Expedia buys rival Travelocity for $280 million

Online travel agency Expedia Inc. is buying competitor Travelocity in a $280-million deal

Online travel agency Expedia Inc. has purchased competitor Travelocity from Sabre Corp. in a $280-million cash deal, the companies said Friday.

Users of the service should not notice any change as a result of the purchase because Expedia has powered Travelocity's websites under a 2013 marketing agreement.

The two offer similar search results because Travelocity has access to Expedia's online booking platform and databases. Travelocity, meanwhile, is seen as having a more robust brand presence.  

"Travelocity is one of the most recognized travel brands in North America, offering thousands of travel destinations to more than 20 million travelers per month," said Dara Khosrowshahi, Expedia's chief executive. "Evolving this relationship strengthens the Expedia Inc. family's ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world." 

The move expands the company's collection of travel websites. Expedia, the world's fifth-largest corporate travel management company, already owns Expedia.com, Hotels.com and Hotwire.com. Expedia has a successful track record of bringing in smaller websites to improve its overall brand, said Edward Woo, an analyst with Ascendiant Capital Markets of Irvine.

The move should position Expedia to compete more directly with Priceline and other large online travel agencies, he said. By acquiring a well-known competitor Expedia can boost its customer share, bring in new hotel inventories and leverage its size for better deals.

Travelocity topped a J.D. Power customer satisfaction survey in 2014, followed by Expedia. 

The sale comes shortly after reports that competitor Orbitz Worldwide Inc. was working with a financial advisor to find potential buyers of the company. 

"As long as the industry remains healthy these mergers are likely to continue," Woo said.

Expedia rose $1.73, or 2.02%, to $87.44 in trading on Wall Street Friday.

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Copyright © 2016, Los Angeles Times


3:07 p.m: This story has been updated with analyst comment and closing stock prices.

This story was first published at 8:33 a.m.