Booking Holdings Inc. (NASDAQ:BKNG) has lost its legal fight against the European Union’s decision to block its €1.63 billion ($1.90 billion) purchase of ETraveli. The EU’s General Court agreed with regulators that the deal could have made Booking even more powerful in hotel bookings.
The concern was fairly straightforward: ETraveli would have given Booking a much stronger position in flights, allowing it to bring more travelers into its platform and then potentially sell them hotels, rental cars and other travel services. Regulators believed that could make life even harder for Booking’s competitors. Booking said it was disappointed with the decision and is considering an appeal to the European Court of Justice.
Room for Growth Without the Deal
The good news for Booking Holdings Inc. is that the company doesn’t suddenly have a weaker business because this deal fell through. Booking.com, Priceline, Agoda and Rentalcars are still major names in online travel, and the company already has a strong position across hotels, flights, rental cars and other services.
Booking can also choose to put the money it would have spent on ETraveli to work elsewhere. Instead of paying $1.9 billion for another company, it could invest more in its own technology, loyalty programs, marketing and flight business. If those investments work, Booking could gradually build the same kind of connected travel platform it wanted from the ETraveli deal, just without having to buy the company.
Booking Holdings Inc. can also appeal the ruling. An appeal may not change the outcome, but the company has not completely closed the door on the deal. Either way, the decision gives Booking a clearer sense of where European regulators are drawing the line, which could help it avoid pursuing deals likely to face the same problem in the future.
Why Booking May Need to Rethink Growth
The obvious downside is that Booking Holdings Inc. has lost a chance to make a much bigger push into flights. ETraveli would have given the company a stronger foothold in flight bookings and, more importantly, another way to bring customers onto its platform. That matters because Booking’s real opportunity isn’t just selling someone a hotel room. It’s getting travelers to book their entire trip through Booking. A customer who starts with a flight could also end up booking a hotel, rental car, and other services. ETraveli would have helped Booking do exactly that.
The bigger problem is what this ruling could mean for Booking’s future acquisitions. If regulators are willing to block a deal because it could make an already-dominant company even stronger, Booking may have fewer options when it comes to buying its way into new areas of travel. That could leave the company with a slower route to growth. Instead of buying established businesses, Booking may have to build more of these capabilities itself. That means spending more time and money on technology, marketing, and attracting customers, while competitors continue trying to take market share.
Conclusion
The failed ETraveli deal is a setback for Booking Holdings Inc., but not a disaster. The company still has a very strong core business, and losing the acquisition doesn’t take away its existing position in online travel. What Booking has lost is an opportunity to accelerate its push into flights and create a more complete travel platform. The company will now have to prove that it can build those capabilities itself.
In the short term, the ruling probably doesn’t change the Booking investment story much. Over the longer term, though, investors will be watching to see whether Booking can keep expanding without relying on big acquisitions.
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This article is originally published at Insider Monkey.
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