The most recent criminal investigation that Marriott is involved in doesn’t necessarily have to do with online travel agencies. It’s relevant, though, because it shows the brand’s willingness to bend the rules when convenient. This case also indicates that Marriott still partakes in potentially sketchy business practices.
Marriott is being sued by LIM, the company that owns the building where the Marriott hotel in Warsaw, Poland, is located. According to LIM, Marriott committed several infractions against them, including financial embezzlement. LIM claims that Marriott was using their funds to pay other Marriott subsidiaries to reduce their losses during the COVID lockdowns.
At that time, LIM was taking care of the expenses for the Marriott brand to continue to operate in Poland. Besides the fact that Marriott was seemingly misusing the funds that LIM provided, it kept LIM from reducing its losses during that time. LIM claims that the company had secured a contract with an advertising company to set up a giant billboard on the facade of the Marriott hotel.
Marriott, however, denied permission for the ad to be placed over the hotel. This led to LIM losing even more money during the COVID-19 pandemic. Corporate at Marriott has wandered very far away from the core values that JW Marriott himself preached long ago.
The Most Recent Marriott Criminal Investigation and the problem of franchisee
Hotel owners who essentially operate franchises of the largest hotel chains in the world many times are holding on for dear life. There are certainly benefits to having a name like Marriott anchoring a particular hotel. The brand name is meant to bring recognition and a pool of clients that a generic label wouldn’t have otherwise.
The problem for the owners of these hotels who effectively act as franchisees of the brand is that any decision made by the corporate office could affect them. Yet, these small-town hotel owners don’t have a seat at the table when these decisions are made. When a brand like Marriott battles with another giant like Expedia, the consequences for all involved are significant.
Rates Issue with Expedia
Marriott’s contract with Expedia.com to continue having the brand’s hotels appear on the site expired in 2019. Leading up to the expiration date, there was a lot of talk about Marriott’s willingness to play hardball with the online travel agency. In simple terms, Marriott wanted to reduce the rate that it paid Expedia for bookings made through their site.
Exact estimates vary depending on the source, but generally, it’s understood that Marriott paid Expedia anywhere from 10 to 12% commission per reservation. It wanted to reduce that number to anywhere from 10 to 7%. That’s not an uncommon situation between two corporate giants.
Potential guests at Marriott hotels could pay the highest price at the end of the day. Expedia may offer higher rates on Marriott hotels, and those guests could just book directly from the Marriott. The problem is both Marriott and Expedia run their own reward programs for travelers.
People not 100% loyal to the Marriott brand may benefit from booking with Expedia. They could end up choosing another hotel over Marriott because of the fees. Plus, they may want to add points to their Expedia loyalty program.
The biggest loser in this scenario is the hotel owner. Any owner who brands their hotel under the Marriott name expects positive results. These altercations between the brand and a popular site like Expedia will not help their bottom line.
It’s not that Marriott is against online travel agencies. The problem seems to be that it has a preferred site that isn’t Expedia.com. Proof of that is another battle the brand faces in the Caribbean.
Booking Seems to Be a Marriott Ally
In the summer of 2019, the Caribbean Hotel and Tourism Association launched a campaign against Marriott Hotels and Booking.com. The association claimed that both brands were deliberately deceiving customers through price dripping. Price dripping occurs in the hotel world when the customer can’t see the final price for their reservation until the last minute.
What the Caribbean-based tourism association threatened to do was not recommend that tourists use the travel site or stay at Marriott hotels. Price dripping is a practice that is banned in many countries. It’s also an issue that has landed Marriott in hot water multiple times.
Marriott has faced at least three lawsuits over price-dripping allegations over the last few years. Two were filled in California, and the Pennsylvania District Attorney’s office headed the other. The ruling in the Pennsylvania case concluded that Marriott could be considered a company that repeatedly infringes price-dripping regulations.
All of these instances come back to affect hotel owners in a very negative way. When potential guests begin to doubt transparency in the prices for Marriott hotels, they will likely avoid them. Many of these malpractices were taking place without the consent of the hotel owners.
Booking prices on Marriott’s official site now can show the “full” price per night immediately. Helping travelers avoid the scam of fake prices on these travel sites that didn’t feature resort fees. The damage to consumer confidence may have already been done.
Final Thoughts
One of the biggest problems for hotel owners who operate under the Marriott brand is that they are not in the room when decisions that affect them are made. That’s not unique to the Marriott brand. The problem with working with Marriott is that the chain has developed a negative reputation over the years.
The case in Poland is one of the biggest red flags that shouldn’t be ignored. It’s clear that Marriott’s corporate offices have put their best interests before their business partners’ several times. With that precedent, people shouldn’t be surprised if it happens again.
Does the Marriott name still bring in guests that hotels couldn’t acquire otherwise? It’s undeniable that just promoting a property through the Marriott official site could bring in more guests. That’s especially true when the Marriott Bonvoy rewards program comes into play.
Marriott, though, is also known for paying its hotels a lower nightly fee for guests who pay with reward points. Considering all these issues, it’s hard to justify getting into business with the brand, even though it’s currently the largest hotel chain in the world.
