Distribution Strategy Update: Important Updates and Actions for Hotels
Marriott International is on a multi-year journey to strengthen and grow our direct booking channels, strategically leverage and manage third-party intermediary growth, and identify opportunities to change the distribution landscape.
As part of our ongoing dialogue with owners and franchisees, we held a Distribution Strategy Advisory Committee meeting in August to align on our approach and strategies. Key takeaways from this meeting included:
- Marriott and other brand companies have an opportunity to take steps to overcome the consumer perception that OTAs offer the best rates.
- Marriott is implementing stronger wholesale agreements at the property level as well as stronger internal-facing policies targeting hotels that violate the Look No Further® Best Rate Guarantee.
- We have extensive efforts underway to gather more data about our guests who use intermediaries and leverage it for customer acquisition.
- Earlier this year, we worked closely with AH&LA to help establish the Consumer Innovation Forum, which provides a venue for brands, owners and management companies to address the hospitality industry’s most important distribution issues.
We are committed to providing you with updates on key elements of our strategy and how it impacts your hotels, and to leverage your valuable feedback to ensure our mutual success. Following is an overview of the latest action items and other updates.
ACTION ITEMS FOR HOTELS
ADDRESS WHOLESALERS VIOLATING MARRIOTT POLICY
In Short: Hotels should enforce, and if permitted, terminate contracts with wholesalers including Hotelbeds and Tourico if they sell rooms in violation of your contract.
The Details: Marriott has identified wholesalers who breach their contractual obligations by distributing discounted static wholesale rates to non-approved third-party sites like Amoma and Getaroom.com. Many hotels have signed agreements with these wholesalers with contract language that requires them to sell the discounted inventory as part of a package. Instead of appropriately packaging the rate with other travel components, our inventory is appearing on non-approved channels at rates ~30% less than we are selling on direct channels. If this continues, it will only worsen the customer perception that OTAs have better rates than direct channels, which harms our direct channels. Hotels should enforce their termination rights under their contracts with wholesalers, including Hotelbeds and Tourico who are our most frequent violators, if these violations are discovered and contract language prevents this practice. Review the memo sent to GMs for more information.
DO NOT PARTICIPATE IN HOTELTONIGHT
In Short: The HotelTonight business model undermines our direct channel pricing and violates our brand standards.
The Details: Over the last few months, Marriott has experienced increased property participation in HotelTonight. HotelTonight is a mobile application aimed to capture impulse travelers on the day of arrival using a “last-minute” sale format. HotelTonight encourages hotels to sell remaining unsold inventory on their app at a deep discount off direct channel rates, which undermines our direct channel pricing, exposes us to trade down and exacerbates customer perception that third-party channels have better rates than direct channels. HotelTonight is not an approved channel and hotels that participate are requested to cease their participation. The HotelTonight business model violates the Look No Further Best Rate Guarantee and Single Image Inventory brand standards.
REFRAIN FROM PARTICIPATING IN EXPEDIA’S IBEACON PROGRAM
In Short: Expedia is piloting a program to test iBeacon technology, which is against our channel standards.
The Details: Many OTAs have positioned themselves to increase customer loyalty by expanding service offerings into more “experience”-related verticals, targeting the total trip continuum. Expedia is currently piloting a program leveraging iBeacon technology, which is an Apple technology that would enable hotels to push notifications to apps on their guests’ mobile devices when in close proximity to that device. These services are not Marriott-certified channels as per Marriott’s Channel Standard For Third Party Distribution and are in direct conflict with Marriott’s strategy. We have contacted GMs of all of our hotels to prohibit participation, and we ask you to support this message. Marriott is currently testing the implementation of similar technologies that will create revenue opportunities returned directly to hotels, enhance our guest’s experience and build Marriott brand loyalty.
INFORMATIONAL ITEMS FOR HOTELS
CHANGES TO LOOK NO FURTHER CLAIMS
In Short: Beginning on January 1, 2015, hotels will be charged $100 for each approved Look No Further (LNF) claim.
The Details: Through the LNF program, guests are able to submit claims if lower rates are found and will be granted the better rate plus 25% off. In addition, beginning on January 1, 2015, hotels will be charged $100 for each approved LNF claim. This charge covers the cost of Marriott’s program team that researches guest claims. The charge is assessed only on approved claims of rate violations. At the end of each month, the total number of approved claims will be pulled from the claims database, and hotels will be charged for any approved claims processed in the prior month. This direct charge is being implemented to ensure that the hotels driving the claims volume are appropriately bearing the cost. Hotels should monitor their approved claims closely to ensure rate parity issues are addressed and claims are reduced. Read more on MGS.
REDESIGNED PREFERRED TRAVEL AGENCY PROGRAM LAUNCHED
In Short: Travel agencies and their agents are now required to get re-certified in order to maintain 10% commission.
The Details: On September 2, Marriott launched a redesign of our Hotel Excellence! (HE!) training program for travel agents. The program, which debuted in 1999, includes an overview of Marriott’s groundbreaking innovations and expanded portfolio in a new learning format, accessible from all web-enabled devices. In addition, we are requiring travel agencies to get re-certified and re-commit to the terms of being a Preferred Travel Agency (PTA). With more than 215,000 graduates, HE! is a key piece of Marriott’s Global Distribution Strategy and is keeping Marriott’s brands top of mind with this sales channel. Read more on MGS.
Thank you for supporting these important components of our distribution strategy. We welcome any feedback or suggestions you may have, so please contact me or your account executive if you would like to discuss.