Starwood's problem was that they lagged in developing limited service properties during the lodging boom, and they had a consistent service problem with Sheraton, their main full service brand. This caused their development pipeline to dry up, and many people, including myself, avoided Sheratons whenever possible. I stayed at one after United put me up for a flight there, and I was underwhelmed by the poor quality breakfast buffet and the green oxidation present in the bathroom knob. The front desk agent refused to give me a breakfast coupon unless I signed up with the SPG program. I was taken back by how argumentative he was. The idea that Marriott can get away with providing the bare minimum service is not something management is going to want to test out in the next recession. When you tick off enough customers that they stop staying at your hotels, it will be too late by the time that information shows up in Marriott's 10K and 10Q filings with the SEC. Bill Marriott's father, John Marriott, once said take care of your employees and they will take care of your customers. No one is going to pay a premium to stay at a Marriott if it is going to be run solely for the benefit of the developers. If you do not understand that, you have little understanding of how a lack of consistent good service will lead to a drop in customer loyalty. Marriott's stance is similar to United Airlines view under Smisek when his leaders said we have the best route structure and do not need overentitled elite customers. The current leadership at United is actively trying to compete with Delta, and they are not as complacent as Smisek was.

Marriott stopped being heavy asset after they ran into trouble with the recession in 1990 and 1991. They took on a lot of debt to rapidly expand in the 1980s, and they needed an emergency loan to stay afloat. They asked Coca Cola for a special loan, and Coca Cola turned them down. Pepsi saw an opportunity, and they loaned Marriott the money and got their soft drink contract.

Starwood's poor performance was because a lot of people who valued good service over only a better rewards program chose to stay at other chains like Hyatt and Marriott. If Marriott thinks they can downgrade their service and live off of the goodwill from earlier years when Marriott had excellent service, they are going to end up having REVPAR numbers closer to the old SPG than the old Marriott. There are enough travelers who will move their stays, and enough of them control corporate and large personal group travel. I have heard many guests at Marriott hotels say they were loyal because Marriott had provided consistently excellent service. None of them said it was because Marriott had more locations than any other hotel chain. Marriott's current management is going to risk that loyalty in their quest for more profit. I remember when an old Holiday Inn reflagged as a Marriott hotel around 2007 in the DC Metro area. The owner did it to increase revenue, and there were some initial pains since the hotel management and employees were not used to the higher standard service requirements for a Marriott hotel.

Every company will do the exact same thing is the biggest lie ever told in any industry. Marriott's management decision to race to the bottom with Hilton is going to eventually backfire because people are not as forgetful and stupid as they think. Whenever decisions are made with a bean counter mentality, you usually end up alienating your customers. In the Southern areas of the United States, Lance Crackers is very popular. They make a peanut butter cracker sandwich that sells well, and it has loyal fans who have had parents and grandparents who were just as loyal. Keebler makes a competitive product, and if you look at the outside box, it looks exactly the same since it has the same number of individually wrapped cracker sandwich containers, and they weigh the same amount. But it becomes apparent when you eat the Keebler version that it is the one designed by bean counters who tried to save money. The Lance peanut butter cracker sandwiches always have some of the peanut butter on the wrappers of the individual containers. This is because they are generous with their peanut butter and some of it ends up going off the cracker. Keebler decided to cut the amount of peanut butter in their competitive product, and it is easily noticeable when you eat it. If Marriott is going to go approach the hotel business the way Keebler makes their peanut butter cracker sandwiches, they are going to destroy their brand value. It won't happen overnight, which is how companies get in trouble when they decide to cut corners.