Marriott CEO: Bonvoy and Breakfast, It’s All About Hotel Owner Costs

Marriott’s new CEO admits in an interview with The Points Guy‘s Scott Mayerowitz that Bonvoy isn’t as generous as Starwood Preferred Guest was. He dismisses guest desires for hotel services as customers having a “short memory.” And he explains lack of service and generous benefits as a need to hold down hotel owner costs.

That, along with $9 million total compensation, the CEO’s comments last week that potential hotel employees can make too much money working for Amazon, tells us where he stands I think and gives us a lens through which to understand the direction of the company.

Marriott CEO Says Guests Suffer “Short-Term Memory” Demanding Services Back

Marriott guests want hotel services because of their ‘short-term memory’ while hotel owners have ‘long memory.’ And Marriott needs to be “more sensitive” to owners.

“I just spent two days with my leadership team talking through a bunch of these issues. I’ve described this phenomenon as the friction that exists between the short memory of our guests and the long memory of our owners.”

…“And because of our short memories, you want everything to be the way it was. You want the restaurant open the hours that it was open before. You want the spa open with all the treatment rooms and all the technicians available. You want full service at the pool. You want daily housekeeping. You want all those things. And, in a way, that’s good because it means our consumers are anxious to get back.”

“At the other end of the spectrum, our owners and franchisees have borne a disproportionate weight, from the impact of the pandemic,” Capuano explained.

“They’ve lost billions of dollars of revenue. Suggestions about getting back to ‘normal,’ they look at you like you have three heads and they say, ‘You’ve got to be more sensitive to the steep climb we have in front of us.’”

Marriott’s previous CEO, the late Arne Sorenson, explained that the development of the Bonvoy program was about saving costs for hotel owners.

Remember that Marriott doesn’t own the hotels. Customers do not pay Marriott, owners do – in a percentage of revenue, management fees, and licensing. Hotel owners are Marriott’s customers, and hotel guests are the product Marriott delivers to those customers.

Marriott’s CEO Doesn’t Think Bonvoy Is As Rich As Starwood’s Program Was

Marriott Bonvoy isn’t as generous as Starwood Preferred Guest according to the CEO.

The integration of Marriott Rewards and SPG was a monumental task. And it’s quite interesting. You hear SPG loyalists say, ‘My goodness, what have you done to our program?’ The program was very guest-friendly. It was less owner-friendly.”

…“What some of those SPG loyalists may have lost, a bit, in terms of the richness of the program, we hope that breadth of choice, whether it be brands or geography, is a bit of a mitigating factor,” Capuano said.

I actually think Capuano misdiagnoses the issue here. Bonvoy as a program is in theory very generous, albeit with the best benefits harder to earn than under Starwood Preferred Guest (since 24 hour check-in is a 100 night benefit, and 100-night status has a spend requirement now too).

The problem isn’t the rules or structure of the program. The problem is implementation – hotels flout the program rules mightily. And Marriott customer service consistently delivers ill-informed answers. The website frequently doesn’t work (e.g. award availability calendar) and lacks features (like gifting an award to someone else).

Bonvoy is in many ways more generous than Marriott Rewards before it, though award charts have been severely devalued. And to be sure the Marriott co-brand credit cards don’t earn as generously as the Starwood Amex used to. But it isn’t about Starwood Preferred Guest being bad for owners – that’s just the mental model Capuano seems to apply across the board, since owners are his customers. He misses that the problem with Bonvoy is in execution not cost structure.

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 InsideFlyer.com, 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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Comments

  1. So, somebody’s head is so buried up his ass is surprising to whom, again?

    Sounds like an airline executive.

  2. Easy answer here, just direct all your frequent travel to Hyatt which is still an excellent program. SPG was, by far, my #1. I went out of my way to stay in SPG properties. Why on earth would I go out of my way to stay in a Bonvoy property when Hyatt is working so hard to attract and retain me?

  3. Seems nearsighted from the CEO as yes, their direct customers are the owners, but at the end of the day, no paying end users = empty hotels = lower revenues being passed on.

  4. If everyone goes to Hyatt, then Hyatt will just devalue the hell out of their program…which is coming!! all these triple point promos. You print money you gotta raise prices.

  5. Wow. You really nailed it with this one. I am a longtime devoted SPG fan who is generally very happy with the way that Marriott has handled the merger (ON PAPER). They retained more benefits than I even hoped for and in theory the Bonvoy program is excellent.

