Wotif takeover could increase hotel costs

Hotels fear the $700 million takeover of Wotif.com could see them charged more to advertise online, meaning higher prices for customers.

The wotif.com travel website home page

The ACCC has cleared the way for Expedia's $700 million takeover of Wotif.com. (AAP)

A $700 million foreign takeover of Wotif.com could push up the cost of accommodation across Australia.

The hotels industry is concerned competition for bookings will fall when global travel booking giant Expedia takes control of Wotif.com by the end of October.

The takeover will concentrate Australia's online travel booking market into the hands of just two companies - Expedia and fellow US giant Priceline, which owns Booking.com and Agoda.

Industry spokesman Bradley Woods said the two operators would now control around 85 per cent of the market, which would likely result in hotels being charged more to advertise their rooms.

Mr Woods said booking websites in the USA and Europe, where Priceline and Expedia dominate, typically charge commissions of between 18 and 25 per cent, compared to Australia's commissions of around 12 per cent.

"The end effect is that Australian hotel rooms could end up more expensive as a result of this decision," he said.

But the Australian Competition and Consumer Commission said on Thursday it would not oppose the deal.

A number of smaller online travel agents have entered the market, while websites like Tripadvisor and Google Hotels Finder were allowing hotels to directly market themselves to consumers, Commissioner Rod Sims said.

"The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry," he said.

"Disruptive developments from smaller online travel agents and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future."

But Mr Woods said metasearch sites do not sell hotel rooms, and so do not boost competition in the market.

"Hotels cannot compete with multi-billion dollar corporations like Expedia and Priceline," he said.

In a statement, Wotif.com welcomed the ACCC's decision and said the takeover was expected to be completed by the end of October, pending approval from shareholders and New Zealand authorities.

Wotif's board of directors has urged shareholders to accept Expedia's $3.30-a-share takeover offer.

Co-founders Graeme Wood and Andrew Bice have agreed to sell their holdings, collectively worth about $240 million.

The company's shares climbed 20 cents, or 6.5 six per cent, to $3.29.


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2 min read
Published 2 October 2014 9:16am
Updated 2 October 2014 4:18pm

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