Marriott International Inc. said it will not keep any profits it makes from its online purchasing unit, Avendra LLC, but will either give hotel owners credits against future purchases or apply the credits against charges for upgrading hotels' reservations and other systems.
Executives at Marriott said yesterday that they are still deciding how the Avendra profits will be divided among owners. They said owners will see profits after Marriott has recouped its Avendra start-up costs.
So far, Avendra has yet to make money.
In the past year, Marriott and Avendra have been named in lawsuits accusing the two companies of illegally keeping vendors' rebates instead of passing them on to hotels. In light of the accusations, Marriott promised hotel owners it would be more open about its relationship with the purchasing unit.
Marriott, the world's largest hotel chain, owns 49 percent of Avendra. Several other hotel companies, including Hyatt Hotels Corp. and Fairmont Hotels & Resorts Inc., and ClubCorp Inc., an operator of golf and country clubs, own the rest.
Avendra gets rebates on goods such as toilet paper, linens and food it buys for hotels. Marriott invested about $5 million in February 2001 to set up Avendra. The online purchasing unit now has 225 employees at its Rockville office, and it expects to have revenue this year of $35 million to $40 million. Last year, Avendra lost $2 million. It expects to make about $2 million this year.
Avendra, which buys for 4,000 hotels, airport concessions, and golf and country clubs, has said that it saves its customers from 10 to 15 percent on purchases because it is able to buy goods at volume discounts.