Weko examines takeover of Hotelplan by Dertour: The German travel group suddenly has the most travel agencies in Switzerland

When a customer enters a travel agency in Switzerland in the future, there's a good chance it's a branch of the Dertour Group. If the German travel group takes over the Migros subsidiary Hotelplan, as announced in February, it will operate around 150 travel agencies in the country.

For comparison: the next largest competitor, Tui, has around 50 branches.

For this reason, the Competition Commission (Weko) is taking a closer look at the matter, as it announced on Tuesday. There are "indications of a dominant market position." Therefore, the authority is initiating an in-depth review of the planned transaction.

Dertour is a subsidiary of the German retailer Rewe. The travel group combines brands such as Helvetic Tours, Kuoni, Kontiki, Cotravel, and Railtour under one roof. In addition to the brand of the same name, Hotelplan also owns Migros Ferien, Travelhouse, and Tourisme pour tous.

According to Weko, the merger would make Dertour the largest tour operator in Switzerland. This does not even take into account Dertour's 50 percent stake in the ITS Travel joint venture with Coop.

The authority is now examining whether sufficient alternatives to Dertour are available to Swiss holiday-loving customers and what impact the takeover would have on the market. This is expected to take place over the next four months.

Based on a report by the Competition Commission on a previous takeover in the travel industry, the combined market share of Dertour and Hotelplan can be estimated at between 40 and 50 percent, a range that observers consider plausible.

Travel providers always justify the increasing concentration in the industry by saying that people are increasingly booking their holidays online themselves and are using travel agencies less.

When the Competition Commission investigated Hotelplan's takeover of Travelhouse in 2006, these considerations were already taken into account in the assessment of the situation. However, they were not used to calculate market shares.

Over the past 20 years, the number of trips booked individually online has increased significantly. However, it is difficult to predict the extent to which travel agencies will continue to lose customers to online booking platforms in the future.

Theoretically, it's conceivable that the competition authority could conclude that there is still a market for more complex trips—such as a Himalayan tour or a multi-month South American trip. It would then have to decide to what extent the Dertour Group, with its Hotelplan activities and its own travel agencies, dominates this market.

Even if that were the case, the Competition Commission could only prohibit the takeover if it would eliminate competition. However, the latter is considered unlikely.

But the authority has another option: It can approve the takeover, but at the same time place the buyer under increased scrutiny for further acquisitions. In this specific case, this would mean that Dertour would then have to report smaller acquisitions to the Competition Commission – including purchases of companies that don't reach the usual turnover threshold of CHF 100 million. The telecom company Swisscom, for example, is subject to such a requirement.

Until the authorities approve the takeover, Hotelplan will continue to operate independently.

It's another matter how many travel agencies Dertour actually intends to operate in Switzerland in the future. While it was stated at the time of the takeover that Dertour would continue to employ all Hotelplan employees, if Dertour hopes to achieve synergies with the acquisition, it would not be surprising if the number of locations decreased sooner or later.