What does the Expedia & Marriott Alliance mean for our Industry?

The hotel industry was abuzz in September when Marriott International announced that Expedia Group would become their exclusive distributor of wholesale rates, availability and content to global travel providers. Marriott will partner with Expedia to create a single gateway for the redistribution of their wholesale inventory. Their goal is to provide a “a consistent and reliable shopping experience for travelers, ensuring accurate display of hotel descriptions, room rates and fees through known and trusted third party travel providers.”

We’ve done some digging into the details and provided an overview of Expedia and this momentous agreement that we shared in a recent webinar. Here is some of what we shared.

Power of Expedia

Expedia was founded in 1996 and was initially a division within Microsoft operating solely as an online travel booking agency. According to Rich Barton, the company's first CEO, the word "Expedia" is derived from a combination of exploration and speed. In 1999, it was spun off as a public company and began a series of acquisitions that eventually led the company to become the conglomerate of brands that it is today. It’s an interesting bit of history that Expedia once owned TripAdvisor but spun it off as a separate business in 2011.

Expedia’s key brands include the following: CarRentals.com, Classic Vacations, Ebookers, Egencia, Expedia.com, Expedia CruiseShipCenters, Expedia Local Expert, Expedia Partner Solutions, HomeAway, Hotels.com, Hotwire Group, Orbitz, Travelocity, trivago and wotif. This group of brands with the official name of Expedia Group encompasses very strong online booking channels which makes them the most powerful online booking engine.

Expedia Group’s Market Share

In 2018, Expedia accounted for 36.6% of OTA revenue. In comparison, Booking.com was at 41% and TripAdvisor was at 4.6%. Both Expedia and Booking.com had great growth compared to the previous year. Expedia grew by 11.6% and Booking.com increased by 14.6% while TripAdvisor had more modest growth at 4.6%.

Although Expedia Group’s brands offer travelers the ability to search and book lodging, airfare, car rentals, and purchase travel insurance, its main business is as a Lodging search and booking site. 69% of Expedia’s revenue in 2018 came from Lodging bookings.  It’s interesting to note that their lodging revenue overall increased by 4% YOY – from 65% to 69% – and Room Nights booked increased by 13%. This may be an indication that these rooms were sold at a higher discount than the previous year.

Expedia Partners have the Most Downloaded Booking Apps

We also took a look at which travel apps people download the most. This data was based on the number of App downloads in Google Play store in the United States as of August 2018, provided by Geckoroutes.com. (Download data from IOS or the Apple App Store was not available.)

All of the Expedia Group brands – identified in green in the pie chart - are leading the pack with a combined 675.2K app downloads. With that comparison, Airbnb falls second with a strong 424.5K app downloads and Booking.com is in the 3rd spot with 335.4k app downloads.

When it comes to looking at which travel app consumers use on a daily basis, the data shows that TripAdvisor has the most unique Daily Active Users at 265.6k. Combined Expedia brands app usage equals 147.6k users and Booking.com has 111.4k daily active users.

Expedia Partner Channels are used most when searching and booking reservations

Earlier this year, we wanted to learn first-hand which channels hotel bookers utilized the most, so we conducted our own survey. We found the following results:

• Individuals are utilizing a Hotel’s own website when doing their searches and the conversion (or “lookers to bookers”) rate is about 50%.
• In comparison, the conversion rate for Expedia Partner channels was at 38%.
• When comparing Expedia.com on its own, the conversion rate increases to 47%.

We believe that advertising campaigns by the major brands in combination with added perks for rewards members have helped increase the rate of direct bookings on hotel websites while the OTA channels have either held steady or somewhat declined over the years.

Marriott & Expedia Agreement: What it Does

So, what does this new distribution agreement between Marriott and Expedia Group mean for the hotel industry in general? We’ve compiled the following list of items that the agreement does and does not accomplish.

What It Does:

• Expedia becomes the exclusive distributor of Marriott International wholesale and promotional room rates and availability.
• It will enable bedbanks such as HotelBeds, WebBeds and other distributors to have a direct connect with Marriott Hotels. This allows Expedia to be the single gateway for the redistribution of Marriott's wholesale inventory through an "optimized distributor".
•  "The optimized distribution solution through Expedia Partner Services will greatly increase the compliance with Marriott's channel standards" - Alezander Pyhan, Marriott International, Vice President Distribution
• Marriott has always been strong with business travelers but this agreement will expand Marriott's visibility in the leisure travel market.
• Expedia Group brands have been given an expanded role in powering flights and hotel packages on the Marriott Vacations website. They will provide the technology for searches for flights, ground transportation, tours and activities while Marriott provides the hotel choices.
• Marriott's BONVOY members will earn rewards points whenever they book packages.
• Marriott has agreed to have an increased presence on Expedia's discounted inventory site, Hotwire which was a taboo for many years due to their working relationship with Priceline,
• Tour operators and travel agents who currently do not have direct access to wholesale rates are now directed to Expedia Partner Solutions to establish ties.

What It Doesn’t Do

• The agreement doesn’t give Marriott a higher profile in search results on Expedia Group sites such as Expedia.com and Hotels.com.
• Marriott's wholesale rate distribution to Online Travel Agencies such as Expedia, Agoda, Booking.com, Priceline and Ctrip will not be directly impacted by this agreement.
• Expedia will not impact tour operators, travel management companies, global distribution systems and airlines that may have direct ties with Marriott.
• Expedia is not taking a revenue hit from the agreement nor is Marriott International.
• This agreement only covers the US point of sale and is not Global at this time.