The Hyatt-Expedia crisis seems to be averted, for now.
On July 31, the deadline for Hyatt and Expedia to reach a new distribution agreement, Hyatt confirmed that it has reached an agreement “in principle” on contract terms.
At least for now, it’s business as usual when it comes to being able to book Hyatt hotels on Expedia and its sister booking sites without any disruption.
Hyatt issued the following statement:
“We remain focused on growing the value proposition for our guests who book directly with Hyatt so that we can build stronger relationships with them. We also work with third-party distributors to reach guests who might not be frequent travelers or who otherwise have a reason to book through these sites.
“Hyatt is in dialogue with all of our OTA [online travel agency] partners around the world as a regular matter. We recently agreed to build on our existing relationship with Booking.com by implementing new initiatives intended to reduce costs and increase flexibility while driving demand. Additionally, we’ve had productive discussions with Expedia and have agreed in principle on terms that address our concerns about distribution costs and flexibility. We expect that Hyatt hotels will continue to be distributed on Expedia platforms without disruption.”
The Hyatt-Expedia deal comes in the context of Expedia having completed a round of contract renegotiations with the likes of most major chains, including Marriott and Hilton. Hyatt’s economics under the new deal likely didn’t achieve the benefits levels of these larger players, however Hyatt presumably will receive a better package now than under its prior contract with Expedia.
“We partner with several hundred thousand hoteliers around the world and we stand by the value we deliver,” Expedia said in a statement that confirmed its tentative agreement with Hyatt. “We bring partners brand agnostic, incremental consumers (only a tiny percentage of our regular consumers book the same hotel brand consistently) from across the globe, and that’s a clear indication of the value we bring to partners, like Hyatt Hotels Corporation.
“Our focus is on supporting Hyatt owners by providing greater flexibility and access to our world-class tools and technology. We appreciate and respect our relationship with Hyatt Hotels Corporation and our existing terms with Hyatt Hotels Corporation remain in place.”
Expedia’s mention of “world-class tools and technology” seems to address hotels’ direct booking pushes and Expedia’s drive to blunt these initiatives. Expedia is trying to forge direct relationships with property owners, arguing that they can get enhanced efficiencies by using these tools and pay lower fees on an online travel agency booking than owners have to pay the brands for a direct booking. It’s a premise that wouldn’t go uncontested by the chains.
In June, news broke that Hyatt had sent a notice to its hotel owners, warning them of the possibility that Hyatt properties may no longer be advertised on Expedia.
And in that same month, Hyatt signed a deal with Expedia’s biggest rival, Booking.com, presumably to gain leverage in its ongoing contract negotiations with Expedia.
Hyatt’s statement about the negotiations seems to affirm that it doesn’t foresee any changes to its distribution channels but there are some clues within that seem to suggest this is still a somewhat tenuous situation for both Hyatt and Expedia.
Notably, Hyatt mentioned its “existing relationship with Booking.com by implementing new initiatives intended to reduce costs and increase flexibility while driving demand,” as if to remind Expedia (and the rest of the travel industry) of their newly revised contract.
The statement also says Hyatt has “agreed in principle” with Expedia, but it does not say that a new contract or agreement has been signed. The company also “expect[s] that Hyatt hotels will continue to be distributed on Expedia platforms without disruption.”
According to a source, however, Hyatt and Expedia have agreed on key terms and have signed a letter of intent. These terms will then be incorporated into a master agreement between the two companies.
What will be interesting is seeing if, once an agreement between the two companies is finally signed, what the terms are, and how much more “flexible” and less expensive the new contract might be for Hyatt. Those new terms will no doubt have an influence of future contract negotiations that take place between the hotel chains and the online travel agencies going forward.
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Photo credit: The Grand Hyatt New York. Hyatt Hotels & Resorts said it doesn't anticipate any changes to its distribution on Expedia platforms. Ludovic Burtron / Flickr