Will an Expedia/Orbitz merger mean cheaper deals?

Will an Expedia/Orbitz merger mean cheaper deals?

The courts have approved the merger but what does it mean for ordinary US vacationers?

The United Stats as just approved Expedia’s bid to buy Orbitz for $1.3billion. The merger of the two leading online travel booking agencies came under close scrutiny due to the long-range effects it may have on the travel industry.

After a six-month investigation into possible violations of monopoly laws, the Justice Department decided that the merger would not harm competition amidst online booking agencies.

The merger will not allow Expedia to charge any additional fees. Moreover, the new company will still have to face competition from other large booking agencies such as Priceline, Kayak and AirBnB.

“We concluded that Expedia’s acquisition of Orbitz is not likely to substantially lessen competition or harm US consumers,” said Bill Baer, head of the Justice Department’s Antitrust Division.

Yet, the online travel booking industry is not what it used to be. Rather than focusing on air flights while offering hotels and rental cars as extra options, attention is increasingly placed on hotels and on-the-ground activities.

Last month, the hotel industry issued a dire warning that after the merger, Expedia and Priceline would control 95 percent of US online travel bookings. This could result in higher prices for vacationers as well as higher fees from hotel owners.

Expedia already owns a substantial number of travel sites including Hotels.com, Hotwire, and Trivago. With its purchase of Orbitz, it will now also own CheapTickets, ebookers, and HotelClub.

Expedia is only a small player in the global travel industry that is worth up to $1.3 trillion. However, in terms of the US market, the merger gives Expedia control of 75 percent of the domestic online travel agency market.

A representative from Expedia as said the company is ‘pleased’ that the courts allowed the deal to stand.

The announcement caused stock in Expedia to rise by nearly five percent; Orbitz’s stock rose by 6.4 percent.



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