With yesterday’s announcement of the new merged loyalty program for Marriott and Starwood the reviews are in and they are mostly positive. But I remain suspicious…
Earlier this year, Marriott International announced its intent to merge with Starwood Hotels and Resorts. While not the largest hotel company, Marriott will continue to be among the largest.
Unlike SPG, Marriott’s success has come from very few Marriott hotels the chain operates and franchise hotels lead the way for the company, with classic hotels often falling under the Autograph collection. The SPG/Marriott merger almost didn’t happen as Anbang Insurance Group, a Chinese company had made a play for Starwood instead but failed to close the deal.
The new loyalty program, “Marriott Bonvoy” rewards members and elite members for staying across its more than 30 hotel brands. The Ritz-Carlton Rewards and Starwood Preferred Guest programs were run independently from Marriott Rewards to this point. The new system will allow guests to earn points per dollar spent, redeem for travel packages, and other opportunities within the program. Business travelers favored SPG and Marriott for separate reasons prior to the merger.
Yesterday’s well-covered SPG/Marriott loyalty program announcement seemed nearly all positive. Stefan from Rapid Travel Chai was a little less positive and I echo his concern, that perhaps this is not all going to be rainbows and unicorns as presented. It feels to me that the blogosphere, more broadly, was concerned that Marriott would completely decimate the program. Therefore when it wasn’t utterly destroyed, everyone feels pretty good about it.
I’ll get into some specifics, but broadly speaking, Marriot has been far stingier than SPG with benefits, redemption rates and general treatment of elites than Starwood ever was. Further, as a survivor of a company merger when one culture dominates, the others typically fight upstream for awhile and then relent or leave, but the dominant culture usually prevails.
With a footprint as large as Marriott’s and with SPG actively on the market looking for a buyer, it was clear that this was going to be an acquisition and as such there was no need to merge people and ideas. Many Starwood Preferred Guest executives left, Aaron Glick went on to run Hilton Honors before leaving for another opportunity, and a couple of top executives now find themselves at Hyatt. How do you keep the culture of SPG if no one is left to influence such? It’s counter to everything I know of companies like Marriott and Starwood joining together.
Most of the information yesterday was rosy, but too many important details were left ambiguous or just don’t seem to make sense if you were a Marriott Rewards guest.
On the lowest end of the redemption chart, SPG members will pay a 25% premium on the worst rooms in the combined company’s stable. It should be noted I am writing this from a Sheraton Four Points in Houston that runs 3500 points per night or roughly a Category 2 hotel and considering my surroundings, “roughly” is the right adjective.
But at the top end, redemption rates are set to drop? The new standard top-level award runs 85,000 (Whatever they decide to call the program) points and using the currency conversion of 3 Marriott points to 1 SPG point (they have stated this will be the transition rate), a 30,000 point St. Regis Aspen reservation that retails at $3000+ for SPG members or 90,000 Marriott rewards points will cost less?
Further, Marriott already values their own properties higher than I would in most cases. For example, would you pay 12,000 Starwood points for a $132/nt Residence Inn Daytona?
How about the same amount for $167/nt boutique in Orlando?
I am less trusting of Marriott’s category pricing and placement for many of their own properties. Moving SPG into those slots seems like it will significantly increase the cost if based on cash rates.
A big question for top-end elites is the breakfast benefit. Good news for SPG members, breakfast is staying at their hotels including top-end properties like St. Regis. That seems mighty generous from a Marriott program perspective that only as of yesterday will allow free breakfast at Courtyard properties for elites that stay 50+ nights in their properties. They went out of their way to exclude four brands from the new, expanded breakfast benefit list, one of which is the Edition brand. How do you trust a brand that wouldn’t give you microwaved eggs at a $120/night Courtyard but will at a $900 St. Regis? And further to that end, why exclude the Edition hotels, less expensive than a St. Regis for example, and presumably breakfast would be too?
Call me a cynic, but I believe generally that companies make decisions logically and based on cost. There’s no way the breakfast options at an Edition will be superior to the St. Regis, nor less expensive. So why give the more expensive one away while charging for the cheaper one?
Delta, China Eastern, and Emirates Crossover Rewards are phasing out by the end of the year. This appears to be because of the tie-up with United Airlines, but why would the world’s largest hotel chain want to alienate these customers while embracing United? The chain is big enough for two credit card agreements, why not two (or four) crossover partners?
This program is staying, with now 60,000 points earning 75,000 points transferring at a rate of 3:1 to airline programs. The program features 40 airlines and this was a highlight of the SPG program, but why would Marriott want to give their customers this option for free? I am untrusting of their intentions and execution on this front. The new program will also offer more point earning on spend for most SPG customers (a certain weak point in the SPG program in the past). But now, Marriott will flow even more of those points out to other programs? It doesn’t seem to make sense to me.
SPG Moments was a great program, one that I nearly took advantage of placing a softball team at Wrigley Field for a game. Things on my side fell through, but I loved the option to spend points on what I consider to be otherwise priceless opportunities.
Feel free to set me straight in the comments, but I couldn’t find any mention of the future of the SPG Moments program at all. Aaron Glick was able to start a similar program at Hilton before he left, but I have not heard anything from Marriott about this. If it doesn’t get mentioned, I have to assume it is going away.
It All Sounds Good, A Little Too Good…
If you have been reading the blogs from my peers, the overwhelming sense has been that yesterday’s event was a great combination of the two programs. I don’t want to discredit my fellow bloggers, I think many of them have good points. But I doubt that any of them would state that this program is better than SPG was on their own. The one advantage was that now SPG points and Marriott points will be the same, allowing guests from both programs to use their combined points on both hotel chains. In some markets, it will improve as SPG’s footprint was around 1/4th the size of Marriott’s but it will also open the door to Marriott guests who may have been looking for better properties with which to redeem their points. There are a lot of Sheraton Four Points out there that are tired but almost all of them would beat out early Courtyards and Fairfields. In small-town America, these properties may be your only option with Marriott which is better than no options with SPG, but not much better. At the top-end of the chain, Ritz-Carlton hotels will continue to separate themselves from the benefits of the broader program while St. Regis does not. Will this mean an influx of guests at St. Regis properties? Possibly.
The move from stays to nights has been glossed over but it’s really important to me. I currently hold top-tier status with Hyatt, SPG/Marriott, IHG, and Hilton. While I have already requalified for Hilton, halfway there with IHG, 92% of the way with SPG (and thus Marriott) and have left Hyatt to the side. Hyatt was previously my first call program but has since fallen to last because it’s just too difficult to hit 55 nights at their properties given their limited footprint and higher prices. Marriott will now require 50 nights unless I get the credit card, which I may do (giving me a 15-night leg up every year) – stays don’t matter. If you’re an SPG purist and had one of their AMEX cards, you’d only need 21 nights to qualify for Platinum but now that the switch to nights has occurred, holding their credit card will still require an additional 66% increase in single night stays. That’s an awful lot. It’s not as bad as Hyatt’s 140% increase when they made the same switch, but it’s still a huge increase.
It will likely also place SPG/Marriott as lower on my list while I re-qualify with Hilton first, then IHG should I roll nights over. Then SPG/Marriott if I have the card or even with Hyatt if I choose not to carry the card.
Just One More Thing
If you hold an American Express Platinum card, Starwood Preferred Guest Gold is still available. Once your status with SPG is claimed, you can then match to Marriott as Gold and the challenge to Platinum for nine nights. Given the requirements next year, I would say this is a must-do action item.
What do you think? Is my suspicion founded or baseless? Is it just sour grapes or is the program too good to be true?