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.