BELLEVUE, Wash. -- With its acquisitions of Travelscape.com and VacationSpot.com
through stock deals valued at a combined $179 million, Expedia.com will expand
and diversify its lodging offerings, according to Erik Blachford,
vice president of marketing.
Travelscape.com, a hotel consolidator, offers discounted
contract rates at more than 1,200 hotels in 240 cities worldwide
and operates at www.travelscape.com and www.LVRS.com (Las Vegas
Reservations Systems).
VacationSpot.com, a reservations network for vacation homes,
rental condos, inns and bed and breakfasts, operates on the Web at
www.vacationspot.com and www.rent-a-holiday.com, with a selection of
about 25,000 properties around the world.
VacationSpot.com also offers technologies that enable property
managers and owners to make their inventory accessible for on-line
booking.
The acquisitions are expected to close in March, subject to such
steps as shareholder approval and government antitrust review.
Although the details are still being worked out, Blachford said
Expedia's plan is to merge VacationSpot.com's inventory into its
own site, Expedia.com, so that within a few years VacationSpot.com
would not exist as a separate brand.
The plan also calls for the integration of Travelscape.com's
discount hotel inventory into the Expedia site but to continue to
offer it through the other sites as a discount service of
Expedia.
"Travelscape is more oriented to the discount traveler. Expedia
is a mainstream site. We don't position it as a discount site,"
Blachford said.
The Travelscape.com and VacationSpot.com acquisitions are a
natural progression by Expedia into offering more complex types of
products and reducing dependence on air, Blachford said. He
declined to specify what percentage of Expedia sales are in the
hotel category, but the PhoCusWright Yearbook 1999, a comprehensive
on-line market study by PhoCusWright in Sherman, Conn., estimated
that in 1998, it was 10% to 15%.
Expedia's hotel inventory now comes mainly from Worldspan and
Pegasus Systems, which has an Internet hotel reservations network
and booking system.
Expedia also has a Hotel Price Matcher service that enables Web
users to specify what they want to pay and hope a property accepts
the offer.
With the Travelscape.com and VacationSpot.com acquisitions, "We
are building up a marketplace so customers can access any type of
lodging. And it gives us the technical infrastructure to 'wire up'
the rest of the [hotel] world," Blachford said.
Hotels will be able to publish their inventory in Expedia
"however they want," although Expedia is not planning to establish
direct connections to hotel reservations systems, he added.
Expedia's recent initial public offering and partial spin-off
from Microsoft gave it the freedom and wherewithal to enter into
deals like the ones with Travelscape.com and VacationSpot.com.
"It gave us the flexibility to make acquisitions that wouldn't
necessarily fit in the Microsoft core portfolio," Blachford
explained.
Expedia will issue about $82 million worth of shares and options
to acquire VacationSpot.com.
For TravelScape.com, it will issue about $95 million worth of
shares, options and warrants and assume about $8 million in
long-term debt.