The J.W. Marriott Phuket Wants Out Of Bonvoy, And They’re Suing

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.

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. Marriott has a 13 billion dollar purchase cost of SPG and a ton of other expenses
    They Will Bonvoy you till the fat lady sings
    It will probably get even worse as time goes on

  2. Something isn’t adding up. It’s a Category 7 property. Cash and points rooms are ~5000 baht ($180) + 19K points. Previously when I stayed at a Category 7 property on points (during peak period) I got a look at the Property reimbursement and it was 350 Euro per night.

  3. “Bonvoyed” has now saturated our vocabulary to the point that Merriam-Webster editors must decide whether it should be added to the dictionary in 2020.

  4. So Marriott has Bonvoyed its program’s members and some of its affiliated hotel-owning partners? Sounds like Marriott hasn’t learned that there is only so much blood to be squeezed from its customers and partners before some of them decide its time to get out of Dodge and hit the road running fast and hard.

  5. @Nick, it is a Category 6 and was a Category 5 property until March 2019, not a Category 7.

  6. @ajs5034 You are right, most of the dates I checked where 60K points so I assumed… $47 still seems low?

  7. @nick, yes $47 is absurdly low. We’ve been to the property over Christmas 2018 and while it certainly is not the most luxurious JW we’ve ever stayed at, a $47/night redemption rate is embarrassingly for Marriott to pay back the property. As a platinum member, we had buffet breakfast for two at $30 each, so the payback rate from Bonvoy doesn’t even cover the cost of the breakfast.

  8. Marriott could just double or triple the cost of redemption for its Bonvoy members and pull an American Airlines ploy and give the hotel another 5 dollars a night

  9. Marriott’s buy-out of Starwood will go down as the worst business deal since PanAm consumed National. Starwood was an innovative brand to access at all levels. If only Starwood could jettison from Marriott, as nobody is thrilled with such mega hotel chains like Marriott and Hilton. Amazing how so much of our life is being Sovietized into a couple of hotel chains, three legacy airlines, one monopolistic federal passenger railroad.

    On the topic of hotels, let’s not forget the worst marketing error in the hotel industry–when Canadian Pacific purchased Fairmont and elected to re-name itself as Fairmont. So much for so many decades of building up the marketing aura of CP hotels.

    As far as the Phuket property, it needs to take the battle to Marriott for failure to comply with contractural terms; malfeasance for denigrating the property’s image; creating competition at the expense of the property.

  10. @Nick +1

    @Gary, you had an earlier blog post that to my understanding stated Marriott reimburses properties at the market rates at the booking time for award redemptions. Or, was that pre-merger policy?

  11. Well, if they leave, there’s still the nearby Renaissance which, IMO, is a significantly better hotel (especially if you’re elite and can get upgraded to the private villas with plunge pool). I walked over to the J.W. Marriott and was so glad to be staying at the Renaissance. I would say that both hotels are in what’s probably the best part of Phuket given that most of the island has been ruined by over-tourism (a huge problem in Thailand).

  12. As I understand the reimbursement is to cover costs. Clearly from other comments, $47 isn’t enough. One would think Marriott has some type of cost reimbursement escalator built into their management contracts? Obviously not. And I don’t blame management for wanting out.

    People forget that Marriott has a reputation of being a tight-wad organization pre-merger. Post merger, Marriott is just being cheap. Marriott room rates are always more than competitors, which isn’t a good position to be in. Next economic down swing, Marriott is in deep do-do because they have used up all their goodwill.

  13. FWIW I suggest that instead of paying member hotels cash for rooms & charging cash for points which are awarded, programs should set up a “points-bank account” for each hotel into which points paid by customers for award nights are deposited, while points earned by customers are withdrawn/ debited! Maybe hotels could even be awarded double points for room nights when they’re very full.
    If a certain hotel runs a points-deficit, then it can be charged an amount of money per point to restore a zero balance!
    This may be an uphill battle to convince the various hotel-guest programs:

  14. I am actually surprised that more
    owners haven’t complained about the saturation. Some properties left but not nearly as many as expected given that some of the owners of full-service properties had contracts that gave them an exclusive geographic radius, prohibiting Starwood (now Marriott) from licensing another full-service hotel within that radius.

  15. I think they are missing a much bigger issue, Thailand, and especially Phuket, is falling out of favor with travelers. Military rule has crippled the country with poor policy, making travel more expensive with strengthening currency. Also, more Thai scams emerge daily via social media. People are finding other places to go. Compensation for award bookings is a direct correlation to hotel occupancy.

  16. This is not the first complaint we’ve heard, especially coming out of the Asia / Orient franchisees, that the chain is focusing on new development to the exclusion of properly managing existing hotels. It is becoming clear that the brands are being managed based on how they can be sold to developers, not how they attract guests. I think this will be a growing problem.

    As for the complaint (that Gary made, not the hotel) that this hotel gets a disproportionate number of redemptions, unless things have changed Marriott is the one program that assigns award categories based on the number of redemptions, not the room rate. If Phuket is getting too many redemptions then the solution is for Marriott to raise it to a higher category.

    Having watched the Miami Beach Eden Roc file a similar lawsuit against Marriott, only to see the Eden Roc being the one who had to pay Marriott, not the other way around, it’s fair to say that I would like to read Marriott’s side of the story before passing judgement, especially on the calculation of that $47 figure.

    BTW, Gary, can we now bury the idea that you occasionally float that hotels want more award guests?

  17. Bonvoy
    Needs to be looked at.
    It borders on being unhelpful to all stakeholders.
    Tony N

  18. You should be aware that Minor has two hotels directly across from the JW which are timeshares and Marriott has a very large timeshare office in the JW as well as surrounding the property with multiple timeshare building. This would cripple Marriott if they lost the branding and give Minor a HUGE advantage.

