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Marriott Joins a Chinese Disruptor

Aug 08, 2017
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AlibabaSMITH BRAIN TRUST — House-sharing broker Airbnb poses a threat to traditional hotels. But Marriott International CEO Arne Sorenson worried more about Google, Amazon and Apple when he visited the University of Maryland's Robert H. Smith School of Business in 2016. He said the real disruption will occur in the hospitality industry when these Internet gatekeepers decide to use their “nearly monopolistic power” to extract tolls from companies that depend on the Internet to connect with customers. Marriott’s vulnerability might help explain its joint venture announced Aug. 7, 2017, with Alibaba Group, which combines the power of Google, Facebook and Amazon in China.

Marriott has nearly 300 hotels in China and another 300 planned. In 2016 the Bethesda, Md.-based company also acquired Starwood Hotels, which has an even stronger presence in China. But the focus of the joint venture will be outbound Chinese travelers. They can use Alibaba's travel service platform, Fliggy, and online payment platform, Alipay, to book Marriott rooms around the world.

“This strategic partnership is a great move for Marriott,” says Smith School professor Gary Cohen, who has decades of experience in China. “They have high visibility in China with numerous brands, including Starwood, so the strong brand recognition among the Chinese population creates a level of trust and comfort when traveling abroad.”

Cohen says the Chinese population is traveling globally in huge numbers. "And they are already quite comfortable with using Alibaba's various platforms, including Fliggy and Alipay — just as we are in the United States with travel aggregators like Trivago, Hotels.com, Priceline and Airbnb,” he says. “It's a win-win when you combine a trusted booking and payment platform with trusted hotel brands.”

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About the University of Maryland's Robert H. Smith School of Business 

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty masters, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.