Sluggish travel industry growth and pressure from insurgent travel providers have prompted Expedia to buy competitor Travelocity. The Wall Street Journal reports the deal is worth $280 million.
The US online travel market is largely controlled by four companies: Expedia, Travelocity, Priceline and Orbitz. Contending with the same pressures and slowing growth, Orbitz is exploring a sale to private equity or perhaps even Google. (Microsoft created Expedia in the late ’90s and spun it out.)
Google several years ago bought ITA software, which powers the reservations systems of many airlines and travel sites. A Google acquisition of Orbitz would probably be blocked by regulators. It’s unclear if regulators will try and prevent the Travelocity acquisition — though probably not.
In 2012 Priceline bought travel search site Kayak for nearly $2 billion.
Expedia and Travelocity have had a Yahoo-Bing-like relationship since 2013, when Expedia began powering Travelocity.com. That makes the acquisition very logical from both perspectives.
Currently Expedia owns the following online travel brands: Hotels.com, Hotwire, eLong and Trivago. Soon that list will include Travelocity. TripAdvisor and Travel Zoo are independent public companies that are themselves now ripe for acquisition as the market consolidates.
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