Hotel Owner Claims “Bonvoyed,” Sues Over Redemptions
Joe Cortez February 04, 2020
A Thai hotel managed by Marriott is taking the hotel chain to court on claims that Marriott Bonvoy is creating more harm for their business than good. Minor International is suing Marriott International over perceived missteps that have cost the property owner money over time.
The owner of the JW Marriott Resort & Spa in Phuket, Thailand says Bonvoy is costing them a significant amount of money and wants Marriott to make up the difference. Skift reports Minor Hotels, owner of the luxury hotel, is suing Marriott International in Thai court over the alleged mismanagement.
Minor International Claims It Got “Bonvoyed” on Award Night Payment
One of the main tenets of the lawsuit revolves around how much Marriott is paying Minor Hotels every time a Marriott Bonvoy member uses their points to stay at the hotel. Minor claims that the price paid by Starwood Hotels was 60 percent more than that offered by Marriott Hotels.
“Following the merger of the Marriott and Starwood loyalty programs in 2018, we were informed by Marriott that the base redemption rate for the JW Marriott Phuket would decrease from approximately $120 per night to $47 per night,” Dillip Rajakarier, chief executive of Minor Hotels, told Skift. “In effect, Marriott was requiring us to sell rooms at a below-market rate. This business [Bonvoy award travel] is some of our lowest-margin business, yet we are forced to honor these redemptions—which hurts our profitability.”
According to business leaders, Minor asked Marriott if they could opt out of the rewards program because of the reportedly low costs. They claim Marriott denied the request, which ultimately lead them to court.
Marriott Calls the Lawsuit “Meritless”
Marriott International, which manages the Phuket JW Marriott Resort & Spa, is fighting the case in two different courts. In a statement to Skift, a spokesperson for the hotel corporation called the suit “meritless” and said the company would take “all steps necessary to protect our rights under the hotel agreements and vigorously defend against Minor’s claims.”
While a judge in Thailand is allowing the lawsuit to move forward, it is pending based on another lawsuit in Singapore. Marriott says their contract includes an agreement that forces disagreements to be handled by arbitration through the Singapore International Arbitration Centre. The Maryland-based company earned a temporary injunction in Singapore, forcing legal proceedings to stop until it is resolved.
Despite the lawsuit, Marriott is planning even further expansion in the popular tourist destination. According to Business Traveller, the company wants to open four more hotels in the country between 2020 and 2024.
I agree: the SPG part confused me. Unless different rules/rates were being applied depending on which program people were from while SPG and Marriott Rewards were merging (during that period when we had like 8+ months to merge account into the new Bonvoy)?? @BigShooter: You're correct. I think the spokesperson said it backwards as $47 is ~60% less than $120 (or the article's author mixed this up): $120 - $47 = $73 $73 / $120 = 0.608 (or 60.8%)
Not sure if the author read the article before writing this. The JW has been managed by Marriott for 18 years, ever since it opened. Starwood was not involved. The article states that after Marriott and SPG programs combined Marriott decided to pay less for award stays than they did before the programs combined. Also, $120 is not 60% more than $47. $47 is ~39% of $120 though. I think the article is more about dissatisfaction with Marriot's overall management practices than just the redemption rate. I'm surprised they haven't come up with some b.s. way to limit award availability if they really aren't making any money.
Confusing. It states: "Minor claims that the price paid by Starwood Hotels was 60 percent more than that offered by Marriott Hotels." The property in a JW Marriott, it would never have been under the SPG program. Was this property an SPG branded property prior to becoming a JW Marriott?
It is worth noting that MINOR Hotels owns competing hotel brands worldwide and this lawsuit may be a way to get out of the franchise agreement they have with Marriott and replace their flags with some of their own brands.