More thoughts on Marriott acquiring SPG

The travel, points and miles blog space has been abuzz in the last 48 hours, after Marriott's acquisition of SPG was announced. To be fair, there's a high level of consternation among SPG loyalists about how the entire deal is unfair to SPG members. And honestly, I haven't really seen a single post or news item about how this will hurt Marriott. I think that, in itself, says a lot. So after the news yesterday, I was thinking about some of the issues that could crop up with this acquisition, which I'll leave you to ponder on, and add to as well.

Let's start with some good news

The acquisition has only just been announced, and won't be finalised till mid- or late- 2016. I'm sure as with any transaction, there are legal and regulatory hurdles to cross. And while I'm no expert on this, I'm not sure if there are competition / anti-trust issues involved here at the US/Global level. So, all those need to be sorted out. So I don't see this acquisition having any immediate consequences, between now and say mid-2016 (or even end of 2016).

There was also this email from Chris Holdren, Senior Vice President, SPG.

Among other things, it says:

"...Today is the first day of a long journey as we combine our two companies. For now, we remain separate, and there is no change to your SPG program status, your Starpoints® or your existing reservations. You will continue to earn Starpoints and elite stay/night credit for your stays, as well as bonus Starpoints for any promotions in which you are participating. There is no change to how you manage your SPG account or book reservations."

So, till further notice, nothing is going to happen to the SPG program or its benefits. However, just because you can continue with the SPG program, it doesn't mean that you should. Simply because here's a program that you know will change, likely to a substantial degree, some time in the next 12-24 months.

There are a ton of problems with any acquisition, and in one such as this, where a large number of members are invested in both the SPG and Marriott Rewards programs, the number of stakeholders is very high. So, what are the possible issues, with reference to members of the two loyalty programs?

Possible and likely outcomes

With a transaction like this, there are some likely outcomes in relation to the loyalty programs as below, along with my assessment of their likelihood of happening:

1. Marriott Rewards will be the remaining program - good likelihood
2. SPG will be the remaining program - low likelihood
3. There will be a modified version of the Marriott Rewards program that accommodates some aspects of SPG - moderate likelihood
4. A new program will be created that blends aspects of both MR and SPG, and establishes middle values for converting existing points, nights, status, etc - low likelihood.

Some key program differences and its effects

So, I've done a quick analysis of how the transaction could affect members of both programs.

Differential elite qualification levels
With SPG, 10 stays/25 nights gets you Gold, and 25 stays/50 nights gets you Platinum status. With Marriott Rewards, you need 10, 50 and 75 nights for Silver, Gold and Platinum respectively. Going by nights' stay required, SPG Platinum and Marriott Gold are comparable, as are SPG Gold and Marriott Silver...at least on paper. However...

Different elite benefits
...Elite benefits from the two programs can be a bit different. For instance, SPG offers lounge (Club) access to Platinums, but Marriott offers it to Gold as well. But then, both need to have spent similar number of nights to earn those respective status levels. Plus SPG Platinum offers upgrades to suites, which Marriott does not guarantee.

And what happens to lifetime status, I wonder!

Starpoints transfer bonus over 20,000 points
SPG offers a 1:1 transfer rate to most of its airline partners, and 5,000 bonus points if you transfer in multiples of 20k Starpoints. Marriott is not as generous with its conversion to airlines.

Differing property redemption levels and reward requirements
I'm sure it is going to be a nightmare for the folks at SPG and MR, to come to a consensus on assigning property levels and reward points requirements between all the MR and SPG hotels. There are currently some very different scales being used, which need to be rationalised to one or more common denominators.

Reward points earning partnerships
SPG has mileage-earning / crossover rewards partnerships with Delta, Emirates and Uber. Marriott, on the other hand, has only one - with United - IIRC. I can't see both partnerships surviving, as they are with competing airlines. Same goes for US-issued credit cards, where SPG seems to have more options (and opportunities) for co-branded credit card sign-ups, than Marriott does.

SPG-ITC partnership in India

This being an India-oriented blog, I'd like to add another dimension here. There are a total of 47 SPG hotels across various brands, in India. These include 12 ITC hotels (11 ITC Luxury Collection hotels and 1 Sheraton branded hotel). I'm not certain of the continued status of that partnership, since at all of the locations where SPG has tied up with ITC, Marriott has its own properties (though admittedly, some of them are just not comparable with the ITC Luxury Collection hotels).

Overall locations in India

SPG has 66 properties in India (including 19 that are construction in progress, though some of these may be so early stage that they might be dropped, having regard to the transaction). Compare that to Marriott's 33 hotels. Also, Marriott has a presence in only 3 or 4 places where SPG does not have hotels. On the contrary, SPG has 12 locations where there are no Marriott hotels, and in a further 9 cities, has more hotels than Marriott does. Therefore, if you're a Marriott loyalist, this is probably a good time as any, to cheer, as there'll be more earning opportunities in India now.

Conclusion

Clearly, the Marriott-SPG combine will be bigger than anything we've seen before. Just take a look at this infographic that they put out yesterday.

I've said before that from a pure point value and stay/redeem perspective, Marriott offers better value than SPG, in India. However, once you include elite and other benefits as I've described above (admittedly, some of them have minimal value in India, such as co-branded points earning options), the equation becomes quite different. All in, it appears that 21 million SPG members will likely have more to worry about losing, than the 54 million Marriott Rewards members! [For convenience, I've disregarded common members.]

That said, if you're an SPG member, you shouldn't worry yet about immediately burning your Starpoints. As I mentioned earlier in this post, the integration of the two programs cannot and will not be immediate, and even after it is announced, there will likely be a period of time before the new common program kicks in. Who knows...the new program may be tailored more to suit SPG members (that shouldn't make Marriott members any worse off).

We'll be tracking this, and update on any developments. Till then, stay tuned.

What are your thoughts on the potential issues for SPG and Marriott Rewards members? And any suggestions for the new program?