What's going on?
Marriott, the US hotel giant, is joining forces with Chinese ecommerce mammoth Alibaba to sell holidays to the growing number of Chinese tourists!
What does this mean?
The two companies are pairing Marriott’s global portfolio of hotels, which includes Marriott, Ritz-Carlton, Sheraton and other brands, with Alibaba’s digital expertise and customer reach in China. Users will be able to book travel experiences, including hotel rooms and sightseeing tours, with Marriott and its partners via Fliggy, Alibaba’s travel platform. The guests will also be able to use Alipay, Alibaba’s smartphone payment platform, when staying at Marriott hotels – making it easier to spend money on their experiences. The deal allows Marriott to tap into booming demand for Chinese outbound travel and helps Alibaba develop travel services as another avenue for its growth.
Why should I care?
The bigger picture: Partnering with Alibaba could become a more popular strategy for global brands looking to sell to the Chinese.
Alibaba calls itself “a gateway for international brands” looking to sell into China. Given its reach (500 million monthly active users) and digital infrastructure (e.g. the ability to incorporate Alipay payments), Alibaba could offer international brands a straightforward and efficient way to access the Chinese market. Alibaba is betting on these kind of initiatives becoming another growth channel.
For markets: Marriott’s investors seemed to like the news.
Marriott’s stock price initially jumped more than 3% following the news (although it pared back its gains to finish up about 1%). Marriott says it expects Chinese travellers to make 700 million trips over the next 5 years, representing a substantial chunk of global demand for travel – and investors are cheering Marriott’s efforts to get more exposure to that demand.