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The New York Times reports that the move by online travel booking company Expedia last week to acquire Orbitz, one of its brethren in the online travel space, for $1.3 billion, suggests that the company believes that it needs to gain size and clout if it is going to be able to compete with the much larger Priceline ... especially since big companies such as Google, Amazon, and smaller startups such as Hipmunk, either are making or planning inroads in the category.

According to the Times, "Since the summer, Expedia has announced deals for Travelocity and of Australia. And in a conference call with analysts, the company hinted that its deal-making streak may continue as it seeks to bolster its barriers against competitors."

While Priceline may be bigger, the Times writes, it "has made only a few acquisitions that give it entry into new areas, like restaurant reservations with the purchase of OpenTable last year ... Expedia has shown more willingness to buy up brands to gain scale. Acquiring Orbitz will bring not only that company’s namesake brand but also CheapTickets and HotelClub, as well as the corporate travel site Orbitz for Business. Those brands will be joining a stable that already includes well-known names like, Hotwire and Trivago."
KC's View:
The basic lesson here is that even disruptive companies, if they're smart, see the possibility that somebody else is going to come in and disrupt their business model. In this case, Expedia is making the gamble that by getting bigger and with greater clout, it can stave off the challengers. Only time will tell whether this is the right strategy .... or whether some smaller company might come in and turn that size into a handicap.