[2015] Marriott to acquire Starwood hotels

[Scott & Laura]

Folks should keep in mind that the Starpoint system provides a huge revenue stream to Hotels. Why would they want to kill that off.

If they accept Starpoints ( keep in mind Starwood Hotels has a signed agreement to accept them) the Vistana Vacations formerly SVN compensates them with CASH


Also by accepting STarpoints from SVN Vistana they get revenues from rooms traded in for them


It would be ludicrous to believe they just paid Billion + for a Hotel brand utilizing STarpoints and dump the very revenue stream that provided that revenue to Starwoods bottom line --and one of the very revenue streams they just compensated Shareholders of Starwood for in order to acquire

At times that makes sense but only in cases where you can dominate market by getting rid of Competitor. Such as Coke buying Pepsi However Federal Government takes dim view on monopolization


In this case Marriot runs their trap line in small rivers and Starwood runs theirs in a big lake---where collectively they add and compliment each other and create oppurtunities for people to stay under one roof. In past if I went to small town I had to use Marriot or Wyndham Now In future I may be able to use Starpoints and stay in small towns


Starwood only was in large cities and fished for business travelers.


Scott

 

[SueDonJ]

I can't believe any of you seriously think Marriott would kill the Starwood brand names.

What could easily happen is the end of the StarPoints program, etc.


Sent from my iPad

I agree, there's no reason to expect the SW hotel brands to disappear when the MAR/HOT acquisition happens. Marriot, Int'l. already manages a number of brands under the umbrella, SW's brands can easily survive.

The loyalty program points are a different story. They've said that the SPG program will be integrated into the Marriott Rewards program and that the end result will be a combination of the two. It'll be interesting to see it from both vantage points.

 

[Scott & Laura]

I agree with integration but not under one Brand name


I think more like Delta-Alsaka--KLM airlines were each has their own but their are interchangeable and transferable across the board


Scott

 

[taffy19]

I read this a few days ago and may be of interest:

http://www.hotelmanagement.net/marr...podcMTctlN73YDBceEJhqyQJxPr3HJdQN18R7RhHnDg==

 

[Scott & Laura]

That article is very good


It confirms my views and suspicions very succinctly

Scott

 

[Scott & Laura]

Sheraton's issues are a lot of them in United States are subpar


Overseas it has a very high name and the Hotels are respected in Europe and China


Scott

 

[Ken555]

I read this a few days ago and may be of interest:



http://www.hotelmanagement.net/marr...podcMTctlN73YDBceEJhqyQJxPr3HJdQN18R7RhHnDg==

Eh, that's a lot of nothing IMO.


Sent from my iPad

 

[Scott & Laura]

Public statements by corporate officers are never a "lot of nothing." they should be paid attention to.



They have reasons and in this case they are assuaging concerns of both stock shareholders, owners of hotels they manage, employees of the Hotels, SPG point users and customers -- by communicating they have recognized concerns of all five
.
It means that the corporate directors have recognized and are acutely sensitive to all the respective issues and concerns. They cannot announce actualities as they have not completed the transaction but, they make clear Gloabal brand recognition is a driving force that this transaction targeted.

In the case of Best Buy purchasing Musicland/Sam Goody group the corporate officers failed to recognize and address either the employees or customers of Musicland and it was a disaster ending in a complete loss to Best Buy.


Scott

 

[x3 skier]

Eh, that's a lot of nothing IMO.


Sent from my iPad

Agree

As the saying goes, "Nothing to see here folks, move along."

As guy quoted says, he was the money and M&A guy, not anything to do with operations, combinations, reorganization, etc. So, he's happy it was a good financial deal and what happens next was a lot of "humma, humma" as we used to say in the trenches when we heard the top brass give out with a lot of bland no content verbiage.

I'd wait and see what actual activities take place.

Cheers

 

[Scott & Laura]

I have read Starwood's corporate margin calls for years and what "the money guy" said was a lot if you know how to read financials. The margin calls addressed Starwoods areas of weakness and how they needed to divest itself of Timeshare unit to raise cash.

The Money guy is generalizing (about Mr.Marriots active involvement along with the others such as operations, etc. having weighed in and given their views) and talked about the positive benefits while recognizing sensitive areas they DO NOT want to see fears arise in --such as SPG.

