Duff on Hospitality Law

Our first Update of 2022 includes a number of stories on the evolving marketing tactics of both hotels and their distribution partners. Enjoy.

Better Days Ahead? Expedia Certainly Thinks So
(“Online travel giants' marketing spend continues to head north,” January 10, 2022 via Phocus Wire)
(“VIDEO: How hotel marketing tactics are shifting,” January 12, 2022 via Phocus Wire)
Last week, two stories detail the major OTAs’ apparent spending spree on sales and marketing. What’s driving this growth? General optimism over the anticipated return of the travel industry? Renewed efforts to defend or capture critical market share in an increasingly competitive online market? Dogged determination to quash hoteliers’ seemingly successful direct booking efforts – particularly over the past 18 months? Maybe a little of all three? According to a report issued last week by PhocusWire, most of the major online booking channels reported huge year-over-year increases in their third quarter sales and marketing spend. Airbnb increased its third quarter year-over-year spend by 156 percent to a measly $291 million. Expedia Group increased its third quarter spend year-over-year by 150 percent to a whopping $1.3 billion and confirmed plans late last week to run Superbowl ads for both Expedia.com and Vrbo (the first such ads by Expedia in years). Booking Holdings increased its year-over-year spend by nearly 100 percent to a total of $1.38 billion. Bucking this trend was China’s Trip.com, whose year-over-year increase of 12 percent was reported to be in response to continued uncertainty over the pandemic.

Happy holidays from snowy Seattle... As you can see from the stories we’ve included below, it was a very quiet week in online travel. Enjoy.

Is Google a Bigger Threat Than Ever? 
(“Rise of Google Represents Ongoing Threat to OTAs,” December 23, 2021 via Hotel Management Network - Top Stories)
With Google’s 2020 revenues 15 times the combined 2020 revenues of Booking and Expedia and Google’s 2021 launch of free hotel booking links, some think a shift in the balance of power between online travel agencies (OTAs) and the search engine is inevitable.

With the holidays rapidly approaching and the yearend only one week away, it is no surprise that the last week was fairly quiet. The one notable exception, however, was Trip.com, which released its financials on Thursday, December 16.   

Trip.com Grows European Market Share with Superior Technology
(“Trip.com Bolsters Flight Search Engine to Boost European Bookings,” December 17, 2021 via Skift) (subscription may be required)
Leveraging its increasingly superior technology platform (particularly around flight search), Chinese platform Trip.com is making huge strides in growing its European market share. Not only is Trip.com’s internally developed flight search engine better at delivering users appropriate fares and itineraries, but the systems’ ability to offer ancillary products and services is attracting the attention of European airlines. (Trip.com owns Travelfusion, one of a handful of technology vendors that aggregate airline NDC content for onward distribution.) Trip.com also plans to be one of the first online booking platforms to roll out Hopper’s price freeze tool (allowing users to pay to freeze fares up to 14 days) to users in North American and Europe as part of a previously announced deal.

Despite what the calendar might say, winter has definitely arrived in the Pacific Northwest. This week’s Update features a variety of stories, including a story or two on online travel agencies (OTAs), and stories on Vacasa’s public debut and Amex GBT’s planned public debut. Tis’ the SPAC season. I hope you enjoy.

Agoda Debuts Additional New Offerings
(“Agoda launches Beds Network to help hotels distribute wholesale rates,” December 9, 2021 via Phocus Wire)
Last week, we included a story detailing the launch of several new Agoda products. Last week, Agoda launched yet another new product, Beds Network, which represents Agoda’s formal entry into wholesale distribution. The Network will leverage Booking Holdings’ existing affiliate network to allow participating suppliers to distribute rates and inventory on a wholesale or B2B basis. According to the announcement, suppliers who participate in the program will have complete control (fully yieldable) over the rate and inventory offered through the solution (which if true, would be quite a departure from competitors’ similar wholesale distribution offerings). Existing Agoda suppliers won’t need to enter into new, or amend existing, contracts to participate. Agoda’s plans call for the Network to be rolled out initially in Asia, the Middle East and Europe, with other markets added throughout 2022.

This week’s Update features stories about a number of emerging corporate travel startups, all of which expect, in one way or another, to take advantage of expected changes in the post-COVID corporate travel industry. Is it just me or is corporate travel starting to get really crowded?

Life House Raises an Additional $60 Million
(“Kayak-Backed Hotel Startup Life House Raises New Funding at $250 Million Valuation,” December 2, 2021 via Bloomberg – News) (subscription may be required)
Over the past year or two, we’ve featured a number of stories on New York-based Life House Hotels, including its operation of the Kayak Miami Beach in partnership with meta search platform, Kayak. Kayak appears to be interested in expanding that relationship as it joins other investors in this latest Life House financing round. The round values Life House, which as of the end of November, held 51 hotel management contracts, at approximately $250 million.

