For Marriott's Hotel Rewards Members, Wait Is Finally Over

(Bloomberg) -- The biggest question for hotel guests has finally been answered.

Ever since Marriott International Inc. acquired Starwood Hotels & Resorts Worldwide Inc. a year and a half ago, members of the two companies' rewards programs have wondered how long it would take for the plans to be combined -- and what perks they'd lose in the bargain. The wait ended on Monday, when Marriott announced its new, integrated loyalty program, unveiling a benefits package that allows customers to keep lifetime status earned under the old programs, and increases the rate at which they earn points through hotel stays by an average of 20 percent.

Members had “a lot of anxiety around what's going to happen when you merge the programs,” David Flueck, Marriott's senior vice president in charge of loyalty, said in an interview. “What will be welcome news, and almost surprising, is that we didn't use this as a time to make the programs less rich -- we're actually investing more in our members.”

Marriott's takeover of Starwood created the world's biggest hotel company, with 30 brands and more than 1.2 million rooms, and the company's loyalty program serves as the glue that holds the sprawling empire together. More than half of Marriott's room revenue comes from loyalty members, most of whom book stays directly instead of through online travel agencies such as Expedia and Priceline. On a recent earnings call, Marriott Chief Executive Officer Arne Sorenson called the loyalty program “the name of the game for the future.”

Hotel owners pay Marriott for points awarded through stays, so increasing member benefits theoretically could raise their expenses. Flueck said the company reduced the cost to landlords by 15 percent, sharing proceeds from the newly negotiated credit-card deals with the banks.

While the changes start in August, some of the program's features either haven't been announced or won't roll out until next year, including a plan to charge more points for free nights during peak travel seasons. Marriott has yet to say what the new program -- one of the industry's largest, with 110 million members -- will be called.

Marriott announced the details before a crowd of elite members and travel bloggers at an event space in Manhattan's Tribeca neighborhood. National Football League sideline reporter Michele Tafoya interviewed the French chef Daniel Boulud about ceviche. A fog machine fired up to conceal the stage while an army of waiters distributed small dishes. And when the smoke cleared, country music star Keith Urban began a 30-minute set.

“It's the vacation stuff that matters,” said Alex Diacre, a longtime Starwood loyalist who held his wife's purse so she could get closer to the stage for Urban's performance. “I can handle the grind of work travel if I get to use points in my personal life.”

Some Starwood Preferred Guest members will find things to complain about. Obtaining the highest tier of benefits is tougher, for one thing, requiring at least 100 nights and at least $20,000 spent at Marriott properties within a year. But the result “is the best possible program that anyone could have reasonably expected,” said Gary Leff, author of the travel-industry blog View from the Wing.

It would also buck a trend in the lodging business. Historically, smaller companies -- like Starwood -- have lavished frequent travelers with rich rewards to convince them to go out of their way to stay in the company's properties. Bigger players like Marriott didn't need to provide the same level of perks, since the company could fill rooms simply by having hotels in places where travelers needed them.

“Starwood was strong on the elite side, Marriott was stronger on earning and redemption,” Leff said. “They have basically stapled the Starwood elite program onto a version of Marriott's earn-and-burn proposition.”

To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Christine Maurus

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