ckendall

Much more likely that shareholders pay; Marriott earns revenue from hotels that rent rooms to customers. Room rates are set in a (moderately) competitive environment. Raising room rates (or otherwise making terms worse for customers) will likely lead to customers going elsewhere and hence reducing future revenue. The stock price is already down by some estimate of the future costs of the breach.

Land-of-Miles

If shareholders pay Exec compensation is hit so it's the last thing that tends to happen. You can progressively make your product worse and boost short term returns for a long time before customers really catch on to this. Look at Hilton and BA as great examples of this.

Bottom line is that Senior Management remuneration will be linked to shareholder returns and who votes for a pay cut?

tfong007

Land-of-Miles

Feel a little sorry for Marriott as this clearly seems to be a Starwood problem they inherited, going to look pretty bad for the former Starwood management if they also covered this up during the sale.

JBord

The SPG bashing is going on because the hack happened under SPG's watch, not Marriott's. Marriott was the one who detected the hack. There's a whole lot of "kill the messenger" going on in this thread. But you're right that it's Marriott's issue now since they bought SPG's hacked reservation system.

I wonder if you'd be calling for lawsuits and fines if this had been discovered in 2015. Again, the only purpose this serves is harming the company that discovered and is trying to fix the data breach that occurred in a company that acquired prior to the acquisition. No one likes when this happens, but it's hardly abnormal these days. I'd much rather see Marriott use the money to help the affected customers in some way than to pay a fine to the government...and no, I don't think both have to happen. Should the company be fined for a problem it didn't cause? If I buy a house and then find a dead body in the walls, should I be charged with murder?

dunno282

unfortunately nothing is 100% safely secured on the web. These software applications are evolving every day and bugs/defects pop up every single day. That's no excuse though. It is the state of the internet that we currently live in. If top tier tech companies hiring the best and brightest to write their software are still getting hacked, then non tech companies who have problems hiring top tech talent are even more vulnerable to these attacks. Also, from my experience the business people in non tech companies do not place a high importance e.g. resources and budget on technology even though they generate a huge amount of profit for them. Trust me, as engineers we've fought those battles on many projects and have lost. Most of them simply do not understand IT. They do the same thing that most of the commenters here do. They overly simplify complex computer systems and think there are band aid solutions to these problems instead of spending money on updating or rewriting old insecure platforms.

Kagehitokiri

amusing marriott spokesperson above >

"Marriott International, Inc. does not own, operate or manage"
that describes franchises, which are 67% of marriott hotels

"Starwood SPG program through its relationship with Design Hotels"
marriott / starwood controls design hotels (domination agreement)

also agree with dunno282

C17PSGR

Would be interesting if this is a topic of discussion between Trump and Xi today at the G20 since the circumstances suggest this is a state actor ....

H3A3H3

So insightful, and so eloquently stated.

In my experience, some of Marriott's most skilled leaders are drowning, and find themselves deeper and deeper in dysfunction, on a weekly basis. I'm saddened to think/say that I barely recognize the company (Marriott), that has been an integral part of our family for 50 years.

tfong007

C17PSGR

Presumably, they conducted due diligence.

The issue is that this is almost certainly actions by a highly sophisticated state actor.

Antarius

RDP on servers running EOL Operating Systems open to the public internet is not indicative of state actor sophistication.

it reeks of weapons grade incompetence.

jr1202sr

https://www.apnews.com/586e0183ca0142d68a01ca6b5898a8a0

NEW YORK (AP) — The data stolen from the Marriott hotel empire in a massive breach is so rich and specific it could be used for espionage, identity theft, reputational attacks and even home burglaries, security experts say.

Hackers stole data on as many as 500 million guests of former Starwood chain properties over four years including credit card and passport numbers, birthdates, phone numbers and hotel arrival and departure dates.

It is one of the biggest data breaches on record. By comparison, last year’s Equifax hack affected more than 145 million people. A Target breach in 2013 affected more than 41 million payment card accounts and exposed contact information for more than 60 million customers.

But the target here — hotels where high-stakes business deals, romantic trysts and espionage are daily currency — makes the data gathered especially sensitive.

The affected reservation system could be extremely enticing to nation-state spies interested in the travels of military and senior government officials, said Jesse Varsalone, a University of Maryland cybersecurity expert.

“There are just so many things you can extrapolate from people staying at hotels,” he said.