The money guy layed out the future of the industry in general and how they hope to address the new competition and fact the industry has gone from competing locally with guy across street for business and now with internet and travel they have to compete globally everywhere to retain customer loyalty.
It is a succinct recognition of sensitive areas needing to be addressed with the acquisition, and the reasons Marriot purchased Starwood and how it will help secure the company's position for the future.


He simplified what is a 500 page novel and summarized it for those who don't want to read 500 pages and presented it in a capsule summary. Who, What, where they are at, why they are there and what issues need to be sensitively handled to retain HAPPY customer loyalty now and in the future To Grow the company


What else is there he can say at this time?

He stated once the company consummates the purchase the other parties will then have the freedom to begin acting and integrating things.

I respectfully disagree with the view that what he said was Nothing important

I retired at age 50 from business and bought Starwood on a whim because it forced us to travel and vacation where I never did before

I view this development as positive and it was described as more of a merger 37-38 percent ownership has a huge voice at the table in a large corporation.

 

[SueDonJ]

This video has already been posted in the Marriott thread:

WATCH: Marriott CEO Discusses Future of Marriott Rewards, SPG Loyalty Programs <--- travelpulse.com link

... Sorenson concluded by stating that the company plans to "create a hospitality loyalty program that values the best of both programs and then some." ...

The CEO of Marriott, Int'l. doesn't usually respond to internet musings in this manner so just as we should seriously consider Public Statements, we should seriously consider this release as well. It's fairly obvious that when all is said and done their intent is to completely integrate the two loyalty programs into one, and it only makes sense that it will come under the MI umbrella as Marriott Rewards.

I'm not sure why, after all that has been said, anyone would expect the two loyalty programs to remain as separate entities?

 

[Scott & Laura]

That is an excellent video. It states clearly the goal is to have a unified point program. It also recognizes branding. After watching and reading my guess is it will be a unified program under a new Name. In that way they can brand it to alleviate every ones concerns. I do not believe Marriot would even attempt to brand it under the name Marriot. Re-branding a merged point system with a new name makes the most sense.

The video acknowledges the legal issues and need for time -- years to appropriately resolve.

Starwoods point system had more to offer then Marriots. Since it was an extension of proprietary knowledge as to how they did it profitably--the merger will give Marriot access and able to come up with a program to enhance and assuage concerns. The Video acknowledges Starwoods program and that it was important to Marriot whose own program lags behind Starwoods.

I think a new program with even greater benefits to increase brand loyalty will emerge. Coupled with the size of the new company they will have a lot of muscle to get increased benefits.





Above all in any business deal is the track record and integrity of the men behind it. Bill Marriot is a family man and family values are utmost important to him. He is not Bernie Madoff. I think Mr.Marriot will serve everyone well.


Scott

 

[Ken555]

And on a related note, I applied for a new credit card with a different hotel affiliation since I have no interest in accumulating even more StarPoints until we know exactly what's going to happen to the program.


Sent from my iPad

 

[SueDonJ]

... I do not believe Marriot would even attempt to brand it under the name Marriot. Re-branding a merged point system with a new name makes the most sense. ...

We'll have to agree to disagree here. Marriott is the acquiring company and already has an established successful loyalty program with brand name recognition. Of course anything can happen but I'll be very surprised if the end result name isn't Marriott Rewards.

... Above all in any business deal is the track record and integrity of the men behind it. Bill Marriot is a family man and family values are utmost important to him. He is not Bernie Madoff. I think Mr.Marriot will serve everyone well.


Scott

Nothing wrong with optimism - we should all hope for nothing but the best! But knowing the Marriott Rewards program, I know that optimism doesn't always pan out. Relative specifically to the timeshares for every single change over the years to the Marriott Rewards program, what they called "enhancements" were and are seen as devaluations by those of us who take full advantage of the loyalty program and timeshare affiliation. And they didn't lose any measurable integrity in the industry for those changes.

 

[Scott & Laura]

I understand your feeling

Two reasons why if they make one system it would be rebranded.

