Peloton enters partnership with 5,400 Hilton hotels

Shares of Peloton are rising upon news that the exercise bike company is partnering with Hilton to provide its bikes to 5,400 hotel's locations.

Video transcript

RACHELLE AKUFFO: All right, well, Peloton shares are rising. We see that they're up about almost 8% here as the company announces a new partnership that will bring bikes to 5,400 Hilton Hotels in the US. Now the news is coming less than a week after the company announced bikes would be available in Dick's Sporting Goods. But despite today's move higher, the stock is still under pressure and near 52-week lows, with the stock down nearly 80% year to date.

And I know we keep following all these different moves that Peloton is making. Seana, I know you're a Peloton fan. What's your take on this now perhaps going into hotels? Do you think this helps perhaps introduce the brand to more people, or do people already have all the home equipment that they are really going to need at this point?

SEANA SMITH: I think it certainly makes a lot of sense. I think people who have a Peloton at home, if they go away and they want to use the bike, I don't think it hurts at all. I think there is a chance that it will help a Peloton widen its customer base. I think the new CEO, Barry McCarthy, there, doing everything he can to try and expand the number of users. Clearly, that has hit a plateau over the last several quarters.

So this is another initiative by the company in order to help grow their business. It makes a lot of sense. I think there's a lot of questions out there on exactly how this is going to work. But 5,400 Hilton branded hotels, that's how many bikes-- or that's how many locations these bikes are going to be. And they aim to do it by the end of the year, so they're not wasting any time. But Dave, I know you have some questions just about how this is exactly going to work.

DAVE BRIGGS: I think this is huge. I think this is bigger than maybe Amazon or Dick's because I think the one thing they haven't had is exposure to the masses. And 5,400 hotels is a huge number, but you don't have to be a Peloton member to use these at Hilton. You do get free access to the app for 90 days if you're a Hilton Honors member. The problem here is you do have to have a login. And they're going to give you one.

However, I think that's just enough to keep people off that bike. It's just enough of a hassle when you've got 30 minutes to kill in the morning. I think they got to allow you to jump on that bike, pick a class, and go. Anything that costs you an extra two to three minutes in the morning when you don't have time to spare will keep you off of that bike. If they can tweak that, I think this is McCarthy's best move, even though we're sipping from a fire hose with all the news Peloton keeps putting out every day.

SEANA SMITH: You know, I agree. But I also think that that's a very easy fix for them, right? If they're able to--

DAVE BRIGGS: Very easy.

SEANA SMITH: Yeah, they're able to just create a login specifically--

RACHELLE AKUFFO: That is true.

SEANA SMITH: --for Hilton so all of their users can maybe just type in their room card or their room number or whatever it is that they need to verify--

DAVE BRIGGS: Done, go.

SEANA SMITH: --that they're saying there, I think you're right. I think that would be smart. So if they are listening--

DAVE BRIGGS: Barry.

SEANA SMITH: --you should take Dave's advice here on this one.

RACHELLE AKUFFO: I mean, it's the same thing as logging into the Wi-Fi, right? I mean, it's-- we're all still willing to take that extra step. But if the Peloton is just sitting there and you don't feel like going into the hotel gym, you have it right there. You're paying for the convenience. You know, it's free with the login. I'm not mad at it. I think this is a smart play by Peloton. Whether that translates, though, into people that wanting to go home and purchase one, that, we still have to figure out. That has not been determined at this point, but still early.

DAVE BRIGGS: Also be curious what discounts they're offering these hotel chains. Are they selling them at market price? Because then it would be a big, big sale for Peloton.