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Why Did Expedia Decide To Shut Down Its Italy-Based Hotel Booking Website, Venere?

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Expedia acquired Venere with the intention of providing competition to Priceline's Booking.com, in Europe. However, Venere's small scale was no match for a behemoth like Booking.com and hence, after almost 9 years of having acquiring it, Expedia has decided to consolidate Venere's property on its Hotels.com website and let go of the weak brand.

Traffic from Venere's site is currently being redirected to Expedia's Hotels.com and the former had stopped taking bookings since December 2016, though its B2B website for travel agents is still in operation in Italy. Expedia bought the Italy-based booking site, Venere, in 2008 when the brand had a significant presence in Europe, the Middle East, and Africa.

Venere underwent a financial restructuring in 2001 and in 2007, 60% of its stake was sold of to leading private equity company, Advent International. Expedia later bought the entire shareholding and added the brand under its umbrella, thereby expanding its own portfolio by 10,000 new properties.

Venere followed the same business model as Booking.com, namely, the agency-based model. In the agency model , the online travel agency pays a pre-decided commission to hotels after a customer has stayed in the hotel and the customer can pay the hotel upon the completion of their stay.

Though Booking.com could reap benefits from the agency model, Venere lagged behind. The reason behind its failure might be the lack of a huge scale like Booking.com . To provide a context, Booking.com is currently the most popular accommodation booking platform in the world with over a million accommodations on its platform across 93,000 destinations. Venere, a local hotel booking website, might not have been as successful in reaping the benefits of the agency model as Booking.com.

It is also more practical for Expedia to engage in a headlong competition with Booking.com rather than employing one of its local players to do the same and hence consolidating Venere's properties into one of its flagship brands does make business sense. As a matter of fact, these days, several of Expedia's brands offer the convenience of agency models and removing Booking.com's competitive advantage might be one of the reasons for this.

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    • What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
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    • How Do We Expect Expedia's Hotels Division To Trend?
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    • Expedia's Evolved Relationship With Marriott International And Its Significance
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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Expedia

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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