Expedia buys a majority share in Trivago resulting in further consolidation in the hotel online search market
TTMS
On 21st December 2012 Expedia Inc announced that they will be acquiring a majority 61.6% stake in Trivago, a German search engine that focuses on hotel price comparison. Trivago, which only started 7 years ago, features search results from more than 600,000 hotels from over 140 booking sites in more than 30 countries. According to Expedia, it is visited by over 20 million people each month.
The deal includes $632 million in cash and common stock. Expedia president and CEO Dara Khosrowshahi says:
"The Trivago team built one of the largest, fastest growing and most well-known travel sites in Europe conducting more than 100 million hotel searches annually through a culture focused on developing great products, building a strong brand and promoting partners' businesses.
"These attributes closely align with our Expedia, Inc. strategy and values and we are thrilled to have them join our portfolio."
Rolf Schromgens, Trivago co-founder and managing director, adds:
"Our passion and focus will remain on independently evolving our comprehensive and individualized hotel search. We will stay committed to our mission: To empower consumers to find their ideal hotel at the lowest possible rate."
The deal is set to close in the first half of 2013, subject to relevant approval from regulatory authorities. The transaction includes provisions for Expedia to acquire remaining trivago shares at fair market value shortly after the third and fifth year anniversaries of the closing date.
This move comes less than two months after Priceline spent $1.8 billion on meta search engine Kayak. Trivago has a better footprint in Europe than Kayak but Priceline also own booking.com who have a significant European presence. Expedia also owns hotwire and hotels.com.
Both moves by Priceline and Expedia can be seen as defensive strategies against the growing power of Google who also continue to grow their search capabilities both organically and through acquisitions. The three are now firmly emerging as the giants in travel search and it will be interesting to see what their next moves are in the faster growing travel sectors of Asia.
For hotel companies this is scary as their distribution is firmly in the hands of sites that bring complete price transparency with a few clicks which ultimately will only result in localised fare wars to ensure front screen presence. Both Priceline and Expedia are stating that their aquisitions will remain indepedent of each other but the actual results of any synergistic projects remain to be seen.
