New Marriott Program

Discussion in 'General Discussion | Travel' started by KENNECTED, Apr 19, 2018.

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Based on the information provided, at this point, the New Marriott Program is:

  1. Better

  2. No difference ❓

  3. Worse

Results are only viewable after voting.
  1. KENNECTED
    Original Member

    KENNECTED Silver Member

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    Now that Marriott has given us details on the "new" program. Based on what we know at this point:

    Do you think the new program is competitive?
    Do you think the new combined company offers a better product than the two single company's?
    Do you think the new combined company decreased competition?
    Do you think the new combined company will cause rates to increase within it's brands?
     
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  2. Counsellor
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    Counsellor Gold Member

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    On the whole, for me I think it will be better since I'll be converted from Lifetime Platinum to Lifetime Platinum Premier (a special status that it seems cannot be "earned", only converted to), with many if not all of the benefits of the Rewards LT Platinum and the Starwood LT Platinum.

    Some others may find it more difficult to earn Lifetime Silver, Gold, or Platinum status because of the requirement for duration (number of years) at the target level or higher.

    There are some peculiarities in the new program that are less favorable than the old Marriott or Starwood programs, e.g., currently Starwoods can earn qualifying nights at up to three rooms per stay, while the new program adopts the Marriott rule of only getting night credit for the room you personally use).

    One thing I have not been able to find out is whether the new program will offer the very popular Marriott "nights plus miles" redemption package (Travel Package). Does anyone know?
     
    Last edited: Apr 19, 2018
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  3. SPG Champion
    Original Member

    SPG Champion Official Representative

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    Travel Packages will continue to exist as they do today. We do have plans to announce new Travel Packages, coming summer 2018. Stay tuned for more information!

    Best regards,

    William R. Sanders
    Social Media Specialist
    Starwood Hotels & Resorts LLC

    spgchampion@starwoodhotels.com
     
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  4. Counsellor
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    Counsellor Gold Member

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    Thank you William. It's a pleasure chatting with you again.

    If there is consideration being given to adding new travel packages, may I request Marriott consider bringing back a new version of an old package? I forget the name given to it -- it might have been something like "European Sampler" -- but the hotel part of the package consisted of 7 nights at European hotels, in certificates for 2, 2, and 3 nights. One could redeem them all at one property, or could use them at two or thee different properties.

    They were really handy for vacations; we used one such package to spend two nights in Prague, two nights in Vienna, and three nights in BudaPest. Wonderful!

    As I recall, I think there was a similar package for hotels in Hawaii.
     
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  5. NYCUA1K

    NYCUA1K Gold Member

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    Smart move on Marriott’s part that will force members to choose between redeeming their points for suddenly more affordable award stays (at least for SPG loyalists) or converting their ‘new’ MR points to 1/3 as many in starpoints to transfer to airline miles. In addition, they have made it such that to earn the most points on the two new co-brand cards, one would have to use them to pay for revenue stays. Both moves are designed to incentivize members to keep their business within Marriott (i.e., to earn and redeem points at MR properties), rather than to repeat SPG’s mistake of incentivizing members to earn starpoints wherever they could and then transfer them to airline miles, essentially turning a hotel points currency into an airline points currency (i.e., miles).
     
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  6. Counsellor
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    Counsellor Gold Member

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    With all due respect, I'm not so sure Starwood's business model was a "mistake".

    By making Starpoints an airline miles "stem cell" (convertable to miles in many airline programs) Starwood made them more flexible and therefore more desirable not just to their customers (thereby encouraging travelers to stay at SPG properties to accumulate Starpoints) but also to other vendors (like AMEX) who bought Starpoints from SPG to give to their clientele.

