I was surprised and honestly a little dismayed to find an email in my inbox this morning with a press release saying that Marriott was buying Starwood. It was no secret that Starwood was actively looking for a buyer. Back in April the board had made an ominous statement, “Starwood to Explore Strategic and Financial Alternatives to Increase Shareholder Value”.
Since that time there has been a colorful parade of potential buyers, even Hilton. It was rumored that there were some Chinese firms in the running, as well as Hyatt. Much as I was disappointed that Starwood wouldn’t remain independent, I was warily ok with the takeover if Hyatt was the winner since I figured a strong loyalty program would likely remain. Hyatt and Starwood both have outstanding hotel loyalty programs in my book.
The door shut on that possibility this morning, when Marriott International and Starwood Hotels & Resorts Worldwide made their announcement.
The merger between the two companies effectively creates the largest hotel company in the world, with 5,500 hotels and 1.1 million guest rooms. The acquisition price came out to be $340 million in cash, and $11.9 billion of Marriott International stock for a total of $12.2 billion.
Once the merger is complete, the following Starwood brands will be under the new Marriott umbrella –
St. Regis, The Luxury Collection, W Hotels, Design Hotels, Westin, Le Meridien, Sheraton, Four Points by Sheraton, Aloft, Element, Tribute Portfolio.
They will join existing Marriott brands –
EDITION, The Ritz-Carlton, Bvlgari, JW Marriott, Autograph Collection, Renaissance, Marriott, Delta Hotels & Resorts, Marriott Executive Apartments, Marriott Vacation Club, Gaylord Hotels, AC Hotels by Marriott, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, TownePlace Suites, Protea Hotels, MoxyHotels.
There is no word yet on what will happen to the Starwood Preferred Guest loyalty program. It may be that Marriott Rewards and Starwood Preferred Guest end up existing simultaneously. That being said, each program is quite different, and Marriott might decide to absorb the SPG program so that only the Marriott Rewards program remains. I don’t expect SPG points to get converted on a 1:1 ratio (and certainly hope they don’t), as I value my Starwood points much more.
The entire merger is expected to close in mid-2016, so there is no rush to dump points just yet.
Listening to the webcast conference call following the statement, there were plenty of questions about the financial side as expected. You can listen to the recorded conference call via the web by clicking here, or dialing 855-859-2056 or 404-537-3406 on your phone and entering pin 82603071.
One of the statements made in the call was that Marriott’s hope is that they will become the “go-to stock in the hospitality business” and that this merger will “broaden our (Marriott’s) appeal to younger travelers” in part because of Marriott’s “willingness to think ahead and embrace change”.
There was some discussion about branding, and when the question was posed about the large total number of brands (30+!) , if there were any that just didn’t fit and needed to be eliminated, one of the Marriott folks said, “Philosophically we think there is a place for all the brands to stay within the portfolio”. Autograph Collection was compared to Tribute, Le Meridien to Renaissance, and there was a cryptic reference to some “distinctions being made between Ritz-Carlton and St Regis properties over time”. Not sure exactly what that means but we’ll find out soon enough.
“Sheraton is truly a global brand. It has significant strength around the world. We need to think a little bit about the challenges in the US rather than in the rest of the world. Starwood came up with a 10-point plan a quarter ago. Generally the notion is that the better hotels will get the Sheraton Grand branding. Hotels that don’t make the standard will leave, and there is growth potential.”
I do like the footprint that Marriott has worldwide since there are properties just about everywhere you want to stay, but Starwood Preferred Guest beats Marriott Rewards any day of the week as far as I’m concerned. As a Starwood Platinum, I receive free continental breakfast (if chosen as my amenity during check-in) , best available room upgrades at check-in (which includes suites) and late checkout. In the Marriott Rewards program as an elite I get free breakfast except at Courtyard properties, but late checkout is based upon availability. In my experience, Marriott rarely upgrades elite members to suites and their properties don’t even have that many suites to begin with. To me, Marriott feels more like a “everyone is equal” program whereas Starwood really puts a special touch on their elite program benefits and service.
The loss of the upgrades that include suites would a huge loss in my book. I love having the extra room to use for work, entertaining guests or simply relaxing, and keeping the bedroom totally separate. Starwood for the most part is great about giving their elite guests a desirable room/suite.
My ears perked up when I heard Arne Sorenson, President & CEO of Marriott International speak a little on why Starwood.
“…Starwood in part because of the strength of SPG. It is very valued by elite travelers and we think there is great value in that program. These are from a customer perspective. We will take the best of both programs and make sure that both are preserved and that the program is enhanced. Bring those programs closer together and drive that much more power from them”.
Hopefully, Marriott really will keep the best from both loyalty programs, and only time will provide us with more details.
What do you think about the merger?