Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. are planning to merge, creating the largest hotel company in the world. During separate stockholder meetings in 2016, shareholders of both Marriott International and Starwood Hotels & Resorts Worldwide approved proposals which outlined plans for Marriott to acquire Starwood. At the close of the deal, Starwood shareholders received 0.8 shares of Marriott including $21 per Starwood common stock. The deal was closed in September of 2016, which began the journey towards total integration of Starwood into Marriott.
The merger is not simply a benefit for shareholders or a step closer to building the world’s largest hotel empire. Additionally, the merger of the loyalty programs specific to Starwood and Marriott will secure the foundation for the largest loyalty program of its kind. By offering to prospective customers a choice between over 5,500 hotels in over 100 countries, their expanded portfolio caters to a commitment to customer experience and satisfaction that is shared by both companies.
In the beginning, Marriott chose to keep loyalty programs for the two hotel brands completely separate; that is, customers could book Marriott hotels with Marriott Rewards Points and Starwood hotels with SPG Starpoints. Additionally, members had the opportunity to link both accounts in order to enjoy elite status in both programs and switch between point currencies at an exchange rate of one SPG Starpoint for every three Marriott Rewards Points. This pleased Starwood account holders, as it respected the value of SPG Starpoints and made sure that the merger would work for both parties.
Upon closing, the plan was to eventually build a newer, stronger loyalty program that played to the strengths of each one. “Marriott will draw upon the very best each program offers and we can’t wait to show the loyal members of these programs the power and benefits of Marriott and Starwood coming together,” explains Executive Vice President and Global Chief Commercial Officer Stephanie Linnartz.
Recent News on the Starwood and Marriott Merger
The final version of the new loyalty program (with many, but not all of the details) was announced on Monday April 16, and although it will not go into effect until August, Marriott has revealed some of the things to expect when it does. First, the overall loyalty program merges benefits across Marriott Rewards, Starwood Preferred Guest, and Ritz-Carlton Rewards. Moving forward, all three loyalty programs will become one comprehensive loyalty program, where all points will be converted into Marriott Rewards Points. The original 3:1 SPG Starpoints to Marriott Rewards Points ratio will still apply, so all SPG Starpoints will be converted to Marriott Rewards Points using that conversion factor later in 2018.
However, the new loyalty program is still unnamed and will remain that way until 2019. Because of this, members will still be earning points under the old program names until then, even though the merge will begin in August. Non-elite members will enjoy an upgrade from the old Starwood system, earning 10 points per dollar spent at each brand apart from Residence Inn, TownPlace Suites, and Element which will earn 5 points per dollar spent.
Instead of maintaining elite status with each program, elite members will now enjoy one consolidated elite rewards system. When the merge is complete, the elite earning structure will contain five categories: Silver, Gold, Platinum, Platinum Premier, and Platinum Premier with Ambassador. The highest level is achieved after 100 booked nights; Platinum Premier with Ambassador members will earn 17.5 points per dollar spent. However, this will be the only elite tier with a spending requirement of $20,000 per year; an average of $200 per night. Additionally, the new elite benefit structure encourages members to earn Platinum status, since this unlocks all of the benefits apart from access to an Additional Choice Benefit, 48-hour Guarantee, Ambassador Service, or Your24 service.
Keep in mind that under the new points redemption structure, customers will enjoy the privilege of having no blackout dates. However, the new loyalty program will introduce a way for hotel brands to price-gouge (or, points-gouge) during peak seasons. For example, if a property is worth 25,000 points per night during “standard” season, it will be worth 20,000 points per night during the “off” season and 30,000 points per night during the “peak” season. Members should keep this in mind when deciding when and how to redeem points under this structure; however, this change will not take effect until February 1, 2019. Additionally, the category status of each hotel brand has not yet been announced, so this change may end up being beneficial to members rather than a devaluation. Marriott has announced that it will start categorizing brands beginning this June.
Marriott has also announced that the SPG airline transfer points program will remain in effect, and with the 3:1 points ratio discussed above, the transfer value of SPG Starpoints will not be affected. Additionally, ten more airlines are due to join the partnership and the efficiency of the program is projected to increase, decreasing processing time and encouraging customers to take advantage of transfer opportunities.
The merger will also expand Marriott’s credit card reach, including new cards coming from Chase and American Express. American Express, which was originally partnered with SPG, will offer a brand new Starwood Preferred Guest American Express Luxury Credit Card which will be accompanied by a myriad of great benefits. Also, new benefits are coming for SPG and SPG Business cardholders through American Express. Through Chase, the all-new Marriott Rewards Premier Plus Credit Card is set to launch on May 3rd, accompanied by an impressive 100,000 point sign-up bonus. Marriott Rewards Business and Ritz-Carlton Rewards cards will still exist under the new system, but the original Marriott Rewards Premier card will be phased out once the new one launches.
All things considered, the merger is turning out to be beneficial for both brands, upholding the value of Starwood rewards and remaining true to Marriott’s successful business model. Keep looking out for more updates as the merger continues towards completion.
