Alibaba, Marriott Will Team Up to Tap a Chinese Tourism Boom
Alibaba Group Holding Ltd. is supercharging its fledgling travel service by partnering with Marriott International Inc., the world’s largest hotel operator with some 6,000 properties globally.
The companies will set up a joint venture to feature Marriott’s entire line-up, from the eponymous brand to the Sheraton and Ritz-Carlton, on Alibaba’s Fliggy site. The two will link their loyalty programs and provide promotions for Chinese travelers, they said in a joint statement.
China is now the world’s largest source of outbound travelers, a still rapidly growing populace that spent more than $100 billion in 2016 and is spurring changes across the global tourism industry. Their rising numbers have fueled a deals spree and spawned alliances between foreign hotel chains and domestic partners. Marriott and its rivals are also hunting for ways to capture more guests and shore up loyalty, as they compete with alternative providers such as Airbnb Inc. and try to reduce fees paid to the likes of Priceline Group Inc. and Expedia Inc.
"The most important piece though is the marriage of our respective areas of expertise," said Arne Sorenson, Marriott’s chief executive officer, declining to discuss revenue-sharing with Alibaba.“It’s really about how do we service this already large but quickly growing group of global travelers, particularly Chinese travelers.”
Marriott shares climbed 1.1 percent to $106.17 in New York. The Bethesda, Maryland-based company plans to release second-quarter earnings after the market closes. Alibaba shares rose 3.6 percent to $158.84.
The venture announced Monday strengthens an existing partnership between Alibaba and Marriott. Marriott tied up with Alibaba affiliate Zhejiang Ant Small & Micro Financial Services Group in 2015, to let guests pay for hotel stays and related items with Alipay on phones.
Under the new agreement, the e-commerce giant will highlight Marriott’s storefront on Fliggy and -- drawing on data on more than 500 million mobile monthly active users -- help devise content and programs to draw in increasingly affluent globetrotters. The global hotel chain may in turn help round out the offerings on Fliggy, which Alibaba is building into a viable competitor to longer-established Ctrip.com International Ltd. and up-and-coming Meituan travel. Last week, Alibaba and Ant unveiled a wide-ranging cooperation agreement with Cathay Pacific Airways Ltd.
“It’s an extension of our partnership to a new area,” Daniel Zhang, Alibaba’s chief executive officer, said in an interview. “Both of us believe we can generate huge synergies from this strategic partnership.”
An estimated 122 million Chinese ventured outside the country in 2016 and spent about $109.8 billion, according to the China National Tourism Administration, with key destinations including Japan and the U.S. The number of visitors to the U.S. alone is forecast to rise 15 percent this year and next to an estimated 3.96 million in 2018 from about 3 million in 2016, according to the U.S. Commerce Department.
Marriott’s hoping to widen its slice of that market. It fended off Anbang Insurance Group Co. last year to win the bidding war for Starwood Hotels & Resorts Worldwide, the purchase of which made Marriott the world’s largest hotel operator and gave it more luxury and lifestyle brands, a bigger presence outside the U.S., and a large cohort of loyal guests, including a big share of higher-spending business travelers. Starwood had about 21 million people in its frequent-guest program at the time of the merger, and Marriott had about 56 million, with some overlap between the two.
Its tie-up with Alibaba reflects the industry’s shift away from traditional industry middle-men. Hotels are offering incentives for guests to book directly and to earn points through co-branded credit cards. Hilton this year teamed up with Amazon.com Inc. to allow members of its Honors frequent-guest program to spend their points on Amazon’s website, starting in July.
News by Bloomberg - edited by Hospitality Ireland