

Expedia Buys Orbitz for $1.6B in Cash - frankacter
http://techcrunch.com/2015/02/12/expedia-buys-orbitz-for-1-6b-in-cash-to-square-up-to-priceline/

======
tiffanyh
3 weeks ago, Expedia acquired Travelocity for $280M.

[http://dealbook.nytimes.com/2015/01/23/expedia-buys-
traveloc...](http://dealbook.nytimes.com/2015/01/23/expedia-buys-travelocity-
for-280-million-in-cash/?_r=0)

This Orbitz deal ($1.6B) makes the Travelocity deal ($280M) look cheap.

~~~
breckenedge
I need to check my sources, but I believe the Travelocity deal excluded much
of Travelocity's technology, it was just a brand-name purchase.

Edit, sources:

> Sparks was brought in a couple of years ago to turn around the company,
> which needed a wholesale upgrading of its back-end systems in order to make
> a go of it, but apparently the transition fell short. [1]

[1] [http://skift.com/2013/08/22/travelocity-gives-in-sites-to-
be...](http://skift.com/2013/08/22/travelocity-gives-in-sites-to-be-powered-
by-expedia/)

~~~
joneholland
Expedia was already powering the Travelocity backend back in 2014 as part of a
strategic deal because travelocity had failed to modernize their stack. . The
latest acquisition simply bought the brand.

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untog
All these sites seem to use the exact same backend services, so it's difficult
to care. About the only site I use regularly is hotels.com because they have a
loyalty scheme (book 10 nights, get 1 free) - and even then I'm sure there's
some catch I'm not aware of that makes them the same as everyone else.

~~~
MichaelGG
The catch, in my anecdotal experience, is that third parties have terrible
integration with the hotels. In some cases, they fax a reservation using a
company credit card, to pay on your behalf. End result is some percent of the
time, this gets messed up and you end up dealing with an annoyed person on
check in that sometimes ends up having to get the agency on the line to sort
it out.

Same for flight bookings. I've never found the attraction of booking through
third parties; it only adds a failure point. Maybe small or specialized
agencies are the exception, like Amex's travel service (which, I think, used a
platform like Expedia's, but they had fantastic phone options and would always
go figure stuff out on my behalf.)

~~~
_delirium
I agree in many cases, but two cases in which I book through the third-party
sites:

1\. For hotels, where the hotel itself doesn't actually have an online-booking
system. Not very common in the U.S., but common among smaller hotels in
Europe. Often a third party (most often booking.com) is the only way to book
these hotels online.

2\. For flights, where Orbitz or Expedia are able to put together a multi-
airline itinerary that I can't get those airlines' own sites to return. The
last time I used Orbitz was for this reason: it was able to come up with a
round-trip ATL-CPH with Delta one way and KLM the other way, with a good price
and times that were convenient for me. The fare rules work because they're
partner airlines (so it ends up billed as a round-trip, not two one-ways), but
I couldn't manage to get either the KLM or Delta websites to offer me that
combination, despite quite a bit of fiddling.

------
geverett
Tis means that hotels in the Us and Europe now effectively have only two
partners to consider for distributing their inventory. This means less
competiton to drive commissions and prices down. Bad news for the consumer.
Good analysis on Skift with more details: [http://skift.com/2015/02/12/its-
expedia-against-everyone-els...](http://skift.com/2015/02/12/its-expedia-
against-everyone-else-after-orbitz-and-travelocity-deals/)

------
dingaling
The origins of Expedia

"And Bill said, ‘No let’s start it inside Microsoft. And if it wants to be
free we’ll consider it.’"

[http://www.wired.com/2013/06/rich-barton-empowers-people-
and...](http://www.wired.com/2013/06/rich-barton-empowers-people-and-picks-
fights-very-profitably/)

~~~
encoderer
Rich Barton went on to found Zillow. He's cut an impressive path.

------
jhulla
According to Forbes, hotels represent 97% of Priceline's revenue with 23%
margins. Car rentals and cruises represented 9% margins and airlines at 3%
margins.

Assuming Expedia and Orbitz have similar profiles, then this is really a
market share fight to capture the largest pool of hotel transactions.

[http://www.forbes.com/sites/greatspeculations/2013/01/10/bre...](http://www.forbes.com/sites/greatspeculations/2013/01/10/breaking-
down-pricelines-business-and-stock-drivers/)

~~~
jessriedel
Does anyone know why there's such a huge disparity in these different types?
I'd think the revenue would start getting driven down toward the value added,
and I can't imagine the value added by a website varies so much between plane
tickets, car rentals, and hotel booking.

~~~
brianpgordon
Airlines are already operating on such razor-thin margins that it's not
surprising that Priceline can't extract much profit from those deals.

------
acomjean
I interviewed at a travel company last year. It was interesting because they
didn't do any of the backend booking stuff (for flights), but instead seemed
to like to direct you to other sites to book and then take a referal cut if
you buy. This was a weird business where the person buying the travel was the
product (I didn't like it).

Expedia is one of the direct bookers. I use them. The UI is not pretty but
functional enough.

~~~
petercooper
I think Hipmunk (the site founded by some of the Reddit founders) works like
that. It's not unusual though. Here in the UK, things like insurance and
utilities are increasingly sold in this way (we call them "price comparison"
sites). I believe(?) Shazam also makes most of its money by referrals to
iTunes and Amazon.

~~~
dot
that is how kayak and tripadvisor make most of their money too. Ever notice
how photo galleries for hotels on tripadvisor open new windows? they're making
sure you have their cookie when you book it on hotels.com, expedia,
booking.com, etc later.

------
smackfu
Surprised there are no anti-trust concerns.

