Last week, Hyatt hotel owners received notification of Hyatt’s intent to terminate its Corporate Lodging Agreement with Expedia. While the announcement is widely speculated to be a negotiating tactic, if Hyatt and Expedia do not reach a settlement effective July 31, 2017, Expedia, along with related channels (Hotels.com, Travelocity, Orbitz, Hotwire and Hotwire Opaque, Wotif, and the Expedia Affiliate Network) will no longer be approved distribution channels for Hyatt properties.
The decision to cut ties with the OTA giant falls on the heels of several months of negotiation and ultimate failure to come to an agreement on what Hyatt considers to be “reasonable, competitive terms,” namely lower commissions and improved flexibility.
In the communication to owners, Hyatt describes this decision as “a powerful step to reduce distribution costs by shifting bookings to lower cost and more flexible channels.” Hyatt acknowledged that Expedia and related bookings represent a notable share of Hyatt’s business, but remain confident that eliminating the channel will drive more bookings to Hyatt direct, enable more meaningful guest connections and reduce costs (enhance profitability). The brand also cited its relatively new guest loyalty platform, World of Hyatt, which was launched in March 2017 to replace Hyatt’s Passport program, is intended to build a stronger community of guests, with enhanced perks and increased engagement.
Hyatt detailed a plan to support this move through what was described as an “aggressive sales and marketing plan” and related initiatives to drive more direct traffic – from increased investment in digital marketing to incentivizing lower-cost booking alternatives, such as travel agencies and travel management companies.
The big questions on the minds of owners remains: what will the impact be (short and long-term), how much will it save, and more importantly, how much will it cost?
What does this mean for Hyatt owners?
Unless Hyatt and Expedia reach a settlement, in a little over a month, your hotel will no longer appear or be booked on Expedia, or any related distribution channels.
