Duff on Hospitality Law

This week’s Update features a variety of stories, including the big three industry players, Trip.com, Expedia and Booking.com; the always insightful update on the current status of airline distribution; and details on CitizenM’s recent introduction of a subscription plan for corporate travelers. Enjoy.

Booking.com Bullish on Long-Term Prospects of Short-Term Rentals
(Booking Holdings CEO Sees Greater Traveler Awareness in Alternative Accommodations as a Long-Term Boon,” Sep 22, 2020 via Skift Travel News) (subscription may be required)
With approximately 6.7 million short-term rental listings on its platform, Booking.com hopes to make the most of travelers’ growing interest in alternative accommodations. Booking Holdings President and CEO, Glenn Fogel, believes the pandemic-induced interest in short-term rentals will remain for many years to come and should position Booking.com well against its online rivals. While demand continues to grow for short-term rentals, creating the supply needed to meet such demand has been challenging. According to Fogel, onboarding its millions of rental properties has cost far more than onboarding traditional guest rooms accommodations. As the demand for short-term rentals continues to rise (and is anticipated to remain long after the pandemic subsides), one might expect to see traditional lodging operators giving rentals a second look. 

This week’s Update features a number of stories on short-term rentals, which is a trend that we will likely see continue as interest continues to grow over Airbnb’s long-awaited IPO. Enjoy.  

Marriott Continues Its Transition to Expedia Partner Solutions
(“Expedia Is Now Marriott’s Exclusive Provider of Wholesale Rates for Travel Agents,” Sep 14, 2020 via Skift Travel News) (subscription may be required)
Last fall, we (like every major distribution news outlet) featured a story detailing Marriott’s decision to partner with Expedia Partner Solutions (EPS) on the re-distribution of Marriott properties’ wholesale rates. This past week, the transition became official as EPS began emailing members and prospective members of the Expedia Travel Agent Affiliate Program and advising them that they would soon have exclusive access to higher margin wholesale rates for more than 7,400 Marriott properties (and with the transition to EPS comes the end of sourcing such rooms through legacy intermediaries (e.g., Hotelbeds)). In an effort to expand its Travel Agent Affiliate Program (which currently boasts 100,000 agents globally), Expedia is offering prospective affiliates a variety of offers, including increased commissions for bookings through December 31^st. While Expedia has made efforts to expand its EPS wholesale offering, no other major brand has yet to follow Marriott’s lead.

Pandemic, protests and riots and now wildfires. To say 2020 has been a challenging year is an understatement. 

As I anticipated, with summer now officially behind us, things have again picked up in the distribution world. This week’s Update features two stories on airline distribution, which as most of my readers know by now, I find instructive as to what we might soon see in the accommodations world, particularly as both industry segments consider plans for a post-pandemic world. Enjoy. 

As One Airline Steps Forward Another Retrenches
(“Air France-KLM and Amadeus Sign Landmark Distribution Deal, Sep 10, 2020 via Skift Travel News; “Delta pauses NDC development, "doubles down" on existing distribution strategy, Sep 10, 2020 via Phocus Wire) (subscription may be required for Skift Travel News)
By now, most everyone is familiar with new distribution capability (NDC) and its potentially disruptive effect on traditional airline distribution. Over the years, we’ve featured dozens of articles about the technology and the bitter battles that have been waged between carriers and their traditional global distribution system (GDS) partners over adoption of the technology. This past week saw announcements by two major airlines detailing the drastically different directions each was taking with regard to the future of airline distribution. 

As summer was coming to a close last week (and people everywhere were doing best to hang onto the last few glimmers), there was little noteworthy news coming out of the distribution world. Enjoy.

Travel Marketers Beware: Apple’s Updated Privacy Practices May Be A Marketer’s Nightmare
(“How Apple’s New Privacy Effort Will Impact Travel Marketing, Sep 3, 2020 via Skift Travel News) (subscription may be required)
While Apple announced late last week that it was likely postponing until early next year previously announced changes to its privacy practices, the proposed changes nevertheless warrant attention by hoteliers and OTAs alike. The changes, which are part of Apple’s campaign to provide users greater transparency and control over their data, require application developers to secure users’ affirmative consent (“opt-in”) before tracking their online practices. The changes further require developers to clearly disclose what data they will be collecting and with whom they will be sharing the data. Should iOS users decide against allowing applications to track their online behavior, hoteliers and OTAs (both of whom maintain branded applications and rely heavily on online marketing firms to place targeted ads in third-party applications) may soon have to find new (or even old) methods of reaching their guests.  

This week’s Update features important updates on the status of rate parity in the EU and introduces yet again, new tools by Google for safety conscious travelers. 

