Mark Brugger, the President and Chief Executive Officer of Diamondrock Hospitality, spoke about how Marriott’s new loyalty program is affecting his hotels during the company’s earnings call held on May 9.
Diamondrock is a large owner of Marriott hotels across 8 of their brands including the Vail Marriott, Renaissance Charleston, and Frenchman’s Reef & Morning Star Marriott Beach Resort.
Marriott St. Thomas, Credit: Marriott
When asked by analysts to provide color on the Bonvoy transition, he noted lower costs and some positives and negatives depending on the property but where he zeroed in on a problem it’s providing breakfast at resorts to elites (“the leads who are their premium folks”) and he suggests breakfast is too expensive to provide for the compensation his hotels receive from the chain.
Brugger says Marriott is working with them on this, though doesn’t share whether that means cutting back on breakfast or raising compensation. Here is how the program currently approaches elite breakfast.
So on the Bonvoy and rewards program, they’ve made some changes and like you would expect when they were on new programs, for some of their hotels, it’s been really good and some we need to make adjustments with the new program.
So, I would say, our rewards cost in Bonvoy are down across our system, which has been good. Some of the contributions in some hotels are up and frankly some are down. And so, we’re working with them and they are agreeable to make adjustments where it’s fair to make adjustments. I’d say the one that we’re — we have been a little bit focused on is they — what — on your Bonvoy, they’ve given the leads who are their premium folks, free breakfast at resorts and they compensate us I think $7 a breakfast. But that’s one that in some markets make sense and in some markets probably is it’s too expensive. So that would be one that under the Bonvoy program we’re working with them on solutions to be equitable.
He acknowledges “rewards cost in Bonvoy are down across our system.” Before the new combined program launched in August 2018, before it became Bonvoy in February 2019, Marriott’s CEO Arne Sorenson explained that the new program would be all about lower costs for owners.