NEW YORK— Marriott International has told its property owners that it will use its profits from the purchasing company, Avendra, to improve the owners operations and not keep the money itself, according to The New York Times. Marriott uses Avendra to negotiate volume-discount purchases of everything from coffee to towels for the 670 hotels that it manages on behalf of separate owners. However, Avendra and Marriott do not disclose Avendras actual prices or the rebates that Avendra receives from vendors, its main source of revenue. A few hotel owners have questioned whether Avendra saves them the average 10% to 15% that it promises and whether Marriott is unfairly profiting at their expense. Marriott has invested at least $5 million in Avendra, and owns 49% of it. Avendras other major investor is the Hyatt Hotels Corporation. At a meeting last week with the Owner Advisory Council, a group of 15 large hotel developers, Marriott executives said that once their company earned back its investment, it would distribute its share of Avendras profit to owners in the form of non-cash credits that they could spend through Avendra, according to the report. Should Avendra produce a windfall, perhaps through an initial public offering, the Marriott executives said their company would use that money to upgrade the hotels reservations and other systems, at a discount to the hotels. Currently, managed hotels share those costs with Marriott. SOURCE: The New York Times
