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Marriott targets Chinese travelers with Alibaba JV

  • Author:Stephanie Ricca
  • Source:hotelnewsnow.com
  • Release on:2017-08-10

Marriott targets Chinese travelers with Alibaba JV

Marriott is treating its new joint venture with Chinese e-commerce giant Alibaba as a new direct channel, where guests will be able to take advantage of members-only pricing.

GLOBAL REPORT—Marriott International’s new joint venture with Alibaba Group, announced Monday, is not just another OTA-style relationship, according to Marriott Global Chief Commercial Officer Stephanie Linnartz.

While the JV will act as an agency model, receiving a transaction fee from bookings, the partnership between Marriott and Alibaba on this initiative is a “unique and special” one, Linnartz said.

For several years, Marriott hotel inventory has been available on Alibaba’s travel e-commerce storefront Fliggy (formerly called Alitrip), along with other international hotel chains, sources said. But this JV “will create a new Marriott booking portal on Fliggy with enhanced functionality,” said Marriot President and CEO Arne Sorenson during the company’s second-quarter earnings conference call with analysts. It also will make Marriott’s three rewards programs—and their benefits—available to guests booking on Fliggy.

“With the joint venture, hotel owners should see both an increase in bookings from Chinese travelers as well as a lower cost for these reservations,” he said.

Neither Sorenson nor Linnartz addressed specific commission rates or transaction fees for owners.

The deal also has “some features of exclusivity for a period of time” for Marriott, Sorenson said on the call, though he did not elaborate.

JV details
Immediately, all Marriott hotel inventory worldwide is available to be booked on Fliggy. In addition, Chinese consumers can use the proprietary Alipay smartphone payment platform to pay for travel booked through the channel in select global markets, with further expansion expected.

“This joint venture creates a digital-travel-services and experience-curation platform.” Linnartz said. “We’re in partnership for the experience online and on digital platforms, and offline when (guests are) in hotels.”

Also key to the partnership: Marriott will offer its Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest loyalty program enrollment and member rates on Fliggy.

“Because this is a unique and special partnership, the JV running Fliggy will be considered a direct channel for us,” Linnartz said, making it eligible to list those member-only rates that until now have only been available on Marriott’s direct-booking channels.

Both Marriott and Alibaba will contribute staff to the JV, she said, and the JV will further develop and operate Marriott’s storefront on Fliggy.

“Over time, we also plan to have the JV manage our Chinese-language versions of Marriott.com and Starwood.com, and the Marriott and Starwood mobile apps,” Linnartz said.

She said the loyalty programs offer particular opportunity down the road.

“Over time, we’ll look for ways to further integrate our loyalty programs with Alibaba’s,” she said. “We’re going to look for ways to match status, align points and more deeply integrate the programs.”

Where they will see an impact
“Of our 30 brands, we have 22 brands in China, so the Chinese consumer knows a lot of our brands,” Linnartz said.

China represents 8% of Marriott’s worldwide rooms and 17% of its worldwide rooms pipeline, Sorenson said on the call.

Linnartz said the company expects to see impact in the Chinese markets with Marriott hotels that in-country travelers go to now, as well as to markets where outbound travel is prevalent, such as Thailand, Japan, Korea, New York City, San Francisco, London and Paris.

However, she said there’s no singular chain scale or city that will absorb the lion’s share of demand coming from China.

“The Chinese marketplace is quite diverse,” she said. “You’ll have people who want luxury product … and people who want product priced at a lower tier.”

On the conference call, Marriott EVP and CFO Leeny Oberg said that “roughly three-quarters of Asia-Pacific travel right now is to Asia-Pacific,” and travel to North America is 15% of that travel.

Sorenson said the key when it comes to impact on U.S. hotels is that the number of inbound travelers is growing.

“I think the U.S. visitation is about 3 million Chinese visitors to the United States in total. And so, they’re going to be a pretty small percentage of business in our hotels or in the industry as a whole,” he said. “But, in most of these markets, it is going up 12%-ish year over year and has been for some period of time. … So it’s a bit of a small base in some markets, but the growth is fabulous.”

Other brands?
Marriott has had a relationship with Alibaba for a number of years, listing hotel inventory on its site and enabling Alipay integration in China and Asia, Linnartz said.

So have a number of other international hotel brands. IHG in 2012 positioned itself as “the first global hotel company to launch a flagship e-store on Alitrip,” according to a news release, and began offering Alipay at Chinese hotels.