This week’s Update features a number of stories on growing online travel platforms – including the launch of an entirely new travel application and the possible resurrection of an old familiar travel application.
Blackrock Embraces Hotel Technology Space
(“SiteMinder Gets Funding Boost as Financial Titan BlackRock Bets on Hotel Tech,” Skift Travel News, January 16, 2020)
Another billion-dollar unicorn is possibly in the making. Last week, Blackrock, the world’s largest money manager, led an investment round in channel manager, SiteMinder, that values SiteMinder at a staggering $750 million. To put this in perspective, SiteMinder reported revenues of only $67 million in its most recent fiscal year that ended on June 30, 2019. To justify such a large valuation (and Blackrock’s bet on the channel manager), SiteMinder will need to find a variety of new products and services to offer its existing and prospective hotel customers. So why SiteMinder? Why now? Is Blackrock’s embrace of this relatively small channel manager an anomaly or the sign of more things to come?
With 2020 now upon us and 2019 in the rearview mirror, I thought this would be a good time to take a look back at the stories (and the themes that the stories represent) we covered in 2019 that I believe will have the largest impact on hotel owners and operators in 2020 and beyond. I hope that you will enjoy.
Our holiday-abbreviated OTA & Travel Distribution Update is below. Happy Holidays.
Booking.com Agrees to EU Demands to Change Travel Offers
Reuters Technology on Dec 20, 2019
The European Commission said that Booking.com had committed to end “manipulative techniques” on its travel site, such as time-limits for making bookings.
Booking.com Building Connected Travel with Google Nest
Phocus Wire on Dec 20, 2019
Booking.com and Google Nest say guests and hosts are looking for more safety and security features when staying in private accommodations with smart technology potentially filling gaps.
What Barry Diller Told Anxious Expedia Workers About the Future
Skift Travel News on Dec 20, 2019
Expedia Group Chairman Barry Diller flew to Seattle to rally the troops. His message to all the employees around the world was, in essence, the sun will rise tomorrow at the travel giant. Impatient investors aren’t quite as sure. No, you’re not going to see Barry Diller sweat.
CCPA: Hotel Loyalty Programs, Data Retention and the Brave New World of Privacy
Hospitality Net - Latest Industry News on Dec 20, 2019
The California Consumer Privacy Act (the "CCPA" or the "Act") is a piece of consumer privacy legislation which was signed by California Governor Jerry Brown on June 28, 2018, and goes into effect on January 1, 2020.
South Korean Competition Authority Takes a Hard Look at Parity
(“Comment: Use by online-travel agencies of MFN clauses under study by South Korean antitrust watchdog,” MLex Insight on Dec 5, 2019)
South Korea’s Fair Trade Commission (KFTC) is rumored to be considering possible antitrust enforcement action against the distributors Booking.com and Agoda over their use of contract rate parity provisions. An investigation of the distributors’ practices is currently under way, and the results of the investigation are expected to be released later this month. Also, under consideration are the market implications of broad versus narrow parity requirements. Stay tuned for further updates.
It should come as no surprise that stories detailing the unexpected resignations of Expedia’s top two senior executives are featured prominently in this week’s Update. Rather than just recirculating the usual industry reports, we thought we might offer a more localized (and detailed) view of the resignations. Oh yeah, we also decided to throw in a story about another Pacific Northwest company’s expansion of its closely watched travel experiment. Enjoy.
