Hotel giants team on Net marketplace
Rivals Marriott and Hyatt say they will form a separate company that will launch an online marketplace connecting buyers and suppliers in the hospitality industry.
The new online marketplace will provide participants such as hotel owners, operators and other industry partners with an easier way to buy and sell a wide range of supplies, from toiletries to furniture, the companies said in a statement. The new marketplace is set to launch later this year.
Financial terms of the deal were not disclosed.
This is the latest move by a group of large companies in one industry to band together in an effort to streamline dealings with their partners and suppliers. Companies are aiming to reduce cost, time and paperwork in their existing internal purchasing process by moving those business relationships to the Web.
A number of business-to-business marketplaces and trading exchanges already exist in the hospitality industry. One, Zoho.com, last week received a $50 million third round of financing from leading technology players including Dell and Ariba. Ariba, which makes specialized software that helps companies link to their partners, suppliers and customers via the Net, also recently set up its own marketplace for the travel and hospitality industry in a joint venture with Sabre Holdings, which operates a Web-based travel reservation system.
Marriott and Hyatt, which franchise more than 1,800 hotels in North America, claim their hotels currently procure an estimated $5 billion annually in related goods and services. The two founding companies said they expect other hotel companies will join the new company, which will initially focus its efforts on the North American market, with intentions to enter other geographic markets over time.
The as-yet unnamed online marketplace will offer reduced prices on products and services, real-time access to a massive supplier base, automated order and fulfillment capabilities, online tracking of information on goods and services ordered, customized content, a help desk and online customer service.
The companies said they will use business e-commerce software from GoCo-op, an e-commerce service provider that will work with the new company and other service providers to combine their existing computer systems and back-office applications with the new marketplace.
Marriott and Hyatt said they are both providing interim management for the new company. Dennis Baker, executive vice president at Marriott, will be the chief operating officer of the new company. Meanwhile, a recruiting firm has begun to search for candidates for the chief executive officer position.
The company, which will be based in the Washington, D.C., area, is expected to be operational later this year, but the venture is still subject to regulatory review and approval. Until the deal closes, Marriott and Hyatt said they will continue to operate their own procurement systems separately.