    And look at what they were "selling" those airline miles for. At the conversion rate of 1.25 airline miles per Starpoint, the miles "cost" the consumer 0.8 Starpoints. If (like me) you value a Starpoint at about 3 cents (because that's the lowest value I redeem them for), that means SPG was selling the airline miles for about 2.4 cents apiece. I'm sure SPG had a deal with the airline to bulk buy the miles at much less than that, so each conversion earned Starwood a tidy profit on each Starpoint.

    Now, would Starwood have made a larger profit if that Starpoint had been redeemed for lodging at an SPG property? Of course. But would they have issued as many Starpoints if they weren't capable of being easily converted into miles in so many programs? I think not. I would say the convertibility aspect would make the Starpoints more sought-after, and thus brought them more customers, both wholesale and retail.

    But even if I'm wrong, remember that SPG is making a profit on each Starpoint converted to airline miles, and even the smaller profits add up. Making it on volume is a viable business model, too.

    All in all, I don't think Starwood lost any money because of making the points convertible, and almost certainly gained a profit.
     
    Last edited: Apr 22, 2018
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  7. oluthomp

    oluthomp Silver Member

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    I am a silver elite in Marriott and a preferred member guest in SPG, with just some few points to becoming Gold in Marriott. When the new program occurs in August will the consolidation automatically bring me to the Gold level or not?
     
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  8. NYCUA1K

    NYCUA1K Gold Member

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    It made "the Starpoints more sought-after", alright, but that did not bring in more customers to its core business, which was to put heads -- lots of them -- on beds. Points that were transferred to airlines made it possible for Starwood to claim as revenue the cash equivalent of the points that they awarded as part of, say, a sale but could not claim as revenue until the points were redeemed, transferred, forfeited, expired ("breakage"). However, that is the same problem that every company that runs a loyalty program has. It is called "points liability." Every company wants to decrease it. So, the transfer of starpoints was not a new revenue stream for Starwood. It was money they already made but needed to claim.

    More to the point is that by making the transfer of starpoints to airline miles favorable, Starwood took business away from its core business and sent it to airlines in ways that you did not mention and, thus, might not have thought about. The starpoint's claim to fame became its "transferability" to airline miles and not for redeeming award stays at Starwood properties, which had, by far, the most expensive awards, especially at their 'aspirational' top-tier properties. Many felt that redeeming starpoints for award stays was "wasteful." A double whammy that led to people simply getting the SPG AMEX cards and earning loads of starpoints through general spend on them without ever setting foot inside Starwood hotels, which were thus deprived of revenue from both paid stays and reimbursement for award stays. Decreased hotel occupancy, decreased revenue. The model was utterly flawed, and likely contributed to Starwood's demise. Marriott, to their credit, saw that the model was boneheaded and decided to effectively cripple it by limiting the the number of starpoints that can be earned through unbonused co-branded CC spend to 0.67 of a point per dollar (from 1point/$).

    I predict that after all the points that AMEX and other companies had purchased but have not yet awarded are exhausted, Marriott will discontinue the starpoint altogether.
     
    Last edited: Apr 22, 2018
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  9. NYCUA1K

    NYCUA1K Gold Member

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    If I were you, I would hurry up and make Marriott Gold Elite because that would ensure that you would be converted to Platinum Elite, which will effectively become in the new program what MR Gold Elite is currently.

    If you are a SPG Gold when the merged program starts in August, you'll be a 'new' Gold Elite, which will be nearly as useless as the current SPG Gold elite (no free breakfast or lounge access, which the new Platinum Elites will have). It is unlikely that you'd be comped the new Platinum status if you do not make it to MR Gold Elite by August because there are simply too many elites in the combined program.
     
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  10. Counsellor
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    Counsellor Gold Member

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    You seem to overlook the point that by making Starpoints more desirable, Starwood was able to sell more Starpoints to folks like AMEX, and even if all the additional Starpoints sold were converted to airline miles, Starwood still made a profit on each additional Starpoint.

    Sure, it would be more profitable per Starpoint if each Starpoint were limited to use toward a hotel night, but that would make them less desirable and therefore Starwood would sell fewer of them to vendors like AMEX.