1) example If McDonalds bought Kentucky Fried Chicken they would not re-brand them McDonalds just because they are owned by McDonalds due to f the strong Brand imagery and that would be case with Marriot who has strong brand imagery that does not lend itself to St.Regis, Westin, Aloft which represent distinctly differing brand imageries

Starwoods point system is well known to be stronger than Marriots a partnership or re-brand would be needed to expand and convey imagery beyond the imagery associated with Marriots name alone. If they merely substituted Marriots name for Starwood--that would set off brand confusion and unduly alarm people.


2) Ritz-Carlton kept there rewards brand and they formed a partnership
Marriot is known not to meddle with brands they acquire Starwoods point system is better than Marriots and Marriots purchase allows them access to inner proprietary information to improve Marriots


Scott

 

[okwiater]

I tend to agree that it is unlikely SPG will simply merge into Marriott Rewards.

Here is an exact quote from Marriott's CEO, Arne Sorenson: "While we will be spending a great deal of time in the coming months developing our strategy for SPG and Marriott Rewards, our members should take comfort in the fact that we know without a doubt these loyalty programs are the most powerful tool we have for developing strong relationships with our best customers. The SPG program was one of the most attractive aspects of our acquisition of Starwood. To state the obvious, devaluing points or member benefits is not the way to preserve and strengthen these programs, which is our aim."

 

[Ken555]

I tend to agree that it is unlikely SPG will simply merge into Marriott Rewards.

Here is an exact quote from Marriott's CEO, Arne Sorenson: "While we will be spending a great deal of time in the coming months developing our strategy for SPG and Marriott Rewards, our members should take comfort in the fact that we know without a doubt these loyalty programs are the most powerful tool we have for developing strong relationships with our best customers. The SPG program was one of the most attractive aspects of our acquisition of Starwood. To state the obvious, devaluing points or member benefits is not the way to preserve and strengthen these programs, which is our aim."

While there is a reason to be hopeful, based on recent history in the travel industry, I would suggest that devaluing the program in some fashion will occur. After so many other programs have devalued their benefits (while marketing typically spins it as a positive change) I'm really quite surprised that some of you really think this time it will be different.

I've decided it's just time to diversify my hotel points for the first time in well over 15 years, in any meaningful way. I rely upon the value I've expected to receive from Starwood and without any guarantee that will remain, which we do not have at this time regardless of all the statements so far released, I think it's just silly to expect anything other than a devalue of the program.

I'll be pleasantly surprised if they don't devalue the program within the next two years (figuring they close the deal next year, that gives them one year or so to make changes).

My guess is that the hotel category change which typically occurs in March/April (IIRC) will show many more hotels moving up than in previous years, as a way to devalue the program in a manner consistent with what we expect as normal...but perhaps including more hotels than normal.


Sent from my iPad

 

[SMHarman]

My guess is that the hotel category change which typically occurs in March/April (IIRC) will show many more hotels moving up than in previous years, as a way to devalue the program in a manner consistent with what we expect as normal...but perhaps including more hotels than normal.


Sent from my iPad

Starwood has always been pretty scientific with category changes and based it on average Revenue per room.

I don't expect that to change. it's driven by the check expected by the hotel to replace a Revenue room.

 

[Ken555]

Starwood has always been pretty scientific with category changes and based it on average Revenue per room.

I don't expect that to change.

That's exactly what I meant. They were, but I don't expect that to remain consistent. It's just such an easy method to devalue the program without many complaining, etc.

I think it's just silly to think they won't try to find more value revenue for the company from the loyalty program. As long as they're still competitive with the market, they'll do fine. Airline programs haven't really suffered after almost all devalued them, and I wouldn't be surprised to see the same with hotel programs.


Sent from my iPad

 

[SMHarman]

That's exactly what I meant. They were, but I don't expect that to remain consistent. It's just such an easy method to devalue the program without many complaining, etc.

I think it's just silly to think they won't try to find more value revenue for the company from the loyalty program. As long as they're still competitive with the market, they'll do fine. Airline programs haven't really suffered after almost all devalued them, and I wouldn't be surprised to see the same with hotel programs.


Sent from my iPad

But for an airline it is right-hand left-hand for much of the spend. Yes some is between the carriers in an alliance.

For the hotels it is franchisor franchisee. Real money.

 

[Ken555]

But for an airline it is right-hand left-hand for much of the spend.

For the hotels it is franchisor franchisee. Real money.

