Marriott Acquires Starwood: Initial Thoughts
T he following statement was posted on Monday, November 2, 2015 at 7:51 in the morning Eastern Standard Time in this discussion: “It is all over the news these days: Hyatt is in talks to take over Starwood. I wonder why Marriott did not step up their game and try to take over them.”
The rationale of the then-uncanny and unintentional prognostication by FlyerTalk member Muerz is that Marriott International, Incorporated and Starwood Hotels and Resorts Worldwide, Incorporated “would be a perfect fit for one another since Starwoods biggest problem is their limited availability in small markets and limited service brands while Marriotts problems are aspirational properties in the highend segment on one side and market penetration problems in Europe on the other side – both of which Starwood could provide.”
Had Muerz not added the statement “So sad they miss this opportunity!”, Muerz might have looked like a genius amongst all of the rumors which were rampant about Hyatt Corporation and Starwood Hotels and Resorts Worldwide, Incorporated possibly merging — and those rumors turned out to be nothing more than a waste of time and bandwidth.
The big news today is that Marriott International, Incorporated announced its acquisition of Starwood Hotels and Resorts Worldwide, Incorporated for $12.2 billion, ensuring the combined entity to easily become the largest lodging company in the world with a combined total of currently a whopping 30 brands consisting of 5,573 hotel properties in greater than 100 countries; and that could increase — unless some of the hotel properties are divested or sold.
In terms of frequent guest loyalty program memberships, there are approximately 54 million members in Marriott Rewards; while Starwood Preferred Guest has approximately 21 million members. There is probably some significant overlap of members, as I am a member of both frequent guest loyalty programs myself.
Marriott acquires Starwood. That news caught a lot of people by surprise.
An Insignificant Comparison Exemplifies the Dichotomy?
I received this euphemistic announcement in an e-mail message from Chris Holdren, who is the senior vice president of the Starwood Preferred Guest frequent guest loyalty program:
Today we’re excited to share the news that Starwood Hotels & Resorts will join together with Marriott International to create the world’s largest hotel company. For our Starwood Preferred Guest® (SPG®) members, this will mean even more choices in even more places, giving you access to 1.1 million rooms across 5,500 hotels and resorts in more than 100 countries.
We will work to bring you the very best of SPG and Marriott Rewards®, two of the most rewarding loyalty programs in our industry. Our members are at the core of everything we do, and that will not change.
Today is the first day of a long journey as we combine our two companies. For now, we remain separate, and there is no change to your SPG program status, your Starpoints® or your existing reservations. You will continue to earn Starpoints and elite stay/night credit for your stays, as well as bonus Starpoints for any promotions in which you are participating. There is no change to how you manage your SPG account or book reservations.
Over the coming months, as we have more to share, we’ll be sure to reach out to you by email, at spg.com and via twitter (@spg). In the meantime, we remain at your service wherever you need us — whether in our hotels, at spg.com, on the SPG mobile app or via our Customer Contact Centers.
Thank you for sharing your travels with us.Chris Holdren
Senior Vice President, Starwood Preferred Guest
I have yet to receive a similar announcement via e-mail message from Marriott Rewards — and as insignificant as that may sound, that to me exemplifies the general dichotomy of the two programs.
My Overall Experience with Marriott
Years ago — back when the frequent guest loyalty program of Marriott International, Inc. was called Marriott’s Club Marquis — I earned Black elite level membership status in what was then considered my first choice in loyalty programs. I was excited about that because it was the first time I reached a mid-tier elite level in a frequent guest loyalty program.
Like a boy in a candy store — or is it toy store — I ripped open my elite package as soon as I received it via postal mail from Marriott. Amongst the goodies I received were two solid metal luggage tags made in China which looked like miniature padlocks; and a list of the benefits I would receive as the newest Black level member of Marriott’s Club Marquis as follows:
- Complimentary upgrade to Concierge Level room if available when checking in for stays of one to two nights
- Exclusive Club Marquis Reservations
- Guaranteed Corporate Rate
- Reservations Preference
- Spouse Stays Free
- $200.00 Reservation Guarantee
- Express Check-In and Check-Out
- $500.00 Check Cashing Privilege with valid Club Marquis card — need not be a registered guest
- Complimentary Daily Newspaper delivered to your room
- 10 percent Gift Shop Discount at Marriott owned and operated gift shops
- Confectionary Gift with turndown on arrival evening
- 10 percent Honored Guest Awards Bonus
- Monthly Honored Guest Awards Activity Statements
Other than the confectionary gift — usually a thin square chocolate wrapped in shiny gold Marriott-branded foil, although sometimes I received two of them — and the ten percent points bonus with every hotel stay, the only benefit about which I really cared and was excited was the upgrade to the Concierge Level. Marriott hotel properties were my top preference. You had to stay at least 50 nights to become a Black elite level member — and don’t forget that at one time, you could not earn points at properties such as Fairfield Inn or Courtyard by Marriott, which had their own frequent guest loyalty programs. Those 50 nights had to be earned only at the higher-level Marriott hotel properties.
Unfortunately, I never was upgraded to a Concierge Level room, as it was never available — not in Andover, Massachusetts, nor on Canal Street in New Orleans, Louisiana, nor any other Marriott hotel property at which I subsequently stayed. I was denied my upgrade at hotel property after hotel property, as I was consistently told “I am sorry, Mr. Cohen, but there are no Concierge Level rooms available at this time.” As I was becoming increasingly disappointed, I began to wonder what was so great about this elite status level after all.
