U.S. Markets closed

Marriott and Expedia Exclusive Agreement Will Retake Control of Wholesale Rates

Dennis Schaal, Skift
Marriott and Expedia Exclusive Agreement Will Retake Control of Wholesale Rates

In an industry first, Expedia Group will next month become the exclusive distributor of Marriott International wholesale and promotional room rates, availability, and content to bedbanks, and other redistributors when they don’t have a direct connection with the hotel chain.

The bigger hotel bedbanks, such as Spain’s HotelBeds, Australia’s WebBeds, and Indonesia’s MG Bedbank, will be directed by Marriott starting October 15 to establish ties with Expedia’s business-to-business unit, Expedia Partner Solutions, if they want to continue to access Marriott’s rates and availabilities from any of the chain’s 7,000 properties in 132 countries and territories.

Come See Marriott International CFO Leeny Oberg and Expedia Group CEO Mark Okerstrom at Skift Global Forum Sept. 18-19 in NYC. Get Tickets Now

The exclusive global pact to create what the two parties are calling “a single gateway for the redistribution of Marriott’s wholesale inventory” through “optimized distributor” Expedia will not impact tour operators, online travel agencies, travel management companies, global distribution systems, and airlines that may have direct ties with Marriott. But it will be felt by a vast array of bedbanks, financial institutions, membership clubs, airlines, online travel agencies, metasearch platforms, wholesalers, and retails travel agents that don’t have such direct ties with the hotel chain.

To some extent, it reduces Marriott’s arduous task of policing all the rogue rates and discounted rooms that unauthorized parties often give to platforms such as Kayak, Trivago, TripAdvisor, and Google to sell to consumers. It would also reduce Marriott’s headaches when consumers arrive for a stay and the rates, fees, amenities, and perks may not be what they expected because they booked an unauthorized wholesale rate.

“All distribution partners and travel providers are required to comply with Marriott’s channel standards,” Alexander Pyhan, Marriott International’s vice president, distribution, told Skift Monday before the joint announcement. “The optimized distribution solution through Expedia Partner Services will greatly increase the compliance with Marriott’s channel standards.”

The proliferation wholesale rates and promotions is highly fragmented, leading to large inefficiencies and costs for Marriott, and also the prospect that guests show up to Marriott properties expecting to earn Bonvoy loyalty points, but they may be ineligible because they booked a wholesale rate or promotion. Officials said the property descriptions, amenities, and fees, including the existence of resort fees, may likewise be inaccurate or misleading when unauthorized resellers make them available in a slipshod manner, Marriott officials said.

The bedbank business model is to redistribute wholesale rates to online travel agencies, wholesalers, traditional travel agencies, and tour operators, who then sell to consumers. Some of these players may be impacted by the Expedia-Marriott deal but wholesalers that contract directly with Marriott and then sell to consumers shouldn’t have to grapple with any big changes.

While consumers and many businesses may be unaware of bedbanks, they play a key role in hotel distribution. For example, HotelBeds Group had a 5.2 percent and other wholesalers a 2 percent market share of hotel reservation revenue in Europe in 2018, according to D-Edge Hospitality Solutions.

A New Era for Marriott and Expedia

The agreement, which further resets the sometimes-contentious Marriott-Expedia relationship of recent years, grew out of the overall Marriott International-Expedia Group contract, which was signed in April. At that time, word was that the pact was revenue net neutral for Expedia; in other words, perhaps Expedia gave some ground to Marriott on hotel commissions, but the online travel company made itself whole with marketing compensation, and agreements such as the technology partnership announced Tuesday.

Zuhairah Washington, senior vice president of strategic accounts at Expedia Group, said that while Expedia’s negotiations with hotels traditionally revolved around compensation rates, the overall dialogue has become more constructive, and “there has been a shift away from us versus you.”

Drew Pinto, senior vice president of distribution and revenue strategy for Marriott International, said the deal with Expedia about wholesale rate distribution should be viewed as part of the two parties’ overall relationship, “signaling a step forward.”

Pinto said Marriott’s confidence about its Expedia relationship grew out of their 2016 agreement for Expedia to power flights on Vacations by Marriott. That prompted Marriott to mull “what else could we do together to complement Marriott’s strategy,” he said.

Vacations by Marriott has grown “multi-fold” since the debut of that Marriott-Expedia partnership, said Pyhan, the chain’s distribution boss.

Leisure Travel

Marriott is known for its foothold in corporate travel.

But turning to the agreement on wholesale rates for bedbanks and tour operators that redistribute them to other businesses, Pyhan said he hopes the pact will increase Marriott’s visibility in the leisure travel market.

Marriott’s wholesale rate distribution to online travel agencies such as Expedia, Agoda, Booking.com, Priceline, and Ctrip would not be directly impacted by the Marriott-Expedia, according to Pinto of Marriott. That’s separate from this new agreement, he added.

But certain online travel agency-owned metasearch platforms, when they receive wholesale rates from companies that aren’t supposed to make them available, could see some of these heavily discounted prices going missing.

Keeping track of all the rogue rates, such as when small online travel agencies receive wholesale rates as part of packages but decide to sell them instead as standalone rooms for steep discounts, has been costly and a major headache for Marriott and other hotels.

Christian Gerron, senior vice president of enterprise solutions at Expedia Group, said mapping rooms and rates “is a crazy, tricky thing to do,” adding he hoped the integrity of Marriott’s approved rates would get “hopefully closer to 100 percent.”

For bedbanks, tour operators, and travel agencies that don’t have direct access to Marriott wholesale rates, starting in mid-October Marriott will be directing them to Expedia Partner Solutions to establish ties.

Who would’ve thunk it?

Join Us at Skift Global Forum!

Subscribe to Skift newsletters covering the business of travel, restaurants, and wellness.