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Expedia Buys Orbitz for $1.6B in Cash

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Re: Expedia Buys Orbitz for $1.6B in Cash

#11

Post by lotsofpulp »

coob wrote: post #8
jeletonskelly wrote: post #4

Earlier quoted context omitted.

It's actually a big deal in the travel industry. Yes, for the most part they are all the same. Online travel sites have negotiated contracts with the hotels that prevent them from selling their inventory at lower prices to anyone else, so you're not going to get a much better deal where ever you book. The big thing here is this makes the Expedia umbrella by far the largest distribution channel for online hotel reserv…

If the no lower prices thing is true, how come comparison engines like triage have such wildly varying prices? Are different bookers taking hits on their margins to drive business?

Most large hotel chains have a best price guarantee which states the hotel's official website will have the lowest advertised price you can get anywhere else (e.g. expedia).

But, non advertised prices can be lower such as on Hotwire, where you don't know which hotel you are reserving, you only get to choose the price and have to stay wherever Hotwire makes the greatest margin.

If you do find a lower advertised price for a specific hotel, you can usually call their 800# and get it price matched and something extra.

http://www.marriott.com/hotel-prices/travel.mi

http://www.starwoodhotels.com/bestrate/index.html

http://hiltonworldwide.hilton.com/en/ww/ourbestrates/guarant...

http://www.hyatt.com/hyatt/specials/offers/offer-details_hot...

https://www.ihg.com/hotels/us/en/customer-care/lowest-intern...

Re: Expedia Buys Orbitz for $1.6B in Cash

#12

Post by kelukelugames »

jhulla wrote: post #9

According to Forbes, hotels represent 97% of Priceline's revenue with 23% margins. Car rentals and cruises represented 9% margins and airlines at 3% margins. Assuming Expedia and Orbitz have similar profiles, then this is really a market share fight to capture the largest pool of hotel transactions. http://www.forbes.com/sites/greatspeculations/2013/01/10/bre...

Yes, the SO works for one of them. The employee discount can go up to 50% for hotels and pretty much nothing on flights.

Re: Expedia Buys Orbitz for $1.6B in Cash

#13

Post by DisView »

coob wrote: post #8
jeletonskelly wrote: post #4

Earlier quoted context omitted.

It's actually a big deal in the travel industry. Yes, for the most part they are all the same. Online travel sites have negotiated contracts with the hotels that prevent them from selling their inventory at lower prices to anyone else, so you're not going to get a much better deal where ever you book. The big thing here is this makes the Expedia umbrella by far the largest distribution channel for online hotel reserv…

If the no lower prices thing is true, how come comparison engines like triage have such wildly varying prices? Are different bookers taking hits on their margins to drive business?

When a hotel signs a contract with an OTA (Online Travel Agency), it is (was) a common practice to include a 'price parity' clause, i.e. the hotelier cannot send different prices for the same offer to different websites, and the OTA agrees on not modifying the final price specified by the hotelier.

But the reality is that: - Not all the hoteliers update all the rates simultaneously (through a channel manager, for example) - Some the hoteliers are not selling the same rooms or rates (breakfast, cancellation options...) in all the OTAs. - Certain OTAs that are just re-selling inventory from wholesalers and the commission applicable to an offer can be modified by the OTA at its will.

There are more 'shady' tricks that can lead to different prices for the same hotel, but it would be too long to write all of them in a post.

Re: Expedia Buys Orbitz for $1.6B in Cash

#15

Post by milesskorpen »

kelukelugames wrote: post #7
smackfu wrote: post #3

Surprised there are no anti-trust concerns.

why would there be? priceline is already bigger than expedia. source: know people who work at both places and internet. https://www.google.com/finance?q=NASDAQ%3APCLN&ei=j8zcVNvlGo... https://www.google.com/finance?q=NASDAQ%3AEXPE&ei=1czcVIimKr... look at profits and market cap.

Should clarify that "Priceline" is primarily Booking.com, not the amusing pricing opacity company out of CT (even if they did make the good decision to buy Booking.com years back).

Re: Expedia Buys Orbitz for $1.6B in Cash

#16

Post by bt3 »

It seems as though the whole travel industry is excited about the news:

EXPE - 90.45 +15.64% OWW - 11.65 +21.05% PCLN - 1092.83 +3.09% TRIP - 82.03 +21.94%

Worth noting as well that the deal was based upon 115M Orbitz shares @ 12/ each, which makes it a $1.38B. The $1.6B represents the enterprise value.

Re: Expedia Buys Orbitz for $1.6B in Cash

#17

Post by kelukelugames »

milesskorpen wrote: post #15
kelukelugames wrote: post #7

Earlier quoted context omitted.

why would there be? priceline is already bigger than expedia. source: know people who work at both places and internet. https://www.google.com/finance?q=NASDAQ%3APCLN&ei=j8zcVNvlGo... https://www.google.com/finance?q=NASDAQ%3AEXPE&ei=1czcVIimKr... look at profits and market cap.

Should clarify that "Priceline" is primarily Booking.com, not the amusing pricing opacity company out of CT (even if they did make the good decision to buy Booking.com years back).

Do you have a source that most of their traffic is from booking.com?

Re: Expedia Buys Orbitz for $1.6B in Cash

#18

Post by burger_moon »

smackfu wrote: post #3

Surprised there are no anti-trust concerns.

In this article from Reuters [0] their CFO stated that they only hold a single digit market share in the travel industry.

"The possibility of antitrust issues was played down by Expedia's Chief Financial Office Mark Okerstrom who said, "It is a $1.3 trillion industry and is highly fragmented ... We are only a small player and our overall share is in single digits.""

[0] http://www.reuters.com/article/2015/02/12/us-orbitz-worldwid...

Re: Expedia Buys Orbitz for $1.6B in Cash

#19

Post by smackfu »

kelukelugames wrote: post #17
milesskorpen wrote: post #15

Earlier quoted context omitted.

Should clarify that "Priceline" is primarily Booking.com, not the amusing pricing opacity company out of CT (even if they did make the good decision to buy Booking.com years back).

Do you have a source that most of their traffic is from booking.com?

Priceline breaks down their financials into domestic and international bookings, based on the location of the unit doing the booking. Booking.com is based in Amsterdam so is counted as international bookings, along with agoda.com and some rental car service. Priceline is domestic. For the latest quarter, the booking numbers were $12B foreign vs $1.7B for domestic.

Re: Expedia Buys Orbitz for $1.6B in Cash

#20

Post by makmanalp »

untog wrote: post #2

All these sites seem to use the exact same backend services, so it's difficult to care. About the only site I use regularly is hotels.com because they have a loyalty scheme (book 10 nights, get 1 free) - and even then I'm sure there's some catch I'm not aware of that makes them the same as everyone else.

This is true in general terms, but the reality is that these sites are charged to use backend services, so they cache results. So how smart the cache invalidation and refresh process is matters a lot to a user, especially during times when there is a lot of contention (think pre-christmas). If there is anything that makes a user bounce, it's telling the user that there exists a ticket for a given price, and the user discovering otherwise after clicking through or starting the payment process.

Then there are a lot of providers who have APIs but are not part of a large backend service. Hotels especially are notorious here.

Furthermore a lot of providers still don't have APIs (yes, in this day and age) and need to be scraped, and will agree to doing so - the better you scrape the more alternatives your users get.

But yeah. In an ideal world what you're saying would be true. And I agree that this is probably a userbase acquisition - market consolidation move rather than a tech one.

disclaimer: used to work at kayak.

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