PHLGovFlyer

What Marriott is acquiring in this purchase are the Starwood brands, the franchise agreements with most of the SPG hotels, the small set of Starwood owned properties, and the SPG loyalty program.

The SPG loyalty program is a major driver of the value of the Starwood brands and in turn the value of the franchise agreements with the various hotel owners. The value of the loyalty program is driven by the perception of value by the customers/members of that loyalty program. If Marriott corporate slashes benefits once the companies are combined it would effectively be slashing the value of the acquisition.

It is possible that Marriott corporate would cut benefits? Sure. But it would be like burning down a house you've just bought because you want to pay lower electric bills. It appears that Marriott is examining aligning their benefits with the SPG benefits and is sticking their toe in the water in a few areas (e.g. late checkout). Obviously, the proof will be in the execution once the merger is underway.

aaupgrade

Yes, and if AA does the same everyone will leave AA. Oh, that's right they did, but they slashed benefits to the level of their competition, and since US Airways was no longer competition, they mirrored the other programs. So where can pissed AA flyers go? To DL or UA where the benefits are the same but they they no status?

Same goes for MR. Once merged, I think MR will truly try to make their elite members (both MR and SW) happy; but there will be changes, and many will complain because it is human nature to not like change and not all the changes will make all the members happy. Except when people leave the new combined Marriott where are they going to, Hilton, IHG, Radisson, Hyatt. Hyatt has the best program, but like IHG and Radisson, a very small footprint, so anyone who does a lot of travel to varied destinations wouldn't even consider those chains. So the only choice left is Hilton. All Marriott has to do is have better benefits than Hilton, which they currently do IMO.

If you look at inflation, no one complains about it because it happens slowly and we hardly notice. Since I use MOM, I do notice when hotel rates double in 4 years. Hotel rates are much more sensitive to world events. 2002-2004 I could get Vail Marriott rooms for $105-169/night during peak ski season. 2006 it was back up in the $300s. I would guess current rates are quite high, but since I bought my place in 2010 I haven't had that property on my radar. Now the reason I bring this up, is MR and probably SW folks go ballistic when their beloved hotels' categories go up a level when they've been at that level for the past 10 years. So a 20% or 30% increase once every 10-15 years they get upset about, but a doubling of hotel prices in 4 years doesn't phase them. A lot of this mindset is probably due to many business travelers on these forums using OPM; which ironically means they are actually earning double the points on those hotels whose prices have doubled in price, but pissed that they have to use 20-30% more points for their award stay.

So while things change, and often we don't like those changes, some of those changes actually benefit the business traveler big time, yet are totally taken for granted.

MD/DC Flyer

Calling IHG with more than 5,000 hotels world wide a small footprint, is a stretch.

Granted the vast majority of them are places I would not chose to stay at. If you really referring to the IC part of IHG, I am in agreement.

PHLGovFlyer

I'm sure there will be changes too. My biggest prediction is that free upgrades to suites for Plats will go away under the combined program and be replaced by something akin to suite night certs. Lots of folks here won't be happy about it.

OTOH, I don't really view the competitive landscape of the hotel world to be anything like the U.S. airline market. In pretty much every major city in the US and the world there are dozens of different hotel brands available at multiple price points and service levels with a wide variety of loyalty programs represented. This is completely different from the US airline market where there are effectively 4 major competitors, each with their own loyalty program, and in many cases a monopoly on non-stop service between certain cities. Sure the airlines have cut benefits - because they can. I don't think there's comparable leverage in the hotel industry.

aaupgrade

Wow my bad, I never realized they had such a large folio, but I must admit I have never given them a close look. Yes, for the most part I was thinking of IC.

On a separate note, I am staying at a Radisson in Maputo in December because pickings were slim and it was one of the better hotels. This will be the second time at a Radisson, because the last time, about 18 years ago in Culver City, I swore I'd never stay at another one and left after 1 night and set up house at the LAX Renaissance.

MaxVO

In the meantime (and almost a year later), the deal still hasn't closed. Marriott is having second thoughts as they may be stuck with owing lots of real estate, that's not part of their business model. Here's one update on this saga.
But hey Marriott, "You'll Be OK" (tm)

kklems

The shareholders didn't approve the merger until 4/18/16, a mere 4 months ago. In fact Anabang didn't withdraw it's offer until the start of April. I would imagine Marriott couldn't examine proprietary information on Starwood until the merger was finalized and the shareholders approved the deal.

In another 6-7 weeks China will finish extracting it's concessions and issue an approval and things will get rolling.

MaxVO

The reasons for the delay are not material to the fact that the commercial real estate market has peaked. Marriott may have to keep the $2B worth of Starwood real estate, which is contrary to their business model. Alternatively they could have a giant fire sale into a weak market. Either way karma is not on their side.

SkiAdcock

Oh good grief. You're quoting the same NY Post article (aka, Daily Mail) which was mentioned above that has a single consulting company quoting. As I mentioned above, when the WSJ, FT, NYT, etc, also have articles saying there are problems I'll pay more attention.

Also, the fact that it will take a while to merge the two loyalty programs is a big well, DUH! Marriott has said they won't be merged until 2018. Just like a lot of airline programs didn't merge their loyalty programs right away.

The deal got approved by the shareholders in April & is going through the regulatory stuff. Marriott/SPG said up front it wasn't expected to close until the summer. China's delaying it, but well, it's China. They do their own thing.

While Marriott doesn't like to own real estate, it has the $$ to continue to do so.

Cheers..

MaxVO

Indeed I initially overlooked your earlier comments. But I'm seeing your comments now to be in agreement with the underlying facts reported in the low-pedigree channel. You just put a different spin on them.

Well thanks, that's useful and you both have valid points:
1. Marriott overpaid, and can't possibly be happy with the timing;
2. Marriott will pay for their blunder as agreed, and has the money to do so.

Btw, I don't think you should wait for the high-pedigree publications to report on something to pay attention. They report such "news" years after the fact, by which time it's historical consensus and no longer actionable.

aaupgrade

Sharon, I'm waiting for an article from a more reputable source like the National Enquirer, then I'll know it's for real.

SkiAdcock

Horace

Big news about the merger this morning. There's a Marriott press release on the PRNewswire website. The headlines are:
Here's the full press release: http://www.prnewswire.com/news-relea...300330889.html

SkiAdcock

Marriott press release:

http://news.marriott.com/2016/09/mar...pproval-china/

"As previously announced, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock.

Assuming that the transaction closes as expected, former Starwood shareholders will be entitled to receive Marriott’s quarterly cash dividend of 30 cents ($0.30) per share of Marriott common stock that Marriott’s Board of Directors declared on September 13, 2016 and which is payable to all Marriott shareholders of record at the close of business on September 23, 2016.

In that case, Starwood’s former public shareholders will not receive the dividend declared by Starwood’s Board of Directors on September 13, 2016. The dividend to Marriott shareholders, including the former Starwood shareholders, will be paid on September 30, 2016."

Cheers.

sammyindc

Merger finally coming to a close!!
I hope they announce when we'll be able to link our MR and SPG accounts and combine point balances soon - will be interesting to see what the SPG to MR conversion rate will be.