    And don't overlook the plus factor -- by giving Starpoints instead of (for example) Marriott Rewards points, Starwood would become more desirable to a traveler who wants to collect Starpoints to convert them into miles, and would encourage him/her to give his hotel business to Starwood, thus resulting in more paid occupancy and thus more revenue.

    All in all, clearly a net positive for Starwood's bottom line.

    Edited to add: You also hypothesize that the convertability will be discontinued after the merger, but on the contrary Marriott's new program will continue it -- applying it also to Marriott Rewards points earned in the past or in the future. Seems as though their beancounters don't agree that it's a losing proposition.
     
    Last edited: Apr 24, 2018
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  11. NYCUA1K

    NYCUA1K Gold Member

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    I did not overlook any point. I squarely addressed it. Points sold to AMEX were not a new revenue stream, as I described, nor was selling points Starwood's core business. Other programs also sell their loyalty points but wisely because the purpose for having a loyalty program is to use it as a marketing tool, and not as a direct source of revenue. Making starpoints more desirable led to the downside that you overlooked and still do: people were simply getting the SPG AMEX cards and earning loads of starpoints on them through general spend without ever setting foot inside Starwood hotels, which were thus deprived of revenue from both paid stays and reimbursement for award stays. As the chart here showed, Starwood awards were the most expensive in the business, so few who used their points to fly ended up in Starwood hotels. Also, their hotels tended to be more expensive in cash; why would anyone want to go there when the point is to save money?
     
    Last edited: Apr 25, 2018
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  12. mattsteg
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    mattsteg Gold Member

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    Meh.
    By making their points very desirable and driving a lot of point-generation through credit card usage, SPG managed to keep their COSTS under control while offering industry-leading in-hotel benefits to elite members. This allowed them to foster a fiercely-loyal and high-spend customer base even with a smaller footprint.

    The new program is competitive. The new product has pluses and minuses. I'd say it is worse, but the (at least for now) availability of top hotels at palatable rates is a big improvement. in hotel recognition will likely get worse due to program scale. How much worse depends on how much Marriott values SPG customers vs. legacy marriott customers, and how much each group shifts in their preference for earn/burn, elite recognition, and property quality.

    I doubt rates will be affected much - rather costs to hotels and distribution costs are where then changes will occur.
     
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  13. NYCUA1K

    NYCUA1K Gold Member

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    Except that the purportedly cost-efficient company and program that offered so-called and self-proclaimed "industry-leading in-hotel benefits" went belly-up!

    It seems to me that you believe in reverse Darwinism or Demise of the Strongest. Well, I don't. Starwood folded and put itself up on the auction block at a time when there were tremendous growth and record profits in the industry because the whole enterprise, especially its loyalty program, was based on a flawed model.

    Among its flaws were the reasons I already gave above, which related to how SPG turned the starpoint into an airline points currency. Part of the members' purportedly "fierce loyalty" was to the starpoint, which could be earned on CC spend and exchanged for free plane tickets, rather than from patronizing SPG and earning starpoints through revenue stays and redeeming them for award stays at 'aspirational' Starwood properties, which were almost an order of magnitude more expensive than the competition. The combination was thoroughly and absolutely boneheaded because it was designed to dis-incentivize members from becoming part of the company's core business. Here's the demise of Starwood in one chart:

    [​IMG]

    The other flaw of the program was that the fierce loyalty that SPG supposedly inspired led to a cadre of elite members that felt "entitled" to perks, some of which they simply made up and decided that hotels owed them, and will have a hard time under the no-nonsense Marriott regime, which began setting things right from the outset for the merged programs by doing exactly what Starwood should have done: pull the plug on any earning of significant numbers of starpoints that was not related to its core business of putting lots heads on beds.
     
