Hospitality Management / International Business / Organizational Strategy

Marriott Courts Chinese Tourists with New Alibaba Partnership

Working in a Marriott Hotel in Pittsburgh as an intern, my role is a lot of the times made up on the fly.  I look for opportunities where I can create value for the hotel and then pursue those opportunities until I uncover the value I was looking for.  This has been the case in a number of endeavors, including associate training, inventory management, and collaboration with local partners.  The latter has been extremely successful, with partners like SkyVue Apartments and Idea Foundry looking to our hotel for their event and promotion needs.

In my pursuit of Idea Foundry, a Pittsburgh startup focusing on the growing Chinese tourist and entrepreneurial traveler market through traveler and business facilitation, I had no idea that a larger deal concerning Marriott International and China’s Alibaba was in the works.  The partnership, announced August 8th of 2017, would allow Chinese consumers to utilize Alibaba’s various applications and services at all 6,000 Marriott hotels worldwide.  With over 500 million users that Alibaba’s services, Marriott essentially tapped into the Amazon of China, securing hundreds of millions of Chinese tourist trips who now have more of an incentive than ever to stay at Marriott hotels.

The gist of the deal is this: Alibaba will showcase Marriott hotels on its travel app Fliggy and develop content, deals, and promotions exclusive to Marriott International hotels[1].  This means that Alibaba will act like any number of other travel applications like Expedia or Priceline but one which only uses Marriott hotels, making it a very exclusive deal for Marriott.  

Alibaba will also allow users to pay for hotel stays and other services/amenities using its Venmo/PayPal like app, Alipay.  These synergies allow both companies to leverage huge potential in areas where they initially were not the strongest: For Alibaba, it is boosting its travel services to compete with more established market players, and for Marriott, it is capturing the 122 million Chinese outbound tourist market, which spent more than $109.8 billion in 2016 (and growing)[2].

Marriott’s exclusive deal with Alibaba is a huge win; the travel company can now leverage its new presence and exclusive market in China with a slew of other recent developments all over the world.  These developments include Marriott’s acquisition of Starwood Hotels and Resorts, a hotel company with over 1,200 hotel including the Sheraton, Westin, and St. Regis brands, which increased its presence in China tremendously.  Chinese travelers using Alibaba applications and services now have even more incentives to become “brand loyal” to Marriott, given how many choices Marriott now offers to Chinese consumers (with nearly 30 brands in its portfolio since the Starwood acquisition).  Marriott has also been working on a number of mobile and technology features, including digital room-key access, in-room mobile guest requests, and the “Moments” programs (where guests can purchase additional experiences like concerts and museum visits alongside hotel accommodations).[3]  With Alibaba’s technical expertise on the e-commerce side, there is a natural fit between the two companies in these endeavors, especially if Marriot can increase these offerings to, potentially, hundreds of millions of travelers.

The biggest case for this partnership is the combination of the Chinese tourist market (which is set to grow to 700 million trips over the next 5 years)[4], and the technological competition between hotel chains. Hilton Worldwide recently upped the ante with an Amazon partnership, allowing guests to use Hilton Honors points to purchase anything on Amazon’s e-commerce site. This is a part of Hilton’s overall strategy on becoming more technologically competitive with the likes of Marriott, offering just as many perks, such as, mobile check-in and digital room-key access that Marriott does.

However, what sets Marriott apart in this endeavor is the focus on globalization that some of the other brands just do not have. I think Marriott sees the future of travel as a more global endeavor. Rather than doubling down on the more established American and European markets, offering discounts and perks to those travelers, Marriott’s focus on more emerging (and often more lucrative) markets in Southeast Asia and other places will surely be more beneficial in the long run. These markets show greater potential for long-term growth, and locking down that growth ensures future longevity.

Turning back to my deal with Idea Foundry, the company that facilitates Chinese business and pleasure travel to Pittsburgh, I was of course ecstatic that my larger parent company and I had similar ideas about the future of travel.  Moreover, I’m hoping to leverage the larger Marriott and Alibaba partnership to create value (and profit) for our small hotel, which is all I ever wanted to do in the first place.

Sources:

[1] https://www.reuters.com/article/us-marriott-intnl-alibaba/marriott-set-to-woo-chinese-tourists-with-alibaba-deal-idUSKBN1AN1JN

[2] https://www.bloomberg.com/news/articles/2017-08-07/alibaba-marriott-will-team-up-to-tap-a-chinese-tourism-boom

[3] https://paymentweek.com/2017-8-10-new-deal-marriott-alibaba-looks-draw-tourists/

[4] https://www.reuters.com/article/us-marriott-intnl-alibaba/marriott-set-to-woo-chinese-tourists-with-alibaba-deal-idUSKBN1AN1JN

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