And because the data included reservations for future stays, along with home addresses, burglars could learn when someone wouldn’t be home, said Scott Grissom of LegalShield, a provider of legal services.

The affected hotel brands were operated by Starwood before it was acquired by Marriott in 2016. They include W Hotels, St. Regis, Sheraton, Westin, Element, Aloft, The Luxury Collection, Le Méridien and Four Points. Starwood-branded timeshare properties were also affected. None of the Marriott-branded chains were threatened.

Email notifications for those who may have been affected begin rolling out Friday and the full scope of the breach was not immediately clear.

Marriott was trying to determine if the purloined records included duplicates, such as a single person staying multiple times.

Security analysts were especially alarmed to learn of the breach’s undetected longevity. Marriott said it first detected until Sept. 8 but was unable to determine until last week what data had possibly been exposed — because the thieves used encryption to remove it in order to avoid detection.

Marriott said it did not yet know how many credit card numbers might have been stolen. A spokeswoman said Saturday that it was not yet able to respond to questions such as whether the intrusion and data theft was committed by a single or multiple groups.

Cybersecurity expert Andrei Barysevich of Recorded Future said Saturday he believed the breach was financially motivated.

A cybercrime gang expert in credit card theft such as the eastern European group known as Fin7 could be a suspect, he said, noting that a dark web credit card vendor recently announced that 2.6 million cards stolen from an unnamed hotel chain would soon be available to the online criminal underworld.

“We will have to wait until an official forensic report, although, Marriott may never share their findings openly,” he said.

Marriott said the stolen credit card information was encrypted but the hackers may have obtained the “two components needed to decrypt the payment card numbers.” It said it cannot “rule out the possibility that both were taken.”

For as many as two-thirds of those affected, the exposed data could include mailing addresses, phone numbers, email addresses and passport numbers. Also dates of birth, gender, reservation dates, arrival and departure times and Starwood Preferred Guest account information.

The breach of personal information could put Marriott in violation of new European privacy laws, as guests included European travelers.

Marriott set up a website and call center for customers who believe they are at risk.

The FBI would not say whether it is investigating, but said in a statement that anyone contacted by Marriott should “take steps to monitor and safeguard their personally identifiable information and report any suspected instances of identity theft to the FBI’s Internet Crime Complaint Center at www.ic3.gov.”

Passport numbers have previously been part of a hack, though it’s not common. They were among records on 9.4 million passengers of Hong Kong-based airline Cathay Pacific obtained in a breach announced in October.

Combined with names, addresses and other personal information, passport numbers are a greater concern than stolen credit card numbers because thieves could use them to open fraudulent accounts, said analyst Ted Rossman of CreditCards.com.

The data purloining highlights just how dangerous hotels can be for people worried about their privacy.

“Hotels have long been important government sources of local information for tracking foreigners: reservation systems and loyalty programs took the surveillance global and made it easier for us to give up our privacy,” said Colin Bastable, CEO of Lucy Security.

Intelligence agencies including the U.S. National Security are well plugged into the global travel industry “by fair means or foul,” he said, non-government cybercriminals now have the same hacking tools.

“Consumers have become collateral damage,” he said. “And we are all consumers.” He advises providing hotels with as little information as possible when making reservations and checking in.

Last year, the cybersecurity firm FireEye highlighted an effort in which Russian state agents allegedly tried to infiltrate the reservation systems of hotels in Europe and the Middle East.

When its acquisition by Marriot was first announced in 2015, Starwood had 21 million people in its loyalty program. The company manages more than 6,700 properties across the globe, most in North America.

Marriott, based in Bethesda, Maryland, said in a regulatory filing that it was too early to say what financial impact the breach might have on the company. It said it has cyber insurance and is working with its carriers to assess coverage.

Elected officials were quick to call for action.

The New York attorney general opened an investigation.

Virginia Sen. Mark Warner said the U.S. needs laws that limit the data companies can collect on customers and ensure that companies account for security costs rather than making consumers “shoulder the burden and harms resulting from these lapses.”

GUWonder

dunno282

as I mentioned above. Because you are overly simplifying a complex computer system. You are assuming that there is some way of finding this security breach without knowing there was one within a reasonable amount of time and money. It's like trying to find a needle in the haystack without knowing there is a needle in there. Also, I think it would be the CTO/CIO that would get fired first.