Duff on Hospitality Law

This week’s Update again features a number of stories on fintech and its emerging influence on the travel and lodging industries. Enjoy.

Hopper Continues Its Meteoric Rise
(“Hopper Notches First Fintech Deal With an Online Travel Agency,” October 14, 2021 via Skift Travel News) (subscription may be required)
Last week, Hopper (online travel app (B2C) and growing provider of AI-enabled fintech products (B2B) announced its first partnership with a rival online travel agency, India’s MakeMyTrip. When implemented, the partnership will allow MakeMyTrip to make use of Hopper’s predictive tools to better price its existing fare lock functionality. Should a fare ultimately exceed a traveler’s locked fare, MakeMyTrip (and not Hopper) will bear the financial risk. According to Hopper, 70 percent of its revenue now comes through these types of ancillary products and services (and not from its travel application). This latest deal comes only a few months after Hopper’s announced deal to provide its predictive and financial products to global distribution system, Amadeus.

The latest Update features a variety of news, including stories regarding Expedia’s planned roll up of its loyalty programs and Marriott’s recently announced loyalty program partnership with Japanese e-commerce platform, Rakuten. Whether COVID or data privacy induced, the travel industry’s renewed interest in loyalty programs – whether through traditional loyalty programs or now, subscription programs – is definitely something to watch. Enjoy.

Marriott and Rakuten Announce Partnership
(“In Marriage of Two Giants, Marriott and Rakuten Take Vow on Loyalty,” July 10, 2021 via WIT)
Marriott International and Japanese e-commerce platform (e-commerce, fintech, digital content and communications all linked through a rewards program) Rakuten Group announced a partnership recently that will provide members of the parties’ loyalty program with benefits under each program. Under the partnership, Marriott gains direct local access to Rakuten’s approximately 100 million members for promoting Marriott’s hotel brands and offering travel experience customized for Japanese travelers. In exchange, Rakuten members – once enrolled in Marriott Bonvoy – will enjoy discounted member rates, opportunities to earn and redeem program points, and other member-only opportunities. Enrollment in Marriott Bonvoy will be via a simplified one-click process on the Rakuten platform. According to John Toomey, Marriott’s Vice President of Sales and Marketing in the Asia-Pacific region, the partnership is part of Marriott’s ongoing efforts to focus on local markets via partnerships and other collaborations with in-country partners. The announced partnership is scheduled to launch in phases, with the first phase starting late next month.

Fall has definitely arrived in the Pacific Northwest. It was a relatively quiet week in the online travel world. This week’s Update features a story on one of the most widely used Global Distribution Systems – Amadeus – as the company announces its second (unnamed) major customer for its new reservation platform. Enjoy.

Airbnb Takes Steps to Accommodate Hotel Listings
(“Airbnb revives hotel strategy, moves closer to rival OTA model,” September 29, 2021 via Phocus Wire)
While the pandemic may have led Airbnb to pause its hotel distribution aspirations, it appears that the pause may have only been temporary. Airbnb is reportedly testing a new API that allows suppliers to provide and display multiple rate plans (similar to many of Airbnb’s OTA competitors). According to two of Airbnb’s beta partners – RoomCloud (an Italian channel manager and booking engine) and Cloudbeds (an US cloud-based PMS provider), the changes are designed to appeal to hoteliers. Airbnb is also apparently re-starting efforts with its mobile booking platform, HotelTonight, as it seeks to fill multiple open positions within the company, including market managers. Airbnb has refused to provide comment on either effort.

Skift’s annual Skift Global Forum, which was held this past week, produced a number of newsworthy items for this week’s Update. Enjoy.  

The Much Aligned Tripadvisor Plus Program Forced to Make Significant Changes
(“Sounding Off: Tripavisor Plus Changes Show the Complexity of Travel Plans,” September 24, 2021 via Phocus Wire)
While the Skift Global Forum received much of the attention this past week, the other major industry newsmaker was Tripadvisor and its decision to make significant changes to its subscription model, Tripadvisor Plus. For weeks now, we’ve detailed the challenges with the program, particularly those around Tripadvisor’s public display of its discounted member rates. For this reason, major brands were unwilling to commit to the program. This past week, Tripadvisor announced an abrupt change and will now feature retail commissionable rates (gone are the member discounted rates), but provide members a cash-back credit “roughly equal” to the former member discount (or new commission percentage). When or how travelers receive the credit is unclear. While the change may make it easier for the major brands to participate (but will they, given that the program now becomes yet another commissionable leisure distribution channel), it isn’t clear whether the change will increase travelers interest in the program (and increase badly needed subscription fees). What is clear is that Wall Street didn’t view the announced changes favorably, cutting the company’s share price by 8 percent (a loss of $374 million in market value) on the day after the news broke.

