When changes to Marriot International’s new co-branded credit cards went into effect at the end of August, the changes mostly merged everything to be more equal in terms of spend and value on the consumer end. Marriott and SPG cards all now earn 6 points per dollar at Marriotts and 2 points per dollar on other applicable rewards purchases.
The most controversial move – at least from a consumer point of view – were the changes made to the Starwood Preferred Guest American Express card, which now earns one-third fewer reward points for most every dollar spent.
“The co-brand credit cards provide several clear benefits and synergies to our owners enabling us to increase marketing spend and reduce interchange fees for spend on property,” said David Flueck, Marriott’s SVP of global loyalty. “Additionally, with the launch of the newly unified programs, we were able to lower charge-out fees for our owners and franchisees.”
So far, according to owners and franchisees HOTELS spoke with, the changes have not made much impact nor given cause for alarm.
“From an owner perspective, cost is king,” said Kristie Dickinson, executive vice president of asset management company CHM Warnick. “And delivering the business, obviously. As it relates to credit cards specifically, the opportunity for owners as it’s been presented by brands is that if, say, you’re moving from two cards to one, then (the owners) would have some potential leverage on their credit card commissions fee.”
Even though Marriott’s fee structures have not yet been released, owner feedback has been optimistic.
Locking in travelers
“We’ll have lower fees on our interchange rates, but I look at it as more as combining two huge loyalty programs and trying to lock travelers into a brand: All of that is going to help us far more than the fee structure,” said Atlanta-based Hospitality Ventures Management Group’s Matt Woodruff, SVP of guest excellence and chief brand partner officer.
“With the credit card piece alone, we feel we will benefit, said Mike Damitio of Chicago-based Geller Capital Partners, which has a Marriott property in Washington, D.C. “Our perspective on this is, as Marriott’s able to negotiate form a stronger leverage position, that’s going to lead to better bargaining power with merchant services, which would be a net gain for us as owners.”
While overall, Damitio is optimistic about the deal, he said he knows it won’t be a perfect transition, either.
“As Starwood members come into the Marriott program, they’re going to get instant status with Marriott and that will entitle them to benefits, and those benefits will certainly come at a cost,” he said. “In our situation, in an urban environment, where we already have a strong Marriott Rewards contingent, I think we will benefit in the end, but I don’t know that that will be the case for all properties.”
Aside from the fee structure, there’s also the sheer marketing power Marriott brings to the table.
“A lot of it is marketing opportunities either for particular hotels or maybe for our hotels in cluster areas,” said Woodruff. “If the rewards card does a marketing promotion to the Atlanta area (his company has five Marriott products in Atlanta), the promotion piece is a big piece for us as well. That’s advertising that we could not afford to do on our own as a single hotel.”
One of the criticisms of the new cards on the consumer end has been that the rewards from the previous SPG card haven’t translated fairly and Marriott’s offering of a free night doesn’t compare to the 3-1 spend ratio SPG AmEx cardholders were getting previously.
“Clearly, that was an act of choice they made to go with the certificate. The certificate may be better for Marriott, in that a lot of times you won’t get as much value because the certificates are capped at a certain number of points, but you may not be able to maximize it at a top-notch hotel,” said Julian Kheel of The Points Guy.
“It strikes me that the free night aspect is definitely more of a Marriott style perk versus an SPG style perk. One of the reasons the SPG card was a good everyday spend card was because SPG was smaller, had a much smaller footprint than Marriott, and needed to offer a little more value to its customers,” Kheel continued. “The whole SPG program was built that way, versus Marriott, which has a lot of different properties and doesn’t necessarily need a robust loyalty program.”
“So, it’s more likely that people will get less value out of their certificates, simply because they’re not maximizing them. And I’m sure Marriott is counting on that for a portion of its customer base,” Kheel said.
More changes coming
What about the fact that all this will change again, when Marriott rolls these programs all into one as-yet-unnamed loyalty program come January?
“The biggest thing will be what happens in 2019 when they all combine,” said Woodruff. “That’ll be kind of the unknown for me. There’s no worries, it’s just going to be another step. Customers are picking one of the three (credit cards) right now that they’re putting their points into, then in 2019, the program’s going to change again, and it may create some questions.”