Okerstrom and Pickerill Out
(“Expedia’s two top execs pushed out as chairman Diller asserts control,” Seattle Times on Dec 5, 2019)
By all accounts we’ve seen, last week’s resignations of Expedia Group CEO Mark Okerstrom and CFO Alan Pickerill came as a complete surprise. What led to the sudden departures? Expedia Group’s dismal third quarter financial results? Differing perspectives on Expedia Group’s go-forward strategies? I’m not sure we will ever know all of the reasons for the resignations. A copy of Expedia Group Chairman Barry Diller’s text to Expedia Group employees immediately following the resignations is included in our Geekwire report. For now, Expedia Group will be led by Diller and Expedia Group Board Vice Chairman, Peter Kern. What this all means for Expedia Group’s hotel supplier partners is unclear, though if asked to speculate (which is all anyone can do at this point), I’d offer that it might be rough going in the near term. While Cyril Ranque appears to still be President of Expedia Group’s lodging partner services, it isn’t clear whether Ranque or even his role within the Expedia Group organizational chart will remain. Even if Ranque retains his position long term, we have no idea what influence Diller’s presence might have on Ranque and his approach to suppliers. We know firsthand that Okerstrom often got personally involved in the negotiation of key lodging partner agreements, and whether Diller is prepared to play a similar role (or even if not playing that role, how Diller might view Expedia Group’s supplier partners and the more moderate “cooperative” approach to key supplier partner relationships exhibited under Okerstrom’s leadership) is unknown. Buckle up everyone.
Need a Recipe? Ask Airbnb
(“Introducing ’Cooking‘ on Airbnb Experiences,” Hospitality Net - Latest Industry News on Nov 26, 2019)
Last Monday, Airbnb introduced “Cooking” on Airbnb Experiences. The new category of experiences allows travelers to book non-traditional experiential cooking classes hosted by families, farmers and other local hosts. The experiences category also provides access to more than 3,000 global family recipes vetted by Slow Food, a grassroots organization dedicated to preserving local foods and customs.
Startup Seeks to Turn Traditional Group Booking Upside Down
(“Booking Startup Stayker Makes Room Blocks Less Risky for Planners,” Skift Travel News on Nov 20, 2019)
Launched last Thursday, Stayker seeks to disrupt traditional group sales and contracting. Rather than rely on traditional room blocks and all that they entail (e.g., room revenue commitments, cut-off dates and attrition), meetings planners using Stayker would bypass the entire rooms negotiation process (and related uncertainties) and instead offer their attendees a link to the new online booking platform. Attendees using the platform would then be able to view all available room inventory in the area (from multiple properties) and book wherever (and whenever) they want at the current rates (no negotiated group rates.) Should such a platform catch on, the group segment (and its associated revenue) could change dramatically. Group bookings would cover food and beverage and meeting space only. Hotels seeking to house group attendees would compete on an area-wide basis and market and promote their inventories (once again) through a third-party online intermediary. It will be interesting to see whether meeting planners embrace this new model. Stay tuned.
Vrbo Repositions Itself
(“Expedia’s Vrbo to Reposition Itself Beyond Vacation Rentals as a Family Travel Business,” Skift Travel News on Nov 14, 2019)
Fresh from its disappointing third-quarter financial results, Expedia Group’s recently announced “repositioning” of Vrbo may be just what the doctor ordered. Earlier this month, Vrbo’s new general manager, Jeff Hurst, announced that Vrbo (Expedia’s short-term rental platform) plans to reposition itself as a family travel site offering vacation products and services (e.g., resort accommodations, in-stay services, etc.) beyond short-term rentals. Expedia provided few details about the new platform and no timeline for the planned repositioning.
Algorithms Under EU Scrutiny
(“Algorithms might raise collusion concerns, Franco-German study says,” MLex Insight on Nov 8, 2019)
As many of you probably already know, algorithms are the heart and soul of most online travel booking platforms (if you doubt me, just try asking for details about property rankings.) The antitrust authorities from Germany and France recently released a joint study examining the effects of algorithms on competition. In particular, the study focused on the relationship of pricing algorithms and horizontal collusion, and how the market dominance of certain platforms (including online travel agencies) may affect the algorithms used. If anyone would like a copy of the study, please let us know.
A recent settlement between Seattle chef Tom Douglas and his restaurant employees highlights the potentially costly technical requirements of Washington’s automatic service charge laws for hospitality businesses.
Washington law allows all “employers” that provide food, beverage, entertainment or portage services (e.g., restaurants, caterers, convention centers and hotels) to impose an automatic service charge on customers for such services. Sounds fairly straightforward, right? Not so fast. This law has two technical, yet important, requirements that employers must follow:
Greg Duff founded and chairs Foster Garvey’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.