The Marriott-Starwood Acquisition: Five Things You Should Know

NH_8823_RTBy Neil Hammond, Partner

Earlier this week, Marriott announced that their merger transaction received approval from the Chinese Ministry of Commerce. Since this was the last green light required to complete the merger, Marriott has now officially solidified its status as the world’s largest hotel company. In light of this news, many are wondering what the deal means for the corporate buyer. Here are the five top things you need to know:

  1. Getting the Brands Together 
    Although Marriott claims there are no plans to get rid of any of the brands, eventually there must be some rationalization to the 30 brands that comprise the Marriott portfolio. We expect comparable brands will be matched up for comparison and, depending upon brand value, consolidated at some point in the future.
      
  2. Corporate Buyer Impact 
    Since most key negotiations and decision-making takes place at the property level, there should not be much immediate impact for the 2017 hotel season. We can expect, however, that Marriott may become the master chain of choice for the chain-wide deal as a catch all/back up to address low activity markets in a corporate program.
     
  3. Traveler Loyalty Impact
    While some of the previous changes can bring increased value to the corporate buyer, they may also promote greater brand loyalty from the corporate traveler, which will reduce the travel manager’s ability to move to other chains if he or she doesn’t get the desired results from Marriott in negotiations. With an increased focus on the traveler experience by many corporations, we could see traveler preferences and a desire to keep costs low coming into conflict.
     
  4. Credit Cards and Rewards
    There has been much speculation surrounding what is a very popular program for travelers – the Starwood AmEx credit card. There has not been an official announcement by Marriott on the matter; however, from our view the card looks destined for the chopping block, in light of the well-regarded and long-standing relationship Marriott has with JPMorgan Chase. And as for those rewards points? For now, the loyalty programs for both chains will be maintained until they are merged, which according to Marriott won’t be until at least 2018.  Until then, members who link their accounts can elect to transfer points at a 3-to-1 ratio (three Marriott Rewards points to one SPG Starpoint) between the programs.
     
  5. The Rest of the Sandbox 
    What will be the reaction of other major hoteliers? Expect this deal to trigger a response from the likes of Hilton, IHG and Hyatt, as they look for ways to strengthen their positions.

Need more guidance or assistance? Our sourcing service includes a full program strategy review followed by complete management of the RFP process, detailed analysis of the proposals using our proprietary, industry-leading SpringBoard Hotel Manager™ software, and leading the negotiations. For more information, please contact us.

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