It's no wonder Marriott International and it CEO Arne Sorenson used LinkedIn to get their message disseminated regarding the acquisition of Starwood Hotels & Resorts Worldwide. After all, Marriott claims that it's top priority in the deal are its associates—both Marriott and Starwood—and its guests—both Marriott and Starwood.
Sorenson's first LinkedIn blog post (on the day the deal was announced) explained the business reasoning behind the merger (we'll get to that). Yesterday, he addressed, in his words, "what the merger might mean for the people who work with us, stay with us and host us in their communities.
"Much of the reason we wanted to bring these companies together is that they have the most experienced, talented associates in the world," he further wrote. "We don’t know now exactly what a merged company will look like, and there will certainly be changes, but we do know that it will benefit from the respective talents of both teams."
When it comes to guests, it's the loyalty program that has first come under fire. Here and here. To wit, many SPG members are fearful that the level of attention they are accustomed to will disappear with the merger. Sorenson took to LinkedIn to allay their fears.
"While we will be spending a great deal of time in the coming months developing our strategy for SPG and Marriott Rewards, our members should take comfort in the fact that we know without a doubt these loyalty programs are the most powerful tool we have for developing strong relationships with our best customers. The SPG program was one of the most attractive aspects of our acquisition of Starwood. To state the obvious, devaluing points or member benefits is not the way to preserve and strengthen these programs, which is our aim."
The jury is still out on this one, but not until the deal closes next year will we actually know.
The day the deal was announced, Sorenson took to the Internet waves not to boast, but to inform.
"The reasons we took this leap," he wrote, "the largest in our company’s 88 years, are two-fold. First, we are confident we can create value for the shareholders of both companies. Second, we are convinced the greater size will help us stay competitive in a quickly-evolving marketplace.
"The hospitality industry today is filled with new and emerging options. Long gone are the days when a Marriott hotel competed against the Hilton hotel across the street. Product quality, great service and brands are still important aspects of our competitive landscape. In recent years, however, we have seen this landscape become more and more complex. With greater sophistication and greater access to information, travelers now have unlimited options, from luxury to economy hotels, from traditional to lifestyle, from well-defined to totally unpredictable."
Can we ascertain that fear—yes, fear—was a reason Marriott made this deal? Here's what Sorenson wrote next: "Even as the hotel industry itself has become more varied, the methods for planning and booking travel have also become varied—think not just TripAdvisor and Expedia, but Google and Alibaba, all provide services and seek to make a profit in our industry. Then, add home-sharing platforms like VRBO, Home Away and Airbnb. While each are very different from another, they look a bit like a combination of an intermediary and a traditional competitor."
Maybe. But this is Marriott we are talking about. A venerable hotel company with almost one million rooms itself before the Starwood deal. But in order to stay ahead of it all, the case is being made by Marriott that scale matters. That being larger is the way to ultimately win. Yes, being large may get you better rates with the OTAs, and give more options to travelers who may be inclined to go the home-sharing route, but it doesn't get rid of them as market-share eaters.
Hotel companies opened themselves up to OTAs post 9/11...and they aren't going away. Ever. That ship has sailed. Home-sharing sites like HomeAway and Airbnb? They are here to stay (no pun intended), too.
Both an example of what can be done with other people's stuff and a little marketing grease.
Next. "So what do we do?" Sorenson asks. "First, we want to expand our offerings to ensure we have the right product in the right place to serve our loyal guests and capture new ones. Second, we want to be big enough to be able to cost-effectively invest in marketing and technology to stay front and center for our guests. Third, we want to have the best loyalty programs in the business. This merger does all that."
That sounds like a plan to take on OTAs and home-sharing.
But, will its most important constituents buy in? And by that I mean the developers and investors who build Marriott and Starwood hotels. While customers matter (obviously), developers are Marriott's bread and butter. Without them, there is no unit growth. Without them, there is a plummeting stock price.
It will be up to Marriott to show the value of building or acquiring and converting hotels under Marriott's now 30 flags. Does an acquisition like this do that? Hopefully Arne Sorenson will blog about it.
*Hotel Management's editor-in-chief, David Eisen, will be speaking to Rick Hoffman, Marriott International's EVP of M&A and business development, later this afternoon regarding the Starwood merger. Make sure and check back for exclusive coverage.