Marriott International took a big step forward with the back-end integration of its three loyalty platforms—Marriott Rewards, Starwood Preferred Guest and Ritz-Carlton Rewards, on 18 August. But the company’s SVP of global loyalty says that work is not done.
GLOBAL REPORT—Marriott International flipped a switch 18 August on the integration of its loyalty platforms—Marriott Rewards, Starwood Preferred Guest and Ritz-Carlton Rewards—in an exercise of scale that is likely to have ripple effects across the hotel industry.
For insight into the integration, and what’s next, Hotel News Now reached out to Marriott International’s SVP of Global Loyalty David Flueck for a Q&A via email.
Q: What exactly happened on 18 August with the integration?
Flueck: “(Beginning) on that date, members of Marriott Rewards, The Ritz-Carlton Rewards and SPG will be able to book, earn and redeem across the portfolio of 29 participating brands, 6,700 hotels in 130 countries all in one place, on any of our digital, mobile and voice reservation channels including Marriott.com and SPG.com. They will also be able to combine their accounts, creating one points and elite nights earned balances, which may potentially move them into a higher elite status tier. Importantly, the new award chart, elite-tier benefits and earning structure goes into effect.”
Q: How has the loyalty program integration gone? Were there any unexpected challenges?
Flueck: “While we are not at the finish line yet, by all accounts, the loyalty integration has gone exceedingly well. It started on the first day as a combined company when we enabled our members to link their accounts and have their status matched at our properties around the world. This was a first in the travel industry and a crowd-pleaser to everyone who followed the news. To date, millions of members have enjoyed having their statuses matched and earning points across both portfolios.
“This past April, we announced the new benefits and Elite tier structure, receiving an overwhelmingly positive response from both members and owners. Members will have full access to our entire portfolio of exceptional properties around the world, earn elite status faster and earn on average 20% more points per dollar spent. Owners will see their fees reduced and lower charge-out rates.
“The biggest challenge with this integration has been the creation and migration of all our loyalty IT systems. It’s an enormous transformation that involves tens of millions of lines of code and teaching thousands of associates new platforms and processes. Airlines and others in the travel industry attempting to integrate their loyalty programs have taken years to do so. We are attempting to do the same heavy lift in only 23 months. As a result, we’ve been very deliberate about when and how everything rolls out so that our members and owners have as smooth a transition as possible.
“Overall, we are excited to bring the benefits of our new scale to both our owners and our members.”
Q: Are you convinced the end result will walk the line of satisfying both loyalty members and owners?
Flueck: “Yes. Most of our owners will see much lower credit card fees and charge-out rates which will impact their bottom line in a very positive way. Members will have virtually endless opportunities to pursue their passions through travel by getting more choice—6,700 properties to choose from across 29 brands, including the largest selection of luxury properties, as well as a faster path to Elite status, and on average, 20% more points earned per dollar spent.”
Q: There’s obviously a lot of attention on this integration of the loyalty programs, from throughout the industry. Why do you think that is? What are the potential implications of this move on the wider industry? What does it change? And is it all for the better, in your view?
Flueck: “Loyalty programs garner immense interest because they are so important to our customers and have a significant impact on results for our owners. When SPG and Marriott Rewards, two of the most awarded loyalty programs in the entire travel industry and the biggest in hospitality with 110 million members, announced we were combining, many people were skeptical that it would be done in a way that was beneficial to both owners and members. I’m thrilled to say, due to our strength of scale and our amazing team, we’ve been able to provide substantial cost-savings to our owners & franchisees and deliver members the richest set of loyalty benefits in the industry. We’re truly raising the bar and redefining what is possible for loyalty programs.”
Q: With the integration of its loyalty programs, Marriott is also making changes to its sliding-scale system, which in the past incentivized owners to sometimes discount rooms to reach a certain occupancy and thus a certain level of redemption. Can you explain? What will this mean for revenue-management strategies?
Flueck: “We spent time listening to our owners and franchisees and working to create a smoother and more cost-effective system for ensuring their rooms were always booked. We believe this will be accomplished by evolving our sliding scale approach that reimburses hotels for the cost of awards on high occupancy nights. Previously, there was a significant jump in reimbursement revenue per award night once a hotel was near sold out. This incented some hotels to drop rates to achieve this occupancy threshold. The new program applies more gradual increases in reimbursement revenue as occupancy rises. This additional reimbursement revenue begins at lower occupancies to encourage revenue management policies that optimize for both occupancy and rate and maximize profitability.”
Q: What are the next steps for the loyalty integration?
Flueck: “The pieces that will roll out in early 2019 include new category eight hotels, which can be booked at category seven rates through the end of 2018, as well as the introduction of off-peak and peak rates will make sought-after properties more affordable for our members.”