Hotel Group: Expedia Merger With Orbitz Could Hurt Consumers
The American Hotel & Lodging Association has come out against the merger of Expedia and Orbitz, two of the largest online travel booking sites. The deal—which would be the second large travel industry merger in less than a year—could lead to higher booking costs and a rise in fraud, the association says.
The last time we talked about online travel sites, it was about complaints by the sites that airlines weren’t playing fair with their data, costing consumers a lot of money. Those complaints helped lead to a Justice Department investigation of the airline industry.
This time, the travel sites themselves are getting called out for potentially anticompetitive behavior. The American Hotel & Lodging Association (AH&LA)—which represents an industry that traditionally has had a better relationship with the travel sites than airlines have—is raising some major concerns about a plan by Expedia to acquire Orbitz, a merger that would bring together two of largest players in the industry.
AH&LA opposes the acquisition, which is under Justice Department review, on the grounds that it would be bad for the hotel industry and consumers, potentially leading to price increases. The association notes that the merger would leave the consolidated company with just one major competitor: Priceline. (Earlier this year, Expedia purchased the other major travel-booking site, Travelocity, for $280 million.)
AH&LA cited PhoCusWright research reported by Skift, which found that Expedia would control 75 percent of the online travel market if the merger were to go through. Combined with Priceline, the two sites and their subsidiaries would make up about 95 percent of the market.
The acquisition also could lead to a rise in fake booking sites, a major concern for the industry, AL&HA says.
“Beyond severely restricting consumer choice, we believe the acquisition could exacerbate the problem of deceptive practices by rogue [online travel agency] affiliates posing as direct hotel booking sites,” AH&LA President and CEO Katherine Lugar said in a news release. “Both companies have affiliate relationships with thousands of smaller websites that offer hotel rooms for booking, some of which have misled consumers who think they are booking directly with a hotel.”
Expedia says that it has no plans to raise prices in the case of a merger and that online travel sites represent only a small portion of travel-booking options.
“In the grand scheme of things, we’re only a small player,” Expedia CEO Dara Khosrowshahi said of the deal earlier this year, according to The Wall Street Journal [subscription].