Marriott delivered a not-so-subtle message to Expedia about their negotiations on a new contract, which comes up for renewal at the end of 2011.
In prepared remarks during Marriott's third-quarter earnings call Oct. 6, CFO Carl Berquist mentioned that the company had just signed a new global distribution contract with Priceline's Booking.com, which uses the commission model and not the merchant model.
In the US especially, Expedia's primary focus is using the merchant model in hotel sales, and Marriott obviously isn't especially enamored with the arrangement.
Berquist said:
In contrast to the merchant model, the Booking.com commissionable model arranges for a benefiting hotel to pay a commission after the stay. While OTAs will continue to represent a very small portion of our overall business, we expect this agreement will improve our efficiency and revenue over time.
And, then came the kicker, as Berquist added: "Incidentally, we are also negotiating our Expedia contract, which is scheduled for a renewal later this year."
The "incidental" remark about Expedia appears to be a well-timed comment, designed to provide a little pressure on Expedia, which represents only about 1% to 1.5% of Marriott's overall sales.
Booking.com is Expedia's main hotel rival in Europe and is expanding in the US with its commission model.
Don't expect Marriott to be able to wriggle out of its merchant model relationship with Expedia in favor of a commission-only arrangement, but the hotel chain hopes that its new ties with Booking.com will put some pressure on Expedia to offer Marriott a better deal than the one expiring later this year.
In other news, COO Arne Sorenson spoke about some of the tech tools that are coming into play in corporate negotiations.
Marriott has been involved in using dynamic pricing for several years, but Sorenson said last room availability is "probably a bigger factor" these days than dynamic pricing for Marriott in negotiations.