In the battle between freelance travel agencies and hotel and airline giants, Expedia has had a mixed week.
We explained to you here the reasons for the war that the big hotel and airline groups are waging against the OTAs (online travel agencies) that take a significant part of their margins.
Expedia was engaged on two fronts: the first concerned Marriott, the world’s largest hotel group, and the second the airline United.
Expedia and Marriott, more partners than enemies.
The hotelier and the agency have therefore announced that they have reached an agreement that may have consequences on the way the relationship between hoteliers and agencies will be organized in the future.
Nothing has been released about the rate negotiated by Marriott, but rumor has it that the hotelier was granted a reduction in commission from 12% to 10%, which was in line with its demands. But in the absence of official communication, these figures, although plausible, remain only assumptions.
Much more interestingly, Marriott has won the right to select the portion of its inventory that it sells through Expedia. In other words, Expedia will no longer have access to all available rooms and rates, allowing Marriott to leverage its direct sales channel and offer the best rates to its customers and loyalty program members.
Indeed if in France the law forbids OTAs to prevent hotels from posting better prices than the agency, it is not the case in many countries. So Marriott came out of this critical part of the negotiation well.
Marriott makes 13% of its sales via online agencies
Does Egencia lose a lot? Et bien pas tant que cela et c’est le chiffre le plus surprenant. Marriott only made 13% of its sales through OTAs in 2018 which I find really low when you consider how they manage to squeeze hoteliers by becoming the customer’s go-to place (until Google changes the game?).
This figure, which I still find low, confirms that the strength of a good loyalty program is to make the direct channel a reflex for customers (but nothing can be taken for granted in this area).
The agreement also contains other projects whose impact will be judged when they materialize.
Now that the Expedia case is settled, it is hard to imagine Marriott not dealing with Booking and its 17% commission.
United stands up to Expedia
At the same time Expedia is facing another front with United announcing that it will pull all of its flights from the OTA as of October 1 (the contract between the two businesses expires on September 30). Expedia recently sued United.
Behind this conflict there is the price, but also the question of data and therefore the knowledge or even the “property” of the customer. While the judge acknowledged that United’s withdrawal could cause damage to Expedia,he also said that the damage was not irreparable and that Expedia did not disclose customer data to United in a manner consistent with industry standards. As a result, he refused to force United to back down.
There is time between now and September 30 and there is nothing to say that United is not simply using this threat to negotiate, but tempers seem very hot between the two businesses.
Bottom line: yes, the “big” players in the sector have decided not to let themselves be taken advantage of anymore and they have arguments to support it. However, this does not help the independent hotelier, who has no negotiating power.
Photo : Expedia by designs by Jack via Shutterstock
