ICT and e-business in the tourism industry ICT adoption ... - empirica

Tourism
4.1.4 Growth, mergers and acquisitions and strategic alliances in the
intermediaries’ markets
Overall, three broad groups of online intermediaries have emerged in the last few years:
global players, regional players and local players.
Global players (e.g. Travelocity, Expedia or Priceline) are mostly situated in North
America, Europe and Asia.
Regional players are mostly European, and to a lesser extent, Asian-Pacific
companies. These companies have mostly grown through acquisitions of and joint
ventures with other players.
Local players are mostly intermediaries that have been unable or unwilling to
move beyond their local markets. As a result, local players have often been the
target for take-overs of players which were trying to build a local presence through
acquisition (cf. Daniele / Frew 2004).
The substantial growth has been achieved essentially through a mix of market growth,
mergers and acquisitions or through strategic alliances. However, while US based
intermediaries have pursued growth strategies largely based on growth or joint ventures,
their European counterparts have often tried to grow via acquiring other companies.
According to Daniele and Frew this could be due to the nature of the European market:
The European market, unlike the US one, is very fragmented and culturally diverse.
Therefore acquisitions, they argue, have allowed these companies to acquire a local and
cultural market presence. The current wave of acquisitions is likely to continue as many
global and regional players are trying to increase their market position in the global
market. In this development, US based companies, Daniele and Frew conclude, however,
are best placed to expand their position due to their substantially higher capital resources
(cf. Daniele / Frew 2004).
Besides acquisitions and mergers, strategic alliances also play a key role in the
development and growth of intermediaries (cf. Daniele / Frew 2004). Expedia Inc., the
world's leading online travel company, for example, has established partnerships with,
among many others, the hotel chains Hyatt Hotels & Resorts, Kimpton Hotels or Hilton
International, with BedandBreakfast.com – the leading online bed and breakfast internet
directory and reservation network – or with MSN, Microsoft Corp.'s network of internet
services (cf. www.expedia.com).
However, Daniele and Frew argue that the ongoing consolidation in the market could, in
the long run, lead to the formation of oligopolies which could, as a result, reduce the level
competition and, subsequently, result in higher prices and less choice for consumers
(Daniele / Frew 2004).
The European Commission is aware of this development and has been closely
monitoring the ongoing consolidation in the travel agency market - and in particular the
online travel agency market. In 2001, for example, the Commission had launched an indepth
investigation on the plan of TUI and Neckermann to market leisure travel services
jointly online via T-Online.
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