In most industries, customers are best served when competitors fight fiercely to please them, not link arms as siblings. Gobbling up the competition may help a parent company's bottom line, but it weakens the marketplace for consumers.
Let's say you're shopping for a vacation. You visit three different online travel agencies (OTAs): Expedia, Orbitz, Travelocity. You compare prices among four budget hotels: Days Inn, Howard Johnson, Super 8, Travelodge. You compare rental rates at Hertz, Dollar, Thrifty. You even consider a cruise on Carnival, Holland America, Princess.
But since you haven't clicked the "about" pages on these sites, you're unaware all the brands within these four sectors are sister companies. In fact, the wide world of travel is much smaller than many consumers realize, with the latest consolidation occurring in online travel.
Before the proverbial ink had dried on Expedia's acquisition of Travelocity last month, Expedia recently announced its acquisition of Orbitz for $1.6 billion. In fact, Expedia has been gobbling up other OTAs for 15 years now, leaving about 80% of the U.S. landscape dominated by just two major players: Expedia and The Priceline Group. Unless, of course, Expedia buys Priceline next month (or vice versa).
Travel industry executives, analysts and regulators debate whether such consolidation inspires healthy competition. But the real question is, does all this consolidation help or hurt consumers?
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