When Marriott acquired Starwood, many die-hard Starwood fans were worried about what would happen to the many more upscale hotels and their beloved rewards program. Marriott addressed the rewards program issue on the day the acquisition became official – and allowed to link the programs and exchange points immediately. They are now addressing the management of luxury properties by creating a separate group within the company to focus on their top 8 brands!
What is happening: With the addition of Starwood’s 11 hotel brands, the Marriott group now has a total of 30 hotel brands in its portfolio. Recently, they grouped them into luxury, premium, select and longer stay. Now, they announced that they are forming a standalone group to manage the JW Marriott, Ritz Carlton and RC Reserve, St. Regis, Luxury Collection, W, Edition and Bulgari brands. The dedicated team will focus on operations, sales and finance. These brands make up 356 properties or nearly 7% of their hotels. The group is focused on Business-to-Business, marketing the brands in the industry and selling them to corporate customers. Each brand will continue to market to their target customers separately, positioning for example Ritz Carlton as traditional luxury vs the W as the “luxury rebel”
What does it meant to me: Marriott is taking a similar approach to Accor after their purchase of the luxury brands Fairmont, Raffles and Swissotel, forming a dedicated luxury group within the larger corporation. And that makes good sense, are both of the groups have the majority of their properties in the budget or midscale segments. From my experience as a business consultant I know that companies develop a distinct identity and it’s difficult to do well in a budget market AND a luxury market. Separating the teams will allow them to better do that – and while most of the focus is on the B2B relations, that’s good for customers of both, luxury and budget brands, too.
Corporate customers are likely to see offers that involve all of the brands – rather than have competing or differing offers from the different brands. And corporate travelers might see events or room availability across the 8 brands.
Individual luxury travelers can feel more sure now that the luxury experience will not be watered down by the majority of cheaper hotels. And they might find enticing offers to try out other luxury brands – if you’ve always stayed at Ritz Carlton, maybe give St. Regis a try in a location without a Ritz Carlton. It will be interesting to see, how the more “individualistic” brands, like The Luxury Collection will do under this arrangement – Marriott has some of the most tightly managed brand standards in the industry – let’s hope these unique properties will be allowed to stay unique.
And members of the Marriott and SPG rewards programs will see similar offers to try out new properties that are now all part of the same program.
Bottomline: This seems like a good business move to me, providing focus on the important luxury segment, while still leveraging the scale of the Marriott Group. I expect it to be beneficial to luxury travelers and corporate travelers, as well as provide additional opportunities to elite members of the rewards program. It will put pressure on other, smaller competitors in the luxury space and it will be interesting to see how Hilton or the Intercontinental Hotel Group will respond!
HT: Find more details about the transaction at Skift!