Hotels say Expedia's Wotif takeover may lift room prices
The Australian Competition and Consumer Commission (ACCC) has given the go ahead for US-based travel giant Expedia to take over Australian trip booking website Wotif.com.
The takeover is worth $703 million, but the ACCC last month launched an investigation into the deal amid concerns within the travel industry that it could lessen competition.
Despite the ACCC's approval, the Accommodation Association of Australia and the Tourism Accommodation Association say their concerns remain.
"Currently Expedia is estimated to hold 10 per cent of the Australian hotel portal market. With the acquisition of Wotif, Expedia will grow to 45 per cent. Another major competitor, Priceline, is believed to have approximately 40 per cent. With a successful acquisition the two companies may have up to 85 per cent of the Australian market," said industry spokesman Bradley Woods.
"The acquisition may trigger major commission rate increases, flowing onto consumers and the Australia tourism industry. Higher commission rates are bad news for consumers."
However, in announcing the decision, ACCC chairman Rod Sims says the regulator is satisfied there is enough competition in the market to allow the takeover.
"The ACCC noted the concerns raised by market participants that Wotif represented an important source of bookings for some accommodation providers and that its removal from the Australian market may result in them paying higher commission rates to online travel agents (OTAs)," Mr Sims said.
"However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years.
"This has included new entry by a number of competitors and business models, including Booking.com, which has grown quickly to become the largest OTA in Australia."
In its decision, the ACCC noted the rising importance of so-called "metasearch" sites, such as TripAdvisor and Google Hotels Finder, which aggregate the offers of hotels and other online travel agents "in one place for consumers".
Mr Sims says the acquisition is unlikely to diminish the dynamic nature of the industry.
"Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future," he said.
Expedia announced its intention to take over Wotif Holdings in July.
The US online flight and hotel booking website has been trying to make inroads into the Australian market.
Wotif shares had surged 6.5 per cent to $3.29 by 11:40am (AEST), reflecting Expedia's offer price of $3.06 per share plus a special 24 cent dividend.
