Expedia is going to buy rival Orbitz for about $1.3 billion.
The boards of both companies have approved the deal. Orbitz shareholders still have to give it the thumbs up. Assuming that happens, what’s in it for consumers?
You might be thinking you’ll have to pay more for airline tickets. After all, the online travel site business is consolidating. Expedia bought Travelocity late last month.
“Certainly, there is one less independent choice, and anytime that happens, let’s face it, that’s not likely to push prices down for consumers,” says Seth Kaplan, managing partner of Airline Weekly.
Kaplan says it might be a bit harder to find good deals.
But not much, because Expedia still has lots of competition, from airline websites to more innovative sites like Hipmunk and HotelTonight.
Kaplan says Expedia isn’t buying up its rivals to hike airfares. It’s trying to gain leverage with airlines, which don’t like allocating tickets to third party sites like Expedia. They’d rather sell their tickets themselves.
“Expedia, if it’s bigger, can go to airlines and say, ‘Look, we control that many more millions of customers, and so you have to care what we think,'” he says.
Kaplan says Expedia wants lots of plane tickets to sell, because that’s what consumer buy first. Then we move on to rental cars and vacation packages, which are marked up more. That’s where Expedia makes its money.