~~~
burger_moon
In this article from Reuters [0] their CFO stated that they only hold a single
digit market share in the travel industry.

"The possibility of antitrust issues was played down by Expedia's Chief
Financial Office Mark Okerstrom who said, "It is a $1.3 trillion industry and
is highly fragmented ... We are only a small player and our overall share is
in single digits.""

[0] [http://www.reuters.com/article/2015/02/12/us-orbitz-
worldwid...](http://www.reuters.com/article/2015/02/12/us-orbitz-worldwide-m-
a-expedia-idUSKBN0LG1OA20150212)

~~~
Someone1234
That's a ridiculous argument by their CEO.

That is like saying Microsoft Office only holds a single digit percentage of
revenue in the technology sector. It might technically be true, but it is
irrelevant. MS Office has a monopolist hold on the office software space.

Monopolies aren't defined by someone who controls an entire sector (a "sector"
is arbitrary anyway) it is when one specific company controls one commodity or
service (see Google Search, which both the EU and US have called a monopoly).

Expedia absolutely has a monopoly on travel price comparison sites now.
However it only becomes an antitrust complaint when they leverage that
position into other markets (e.g. like Windows with Internet Explorer, or
Google with Google+).

So while I don't think Expedia has broken any laws, yet. I will say that if
they started using their newfound position for leverage I'd hope the US and EU
governments stepped on them pretty fast.

~~~
paulhauggis
"it is when one specific company controls one commodity or service"

There are plenty of office alternatives, including open office.

Here is a list of 10: [http://www.digitaltrends.com/computing/best-microsoft-
office...](http://www.digitaltrends.com/computing/best-microsoft-office-
alternatives/)

Google also has competition: Bing, Yahoo, and Baidu to name a few.

"Expedia absolutely has a monopoly on travel price comparison sites now."

There are many other travel comparison sites. How can they possibly have a
monopoly?

------
bt3
It seems as though the whole travel industry is excited about the news:

EXPE - 90.45 +15.64% OWW - 11.65 +21.05% PCLN - 1092.83 +3.09% TRIP - 82.03
+21.94%

Worth noting as well that the deal was based upon 115M Orbitz shares @ 12/
each, which makes it a $1.38B. The $1.6B represents the enterprise value.

------
sk2code
I applied for a Job at Orbitz yesterday and today this news came. Orbitz
ratings are pretty solid on Glassdoor and that makes them one of the best
companies to work for in the Chicagoland area, hope it remains the same after
the merger.

~~~
bechampion
I've worked for orbitz for 7 years , good place to work , don't know what the
outcome of this acquisition will be tho.

~~~
dwd
This is probably a fair indication of what might happen

[http://www.smh.com.au/business/wotif-boss-and-other-staff-
ge...](http://www.smh.com.au/business/wotif-boss-and-other-staff-get-a-
permanent-vacation-following-expedia-takeover-20150125-12xrbu.html)

------
stevenj
In all cash deals like this, is there just a bank wire transfer that's made in
the purchase amount from one company's account to the other's once everything
has been approved and the deal has closed?

~~~
giarc
I can't answer your question directly, but I'm reminded of a story a friend
once told. He was a new lawyer at a large firm. He was helping with a large
deal and the bank couldn't get a hold of the lawyers listed above him. The
bank called him and said "Is this $12.5 million transfer approved?" Do which
he said yes, and 1 second later, 12 million dollars was moved from one account
to another. So perhaps, with some authorization calls, it is as simple as a
wire transfer.

~~~
chx
My brother once put in a 1M EUR transaction instead of 1M HUF he wanted and it
went through without a hitch... even though his account didn't have that sort
of money or even anything close to that. That was weird and disconcerting.

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jrochkind1
i've been using kayak instead for quite a while now. Expedia bought them yet?
Nope, looks like Priceline did. Well, it's still a good site last time I
checked.

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0505gonzalez
Really interesting strategy Expedia has, having these new brands benefit from
Expedia's tech stack.

------
niels_olson
Is Orbitz still running lisp code?

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greatquux
Anyone know if Orbitz is still built on lisp as pg famously documented so long
ago?

~~~
itazula
A lot of job listings here:
[https://twitter.com/OrbitzTalent?original_referer=https%3A%2...](https://twitter.com/OrbitzTalent?original_referer=https%3A%2F%2Fcareers.orbitz.com%2F&profile_id=70411733&tw_i=565903637235658752&tw_p=embeddedtimeline&tw_w=405387587155533824)

A quick scan of the software engineering positions did not, however, uncover
any Lisp-related jobs.

------
nnoitra
So they put their money in bags and give it to them?

------
aepearson
Wait until they buy Homeaway next..

~~~
stephengoodwin
Homeaway focuses on vacation rentals and is in a very different market than
Expedia and Orbitz.

It's not out of the realm of possibilities, but Expedia and Orbitz are much
closer competitors than either would be with Homeaway.

~~~
joneholland
Expedia syndicates HomeAway listings on their site now.

~~~
aepearson
At Homeaway's most recent national conference it seemed pretty clear that this
was the first step in acquisition.

