Duff on Hospitality Law

Like prior weeks’ Updates, this week’s Update features stories on the growing phenomenon of fintech and its effect on the travel industry. Enjoy.

Dissatisfaction With Expedia Directors
(“Do Travel Agents Matter in Online Travel? Expedia Thinks So,” June 22, 2022 via Skift (subscription may be required)
Skift recently featured an interesting article describing apparent shareholder dissatisfaction with certain of the online travel giant’s board members. The dissatisfaction (expressed through withheld votes in connection with Expedia’s recent annual shareholders’ meeting) was focused on board members Chelsea Clinton, Craig Jacobs, Dara Khosrowshahi and Beverly Anderson. While there isn’t any information detailing the reasons for the withheld votes, Skift speculates it may relate to shareholder concerns with executive compensation, depressed share price or even the political views of the targeted board members.

This week’s Update features a variety of stories, including updates on Sabre’s attribution sales efforts and the growing importance of Booking.com’s mobile application in the U.S. Enjoy.

Sabre Moves Forward With Attribution-Based Sales
(“Sabre on Hospitality Marketplace Development, Attribute Selling,” June 14, 2022 via Phocus Wire)
For some time now, clients have complained that Sabre’s (and other GDS providers’) innovation efforts have largely been focused on airlines, leaving hoteliers to fend for themselves with the old legacy GDS platforms. According to Sabre, that “airline-first” approach may soon change as Sabre continues its efforts to launch its new intelligent retailing platform. According to Sabre’s Senior Vice President of Sabre Hospitality Solutions, Frank Trampert, Sabre’s new platform will allow hoteliers to create personalized offers like those found on traditional retail websites (e.g. Amazon). Hotel rooms will remain central to the platform, but other ancillary amenities and services will be available for booking at the same time. This month, Sabre plans to introduce 23 features as part of the platform’s initial product test. Pilots of the platform will begin in October with a general release of the platform scheduled for early 2023.

This week’s Update features two stories detailing fintech’s growing influence on online travel. Regular readers of our Update know that we’ve featured a number of fintech and payment related stories this past year, with multiple stories on Hopper, Booking.com and its much discussed payment platform, Visa, and others. And if you need any further proof of the growing influence (or likely future influence) of payments on online travel, one only need to review the list of regular readers of our online travel blog on JD Supra, which reads like a who’s who of the payments world – American Express, Capital One, Bank of America, JP Morgan Chase and Deutsche Bank. I hope you enjoy this week’s Update.

Musafir Partners with Mastercard to Launch Innovative Payment Options
(“UAE-Based OTA Musafir Signs with Mastercard,” May 27, 2022 via Business Travel News)
Three weeks ago, it was Agoda announcing its partnership with Visa. Last week, Dubai-based online travel agent Musafir announced its own exclusive partnership with Mastercard. According to the announcement, the parties will work together to “digitize payment flows,” launch new innovative payment products and provide expense management tools for Musafir’s corporate customers. Musafir claims to be the region’s first O.T.A. with 1800 businesses participating on its business booking platform.  For more details on the growing influence of fintech products on online travel, make sure to read the story below from Wit, detailing Amadeus’ recent Travel Fintech Investment Trends 2022 report.  

With earnings season upon us, it was difficult to limit this week’s Update to just 12 stories. For those of you seeking a deeper dive into the latest on online booking platforms, Expedia Group and Booking Holdings I encourage you to take a look at the Expedia Group and Booking Holdings call transcripts. Enjoy. 

Expedia Updates
(“Expedia Unveils New Strategy,” May 6, 2022 via Hotel Business)
(“Expedia Group Revenue Jumps 81 Percent as Travel Recovery Continues,” May 2, 2022 via Phocus Wire)
(“Expedia Group Revamps Marketplace, Tech Platform as Part of New Strategy,” May 4, 2022 via Phocus Wire)

Last week not only saw the release of Expedia’s first quarter earnings report, but also the hosting of Expedia’s annual partner conference – this year titled Explore. Here are my key takeaways from this past quarter’s earnings release and reported Explore highlights:

• • While Expedia’s quarterly financial performance still lagged behind 2019, recent months (starting with February) have exceeded same month comparisons to 2019.
    
    
  • Traveler demand is returning stronger than ever, despite the emergence of COVID variants, the war in Ukraine, inflation, etc. In CEO Peter Kern’s words, the recovery “seems too strong to be held down.” Demand is also starting to return across multiple segments, including CBD business and business travel.
    
    
  • VRBO continues to enjoy unprecedented success, performing now at levels above 2019. Supply constraints remain a concern, particularly in key markets.
    
    
  • Expedia’s B2B business (most notably, Optimized Distribution) continues to gain traction (particularly with the recent enrollment of IHG) and is now a major focal point for Expedia’s future growth. Expect increased interest in enrolling supplier partners of all sizes in Expedia’s B2B program.
    
    
  • When discussing Expedia’s latest quarterly marketing investments, Peter referred repeatedly to efforts now focused on developing longer term relationships with its travelers and the “lifetime value” of such travelers. According to Peter, “the industry has been very transactionally focused and we haven’t been great historically at measuring lifetime value...” Sound familiar? Sounds like Peter may have stolen a page or two from hoteliers’ song books on the real value of direct channel bookings (and their associated investments) versus the “transactional” bookings often sourced through third party online channels.
    
