Expedia, which was already announced a deal last month to purchase Travelocity. Orbitz also made clear they were shopping themselves, and now Expedia is buying them, too. (HT: S.)
The Travelocity deal wasn’t meaningful, they had long since given up investing in their search and booking platform.
The Orbitz acquisition is a much bigger deal.
- Orbitz generally has the best airfare search technology for combining fares across different airlines.
- That’s useful for fuel dumps (though not as useful as Expedia’s various country sites that allow you to issue tickets in the country of your choice).
- Orbitz is also more advanced than Expedia in pushing hotel choices that it thinks best match consumer preferences, rather than those with the best payout to the booking engine (or that are privileged for other internal reasons).
- More players investing in search technology push out the progress in delivering best results for consumers, so consolidation there is on net undesirable.
That said there are still new entrants in the search space, and Google’s increasing presence should more than compensate if we lose Orbitz.
And a stronger Expedia plus Google will both represent competitors to Priceline, which is really Kayak and Booking.com.
To most consumers this will be almost meaningless.
- For air, the DOT is on the verge of eliminating competition in schedule and pricing display by mandating the way all flights and prices can be shown (and requiring prominent disclosure to the extent airlines are missing). They’re actually considering bringing back the display bias rules that ended years ago when it was determined they were unnecessary and unhelpful.
- In the near term this shifts a bit of leverage in how fares are displayed away from airlines and to the OTA’s in their ongoing tug-o-war but the current administration doesn’t want to leave things up to either.
- This deal, as final rules are pending, would seem to make it less likely the DOT will back down.
For expert consumers this means in the long term that we get fewer unique options. They likely eventually focus on a single tech platform rather than investing in both. But each site is good for different things.
- Orbitz is better for building and pricing complex multi-carrier itineraries.
- Expedia is great for issuing tickets in the country of choice.
For rebate seekers over time we may see lower payouts. OTAs still compete with the remaining sites and with booking direct. But there will be fewer players left to drive up rebates in cash and miles through shopping portals. And there will be less need to spend on loyalty (as though Expedia rewards could be gutted even more).
For hotels this may mean higher commissions.. and more extreme efforts to get consumers to book direct. Hotel chains have been pushing down commissions in recent years. Expedia plus Orbitz means greater pricing power. Being cut off from Expedia and Orbitz is worse than just one or the other.
We’re still in the early stages of online booking technology, so don’t think of this as a static, shrinking market. The future is in advances that allow mass customization and tailored travel recommendations. We shouldn’t expect that the biggest entity now will stay the biggest — the future of online booking will be won by the companies that can best guide customers through the complex world of travel to the myriad choices that work best for them.
That’s not just ‘which flight is cheapest’ or ‘which hotel gives me the features I want’ but which connection is best given weather, which total trip cost is lowest or even provides the best overall value, and what site best knows and understands even unstated preferences of a given consumer.
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