The coming travel-website consolidation
01/30/2011|9:11:42 AM|The Economist

Rivals can quickly become allies if it makes business sense. Last year AXA Private Equity and Permira competed fiercely in takeover battles of two European travel websites. AXA won the upper hand in the bidding war for Go Voyages, a French travel website, while Permira snapped up eDreams, a Barcelona-based travel website that AXA also coveted. Now the two private-equity firms have joined forces in a takeover bid for Opodo, Europe’s biggest travel website.

With their recently formed alliance AXA and Permira are hoping to merge Opodo with Go Voyages and eDreams to create a proper European rival to Orbitz and Expedia, two American firms which are the market leaders. The official deadline for the bids in the auction of Opodo, run by JPMorgan, an investment bank, was January 25th. Apart from the private-equity duo, Carlyle, an American private-equity firm that owns Orizonia, a Spanish tour operator, and Expedia are likely to have submitted bids. In a few days Amadeus, the Spanish travel-technology firm that owns Opodo, is expected to reveal to whom it will sell the website, which was founded by a consortium of European airlines and first launched in 2001 in Germany.

Is consolidation good news for travellers? Generally a higher number of competitors means more choice for consumers, but in the fragmented online-travel business some consolidation is good news for buyers. The market leaders in France (Go Voyages) and Germany (Priceline) capture only a bit more than one-tenth of the online-travel market in their respective countries. Bigger companies have more negotiating power when they haggle over prices with airlines, hotels and insurance companies. “I don’t see a threat to consumers in a little more concentration,” says Christoph Klenner at the European Technology and Travel Services Association in Brussels.

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