A few days ago I posted my suspicions about Marriott/SPG’s overwhelmingly positive reception. One Mile At A Time posted that there were some great new values in the new award chart that probably wouldn’t last. Friends, readers, strangers – I have some bad news.
Live From The Freddies
My wife and I were able to attend the Freddies (an award event for travel loyalty programs) and found ourselves milling around before the start of the event. When the Marriott folks walked up behind us in line for a Coca-Cola I thought I should take the opportunity to ask these leading representatives of the world’s largest hotel chain about the transition with SPG and some of the discrepancies in the new award chart that would make more expensive properties in SPG’s line (with a 1:3 ratio to Marriott points) a far better deal. In some cases, the new price would come in less than 2/3rds of the old price. A 35,000 SPG point redemption should cost 105,000 apples to apples, but on the new chart, there is a period where that room would only cost 60,000 [unnamed Marriott loyalty program] points. Even peak prices of 100,000 would technically bring the price down, though by less than 2,000 SPG points by comparison.
A perplexed look appeared when I asked about the great new deals. Then a look and tone of indignation. This unnamed representative was a little brusque generally, though my tone was upbeat talking about the great new deals in the program. [Their] hubris was offputting and lacked pleasantness at best and humility at minimum.
While there are no specifics as to what the new categories will be, how much the nights will cost nor the swing from peak to off-peak there were some preliminary indications eluded to. It was clear by the look on [their] faces and the tone of the response that things were about to change. Indeed, one representative said as much. “There will be new categories” and friends, they won’t be lower prices.
I asked about sweet spots and was again greeted by a perplexed response. “Sweet spots? What’s a sweet spot?” It’s funny to me that at an industry event where half of the attendees are award nominees and the others are bloggers, that this particular program executive was so removed from what we all know and write about all the time that the concept of an outsized value was foreign. So I clarified, explaining to an executive at the world’s largest hotel chain, a person senior in their loyalty program’s management, what an outsized value is and why we are so passionate about loyalty programs. Because a commenter recently mentioned a particular Marriott property, I used specifics to illustrate my point.
“For example, the Ritz-Carlton Jakarta prices nights at $300-400/nt, but the award prices were just 30,000/night while a Courtyard runs $130 and 30,000 points but the Bohemian [boutique owned Marriott] down the road [ in Orlando] costs twice the money but the point difference is only 5,000 more points/night. The Ritz in Jakarta delivers outsized value and makes me want to earn more Marriott points.” I wasn’t trying to out the forgotten cheaper redemptions in the system, I was making a point about loyalty program basics that should not have been new information. It’s startling to me that this seemed to be virgin ground.
“That must have been an odd weekend or off-peak.” The representative said, completely focusing on the wrong thing. Not a surprise in and of itself, but disappointing all the same.
Their statement though suggested that these anomalies should remain anomalies. When pressed further regarding whether they were pursuing a more direct relationship between redemption cost and room price as Southwest (and Hilton) have done, they stated that not exactly but close.
Seeing my reaction (I wear these things on my face) [he/she] indicated that some properties would move up and some down in cost. I mentioned that another program bases their categories on occupancy. That is why (in the other program) one property charges the second-from-the-highest redemption level for a hotel that routinely sells for $250-300/nt while the same category is home to another famous property that runs $800-3,000/nt. The less expensive hotel is just as busy on an occupancy basis as the astronomical property thus, they are in the same category.
That’s not how [the new, still somehow unnamed Marriott] loyalty program will price their rooms. They will be attached to a historical ADR (average daily rate) from the previous year. This removes sweet spots in effect.
Unambiguous new information count (3):
- New categories are coming and they will be at the higher end of the chart, not the lower end.
- Some hotels will move categories going up and down (nothing earth shattering there) but this seemed to defend that if you add categories you have to fill them so prices will increase.
- Those redemption rates will be based, at least strongly correlated (I presume in price buckets) with the previous year’s ADR.
The executive and their compatriots standing amongst us went along with this so it appeared to be public knowledge at least within the hallways at Marriott.
Book Your Stays Now!
Given the rest of the above conversation, I picked a date reflective of other milestones in their new [still unnamed Marriott] program. “So will those new categories and redemption changes roll out by August 1st?” Oh yeah was the response I got. The new categories which by definition will result in at least a partial devaluation of their most expensive properties will occur by August 1st. When that day happens I don’t know, but we at least have this.
So in review – I was right to be suspicious/pessimistic, as was Stefan. While the initial reports were overly positive in my opinion, it’s clear they do intend to charge more than what they have posted in their new chart.
You have been warned.
Are you going to make some bookings for the future before devaluation/new categories are added? If so, what are your target properties? Are you surprised by their move to devalue their brand new program within a few months of launch?