For those of you celebrating Thanksgiving this week, happy holidays. This week’s Update features a wide variety of stories, including PhocusWire’s annual list of the 25 hot travel startups. Enjoy.

Expedia Partner Solutions Offers Carbon Neutral Hotel Stays
(“Expedia and Key Travel create ‘carbon neutral’ hotel stays,” November 18, 2021 via Travel Weekly (UK) – News)
Expedia Partner Solutions (EPS) and Key Travel are collaborating to offer travelers the opportunity to offset the carbon emissions associated with their stay through the purchase of carbon offsets. With each stay booked through EPS, EPS and Key Travel will pay the amount of the carbon offset to nonprofit, Cool Effects, which will then invest the funds in verified carbon reduction projects around the world.

We begin this week’s Update with the announced acquisition of Getaroom by Booking Holdings. Enjoy.

Booking Holdings to Acquire Getaroom
(“Booking Holdings to Acquire Getaroom for $1.2 Billion,” November 12, 2021 via Phocus Wire)
On Friday (November 12), Booking Holdings announced one of its largest acquisitions in some time – the $1.2 billion purchase of B2B platform, Getaroom. At closing, Getaroom will join Priceline’s strategic partnerships team, Priceline Partner Network, which, Priceline claims, will result in new and improved B2B distribution opportunities for its hotel suppliers.  

Last week was earnings week for many of the public online travel companies, and we’ve included stories summarizing those releases for several of the largest – Expedia Group, Airbnb, Booking Holdings and Sabre. We’ve also included copies of the transcripts of last week’s earnings calls for both Expedia and Booking. Enjoy.

Amazon Expands India Travel Offerings
(“Amazon to Offer Travel in India via MakeMy Trip,” November 3, 2021 via Phocus Wire)
Last week, Indian online travel agent, MakeMyTrip, and Amazon announced a new partnership through which MakeMyTrip’s travel services will be made available to customers in India through the online retailer’s website and mobile application. Customers purchasing travel services on the Amazon platforms will also be able to pay for their purchases via Amazon Pay. According to the press release, the travel services will be available for booking in the next few months. Readers of our Update will know that this isn’t Amazon’s first foray into travel services – virtual tours in September 2020 and domestic air tickets and bus passes in India in May and December 2019.

Our cruise industry friends make an appearance in this week’s Update, one of their first appearances in some time. Enjoy.

South Korean Regulators Re-Examine OTA Practices
(“Online hotel booking sites to come under heightened scrutiny from South Korean regulator,” October 28, 2021 via MLEX Insight) (subscription may be required)
By now, readers are well aware of South Korea’s previous investigation into the major online travel agencies (OTAs)’ contracting practices (specifically, rate parity requirements) and the resulting “corrections” announced by OTAs (Booking.com, Agoda, Expedia and Hotels.com) earlier this year. These corrections mirror the compromises reached in several other countries where OTAs agreed to remove availability and indirect channel rate parity, but retained direct channel parity requirements (e.g., hoteliers must continue to provide OTAs with rates equal to or better than the rates on the hoteliers’ own websites). With the travel industry expected to rebound quickly in Korea as the threat of COVID subsides, the Korea Fair Trade Commission (KFTC) announced last week plans to re-examine the OTAs’ current contracting practices and their effect on the market. Separately, the KFTC announced that an investigation into OTAs’ advertising practices, specifically whether OTAs provide adequate notice regarding display advertising’s effects on sort order, was already underway.

This week’s Update features yet another story about Hopper as well as an important update on the future of keyword restrictions. Enjoy.

Marriott Goes to Trial
(“Marriott Loses Bid for More Time Ahead of TravelPass Trial,” October 20, 2021 via Law360 – Competition) (subscription may be required)
Marriott’s efforts to postpone the start of trial in the TravelPass matter were derailed last week. While the recent court ruling was entirely procedural in nature (Marriott sought to postpone the start of trial to allow the court additional time to review earlier decisions on the applicable anti-trust standards), the case and its ultimate outcome are something to watch. Among the many issues to be decided at trial is the question of whether agreements between hoteliers and their distribution partners prohibiting the distributors’ use of keywords is permitted under applicable U.S. antitrust law. Of the many initially named defendants (Choice, Wyndham, Hilton, Caesars, Red Roof, Hyatt and Six Continents), only Marriott has elected to proceed to trial. Expect additional updates in the near future as trial is set to begin on Monday, November 1^st, and the court prepares to issue several key preliminary rulings regarding the applicable legal standards.