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.
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.