While this week’s news of Marriott’s purchase of Starwood caught many industry experts by surprise, focus has quickly shifted to the question of “what does it mean to me?” Owners are asking this question, of course, and more & more customers are doing the same. While of course we will all have to wait and see, here we will weigh some of the positives and negatives.

Let’s start with the positives:

Greater Loyalty: It’s already been publicly stated by Marriott’s CEO Arne Sorenson that the existing Marriott Rewards and Starwood Preferred Guest loyalty programs will be untouched in the short term. It’s easy to anticipate that changes will ultimately take place, but we need to be careful not to underestimate the complexity and magnitude of this issue. Combined with the fact that the overall Marriott/Starwood deal itself is not expected to close until at least mid-2016, it’s easy to see that no one should expect significant changes to these programs for the next year or more.
Greater Innovation: For owners and for major customers of these brands, there is much to look forward to. Reality tells us that Marriott has a long history of doing many things very well; their reputation for consistency, their ability to introduce new concepts in lodging (think Courtyard in 1983 and Autograph in 2009, just to name a few), speak for themselves. Starwood, while similar in many respects, has also established its own hotel & resort “DNA.” Their launching of the W Brand in 1998 was revolutionary for our industry. Today, Starwood brands and products offer a menu of “something for everyone” that is not unlike that of Marriott, but yet is sufficiently different that Starwood properties have historically been able to perform very well against their Marriott-branded competitors. Thus, it is very reasonable to believe that the “combining” of these two mega-brands will lead to further significant innovation in the years to come.
Greater Efficiency: Another point of reference; actually unbeknownst to many outside of the hotel industry is the fact that Marriott first purchased a major interest in the Ritz Carlton Hotel Company all the way back in 1995, becoming a 99% owner of the brand in 1998. At that time, hoteliers and customers alike expressed concern about the potential for a “Marriott-ization” of Ritz Carlton, which could ultimately devalue the integrity and value of the Ritz Carlton brand. Now, some 20 years later, it is very clear to see that these fears were misplaced, as the brand is arguably stronger than ever, in size, in customer satisfaction, and in positioning as one of the top luxury hotel brands in the world. If one considers the proven ability of both Marriott and Starwood to successfully develop their own brands, as well as their ability to leverage their large scale strategic and technical infrastructures, it seems clear that the joining of these forces bodes well for the future of our industry.

While there are numerous potential positive outcomes from this mega-deal, there are concerns as well. From the perspective of the hotel owner, there are several scenarios which can raise a flag.

Questions of competition: For example, that property owner who today carries a Starwood-branded hotel or two in a given market, competing directly with Marriott and others, has to wonder how this competition will unfold when those Marriott-branded assets that are “the competition” today are suddenly owned by the same parent brand as my Starwood-branded asset. When it comes to things like Global Sales support, Field Marketing support, Operational support, etc., does my brand strategy remain the same as when Marriott and Starwood were competitors rather than sister-brands?
Pricing and Data Transparency: From the consumer’s perspective, there is much to learn about how this transaction will unfold. Using a similar example, think about a case in which today’s market has multiple Starwood-branded properties competing with multiple Marriott-branded (among other) properties. Pricing is an obvious point of interest; with Marriott owning the Starwood brand and all of its systems, the potential for pricing information that today is clearly proprietary to be shared in the future is very real. Undoubtedly, this will be a major point of discussion in the review process that takes place before the deal is complete, but it raises a flag today nonetheless.

What we know today is that the deal is not nearly complete, and the strategic planning and approval process that goes into this transaction is only just starting to take place. While history tells us that Marriott does not make hasty decisions in cases such as this, and that there are many positive outcomes to look forward to over the next several months, there is much work to be done on the detail to ensure that all constituents are well-served. The industry will have its eyes closely focused on this process, as the implications are far-reaching.