I woke up this morning to a shocking number. I’m still having trouble believing it. But, I’m getting a bit ahead of myself. Let’s set the table. You remember that Marriott and Starwood officially completed their merger last year, right?
Marriott is a much larger hotel chain than Starwood. They also have a loyal following from their elite members. To some degree, that loyalty reaches an irrational pace for some travelers, who believe that no other program holds a candle to Marriott Rewards. Marriott has a number of great hotels, and Marriott Rewards has a number of solid benefits to their loyalty program.
But, even through the lens of “different strokes for different folks”, I find it hard to argue that they are superior to every other loyalty program. Specifically, key benefits like guaranteed late checkout and suites for elite members didn’t even come into existence until the merger, and even then begrudgingly in fits and starts.
If the shocking number I heard this morning is true, it might explain a bit of the fanatical commitment some Marriott loyalists have. It started with a tweet this morning and has developed into a very informative article written by Wandering Aramean. Lots of good information here, but this is what I focused on:
In the early phases of processing it was expected that the new Marriott Rewards would have 85 million members based on a 16% overlap of customers between the two programs. He revealed in the presentation that the overlap was only 11%, suggesting a nice boost in total program size.
I just about fell off my chair when I read this. Even though Starwood Preferred Guest is a much smaller program, approximately 90% of Marriott Rewards members don’t even have a Starwood account, according to Thom Kozik.
Reading The Tea Leaves
11% overlap is a shocking number to me. For many years, I was an SPG loyalist, committing most of my business there. But, I always had occasional stays at Marriott, Hilton, etc. When confronted with the elite benefits of Hyatt, I became a convert and now focus more readily on their hotels. But, I still end up with stays at other chains.
Maybe it’s due to the smaller footprint of Hyatt and SPG, or a key promotion. Sometimes, like the Freddie Awards a couple of years ago, it was due to the host hotel being a Hilton.
I’ve stayed at my fair share of flea-bitten dog hotels in the name of status. Any self-respecting points junkie has. But, an 11% overlap only has two probable correlations I can see:
- Marriott Rewards members stay at sub-standard hotels frequently in the name of loyalty. They don’t pick the best property or location in a given market, they pick the Marriott property with the best location or attributes for their stays.
- Marriott Rewards members don’t bother registering for other hotel loyalty programs when they stay at a non-Marriott because they don’t see the value in any other hotel loyalty currency.
Neither is particularly noteworthy in small quantities. When you start talking tens of millions, it’s pretty darn noteworthy.
The Final Two Pennies
If #2 above is true, then it bodes well for Marriott’s strategy to de-emphasize points earning. I’ve heard Marriott members talk about some of the redemptions they make with their points, and I’m frequently shocked. Given the price of some hotels and how many points needed to redeem for a free night, I’ve seen some pretty bad redemptions. The transfers to airline miles can be pretty painful as well.
Maybe Marriott is on to something here. If they’ve really been able to train customers they shouldn’t be able to redeem their loyalty points for great value, that’s a big win for them. And, an indicator of whether Starwood Preferred Guest members will be happy with the future value of the points they’ll be earning for continued loyalty.
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