Yesterday it was announced that Marriott will be taking over Starwood in a $12.2 billion deal which should close in mid-2016. This makes them the world’s largest hotel chain, with 5,500+ hotels in 100+ countries spread across 30 brands.
The announcement sort of came out of left field, as there had been a ton of speculation regarding a Starwood takeover, though up until now it had been centered around Wyndham, IHG, and Hyatt. The first public knowledge of Marriott possibly taking over Starwood was when the deal was announced.
As an SPG loyalist and newly minted Starwood Ambassador member, I’m sort of sad to see this merger:
- If there’s one thing we’ve learned from the US airlines over the past decade, it’s that consolidation isn’t a good thing, in particular for loyalty programs
- I love Starwood partly because they’re a smaller chain with unique properties, and I think that’s part of why they have such a rewarding program, since they don’t quite have the global coverage of Hilton, IHG, or Marriott
With that in mind, at this point all we can do is wait and see what happens. The good news is that nothing is changing overnight, given that the deal is only closing in mid-2016. I suspect both programs will continue to be run independently through at least all of 2016, and it’ll be the 2017 program year where we see major changes. We may see reciprocal benefits before that, but either way I suspect we have at least a year before major changes happen to either program.
I received an email from Starwood yesterday, which read in part as follows:
We will work to bring you the very best of SPG and Marriott Rewards®, two of the most rewarding loyalty programs in our industry. Our members are at the core of everything we do, and that will not change.
Today is the first day of a long journey as we combine our two companies. For now, we remain separate, and there is no change to your SPG program status, your Starpoints® or your existing reservations. You will continue to earn Starpoints and elite stay/night credit for your stays, as well as bonus Starpoints for any promotions in which you are participating. There is no change to how you manage your SPG account or book reservations.
I think the part of the email which stuck out most to me was this line:
Today is the first day of a long journey as we combine our two companies
No matter which US airline you’re loyal to, you’ve no doubt recently been through one of these “long journeys,” and I think we can all agree…
I’ve had just about all the “long journeys” I can handle!
Anyway, now that I’ve had a day to think about this takeover, I figured I’d share a few further thoughts I’ve had regarding different aspects of Marriott Rewards and Starwood Preferred Guest.
Admittedly everything is speculation at this point, though I’ll share my thoughts in the context of what we do know about the current programs:
What happens to Marriott & Starwood lifetime status?
Years ago I stopped caring about lifetime status. That’s because I quickly learned that lifetime status is based on the program’s lifetime as opposed to the member’s lifetime, and we’re certainly seeing lately that those can be two very different things.
The good news is that both Marriott and Starwood offer lifetime status.
Marriott’s current system works as follows:
- Lifetime Silver Elite: 250 nights and 1.2 million points
- Lifetime Gold Elite: 500 nights and 1.6 million points
- Lifetime Platinum Elite: 750 nights and 2 million points
Starwood’s current system works as follows:
- Lifetime Gold Status: 250 nights and 5 years of elite status
- Lifetime Platinum Status: 500 nights and 10 years of Platinum status
We don’t know what the new elite program will look like, let alone what the new lifetime status program will look like. Based purely on the numbers, it looks like lifetime Marriott Silver is most comparable to lifetime Starwood Gold, while lifetime Marriott Gold is most comparable to lifetime Starwood Platinum.
Which isn’t very good news for SPG members, since I think just about anyone would agree that SPG Gold is worth more than Marriott Silver, and SPG Platinum is worth more than Marriott Gold.
So we’ll see what elite tiers the new program has, and also what benefits they come with. If you’re a Marriott Rewards member I don’t think you have anything to worry about when it comes to lifetime status. Meanwhile with Starwood I’d be a bit more worried.
I’m a lifetime SPG Gold member and a few years from reaching lifetime Platinum status, so I’m rather bummed about that, because something tells me the threshold will be changing, or at least the benefits associated with the status will change.
Which card issuer wins the contract: American Express or Chase?
The huge implications of this takeover aren’t just limited to consumers. Credit card issuers have a lot at stake as well. Chase presently issues Marriott’s co-branded credit card, while American Express presently issues Starwood’s co-branded credit card.
So which will be the surviving issuer?
- History suggests that the larger loyalty program generally also has the surviving card issuer
- This would be a huge loss for American Express; Chase already issues cards for Hyatt, IHG, and Marriott, so it would be less of a loss for them, while Amex recently lost their Costco partnership, which hurt them immensely
- Hilton has cards issued by both American Express and Citi, so in theory I suppose they could co-issue cards, though at the same time I don’t see that as being especially likely
What happens to SPG Crossover Rewards & Uber partnerships?
SPG has some unique partnerships, including:
- Crossover Rewards with Delta SkyMiles
- Crossover Rewards with Emirates Skywards
- A partnership with Uber, whereby you can earn Starpoints for Uber rides
What’s the fate of these partnerships?
Marriott has a partnership with United, so I doubt they’d keep a partnership with both Delta and United.
I think which card issuer survives might indicate what happens here. Delta and Starwood are both with American Express, while Marriott and United are both with Chase. Which issuer issues the combined program’s card might also dictate which of those partnerships survives.
As far as the Uber partnership goes, hopefully that continues, at least in the short term. Only time will tell if it’s necessary in the long term. Consolidation translates to fewer member benefits (at least in the airline industry), so at some point they may decide it isn’t necessary anymore.
What about Starwood mileage transfers?
What makes SPG unique as a program is that you can convert Starpoints into airline miles efficiently, at a 1:1 ratio. Then for every 20,000 points you transfer you get a 5,000 point bonus, meaning each Starpoint can be worth 1.25 miles. That can be a great use of Starpoints, and really makes the points much more versatile. If Starwood devalues their own redemption rates, the option to transfer to dozens of airline programs is still there.
Meanwhile Marriott offers Hotel + Air Packages, whereby you can redeem points for a package including a set number of nights in a hotel plus a set number of airline miles. It’s also a great use of points.
However, I would assume only one of these offerings will survive — either the ability to transfer points to airlines at a lucrative ratio, or the ability to book these lucrative packages. Assuming the current Marriott “currency” survives, it goes without saying that 1:1 airline transfers won’t survive. We can just hope some other lucrative mileage transfer option continues to be available.
We have a long road ahead of us, and I’m certainly not excited about more consolidation in the travel industry. During a conference call Marriott’s CEO said they “will take the best of both of these programs and make sure that those bests are preserved and that the program is enhanced.” We can hope that’s true, but I’m pretty sure I’ve heard that with every merger, and it’s almost never true. 😉
Above are some of the topics I’m most curious about, and I’ll be waiting with baited breath to see what ends up happening.
In the meantime it’s “business as usual” for me, as I won’t be rushing to redeem Starpoints, etc. We have a good amount of time before anything drastic happens.
How do you feel about the potential for the above changes?