MCR Hotels Trial Runs Attribute Pricing
(“One of the US's largest hotel owners is charging guests $25 to use the swimming pool and $20 to check in early — but is cutting room prices in return,” August 18, 2021 via Business Insider)
In an interview with the Wall Street Journal, hotel owner and operator, MCR Hotels CEO, Tyler Morse, shared the company’s plans to begin offering attribute pricing for 12 of its independent hotels. According to Morse, the company plans to reduce its hotels’ base room rates, while at the same time charging additional fees for guests’ use of certain of the hotels’ amenities (e.g., pool or fitness center) or other services (e.g., early arrival).  Whether MCR’s plans signal the beginning of the lodging industry’s long discussed transition to attribute pricing remains to be seen. With many hotels suspending traditional guest services (e.g. daily housekeeping) during the pandemic (and owners reaping the associated economic benefits), the post-pandemic return of the lodging industry may provide a unique opportunity to rethink guest room pricing. How these new practices might fit with legacy distribution systems, OTA fee structures, sales contracting practices, etc., remains to be seen. 

Where did summer go? It was another quiet week in the online travel world, though I expect things may pick up in the weeks ahead as everyone returns from their summer breaks. Enjoy.

Travelport and Amazon Web Services Announce Travel Startup Accelerator
(“Travelport Teams With Amazon Web Services to Support Travel Startups,” September 2, 2021 via Skift Travel News) (subscription may be required)
Recently, Travelport and Amazon Web Services (AWS) announced the launch of a travel startup accelerator designed to provide travel entrepreneurs access to data and channel expertise, potential supplier partners (including hotels) and prospective travelers. The inaugural session will feature 10 travel startups with a focus on digital marketing and personalization. Judges will include representatives from American Express GBT, Internova and Priceline.

Russian Authorities Impose Anti-Trust Penalty on Booking.com
(“Booking.com Faces $17.5 Million Competition Fine in Russia,” August 26, 2021 via Skift) (subscription may be required)
Russia’s federal antimonopoly service (FAS) announced that it was imposing a $17.5 million dollar fine on Booking.com for its alleged abuse of its market dominant position.  The fine comes nine months after FAS accused the online travel agent of violating Russia’s competition laws.  Booking.com plans to appeal the fine.

Last week was earnings release week for three of the major online travel platforms – Expedia Group, Booking Holdings and Tripavisor. This week’s Update includes transcripts from the three platforms’ earnings calls as well as several leading industry perspectives on the platforms’ recent quarterly performance. Enjoy.

A few immediate takeaways from two of last week’s earnings’ releases…

This week’s Update features stories on the divergent paths of two of the leading metasearch sites – Kayak and Trivago – and updates on recent efforts by airlines JetBlue and RyanAir to grow their direct bookings. Enjoy.

Two Metasearch Sites, Two Different Paths
("Trivago and Kayak Split Over Travel's Metasearch's Future," July 30, 2021 via Skift Travel News) (subscription may be required)
To diversify or remain focused on your core business or target customer seems to be a frequently asked question by many of the largest online travel platforms, particularly now as these platforms seek to re-establish critical post-COVID revenue streams. The latest example is Trivago’s recent launch of its new local content (e.g., local concerts, theater and other activities) in the United Kingdom to inspire and attract travelers’ interest before booking, while Trivago’s main competitor, Kayak, remains focused on travelers ready to book their trip. How long will these metasearch giants pursue these different strategies? Which strategy will prove best? It is too early to tell. 

It was a relatively quiet week in the online travel world. Booking’s announcement last week about its launch of a new fintech business spurred several additional stories last week, two of which are included in this week’s Update. Enjoy.

Much Ado About Nothing: Tripadvisor Plus Announces Initial Partners  
("Tripadvisor Plus Signs Its First Hotel Chains But Those Missing Are a Bigger Story," June 14, 2021 via Skift Travel News) (subscription may be required)
Recently, Tripadvisor announced that it had signed its first three hotel groups to its subscription service, Tripadvisor Plus: Barcelo Hotels, Millennium Hotels and Pestana Hotel Group. While these three groups represent an additional 500 new hotels for the service, Tripadvisor Plus has yet to convince any major supplier to join the service. Tripadvisor claims it continues to have many “positive conversations” with major suppliers about the service, though, at least publicly, nothing has yet come from those “conversations.” Until then, Tripadvisor will have to continue relying on rates and inventory sourced from other intermediaries like Trip.com, Getaroom and Internova. Suppliers wishing to avoid the new subscription service will need to remain vigilant in their efforts to monitor and possibly curtail the onward distribution practices of these (and other) existing distribution partners.