Duff on Hospitality Law

American Airlines’ decision to soften its approach on distribution with travel agents and advisors garnered most of the industry’s attention this week.  Otherwise, the holiday week for many was relatively quiet.  Enjoy.

• • Another Quarter and Another Staggering Amount Spent on Sales and Marketing.  According to their first quarter financials, the “Big Four” online travel agents (Expedia Group, Booking Holdings, Airbnb and Trip.com Group) spent a staggering $4.08 billion in sales and marketing in the first quarter of this year (a 10% increase over the same period last year).  How do these amounts compare to companies outside the online travel industry?  In the first quarter, the Big Four outspent their industry counterparts by a factor of 4 – when measured as a percentage of overall revenue (9.2% vs. 37%).     
  • A Few More Carrots Than Sticks:  American Airlines’ About Face.  Facing cuts in its financial forecasts, American Airlines announced this past week that it was moderating its historically aggressive NDC rollout.  According to American CEO, Robert Isom, the airline’s financial misses were due, in part, to its misguided sales and distribution strategy.  Going forward, American will seek to incentivize agencies’ and advisors’ use of its NDC platform as opposed to penalizing those who don’t.  As part of its newly announced change, American is reversing one of the most controversial aspects of its NDC campaign, the withholding of American Advantage loyalty benefits on bookings made through non preferred NDC advisors.   
  • Travel Technology Association Holds Its First Policy & Innovation Showcase.  Members of the Travel Technology Association held its first Policy & Innovation Showcase this past week for members of Congress and the media.  Companies presenting and/or hosting this event included Sabre, Airbnb, Tripadvisor, Expedia, Booking Holdings, Amadeus, Travelport and Chase Travel Group.  Issues currently on the Association’s agenda include the reform of the Communications Decency Act (Section 230), the American Privacy Rights Act and ancillary fee transparency.  According to comments by Association CEO Laura Chadwick, all travel companies are becoming technology companies.