4 September 2014,

THE Australian Competition and Consumer Commission (ACCC) has expressed concerns that Expedia’s proposed acquisition of Wotif.com Holdings Limited (ASX: WTF) would be a negative for the Australian tourism and hospitality industry.

The proposed takeover of the Brisbane company by the United States travel giant was announced in July for $703 million, subject to WTF shareholder and court approval and to be finalised in October.

ACCC chairman Rod Sims says there is concern that taking WTF offshore would make for an anti-competitive playing field and pass on a rate rise to industry providers.

A report issued by the ACCC has questioned whether removing WTF from the domestic market will increase the rate of commissions charged to hotels and other accommodation providers in Australia.

While still speculation, a consumer rate rise could therefore be an ancillary drawback of the acquisition.

“The ACCC is seeking further information to determine whether the proposed acquisition is likely to substantially lessen competition in the market for the online distribution of Australian accommodation,” says Sims.

“Market inquiries have indicated that Wotif is a major source of bookings for Australian accommodation providers and charges a lower commission rate than Expedia.

“Commission rates charged by Expedia and Booking.com in Australia are lower than the rates charged by those companies in other parts of the world and the presence of Wotif may be a contributing factor to this difference.

“Market participants have expressed concern that the removal of Wotif as an independent competitor will allow Expedia to increase its commission rate.”

On the other hand, Sims says the acquisition has the potential to give rise to new business models in the Australian market and promote healthy competition.

“The ACCC has observed significant changes in the way that accommodation is offered to consumers in recent years,” he says.

“A key issue for the ACCC will be whether the dynamic nature of the industry is likely to facilitate the development of new business models and discipline Expedia’s competitive conduct post-acquisition.”

The nature of the issue has caused a deferral in the ACCC’s final decision until October 2.

The ACCC is inviting further submissions from the market up until September 19.






Contact us

Email News Update Sign Up Contact Details

PO Box 1487
Mudgeeraba QLD 4213

LoginTell a FriendSign Up to Newsletter