,

Marriott continues march to world domination

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By: RickFerguson |

Posted on August 14, 2017

Marriott links with Alibaba

If there was any doubt left that Marriott’s Starwood acquisition has positioned it as the world’s most powerful hotel brand, a new partnership with Chinese e-commerce giant Alibaba ought to put those doubts to rest. With a place of honor on Alibaba’s travel portal and linkage between the two companies’ respective loyalty programs in the works, Marriott may find itself with a first-mover advantage in China that its competitors may find impossible to beat. Will Marriott become unbeatable in global travel? Stay tuned.

By Rick Ferguson

The JV seems, at first glance, no more momentous than any of the other hundreds of joint ventures announced this month; drawing on resources from both Marriott and Alibaba, the joint venture will manage Marriott’s storefront on Fliggy, Alibaba’s travel service platform. It will also market directly to Alibaba’s customer base, provide a link between Marriott’s loyalty programs and Alibaba’s loyalty program, and support Marriott hotels globally with content, programs and promotions customized for the Chinese traveler.

Lest we fail to convey the sheer magnitude of this deal, however, we should look a little more closely at Alibaba Group Holding Ltd. Alibaba is the world’s larger retailer, surpassing Walmart, and second only to Amazon in ecommerce revenue. The company generates more transactions than Amazon and eBay combined, and its online sales and profits are bigger than Amazon, eBay, and Walmart combined. Last month, its market cap grew to USD$409 billion, making it Asia’s most valuable company, and it routinely beats analyst’s growth estimates. Its online sales portals reportedly top 500 million active users. Its Alipay mobile payments platform has 300 million active users and just under half of China’s $5.5 trillion mobile payments market.

And now Marriott has the inside track to market to Alibaba’s 500 million active consumers, who are estimated to take an estimated 700 million trips over the next five years. In a LinkedIn post accompanying the announcement of the JV, Marriott CEO Arne Sorenson could scarcely contain his joy:

“Globally, the middle class is forecasted to see an increase of three billion people by 2031, with China leading the way. While travel is already booming in China, it is estimated that less than 10% of Chinese nationals have passports. Imagine the potential for major growth that lies ahead as more Chinese join the ranks of the middle class and choose to travel.

“In fact, Chinese President Xi Jinping expects 700 million Chinese visits overseas in the next five years. China continues to lead global outbound travel, after registering double-digit growth in tourism expenditures every year since 2004. Spending by outbound Chinese travelers in 2016 alone reached US$261 billion, as the total number of outbound travelers rose to 135 million. That’s why our partnership with Alibaba was a priority for both companies – together, we want to make travel smarter.”

Here's how the deal will play out in practical terms, courtesy of Marriott:

Frictionless global travel: The joint venture will provide newly-integrated functionality to make the entire travel experience frictionless from planning, booking, paying and managing a trip to all of the activities associated once at the destination like shopping, dining and sightseeing. The joint venture will deliver user-friendly technology solutions that will open up a world of travel options for Chinese consumers.

Personalized and VIP Experiences: The joint venture will leverage technology to curate customized experiences for Chinese consumers. Marriott will offer access to private concerts, family-focused experiences, and court-side seats at sporting and other events through its Starwood Preferred Guest (SPG) Moments and Marriott Rewards Moments programs. Eligible members from Alibaba’s loyalty program will benefit from personalized hospitality programs and Marriott’s award-winning SPG ambassador program.

Wallet-free Travel: Alipay will be accepted at Marriott hotels in select global markets with further expansion expected around the world.

Next-Gen Loyalty: Connecting Marriott’s award-winning loyalty platform – Marriott Rewards, The Ritz-Carlton Rewards and SPG – with Alibaba’s large-scale consumer reach will establish a new benchmark for the next-generation loyalty program.

In addition, in celebration of Alibaba’s Members day on August 8, Alibaba members will be able to enroll in one of Marriott’s loyalty programs – Marriott Rewards, The Ritz-Carlton Rewards or SPG – and book exclusive member rates through one of Marriott’s digital channels, beginning immediately.

As Skift points out, however, the deal apparently doesn’t guarantee exclusivity for Marriott’s Alibaba presence. Money quote:

“Sorenson did not rule out the possibility of Alibaba forming similar partnerships with other hotel companies in the distant future but did say, ‘There are some features of exclusivity in this deal for a period of time. That’s as far as we can go.’ He also noted that the most important benefit of the joint venture was to increase hotel demand at Marriott hotels, especially within the growing Chinese travel market.”
Still, Marriott has now cemented what we in the marketing business like to call “first-mover advantage.” By the time Hilton and other competitors can catch up, Marriott will already be leveraging the joint venture to build relationships with untold millions of Chinese travelers. Far from stumbling through integration issues after the Starwood integration, as we’ve seen many acquisitions proceed in the past, Marriott has hit the ground running and seems to be outpacing the competition. If Alibaba is the Amazon of China, then Marriott may turn out to be the Amazon of hotel brands.

Rick Ferguson is Editor in Chief of the Wise Marketer Group.