Duff on Hospitality Law

We cover the gamut of distribution topics in this week’s Update – OTAs, GDS, search, short-term rentals and wholesalers. Enjoy.

Is OTA Supremacy Undeniable?
(“Online Travel: Can Anyone Challenge The Supremacy Of Booking And Expedia?” Jun, 2020 via Hospitality Net - Latest Industry News)
Similar questions have been asked frequently across the industry as pundits, analysts and experts have warned that the struggling lodging industry is destined to repeat its post-9/11 practices of effectively turning over control of its room inventory to online distributors. Several of this week’s stories look closely at this issue and try to answer the question of whether hoteliers are bound to repeat history or will perhaps use this opportunity to forge a new path.

This week’s Update again features more stories than usual. With so many in the lodging industry using the current downturn as an opportunity to question “business as usual,” we want to be as inclusive as possible. Enjoy. 

Trip.com Offers Some Good News and Some Bad News
(“Trip.com Group Highlights Signs of a China Travel Rebound Despite a Sobering Outlook,” May 28, 2020 via Skift Travel News)
Trip.com’s recent first-quarter earnings release offered a little something for everyone. The optimists will point to the reported increases in domestic travel within China and South Korea, and the unexpected strong performance in the luxury segment. The pessimists will point to Trip.com’s dismal first-quarter earnings (operating loss of $211 million compared to an operating profit of $123.7 million a year earlier), projected $153-$181 million operating losses in the second quarter and the non-existent international travel market. Despite the daunting task ahead, Trip.com CEO, Jane Jie Sun remains optimistic and expects to continue the company’s focus on domestic leisure travel in the near term.

This week’s OTA & Travel Distribution Update includes a greater number of stories than usual given the ever-changing COVID-19 situation. I hope you enjoy.

Expedia’s Quarterly Earnings Release Garners the Week’s Headlines
(“Expedia Group CEO Peter Kern: ‘Google’s a problem for everyone who sells something online,” GeekWire on May 22, 2020)
Given the amount of coverage last week paid to Expedia’s first-quarter earnings release, it was necessary to feature at least one story highlighting the release’s key takeaways. In fact, we included three stories, with one from our favorite Seattle-based publication, Geekwire. Some of the points that caught my attention include (1) leadership’s continued focus on Google and its increasing influence in online travel, (2) the relatively strongperformance of VRBO and travelers’ interest in whole-home accommodations post-COVID-19, and (3) Expedia’s opportunistic view of the pandemic and hotels’ resulting need for occupancy (which may present the same kinds of opportunities for Expedia and other OTAs that existed following 9/11).

Even as Seattle hotels face devastating impacts from the COVID-19 shutdown and start planning how they might reopen, the City of Seattle is proceeding with sweeping ordinances protecting employees in hotels with 60 or more guest rooms. On May 15, the Seattle Office of Labor Standards (“OLS”) proposed administrative rules for these new hotel employee protections.

This week’s OTA & Travel Distribution Update for the week ending Friday, May 15, 2020 contains a wide variety of stories – from the tried and true to the truly bizarre. I hope you enjoy.

IHG Finally Opens Ctrip Flagship Store
(“IHG Announces Partnership with Trip.com Group's Ctrip,” May 14, 2020 via Hotel News Resource)
For some time now, many of the largest hotel companies have operated flagship stores on Trip.com’s Ctrip. This past week, seeking to take advantage of the rebounding domestic China market, InterContinental Hotels Group (IHG) announced a broad partnership with Ctrip, including the addition of a new IHG flagship store. What’s most interesting about IHG’s announcement, however, is the planned “cooperation” between the two heavyweight’s loyalty programs. Users of the IHG flagship store will be able to enroll in IHG’s Rewards Club. Direct membership matching – whereby elite members of Ctrip’s loyalty program can apply for elite membership in IHG’s program - will also be offered. As part of this new partnership, it will be interesting to see whether IHG will offer its loyalty program rates through the flagship store or provide IHG loyalty program members who book through the Ctrip store membership benefits. The last time we saw that level of cooperation between a brand loyalty program and a distributor was the headscratcher of a deal between Expedia and Red Lion from 2016.

This week’s Update features a number of stories detailing the disastrous effects of COVID-19 on some well-known distributors. No one is immune from this current downturn.

You Can Now Add Trivago and Airbnb to the Austerity List
(“Trivago Looks to Reorganize With ‘Significant’ Job Cuts,” May 4, 2020 via Skift, “Airbnb lays off 25% of staff, cuts back investment in hotels, transportation,” May 5th, 2020 via phocuswire.com)
Last week, we featured a story detailing the measures being implemented by TripAdvisor to ride out COVID-19. Last week, both Expedia Group’s Trivago and Airbnb announced their own versions of austerity measures. In addition to its 25 percent workforce reduction, Airbnb announced the temporary curtailment of Airbnb’s transportation business and a reduction in investment in its hotels and luxury categories. What this might mean for hotels currently on Airbnb’s platform (HotelTonight or otherwise) or Airbnb’s ambitions of becoming a full-service travel platform remains murky.

Cocktail anyone?

Yesterday, the Washington State Liquor and Cannabis Board (the “WSLCB”) announced that spirits, beer and wine restaurant licensees (“SBW Restaurants”) may sell pre-mixed alcoholic beverages for off-premises consumption during the COVID-19 pandemic (the “Bulletin”). In other words, if you are a SBW Restaurant, you can sell cocktails to-go.

This week’s Update features a number of updates on previous stories, including our recent story on Expedia’s apparent abandonment of indirect and direct channel rate parity provisions in Australia. Enjoy.

Expedia Abandons Rate Parity in Australia
(“Expedia's scrapping of all MFNs followed Australian official's public smackdown of platforms,” May, 2020 via MLEX Insight)
For those of you with properties in Australia still operating under Expedia’s narrow version of rate parity adopted in 2016, I have good news. As we reported two weeks ago, Expedia has in fact agreed – without a request from, or consultation with, the Australia Competition & Consumer Commission (ACCC) – to remove all rate parity provisions from its contracts with Australian hotel suppliers. Although the change did come at the request of the ACCC, it’s clear that pressure from the ACCC beginning back in 2018 may have been behind Expedia’s decision. With the change, Expedia is no longer the subject of the ACCC’s ongoing investigation into travel platforms’ use of the often controversial provisions. As noted in our initial story, Booking.com however remains the subject of ACCC’s investigation.

Because many hotels and resorts hold Federal Communications Commission (“FCC”) licenses for the wireless radios that employees use for daily communications on property, the next property acquisition or sale may have more regulatory hoops than you realize. In fact, if a property holds FCC licenses, the property can’t be bought or sold without the FCC first consenting to the transfer of control of the radio licenses.

This week’s Update contains updates on several fronts, but begins with a story that I found thoroughly depressing, but summarizes, perhaps better than any other story I’ve seen in recent weeks, the current state of the travel industry. According to reports (now confirmed), The New York Times plans to stop temporarily printing its weekly travel section in its Sunday print edition. The sports section is facing a similar fate. In their spots, the paper will instead publish a new Sunday section titled, “At Home.” Wait, what? Now, I completely understand the decision and appreciate the circumstances that made this change necessary practically, but the complete disappearance of travel from this Sunday morning staple for so many speaks volumes. The complete article is available on Skift Travel News’ website.

Now, back to distribution…