Courting U.S. small businesses isn’t the only thing Chinese ecommerce giant Alibaba Group (BABA) is doing on American soil. It’s also going after the hospitality market, striking an alliance with hotel giant Marriott International Inc. (MAR).
In an effort to corner more of the consumer dollars spent on travel, the two companies announced a deal earlier Monday in which Chinese consumers will be able to use Alibaba’s travel website and its mobile app to secure rooms in the more than 5,700 Marriott hotels around the globe. What’s more, Chinese consumers will be able to use Alipay, Alibaba’s digital payment platform when they stay at Marriott hotels outside of China.
The deal comes at a time when Chinese consumers are opening up their purse strings and are spending a lot of money on foreign travel. According to a report in The Wall Street Journal citing the research firm Euromonitor International, online travel sales in China are set to hit $86.9 billion this year, up 20% from a year ago. Alibaba said in a press release announcing the deal that Chinese travelers are forecast to take 700 million trips during the next five years. (See also: Alibaba Aims to Become World's Fifth Largest Economy by 2036.)
Serving Chinese Travelers
The deal is also part of the Chinese ecommerce giant’s offline-online retail vision in which the new buzzword signifies the ability of mobile platforms to facilitate the interaction between traditional offline business and their customers online through mobile apps. The business strategy draws customers into the physical offline premises via online transactions and relies on big data to make that possible. Its ability to harness data to entice consumers to shop more has drawn interest from Wall Street, which has been growing increasingly bullish on the company.
"By forming this partnership, we are pairing our hospitality expertise with Alibaba's digital travel platform, retail expertise and digital payment platform, Alipay, and driving membership to our loyalty programs. With the growing number of Chinese consumers exploring new destinations, this venture will introduce our hotels worldwide to this new and growing traveling class," said Marriott President and Chief Executive Officer Arne Sorenson in a prepared statement. (See also: Alibaba to Bring US Businesses Online to China.)
Under the deal, Alibaba and Marriott will work together to create technology that will enable Chinese consumers to not only book and pay for a trip but also plan and manage all of the activities, be it shopping, dining or sightseeing. Marriott will also offer access to private concerts, family experiences and courtside seats to sporting events for Chinese consumers who take part in its Starwood Preferred Guest Moments and Marriott Rewards Moment programs. In addition to boosting sales outside of its core ecommerce business, the deal puts pressure on Alibaba travel rival Ctrip.com International, which has also been investing in U.S. travel companies during the past year, reported the Journal.