Wednesday, February 21, 2018
Business

What about my SPG points? Marriott merger has Starwood devotees nervous — and angry

Frequent customers of Starwood Hotels & Resorts are reacting emotionally to the news that Marriott International is acquiring Starwood, which owns the Westin, Sheraton and W hotel chains. It seems less like a company they do business with is merging and more like their mother is marrying a man they disapprove of.

"I'm livid," Hugo Espinoza, a San Franciscan who has spent 203 nights in Starwood hotels so far this year, said in an email. "I dread to think what the merger will do to my platinum-for-life status."

Every big hotel chain has a loyalty program, but Starwood Preferred Guest stands out for the way it pampers the company's most frequent customers. Even staying 25 nights a year will get you guaranteed 4 p.m. checkouts at most hotels, a benefit that is only offered subject to availability at Marriott. Those staying at least 100 nights a year are assigned a personal travel ambassador to handle their bookings, cajole hotel managers for upgrades and arrange customized perks.

Members worry it will become harder to get perks, just as it became harder to get upgrades and free flights under frequent flier programs after the recent spate of airline mergers.

"The level of personalization and the attention that I get from SPG is a huge comfort," said Ryan Huff, a consultant from New York who has averaged over 100 nights a year in Starwood hotels since 2008. "I send my ambassador a Christmas gift and know about her family, and she knows my wife."

"They get to know all your likes and dislikes," said Charley Cullen Walters, an Ambassador-level member from West Hollywood, Calif., who runs a public relations firm. Walters happens to like chocolate-raspberry mousse, and most Starwood hotels know to greet him with that dessert upon check-in. He's worried that service will deteriorate as Starwood gets folded into the much larger Marriott network.

VIDEO: WHAT HAPPENS TO MY TRAVEL POINTS?

Starwood customers are right to worry, says Gary Leff, who writes the View From the Wing blog, about travel reward programs, because the two companies have fundamentally different business models. In the title of his blog post about the merger, he declared it's "time to start gnashing teeth."

"In general, the smaller programs are ones that treat elites better," said Leff, who maintains upper-tier elite status with Starwood, Hyatt and Hilton. "It's not hard to just fall out of an airplane into a Marriott. You have to make a choice to be loyal to Starwood."

Starwood has nearly 1,300 hotels worldwide, with an emphasis on luxurious and distinctive hotels under brands like W, Le Méridien and St. Regis. Marriott has over 4,200 hotels, with particular strength in the kinds of properties that don't offer a lot of frills. Because Marriott can count on its geographic reach as a selling point — no matter where your sales meeting is, there's probably a perfectly adequate Courtyard by Marriott nearby — it does not need to be as aggressive about personal service.

From the companies' perspective, the distinction between the Marriott and Starwood portfolios is a major reason for the merger. Adding Starwood will allow Marriott to reward its existing customers with stays at a wider array of interesting luxury properties, while existing Starwood loyalists will gain the benefit of Marriott's greater geographic reach. But Marriott will need to overcome some Starwood fanatics' reservations about the quality of the Marriott portfolio.

"Oh great, now I can use my over one million hard-earned SPG platinum ambassador points on that new SpringHill Suites," wrote Joe Cutaia, a Chicago consultant, referring to one of Marriott's limited-service brands. (He was being sarcastic.) Walters comforted himself by noting that Marriott at least owns Ritz-Carlton, "which I guess is good," though Leff contends many Ritz-Carltons are "resort factories" lacking the distinctive touches of Starwood's top properties.

"Ritz Carlton Grand Cayman, if you don't put your book down on a beach chair at 8 a.m., you're in the fifth row back from the beach," Leff said. "They're not unique, special places." Speaking of unique, Leff noted he is looking forward to a planned stay at Al Maha, a Starwood Luxury Collection resort in Dubai, in part because it offers falconry.

Of course, if you've ever stayed at a Sheraton, you know the average Starwood hotel does not offer falconry. But access to these splurge resorts is an important selling point for Starwood fanatics, one they are concerned they will lose as Marriott customers compete for the limited set of rooms available to be booked with points.

There are other reasons for Starwood elite customers to be concerned about becoming fish in a much bigger pond. Marriott Rewards has 54 million members, more than twice the 21 million participants in Starwood Preferred Guest. After the merger, the combined Marriott-Starwood will be the world's largest hotel network by some margin, and its commensurately large base of frequent customers will make it difficult to offer benefits like guaranteed 4 p.m. checkout; if too many customers are entitled to such a late checkout, hotels will be left without rooms for guests checking in.

Setting those capacity concerns aside, there is the separate question of whether Marriott will continue to meet the expectations for personal service that Starwood's top customers have developed, which are often very high.

"It was just a little bit annoying to find out about this in the news instead of some advance communication from them," Walters said of the merger. When I pointed out that an advance tip would have violated Securities and Exchange Commission rules, he said they should have at least reached out personally to top members soon after the announcement.

"I haven't heard back from my ambassador, which is shocking because they usually get back to you within 24 hours," he said. "It's kind of this weird 'I don't know what's going on' phase, and I think a lot of people are feeling that, too."

He may not learn what's going on for a while. Neither company responded to a request for comment about the merger's impact on loyalty programs. Leff said he suspected that they had not yet decided what they would do and that merging Marriott Rewards with Starwood Preferred Guest would be a significant and time-consuming information technology challenge. He doubts customers will experience changes to their benefits before 2017 at the earliest.

If conditions deteriorate enough, Starwood's biggest fans will face the prospect of switching allegiances, but the big question is to where. Huff says he could go to Hilton, which is "not as good, but pretty good." Walters doesn't know what he would do.

"I'm so 100 percent Starwood," he said. "I guess I've heard Hyatt is sort of the next best thing."

 
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