Expedia is purchasing Newtrade Technologies, a Montreal-based software development company. Newtrade is developing an XML-based system that will allow hotels to send information about their room availability and pricing to various distribution networks via the Internet. Expedia and Newtrade plan to introduce the new technology early next year, the companies said.
"We felt there was a need for a solution to improve connectivity between hotels and their distribution partners, including Expedia. We felt Newtrade was the leader in developing this technology," said Marj Charlier, director of investor relations for Bellevue, Wash.-based Expedia.
Travel has been one of the biggest and fastest growing areas of e-commerce. On the Internet, hotel bookings have long trailed behind airline ticket sales, but that may be changing. A recent research report from Bear Stearns, for instance,that use of Web sites to book hotel rooms is poised to surge in the next few years.
Part of the problem hotels have faced is that unlike airfares, which are largely distributed online, lodging information has generally been distributed via fax to companies such as Expedia or to global distribution systems, said Jared Blank, an online travel analyst for Jupiter Research. It's been done that way for a long time, and the distribution companies have had little incentive to change, he said.
Newtrade's system may not be an immediate incentive for distributors to change their ways, but it could help Expedia itself get access to a wider selection of rooms and rates, Blank said.
"This will improve the relations they have with their hotel partners," he said.
But Newtrade's technology will work with other companies besides just Expedia, Charlier said. Because it is based on XML (Extensible Markup Language), Newtrade's software will be able to connect the various systems used by hotels to manage their room inventory with the systems used by the various distribution networks, she said.
Despite its acquisition of Newtrade, Expedia does not plan to use Newtrade's technology exclusively, Charlier said. Although Expedia has not figured out the business model, it doesn't plan to generate significant revenue from the move, she said.
"We acquired this as a tool to improve hotel distribution. We did not acquire it as a revenue-generating business," Charlier said. "The whole concept is that this will make our connection with hotels more efficient and less labor-intensive, both on our side and on the hotels' side."
Charlier declined to say how much Expedia agreed to pay for Newtrade, calling the all-cash deal "immaterial." Expedia expects the acquisition to close within the next month, she said.
Newtrade has about 65 employees, Charlier said. Expedia does not plan to have any layoffs at Newtrade as a result of the acquisition, she said.
Newtrade representatives were not immediately available for comment.