Skift Take

Booking Holdings' hoped-for acquisition of Etraveli Group is not a make or break deal for Booking, but its failure to close would be a setback for its connected trip strategy.

Booking Holdings views its still-pending acquisition of Sweden’s Etraveli Group as “critical” to its expansion in flights and the company’s connected trip strategy, but European Commission regulators decided to take a harder look at the $1.8 billion deal.

Reuters reported that the European Commission began a preliminary review of the acquisition last month, but chose to launch a wider “in-depth investigation” beginning next week.

Booking Holdings announced its intent to acquire Etraveli Group, which specializes in flight technology and also operates brands including Supersaver, Flight Network, Gotogate, Mytrip.com and metasearch engine Flygresor.se, a year ago. The deal has already passed regulatory muster in the UK.

“Given the strategic importance of flights to our connected trip offering, we believe it is critical to bring Etraveli’s flight expertise and technology in-house while also unlocking some of the limitations that exist in our current commercial agreement,” Booking Holdings CEO Glenn Fogel said earlier this year in discussing the Etraveli Group deal.

Now it appears that the potential acquisition faces challenges, at the least, although perhaps Booking, which has already been under scrutiny by European regulators over its strengths in hotels, could make concessions to smooth things over.

Booking Holdings’ U.S.-based Priceline unit offered flights from day one of its founding in 1997, but the parent company’s flagship Booking.com, which traces its origins to 1996, eschewed flights in favor of its core hotel offering until around four years ago. Booking.com introduced a flights tab at that time and passed off customers to sister brand Kayak for search results, but in 2019 it partnered with Etraveli to get Booking.com’s flights business off the ground in earnest.

As of May 2022, Booking.com was offering flights in around 40 countries.

Fogel said earlier this year flights is an essential part of his connected trip strategy to make travel more seamless. Not only does it bring travelers into the trip-planning process sooner than if they were starting with hotels or short-term rentals, but it is also attracting an influx of new customers, many of whom are booking flights on Booking.com, as well as accommodations.

The company said a few months ago that around 20 percent of travelers who book a flight on Booking.com are new customers.

To be sure, the Etraveli Group acquisition is not a make or break one for Booking Holdings, but if the European Commission blocks the deal outright, it would certainly be a setback for Fogel’s overall strategy. In such a scenario, Booking might have to stick with the limitations of partnerships to try to further develop its flights technology solo.

“They do a lot of things that could we recreate on our own?,” Fogel asked rhetorically referring to Etraveli Group a few months after the deal announcement. “Probably, but it would take a long time, would require us to use resources that we want to use elsewhere. So by acquiring Etraveli, we’re going to bring that technology in-house and be able to do things that we couldn’t do when we were just a commercial partner.”

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Tags: airlines, booking holdings, booking.com, connected trip, etraveli, european commission, european union, flights, glenn fogel, kayak, m&a, mergers and acquisitions, partnerships, priceline, regulations

Photo credit: European Commission regulators are taking an in-depth look at Booking's proposed acquisition of Etraveli Group. Pictured is a Eurowings aircraft. Lufthansa Group

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