Destination & Tourism
The Marriott-Starwood Merger: What It Means To You
PHOTO: Marriott CEO Arne Sorenson, left, and Executive Chairman Bill Marriott in New York’s Times Square on the day the Starwood deal was finalized. (courtesy Marriott)
When the end result of an acquisition translates into one hotel company operating 5,700 properties and 1.1 million rooms in more than 110 countries, agents need to take notice. But how much will Marriott’s acquisition of Starwood – bringing 30 brands under one umbrella – affect agents who sell Marriott products?
“Marriott’s relationship with travel agents is as important as ever, and we want to make the merger as seamless as possible for all of our stakeholders – including agents,” says Brian King, global officer-digital, distribution, revenue management and global sales for Marriott. “As a combined company, Starwood and Marriott sales organizations will sell our respective legacy brands through the end of 2016. As such, the Starwood sales team will continue to manage their existing relationships with customers.”
Marriott now operates an amazing diversity of brands: luxury brands like The Ritz-Carlton, W and Edition; upscale properties like Westin, Renaissance and Autograph Collection; business lodging like Marriott Hotels and Sheraton; and trendy hotels like Moxy, AC Hotels and Aloft.
THE MARRIOTT-AGENT RELATIONSHIP
Agents are generally optimistic about the combined company. “A merger of this magnitude is bound to have an impact but it is still too early to know,” says Kimberly Wilson Wetty, co-president of Valerie Wilson Travel International in New York. “At this point, it is still business as usual for both Starwood and Marriott, and we have been told that for the short term they plan to keep sales programs, sales teams, etc.”
Brad Anderson, president of Avoya Travel, says, “I don’t anticipate any dilution of commissions or support. There is just too much competition in the market from other large hotel groups. It’s possible that other hotel groups will be more aggressive in courting customer and agent loyalty, as this merger is a big move and they might feel compelled to protect their market share. For example, one way they might try to shift share loyalty would be to arrange status matching via the customer’s travel agent.”
Maureen O’Hanlon, a partner with The Prism Partnership, a consulting firm, says, “Both chains have focused on travel agents and have had training and incentive programs which were of benefit to agencies. How they combine the best of each program could be a positive for the agency community.”
Although there have been tensions between Marriott and travel agents because of the company’s direct-booking initiatives, a positive sign was that Arne Sorenson, Marriott’s CEO, spoke at the ASTA Global Convention in Lake Tahoe in late September, just days after the deal was completed. In an interview at the conference, Sorenson said, “Search engines can put themselves in the middle of every relationship we’ve got. We thought the only way we could cut through the clutter is not that you get the same rate, but that you get a better rate. So customers know it’s in their interest not to go through those online booking channels.”
Commenting on the differences between traditional agents and online travel agencies (OTAs), Sorenson noted that Marriott’s relationship with traditional travel advisors is “just as relevant” as in the past. “Agents provide value,” he said. “They help manage corporate programs or put together that special vacation, while online players sometimes deliver value and sometimes don’t, and can be translated into a threat when they start taking business from Marriott’s existing customers.”
Bill Watson, a partner with The Prism Partnership, says, “If the merged entity can shift share away from the OTAs, which is one of the primary reasons for the merger, then the quest to eliminate those ultra-high OTA commissions could also slop over into affecting the retail agency world as guests see better deals for booking direct, so it will be a fine line for the chain to walk, balancing between nurturing the retail community, who are key within the managed travel sector, and pushing the OTAs back.“
Some have expressed concern that travel agent-hotel sales team relationships will be affected as smaller producers slip through the cracks working with a mega-company. Watson says agents should expect “teething problems” within the sales and marketing organizations that deal with the agency community as the two organizations merge.
And Wilson Wetty agrees, saying, “The agency community has very strong relationships with corporate executives and sales managers at both brands, and it will be sad to see good people lose their jobs, which I believe is inevitable.”
Marriott has made moves to reassure agents on the luxury side where agent business represents the highest percentage. Ritz-Carlton management sent a letter to members of its Inner Circle group of travel advisors, saying, “There has been no change in our sales team and we are still dedicated to our existing customers and hotel brands. The same is true from the Starwood side for the immediate future.”
Wilson Wetty notes that mergers “typically create change.” She encourages travel advisors to be open-minded to what the new relationship could mean and adapt as needed. “I hope Marriott-Starwood won’t lose sight of the critical value of the travel agency community as a beneficial channel as the merger details play out,” she says.
And Anderson says, “For now, agents are going to have to be patient and keep good relationships with all the large hotel groups. That will be in the customer’s best interest and when that is served well, everyone wins. Times of change are times of opportunity. The merger between two quality hotel groups should open up more opportunities if agents are willing to think and act differently than before.”
Noting that Marriott was named Hotelier of the Year at the ASTA Global Convention, Marriott’s King says, “There will be changes ahead. Marriott and Starwood have begun the work of assessing organizational and account management strategies that work best for our customers and guests going forward. As we go through the process of looking at our organizational structure, we plan to engage in a dialogue with the travel agent community so we understand agents’ concerns.”
What Price Loyalty?
Marriott CEO Arne Sorenson has said that a combined loyalty program was a crucial reason why Marriott pursued Starwood, calling Marriott Rewards “the principal tool we use to have direct relationships with our customers” and noting the “resonance that SPG [Starwood Preferred Guest] has with members.”
Brian King, Marriott’s global officer-digital, distribution, revenue management and global sales, says the two programs would be operated separately “for now,” though they were linked as soon as the deal was completed. He said the company is ready to assist travel agents with all SPG, SPG Pro, SPG Business, and Luxury Privileges needs. SPG Pro members will continue to earn Starpoints for any Starwood bookings, and be able to redeem their rewards for either Starwood or Marriott hotels.
Mark Haley of The Prism Partnership, says both chains have focused on agents and believes the merger “will ultimately be good for hotel guests as the pool of properties to earn and burn points is now much larger than before.”
However, Haley adds that many SPG elite members are truly passionate about “their” program, and are concerned that Marriott will make SPG “just another pickle in the barrel.” He adds, “Marriott is going to take their time about combining the programs and wants to make sure they get it right.”
Brad Anderson, president of Avoya Travel, says, “As an SPG Platinum member, when I linked my accounts together, I was made a Marriott Rewards Platinum member. It was a very easy process and I am excited to have access to the Marriott Rewards hotel brands. From a customer perspective, this opens up more benefits and more hotel options. I would like to think that as customer-friendly as both Marriott and Starwood have been over the years, they will incorporate the best of both programs when the two are combined, as eliminating benefits from either program could potentially upset their most valuable customers. There is a lot of competition from other hotel groups who could be the beneficiary if reward benefits are reduced.”
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A version of this article appears in print in the November 2016 issue of Vacation Agent Magazine.
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