Hyatt Hotels is threatening to terminate its distribution
agreement with Expedia Inc. as soon as next month in what's likely an effort to
negotiate better terms, reports eHotelier.
Hyatt notified hotel owners last week that it intended to
terminate its Expedia agreement at the end of July, a move that would remove
Hyatt listings from Expedia.com, Orbitz, Hotels.com, Hotwire and Travelocity.
Expedia Inc. controls 70% of OTA sales in the U.S., according
to research firm Phocuswright. Priceline Group controls 23%, and smaller OTAs account for the
"Hyatt is in constant dialogue with Expedia and all our
OTA partners around the world, but we will not get in to the details of those
discussions," a Hyatt spokesperson wrote in an e-mail to Travel Weekly on
Wednesday. "Our focus remains on growing the value proposition for booking
directly with Hyatt so we can build strong relationships with our guests, as
well as working with third-party distributors in line with our efforts to
improve hotel profitability."
Expedia in a statement said, "Expedia stands by the value that we provide to our several
hundred thousand hotel partners, which includes a global base of brand
agnostic, incremental customers -- less than .05% of our regular customers book
the same hotel brand consistently. Like all of our partners, we value our
relationship with Hyatt Hotels, but we can’t comment on contract specifics."
The dispute is the latest salvo in hotel companies' efforts to
reduce distribution costs and stem the tide of rising OTA sales. OTAs are
hotels' most expensive distribution channel, costing them between 15% and 25%
of room revenue. Expedia is thought to
account for about 10% of bookings.
In an interview with Travel Weekly last month, Expedia CEO Dara Khosrowshahi said, "We’ve been reducing prices for our hotel partners in terms
of commission rates. Our partners are getting more for less."
Khosrowshahi made no reference to the Hyatt relationship at the time.