Wotif.com Holdings Limited (WTF)

By Jason Fittler,

Wotif.com Holdings Limited (WTF) is a provider of online accommodation, activity and flight booking services.

The company represents over 23,500 properties in more than 69 countries. It has headquarters in Australia and offices in New Zealand, the United Kingdom, Thailand, China, Indonesia, Hong Kong, Malaysia and Singapore, Argentina, Columbia, Czech Republic, Italy, Japan, the Philippines, Spain, South Africa and Vietnam.

The Australian Competition and Consumer Commission, (ACCC), has released a Statement of Issues about Expedia's proposed acquisition of Wotif.

Disappointingly, although not entirely unsurprising, is the ACCC's preliminary view that bricks-and-mortar travel agents are not part of the same accommodation booking market as online travel agents (OTA).

This means the ACCC has taken a narrow view with Wotif, Expedia and Priceline considered the three large players.

With Wotif charging the lowest commissions of the three, the ACCC is concerned that the takeover will lead to an increase in commission rates.

We believe the ACCC has also taken a stringent view of what constitutes barriers to entry. It has identified the high costs of advertising and the sunk costs of developing an online platform as potentially significant entry barriers.

However, a key issue, which may lead to a favourable outcome, is the dynamic nature of the industry and whether new business models will lead to disciplined competitive conduct should the acquisition proceed.

There seems to be a emerging threat to traditional OTAs in the form of metasearch engines, such as HotelsCombined and Kayak.com, and user-generated content such as TripAdvisor.

Although WTF rallied on the back of the takeover announcement the price has pulled back recently pending the ACCC decision.

For more information about Wotif.com Holdings Limited (WTF) please contact us on 07 4771 4577.