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Leeny Oberg, Marriott’s Executive Vice President and Chief Financial Officer, spoke at the Goldman Sachs Lodging, Gaming, Restaurant, & Leisure conference yesterday.
Naturally much of the conversation focused on the integration of Starwood. She acknowledged that there were unique things they gain from the Starwood side in loyalty, brand marketing and how Starwood does innovation.
She talked about bringing the Sheraton brand up to par, given the problem with consistency that Sheraton has had. They took the bottom 50 of 200 Sheratons in the U.S. (based on revenue per available room and customer satisfaction) and reports that half of those, about 25, are undergoing renovation. A couple are leaving the brand, and they’re in the process of having conversation with the rest.
View from the Sheraton Iguazu Falls
The challenge of integrating Starwood and Marriott is a huge IT project, and the loyalty programs are as well. Oberg describes bringing the loyalty programs together as being both an issue of having one back-end system and having one customer-facing ‘front door’. She expects that it will be “late 2018 for the ability to have one back engine” running the two programs on a single platform. Then ultimately they want “one front door” or single program for customers.
While they expect bringing programs together “by the end of ’18” (she describes that as “hopeful” and says she is “not promising”). Although she notes that the two programs can change policies to become more alike in the meantime. IT projects, of course, rarely progress on hopeful timelines so pushing back farther shouldn’t be surprising.
In addition to the IT, the biggest hurdles to a single program are the credit card deals that they have (Chase with Marriott and American Express with Starwood) and the timeshare deals (which are 80 year contracts). She sees the credit card deals as easier because those are short term contracts, so everyone has an incentive to work together towards a re-up. Surprising no one, the bidding between American Express and Chase means that Marriott has “tremendous potential.. [for] a stronger credit card deal than we had before, good benefits for all constituencies.”
Bringing the programs together makes it very timely to decide whether to get a Marriott or Starwood credit card while both are still around, since the Marriott Rewards® Premier Credit Card has the better bonus right now, and lets you spend towards elite status credits and the Starwood Preferred Guest® Credit Card from American Express has a $0 fee the first year (then $95), and offers stronger points-earn for your ongoing spend. (Having both before or in case applications go away for one or the other seems like a smart idea.)
Ritz-Carlton Laguna Niguel, credit: Ritz-Carlton
One guess is that we could wind up with a dual issuer scenario not unlike what US Airways had after being taken over by America West (Juniper Bank now Barclaycard issuing new cards while legacy Bank of America cards continued earning) and what American had after being taken over by US Airways (Citibank issuing new cards while Barclaycard cards continued earning) or like what American has now with two issuers — at least through the end of current contracts, while American Express and Chase bid on a single-issuer deal.
Hey Gary, do you think SPG Moments will disappear when the programs become one, or is there a chance Marriott will keep it going by anothe name?
@JoshB – Marriott has Marriott Rewards Experiences which is similar in a lot of respects though not as built out as SPG Moments so I would expect it to remain.
https://www.experiencesmarketplace.com/
American express won’t go down without a fight. I have faith in them
Already have both — soon as the merger was confirmed. Spend is on the AmEx, but I’m holding onto both to see what happens.
@JoshB – Marriott introduced their version of moments last April so I think experiential rewards are here to say
Chase will do whatever it takes to stay.
Thanks, Duke and Gary!
Gary,
Do you believe there will be a benefit to qualify as a lifetime Platinum for SPG early next year?
This is year 9 for me and I will travel quite a bit early next year – curious if it is worth gutting it out hoping they recognize that status before they merge the programs.
Gary, do you have any insight into the management that seems to be steering the direction of the combined loyalty program? I hope they are wise enough to give SPG management the larger role in the new program. If they just try to stuff SPG into Marriott Rewards I think they will be destroying an enormous amount of value. I have been a Marriott platinum for years and never paid much attention to the SPG program, but since this merger, I have been introduced to SPG and really blown away by how much better it is. I’m regretting missing out for all of these years. I imagine it took a lot of foresight and hard work to assemble all of the transfer partners SPG has, otherwise Chase and Citi probably would have all of the partners SPG has when they were throwing money at building out UR and TY programs.
@Rob we’ve seen Marriott make some improvements like 4pm checkout and experiential rewards, testing Ambassador service, so they are attuned to what they have in SPG. We’ll see how far they get but they view the loyalty program as the tool that lets them retain all 30 combined brands.
@Shamrock they’ll certainly recognize it, unclear in what way (eg whether it’ll be lifetime top tier or not)
Any chance at the end of 2017 the companies surprise the public and announce that stays at either chain will in fact count for elite status? I’m trying to re-qualify for PLT which is difficult for me given I frequently travel to destinations where there are no SPG properties. When that is the case, I stay at Hilton properties, but I would gladly switch to Marriott properties if I could elite night credit for SPG.
Interesting story Gary. Thanks. However, I seriously doubt there is any chance for 2 cobranded issuers. Chase and American Express have both shown 0 interest, downright hostility, towards sharing cobranded relationships, especially with each other.
So who will win? It does sound like Marriott is not playing favorites and will go with whichever issuer makes the best deal. Good. I too hold both cards and imho the SPG AmEx is far superior to the Marriott Visa. Chase will really have to step up.
