Expedia is now clear to takeover online hotel room booking business Wotif.com after the Australian Competition and Consumer Commission (ACCC) decided not to oppose the acquisition.
The ACCC said the acquisition was unlikely to diminish the nature of the industry given significant changes in the online accommodation distribution market, including the entry of new competitors and business models.
The deal was announced in July after Wotif was one of the ten worst performers on the ASX in 2013/14. In the 12 months to June 30, Wotif’s share price plummeted 46.5%.
Today Wotif’s shares were trading up 6.47% to $3.29 a piece after the ACCC announced its decision.
This chart from the ASX shows Wotif’s daily close price over the past 12 months.
The consumer watchdog highlighted the increasing importance of metasearch sites such as TripAdvisor and Google Hotels Finder, which aggregate the offers of hotels and numerous Online Travel Agents (OTAs) in one place for consumers.
“Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers,” ACCC chairman Rod Sims said.
While the acquisition is not likely to result in a substantial lessening of competition, “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,” Sims said.
The Australian Hotels Association, the Accommodation Association of Australia and the Tourism Accommodation Association all raised concerns that Wotif represented an important source of bookings for some accommodation providers and its removal from the Australian market may result in higher commission rates being paid.
“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,” Australian Hotel and Accommodation Industry spokesperson Bradley Woods said.
“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.”