The J.W. Marriott Phuket, whose ownership group also has the St. Regis Bangkok, believes that Marriott is mismanaging their resort property. The hotel failed to reach budgeted goals between 2013 and 2018 and there hasn’t been a budget agreed to since. Even before the pandemic they were doing less than they were in 2013. News of their lawsuit broke in January, and despite Marriott’s best efforts to keep it out of Thailand courts their claims are being permitted to move forward. (HT: John Shepherd)
The hotel has several complaints:
- Mismanagement. They argue in a lawsuit in Thailand that Marriott is responsible for ” poor purchasing practices, high staff turnover and bad sales and marketing decisions.”
- Conflict of interest. Marriott acquired Starwood and keeps adding to its brands. As a result they’re focused on growing the overall Marriott business in the region, rather than the business of the J.W. Marriott. They have too many hotels and too many brands and promoting other hotels comes at the expense of promoting theirs. They contend Marriott has been “[u]sing the facilities of the JW Marriott Phuket to promote Marriott’s other competing hotels” and “[m]isappropriating [the property owner’s] confidential and proprietary information to promote Marriott’s competing hotels.”
- Bonvoy. While Marriott CEO Arne Sorenson promised that the new combined loyalty program would come at a lower cost for hotel owners the J.W. Marriott Phuket complains that the amount they’re reimbursed for award nights has dropped by two-thirds. And they want out.
Forcing the JW Marriott Phuket to accept high volumes of low margin business through Marriott’s loyalty program and operating its loyalty program in bad faith and in a manner contrary to the interest of [the hotel].
J.W. Marriott Phuket, Credit: Marriott
Here’s the complaint about Bonvoy:
Marriott unilaterally sets the rate it pays to the hotel for stays booked through Bonvoy. “Following the merger of the Marriott and Starwood loyalty programs in 2018, we were informed by Marriott that the base redemption rate for the JW Marriott Phuket would decrease from approximately $120 per night to $47 per night,” said Dillip Rajakarier, group CEO of Minor International and CEO of Minor Hotels Group.
“In effect, Marriott was requiring us to sell rooms at a below-market rate. This business [Bonvoy] is some of our lowest-margin business, yet we are forced to honor these redemptions — which hurts our profitability. We requested to cease participating in the program, which we consider to have an overall net negative effect on our hotel, and Marriott refused to consider this.”
A hotel like the J.W. Marriott Phuket likely attracts a large number of redemption stays. Unhappy hotels then frequently go and play games with their inventory to limit redemptions.
If this lawsuit succeeds we’ll certainly see more hotels complaining about the rapid expansion of brands, diluting the focus that a chain gives to any of its independently-owned hotels, and we’ve already been seeing many popular redemption spots complain about the revenue award stays generate.