Suppliers Come and Go on Google’s Short-Term Rental Platform 
(“Booking Is In, Airbnb Is Out of Google Vacation Rentals,” Aug 26, 2020 via Skift Travel News) (subscription may be required)
Participate in the free advertising program of the world’s most dominant search engine (and at the same time further strengthen the search engine’s dominance) or shun the program and its millions of potential users and go it alone? That is the difficult choice currently facing short-term rental suppliers (i.e., OTAs and management companies). In the year since Google launched its vacation rental program, suppliers have come and gone (and come again). Just a few months ago, neither Booking.com nor its sister-company, Agoda, participated in the program (after being featured as one of the primary participants at the program’s launch in early 2019). Airbnb followed quite a different path, joining the platform when Booking.com/Agoda were out and then leaving the platform when Booking.com/Agoda returned. Today, Booking.com and Agoda are both participants, while Airbnb is not. 

This week’s OTA & Travel Distribution Update includes Google prominently featured in the news and a new agreement for Choice Hotels. Enjoy.

Google Continues to Unveil New Travel Products Despite Pandemic
(“Google Quietly Debuts Game-Changing Tours and Activities Advertising Product,” Aug 17, 2020 via Skift Travel News) (subscription may be required)
Last week, we featured a story on Google’s release of new pandemic-related information on popular travel destinations. This week, we introduce you to Google’s new tours and attractions advertising platform. Although the new advertising is viewable today by users in only a few select markets, the advertising, which appears higher than traditional search ads and organic results, is poised to do to tours and attractions what similar advertising did to hotels. The price to participate in the new advertising is not cheap; featured tours and attractions providers are rumored to be required to provide Google a perpetual license to use the providers’ content. I’m sure this won’t be the last story on this new Google travel product. 

Parity Commitments Extended by Expedia and Booking.com
(“Expedia, Booking.com voluntarily extend 'price parity' antitrust commitments, Aug 14, 2020 via MLEX Insight)
While the European Commission continues its re-examination of Expedia’s and Booking.com’s parity practices, both platforms recently announced their decision to extend their so-called “narrow” parity commitments (the commitments by both Expedia and Booking.com were set to expire in July). While the extensions were welcome news for many regulators, hoteliers throughout Europe continue to challenge the effectiveness of the commitments and demand an outright ban on all parity requirements. I doubt we will see much movement on this issue by regulators as the world continues its struggle with the COVID-19 pandemic, and regulators are caught up in their ongoing investigations of larger online platforms like Google and Facebook. 

Below is an abbreviated version of this week’s OTA &Travel Distribution Update. Enjoy.

Booking Holdings Feels "Full Impact" of Coronavirus as Gross Bookings Plunge 91 Percent in Q2 2020
Aug 6, 2020 via Phocus Wire
Booking Holdings’ gross travel bookings plummeted 91 percent to $2.1 billion in the second quarter of 2020 as the company felt the “full impact” of COVID-19, said President and CEO Glenn Fogel.

This week’s Update takes a deep dive into all things Expedia, and includes several stories regarding Expedia’s recent disastrous quarterly earnings release, an actual copy of the release as well as a copy of a complaint recently filed in Washington state against Expedia that raises some interesting questions for Expedia and other travel intermediaries. Enjoy.

Expedia’s Recent Quarterly Earnings Release Reflects Current Travel Industry Misery
(“Abysmal April pulls Expedia Group down to record lows in second quarter,” Jul 31, 2020 via PhocusWire)
Where to start…Here are my key takeaways from Expedia’s second-quarter earnings report:

• • “Worst quarter the travel industry has seen in modern history.” Peter Kern, Expedia CEO
  • 82 percent decline year over year in overall revenue ($3.2 billion to $566 million), with lodging revenue declining 78 percent
  • 90 percent decline year over year in gross bookings
  • 91 percent decline year over year in media and advertising revenues (Trivago and Expedia Group Media Solutions)
  • Company-wide selling and marketing expenses in the second quarter dropped from $1.6 billion to $296 million
  • April was the low point (cancellations exceeding bookings), but May and June have seen modest increases in bookings (and cancellations have stabilized).
  • Drive-to destinations are the first to return
  • Vrbo has become Expedia Group’s pandemic bright spot with daily rates continuing to increase (yes, increase) and the overwhelming majority (experts speculate as high as 83 percent) of bookings coming through organic (less expensive) sources. Dare we say that Vrbo is engaged in its own form of direct booking program…
  • Although Expedia’s $275 million industry recovery program has been rolled out to partners in 80 countries, no information was given on the number of partners that have actually enrolled in the program and/or how much of the $275 million has actually been distributed.

It was a relatively quiet week for the distribution industry. Enjoy.

Family Travel Club Launched in the Midst of a Pandemic
(“Online Family Travel Club Launched by Wall Street Journal Alums Unbowed by Pandemic,”
Jul 20, 2020 via Skift Travel News) (subscription may be required)
This past week saw the launch of The Expedition, a subscription-based online travel platform focused on families. Founded by two former newspaper and magazine editors (Wall Street Journal, Travel + Leisure and TIME), the newly launched platform will feature travel content and discounted services and products, and provide subscribers an interactive network of travel industry professionals and travelers focused exclusively on family travel.