Hospo Assoc has Wotif takeover concerns

TOM PULLAR-STRECKER
Last updated 14:42 12/08/2014

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The Hospitality Association expects to make a submission to regulators on Expedia's proposed A$703 million (NZ$771.5m) takeover of online accommodation booking service Wotif.

Chief executive Bruce Robertson said he did not want to pre-empt the association's stance, but most concerns were likely to be "around fees and the reduction of competition".

Expedia announced its planned takeover of Wotif last month, and the Commerce Commission expects to decide by October 10 whether to allow the two online intermediaries to pool their New Zealand operations.

Both companies operate websites that let people book accommodation and flights online, taking a cut from hotels and airlines.

Expedia is believed to be the largest such online intermediary globally, while Wotif is understood to be the bigger player in New Zealand and Australia.

Wotif has been struggling to grow in the face of stronger competition from Expedia and another United States rival, Priceline, owner of booking.com.

Wotif today reported a 15 per cent drop in its annual profit to A$43m on near-flat revenues of A$150m. That was despite increasing its commission on hotel bookings from 11 per cent to 12 per cent in January.

Wellington Museum Art Hotel owner Chris Parkin said last month that Expedia's commissions ranged between 15 and 25 per cent and he feared a takeover would result in customers having to pay more for hotel rooms.

He encouraged people to book rooms with hotels direct.

Robertson said the Hospitality Association would encourage its members to make direct submissions to the Commerce Commission on the proposed takeover.

"We will probably do a submission, but we felt it was sufficiently important that our members might have their own view," he said.

It was "a fair question" whether New Zealand's competition watchdog could have much influence, given Expedia and Wotif could dispense with their local offices and serve the New Zealand market from overseas if they were denied permission to pool their local assets.

"That is one of the challenges we have got with these global services which actually don't need to be based in New Zealand," Robertson said.

Although the Commerce Commission has no jurisdiction to determine whether Expedia should be able to take over Wotif's assets outside New Zealand, the Australian Competition and Consumer Commission is examining whether to allow the merger in Australia, where most of Wotif's staff are based.

The ACCC expects to reach its decision by September 4.

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