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Daily-deals provider Groupon Inc. (GRPN - Analyst Report) recently announced that it has acquired Blink, which provides same-day hotel booking service through its mobile app. Based in Madrid, Spain, Blink has partnerships with approximately 2,000 hotel owners in eight European countries.

Blink will be integrated within Groupon’s Getaways travel business that the company launched in 2011. Groupon’s service works with hotels and other partners to provide travel deals in 48 countries. The addition of Blink is expected to boost Groupon’s European travel business going forward.

Mobile service offerings are increasingly becoming the key growth catalyst for Groupon. The latest acquisition will help the company to solidify its position in a market, which has significant growth potential.

Smartphones are playing a key role in travel purchases, especially in case of last minute bookings. eMarketer expects smartphone travel researchers in the U.S. to grow to 50 million or 40% of all digital travel researchers this year, with total U.S. mobile travel sales touching $13.6 billion.

We believe that Groupon has adopted a prudent policy of making strategic acquisitions. These acquisitions not only expand its product portfolio and market share but also eliminate competition. Groupon is also forging partnerships to boost its penetration. In August, the company extended its 3-year partnership with Fiksu, which will allow the latter to exclusively market Groupon’s mobile applications worldwide.

Groupon’s increasing focus on delivering mobile service offerings significantly boosted traffic. This is evident from the fact that 50.0% of the transactions in North America were through mobile devices, up from 30% in the year-ago quarter. Additionally, more than 7.5 million people downloaded Groupon’s mobile apps during the quarter, which led to robust growth in the mobile business.

We believe that Groupon is well positioned to gain from rising e-commerce spending on mobile devices, a profitable domestic market and an under-penetrated international market. However, we believe that the market is becoming more competitive due to the growing interest of technology stalwarts such as eBay (EBAY - Analyst Report), Amazon (AMZN - Analyst Report) and Google .

Groupon carries a Zacks Rank #3 (Hold).

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