Australia’s corporate watchdog, the ACCC, today said it will not oppose Expedia’s purchase of Wotif.com because the online travel market is becoming increasingly competitive due to the emergence of meta-search sites and the rise and rise of other OTAs such as Booking.com.
In other words, the ACCC believes Expedia will not achieve market dominance (and monopolistic pricing power) via the acquisition, which is expected to close later this month.
But Australian hoteliers disagree and claim the consolidation will lead to higher commission rates for accommodation owners.
Industry groups the AHA, the Accommodation Association of Australia (AAoA) and the Tourism Accommodation Association (TAA) all oppose the deal.
Industry Spokesman, Bradley Woods, claimed: “The acquisition may trigger major commission rate increases, flowing onto consumers and the Australia tourism industry.
“The growth in meta search engines, does not guarantee more competition or protection from massive commission rate increases, as OTAs are already buying meta search companies and consolidation creep is happening.
“That means that OTA’s may inevitably push up commission rates from the 11-12% currently towards the 18 – 25% that is more typical in the USA and Europe.”
Without citing sources, Mr Woods claimed: “Currently Expedia is estimated to hold 10% of the Australian hotel portal market.
“With the acquisition of Wotif, Expedia will grow to 45%. “Another major competitor, Priceline, is believed to have approximately 40%.”
Therefore “with a successful acquisition the two companies may have up to 85% of the Australian market.
“The end effect of acquisitions and concentrations of market power into two or three companies will be that the consumer may end up bearing the cost of less competition.
“The hotel and accommodation industry is also concerned about the emergence of rate clauses into hotel and OTA contracts by which OTAs demand that hotels not be allowed to offer better rates to consumers through their own hotel owned websites or booking systems.
“We have already raised the issue with the ACCC and will now take the matter further with the Commonwealth Government as it is clearly contrary to Australia’s competition and consumer law principles,” Mr Woods concluded.