Booking Holding's acquisition of eTraveli serves as a litmus test for how far regulatory bodies can go to curb market consolidation.
Skift Global Forum was held in New York City on September 26-28, 2023. Read coverage of the event at the link below.
Glenn Fogel, Booking Holdings CEO, confirmed Wednesday that Booking.com has extended its contract with Swedish flight-tech company eTraveli Group eTraveli and would continue to build its fledgling flight business while appealing the European Commission’s objection to the $1.7 billion acquisition.
However, he said the scaled-down strategy would mean going slower, and “consumers would end up paying.”
Fogel raised concerns about the blocking of the deal in a discussion with Skift Founding Editor Dennis Schaal at the Skift Global Forum in New York. “I absolutely believe they’re wrong on the facts, wrong on the law, and it’s the wrong policy,” he said.
In the commission’s view, the eTraveli deal would make Booking.com even stronger in hotel sales because an increasing number of flyers would be offered hotel deals when they buy airline tickets. The commission claims the company has more than 60% of the online hotel OTA market share in Europe, with a survey of 15,000 hotels indicating that the hotels were fearful the deal would boost Booking’s ability to raise prices.
Fogel questioned how owning eTraveli would change its ability to raise prices. “We’re currently doing business with eTraveli. We’ll be doing the same business after we own the shares of eTraveli. How does that impact anything? Again, the logic makes no sense at all.”
“I’m against raising prices. I would not trust polls or surveys as agreeing to come out and make very serious decisions for the good of the entire society,” said Fogel.
Considering the impact of a failed appeal and what it meant for future mergers and acquisitions, Fogel said he believed the eTraveli deal had broader implications, claiming “regulators are trying to make a statement and coming up with new laws and new regulations without actually having to have new laws.”
“So we’re going to continue to build out our flight business, which has been doing very well. This is an unfortunate transaction. It will not allow us as quickly and as easily to improve the flight product that we have in this brand, particularly for people who have been pleading for a better flight experience,” said Fogel, “We want to try and promote new products and new services that benefit society. Big is not necessarily bad. If you misuse your powers, it is bad.”
Commission Fees for Partners
When pressed for his viewpoint on commissions charged to Booking.com partners, Fogel believed it all came down to choice and that Booking.com was not in a “dominant position.”
“If we charge too much, nobody buys our service. It’s that simple,” said Fogel, “If I went to a hotel and said we’d like to have 60%, 70% commission. You know what they’d say? Go away. They’d look at the market and say I can use anybody. If you run get to choose who you want to use and when you want to use them.”
“It is not a surprising observation that when it is high season, third-party distributors get fewer rooms than they do when it’s low season. If we’re not giving you value, don’t use our service… If you don’t like the price, don’t use it,” said Fogel.
New York STR Regulation ‘Too Draconian’
Commenting on New York City’s new regulation for short term rentals that sees hosts needing to be licensed and present during a stay of less than 30 days, Fogel said it was a complex situation with many stakeholders but felt it was “too draconian.”
“The way New York City has done it is one way to do it. Maybe there are other ways. Maybe there’s better zoning that could work it out better for everybody. But every municipality that has a large influx of tourists, we have to work these issues out,” said Fogel. “There are competing interests here. And sometimes you say, well, how about just the price? Why don’t we just put in a really big tourist tax on it? But then only people who have more money do that visit. And maybe that’s not fair, either. So I’m glad I’m not a politician.”
“We have a responsibility to participate and try to make sure that this is what is the optimal solution for all the stakeholders,” said Fogel.
Skift Global Forum 2023 Coverage
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