Expedia Takes Decolar.com Stake as It Deepens Latin America Ties

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Expedia Takes Decolar.com Stake as It Deepens Latin America Ties
Expedia Inc said on Tuesday it will take a minority stake in Latin American online travel company Decolar.com Inc, expanding its exposure in the region.

Expedia has invested $270 million (roughly Rs. 1,695 crores) for a stake of under 20 percent of Decolar and has broadened the hotel listings the companies have shared since 2002, Expedia's Chief Financial Officer Mark Okerstrom told investors at a Piper Jaffray & Co conference.

The deal marks the latest expansion of Expedia, the world's second-largest online travel company by bookings after the Priceline Group Inc.

Driving industry consolidation, Expedia in January purchased Travelocity for $280 million and in February announced plans to acquire Orbitz Worldwide Inc for more than $1.3 billion (roughly Rs. 8,165 crores).

"Our strategy is very clearly to own and empower the best travel brands that exist in the world," Okerstrom said. Expedia is excited "to develop (its) relationship over time" with Decolar, he added.

Shares of Expedia were down about 0.9 percent in afternoon trading.

S&P Capital IQ analyst Tuna Amobi said the deal appears structured in such a way that Expedia could potentially increase its investment in Decolar to a controlling stake.

"It's a playbook that we've seen before," Amobi said in an email.

Expedia announced a marketing agreement with Travelocity in 2013 prior to its acquisition of that travel agency.

While Expedia's Chinese brand eLong is facing heated competition, Okerstrom said its new investment in Latin America was very different.

Decolar "is really the number one player. They have been around for a long time and have built a very solid position in Brazil and in Argentina," he said during the conference. "It's very different from China. You certainly don't have the big Internet giants in playing with their pawns."

Amobi said an emerging middle class in Latin America presents an opportunity for the online travel industry.

Expedia hopes to grow its business abroad to the point that the U.S. market drops to between 30 percent and 40 percent of Expedia's business, down from about 50 percent currently, Okerstrom said.

© Thomson Reuters 2015

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