Marriott’s New Expedia Contract Signals Shift in Direct Booking Wars
With Marriott International and Expedia Group finally completing their contract negotiations, the deal they’ve struck could have an impact on the relationship between hotels and online travel agencies more broadly going forward.
The months-long contract negotiations, which began in November, have resulted in a new multi-year deal between the hotel and online travel agency behemoths that includes some key features that give Marriott and its hotel owners more control over their distribution relationship with Expedia, but also positions Expedia as more of a partner to Marriott and its owners.
Now that Marriott is the world’s largest hotel company — it opened its 7,000th property this week — many industry observers expected Marriott’s increased scale following its $13.3 billion acquisition of Starwood Hotels & Resorts would help the company obtain a much lower commission rate from Expedia.
While there is no specific information available about the much-discussed commission rate that Marriott hotel owners would pay to Expedia whenever a customer books one of their rooms through one of Expedia’s multiple channels, the deal does include some features in it that benefit owners.
Some reports, including one from CNBC however, suggested Marriott was able to lower that rate from an approximate 12 percent to 10 percent. CNBC has since removed that reported 10 percent rate from its original article.
Specifically, Marriott and its hotel owners can decide when and where to distribute room rates and inventory and to be able to differentiate among Marriott’s own direct channels, thereby reducing the overall costs they pay to sell their rooms online. In other words, Marriott hotel owners don’t have to offer the same rooms or inventory to Expedia as they would to Marriott’s own direct channels, and Marriott and its owners continue to be able to offer special room rates and offers for Marriott Bonvoy loyalty members.
The deal positions Marriott and Expedia not as enemies, but more as partners. In a letter Marriott International sent to its hotel owners and obtained by Skift, Marriott Chief Commercial Officer Stephanie Linnartz described the deal as one that “redefines our relationship with Expedia beyond transient retail bookings by leveraging Expedia as a technology solution provider.”
Perhaps the most interesting part of the deal, however, is that Expedia and Marriott are developing “an innovative distribution solution that will address challenges in other leisure segments beyond transient retail bookings.” This is expected to debut in the fourth quarter, and is noted in the joint statement issued by both companies on Thursday morning. It states: