In his ongoing bid to colonize the Internet travel market, Barry Diller's Hotels.com has terminated a contract with Travelocity

In his ongoing bid to colonize the Internet travel market, Barry Diller's Hotels.com has terminated a contract with Travelocity, paving the way for Expedia to fully take on its Internet travel competitor. As Diller has expanded his aegis in the online travel marketplace, a combination of factors led to his company's decision to end its agreement with Travelocity. "On Friday, August 29, 2003, Travelocity terminated the exclusivity to which Hotels.com was entitled under the hotel supply agreement between Hotels.com and Travelocity. In response to that improper action and other prior breaches of the agreement by Travelocity over the past year, Hotels.com announced today that the company has terminated the agreement in full and ceased offering its industry-leading lodging inventory on the Travelocity web site," Hotels.com said in a press release. The move opens the way for what the company "full cooperation and cross selling initiatives" between Hotels.com and its sister company Expedia, both of which are owned by Diller's InterActiveCorp parent company. Prior to Tuesday's termination of its agreement with Travelocity, Hotels.com and the company's contract had precluded the types of marketing and sales synergies that it clearly will pursue with Expedia going forward.