Since news broke that Marriott International and Expedia Group had inked a new multiyear contract and "reached mutually beneficial economic terms" last week, speculation about the contract's commission rate has run rampant. 

Robert Cole, senior research analyst for lodging and leisure travel at Phocuswright, said he believes that Marriott is likely to have negotiated a rate below 12%, a rate that Marriott was widely rumored to have been paying. 

"These numbers are pure conjecture, and I have no inside information, but my understanding from what I've heard is that Marriott got its commission rate down to maybe 11.5% or so," Cole said. "I'm sure Marriott would have loved to get it to 10% and that Expedia would have loved to push them up to 15%, but they've come to an equilibrium. Expedia has no real interest in losing Marriott, and Marriott has that same feeling toward Expedia."

Cole added that sheer size, combined with the hotel industry's record-high occupancy and extended growth streak, could have given Marriott added leverage in negotiations. The deal with Expedia is the first since Marriott acquired Starwood in 2016, and the hotel group's portfolio now includes 30 brands. 

But while a commission cut is certainly considered a win for Marriott, Cole warned that too drastic a reduction could also end up backfiring in some cases. 

"If Marriott goes too low with these commissions, then they could become less competitive from a compensation basis," he said. "In cases where two hotels might be fairly identical and priced the same, which one should rank higher? You would think it makes more sense for Expedia to surface the hotel that pays a 12% commission over the one that pays 11%."

Of course, commission rates are far from the only piece of the puzzle. In their joint statement on the contract, Marriott and Expedia said that the agreement also "expands Expedia Group's role related to the Vacations by Marriott leisure packaging platform, and it leverages Expedia Group's technology capabilities for an innovative distribution arrangement beyond transient retail bookings, which is expected to launch in the fourth quarter."

Those details, along with the presumed commission decrease, could influence how other major hotel players approach their own negotiations with Expedia. 

"I think some of these other hotel companies might be saying, 'Hey, Marriott appears to have gotten a little bit of a haircut on their rate -- maybe we can do the same,'" Cole said. "For all of them, the big challenge is how to work with the OTAs and make sure that both sides are really, legitimately benefiting and working toward the same goals and not against each other. Because you can expend a huge amount of energy fighting, which doesn't get anybody anywhere and just makes the channel dysfunctional."

With specifics about the Marriott-Expedia agreement lacking, some believe it's too early to tell just how big an impact the deal could have on the industry. 

Mark Meader, ASTA's senior vice president of industry affairs and education, said, "Speculation on the recently announced agreement between Marriott and Expedia is premature at best given the confidentiality and likely complexity of the agreement. Assuming they have reached 'mutually beneficial economic terms,' as per their joint statement, both parties win. The effect on other players in the travel space, including travel advisors, either directly or indirectly, remains to be seen."

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