Once my Black elite level membership expired, I started to stay at the properties of other hotel chains — including Starwood, which itself was formed back in 1991 as a result of a merging of separate hotel brands such as Westin and Sheraton — and never looked back, as I found that elite levels of other frequent guest loyalty programs were easier to attain and the benefits were more substantial and rewarding.
My Thoughts on Marriott Today
Look, I have no qualms about staying at Marriott hotel properties. In fact, I would actually recommend staying at Marriott properties — though it certainly would not be amongst my top recommendation. I usually have stayed in quiet, reasonably comfortable rooms, and I have always generally been treated well by Marriott — even when I was “walked” from the Melville Marriott Long Island property years ago when I arrived late at night and my reserved room was not available. My favorite Fairfield Inn in Nashua used to serve warm cookies, had a real fireplace in the lobby with a roaring fire during cold winters, water coolers at the stairwell for its guests, and other amenities not usually offered by Fairfield Inn properties — but it appears that that Fairfield Inn no longer exists.
My experience with point redemption on properties seem to generally be fair, and the points which I earned have never expired. I was even a Silver Marriott Rewards elite member for several years for reasons about which I still do not know how I qualified.
Mediocre recent stays at hotel properties within the global portfolio of brands of Marriott International, Incorporated — such as Protea Hotel Samrand in South Africa and AC Hotel Coslada Aeropuerto in Spain — suggested to me that Marriott International, Incorporated was already growing too fast before the announcement of the acquisition of Starwood Hotels and Resorts Worldwide, Incorporated. In my opinion, the lodging company needs to work out all of the “kinks” and issues with the hotel and resort properties already within their portfolio.
In addition to creating more hotel brands — such as Moxy, for example — Marriott International, Incorporated has been on an acquisition spree within recent years to fuel its thirst for rapid growth, which included:
Apparently, I Am Not Alone…
Few frequent travelers are happy about this news — especially those whose main frequent guest loyalty program is Starwood Preferred Guest, where many FlyerTalk members were quite vocal about the news and oppose the acquisition. The same news for those FlyerTalk members loyal to Marriott Rewards was not nearly as contentious or as popular; but they were not exactly jumping up and down for joy, either.
Many frequent fliers and “bloggers” have stated that Starwood Preferred Guest is superior in many ways to Marriott Rewards; and if you are expecting me to disagree, you will be disappointed. I earned elite level status in the Starwood Preferred Guest frequent guest loyalty program at one time as well; and I agree that the Starwood experience is better overall than the Marriott experience
How Will the Frequent Guest Loyalty Programs Be Affected?
“The reasons we took this leap, the largest in our company’s 88 years, are two-fold”, Arne Sorenson — who is the president and chief executive officer of Marriott International, Incorporated — posted in this article pertaining to the “growth of choices, value, opportunities” on LinkedIn. “First, we are confident we can create value for the shareholders of both companies. Second, we are convinced the greater size will help us stay competitive in a quickly-evolving marketplace.”
Notice that frequent guest loyalty programs were not amongst those two reasons; but Arne Sorenson did post the following message in this discussion on FlyerTalk:
As a valued member, we’re excited to share the news that Marriott International will join together with Starwood Hotels & Resorts to create the world’s largest hotel company. For our Marriott Rewards members, this will mean even more choices in even more places, giving you access to 1.1 million rooms across 5,500 hotels in more than 100 countries.
Marriott Rewards and Starwood Preferred Guest (SPG) are among the industry’s most-awarded loyalty programs, and they should be even stronger when the companies merge. Our programs and brands complement each other well, and we intend to draw upon the best of both programs to provide more value for our guests and hotels.
This is the start of a long journey as we combine our two companies. For now, we remain separate, and there is no change to your Marriott Rewards program status, your Rewards points or your existing reservations. You will continue to earn Rewards points and elite stay/night credit for your stays, and bonus points for any promotions in which are you are participating. There is no change to how you manage your Rewards account or book reservations.
Over the coming months, as we have more to share we’ll be sure to reach out to you by e-mail, at marriottrewards.com and via twitter (@MarriottRewards). In the meantime, we remain at your service wherever you need us—whether in our hotels, at marriottrewards.com, the Marriott mobile app, or via our Customer Care Centers.
All my best,
If you are hoping that Marriott will incorporate the more superior features and benefits of the two programs moving forward once the acquisition is completed, you are absolutely correct — as long as that choice is also the more profitable one for Marriott…
…which is my way of saying for you not to hold your breath, as per the history of consolidation of frequent travel loyalty programs in recent years. Even without a merger or acquisition, frequent travel loyalty programs are perceived to have been devalued significantly in recent years. Besides, Starwood Preferred Guest had to have a superior frequent guest loyalty program to differentiate itself from Marriott Rewards simply due to sheer numbers: there are currently almost 3.5 times as many Marriott hotel properties as there are Starwood properties.
Keep in mind that the acquisition is not a done deal, as it will be subject to regulatory hurdles by government agencies worldwide — such as the Department of Justice of the United States. Shareholder approval is also necessary for the deal to be completed. I do not expect those hurdles to be major impediments, however — but you never know.
Beneficial results which I would expect from the merging of the two lodging companies would include the pooling of points and the merging of stays towards lifetime elite level status — as well as, of course, the number of hotel rooms all over the world at which you can stay to earn points in the same program. Admittedly, those are isolated bright spots in what many perceive to be bad news in the world of frequent guest loyalty programs.
Logo source: PRNewsFoto and Marriott International, Incorporated.