Weighing up Expedia's triple combo of major acquisitions

By David Tossell, Vice President Travel and Hospitality Practice at DataArt

In a guest post for Travolution, UK’s leading news source for the travel industry, David Tossell of DataArt analyzes the recent acquisitions by Expedia and what it means for the sector.

“We all saw it coming… Expedia had completed the “great travel land grab” in locking-up Wotif, Travelocity and Orbitz over the span of just a few months. Phocuswright estimates that the Orbitz acquisition gives Expedia a 75% market share in US online travel agencies…

Taking Orbitz out of play may have just been a smart defensive play, as Expedia’s chess move keeps Amazon, eLong, Qunar, Flight Centre, etc. from having a quick way to ramp-up a US presence. Another reason for Expedia, is that Orbitz serves as a nice complement to its private label travel business and brings American Express, AAA, AARP, Yahoo, Capital One, Royal Bank of Canada and more all under one roof. Priceline’s private label market share is well below that of Expedia - especially a combined Expedia / Orbitz. Hence, Expedia’s Orbitz acquisition makes them a powerhouse in the private label travel business.

Priceline stands to benefit from the Orbitz acquisition for many of the same reasons as Expedia will benefit.

First, a consolidated OTA distribution channel helps Priceline’s negotiation leverage with suppliers. Second, Orbitz benefits from seeing the likes of Amazon, Google and other OTA not stepping-up competition with an Orbitz acquisition. Third, Priceline’s position likely improves by picking-up large accounts in the private label travel business, as it's now a two-horse race rather than a three-horse race with Orbitz becoming a logo for Expedia.

The one-two-three punch of Expedia taking down Wotif Group, Travelocity and Orbitz in a matter of months underscores that Priceline’s acquisition strategy is differentiated from that of Expedia’s.

“Is Expedia-Orbitz-Travelocity where it ends?” Of course not. We are witness to the intersection of the chess game of mergers and acquisitions, the adoption of emerging technologies and the dynamics of a marketplace made up of multiple stakeholder types.

In all likelihood, the travel distribution ecosystem will remain an evolving space for decades to come.”

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