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Two months after Airbnb rolled out a controversial $260 million coronavirus relief package for hosts, rival Expedia Group is slightly upping the ante with an estimated $275 million recovery package for hotels, destinations, and owners and operators of alternative accommodations.
One of the common denominators in their respective programs is both companies attracted funding from private equity firms, including a mutual minority partner, Silver Lake, which helped boost resources to be in a position to fund relief efforts.
To be sure, though, Expedia and Airbnb’s programs are very different.
The main planks of Expedia Group’s effort, which includes a projected $250 million worth of marketing credits, reduced and delayed commission payments for hoteliers, as well as $25 million in credits from Expedia Group Media Solutions for destinations’ co-op advertising campaigns.
Specifically, the Expedia Group plan includes:
- Expedia Group will take 25 percent of the compensation it earned from a property in 2019, and turn it into marketing credits if the property chooses to participate. The company will reduce its commissions from partners by 10 percent for three months, and extend pay-at-the hotel compensation for 90 days after the stay. The “credits,” which would range from $200 at a minimum to $100,000 maximum, should not be confused with credit cards that require repayment, as some international partners erroneously believed.
- Vacation rental property managers and owners are eligible for the credits and commission relief as long as they’ve contracted with the Expedia Partner Central platform, and not just with its Vrbo subsidiary alone. Vrbo had roughly 2.1 listings at the end of 2019, and about 765,000 that have been integrated onto the Expedia platform. Expedia Group urged property managers to reach out to their account reps for information about eligibility.
- Destinations would be eligible to participate in a $25 million co-op advertising program “to reignite demand through market awareness,” Expedia stated.
- Expedia is sharing for free training and education videos for furloughed and laid off workers that it created for its own team.
Expedia Group also is rolling out several new programs and features that don’t readily fit into the marketing credits or financial relief categories. Among them, hotels can now add wholesale rates into Expedia Partner Central on a non-exclusive basis, and access Expedia’s array of distribution partners, including airlines, banks, and loyalty partners; lodging partners can highlight hygiene measures, and Expedia is introducing a data dashboard for insights about demand, and tools to spotlight flexible airfares and refundable lodging rates.
Expedia Plan Versus Airbnb and Google’s
In contrast, although hosts have criticized Airbnb’s relief program as being too slow to implement and relatively small, Airbnb is providing $250 million in payments to hosts, and $10 million in grants to super hosts. Expedia’s program, on the other hand, doesn’t involve payments per se, but is mostly marketing credits to spend on the Expedia platform, and financial relief such as reduced commissions, and extended payment terms.
Asked whether Expedia Group’s recovery package was self-serving, Cyril Ranque, president of the company’s Travel Partners Group, said partners expressed the need to grab the spotlight and take market share when a recovery occurs, and to access resources to do that cheaply. He added that the best way to do that was to provide them with marketing money and financial relief.
Instead of generating marketing spend from partners organically, “we are going to give it back from the get-go,” Ranque said.
To participate in the Expedia recovery program, hoteliers need to provide the company with their lowest retail rates, as well as competitive pricing on things like holiday packages and member only deals, Ranque said.
The Expedia Group executive said airlines and large hotel chains have their own plans to access governmental relief programs, but the Expedia recovery program announced Thursday is geared “more for the smaller guy because there was a kind of gap.”
However, with only a little more than one-third of Expedia Group’s vacation rental hosts eligible for the marketing credits and financial relief, Ranque said it wasn’t scalable to to include those properties that have contracted solely with Vrbo.
So in the short-term rental sphere, Expedia’s program might be skewed toward property managers and vacation rental owners with a substantial number of listings rather than individual owners.
Still, the focus of Expedia’s program in the lodging sector isn’t on large hotel chains, but smaller groups and independent properties.
In addition to Airbnb, Google pledged $340 million in advertising credits for small businesses of all kinds, not just travel firms. Both Airbnb and Google’s programs have been criticized for their relatively diminutive dimensions.
Asked whether Expedia Group’s $275 million plan would come under fire for similar reasons, Ranque said “in a world coming out of zero revenue, it’s quite a lot.”
In an earnings call a week ago, Expedia Group CEO Peter Kern said: “Like some of the other companies in our space, you probably heard that late March into April was the trough of the business. That is true for us. We saw gross bookings, new lodging bookings, down about 85 percent year-on-year, which, of course, was terrible. And cancellations were extremely high.”
Booking Holdings Has No Monetary Relief Plan
[Update: Unlike Airbnb’s payments and Expedia Group’s marketing credits, Booking Holdings doesn’t have a similar recovery plan for partners where money changes hands. Instead, according to a spokesperson, the company has lots of ongoing partner efforts, but they involve developing recovery toolkits, and sharing data on how flexible rates and enhanced cleaning practices can lead to increased conversion.
Booking Holdings is also developing incentive plans to stimulate consumer demand, the spokesperson said.]
The amount of Expedia Group’s recovery plan, pegged in the announcement at $275 million, is an estimate. The final figures will depend on how many lodging and destination partners opt into the program.
The timing of the program’s implementation, too, will depend on when properties and destinations around the world open up based on governmental regulations and market conditions.
For example, the marketing credits and financial relief for lodging partners, which is currently being piloted in a few countries in Asia, “will become available to partners based on recovery signals, including demand trends, from their specific markets,” Expedia Group stated.
Ranque said the program will kick into gear “progressively” to ramp up at opportune moments “so we are not too early and not too late.”
Note: This story has been updated to detail what Booking Holdings is doing — or not doing — to help partners recover from the coronavirus crisis.