In case you haven’t heard, Marriott has announced that they will purchase Starwood Hotels & Resorts Worldwide Inc in cash and stock for $12.2 billion. This would make them the largest hotel chain in the world with over 1.1 million rooms in over 5,500 hotels with a staggering 30 different brands. Marriott wasn’t the only suitor for SPG with IHG reportedly being interested in July (which was later denied) and Hyatt in acquisition talks with SPG in early October. You can read the press release on the SPG site here & Marriott site here
Last month SPG announced they would be spinning off their timeshare unit and selling that to Interval Leisure Group.
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What This Means For You
To begin with, nothing will change. The acquisition hasn’t been approved yet and they’ll need approval first. SPG currently accounts for approximately 3-4% of hotel rooms in the US and Marriott accounts for roughly 10% of rooms. Given that this will bring them to a total of less than 15% of rooms in the US, it’s highly likely that this acquisition will be approved. It’s expected this will happen in middle to late 2016.
Obviously both companies are going to say that this will be a net gain for their loyalty customers, they’ll have access to more properties to earn & redeem points at and their loyalty will count at more properties worldwide. For example:
We will work to bring you the very best of SPG and Marriott Rewards®, two of the most rewarding loyalty programs in our industry. Our members are at the core of everything we do, and that will not change
The real question isn’t if the number of properties in the combined hotel chain will increase (it will), the question is if members of either or both of the loyalty programs will be better or worse off than pre-acquisition. At this stage it’s obviously too early to tell, but I daresay that the majority of people will be worse off than before – especially those loyal to SPG.
What Will Happen To The American Express SPG Cards?
American Express has already lost the Costco & JetBlue portfolios this year, and this means they will lose their only exclusive co-branded hotel partner. It’s possible as part of the acquisition they’ll be allowed to issue a Marriott card, but Chase currently holds that portfolio and it’s unlikely they’d be willing to give up their own exclusive rights to Marriott (especially after this acquisition).
Our Verdict
Consolidation in markets is almost always a win for the companies involved and a loss for consumers in general. I can’t see this going particularly well for SPG elites and those with a stockpile of SPG points – although those with the latter will likely be given enough time to burn their points before they are converted to Marriott.
This will also likely lead to a reduction in competition in the hotel credit card market, although American Express will be surely keen to take grab an exclusive hotel partner for their own portfolio. At the moment this is really a wait and see situation, this is going to be a long drawn out process and I can almost guarantee that in 12 months time you’ll be sick of hearing about Marriott & SPG in the same sentence.
Hat tip to reader Mitch & Travel Blogger Buzz