    To be fair to Marriott, as an Ambassador guest who typically stays at Legacy Starwood top tier hotels, my experience since the merger has been comparable to my pre merger stays. The Legacy SPG hotels were trained right and have a culture of valuing elite members.

    But my biggest disappointment is exactly as you outline- execution. SPG was awesome at enforcing benefits. If a hotel broke the rules they would step in and advocate for the guest. And SPG had the much missed Lurker (William Sanders) was an amazing liaison for guests. I always felt as if SPG had my back.

    I am lucky that I have access to the Ambassador team, who has superior knowledge of the program and the ability to assist with issues- but even they seem confused by some of the policies and I have had a few who totally misunderstood some of the basic benefits. I feel really sorry for members who have to deal with agents who don’t understand the rules and are unwilling or unable to intervene.

    Many point out that SPG wasn’t viable and I get that Marriott needs to run a profitable business. But there is no doubt that this is the biggest weakness of the program that I hope they address.

  6. What BS “holding down the cost for operators” really? Those ‘operators’ are well funded run by equity capital etc whose only loyalty is the bottom line all the while we loyal customers are getting the wrong end of the stick. It makes me sick that I have 4400 + room nights with Marriott only to be told by a non Marriott the importance is with the operator. what a huge mistake I and my company made all these years. Well folks we can see where this is going and its not for us. And yes Hyatt will do the same, the only advantage with Hyatt is there is still a Hyatt around unlike Marriott ( family only has 17% combined ownership pls correct me if wrong).

    I will use my 2mm marriott points and be done

  7. Hotels and Airlines for some crazy reason believe that guests should be willing to accept lesser benefits/services for higher prices to help get them back on their feet. That takes some big round hairy cajones after taking tax payers dollars, giving executives huge bonuses and laying off staff

    Would you pay double to see a movie in a theatre because they lost money in pandemic?
    Would you pay 2x to get a haircut? Have dinner in a nice restaurant?

    A lot of business lost money. Winning back your guests after the pandemic should be a priority. Marriott and Hilton should be bending over backwards to enhance the guest experience rather than providing a watered down product and crying poverty

  8. Such BS. Breakfast if cheap and is a nice perk to add. The Starwood / Marriott merger has been a mess and as somone who once worked on the Starwood loyalty side, Marriott continues to cheaper the program.

    Unfortunately, they still have better properities then Hilton. . .for now.

  9. @Ryan

    If everyone flocks to Hyatt then it should validate that elite benefits make a difference. Bonvoy would be be pressured to follow suit. I believe it would lead to better outcomes for all but if Bonvoy is truly tone deaf then perhaps not.

  10. Your comments are spot on. As long as Marriott sees its customers and their views as an obstacle instead of a solution, you set yourself up for failure. A “brand” is actually the sum of the customers’ expectations. Marriott cannot claim who it is and not deal with customer expectations. They sent me an email talking about “flexibility” and yet the city I wanted to travel was 98% no cancellation rooms. That is just not good customer service.

    – Lifetime Platinum Member

  11. Mets fan in NC stated it perfectly. For a hotel to upgrade a Platinum to what would be an empty suite costs nothing and when you have to fight for it and still not get it – well, that does not inspire loyalty. I’ve already stopped using my Bonvoy Amex. Yes, it’s all about the bottom line but they used to look at us, the guests, and understand the value they got in making us feel that loyalty counted for something. Hyatts are easier to book and cost many fewer points. I have often booked a stay on points and contacted the hotel prior to the stay asking what the daily fee would be for a suite upgrade. They have always been happy to oblige! Note – these are vacation stays only. I was so happy when I got Platinum for Life. Now to be told I won’t get breakfast!

  12. There are two problems: execution, as Gary pointed out and the continuing efforts to worsen the experience for engaged loyalty members. Both are illustrative of the mentality that Arne initiated of the loyal customer as an adversary or a sucker rather than a valued asset.

  13. I understand the pandemic issue we are all living thru it. But hotel operators have jacked up the room rates sometimes doubled! With less or no service. Marriott needs to take care of its Platinum members or there is no reason to choose a Marriott property when other brands are available. I use to drive out of my way for a stay. But no more. If you can’t be loyal to me I can’t be loyal to you.

  14. Mets Fan nailed it and this interview confirms it: “Hotels and Airlines for some crazy reason believe that guests should be willing to accept lesser benefits/services for higher prices to help get them back on their feet.”

    Giving away money without expecting value is philanthropy. Taking money without delivering value is theft. Marriott is not a charity, and most guests are not inclined to treat it as one.

