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Expedia to acquire Wotif

July 9th, 2014 | | Accommodation

Screen Shot 2014-07-08 at 1.33.32 pmUS online travel giant Expedia has entered into an agreement to acquire 100 per cent of Aussie-based online travel company Wotif Group for total cash consideration of AUD$703 million.

Wotif Group operates online travel brands in the Asia-Pacific region including, Wotif.com, lastminute.com.au, travel.com.au, Asia Web Direct, LateStays.com, GoDo.com.au and Arnold Travel Technology.

While the deal is subject to approval by shareholders, the Wotif board is unanimously recommending it.

Wotif Group chairman Dick McIlwain said the board had carefully assessed the changing dynamics of the market, and the uncertainties faced if Wotif were to continue independently.

„We believe that shareholder value will be maximised, and that Wotif Group will be best positioned for the future through the proposed transaction,” he said in a statement.

„The Expedia group is well placed to leverage and support our strong brands, operations, people and customer relationships in an online travel market that is becoming increasingly global,” he said.

Wotif Group managing director and chief executive officer, Scott Blume said joining Expedia allows Wotif to rapidly advance two of its strategic initiatives – strengthening offshore supply and improving customer and supplier value through enhanced technology.

„We believe this will help solidify our position as the premier travel brand in Australia and New Zealand, grow our business across the Asia-Pacific region and increase our exposure and brand awareness to inbound international travellers,” he said.

Expedia group president and chief executive officer, Dara Khosrowshahi, said the acquisition will allow both companies to continue driving growth opportunities by leveraging the unique strengths each brings to the table.

„Wotif Group will add to our collection of travel’s most trusted brands and enhance our Asia-Pacific supply, while Expedia will expose Wotif Group’s customers to our extensive global supply and world-class technology,” Khosrowshahi said.

However, some in the accommodation sector are concerned about the implications of the acquisition, saying it raises concerns about commission levels in Australia. Small boutique properties that don’t have sales teams and rely on OTAs like Wotif and Expedia are likely to be the most concerned about the merger, given the difference in commission rates between the two companies.

Accommodation Association of Australia chief executive, Richard Munro, says the competitiveness would need to remain.

„The Accommodation Association of Australia expectations would be that the competitiveness of the online distribution agencies remain, ensuring that accommodation operators are able to access the best global distribution systems to customers,” he said.

„We would also expect that reasonable transaction costs for accommodation operators would be a focus for this proposed new entity, and for that matter any online agency, to ensure consumers are receiving the best outcomes on price.”

Documents covering the deal are expected to be released for review in mid- August, and if approved will go ahead in early October.

Is the Wotif buy-out good or bad for the Australian travel industry? Have your say.