Will Marriott Create a New Rewards Program When it Merges With Starwood?

Shareholders voted today to approve Marriott’s acquisition of Starwood.

It’s a decent deal for Starwood shareholders, though with Marriott trading at $66 as of this writing, 0.8 shares of Marriott plus $21 cash isn’t as good as the binding and fully financed earlier deal of $78 cash from Anbang.

It’s a good deal for Marriott customers, who have more places to earn and redeem at. And remember that there are more Marriott Rewards members than Starwood Preferred Guest members.

It’s generally though to not be a good deal for Starwoood’s frequent guests (elite members) who could easily have been Marriott elites if they had wanted to but preferred the array of benefits offered by the Starwood Preferred Guest program. Though Marriott says they value Starwood’s customers, and will likely make some changes to their own loyalty offerings as a result of this deal, there’s not much change that Starwood Platinums will be happier with the Marriott acquisition — despite Marriott’s larger footprint — than had Starwood remained indepedent.


St. Regis Bali

Marriott knows they have a challenge in bringing over Starwood’s most frequent customers. And their CEO stresses a strong commitment to meeting this challenge, telling me that he believes loyalty is more important for the company going forward rather than less important despite becoming the world’s largest hotel chain and having greater leverage over suppliers, distribution channels, and ultimately many guests.

Another challenge facing Marriott — and customers — is that Starwood has an extremely strong co-brand credit card which generates outsized revenue considering the size of Starwood. Marriott doesn’t really want to lose that revenue stream, though they have a long-term exclusive deal with Chase.


W Union Square

I’ve suggested that one thing Marriott could do is start over from a loyalty perspective, create a new program that they move both Marriott Rewards members and Starwood Preferred Guest members into. (I first heard this suggestion from Randy Petersen who noted it’s how Starwood Preferred Guest itself was born out of Westin Premier and Sheraton Club International.)

  • That could help program members see it as something new.

  • That could help them break free of legacy differences between the programs and get creative to make the economics of the program work rather than just adding benefits onto Marriott Rewards.

  • And their lawyers might even be able to use it as an opportunity to fold American Express back into the equation or at least the bidding to help fund a richer program.

Marriott told investors that Marriott Rewards and Starwood Preferred Guest would be combined into a single program. But they haven’t actually said that program would be Marriott Rewards.

Today’s announcement to Starwood Preferred Guest members reads,

Getting answers to these complicated, important questions will take time. In fact, we don’t anticipate launching a newly combined program until 2018. This means SPG will continue to run separately until then. In the meantime, we’re actively exploring ways to build bridges between the two programs to further enhance your experience.


(Emphasis mine.)

Mommy Points shares scuttlebutt that suggests the idea of a new program could be under consideration.

The phrase “Marriott Preferred Guest” was used a couple times for the name of the eventual program.


Marriott Seattle Airport Atrium

Rather than worry over what ratio Starwood points transfer over to Marriott, both Marriott and Starwood points could transfer into a new program. The new program could offer guaranteed late checkout, strong upgrades, and breakfast chain-wide (although they might have exclusions with some Ritz-Carlton properties). Marriott already seems to be considering a personalized program like Starwood’s Ambassador.

It’s an interesting possibility to imagine, and one that could offer upside to members of both programs.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I’m also curious how they would handle those who hold top tier in BOTH…do I get 100 night benefits since combined I have that?

  2. I think there is much to do about something we have no real control over and frankly it’s in the best interest of Marriott to provide what they think is the best possible program at that moment in time when they launch the combined programs. I have been a member of Marriott’s program from almost it’s inception, ( LFT Plat) and have found it to be as consistent as any out there. Sure their redemption points are ever increasing but then so is everyone else’s. Thats why your seeing cash + points being so popular.

  3. The biggest lesson Marriott might learn is that St. Regis operates wonderfully within the same confines of SPG as do the other SPG hotel brands (except the newest Design hotels)…and St. Regis has successfully been expanding and growing its younger customer base at the same time. If St. Regis can do that, there’s no reason Ritz Carlton cannot do the same within the same confines of the new overall SPG-MR program. The fact is that SPG elites like me love to stay at St. Regis over the comparably priced RC, FS, MO, and Peninsula properties partly because of the incredible value add we get with SPG benefits at St. Regis (free breakfast, upgrades, suite upgrades possibly for Platinums, earned points, etc). Marriott would do well to recognize that attraction for Ritz Carlton, as well…or risk losing elite high revenue customers to FS, MO, Pen, and other high end non-loyalty chains.

  4. The main DISadvantage of the present SPG is that hotel stays earn a measly 2 points per night! Or 3 for Elites. Which tilts the program heavily in favor of earning via credit-card spend! Given how many Starpoints it takes to get a free room vs. at Hyatt, Marriott, or IHG, they should offer 4 ppn, 5 or 6 for Elites!

  5. @B1BomberVB SPG members which stay 75 or more nights already do get 4 points per dollar and with the SPG card get 6 points minimum. You also get 4 points plus the credit card points for using Uber when staying at an SPG hotel.

  6. Once the merger is complete, there will ultimately be one program. It will be a hybrid of both Marriott Rewards and the SPG program. They will not alienate their best customers. They will offer only as much as they feel they need to in order to get butts in beds and CC spending on co brand cards. It’s a business, and Marriott knows what it’s doing. BoardingArea is a great site and the contributors are fun to read and interact with, but having several bloggers writing on the same subject and posing the same question that no one knows the answer to is getting redundant.

  7. @Marriott Gold Man – what other people choose to write who happen to be hosted on Boarding Area’s platform doesn’t really influence my choice of topics… and in any case I don’t see a whole lot of people talking about creating a brand new program.

  8. the accurate accrual value for SPG stay is actually somewhat misleading for me. as a plat i get 3+2 base, plus welcome pts & green choice if more than one night. on average 2 night Sheraton stay nails ~2500 pts easy.

  9. The disappointment for me is that SPG hotels are often destinations, or at least boutiques, whereas Marriotts are usually quite generic (and overpriced for what they offer the customer). Marriott offers pretense, while SPG offers great locations. I’m confused how these types of lodging can co-exist in 1 program. The only option would be for Marriott to jack up the point redemption requirement for all the SPG properties. Marriott already charges 40,000 points for it’s higher-end hotels. I’d hate to think what Marriott will extort for stays at the SPG Disney properties, for example. Currently I can get on-Disney hotels for 7,000 to 10,000 SPG points. The Marriott credit card provides such little value compared to the SPG credit card, so I’m fairly depressed about the earning potential, going forward.

  10. More wishful thinking. Marriott is not at all convinced that their Rewards program is so bad that expenses to essentially start over with a new hybrid program would be justified. SPG will simply be assimilated into their current program with some tweaking done around the edges to achieve a smooth integration. It won’t be unlike what we saw happen with the airline mergers. The structure of the bigger program will survive.

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