There are many variables involved. But it would be easy to devalue the program while not impacting the money corporate pays the franchisee for a night. And even for airlines, the frequent miles unspent are a liability for them and every time they devalue they "earn" $$$.

It's simple to say I'm wrong. It's more difficult to suggest that it's unrealistic to believe that Marriott will do whatever they can to earn more money, and there's always been a fine line for the loyalty programs in earning the loyalty of frequent travelers and not doing so.


Sent from my iPad

 

[SMHarman]

I'm not saying you are wrong. You are likely right.

Some of this really may be down to how the franchise agreement is written for SPG.

Interesting times are ahead and like you my hotel spend is up for grabs. Though cash back looks more appealing. Our Chase freedom.

 

[okwiater]

The fact that so many of you are talking about taking so much of your business elsewhere if SPG is significantly devalued is precisely the reason why I believe Marriott will be judicious in how they redesign the points program. Marriott didn't give up 38% of the company to simply go and piss off all the Starwood customers. I'm sure there will be changes and Marriott will be looking out for its bottom line, but the assumption that "devaluing points = more revenue" is overly simplistic and likely inaccurate. As others have pointed out, this isn't an airline and Marriott will have dozens of competitors across its markets... not to mention thousands of franchisees whose livelihoods will be affected if Marriott chases away Starwood's most loyal former customers.

 

[x3 skier]

One of their biggest competitors is the Hilton family that made a huge devaluation of their program. Since Starwood and Marriott will no longer have to compete against each other, I see this as a good indication a devaluation of Star Points is likely if not certain since they can devalue less than Hilton and still have a better program to retain customers.

Cheers

 

[SueDonJ]

The fact that so many of you are talking about taking so much of your business elsewhere if SPG is significantly devalued is precisely the reason why I believe Marriott will be judicious in how they redesign the points program. Marriott didn't give up 38% of the company to simply go and piss off all the Starwood customers. I'm sure there will be changes and Marriott will be looking out for its bottom line, but the assumption that "devaluing points = more revenue" is overly simplistic and likely inaccurate. As others have pointed out, this isn't an airline and Marriott will have dozens of competitors across its markets... not to mention thousands of franchisees whose livelihoods will be affected if Marriott chases away Starwood's most loyal former customers.

Understandably you're looking at it from the Starwood side of the house. But what happens when you look at it from the Marriott side?

There are 21m SPG members of which the majority, from all I'm reading/hearing, think that their program is more valuable than the Marriott Rewards program. (It may well be but reality doesn't matter because it's the perception that fueled the internet outcry, that forced MI's CEO to issue that unprecedented youtube statement.) What you and they seem to be saying is that if the end result loyalty program devalues their benefits, they'll jump ship for a competitor.

There are 54m Marriott Rewards members who, if the SPG benefits are actually better than those of MR and Marriott doesn't devalue them, will understandably want their benefits to be increased to match the SPG benefits when/if the two programs are consolidated. Although they're not as vocal at this point about jumping ship if they're not treated equally by the end result, you can bet they'll use the threat then as effectively as SPG members are using it now.

So what will hurt Marriott more? Devaluing somewhat the SPG program and risking a percentage of the 21m jumping ship, or taking the risk that an equal percentage of the 54m MR members will jump ship if the end result under the Marriott umbrella is two programs of which the acquired one has a perceived higher value? The one thing I wouldn't expect them to do is retain all of the highest-value benefits in both systems without devaluing others; that's just not going to happen.

One constant is that people hate change; another is that people threaten all sorts of things but don't follow through. Marriott is under no illusion that just the fact that this acquisition is happening will cause some SPG and MR to jump ship regardless of the end result loyalty program. Their aim is going to be to pacify as many SPG and MR members as they can - and there the MR members have the numbers to come out on top. And like I said, don't be fooled by their words - what they present as "enhancements" in one aspect of the program usually result in a concession/devaluation elsewhere.

{eta} What's telling is that back in October Marriott announced changes to the MR program to bring certain aspects in line with SPG (cash&points, counting award redemption nights, etc.) Obviously in hindsight they were forward-looking to try to fend off some of the criticism being voiced now, but it also proves that they've already put a value on aspects of SPG's program that they're willing to retain. (Upcoming MR changes: Cash & Points for real, award stays towards status, and more <--- flyertalk.com thread)