebook, which recently redesigned and relaunched its business pages, perhaps in a way to compete with Yelp.

YELP is trading up 44 percent this morning in light of the news; OpenTable's parent company Priceline Group (PCLN) is currently down nearly 2 percent.

Update 12/18; 4:45 p.m.: This post has been updated to reflect a statement from OpenTable and a response from Yelp.