Bill Marriott Shares the Real Reason Marriott is Buying Starwood

Marriott is buying Starwood for the increased clout it gives them in negotiations — with partners, online travel agencies, and everyone else. That’s according to Marriott Executive Chairman Bill Marriott.

From the beginning the narrative around the deal has been that the size and scale of Marriott would help them in negotiating with online travel agencies. And by expanding their footprint they’d also be able to capture more corporate deals, and a greater share of spend from each deal.

Since the deal was struck, and Starwood’s customers started vocally expressing concerns, the idea of acquiring Starwood’s customers became a focal part of the narrative.

Bill Marriott, though, expands on the importance of the deal for leverage in everyone they deal with.

When asked if Marriott’s decision to buy Starwood was driven by a desire to protect the company against the power of online travel agencies and gain more market share, he said, “Obviously, the more clout you have in the marketplace, the better your relationships with your partners, OTAs, credit card companies, coffee sales, and reservation systems, all those kinds of things become more attractive to our owners in producing more profit to the bottom line.”

Of course they aren’t gaining greater leverage over online travel agencies, credit card companies, coffee sales, and reservation systems without also gaining that over customers. So while of course Marriott wants Starwood’s customers, every other element of the deal is about driving down their costs — for distribution through travel agencies, through lower negotiated coffee prices — or increasing revenue by gaining customer wallet share. It would seem out of place to believe that in the area of customer loyalty that the idea was increasing costs to provide greater benefits, or about reducing revenue from program members.

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Marriott also says that if Chinese insurer Anbang had solidified their counter-offer of $82.75 a share for Starwood, that the Marriott board would have bowed out of the bidding.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Of course this is all about raising prices. If other travel industry mergers have taught us anything (especially airline mergers), these mergers are about cutting costs, sacking staff, and raising prices…. And of course slashing reward programs.

  2. The U.S. hotel and airline industries are steadily consolidating back into oligopolies. The winners, despite whatever the companies may say (e.g. “more global destinations to serve our valued customers”), won’t be consumers. Competition, it was nice knowing you.

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