Las Vegas Review-Journal (Sunday)
Marriott’s new loyalty program: Not as bad as Starwood fans feared
In the nearly 2 1/2 years since Marriott announced its intention to acquire Starwood Hotels and Resorts, the parent of Westin, Sheraton and W, skeptical customers of both companies have waited impatiently for answers to the question: Just how many rewards and perks would Marriott take away from the 110 million members when it combined the loyalty programs?
Last week, we all found out: Not as many as we had feared.
The new rules will make it harder for some customers to qualify for the highest levels of elite status, and the program’s new co-branded American Express cards will not be as lucrative for many people who like transferring hotel points into airline frequent flyer programs. But Marriott’s new Chase Visa will prove more generous for many cardholders. Meanwhile, everyone in the program gets access to 6,500 hotels, greatly increasing the number of places to earn points and redeem them.
“The product they are announcing is not anybody’s worst case or fears coming true,” said Gary Leff, a travel industry blogger with a specialty in spanking companies that devalue their loyalty programs. “In many ways, this is the best possible outcome we could have expected.”
Marriott’s prudence here makes sense given the stakes. It is now the largest hotel company on earth, and while scale will help its negotiations with online travel agencies, getting bigger is counterproductive if it scares customers away. Its loyalty program moves are also notable for what did not happen, namely tying the program much more closely to revenue. Which is not to say Marriott’s new program won’t annoy some people. Experienced players of the rewards program game often do best by combining travel at a single hotel or airline with everyday use of its co-branded credit card. And because the new cards will give out differing numbers of points depending on where you use them, everyone will have to do some math to see how he or she will make out in the new system.
Any evaluation of a loyalty program begins with the earnand-burn analysis: What do you get in exchange for your loyalty, and what can you trade it for when you want to redeem? According to David Flueck, senior vice president of global loyalty for Marriott, hotel guests will earn about 20 percent more points than they did previously.
That number is meaningless, however, if the points are worth less when redeemed. Marriott is moving to three-tier pricing in points for free rooms — a standard price and then peak and off-peak rates coming next year. Within that kind of plan, there is a lot of room for Marriott to improve its own economics at the expense of frequent customers.
Flueck made the following points when I pressed him: There are more properties where standard award pricing will fall than there are where they will rise. There will be roughly the same number of peak and offpeak nights. And he answered with a straight-up “no” when I asked whether the changes were designed to devalue the Starwood Preferred Guest program, where members are often able to get up to (a quite generous) 3 cents per point in value when booking free rooms.
Assessing the changes will be complicated enough for many travelers. But the analysis gets more confounding when you consider the various credit cards on offer. Instead of consolidating its portfolio with one card issuer, Marriott chose to maintain its relationship with both American Express and Chase. Both introduced new cards Monday.
The annual fee for the new Premier Plus Chase card is $10 more, though it will also offer more points than the current Premier plastic. Cardholders will need to alert the company if they want to switch.
The more interesting developments here, however, are on the American Express side. It is adding a “Luxury” American Express card that will be available in August and require a $450 annual fee. It will earn 6 loyalty points for every dollar spent at Marriott hotels, 3 at restaurants and airlines, and 2 points everywhere else.
Marriott has been allowing Starwood members to transfer their points into Marriott’s existing program at a 1-Starwood-for-3-Marriott ratio. I ran my own numbers on card spending from 2017 (and made some wild guesses about future travel spending) and found that the points I earn will fall by about a third.
At first glance, this would seem to matter a great deal, especially to people who like trading points for airline miles. While Marriott is preserving that feature and the bonus points that it sometimes gives out during the transfer, earning fewer points through card spending means fewer miles on the other side of the trade.
So who would add this card? Consider the other perks. A $300 annual credit for any money you spend at a Marriott property brings the annual fee down to $150. Then, you get a certificate for a free night stay at all but the most expensive hotels. That could be worth that remaining $150, easy. Cardholders will also get the speediest Wi-Fi in hotels without having to pay for it.
Finally, anyone who manages to spend $75,000 per year on the card will get platinum status without even having to lay a head on a bed.
Current Starwood American Express cardholders will be able to count any spending from Jan. 1 onward toward the $75,000 tally if they switch to the new card this year. No change to card numbers will be required.