So previously, if you wanted to book a hotel using Kayak’s search engine, you would click through to the hotel or partner site to book the reservation. Kayak would receive a affiliate fee from the transaction but the actual booking would be made outside of the search engine.

Now, you can make the reservation within the Kayak platform, similar to the experience of making a hotel booking through Expedia (although you’ll still be able to book via the hotel or other sites as well). Travelocity will process the transactions and provide customer service on a white label basis. Financial terms of the deal were not disclosed. The feature was previously released in a limited beta and will be available on its website and iPhone application in the coming weeks.

Of course, Kayak will now compete with Expedia, Orbitz and others for travel booking. Also, it doesn’t appear that Kayak will be extending the same functionality for airline bookings for now.

Get the full story at TechCrunch

Press Release from Travelocity:

Travelocity Partner Network Reaches Agreement with KAYAK

Building on its industry-leading distribution capabilities, The Travelocity Partner Network has signed a contract with leading travel search engine KAYAK.

Under the terms of the agreement, Travelocity Partner Network will power KAYAK’s new hotel booking engine which adds to its existing selection of hotel options on both KAYAK.com and its array of applications for mobile devices. Financial terms of the agreement were not disclosed.

“The addition of KAYAK to the Travelocity Partner Network (TPN) is a testament to the strength of Travelocity’s broader distribution network and our global hotel platform,” said Hugh Jones, president and CEO, Travelocity. “Our TPN partners are world-class organizations and share our commitment of bringing value and quality service to our mutual customers.”

The Travelocity Partner Network powers more than 250 online travel sites through its suite of private and white label services. Clients include an array of e-commerce sites, destination marketing organizations and financial services companies.

Press Release from Kayak

Kayak Launches New Hotel Booking Option

Today, KAYAK (kayak.com) released the option to complete hotel bookings directly through the company's website. The feature was released in a limited beta and will be fully released on the company's sites and iPhone application in the coming weeks. The new booking option adds to the existing selection of hotel booking options available through KAYAK, including booking directly with hotel providers and through online travel agencies.

"Our users value that we give them choices on where to book, though some people would prefer to complete their purchases without leaving KAYAK," said Steve Hafner, KAYAK Chief Executive Officer and Cofounder. "We're excited to offer a simple booking process on our sites and mobile applications in addition to the same choices we currently offer. For people who use KAYAK's mobile app in particular, this will make booking much easier."

The company will use reservation-booking partners to provide direct booking functionality on KAYAK and is launching the feature through the Travelocity Partner Network. Travelocity will process the transactions and provide customer service on a white label basis.

"The addition of KAYAK to the Travelocity Partner Network (TPN) is a testament to the strength of Travelocity's broader distribution network and our global hotel platform," said Hugh Jones, president and CEO, Travelocity. "Our TPN partners are world-class organizations and share our commitment of bringing value and quality service to our mutual customers."

The feature will also integrate with KAYAK's free itinerary management service.