The European Commission's logic appears to be that any strengthening of Booking.com — even in its flights business — would bolster its grip on the hotel business. Deal or no deal, Booking is committed to expanding in flights.
Dennis' Online Travel Briefing
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There is no doubt that Booking.com is the dominant hotel room seller among online travel agencies in Europe. It is also apparent that the European Commission is acutely focused on limiting Booking’s grip.
But in delaying or potentially scuttling parent company Booking Holdings’ still-pending November 2021 deal to acquire Swedish flights seller Etraveli Group for $1.8 billion, the Commission’s logic appears to be skewed.
With a final decision due by August 30, the Commission issued a statement of objections to the proposed acquisition last month, arguing that the deal could strengthen Amsterdam-based Booking’s position in hotels.
Citing one of its concerns, the Commission said the deal could “strengthen Booking’s dominant position in the hotel OTA [Online Travel Agency] market further, increasing its bargaining position towards hotels and diverting demand from cheaper alternative sales channels. Competition is already limited in the hotel OTA market and Booking appears to be unconstrained by competing OTAs, hotels and end customers.”
The Booking.com-Etraveli Acquisition Is All About Flights, Not Hotels
Let’s remember that although what is now called Booking Holdings originated in 1996 with Priceline’s Name Your Own Price feature for buying airline tickets, Booking.com long focused solely on accommodations, and only launched its own flights business in 2019.
The basis for the Commission’s concerns is the idea that strengthening Booking.com’s position in flights, which is why the company is trying to acquire Etraveli, would also bolster its ability to sell accommodations, attractions and car rentals.
But this line of reasoning downplays several facts, including:
- Etraveli Group is not a major player in hotels.
- It already sources many of its hotels through a partnership with Booking.com.
- The two companies already have a flights partnership.
- Travelers don’t automatically book a flight from a reseller like Booking.com, and then navigate over to the hotel section and book a stay there, as well.
In fact, it is well-known that people booking a trip, whether it is a flight or a hotel or both, tend to search dozens of travel sites before finalizing their bookings. They might do research on Google, search hotels on Trivago, or go directly to a hotel website to earn or burn some points for the booking.
So would Booking gain a substantial advantage in hotels when someone books a flight on its website or apps? Marginally, at best.
The Commission forecasts that Booking.com would increase its hotel market share in the low single-digits from the acquisition, if it goes through.
Booking.com Will Enhance Its Flights Business Even If the Merger Gets Blocked
But does that number take into account that Booking.com already has a flights business — and that it will continue to build that business regardless of the outcome of the acquisition?
Is virtually any substantial acquisition that would strengthen Booking.com, regardless of how far afield from the hotel sector it might be, now off the table?
That appears to be the logic of the European Commission’s objections.
This could end up in the courts.
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