Monday news broke that Marriott is acquiring Starwood.
The deal may make sense for Marriott, at least there’s a chance it’s a good deal, because Marriott has strength both in full service and select service and in the United States while Starwood has a global footprint (they are a smaller company but in more countries than Marriott) with iconic hotels.
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Marriott Rewards members will gain access to a whole host of hotels where they’ll actually want to spend their points – whereas for the most part they have places now that they can sleep, they’ll have Starwood’s hotels where they’ll want to stay.
Starwood members on the other hand have significant consternation. Starwood Platinums have chosen to be loyal to the chain for a reason. One rarely finds oneself loyal to Starwood, Hyatt, or a smaller chain by accident. It’s the particular benefits and value proposition that appeal to the customer, so a merger with mega-Marriott leaves open the likelihood that the unique value proposition will be eroded.
- It may ultimately get swallowed up, folded into Marriott Rewards
- Marriott executives, with a different philosophy and culture, will be in charge — at least at the top
- A chain the size of Marriott may not need to go to the lengths to convince guests to make the choice to stay, and given their size it may be more unwieldly to deliver customized benefits.
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So it’s not exactly reassuring to see Marriott’s CEO describing the future of Starwood thusly:
Skift: Is the goal to eventually dissolve the Starwood name?
Sorenson: You know, I don’t know about that. Starwood is used in Starwood Preferred Guest [program], probably the one place it shows up in a customer-facing way. We’ll need to assess the value associated with the use of that word, and we might well need it in some way.
Yes, the future of Starwood is that they might need the name. In some way. Sigh.
No doubt it’s why you get a new piece in the New York Times, Marriott Merger Has Starwood Lovers Nervous.
Starwood customers are right to worry, says Gary Leff, who writes the View From the Wing blog, about travel reward programs, because the two companies have fundamentally different business models. In the title of his blog post about the merger, he declared it’s “time to start gnashing teeth.”
“In general, the smaller programs are ones that treat elites better,” said Mr. Leff, who maintains upper-tier elite status with Starwood, Hyatt and Hilton. “It’s not hard to just fall out of an airplane into a Marriott. You have to make a choice to be loyal to Starwood.”
…Mr. Walters comforted himself by noting that Marriott at least owns Ritz-Carlton, “which I guess is good,” though Mr. Leff contends many Ritz-Carltons are “resort factories” lacking the distinctive touches of Starwood’s top properties.
“Ritz Carlton Grand Cayman, if you don’t put your book down on a beach chair at 8 a.m., you’re in the fifth row back from the beach,” Mr. Leff said. “They’re not unique, special places.” Speaking of unique, Mr. Leff noted he is looking forward to a planned stay at Al Maha, a Starwood Luxury Collection resort in Dubai, in part because it offers falconry.
But there’s no reason to panic, at least right away, I don’t expect that Really Bad Things will happen until 2017 at least.
Mr. Leff said he suspected that they had not yet decided what they would do and that merging Marriott Rewards with Starwood Preferred Guest would be a significant and time-consuming information technology challenge. He doubts customers will experience changes to their benefits before 2017 at the earliest.
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