ALIBABA GROUP HOLDING LTD (NYSE:BABA)
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By Liza Lin and Chris Kirkham
Alibaba Group Holding Ltd. said it would team up with U.S. hotel company Marriott International Inc. to expand its online-travel footprint as more Chinese venture abroad.
Chinese consumers will be able to use Alibaba's travel-service website and app to book rooms in the more than 6,200 hotel properties world-wide that Marriott operates under such names as Marriott, Courtyard, Ritz-Carlton and Sheraton, Alibaba said Monday. They also will be able to use the same Alipay smartphone payment platform they use at home when they stay in Marriott properties abroad.
Chinese e-commerce leader Alibaba, based in Hangzhou, is expanding beyond traditional retail categories, such as clothing, into entertainment and travel bookings as the Chinese appetite for international travel rises in tandem with income.
Marriott executives said the joint venture, which involves undisclosed investments from both companies, is aimed at getting more Chinese consumers into Marriott's loyalty programs and hotel properties across the world. Outbound travel from mainland China has grown by 71% over the past four years, according to industry researcher Euromonitor International, and is projected grow by more than 30% to more than 109 million trips by 2020.
Stephanie Linnartz, Marriott's global chief commercial officer, said in an interview that Alibaba's understanding of Chinese consumer tastes will give the hotel company a market-share advantage for this group of travelers.
"They have significant customer data and insights on the Chinese consumer," she said. "We're getting deep and rich into the psyche of the Chinese consumers through this partnership."
Marriott already has a major presence in China, with more than 500 hotels that are open or in the pipeline. The company's acquisition of Starwood Hotels Resorts Worldwide Inc., which closed last year, helped to significantly boost its footprint.
Since the end of 2011, Marriott has grown its room count in China by more than 43%, to nearly 97,000 rooms across 272 properties at the end of the second quarter.
Based on the number of rooms, it has more than any other U.S. hotel corporation in China except Wyndham Worldwide Corp., which owns the Super 8 and Ramada brands, according to STR, a data company that tracks the hotel industry. The largest hotel company by rooms in China is the state-owned Jin Jiang International Hotels, the STR data show.
Marriott hopes the new partnership will capitalize on its brand awareness in the country by driving more Chinese customers to its hotels elsewhere in the world. The company estimates that
The partnership with Alibaba also will help Marriott drive more direct bookings to its hotels, the company said. Many of the world's largest hotel chains have been trying to claw back business from third-party travel sites run by companies such as Expedia Inc., Priceline Group Inc. and China's largest travel website, Ctrip.com International Ltd.
The sites bring in new customers but also add costs because they take commissions of up to 30% for each booking.
Alibaba's latest tie-up throws a challenge to Ctrip, which in November acquired U.K. travel search engine Skyscanner Ltd. During the past year, Ctrip has also invested in three U.S. travel operators and an Indian tourism website, seeking to position itself as the first choice online for Chinese traveling abroad.
Marriott's Ms. Linnartz said bookings made through Fliggy, Alibaba's travel website, will count as direct bookings to Marriott properties. She said cost savings are a plus, but she added that the main goal is to connect better with Chinese consumers through personalized services at Marriott's hotels, such as ambassadors who speak Mandarin or curated sightseeing trips organized through the loyalty programs.
"We can bring things at the property level that have not been done before," she said.
The two companies also plan to link up Alibaba's loyalty program with Marriott's rewards programs.
On an earnings call Monday, Marriott's chief financial officer, Leeny Oberg, said the joint venture was a "very modest investment."
China's online travel-sales market is expected to be valued at 584 billion yuan ($87 billion) this year, up more than 20% from 2016, according to Euromonitor International.
Write to Liza Lin at Liza.Lin@wsj.com and Chris Kirkham at firstname.lastname@example.org
(END) Dow Jones Newswires
August 07, 2017 19:14 ET (23:14 GMT)
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