In early June, Hyatt made known its desire to split off from Expedia over contract arrangements, but the separation is being called off after a round of talks, leading both parties to come to an agreement.
“Our formal agreement with Expedia is complete,” a Hyatt spokesperson said in a statement to HOTEL MANAGEMENT. “The team at Expedia worked quickly and productively with us, and we are pleased to continue our long-standing relationship without interruption to Hyatt hotel distribution on all Expedia platforms.
“As we continue to build the value proposition for our guests who book directly with Hyatt, we also work with third-party distributors to reach guests who might not be frequent travelers or who otherwise have a reason to book through these sites. These recent agreements with both Booking.com and Expedia allow us to achieve our goal of making Hyatt hotels available where many guests are booking while also reducing costs and improving flexibility.”
Hyatt’s decision to separate from the OTA was met with consternation from multiple corners of the hospitality industry, with the hotel company’s owners standing to lose the most. Expedia, by comparison, seemed unfazed by a potential split with Hyatt, with Expedia CEO Dara Khosrowshahi saying on the company’s Q2 earnings call: “as far as the financial impact, it is minimal to none.” Furthermore, Choice Hotels International tried to walk away from its relationship with Expedia in 2009 before returning to the company three months later.
Hyatt shareholders were also shaken by the initial announcement, with a report from Guggenheim Securities in June finding that the company earns as many as 11 to 13 percent of its total room nights from Expedia, and said that by walking away form Expedia Hyatt would recoup only $23 million in savings.
Perhaps it’s best to view Hyatt’s announcement to vacate Expedia as a loud negotiation tactic, but in today’s world stranger things have happened, and no analyst out there was willing to say the split was impossible. Hyatt’s owners even began speaking up, with one stating that Hyatt’s weakest attribute — transient business — will suffer greatly if divorced from the Expedia booking engine.