The world is huge

Don't miss any of it

Travel news, itineraries, and inspiration delivered straight to your inbox.

By proceeding, you agree to our Privacy Policy and Terms of Use.

X

More Consolidation with Expedia’s Purchase of Orbitz

Today’s big news in the online travel agency (OTA) world: Expedia and Orbitz have agreed on terms for the sale of the latter to the former. The transaction would value Orbitz at around $1.6 billion, and is subject to approval by regulators and Orbitz’s shareholders.

On a conference call to discuss the acquisition, Dara Khosrowshahi, Expedia, Inc.’s chief, said the addition of Orbitz to the Expedia portfolio would result in $75 million in incremental revenues during the first year, driven by “synergies and increased efficiencies.” He also alluded to the “war for global talent,” and the technical and marketing horsepower that the Orbitz team would add to the company’s workforce.

Less discussed was the effect that consolidation in the OTA area would have on competition, and ultimately on prices at the consumer level. Of the four largest OTAs—Expedia, Travelocity, Orbitz, Priceline—Expedia has already acquired Travelocity. With the purchase of Orbitz, Expedia-owned companies will reign supreme in the space. It’s hard to imagine that the net effect will be anything other than decreased competition. And that welcome prospect, of course, must have played a part in Expedia’s decision to make the purchase.

Khosrowshahi pointed out, rightly, that OTAs are not alone in the travel-distribution business. The airlines, hotels, rental-car companies, Google, TripAdvisor, and others are all vying to be travel consumers’ first choice when it comes to researching and booking travel.

But it’s also true that for many travelers, OTAs have become the be-all and end-all in purchasing travel. With Expedia’s latest acquisition, any assumptions consumers may have harbored about competition keeping OTA prices in check are looking increasingly tenuous. More than ever, it’s caveat emptor.

Reader Reality Check

How do you expect the Orbitz purchase to affect choice and pricing?

This article originally appeared on FrequentFlier.com.

We hand-pick everything we recommend and select items through testing and reviews. Some products are sent to us free of charge with no incentive to offer a favorable review. We offer our unbiased opinions and do not accept compensation to review products. All items are in stock and prices are accurate at the time of publication. If you buy something through our links, we may earn a commission.

Top Fares From