    At the moment, leisure travel is bustling and people may be willing to put up with fewer benefits and services. It won’t last. Like many others who accumulated points and elite status through years of business travel, I’m planning to show Marriott all of the “loyalty” they seem to be showing me: Zero..

  15. Remember TQM – Total Quality Management? When the customer was always right, even when they were wrong. Marriott is missing a huge opportunity, the pendulum will spring back to the customer and the hopefully the customer will be still be there, unless they have left for a brand that is delivering their promise of service. Today it is no longer TQM – it is TCM – Total Covid Management, blame everything on Covid.

  16. I was checking out of Hilton in Baltimore on March 13 2020 and the ladies at the front desk were already talking about their friends in the hospitality industry who were fired from their jobs because of the falling demand. Yes, the hotel owners lost a lot of revenue but they also adapted to operate with a skeleton crew and minimal services. Serving food on paper plates and listing three food options on the menu is in some cases to be much cheaper than operating a full blown restaurant. Most the profit in restaurant business is made from selling drinks and particularly alcohol. Thus, breakfast is less profitable and it is much cheaper to offer gab-and-go items. When the demand for hotel rooms came back, many hotels continued operating the same way as during the pandemic . They also have trouble with hiring people back. Why open a lounge and have an extra expense?

  17. No service at “full service” hotels = no stay. Until this happens, the decline will continue.

  18. Owners have long memories. They also remember how they paid Marriott their monies during the pandemic, even if their properties were either closed or had 5% occupancy.

    The hotel spa worker was probably let go within the first few days of the pandemic. Let’s not kid ourselves. I would hope this is a profit center for most hotels that provide this…

    In terms of daily housekeeping, an open swimming pool, or free breakfast…These are what has been posted in hotel literature for decades. Despite charging large management fees, Marriott didn’t tell customers on their website whether they’re getting a hot breakfast or a paper bag during this pandemic.

    The reason why breakfast is provided free in hotels, is in short – it’s a very inexpensive meal that consumers value…Eggs are cheap. Limited service hotels provide this for free every day. Now it’s some sort of major problem for full service ones?

    Are consumers over entitled? They’re paying for services. They can and will vote their wallet.
    Are Hotel owners over entitled? They’ve suffered a major hit, and are trying to recoup.
    Is Marriott over entitled. The CEO most likely left his meeting with angry people, deflected blame elsewhere and flew home in his corporate jet.

    Follow the money.

  19. Worth Repeating

    “Mets Fan nailed it and this interview confirms it: “Hotels and Airlines for some crazy reason believe that guests should be willing to accept lesser benefits/services for higher prices to help get them back on their feet.”

  20. @Kuloko:

    You said, “ Thus, breakfast is less profitable and it is much cheaper to offer gab-and-go items.”

    Breakfast is one of the most profitable meals a hotel or restaurant can offer, especially a buffet. $15-$40 for a buffet that covers maybe $3-$5 per customer is an insane profit margin.

  21. It’s funny how inept he is as a ceo. I would consider myself as a lifetime titanium Elite to be one of the most loyal customers that they had. I frequently spent in the five figures on an annual basis. On the other hand perhaps he is truly brilliant. The implementation of this new program has reduced owners cost for a loyal and frequent customer like me down to…ZERO. I just don’t stay there anymore, period. I feel disrespected because of the financial and time investment that I made to earn that status and earn my points and I feel that I’ve been stolen from by the devaluations. Whether it’s allowed by the terms or not, these programs are built on a platform of trust. Marriott reached that trust and has proven not only that they were in no hurry to build it back but now they have solidified that they intend to never bring it back, ever. That’s perfectly fine and I intend to take my $25,000 in annual room and f&b revenue elsewhere because I would hate to make him fail at his mission of having the owners suffer some costs at my expense.

    Maybe I’ve just proven his point and shown that I really am loyal to Bonoy after all.

  22. With Americans having built up $2.5 trillion in excess savings during this pandemic, it’s quite the steal by hotel owners that has consumers being hit by a double whammy of rapidly rising hotel prices combined with worse hotel service.

  23. Maybe it’s just getting old, but I have really stopped seeing the benefit of “full service” properties from most domestic chains other than attending conferences. Especially suburban branches. I have been a limited free agent over the last 20+ years, having had high level status over the years with all four major loyalty programs at various times, but only one at a time. The more I travel, the more I want a high end limited service property with a properly functioning refrigerator and a microwave. A lounge used to be wonderful, but in most chains domestic lounged were getting scaled back even before COVID. It’s not like every or even a few marginal Marriott had a lounge like the Hilton Vienna (Austria, not Virginia) circa 2004 where it was massive and tasteful with exceptional service and high end complementary liquor.

