Scott Laird | September 22, 2016 9:00 PM ET
A Closer Look at Marriott’s Expedia Partnership
When it comes to distribution, providers of travel services love to flip flop. Earlier this month, Marriott International announced it had partnered with Expedia to power its vacation packages booking engine, which allows guests to combine airfare, ground transportation, and tours with a Marriott hotel room.
Marriott CEO Arne Sorensen made the standard boilerplate announcement about the deal, which began Sept. 1, “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.”
Let’s look at this a little bit. To the average traveler, this is confusing. There are something like five different stakeholders in play here. Here are some notable takeaways from this arrangement:
Expedia is acting more like a technology company than a travel seller
Expedia is a travel seller, and they’re a gigantic one. As such, it made sense for them to develop technology to merchandise and display their wares in a digital environment. It’s good stuff, and Marriott took notice and now wants to use Expedia’s platform to sell vacation packages, which have a lower cancellation rate than room-only reservations (generally because packages are pre-paid and cancellation comes at a penalty).
So Expedia’s recouping a little of their investment in developing the technology by licensing it to someone else, while it focuses on its core revenue stream (commissions, fees, and markups from travel sales). While this is all well and good, it muddies Expedia’s reputation as a consumer-facing travel seller.
Marriott is selling to more than just guests
What’s notable about Sorenson’s statement is the bit about “driving value to hotel owners and travelers alike.” I suspect that the wink in the direction of hotel owners is a bit more drawn out, considering that Marriott’s ability to market and distribute its product is its primary value-add for hotel owners. This really highlights Marriott’s aspiration as a brand management company rather than an owner-operator of hotels.
By adding to an already impressive suite of distribution products, Marriott’s appealing to hotel owners who are shopping for brands to put on their hotel. For those used to Marriott messaging their role as a travel provider, this split-stakeholder communication might seem unclear.
It’s a reversal of a hospitality trend toward direct booking
Hospitality companies love direct bookings. They don’t have to pay commissions, they don’t have to sell their product to a third party at a discount, they don’t have to worry about outdated information being passed along through a distribution channel they can’t control. Hotels have been incentivizing direct bookings, particularly with members of their loyalty programs, by limiting some perks, benefits, and promotions only to direct bookings.
It’s worth noting that Expedia is replacing an existing vendor to the already-existing Vacations by Marriott line, but Marriott’s continued focus on the channel while at the same time preferring direct bookings appears disjointed.
What does this mean for travelers?
For the average traveler, it could mean confusion. So you’re buying a package from Vacations by Marriott, which is amalgamated by Expedia, and includes products from Marriott, a car rental company, a tour operator, and an airline. Will each of the individual policies of each of those operators be clear (a test of the booking flow failed to provide details on fare rules, restrictions, or fees imposed by the airline, as an example)?
The policies and approach one trusts they’ll receive from Marriott may or may not be inherent with every supplier in the process, and it can be risky for Marriott to stake their own reputation as a travel provider on suppliers they don’t have direct control over.
In addition to this, the daily rate actually charged by the hotel is opaque, or not broken down on a nightly basis, and it’s prepaid via an intermediary, so it could affect hotel loyalty points earning and benefits. Vacations by Marriott advertised a flat point bonus for booking a package, something generally not offered for other third party providers booking similar packages, but not points directly earned for the stay. There’s additional confusion over whether you’re really purchasing a Marriott product when there are different rules concerning loyalty.
Buying travel will always be an experience valued on personal preference. My personal experience has been that the best buying and selling relationships in travel have been direct ones. There’s less chance of a miscommunication on details or policies, I know who to contact when there’s an issue, and I know who to sing praises for when my expectations are exceeded. Now, that’s not always the absolute cheapest way to buy travel, but it’s worked great for me. To me, there’s nothing more frustrating than calling a package provider with a question or a problem, and then waiting while they take the time to fully research the specifics with the vendor, either by reading through printed materials or putting me on hold to make a phone call to a vendor that I could have called myself.
In many cases, this is exactly where a professional travel agent is worth their salt. The consultative selling relationship employed by travel agents is built upon trust in an agent’s expertise on and relationships with their suppliers. A good travel agent knows all of the stakeholders in their customer’s purchases, and leverages their relationship with those suppliers to enhance their own relationships with their clients.
The lesson to be learned here is that like it or not, the marketplace is becoming more confusing, and it’s up to travelers to stay educated about the exact details of what they’re buying, and most importantly, from whom.
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