Australia’s competition watchdog has given the green light for global travel booking giant Expedia’s $700 million takeover of Wotif.com.
The Australian Competition and Consumer Commission said it would not oppose the acquisition, despite opposition from hotels who claim the move will push up fees.
ACCC chairman Rod Sims said competition in the online travel booking sector had grown considerably recently, which would limit Expedia’s ability to increase fees.
“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry,” he said.
He said a number of smaller online travel agents had entered the market and metasearch sites like Tripadvisor and Google Hotels Finder were playing an increasingly important role, allowing hotels to directly market themselves to consumers.
“Disruptive developments from smaller online travel agents and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future.”
Hotel groups had argued that commissions charged by Expedia and its fellow US giant Priceline, which owns Booking.com and Agoda, were lower in Australia due to more competition here.
Removing Wotif from the equation could lead to higher fees, they claimed.
In a statement, Wotif.com welcomed the decision and said the takeover was expected to be completed by the end of October, pending approval from shareholders and New Zealand authorities.
Wotif’s board of directors has urged shareholders to accept Expedia’s $3.30-a-share takeover offer.
Co-founders Graeme Wood and Andrew Bice have agreed to sell their holdings.
The Australian Hotel and Accommodation Industry responded to the decision expressing concerns it would reduce competition.
Industry Spokesman, Bradley Woods, said; “This acquisition removes choice for accommodation providers between foreign and Australian operators and different commission models for selling their rooms online through third-party websites
“The growth in meta search engines, does not guarantee more competition or protection from massive commission rate increases, as OTA’s are already buying meta search companies and consolidation creep is already happening.
“The movement is definitely towards consolidation and that means that OTA’s may inevitably push up commission rates from the 11-12% currently towards the 18 – 25% that is more typical in the USA and Europe.
“The end effect of acquisitions and concentrations of market power into two or three companies will be that the consumer may end up bearing the cost of less competition.
“The hotel and accommodation industry is also concerned about the emergence of rate clauses into hotel and OTA contracts by which OTAs demand that hotels not be allowed to offer better rates to consumers through their own hotel owned websites or booking systems. We have already raised the issue with the ACCC and will now take the matter further with the Commonwealth government and ACCC as it is clearly contrary to Australia’s competition and consumer law principles.”
In other ACCC decisions today Tabcorp has received the all clear to buy the ACT government’s gaming business ACTTAB in a $105.5 million deal.
The Australian Competition and Consumer Commission says it will not oppose the takeover as it does not expect the deal will cause a major increase in gaming market concentration.
“The ACCC determined that Tabcorp would continue to be competitively constrained by the corporate bookmakers and other state-based operators,” ACCC commissioner Jill Walker said on Thursday.
As part of the deal, which was announced in July, the ACT government will issue Tabcorp with a totaliser and sports bookmaking licence, while the company will pay an annual $1 million licence fee.
ACTTAB runs the territory’s wagering, Keno and trackside businesses.
