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Yes, at first glance it does seem “a little counter-intuitive.”
Expedia Inc., which gets the majority of its revenue from selling hotel stays and has been battling with the major chains over their direct-booking efforts, is now helping Marriott International sell more hotel rooms away from Expedia turf and on Marriott’s sites.
Starting September 1, Expedia began powering flight and hotel vacation packages for Vacations by Marriott. Expedia provides the technology, as well as flights, ground transportation, and tours and activities, and Marriott provides its own hotels.
It’s a white-label deal — Expedia’s first with a hotel — and there’s no Expedia branding on the Vacations by Marriott site. Users can save money by pairing flights and hotels in a package and they can earn Marriott Rewards points when they book.
The site has the “look and feel” of Expedia.com, including marketing messages such as, “5,301 people are now shopping for Paris hotels on Vacations by Marriott right now” or “We have 5 left at $1,800” for an eight-night stay at a particular property.
The deal for Expedia to power Vacations by Marriott, which replaces Switchfly as the technology provider, follows Expedia’s recent agreement to access Red Lion’s member-only rates and to auto-enroll Expedia and Hotels.com customers booking Red Lion hotels into the chain’s Hello Rewards loyalty program.
Cyril Ranque, Expedia Inc.’s president of lodging partner services, said these agreements and others are all about Expedia becoming “an enabler” by providing technology services to partners and branching out from its traditional role of being merely a distributor.
“We are listening to their objectives,” Ranque said of Expedia’s partners, “even if it seems a little counter-intuitive.”
While forging these sorts of agreements with hotels, Ranque expressed the hope that direct-booking issues with the chains — where the online travel agencies and chains are each fighting to get consumers to book on their own sites — will sort themselves out over time.
Marriott CEO Arne Sorenson said in a statement that his company wants to explore new opportunities with Expedia.
“We believe there is considerable untapped opportunity between our two companies to drive value to hotel owners and travelers alike by strengthening our Vacations by Marriott’s offering,” Sorenson said. “We are thrilled to launch this new product with Expedia’s technology, and to explore new areas of partnership beyond our existing distribution relationship.”
Ranque said the agreement to power Vacations by Marriott is a “first step” to show the type of value Expedia can provide to partners, and a “milestone” that highlights the online travel agency’s “new position” and the trajectory of some of its investments.
Unlike Expedia’s Red Lion agreement, which appeared to reset the relationship and overflowed into areas such as marketing and corporate travel, the Expedia-Marriott agreement doesn’t impact other areas such as the hotel commissions Marriott has to pay for bookings on Expedia.com or Hotels.com, according to Ranque.
Expedia calls its Marriott agreement, which currently only covers the U.S. point of sale, a “next generation partnership” in that it’s more flexible than past agreements. Although Ranque wouldn’t detail the length of the agreement, he said it doesn’t lock either party into a long-term contract.
Ranque added that the two parties will test products and learn from them and expand them or contract them as necessary.
“Everyone’s collecting data and analyzing,” Ranque said. “We are trying to move away from discussions that lock partners into long-term agreements.”
In other signs that Expedia’s relationships with partners are evolving, the company is launching Travel Ads Direct, which offers pay per click links from Expedia to hotel websites, and Expedia is testing a meetings-booking platform for hotels in Germany. Branded properties, including several from Wyndham and Best Western, are among those using the meetings platform.
If you wonder why venture capitalists sometimes express a reluctance to get involved in the travel industry, these new relationships between hotels and online travel agencies could reinforce those feelings because they speak to the complexity and evolving nature of the travel industry.