    I am LT Gold, currently Platinum due to the pandemic rollover and a fortuitous stretch of $53/night Fairfield rates near one of my family members. No way I will ever get there again, I’m down to about 15k MR points at this point. Unless there is a crazy low rate, Marriott brands are my fourth choice right now. Residence and Townplace are not competitive with Home2Suites or new-build Hyatt House, which are my first choices for 2-5 nights.

  24. I was SPG member from very beginning and quite happy with their rewards. Then came greedy Marriott and screwed SPG program, I was still top member with BonVoy. Now some new CEO is making such a disrespectful statemnts to us, Marriott clients? Well, Mr. CEO you will loose your valuable clients, including myself, we’ll book other hotels from now on. To bad Mr. Capuano doesn’t now history too good, so please check what happened to AA CEO when AA Advantage program and other serious financial curs were implemented. With kind regards, M

  25. Bonvoy would be fine as a program if the category changes weren’t so brutal. JW Marriotts have almost uniformly doubled in price 🙁 since 2018. Basically, Marriott is flipping the bird to anyone who accumulated points pre-merger who didn’t burn them when they had a 60k teaser rate on every top property

  26. You can substitute “Disney” for “Marriott/Bonvoy”, and “Chepak” for “Capuano” to get the same story.

  27. I left the industry after 20 years. The poster who commented about the customer is always right even when they are wrong is exactly why I left. Now that I’m out of the service industry, you couldn’t pay me enough to return. I’ll get my need to please fulfilled through volunteering now that I have way more time instead of long hours serving entitled people who you frequently couldn’t please.

  28. I have been tipping waiter more since the Pandemic (30 to 35%). i would pay a little more for the hotel room, BUT – I want full service and full benefits – lounges open or breakfast in restaurant (not a credit), room cleaning, etc.

  29. Biggest annoyance for me is lack of access to Executive Lounges. As a Gold SPG Member always had access. Now I am told by the fresh-faced desk clerk: I understand…

  30. Rich lifetime platinum people complaining about rich hoteliers and owners trying to make more money… interesting read of these comments. Regular guests already preferred selective service Marriotts. Why stay at a JW, pay $40 to park and $30 for a breakfast sandwich when the Springhill Suites down the road had free parking and breakfast? If I don’t need a conference room or the sense that this lobby is fancy like my mansion, what’s the point?

    People leaving comments about how hotel owners fired staff so they should be able to offer rich guests better benefits should be disgusted. What about the fired staff? Hotel owners should rehire staff with increased wages even if you don’t get your free suite upgrades that you can afford to pay for anyhow.

    Owners and executives have already been pocketing a disproportionate share of profits for years. When they started to think about possinly making less money due to Covid, they just tossed their workers to the curb and jacked up rates for consumers. Ironically, that isn’t a good business model, so companies doing things the right way will continue to grow even if their CEOs makes $5m less per year to make it work. Shocking.

  31. Marriott sucks. How can capitalism survive with continued mergers and acquisitions? Air BNB here I come.

  32. Couldn’t agree more ..took me 45 minutes to get an associate when I called the 800 number..and them I got some lame excuse about it having to do with covid
    Wasn’t an isolated incident.never happened with SPG. Cant wait to use up my free nights and drop bonvoy. Hilton honers has way better service.

  33. Convenient to blame on owners …..

    Owners love the most loyal guest and they will go above and beyond….

    The problem is the amount owners pay for loyalty points which never go to first tier of loyalty and point expire …

    Owners pay for those points and Marriott pockets them once they expire …

    For every platinum there are 1000 , one night stays who never go to redemption.

    Basically very bad for owners , instead of throwing owners under the bus Marriott should spend money out of pocket to promote loyalty to most loyal members.

    No need to put all burden on owner .

  34. Medical reason led us to stay at Residence Inn for at least 2 months and would have been 12 months had the services been as expected.

    We found Airbnd better for us a few years ago. We will return for the remainder of our stay to Airbnb.

    The BONVOY team told us that there is NO enhanced Internet for anyone! The staff here does not know how to implement. A 2nd call to BONVOY team and we were told there IS an enhanced Internet benefit but wanted me to tell the staff how to implement rather than calling and helping.

    No breakfast at any of the 4 hotels owned by these owners (2 are Marriott). All four had breakfast before the pandemic.

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