    Last edited: Apr 27, 2018
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  14. mattsteg
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    mattsteg Gold Member

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  15. NYCUA1K

    NYCUA1K Gold Member

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    The reason Starwood found itself on the auction block was clearly documented by none other than the Wall Street Journal. At a time when every other hospitality company was thriving and growing, the company with a points currency that was "very desirable and driving a lot of point-generation through credit card usage" and "managed to keep their COSTS under control while offering industry-leading in-hotel benefits to elite members" was actually under-performing and about to go on the auction block because its growth got anemic, revenue fell, stockholders bitched, a CEO got canned, his replacement immediately bailed out to go run an entertainment company, and the rest is history. Slow growth was part of it, but falling profits when competitors were posting record profits was the biggest part because it also impeded growth. The reasons are not mutually exclusive.

    Well, you do not have to take my word for it. Here are excerpts from how the WSJ reported it at the time (sub. req.):
    _______________________
    Starwood Hotels CEO Frits van Paasschen Resigns

    By Craig Karmin and Joann S. Lublin
    Updated Feb. 17, 2015 6:19 p.m. ET

    Chief Executive Frits van Paasschen faced pressure to increase the number of hotels in Starwood’s system.
    ....
    His sudden exit shows how hotel companies have little tolerance for mixed results at a time when the industry is booming, rising group and leisure travel are lifting revenue-per-available room to new highs, and hotels are fetching record sales prices.
    ....
    Starwood’s stock returned 10% over the past 12 months, including dividends, lagging behind the 30% or more enjoyed by rivals like Marriott and Hilton.
    .....
    Some analysts also suggested the board was unhappy with the number of hotel owners that have dropped a Starwood brand recently. In 2014, Starwood added 74 hotels and 15,000 rooms to its system, but it also lost 28 hotels and 7,000 rooms during the year.
    ....
    Last year, Thayer Lodging Group said that Westin Diplomat Resort & Spa, with 998 rooms in Hollywood, Fla., would leave the Starwood brand and become affiliated with Hilton.
    “We were convinced that Hilton would be more effective at driving convention and group business to that hotel,” says Leland Pillsbury, Thayer’s CEO.

    _________________________

    That is why Starwood went up on the auction block. It was under-performing across the board when the competition was thriving. Therefore, Marriott has been wise to cripple the earning of starpoints and the SPG model that encouraged the earning of points through CC spend and point redemptions that were not associated with hotel stays. Marriott knows that it is first and foremost a hospitality company, whose bottom line depends on, yes, putting heads on beds and not butts on premium airline seats!

    Lastly, I'd predicted that Marriott would get rid of the starpoint altogether. What I did not expect was for it to happen swiftly. Well, this week I got a letter dated April 17 from AMEX informing me about "important changes" to my SPG Credit Card from American Express, and there was this line:

    "Beginning at the time of program change [August 1, '18], Starpoints will be referred to as points."

    The demise of Starwood and SPG is complete.
     
    Last edited: Apr 27, 2018
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  16. mattsteg
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    mattsteg Gold Member

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    Are you tgat dense?

    Your excerpts point to the exact issue I had mentioned - inability to grow fast enough to meet market demands. You can only build and reflag so fast, especially without many cheap brands.

    That's a structural issue with building a hotel group dominated by full service and luxury properties, not a loyalty program one.
     
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  17. Counsellor
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    Counsellor Gold Member

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    If the "flaw" causing SPG loss of revenue or of hotel patronage (if that indeed happened) was, as you suggest, the convertibility of Starpoints to airline miles at favorable rates, Marriott has deliberately exposed itself to that same "flaw" by incorporating it into the new program -- and exacerbated the "problem" by applying the convertibility at the favorable rate even to the "old" Marriott Rewards points being carried over to the new program.

    To recap, the Starpoints convertibility you seem troubled by offered to exchange 20,000 Starpoints for 25,000 airline miles.

