Before the ink was dry on Marriott International's acquisition of Starwood Hotels and Resorts, there was one cardinal question on everyone's mind: How will it impact each company’s loyalty program?
We now have an answer—and depending on who you ask, it's either good or bad.
Two years since the merger, Marriott is set to introduce one set of unified benefits across the Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest programs that the company expects to help members earn points faster than before.
Beginning in August, members will be able to combine their individual accounts into a single account covering the portfolio. The Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest names will remain under the new set of unified benefits until a new program name is introduced in 2019.
David Flueck, Marriott's SVP of global loyalty, has the responsibility of ensuring a smooth rewards program transition. It's his job—his undertaking—to assure SPG members are happy now falling under the Marriott banner; it's no easy task. He said the new program will be “richer” for members, allowing them to get 20 percent more points per dollar spent than they earned under the former program. The focus, he said, would be to combine the “earning and redemption power” of Marriott Rewards with the elite benefits of SPG. “Members will be able to achieve elite status faster and enjoy the best benefits under the new tier structure,” he said. Marriott will continue to recognize SPG members who achieved Lifetime status.
Marriott, with its acquisition of Starwood, has more than 1 million rooms worldwide. This breadth of hotels—spread across 30 brands—means more product in more places, making it more possible for rewards members to find a hotel in a destination they are looking to go.
"Everyone loves travel loyalty programs to earn points for experiences, but it has always required a tradeoff—to get the most out of a loyalty program, members often need to choose between the place you want to visit, and the place you want to stay—but no more."
Julian Kheel is a senior editor at The Points Guy, a go-to resource for travel advice with a focus on loyalty programs. It's his job to size up loyalty programs and inform the public about their efficacy and overall value. His opinion of the new program is mixed.
The good: Some of the most popular and key features from earlier programs will be incorporated into the new one, he said. For example, SPG members have traditionally been able to transfer their membership points to airline partners. “That feature of the program, which many didn't expect to survive, not only is in the new program but has been expanded to even more airlines,” he said.
It's concern over SPG credit cards that gives him pause.
Branded credit cards go a long way toward earning points for members, and as part of the unification, members can sign up for new JPMorgan Chase Marriott Rewards cards and American Express SPG cards. (They can also keep their current cards for the time being.) Under the new program, members will automatically achieve elite status, while “significantly accelerating” the points they can earn, Flueck said.
But Kheel cautioned that current SPG members may not be thrilled with their new cards. “SPG cardholders have been used to earning one point per dollar on all of their purchases,” he explained. The new program will now give them two points per dollar on all their purchases, which sounds better, he acknowledged, but because SPG members will see their existing points balance triple, the old SPG points are actually worth three times as much as the points in the new program. “Effectively, the old cards were earning three points of the new program currency because it's a three-to-one ratio on the old cards, while the new cards will only be earning two points in the new program,” he said. “So even though on paper it looks like an increase in the number of points you'll be earning with the SPG credit cards, it's actually a 33-percent reduction. On paper, the number goes up, but the value of those points actually is going down.”
This, Kheel added, is the one element of the new program that has received negative feedback from The Points Guy readers. “I think there will be some members who routinely used an SPG card as their primary credit card who will be looking for other options once that switch happens in August,” he predicted.
With travelers prioritizing bragging-rights experiences, Marriott is also expanding its experiential “Moments” program. The new experiences included in Moments can be purchased with cash and do not require a hotel reservation, and members of all three loyalty programs will earn points when they purchase one of the new experiences. There are more than 110,000 of these experiences in 1,000 destinations. They include tours and activities to exclusive member-only experiences, such as live private concerts and VIP access to sporting events and music festivals.
Kheel acknowledges that travelers are keen to use points for things other than hotels and air, but thinks the new Moments program doesn't have the punch as the old one. “People certainly are interested in redeeming their points and miles for options aside from just hotel stays or airline flights, and travel companies have been attempting to provide more options on that front,” he said. “The new Moments program that Marriott is launching is actually separate from the old Moments program that they previously had for the separate Marriott and SPG brands. And the experiences in those old programs are really more interesting than the new one. That's because the old program experiences are very exclusive-style events, such as the opportunity to throw out the first pitch at Major League Baseball games or box seats at the U.S. Open. That's the sort of experiences that we think consumers really want access to when it comes to using their points and miles.”
The Future of Branded Loyalty
With more travel-related loyalty programs than ever before, getting and keeping members will become a priority and with mergers and acquisitions narrowing the available options, it becomes that more important. Wyndham, for example, is looking to attract members by simplifying its structure into a single earnings level for all hotels across its portfolio. Kheel doesn’t expect Marriott to follow suit—exactly.
“They still have eight award tiers encompassing their various levels of properties,” he said of the updated program. “However, that is certainly simplified from some of the previous award charts at the three [individual] programs, which in some cases were larger.” This is a move towards simplification, said Kheel, and while travelers may like an easy-to-follow system for earning points, simplified programs offer fewer opportunities for travelers to get “maximum value” for their dollar. “There’s certainly a give-and-take on that front.”
Marriott will put out a new name for the new program in early 2019, Kheel noted. "So at that point, we can expect that the old SPG and Ritz-Carlton loyalty brands will fade away."
Travel loyalty programs, said Kheel, have never been more popular than they are today. “People really are interested in getting rewarded for their hotel stays and their airline flights, and we don't see that decreasing anytime soon,” he said.
While mergers do complicate the picture, he acknowledged, most combined programs have been put together in a way that attempts to retain customers rather than trying to do away with the program. “Travel companies definitely see the value in these loyalty programs—some more than others, of course—so we certainly think there's a bright continuing future when it comes to travel loyalty programs," Kheel said.