Expedia Group and Marriott International, the world’s largest hotel company, finalized negotiations last week after their previous contract expired in November. Although only speculations have been addressed about the effects of the new deal, the fact remains that the relationship between hotels and online-travel-agencies (OTA) has always been contentious.
Despite lower margins from bookings made on OTAs, hotels need to play on OTAs and metasearch sites to both increase exposure and drive bookings. This is especially true for luxury hotel brands.
Expedia’s platform is friendlier to lower-priced hotels than luxury hotels, according to Gartner L2’s Digital IQ Index: Luxury Hotels. This means that Marriott’s vast portfolio can work in its favor in its relationship with Expedia. Luxury brands captured the highest organic visibility on KAYAK during the study period, accounting for 61% of top hotel listings. On TripAdvisor, however, just 44% of those brands appear organically, and they do even worse on Expedia, where only 23% of brands capture organic visibility. To compensate, brands pay to appear in the top search results. On Expedia, 38% of luxury brand listings were paid results.
Who makes up the competition on Expedia? Most often, it’s lower priced hotels. The average price of listings on Expedia hovered around $165 during the study period, or $234 for luxury brand listings. Pay-to-play is a common strategy for luxury brands to compete for visibility.
Marriott and Expedia’s new contract is an example of the changing booking climate in the hotel industry. Instead of fighting, both companies are leveraging each other’s technology as well as user base. As the old saying goes: keep your friends close, and your frenemies closer.