    
  • At last week’s Explore event, Expedia launched its new technology platform, Expedia Group Open World. This new platform will allow partners of all shapes and sizes to contribute products, services and content to the overall traveler experience.  Expedia also revealed its new reimagined marketplace, which, among other things, will now rank individual hotels (which ranking then affects display and sort order) by a new guest experience score – which takes into consideration guest reviews, customer service interactions, etc. And in a nod to Hopper and its incredible success these past few years, Expedia is also launching a price predictive tool that will allow users to track historical and anticipated future rate changes for both air (today) and hotel rooms (later this year).
    
    

Last week was all about loyalty as we saw a number of stories on the new roles that technology and online platforms are playing for hoteliers seeking to update and expand (or even launch) their loyalty programs. We include three of those stories in this week’s Update. Enjoy.

Technology Powers Loyalty Program Growth
(“IHG introduces new loyalty program,” April 13, 2022 via Hotel Business)
 (“Tech is powering the new look of hotel loyalty programs,” April 16, 2022 via Phocus Wire)
(“Fintech to Help Smaller Hotel Brands Like Selina Launch Rewards Cards,” April 13, 2022 via Skift) (subscription may be required)
This week, we feature three separate stories detailing the important role that technology (and online platforms) is playing in updating existing and launching new loyalty programs.

• • In recent weeks, both IHG and Accor have announced major updates (in the case of IHG, a complete overhaul) to their loyalty programs. In the case of IHG and its new IHG One Rewards program, the program is centered on IHG’s mobile application and now allows members to customize the rewards they receive through another online platform, Milestone Rewards. The newly constituted program, including Milestone Rewards, is expected to be available in June. Accor also recently announced changes to its loyalty program Accor Live Limitless (ALL) through a new partnership with online entertainment platform Fever, which will allow members to use their loyalty program benefits to book a variety of activities and experiences.
  • Lastly, Skift explains how fintech startups are allowing smaller hotel and travel companies (Selina) to launch new co-branded payment cards (to boost their fledging loyalty programs) in under a month. In Selina’s case, its planned card will feature cash rewards for signing up, loyalty program points and cash rebates for hotel stays. 

This week’s Online Travel Update features a variety of stories, including a follow up story on Uber’s ongoing transition from ride hailing app to super app. Enjoy.

Groups360 Raises an Additional $50 Million
(“Groups360 attracts $35 million, plots group travel platform expansion,” April 8, 2022 via Phocus Wire)
Groups360 announced recently that it raised an additional $50 million in funding. The group booking platform was started in 2014 and in 2019, received a $50 million investment from hoteliers Accor, IHG, Hilton and Marriott. Groups360 plans to use this latest investment to further its expansion across EMEA and APAC. Groups360’s main offering, GroupSynch, allows users to book guest rooms and meeting rooms entirely online – similar to competing online offerings from CVENT (Instant Book), Hotelplanner and others. From our perspective, the first company to offer reasonable contracting terms that recognize hoteliers’ concerns generally regarding online distribution, will likely have a huge advantage.

As you can see from our stories below, it was a rather quiet week for online travel. Enjoy.

Want to Play a Game While You Book That Vacation Package?  
(“OYO, Hopper bet on gamification to drive user retention,” March 7, 2022 via Phocus Wire)
Yes, another story about Hopper. Last week, Skift ran an interesting story on plans by both OYO and Hopper to incorporate games into their booking platforms. Both companies view games as a means to higher user retention and ultimately to achieving the much-desired super app status. According to Hopper, it is exploring both “game theory” (using rewards to drive desired outcomes) and actual games that entertain users and drive repeat visits (and ultimately, bookings). The Chinese e-commerce site, Pinduoduo, is one example that Hopper identifies where game theory and actual games have led to significant numbers of repeat users. Rather than investing in paid search marketing (like the majority of Hopper’s major booking platform competitors), Hopper is exploring using its marketing resources to reward frequent users with discounts and other financial rewards.  

Our newest post comes from my Portland, Oregon colleague and partner, Joy Ellis. For those of you who have not met Joy, Joy serves as the Portland Chair of our Hospitality, Travel and Tourism Practice Group. She also has over 15 years of legal experience in the areas of commercial litigation, employment litigation and employment-related advice, and brings us important news on the latest chapter of ongoing litigation between online travel companies and the many jurisdictions that have sought to collect allegedly unpaid or underpaid lodging taxes. This latest installment involves our own City of Portland. Thank you Joy for this important update.

Across the country, online travel companies (“OTCs”) are involved in litigation with local officials over the tax on hotel rooms. City officials argue that online travel sites shortchange the cities on their local hotel taxes. The OTCs disagree.

Here’s the crux of the issue: let’s say a guest books a hotel room through an OTC’s website. The traveler booking the room pays an amount to the OTC, part of which goes to the hotel and part of which is kept by the OTC as a facilitation and service fee. The fee attributable to the hotel includes the often severely discounted ("net" or "merchant") room rate agreed upon between the OTC and the hotel, plus the hotel tax owed on that discounted rate. City officials want the hotel tax to be based on the entire ("retail") amount paid by the traveler to the OTC. The OTCs argue that local lodging tax on hotel rooms should be remitted based on the actual amount a hotel receives for a room rather than the total amount that a guest pays the OTC for a room.