Retail

Marriott, Starwood Luxury Brands Stay Separate

Just a year-and-a-half ago, Marriott began the conversation around buying Starwood Hotels & Resorts. After the $13.3 billion deal went through, shareholders and the public are learning more about what will come of the 30 brands and more than 5,700 properties.

Since the merger, Marriott has spent more than $237 million on related costs, in just the third quarter of 2016. Marriott’s CFO announced earlier this month that an additional $50 million was spent on transition and transaction costs and interest expenses.

Arne Sorenson, Marriott’s CEO, has been confident and even bullish about the two companies integrating and creating savings, despite saying that he does not expect to hit the projected $250 million in cost savings in the next year. Earlier this month, he released that all Starwood-managed hotels were adopting Avendra, which is a the purchasing platform that Marriott had been using prior to the merger.

But throughout these changes and costs, many question what will happen to two companies’ 30 brands. But the luxury brands in particular, which have typically competed, will stay separate. Experts had speculated a consolidation of the Ritz-Carlton, St. Regis, Bulgari Hotels and JW Marriott, but the company says they’re staying the way they are.

Tina Edmundson, Marriott’s global brand offer, told Bloomberg how the 30 properties — 19 of them were Marriott first — will survive, each separately but with combined interests. While Bloomberg experts are skeptical about the long run of this “separate” initiative, Edmundson says that the business was thoughtful in this decision and wanted to keep focus on helping customers with both price and experience.

Specifically, there were questions about Marriott’s three “soft brands,” which are independent properties and were speculated to be placed under one category. Apparently not so. The luxury collection, Tribute Portfolio and Autograph Collection will stay put. As will the Design Hotels, which comprise 280 independent properties related to the Starwood preferred guest loyalty program.

As for the leading luxury brands, there will now be eight that are considered under that classification, including the Ritz-Carlton, Ritz-Carlton Reserve, Bvlgari, St. Regis, Edition, the Luxury Collection, JW Marriott and W. However, the group will be dividing into two grouping profiles — classic luxury and distinctive luxury — which clarifies one as more business travel–oriented, while the other has a more contemporary and boutique feel. The Autograph collection is not included, however, and experts say this could be a value proposition and will be classified as a “distinct premium” property — which will also include Le Meridien and the Westin brands.

But the biggest distinction may be the fact that Ritz-Carlton and St. Regis will not combine. While seemingly similar, the reason for the separation is the loyalty that they each bring with their brand.

“When we think about any of our brands, we start with the consumer and look at what they value,” said Edmundson, who has been in the industry for 26 years and worked at Starwood for 18 years earlier in her career in brand operations. “With Ritz-Carlton, this consumer is really leaning toward discovery. And for St. Regis, it’s really about status and connoisseurship.”

She added that Ritz-Carlton customers tend to use the hotel to explore a new place, while St. Regis guests make the hotel their destination.

“The St. Regis customer is looking for the hotel to serve up performances by jazz legends or signature rituals like midnight supper and St. Regis bloody marys,” said Edmundson, who added that when talking with customers, these elements came up without prompting them.

Interestingly but not surprisingly, the brands will be experimenting with technology more than ever. Previously, with its two brands Aloft and W, Starwood had experimented with them as tech innovation from Apple TV to robot room service.

Edmundson said the Marriott consumer is discerning and will be looking for innovation.

“We need to offer what today and tomorrow’s luxury guest is looking for,” she said. “Innovation in the luxury space is absolutely a priority.”

That may mean data mining to focusing on the geography and mindset for the traveler. Either way, she said the intention is to be at the forefront of the technology spectrum, and it begins at the W and Edison properties.

And, last, the element that many loyalty travelers may have first thought of when they head the merge: What happens to my points?

That’s still in process, said Edmundson. For now, both reward programs are staying separate, but jointly together — meaning, the points are still good across all if not most properties, but Marriott isn’t ready to reveal the new terms yet. Stay tuned for 2018.

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