The companies have been working under an extension agreement after the previous contract expired in November. The new agreement is the first between the two since Marriott became the world's largest hotel company following its acquisition of Starwood Hotels in 2016.
According to two people familiar with the matter, Marriott was able to negotiate a commission rate with Expedia. The last reported rate was 12%. Last year, Marriott CEO Arne Sorenson told Reuters that the company was trying to cut commissions for online travel agencies, which can take a large bite out of hotels' profits.
Expedia's stock rose 1.4% in premarket trading Thursday, while shares of Marriott remained flat.
The deal will continue Marriott's arrangement with Expedia for booking last-minute guests, as well as expanding Expedia's role with Marriott's leisure packaging platform. In the fourth quarter, Marriott and Expedia plan to launch a distribution arrangement that deals with more than just last-minute bookings.
—CNBC's Seema Mody contributed to this report.