Marriott to Reinvest Avendra Profits

WASHINGTON, DC-Marriott International Inc. has responded to the bevy of finger-pointing and lawsuits by its franchisees accusing the global hotel conglomerate of making off with millions of dollars in supplier kickbacks from Avendra LLC, the Internet-driven business-to-business hospitality procurement company, 49% of which is owned by Marriott.

While Marriott has consistently denied any wrongdoing during the last several lawsuit-filled months–which have brought forth accusations ranging from racketeering to commercial bribery–the company recently took actions to address the growing outcries. “Marriott has indicated that it plans to return potential financial gains realized from its investment in Avendra to the benefit of hotels in the Marriott system,” A Marriott spokesperson tells GlobeSt.com.

Marriott’s franchise-owners are encouraged to use Avendra for acquiring supplies ranging from bed sheets to mini-shampoo products. Avendra came into being in 2000 when Bass Hotels & Resorts, Hyatt Hotels Corp., and ClubCorp USA Inc. joined Marriott in launching the new procurement concern. The company buys goods for low prices due to its bulk purchases, and in turn, purports to save its customer hotels 10% to 15% on their purchases.

Marriott made a $5-million investment in the company, which lost $2 million last year. “As a matter of information, Marriott has disclosed that it lost approximately $1 million on its investment in Avendra in 2001,” says the company spokesperson. Avendra expects to turn a profit in 2002. However, more than a few among the some 4,000 hotel-franchise owners are balking at the notion that Avendra saves them money on purchases, as promised. But Marriott’s recently announced profit plan is expected to calm the flames. “While some hypothetical examples have surfaced, the exact details of this plan have not yet been finalized,” the spokesperson adds.