Marriott is buying Starwood in a deal expected to close in June.
Nothing will change right away. It took two years for Marriott to integrate 100 Protea hotels, and Starwood is more than 10 times the size. The data migration project alone is likely an 18 month IT effort. I’ll still be using my Starwood Platinum status in 2017, I’m sure.
St. Regis Bali
Winners and losers:
- Marriott Rewards members are pretty likely to benefit from this merger. Marriott has a long list of properties you can redeem for, but not a ton that you’d look forward to redeeming for. That will change. Marriott Rewards points will gain the value of redemption for Starwood’s portfolio of aspirational properties.
- Starwood Preferred Guest general members who stay at their hotels may benefit from this merger. Marriott Rewards offers a better rebate for in-hotel spend than Starwood does.
- Customers who earn points primarily through credit card spend may lose. If the Starwood American Express card goes away, that will be a shame, ending one of the real enduring values in loyalty. I’ve been an SPG American Express cardholder since 2001. American Express would love to find a way to continue issuing their card, but based on the earnings offered by the Marriott co-brand it’s hard to imagine the economics remaining as favorable to consumers.
- Starwood elite members may lose. Marriott doesn’t guarantee late check-out, promise suite upgrades, or even breakfast at resorts. That needs to change.
- Starwood lifetime elites may be nervous. Starwood offers lifetime Gold after 5 years at Gold or higher and 250 nights and lifetime Platinum after 10 years at Platinum or higher and 500 nights. What status will they be transitioned to at Marriott, and what will those benefits look like?
- The devil is in the details for SPG members with big balances. A Starpoint is worth at least 3 times as much as a Marriott point. If SPG is folded into Marriott Rewards, and Starwood points become Marriott points, what ratio will they transfer at? Anything less than 3-to-1 is a devaluation.
W Seoul Walkerhill
The truth is that Marriott doesn’t know the answers to these concerns yet. But their CEO really wants to reassure members.
Sorenson told CNBC that they wanted to create a combined plan that offered everything a guest could want: “Something that is even more powerful for our customers so they’ll say ‘Why should I get a card with anyone else?’”
“We’ve heard from SPG members loud and clear when they say ‘Tell me I’ll be OK,’” Sorenson said. “You’ll be OK. I want to make sure we continue to earn that loyalty.”
Sorenson was reiterating comments he made earlier on the company’s earnings call. “How do you take these two leading loyalty programs in Marriott Rewards and Starwood Preferred Guest and create something which is more powerful?” he said during the call. “The only concern we hear in response to the deal are Rewards and SPG members who want to know their points are protected. The principle reason for the deal is to redouble our commitment to them.”
Reassurance will come from specifics, which they won’t know until some time after the merger closes.
However members aren’t just concerned with whether ‘their points are protected’ but with the benefits offered by the program. Marriott needs to figure out how to match benefits that Starwood has consistently offered to elite members, how to capture the value of the Starwood co-brand American Express card, and how to respect Starwood lifetime members as well as Starwood account balances.
Marriott can begin to earn the trust of customers when it begins to answer these questions.