Marriott Hotels purchased Starwood and replacing the beloved Starwood Preferred Guest (SPG) with a new combined program, Bonvoy. Three data points suggest that SPG members haven’t stayed with the new Bonvoy program.
What’s Not to Like? Everything
For Starwood Preferred Guest members, especially elites, Marriott’s new Bonvoy program has disappointed. Many have been vocal about the system’s failures including IT/Customer Service issues that stretched for months on end. The executive responsible for Bonvoy has left as well along with many SPG executives.
SPG Members enjoyed upgrades to the best available suite upon checkin, that’s gone now. Reward nights cost more, the value of points in some cases has fallen to negative levels (more on that in another post). Breakfast privileges and other benefits require a decoder ring to decipher. The one sweet spot of the Marriott Rewards system (Hotel + Air packages) has been reduced to rubble.
Marriott CEO Misinterprets Survey Data
Ed Pizzarello highlighted comments made by Marriott CEO Arne Sorenson this week. He cited a survey of Bonvoy members:
“In a recent survey of Bonvoy members by an eight to one margin. Respondent said, they preferred the new Marriott Bonvoy loyalty program over either Marriott Rewards or SPG.”
Since the start of the year 12 million members were added to the program, but that’s a substantial key to Sorenson’s survey results. About 10% new additions would have never known the SPG program in the first place. Marriott was also much larger than SPG by membership and number of properties; had the survey been conducted of former SPG members and not the overall populous, results would not likely have been as positive.
Further, the survey is only of current program members responding. I am currently a Bonvoy Titanium with zero stays this year, reward or cash nights and while I wasn’t surveyed, they wouldn’t have liked the results. What about other disengaged Bonvoy members that have simply left the brand?
Financial Performance Tells The Story
In the third quarter of 2019, Marriott reported profits down 23%. The chain claimed that Hong Kong protest disruptions were in part to blame:
Marriott had said the growth rate has moderated across its markets and that political demonstrations in Hong Kong have constrained growth. – Armental, Wall Street Journal
I’m not buying that, at least not in total. Hilton was mostly flat, even showing moderate growth despite softness in prices. Hyatt also stated that they have been somewhat affected by the Hong Kong disruptions but limited those exposures to less than 2% in every category and reported higher than estimates at 13% during the period. IHG, who hates their elites, is down less than 1% for the period.
While it’s not in Marriott’s interest to show how many SPG elites have reduced their stays within the Marriott family, it’s not a secret that SPG members have been vocal about being Bonvoyed by the new program, Sorenson calls that “noise at the edges.” But SPG hotels were top heavy in favor of luxury properties, their fan base incredibly enthusiastic. Perhaps that noise at the edges was worth listening to.
Hilton Offers More Data, Potentially
Hilton has been generous with status matches in years past. Overly generous. Hilton has substantially changed their status matches and adjusted challenges. This behavior is consistent with having a substantial amount of elites or being out of balance with too many elites and not enough general members.
Some would suggest that because Hilton has been so generous in the past that SPG members have flocked to Hilton which makes sense given the size of their hotel chain, generous benefits and proclivity to welcome elites from other chains. Hilton also offers Diamond (top tier qualification) based on stays, as did SPG.
However, I would be remiss to not acknowledge that the Hilton Aspire credit card from American Express includes Diamond status and the benefits more than offset the annual fee; that would also swell the Diamond membership.
Marriott has not had a successful Bonvoy rollout. Most peers express some softness in the market and struggle with Hong Kong disruptions but just Marriott has seen a dramatic drop in profitability. Sorenson’s misinterpretation of Bonvoy approval ignores the skew of prior Marriott members and new members into the program that never experienced Starwood Preferred Guest. It also assumes that members who maintain active accounts have not left the program and I can personally attest that to be false. In my opinion, SPG members have voted with their feet, and wallets.
What do you think? Did Marriott Bonvoy themselves with SPG members? Does the data tell another story?