Earlier today I posted about Hyatt potentially buying Starwood hotels as reported by CNBC. Then Matthew from Live and Let’s Fly here on Upgrd wrote this post.
Matthew Had Salient Points
There were, of course, some valid points:
“Northwest and Delta merged, and we lost a great Northwest loyalty program and website.”
“United and Continental merged, also taking the the worst aspects of both programs.”
but then he makes an assumption with which I disagree:
“We have two great products right now — Hyatt Gold Passport and the Hyatt co-branded credit card from Chase and Starwood Preferred Guest and the Starwood co-branded card from American Express. It seems unlikely that both cards would survive a merger and that really hurts discerning consumers.”
Matthew, my friend, this merger would be great and you are wrong!
1) Matthew, think about the properties
I am a Hyatt super fan. I am not a super fan, however, of some of their location choices. To date, there is not a single property in Spain, just one property in Milan and none in the rest of Italy, just three in London, none in Lima, one in Bangkok, one in Singapore. There are some in development like Rio De Jinero, the Park Hyatt Bangkok, eight more properties in Shanghai, but nothing in all of Scandinavia. Seriously Hyatt, how do you have eight properties in Pittsburgh, but none in Ireland, Belgium, Ecuador, Belize?
Starwood has more than 1200 properties dwarfing Hyatt’s 500+ which would shore up some of those colossal gaps. Lima has three Starwood properties for example (though one they should not even take as part of the deal). In Bangkok, Starwood has 10 properties across just about every price point imaginable and all over the city. If you want to stay with Hyatt, you have one choice, the Grand Hyatt Erawan and it’s not cheap.
I think there would be a lot less Intercontinental Hotel Group loyalists, Marriott, and Hilton diehards if Hyatt had a competitive number of hotels. But each of those chains is 8-11x Hyatt’s current size. I am a Hyatt Diamond member by choice, I am an IHG Spire member because work trips put me in places where Hyatt just doesn’t have the footprint. By tripling the eligible hotels I stand a chance to give them even more of my business and improve my experience.
2) The credit card is meaningless
Any credit card deal in the modern era is going to give you at least mid-tier status regardless of who the bank or the processor is. However, I am not particularly captivated by either general offer for their cards. The Chase Hyatt Visa now offers 50,000 points (much more usable than two free night certificates) and has wider acceptance than American Express. The SPG AMEX however, offers some additional benefits like free Boingo membership and 20,000-30,000 points depending on the offer period. Both offer about 10 nights at the lowest tier hotel, though Hyatt offers more value at their highest tier hotels using points.
Then Matthew says this:
“The Starwood card from American Express offers an incredible value in its broad range of airline partners and lucrative transfer ratios, generally 20K Starwood for every 25K airline points. Hyatt Gold Passport has a terrible ratio of 50,0000 Hyatt Gold Passport points for every 25,000 airline miles.”
To me, that looks like almost the same offer. You might come slightly ahead if Starwood is offering 25,000 points for their card, but that is usually after hitting higher tiered spending thresholds thoughout the year. Assuming Starwood is going to offer you a credit card for 20,000 points that can be converted to 25,000 airline miles, and Hyatt is offering a credit card that offers 50,000 points converted to 25,000 airline miles, I struggle to see the difference.
Further, American Express has been losing partners left and right. Costco was a huge loss (10-20% of their business depending on which metric you choose to use), then JetBlue just left and is moving to Barclays. Their stock has accordingly taken a dip this year, and if they stick to their guns they may also lose SPG if the merger goes through. Hyatt is leaving the AMEX Open program that offers a 5% discount to business card users this year. However, it also seems like an opportunity for American Express to get more aggressive and grow their business from just Starwood to also Hyatt card holders. That may mean better benefits for Hyatt card holders with new competition among Chase and American Express for the business.
I agree that the loss of Hyatt as a Chase transfer partner would be a significant loss to the Ultimate Rewards program, however, their addition to the American Express Membership Rewards program could be just as handy as Chase was, maybe more so.
3) I am actually hoping for a higher Hyatt tier.
Hyatt Diamond membership is achieved after 25 stays or 50 nights, which can be a serious challenge if you don’t regularly travel to major metros for work or any of the many countries Hyatt for which does not yet have a presence. However, the tier is one of the most generous in the business with free breakfast, late checkout, and four confirmed suite upgrades good for six nights each.
Starwood offers a Platinum tier at the same rate (25 stays or 50 nights) but also has additional thresholds to encourage guests to stay even more nights. Starwood Platinum has most of the above (no confirmed suite upgrades) but adds the benefit of being upgraded to the best available room at checkin including a standard suite. At 75 nights there is a higher earning rate, and my 24 giving you 24 hours of access to the room regardless of when you checkin or need to check out.
I hit Diamond this year unusually early in the year and while I don’t have many options to stay more nights for work, I certainly do for personal holidays. The only incentive is enjoying the benefits I have already earned, but if there was a bonus for hitting another 25 nights I might strive for it. I am confident that with SPG added to the program that would happen.
What Matthew Got Right
Jeff Zidell runs a great program at Hyatt. By Hyatt buying Starwood (not a merger, a purchase) it would be assumed that he would be in charge of the entire program and its integration. Program changes come with plenty of notice, few hotels change tiers year over year making the program predictable and easier to save up for the properties and nights you really want. There was a slight devaluation more than a year ago, but also the added value of points plus cash nights and soon the ability to secure those nights online. While those changes were all overdue, he runs a program I can trust that rewards me for my loyalty. And with a merger that’s 1200 more possibilities for me to be a loyal Hyatt Diamond member.
So what say you? Is Matthew right that this merger is just another in a long line of general travel consolidation that will harm consumers? Or am I right that this is going to give Hyatt the hotels they need in the places they don’t have them? Can’t we trust Jeff that he is going to make it a best of both programs going forward?
While this debate was settled once SPG was purchased by Marriott, with which blogger do you side?