Hotels: Expedia-Orbitz Merger Will Create Significant Consequences
Jennifer Billock August 10, 2015
Expedia and Orbitz are looking to merge into a single company, but the hotel industry opposes the deal.
In February, online travel booking site Expedia agreed to a $1.3 billion sale that would see the company absorb online travel booking site Orbitz. The sale, which was expected to be complete in the second half of this year, is currently under review by the U.S. Department of Justice.
The reason for the extensive review is because of dissention from the hotel industry, which opposes the deal.
“We believe this transaction and the resulting consolidation of the online travel marketplace will result in significant negative consequences, particularly for consumers, but also for the large number of our members who are small business owners and franchised properties,” said Katherine Lugar, the American Hotel and Lodging Association’s CEO, said in a statement last week, as reported by NBC News.
The American Hotel and Lodging Association, as well as the hotel community at large, is concerned that such a merger would result in higher prices for travelers and bigger fees for hotel operators, especially because Expedia’s fees are 11 percent higher than Orbitz’s. The Association also worries that the combination of both companies would limit consumer choice – it would two competing organizations, Expedia and The Priceline Group Inc. to oversee 95 percent of U.S. online travel booking sites.
The merger could also potentially result in lower profit margins for independent properties listed on the sites; the companies bring them new business, but heightened fees could force them to remove their listings.
[Photo: iStock]
