Hotels reactions to Wotif takeover ‚Äúmisguided”
The hotel associations' reactions to the Expedia-Wotif acquisition approval yesterday has been described as “slightly misguided”, according to travel industry research authority, PhoCusWright.
A research analyst for the company told Travel Today that while “there’s no denying that the deal would boost position of the combined entity online, it is worth noting that three-fourths of ANZ’s accommodation bookings are still fulfilled offline”.
“The offline market, too, is largely consolidated. Hybrid presence of leading retailers through expansive franchisee networks and their active marketing promotions cannot be dismissed or overlooked,” PhoCusWright research analyst, Asia Pacific, Chetan Kapoor said.
According to Kapoor, the Australia/New Zealand region has amongst the lowest hotel commission rates globally, regardless if the Wotif acquisition took place.
“Acquisition or not, Wotif has steadily increased commissions to offset rising cost of customer acquisition and maintain revenues. Aligning with Expedia would certainly allow both parties to play to their strengths. But let’s not forget that despite being present for a decade, Expedia’s made little dent in the domestic market,” Kapoor said.
Kapoor claims that despite the Expedia buy-out in this market, Wotif’s growth will be pinned on its success overseas, rather than domestically.
“Even Wotif’s growth is now more than ever tied to overseas expansion and outbound bookings than domestic. Nevertheless, achieving sales targets would be a key requirement in Expedia-Wotif’s pitch to domestic hotels for higher commissions. This will not be a cakewalk considering evolving competitive dynamics.
“The rise of Booking.com and other online intermediaries – local and international – coupled with historically strong foothold of traditional retailers could contain Expedia-Wotif’s future growth in the domestic lodging market, in turn limiting their position to increase commissions excessively.”
Various hotels associations yesterday were up in arms against the ACCC verdict allowing Expedia to buy Wotif for $700 million, saying the deal would likely result in a "consolidation creep", and trigger an onslaught of higher commission rates and possibly more expensive rates for consumers.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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