Tuesday, 9 September 2014

Wotif to be acquired by Expedia (2)

I see that the Expedia proposal to acquire Wotif has been given an "amber light" by the ACCC.  It seems that one of the issues of possible concern  is that Expedia tends to charge accommodation providers a higher commission than Wotif, and that if the Priceline group (which is booking.com and Agoda) and Expedia (which includes Hotels.com, as well as others) were the only participants of any scale in the on line travel agent (OTA) market, the  accommodation industry considers that rates charged to hotels would possibly rise.

I skimmed through the very interesting Statement of Issues and noted that the ACCC seems mainly concerned (see paragraphs 47 and 52) with the three largest participants on the OTA market (Expedia, Wotif and Booking.com), and doesn't  place a great deal of weight on other players in the market, such as Zuji (owned by Webjet), Flight Centre, and Orbitz (which is HotelClub.com and is linked to Helloworld).   How this will flow through to the final determination remains to be seen.

What I found very interesting in the Statement of Issues were the descriptions of the participants in the market, as above, and also that Wotif includes lastminute.com.au and travel.com.au.

The ACCC's release contains a reference to Hooroo, as a relatively new OTA.  I hadn't heard of this, so I followed up on it.   It didn't take long to see that it's owned by Qantas!   And they've built it from scratch and it's based in Melbourne.  I may in fact have unknowingly used it when booking through the Qantas site. I've added it to my bookmarks and will be looking at it in the future, but my first impression is that it's got quite a way to go before it can be taken to be a serious player in this market.   It doesn't have much coverage and it's a pity that I don't seem to be able to see the rates charged by overseas properties in their local currencies.

The Statement of Issues also stated that OTAs (except Wotif) generally charge a base rate of commission to accommodation providers for bookings through their portals and charge a higher rate of commission to hotels to appear on the front page of their unrefined search results. I guess we all assumed this, but it's interesting to see it in writing.  Another case of "buyer beware", I suppose.

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