United States won’t block Expedia-Orbitz merger

According to Forbes, the travel market is valued at $1.3 billion annually and Expedia commands five percent of the market. With its purchase of Orbitz, it will now also own CheapTickets, ebookers, and HotelClub. The American Hotel & Lodging Association said Expedia and Price will control 95 percent of USA online travel bookings.

But Bill Baer, head of the Justice Department’s anti-trust division, said: “We know online travel booking is important to United States consumers and to the airlines, vehicle rental companies and hotels that serve those consumers”. Indeed, key members of Congress, including the Chair and Ranking Member of the Senate antitrust subcommittee and vital leaders in the House, along with leading consumer advocates expressed their concerns about consolidation. “At the end of this process, however, we concluded that the acquisition is unlikely to harm competition and consumers”. “We took those concerns seriously…”

“There are several reasons for this conclusion”. And commissions charged by the newly merging companies won’t necessarily skyrocket since Orbitz had fewer relationships with hotel operators to begin with.

Despite the growing popularity of online travel agencies for booking travel, they accounted for 16% of travel gross bookings in the US previous year vs. 28% share at each of the other channels – supplier websites, travel management firms and phone or walk-ins, according to Phocuswright.

The agency said Wednesday it found no evidence that Expedia is likely to charge new fees and added the deal should not affect the commissions Expedia charges to hotels, airlines and vehicle rental companies. “In the past 18 months for example, the industry has seen the introduction of TripAdvisor’s Instant Booking service and Google’s Hotel and Flight Finder with related booking functionality, ” the Justice Department said.

In February 2015, Expedia announced a definitive agreement to acquire Orbitz Worldwide Inc., and Orbitz Worldwide’s brands, for $12.00 per share in cash, representing an enterprise value of approximately $1.6 billion.