  19. Will be interesting to see if the spat spills over to the St Regis BKK which is also owned by the Minor Group and managed by Marriott.

  20. I’m a Marriott Titanium Lifetime member. Since the merger, the cost to book a room with points have increased significantly. The new company is mostly interested in expanding the brand at the expense of its most loyal customers. I don’t doubt why this property thinks they are being mis-managed.

  21. Important context: Minor Hotels has its own brands and I think this is nothing more than an attempt to get this property re-flagged under its own brands while also promoting itself as an alternative in Southeast Asia to Marriott.

  22. We did a Marriott time share presentation, in Vegas, and it was at $32,000. WTF. Then a maintenance fee of $1300 a year. Not sure what it’s up to today but this is ridiculous. We go to Hilton Head each year and in the open market, we can get a 5 star resort, for $1100 a week. 3 bed, 3 bath, ocean front, 1500 sq. ft. Why would i pay $32000 up front for something i can get $300 cheaper, on the open market. I do own a TS in the Black Hills i can trade for any where in the world. I paid $3000 for that one. Rally Week. I can rent it for $2800 for that week 3 bd. 2 bath. Sleeps10. Some just don’t get it.

  23. i did stay there some years ago and did not even like the resort…. very dark inside and old fashioned rooms….. i moved to the Renaissance next door which is a bright, modern and much more happy place to stay…… and that is what many people want i think…..
    I was booked in for 1 week for vacation at The JW Marriott, but decided to move next door fast……
    The hotel does not represent what people are looking for nowadays…… even the Marriott Nai Yang Beach Resort close to the Airport is much nicer with excellent staff, nicer rooms and huge pools……..
    The owners should also realize that the taste of people changes in the cause of years and they should not only blame Marriott…….
    The Japanese Restaurant was good, i liked that one….. good quality, but expensive
    I am a happy BonVoy Titanium Member, but would not choose that resort, for me its not worth the money more my points…..

  24. Minor team are I believed run by uneducated team. First of all are they blind to see how the Phuket market is performing since many years. Do they don’t know how to read a STR report. Marriott should ask Minor group to present the reports for their other hotels in the region to see how many of there hotels have managed to achieve budget and growth since 2013. MINOR is a baby company who want to make quick cash and move out. It’s not the fault of Marriott it’s the bloody market. Redemption rate they have no case based on Marriott agreement where the owners arre safegaured.
    I think Minon is forget that they are running JW Marriott where their cost of purchasing cost to provide quality will be much higher that a OYO hotel.

  25. The fact that we aren’t reading tons of articles like this on the regular lends to believe that the $47 rate may be exaggerated low. Sounds like a facility that isn’t feeling served well by Marriott as a whole and is stacking the deck, to the point of exaggerating, just to get out from under their contract.

    And as far as the worst mergers, I think that title goes to the Sprint/Nextel merger.

  26. Every Marriott hotel has to allocate a contracted percentage of the room pool each day. Example: 200 basic rooms/ 20 rooms set aside for redemption/points. Once that percentage is reached they don’t have to release any more rooms for redemption. There is no blackout dates for redemption. They have the right to sell all other rooms to pay their bills.

  27. @Kevin – unless the hotel is all suite, they have to make all standard rooms available as awards, though there is a minimum % of rooms that have to be allocated as standard rooms. legacy marriott properties can still have ‘high demand dates’ where they make fewer awards available though this is being phased out.

  28. On top of the drop in rate paid to the hotel – its possible they may not even be getting paid at all on some nights – when I worked at a Sheraton in New York City (SPG), the hotel was not able to invoice for reimbursement of award stays unless occupancy hit 95% (or something like that – don’t remember the exact %, but it was definitely in the 90s). On the overnight shift, I would run the report to submit to Finance when we qualified. Not sure if Marriott was doing a similar thing back then, or now in the Bonvoy program, but either way it shows that these stays are not always a great deal for the property owners.

  29. @Hsrry How – I am also Lifetime Titanium buy understand Marriott, like all companies, has to put their own interest first. OF COURSE they focus on growing the brand over doing things for you or me (as they should). Their fiduciary responsibility is to shareholders, not elite members. Get over your self!

    As to people with the tired, old “Bonvoyed” phrase – move along as well. Things aren’t going back to 2015 so accept that fact or find another hotel – Marriott will be just fine.

    Finally the claim in the suit on staffing and turnover seems crazy. The franchisee is responsible for that so they are blaming themselves in the suit?

  30. Wait a minute – consumers definitely aren’t happy with Bonvoy. Hotels aren’t happy with Bonvoy. Who is happy with Bonvoy?

  31. @AC this isn’t a franchise but a management contract. Big difference. In a franchise the employees would work for the franchise whereas with a management contract they are Marriott employees from beginning to end.

    Also, it seems clear that the world is waking up to the fact that fiduciary responsibility is to the stakeholders and not just the shareholders. Even Jack Welch now realizes that the Shareholder Value cult, at the expense of other stakeholders has not worked out well.

  32. @Dan Rohman,
    The same reason people buy variable annuities, use expensive financial advisors, etc. They believe what they are told instead of researching things for themselves so they end up getting scammed or losing money.

    Then people try to convince themselves they made a good deal. I have a friend who bought a timeshare when he was young and has regretted it every since. He uses it but could have saved a lot just by renting a place when it is needed.

  33. @David “Even Jack Welch now realizes…”

    Jack Welch died on March 1st. Doubt he has had much insight since then.

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