Expedia to buy rival Travelocity for $376 million

Expedia to buy rival Travelocity for $376 million

New York - Expedia has agreed to buy long-time rival Travelocity from Sabre Corp for US$280 million (S$376 million), joining two of the most prominent travel sites as they face pressure from industry newcomers, The Wall Street Journal reported.

Expedia and Travelocity have been working together since 2013, when they entered into a longterm agreement under which Expedia handles most of Travelocity's operations, from running searches to answering customers' questions, while Travelocity drove additional Web traffic to Expedia.

"Travelocity is one of the most recognised travel brands in North America, offering thousands of travel destinations to more than 20 million travellers per month," said Expedia chief executive Dara Khosrowshahi.

"The strategic marketing agreement we've had in place has been a marriage of Travelocity's strong brand with our best-in-class booking platform, supply base and customer service."

The shares of Expedia rose 2 per cent to US$87.44 at the close in New York last Friday, while Sabre increased 1.1 per cent to US$20.71.

Expedia, launched in 1996 by a small division within Microsoft, went public in 1999 and has since grown into a travel behemoth with brands such as Hotels.com, Hotwire, eLong and Trivago.

Mr Ronald Josey, an analyst at JMP Securities, told Bloomberg that Expedia's move is a "very strategic acquisition that could be accretive from day one".

But the deal also underscores how crowded the online travel industry has become.

The legacy players - Expedia, Travelocity, Priceline.com and Orbitz Worldwide - have been joined in recent years by websites like Kayak and Hipmunk that also scan the online travel agencies in their searches for travel deals.

Travel websites have had to respond to the competitiveness by offering discounts and loyalty programmes. The online travel industry has been active with deals.

Priceline, the largest online travel company, last year acquired a minority stake in Ctrip.com and paid about US$2.5 billion to purchase restaurant- reservations website company OpenTable.

Orbitz Worldwide, the online travel agent that runs Orbitz.com and Cheaptickets.com, is also exploring a sale.

This article was first published on January 25, 2015.
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