Yelp, OpenTable part ways amid heightened competition

By Julia Love

SAN FRANCISCO (Reuters) - Review site Yelp Inc and restaurant reservation service OpenTable have quietly ended a long-running partnership, the companies confirmed on Thursday, as the one-time allies increasingly eye each other's businesses.

The companies parted ways in April under mounting competition, with OpenTable facing new rivals to its reservation business and Yelp dogged with questions about stalling growth. Both companies are trying to take charge of the entire customer experience, said analyst Ben Bajarin of Creative Strategies.

"If they have to share that customer with someone else, it threatens their long-term viability," he said.

The companies halted a deal that since 2010 had allowed users to make OpenTable reservations through Yelp, home to a trove of reviews from diners.

The move, long speculated by industry watchers, underscores the growing rivalry between the companies, said Kerry Rice, a senior analyst at Needham & Company.

"Those two companies will be more head-to-head competitors," he said.

While the deal was not a big revenue source for either company, Yelp drove traffic to OpenTable, a former OpenTable employee said. But business has kept humming, OpenTable spokeswoman Lisa Singh wrote in an email.

"This did not have a material impact on our business or the millions of diners who find and book great restaurants on OpenTable," she said.

Yelp touted its progress in reservations.

"We're excited about the more than 18,000 restaurants that have chosen Yelp's reservation products for their reach, flexibility, and affordability," a Yelp spokeswoman said in a statement.

The spokeswoman confirmed OpenTable paid Yelp for referrals.

"We had the standard referral relationship with OpenTable that they have with others, and it was immaterial to Yelp," she said.

While OpenTable is best known for bookings and Yelp for reviews, the companies have gradually encroached on each other's territory.

OpenTable, which was acquired by Priceline Group Inc last year, has expanded its reviews. And Yelp in 2013 acquired rival reservation firm SeatMe, which offers restaurants similar services at a lower price, sparking speculation that the deal with OpenTable was in jeopardy.

The rivalry had intensified in recent years, with SeatMe attempting to poach employees from OpenTable, the former OpenTable employee said.

The end of the deal puts pressure on the companies to solidify their expertise in the new areas so customers don't have to hop back and forth, said Bajarin.

"I personally have found it a lot more inconvenient that they stopped working together," he said.

(Editing by Stephen R. Trousdale and Cynthia Osterman)