Mariott will buy Starwood

[AJK]

1) As mentioned, consolidation is almost never good for consumers.
2) More importantly, look at Hilton and Blackstone. 'Nuff said.

[Dan]

You've quoted Seth's argument, but the Chinese aren't Blackstone. They're looking to hedge against the yuan and they're not going to do that by buying a loyalty program and then killing it.

Marriott on the other hand has every reason to kill the best parts of SPG, namely the airline transfers, suite upgrades, and high value of points.
Even if by some miracle all of that stays,  Marriott means losing yet another cobrand card issuer and having less competition in the industry. They'll be the biggest by far and that will negate the need to be generous in the long-term. Never mind that the only over generous program left will be tiny Hyatt.

I'm not buying Marriott being the ideal outcome here at all.

[AJK]

Your first mistake is referring to Anbang as "the Chinese" and not "a for-profit entity looking to increase such profits."  Too much of a carrot hanging in front of a consortium of investors who want to make something called $$$ and ROI. They could not care less whether you get your "suite upgrade."

Second, TBG didn't "kill" Hilton; in fact TBG made in excess of $10 billion milking the heck out of Hilton, yet here it remains...  with TBG ever richer. If you don't think Anbang has seen that and begins to think, you're fooling yourself.

[CS1]

Your first mistake is referring to Anbang as "the Chinese" and not "a for-profit entity looking to increase such profits."  Too much of a carrot hanging in front of a consortium of investors who want to make something called $$$ and ROI. They could not care less whether you get you "suite upgrade."

Second, TBG didn't "kill" Hilton; in fact TBG made in excess of $10 billion milking the heck out of Hilton, yet here it remains, with TBG ever richer. If you don't think Anbang sees that and thinks, you're fooling yourself.

it's not about the suite upgrade. It's about the customer loyalty. Almost anyone who has SPG plat and those who have earned lifetime plat will automatically choose to stay in a starwood in every city that they travel to over a hyatt, hilton or marriott due to the fact that every stay, regardless of cash, points, or c & p counts as a stay towards their next year's platinum. That's in addition to the fact that most properties are pretty decent and/or upscale, and that their point > value ratio is quite high...

[AJK]

...huh? 

TBG conducted what is arguably the worst gutting of a program ever, and guess what the stock price did? It obviously plummeted. Surely, customers--of "customer loyalty" fame--voted with their wallets and abandoned Hilton, their status, and their large footprint.

Wrong. The stock went up. Nearly 50%. And then TBG unloaded billions worth, solidifying its place as one of the greatest LBO's in the history. of. the. world.

Yes, this is totally about a hedge and customer loyalty.

[Dan]

Hilton had the footprint to handle a deval. Businesspeople still need to stay there.
SPG simply does not, so they use a richer loyalty program to force stays there. A gutting of SPGs loyalty program will leave little of value.

To put it simply.
Odds of SPG deval with Marriott takeover=99%
Odds of SPG deval with Anbang takeover=50%.

Pick your poison sir.

[AJK]

To beg a question means to assume the conclusion of an argument—a type of circular reasoning. This is an informal fallacy, in which an arguer includes the conclusion to be proven within a premise of the argument, often in an indirect way such that its presence within the premise is hidden or at least not easily apparent.

[tzifanya54]

The problem is even the "loyal customers", don't care enough. If it makes sense to stay at a property they will stay there even if they are ticked off. Most people are not fanatics, they may say or think something in theory, but at the end of the day they do what's easy, or financially viable for them.

[AJK]

The problem is even the "loyal customers", don't care enough. If it makes sense to stay at a property they will stay there even if they are ticked off. Most people are not fanatics, they may say or think something in theory, but at the end of the day they do what's easy, or financially viable for them.

Precisely.

People on DDF and FT and MP can pontificate until the cows come home. Bottom line is most SPG member will continue staying where they've been staying, regardless of devaluations.

See, Delta.

[Dan]

So you'll pick the guaranteed deval versus the tossup deval.
Cool story bro.

[AJK]

Well, now that we've settled that. If only I could win arguments like that, my job would be a lot easier.

Speaking of which, back to work for me. Keep fighting the good fight.

...or make a blog post about it.

[meme]

http://www.pymnts.com/news/acquiring/2016/why-amex-is-hoping-against-the-starwood-marriott-merger/

[EJB]

...huh? 

TBG conducted what is arguably the worst gutting of a program ever, and guess what the stock price did? It obviously plummeted. Surely, customers--of "customer loyalty" fame--voted with their wallets and abandoned Hilton, their status, and their large footprint.

Wrong. The stock went up. Nearly 50%. And then TBG unloaded billions worth, solidifying its place as one of the greatest LBO's in the history. of. the. world.

Yes, this is totally about a hedge and customer loyalty.

As Dan mentioned, SPG's competitive advantage is customer loyalty. Marriott's is their scale. SPG can't afford a huge devaluation, while Marriott + SPG can.

Similarly, Hilton could, and did, while Hyatt can't, and their program remains relatively strong

[EJB]

Precisely.

People on DDF and FT and MP can pontificate until the cows come home. Bottom line is most SPG member will continue staying where they've been staying, regardless of devaluations.

See, Delta.

Not a good example.

1. Delta has a much larger presence as an airline than SPG has as a hotel chain
2. It's inconvenient to switch from Delta to another airline if you live by or travel to Delta hubs frequently. The same can't be said for switching hotel chain loyalty.
3. IMO Delta never set itself apart from the competition with their loyalty program. SPG did.

One thing to keep in mind, Marriott's program isn't much less valuable than SPG's is for most people. It is for us, since we generate points predominantly due to spend and signup bonuses as opposed to through stays, but for the average traveler, it's not. While Marriott points are worth a fraction  (~1/3 IMO) of SPG points, they also are much (~5x) easier to accrue through stays. My guess is that SPG points convert to Marriott points at a 1:2 ratio and little changes are made to the Marriott program structure once the programs merge. 

[Dan]

As Dan mentioned, SPG's competitive advantage is customer loyalty. Marriott's is their scale. SPG can't afford a huge devaluation, while Marriott + SPG can.

Similarly, Hilton could, and did, while Hyatt can't, and their program remains relatively strong

Not a good example.

1. Delta has a much larger presence as an airline than SPG has as a hotel chain
2. It's inconvenient to switch from Delta to another airline if you live by or travel to Delta hubs frequently. The same can't be said for switching hotel chain loyalty.
3. IMO Delta never set itself apart from the competition with their loyalty program. SPG did.

One thing to keep in mind, Marriott's program isn't much less valuable than SPG's is for most people. It is for us, since we generate points predominantly due to spend and signup bonuses as opposed to through stays, but for the average traveler, it's not. While Marriott points are worth a fraction  (~1/3 IMO) of SPG points, they also are much (~5x) easier to accrue through stays. My guess is that SPG points convert to Marriott points at a 1:2 ratio and little changes are made to the Marriott program structure once the programs merge. 

All perfectly stated.

If SPG and Hyatt could devalue, they would. They lack the scale to do so.
Delta focuses on network and operations, not loyalty. SPG and Hyatt are loyalty plays and don't have the ability to devalue like Marriott, IHG, and Hilton have.

[puppydogs]

ANBANG just raised their offer

[CS1]

ANBANG just raised their offer

not "april fools"?

[Proisrael]

not "april fools"?

82.75 a share!!

[Hershelsdeals]

http://www.businessinsider.com/anbang-makes-revised-offer-for-starwood-2016-3

[CS1]

82.75 a share!!

It's at $84/share now.