    As I mentioned earlier, the "new" MR program continues the same convertibility model -- they converted Starppoints to MR points at a rate of 3 MR points for one Starpoint. They then offer to exchange MR points to airline miles at a 3 for 1 rate, but if you exchange in amounts of 60,000 MR points (i.e., what 20,000 Starpoints became) they will "give" you an additional 15,000 MR points so that you're exchanging 75,000 MR points for 25,000 airline miles.

    So, you're still getting 25K airline miles for the MR equivalent of 20K Starpoints.

    And, more importantly, you can exchange MR points you already have in your account, and any new ones you earn, at the same rate! If the poison was bad for Starpoints, it now infects all MR points as well! Shall we expect Marriott to see the "loss of revenue and of heads in beds" you seem to have seen with SPG?

    I will agree that Marriott has not been as generous as SPG going forward, though. Instead of giving the equivalent of one Starpoint (3 MR points) per dollar charged to the credit card for non-Marriott spend, they will give only two MR points. This does reduce the value to the customer of the AMEX card, and it may be a ploy to drive that card out of the market.
     
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  18. NYCUA1K

    NYCUA1K Gold Member

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    If you want to launch insults, then make sure you are not simply "projecting" and the insults actually apply to you.

    Check this out. "Slow growth was part of it, but falling profits when competitors were posting record profits was the biggest part because it also impeded growth."

    See it right there in very simple English that I did acknowledge that slow growth was part of it? The question for you is why the slow growth when everyone else was thriving?

    Also the WSJ article debunked this other bogus claim that you made: "Starwood Hotels was [sic] consistently more profitable than Marriott..." Total bunk.

    I remember you from the past and had even blocked you for a time. Either stick to the issues or go away and insult someone your "size".

    G'day.
     
    Last edited: Apr 28, 2018
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  19. NYCUA1K

    NYCUA1K Gold Member

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    The structure of transferring starpoints to miles has not changed. Marriott has simply crippled the value of their transferability by limiting how many can be earned on general spend. To earn significant numbers of starpoints (to be referred to simply as "points" after August 1), one has to do revenue stays at Marriott properties for 2x/$, or buy airline tickets or dine for 1x/$; spend on everything else will earn just 0.67x/$ and that's the killer. At the same time, Marriott has made the redemption of points for award stays more affordable than were SPG awards. Therefore, members have been forced to make a choice between transferring "points" earned mostly through hotel stays to miles or booking award stays at suddenly affordable 'aspirational' properties.

    For those who play the game with a "full deck", the choice is a no-brainer...and Marriott wins by keeping most of the point activities tied to the company's core business...

    G'day.
     
    Last edited: Apr 27, 2018
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  20. Kalboz
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    Kalboz Gold Member

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    How can members find out how many lifetime SPG points they have earned? And what's the conversion rate of these SPG LT points to the combines lifetime calculator after august 1st?

    Tried to find out on the SPG website to no avail.

    Thank you!
     
  21. SPG Champion
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    SPG Champion Official Representative

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    SPG did not rely on this information for earning any level of lifetime status, so my best guess at the moment is that it is not retrievable and may be irrelevant.

    Isn't this available here: https://members.marriott.com/faq/#h...member-what-happens-to-my-existing-starpoints

    "In August, Starpoints® will become points and your balance will be multiplied by three during a one-time conversion..."

    Best regards,

    William R. Sanders
    Social Media Specialist
    Starwood Hotels & Resorts LLC

    spgchampion@starwoodhotels.com
     
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  22. JoyfulTraveler

    JoyfulTraveler Silver Member

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    From a personal point of view, the combined program is a big plus for me. As a lifetime Marriott Platinum this means I have that status with both hotel groups for life. In the past, I would stay at a few Starwood properties each year. However, I was only lifetime Gold with Starwood. Now I will look not only at a high-end Marriott, J. W., Autograph Collection, etc but will now consider Westin, W, Luxury Collection etc. So many more choices.
     

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