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Michael McLellan

How Will Marriott and Starwood Hotels Merger Affect Business Travelers?

by Michael McLellan | Dun & Bradstreet Editor

July 12, 2016 | 1 Comment »

EU regulators recently approved the $12+ billion hotel company megamerger between Marriott International and Starwood Hotels & Resorts Worldwide. The merger will create the world’s biggest hotel company, with more than 5,500 hotels and about 1.1 million rooms in some 100 countries worldwide.

The transaction should gain final regulatory approval in the US soon, and the headline-grabbing deal will likely close shortly thereafter. Both companies’ shareholders voted overwhelmingly in favor of the cash-and-stock deal back in April. But what will the combination of the two companies mean for hotel guests, especially business travelers, going forward?

Like car rental companies and airlines, hotels rely on the loyalty of frequent travelers. A large portion of the return guests at Marriott’s brands like the luxurious Ritz-Carlton hotels and Starwood’s Sheraton and Westin hotels consists of business travelers. In highly competitive industries like hospitality, customer loyalty or “rewards programs” are critical to securing long-term brand loyalty and return business from frequent travelers.

In this case, business travelers will want to know the fate of the two companies’ rewards programs. Starwood’s loyalty program, “Starwood Preferred Guest” (SPG), is a frequent-guest incentive marketing program, allowing members to earn and redeem points for room stays, room upgrades, and flights. Marriott’s own rewards program works much the same way.

Although the companies have so far stated that the two hotel brands won’t launch a “newly combined program” until 2018, Marriott is already aligning its program with the SPG program to some extent. But initially it sounds as though not much will change on the surface for people staying at Marriott or Starwood properties and for members of the two different loyalty programs.

Starwood was already one of the world’s largest hotel companies, with nearly 1,300 properties in about 100 countries. Its hotel empire consists of upscale brands such as Sheraton and Westin. It operates about 100 luxury resorts and hotels through its St. Regis and Luxury Collection units, while its 40 W Hotels offer ultramodern style.

Marriott was also already one of the world’s leading hoteliers, with some 4,400 operated or franchised properties worldwide. Its hotels include such full-service brands as Renaissance Hotels and its flagship Marriott Hotels & Resorts, as well as select-service and extended-stay brands Courtyard and Fairfield Inn. Marriott also manages about 45 golf courses.

Prior to the merger, Starwood planned to increase its operating hotel footprint in Latin America by 50% during the next five years, opening an average of seven new hotels per year in the region. Starwood also had plans to continue to expand in Europe as well, where it expects to open more than 60 new hotels and resorts by 2020.

The bulk of Marriott’s hotels are located in the US, while about 15% of its properties are international. The merger with Starwood gives Marriott many more hotel properties in Asia, Europe, and Latin America.

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Michael McLellan covers the business of restaurants, marketing, media, technology, and more for D&B and Hoover’s. He is a graduate of the University of Texas at Austin’s Radio-Television-Film program. Follow him on Twitter.

I understand the merger, but never hear about what would Marriott do with the Element Hotels as this is a new brand for Starwood. So much about the full service Hotels. How about the limited service Hotels would gain out of this merger?

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