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Emergence of Google and TripAdvisor booking helps pave way for Orbitz takeover by Expedia

Posted on 17/09/2015 by Jasmin Iceton

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The prospect of massive online travel consolidation has been triggered after Expedia won approval from US competition authorities to take over rival Orbitz for $1.3 billion.

The US Justice Department said a six-month investigation had found no evidence that the merger would lessen options for consumers.

It noted that Orbitz is a relatively small source of bookings for airlines, car rental companies and hotels.

Hotwire and Hotels.com are owned by Expedia, which also purchased Travelocity in January for $280 million. That paved the way for the acquisition of Orbitz, which reported $10 billion in bookings last year for air fares and hotels.

Orbitz Worldwide owns ebookers in the UK together with cheaptickets.com and hotelclub.com.

Booking.com, OpenTable and Kayak are owned by Expedia’s rival Priceline.

The American Hotel and Lodging Association had argued that the merger would create a "duopoly" between Expedia and Priceline, which will now control 95% of the online travel-marketplace, a business that generates $152 billion a year, the Washington Post reported.

But Bill Baer, head of the Justice Department's anti-trust division, said: “We know online travel booking is important to US consumers and to the airlines, car rental companies and hotels that serve those consumers.

Over the course of a six-month investigation, lawyers and economists from the anti-trust division reviewed tens of thousands of business documents, analysed transactional data from the merging companies and from other industry players and interviewed over 60 industry participants of various types and sizes.

“The antitrust division investigated the concerns that have been expressed about this transaction. We took those concerns seriously and factored into our analysis all of the information provided by third parties. At the end of this process, however, we concluded that the acquisition is unlikely to harm competition and consumers.

“There are several reasons for this conclusion. First, we uncovered no evidence in our investigation that the merger is likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz. So we focused our investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies and hotels.

“Second, we found that Orbitz is only a small source of bookings for most of these companies and thus has had no impact in recent years on the commissions Expedia charges.

“Many independent hotel operators, for example, do not contract with Orbitz, and those hotels that do often obtain very few bookings from its site. In addition, beyond Expedia and Orbitz, travel service providers have alternative ways to attract customers and obtain bookings, including Expedia’s largest online travel agent rival, Priceline.

“Third, the evidence suggests that the online travel business is rapidly evolving.

“In the past 18 months, for example, the industry has seen the introduction of TripAdvisor’s Instant Booking service and Google’s Hotel and Flight Finder with related booking functionality.

“Looking at the facts and applying our horizontal merger guidelines, we concluded that Expedia’s acquisition of Orbitz is not likely to substantially lessen competition or harm US consumers.”

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