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Published on Thursday, April 5, 2018

Marriott looks to cut OTA commissions

The big online travel agencies are the next target for Marriott International as it looks to further reduce distribution costs.

It comes after the hotel giant cut commission for group bookings for its hotels in the US and Canada from 10% to 7%. The cuts, announced in January, came into force this month. Rival Hilton has since followed suit.

Marriott chief executive Arne Sorenson says Expedia Group Inc will be first and the company hopes to renegotiate commission rates later this year when they are up for renewal.

"We would certainly like to pay less. We will have to see how the negotiations go," Sorenson told Reuters.

It would be the first contract talks with a major OTA since the merger with Starwood Hotels & Resorts.

The now significantly expanded portfolio will give Marriott more bargaining power.

Its contract with Booking Holdings Inc is up for renewal in 2019.

Marriott says the large OTAs generate about 12% of revenue while the majority of business comes via direct bookings.

Overall, about 55% comes from loyalty members.

"We have seen significant growth in all digital channels...What has declined a bit would be travel agents, in part because people are moving online and doing things themselves," Sorenson said.

Sorenson was speaking at an event in India to mark the opening of the Sheraton Grand Bengaluru Whitefield, its 100th hotel in the country.


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