Marriott loyalty leans on resorts

Elegant Hotels (Elegant Hotels)

Marriott International described the launch of its all-inclusive resorts platform as a “milestone achievement” in 2019.

As part of the group’s full-year results presentation, president & CEO Arne Sorenson added that it was “far too soon” to predict what the impact of the coronavirus would be on the group’s performance in Italy.

Sorenson told analysts: “Italy will see cancellations and we will see declining revpar. It’s still too early to tell. I know that some of the Italian cities, we've probably lost a few tens of points of occupancy in the first days. But that's not the country as a whole and it's far too soon to come up with predictions.”

Sorenson said that the “milestone achievements” in 2019 included its all-inclusive platform “which was augmented by our recent acquisition of the Elegant Hotels Group in Barbados. These expanded offerings and programme enhancements provide meaningful value to our owners and guests help to drive loyalty engagement and provide additional ways for members to earn and redeem points”.

The company currently has 10 all-inclusive resorts with seven more projects in the pipeline.

The CEO said that the company had seen “very healthy increases in penetration outside the US” for its loyalty programme in full-service hotels and in resort destinations.

The programme had 141 million members at the end of January, which Sorenson described as a  “key competitive advantage”. Member share of occupied rooms was 52% in 2019, 58% in North  America, with, the CEO said, “solid growth from co-branded credit cards. More of our guests booked direct” with worldwide sales accounting for three quarters of room nights and direct digital bookings accounting for one third.

At the company’s security analysts meeting last year, Stephanie Linnartz, CCO said that in 2018, with the benefit of renegotiated terms with the group’s financial partners, credit card branding fees delivered $380m and in 2019 were expected to reach between $410m and $420m. She said: “Not only have these renegotiated terms delivered higher branding fees but they have significantly lowered credit card processing costs at our hotels, to the benefit of our owners.”

Marriott International made its move on Elegant in October last year, just over a month after the US group launched an all-inclusive platform, signing management contracts with hotel developers who planned to build five new all-inclusive resorts, expected to open between 2022 and 2025 in Mexico and the Dominican Republic.

The company said: “We see this as a global opportunity, however, and ultimately expect to have Marriott International-branded all-inclusive properties in popular leisure destinations all over the world.”

The company closed 2019 adding 10,000 rooms to its pipeline across 15 brands in the Caribbean and Latin America. Laurent de Kousemaeker, CDO, Marriott International, said: “We had a landmark year for hotel transactions in the Caribbean and Latin America in 2019, fuelled by the hotel development community’s demand for our leading business support and loyalty programme, our attractive brands and strong owner interest in our new all-inclusive brand extensions. With a growing pipeline of 146 hotels and resorts totalling over 24,000 rooms, we are poised for solid growth in this region, providing more opportunity to drive engagement with our loyalty members.”


Insight: Marriott International has, we understand, also signed on a resort property in Portugal, an indication that, largely untested it may be in terms of resorts, but that’s not going to stop owners from signing up and why wouldn’t it with all those loyalty members slavering away to redeem their points? The company has something to feed them and, as long as owners are careful to keep an eye on how the redemption plan affects them, everyone is a winner.

For the wider resort sector, it opens up prospects in terms of global operators coming into the space and providing potential exits for brands and resorts but also a spot of competition at a time when the  resorts sector is going through a period of change and reinvigoration thanks to brand such as Selina, which has introduced the idea of the work-life balance into the realm of cocktails and palm trees.

Nevius Glussi, director of development, LVMH Hotel Management, told the advisory board of the Resort & Residential Hospitality Forum: “The new trend is that you can no longer bully your customer into doing what you want.” As Marriott International has noted, the demands of the consumer are pushing the global majors into pastures new. Those with expertise can expect a knock.