U.S. airlines, hotel industry wary of Expedia-Orbitz merger

Fri Feb 13, 2015 7:52pm EST
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By Jeffrey Dastin

(Reuters) - The U.S. airline industry expressed concerns on Friday about the tentative merger of Expedia Inc (EXPE.O: Quote) and Orbitz Worldwide Inc OWW.N, saying it could hurt the travel business, but hinted it would not lobby actively against the deal.

Expedia's agreement on Thursday to buy Orbitz for $1.33 billion marked the latest in a spree of acquisitions it and the larger Priceline Group Inc (PCLN.O: Quote) have made to become the world's dominant online travel agencies.

Experts say the companies' followings give them power when negotiating contracts with hotels and airlines, which to varying degrees rely on the sites to sell their products. Combined with Orbitz and Travelocity, which it acquired in January, Expedia received about 39 million unique website visitors in December 2014, according to Internet analytics company comScore Inc.

These mergers "strengthen Expedia's position in the distribution chain and could have implications for consumers, travel agents and airlines," Melanie Hinton, spokeswoman for the trade group Airlines for America, said on Friday in an email.

"We would expect the Department of Transportation and the Department of Justice to carefully examine these transactions and their impact on consumers and competition."

When asked whether the trade group would take action to oppose the merger, Hinton repeated that regulators would review the deal thoroughly.

The President of the American Hotel and Lodging Association, Katherine Lugar, also said in a statement that the merger "appears to be counter to the goal of creating more consumer choice."

Expedia has downplayed concerns that consolidation would drive up prices, saying there are more deals for consumers now that companies such as Google Inc (GOOGL.O: Quote), as well as individual airline and hotel sites, are competing.   Continued...

CEO of Expedia, Inc. Dara Khosrowshahi attends the Allen & Co Media Conference in Sun Valley, Idaho July 13, 2012.  Reuters/Jim Urquhart