Thank you for this. It is only in the last two years that I began to realize the value of brand loyalty. I started with Southwest and now have a companion pass for all my travel with them. I also started with Marriott around the same time – mainly because they had a hotel brand everywhere I was traveling. However, at that time, I was using my SW card for Marriott and thought I was doing well – until I finally got the Marriott Chase card. I’ve already reached Elite Gold (which took me literally all year, until mid-December, last year) and will very likely reach Platinum this year for the first time. So I am fascinated now to read that a) the Starpoints Amex has better perks, and; b) several people are saying it is better to get both NOW before a decision is made for one or the other. (The latter is not as big of a concern as I’m sure whichever way they go, they would make some sort of offer to those who have the other card. Costco switched from Amex to Citi last year and they automatically sent cards to all of their Amex customers.) In any case, I am really curious as to what it is that makes the Starpoint Amex so much better than the Marriott Chase. I happen to really like the Marriott card. But – admittedly I am relatively new to all this as I see some people saying they have been involved with these sorts of programs for several years. Any insight and advice is greatly appreciated.
” If they just try to stuff SPG into Marriott Rewards I think they will be destroying an enormous amount of value. I have been a Marriott platinum for years and never paid much attention to the SPG program, but since this merger, I have been introduced to SPG and really blown away by how much better it is.”
Agree completely. I just became SPG Gold while staying at a Marriott property in Europe. Marriott’s back end is really bad … all sorts of erroneous stuff shows up on bills even as a Silver member and they’ve got to understand that SPG is a much better all-around product … trying to do literally anything on the Marriott app sends you to their website whereas in the SPG app it’s all baked in. I like that a lot when I am traveling fast and furious and suddenly want to book an award room for 2 to 3 hours from now. Works flawlessly on SPG app but have been at two Marriott properties where they claimed I had insufficient points for the award that was already awarded and already deducted from my account — showed them the confirmation email to prove it. In my view end of 2018 would be an extremely ambitious deadline, just 18 months from now. I don’t see that happening.
Two comments worth repeating (IMHO):
From Joseph N.: “I too hold both cards and imho the SPG AmEx is far superior to the Marriott Visa. Chase will really have to step up.”
From Rob: “If they just try to stuff SPG into Marriott Rewards I think they will be destroying an enormous amount of value. I have been a Marriott platinum for years and never paid much attention to the SPG program, but since this merger, I have been introduced to SPG and really blown away by how much better it is.”
I have to agree. Completely. When I first started paying attention to things like points and loyalty programs, I looked into Hilton, Hyatt, Marriott, and Starwood . . . and Fairmont, Kimpton, iPrefer, etc., etc., etc. I came away with Starwood far in the lead, so to speak, in terms of benefits + footprint. No doubt the (old) Hyatt program was good, but there weren’t enough properties where I needed them to be, while all the rest fell short. And as I mentioned above, while I hold both the SPG AMEX card and the Marriott Chase card, all my spend goes on the SPG card — better rewards, higher point return.
@Whitney —> 1) You earn MORE points (better return) by using your SPG Amex card than using the Chase Marriott card — even when staying at a Marriott property! This is important because, as of now, you can move your points back-and-forth at a ratio of 1 SPG = 3 Marriott points. That adds up fast!
With GOLD status at both chains (Gold @ one = Gold @ the other):
If staying @ Marriott
— using SPG AMEX: 2x Starpoints on spend + 12.5 Marriott Rewards points on stay = equivalent of 18.5 Marriott points, or 6.167 Starpoints per $1.
— using Marriott Rewards Visa: 5x Marriott points on spend + 12.5 Marriott points on stay at Marriott or Ritz = 17.5 Marriott points (5.833 SPG points) per $1.
If staying @ Starwood
— using SPG AMEX: 2x Starpoints on spend + 3 Starpoints for staying at Starwood = equal to 5 Starpoints (15 Marriott points) per $1.
— using Marriott Rewards Visa: 5x Marriott points on spend + 3x SPG points on the stay = equivalent of 14 Marriott points, or 4.667 SPG points per $1.
/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\
With SILVER status (Marriott only; no SPG equivalent):
Staying @ Marriott
— using SPG AMEX: 2x Starpoints on spend + 12 Marriott Rewards points on stay = equivalent of 18 Marriott points, or 6 Starpoints per $1.
— using Marriott Rewards Visa: 17 Marriott points for staying at a Marriott or Ritz (5.667 SPG points) per $1.
Staying @ Starwood
— using SPG AMEX: 2x Starpoints on spend + 2 Starpoints for staying at Starwood = equal to 4 Starpoints (12 Marriott points) per $1.
— using Marriott Rewards Visa: 5x Marriott points on spend + 2x SPG points on the stay = equivalent of 11 Marriott points, or 3.667 SPG points per $1.
/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\/\
On top of this, Marriott is playing “catch up” to SPG in terms of benefits at each level, in terms of guaranteed late check-out, upgrades, experiential “awards” for points, etc., etc. Being Platinum (a level I’ve never reached) merely widens the gap. Don’t misunderstand: Marriott treats its elite members well . . . but not as well as SPG.
It is appalling how narrow-minded this articles (and comments) seem to be ! Ladies and Gentlemen (Mr. Trump included) : let me get you into perspective: The US of A have a 200 million people population. The Eu has about 260 million. I’m not going into Asia, because it would take a lot o zeros …
SPG is by far the best programme on earth (yes, I’m a lifetime Plat). Marriott has a lot to learn about the matter. But what is most , I think hotel chains should consider firstly what they directly offer to their clients, instead of using “tricks” like credit cards that aren’t available but in the US of A.
The market being global , does it make sense that Us citizens have access to SPG Amex Plats and the rest o f us don’t?
Does it make sense that these “guests” earn their statute when they buy groceries or a random bottle of bubbly, instead of by staying in one of “our” brand hotels ?
And if Marriott thinks this is the way to go, I have some news: Hilton is there, Hyatt is there and even Four Seasons is getting into the Frequent Guest business. I would reconsider and focous on your core-business: Hotels !