Mar­riott eyes China’s on­line travel mar­ket

Ho­tel group hopes to en­gage in­ter­net gi­ant’s 500 mil­lion cus­tomer base via JV

China Daily (Hong Kong) - - HOSPITALITY - By XU JUNQIAN in Shang­hai xu­jun­qian@chi­nadaily.com.cn

Ho­tel group Mar­riott In­ter­na­tional and e-com­merce gi­ant Alibaba an­nounced a wide-rang­ing part­ner­ship in the form of a new joint ven­ture on Mon­day in Shang­hai. Fol­low­ing the an­nounce­ment, Arne Soren­son, pres­i­dent and CEO of Mar­riott In­ter­na­tional, made no bones about his am­bi­tion to tap into China’s hun­dreds of mil­lions of mid­dle-class trav­el­ers, who have de­vel­oped an in­sa­tiable de­sire to ex­plore their home coun­try and the world.

But es­sen­tially, as the helms­man of the world’s largest ho­tel com­pany, with a port­fo­lio of more than 30 brands, Soren­son noted that it is the luxury and life­style seg­ment that will “cap­ture the imag­i­na­tion” of Chi­nese trav­el­ers.

This will drive the most sig­nif­i­cant growth of the mar­ket, he said to China Daily on Tues­day in an exclusive in­ter­view fol­low­ing the an­nounce­ment of the part­ner­ship.

“To talk about this joint ven­ture, all we need to say is two words, ‘Mar­riott’ and ‘Alibaba’,” said Soren­son, re­fer­ring to the part­ner­ship that the two sides have been work­ing on for ap­prox­i­mately one year.

The plans base the joint ven­ture in Hangzhou, Zhe­jiang province, where Alibaba is head­quar­tered. The aim is to lever­age Alibaba’s dig­i­tal ex­per­tise and its 500 mil­lion ac­tive cus­tomer base, and at the same time to bring exclusive ben­e­fits that were pre­vi­ously only avail­able for the hos­pi­tal­ity group’s re­ward pro­gram mem­bers.

The joint ven­ture will man­age Mar­riott’s store­front on Fliggy, Alibaba’s travel ser­vice plat­form, as well as the ho­tel chain’s Chi­nese-lan­guage dig­i­tal chan­nels, in­clud­ing Mar­riott, Star­wood­ho­tels and other cor­re­spond­ing mo­bile apps.

Ac­cord­ing to a joint state­ment by the two par­ties, the ven­ture will “el­e­vate and rede­fine the travel ex­pe­ri­ences” of mil­lions of Chi­nese trav­el­ers by of­fer­ing per­son­al­ized travel pack­ages, among other ben­e­fits.

Soren­son ex­plained that he knew Jack Ma be­fore the part­ner­ship talks kicked off a year ago, but that it was the group’s ac­qui­si­tion of Star­wood that got talks about a part­ner­ship un­der­way. “When we an­nounced our ac­qui­si­tion of Star­wood, I think Alibaba saw Mar­riott as a more de­sir­able part­ner.”

“I am con­vinced that we would not have this deal had we not ac­quired Star­wood, since our big plat­form and our strength in the luxury and life­style seg­ments are very as­pi­ra­tional for Alibaba,” he said. “They are at­trac­tive to us be­cause of their China ex­per­tise and the size of their con­sumer base.”

Statis­tics from Alibaba showed that around 500 mil­lion cus­tomers have placed at least one or­der on its plat­form over the past 12 months.

Of them, 15 mil­lion are clas­si­fied as “su­per mem­bers”, who have not only shopped fre­quently, but have also been ac­tive in terms of re­view­ing prod­ucts and sign­ing up for pro­mo­tions.

“Ini­tially we will fo­cus on the top 50 or 100 mil­lion cus­tomers in­stead of all 500 mil­lion, as they are not all im­me­di­ate prospects. Of course, part of that will de­pend on what type of prod­ucts we of­fer,” Soren­son said.

Be­fore the part­ner­ship was agreed, Mar­riott said it would strengthen its pres­ence in China, and it has an­other 340 prop­er­ties in the pipe­line. The group cur­rently op­er­ates more than 300 prop­er­ties around China.

Brands such as Fair­field and Aloft, which fall into the group’s tar­get eco­nomic cat­e­gory, are not only lo­cat­ing their flag­ships in the coun­try but also ag­gres­sively ex­pand­ing across the na­tion.

The first stage of the part­ner­ship with Alibaba, how­ever, is about tech­nol­ogy, mak­ing sure the two plat­forms are well con­nected. All of the group’s prop­er­ties within China have been con­nected to Ali­pay, the mo­bile pay­ment tool owned and run by Alibaba af­fil­i­ate Ant Fi­nan­cial Ser­vices Group.

Mar­riott first started to in­cor­po­rate Ali­pay in 2015, ini­tially at 10 of its prop­er­ties in Shang­hai, Bei­jing and Hong Kong. The com­pany ex­pects that by the end of 2018, the wal­let-free pay­ment tool will be avail­able at all of its more than 6,100 prop­er­ties world­wide.

“It is not nec­es­sar­ily about boost­ing the pay­ment, but more about our re­la­tion­ship with cus­tomers,” said Soren­son about why in­tro­duc­ing Ali­pay was a pri­or­ity.

“We want to pro­vide what the cus­tomers want. And we are told Chi­nese cus­tomers want it,” he said. “We don’t have much mo­bile de­vice pay­ment in the United States, while in China it’s ev­ery­where. I think it will be in­ter­est­ing to see how it’s adopted by the other parts of the world.”

Ac­cord­ing to the China Na­tional Tourism Ad­min­is­tra­tion, there were up­wards of 122 mil­lion out­bound trips in 2016. Ex­perts es­ti­mated the fig­ure will in­crease up to six­fold over the next five years.

“I think the way the Chi­nese tourism mar­ket is evolv­ing means it is get­ting harder and harder for us to say ‘this is what all Chi­nese want’,” Soren­son said. “The needs and de­sires of Chi­nese trav­el­ers are as var­ied as any­where else in the world.”

“We want to do some­thing bolder and cre­ate sort of a liv­ing re­la­tion­ship, which Daniel Zhang (CEO of Alibaba) de­scribed as a mar­riage, and some­thing we in­vest in to­gether with not only money, but also peo­ple and ex­per­tise,” he noted. “I think it drives a stronger align­ment be­tween the two com­pa­nies and a broader re­la­tion­ship that feeds the am­bi­tion of both com­pa­nies.”

Top: W Shang­hai - The Bund, which opened in June, is an iconic ad­di­tion to the Shang­hai sky­line. Above: The new ho­tel’s rooftop pool. W is one of more than 30 brands owned by Mar­riott In­ter­na­tional.

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