Competition in the online travel and accommodation sector is set to hot up following Webjet’s announcement that it will sell hotel room bookings through online auction site eBay.
The companies will sell hotel room bookings through a joint venture arrangement. Details are yet to be finalised, but it is likely to involve the launch of a branded sub-site, similar to the new eBay Motors site, in late July or early August.
The deal will give eBay users direct access to Webjet’s hotel room inventory, drawn from a network of 50,000 hotels around the world, while Webjet gets a direct marketing and distribution channel to eBay’s customer base, claimed to be five million strong in Australia.
Although the commercial arrangements behind the deal are confidential, Webjet says it will incur “only marginal incremental operating costs” from the venture and profits will be shared between the two companies.
Webjet managing director David Clarke says the deal presents a “phenomenal opportunity” for the company to increase its share of the online accomodation market.
“Unlike many other forms of distribution, eBay has a unique and very special community of members of enormous size and marketing strength in the Australia region,” Clarke says. “It is the single largest step Webjet could make in terms of extending its market footprint into the sale of hotels.”
The move will further ratchet up already intense competition in the online travel and accommodation industry as players battle to capture share of a rapidly growing market.
The eBay deal will help Webjet to bolster its position after losing out to competitor Wotif.com in a protracted battle to purchase flight booking site travel.com.au earlier this year.
Wotif.com is currently the dominant player in the online accomodation segment of the market, but Clarke says that could all change following the Webjet/eBay deal.
“The accomodation sector is extremely fragmented compared to the airline and online travel agency markets, and if you then look at the size of the eBay community of users there is clearly room there to make a structural change to online accomodation and massively increase sales,” Clarke says.
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