Anbang Withdraws Without Explanation, Leaves Marriott As The Victor In The Starwood Soap Opera

In a bit of a surprise move, Anbang pulled out of the bidding for Starwood Hotels, even though it had offered what seemed to be the superior bid.  The Wall Street Journal was one of the first to report this yesterday:

Anbang Insurance Group Co. walked away from its $14 billion bid to buy Starwood Hotels & Resorts Worldwide Inc., a surprise move that caps off a three-week bidding war with Marriott International Inc.and could put a dent in a recent surge in overseas deal-making by Chinese companies.

Anbang and its partners—private-equity firms J.C. Flowers & Co. and Primavera Capital Group—said in a statement late Thursday that they decided to abandon their Starwood bid “due to various market considerations.” They didn’t elaborate in the statement, which confirmed an earlier report by The Wall Street Journal.

The next line of the article is, ahem, well-put:

The abrupt withdrawal appears to end a topsy-turvy bidding war that highlights both the newfound muscle of Chinese companies in the high-stakes global business of mergers and acquisitions, and questions surrounding their ability to close such deals.

Yes, it would appear that the saga for Starwood is over.  It was a bit of a roller-coaster for sure since Starwood put themselves up for sale last year.  The back and forth between Marriott and Anbang was interesting to watch, and I suspect we’ll never know the true reason why Anbang bowed out.  Maybe the Chinese government wasn’t willing to give them permission to purchase SPG, though I don’t think Anbang would have gone as far as they did without at least tacit approval of the Chinese government.  In the end, after crazy PR statements, public posturing and uncertainty for the employees and frequent travelers of SPG, Marriott is left as the last man standing.

I noted recently that in the case of Marriott versus Anbang, the devil we know may actually be better than the devil we don’t.  Anbang has very little presence in the hotel business, and certainly nothing at this scale.  Predicting how they would run Starwood is like trying to read the license plate of a car while looking out a plane window at 30,000 feet.

Where Does That Leave Frequent Travelers?

We know what to expect from Marriott.  For starters, SPG members should understand that Marriott has a completely different understanding of loyalty than Marriott.  At its core, it seems Marriott believes that customers are loyalty because they offer a good, consistent hotel product.  Not necessarily because they offer points, amenities or other elite benefits.

I’ve often marveled at how passionate so many Marriott members are, even in the face of national evidence they could be treated better by other loyalty programs.  Call it a version of Stockholm syndrome, where the prisoner just moves from bland, cookie-cutter hotel to bland, cookie-cutter hotel in a different city.

Contrary to other bloggers in the frequent travel space, I’ve often shied away from the “earn and burn” strategy as a way to avoid your points or miles being worth less later on.  I think there’s nothing wrong losing a bit of value in the long run if it ultimately means you can redeem for the trips you want.

I just can’t advocate a strategy of holding onto Starpoints here.  We don’t know exactly what will happen when the two programs merge.  We know it will be a while.  It could ultimately be 2018 before members are forced to convert Starpoints to Marriott Rewards points.

But, I can assure you that your Starpoints will not get more valuable after the merger.  You’ll have more places to redeem them, for sure.  It’s just a question of how much more valuable that is to SPG members.  I’ve often said that Marriott having 3 properties in Williamsburg, VA doesn’t make them 3 times better than SPG.  Sure, it’s great to have options to spend points in a tertiary market like Williamsburg.  But, quantity often doesn’t beat out quality.

I suspect we’ve reached the end of the road on new information for a while.  2016 will be business as usual for both programs, though we may see some bridges between the two start to appear later this year.

For now, the best thing to do is figure out where to spend your Starpoints.

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