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Marriott did not take the plunge into alternative accommodations for immediate financial gains, but the move is a key new piece of its strategy to keep its customer base engaged and loyal.
Marriott Chief Financial Officer Kathleen Kelly Oberg said the amount of money it is investing in its new Homes & Villas website, and any profits it expects aren’t material to the chain’s financial results.
“On the financial impact, both from an investment standpoint as well from a profitability standpoint, it’s really de minims,” Kelly Oberg said. “And hopefully over time, it’ll be something that will be kind of worth pointing out a number to you. But for the near term, I certainly — I wouldn’t expect it to be anything meaningful at all.”
But that doesn’t mean that the venture, in which Marriott acts like a third-party online travel company and offers inventory from property managers, isn’t an important cog in the company’s strategy.
“And then as you think about home sharing, I think there, it’s really about making sure that we have the full array of experiences that our customers want, again to make sure they stay within our ecosystem,” Kelly Oberg told the audience at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference 2019 on Tuesday. “And that was part of the impetus to starting Marriott Homes & Villas.”
An Extension of the Direct-Booking Strategy
In fact, even though property managers handle the bookings and provide customer support through Homes & Villas, the platform can be seen as an extension of Marriott’s direct-booking strategy because vacation rental customers can book, earn and redeem Marriott Bonvoy points, and it’s a way to keep customers within the Marriott ecosystem.
With Homes & Villas, Bonvoy members earn five points per dollar spent, and can redeem at a rate of 143 points per dollar.
“And we felt that it was really important for our consumer to be able to add that to their repertoire of choices, when they’re out staying in all of our hotels and earning lots of points,” Kelly Oberg said. “It’s clear from our experience last year that from the (homesharing) proof-of-concept project that we did — that Bonvoy members responded really well and found it as a really rewarding way for them to use their points. And it tended to be meaningfully longer stays and for leisure, which really points to wanting to provide that opportunity that, again, makes our program stickier.”
In other words, why lose Marriott customers to Airbnb or Vrbo when you can keep them on board in Homes & Villas, which features plenty of View Hotels links within homesharing search results.
Getting Smarter About Online Travel Agencies
Kelly Oberg acknowledges that customers will shop around on Expedia and Booking.com, but hopefully they’ve been educated enough about the benefits of direct booking with Marriott to get often-lower rates and to earn Bonvoy points.
She said Marriott has used its data to better-predict when hotel occupancy will get filled without using online travel agencies so this will enhance revenue.
Marriott “in some cases will say, ‘You know what? We’re going to shut that window on the OTAs for this Monday night because it’s clear it’s already going to fill up.’ And, in that case then, you’re doing some yielding that makes their great inventory available but not through the OTA channel,” Kelly Oberg said.
The online travel agencies often wax on about their ever-improving use of data to inform operations. It appears as though Marriott and other hotels can get skilled at the same game.