Marriott-Starwood: Do I-Bankers, Protea, and Delta Give Us Hope?

After the breathless reports of the Marriott-Starwood deal on Monday, I read through the Tuesday FT and WSJ reports and there are items of note:

  • Deal will not close until mid-2016
  • $400 million breakup fee if the deal falls through
  • Investors not happy with the perceived low valuation of Starwood

Four years spent in halls of Wharton with wannabe investment bankers taught me enough that the second they earned their fees for this deal, they began licking their chops for a share of the $400 million breakup fee and a new round of fees for a new deal. Bonus time and they have half a year to do it.

If the Deal Closes:

Let’s fast-forward to mid-2016 and presume the deal closes. Do Marriott’s acquisitions of South Africa’s Protea and Canada’s Delta indicate a way forward for Starwood Preferred Guest? Both are smaller than Starwood in size and scope: Protea with 116 properties in Africa, and Delta with 37 properties in Canada.

Protea:

Marriott announced the Protea deal on January 22, 2014 and closed the deal on April 1, 2014. 25 of Protea’s hotels in South Africa joined Marriott Rewards on February 25, 2015. The other properties are still listed as ‘late 2015’ and there has been no public update for months.

I can confirm from a stay in October that Cape Town’s African Pride Crystal Towers recognized my Marriott Gold status and is a nice corporate park hotel for business, if you don’t mind the mood lighting. Don’t ask your colleague up to your room unless you mean to go all the way.

African Pride Crystal Towers

African Pride Crystal Towers

Namibia’s Protea Hotel Long Beach showed no indication of upcoming integration with Marriott. One of those hotels where the staff insist the internet works when the signal can’t even reach the room.

Protea Hotel Long Beach

Protea Hotel Long Beach

Delta:

Marriott announced the Delta deal on January 25, 2015 and closed the deal on April 1, 2015. Marriott moved quickly, from June 18, 2015 Delta Privilege was folded into Marriott Rewards with a transition period until February 29, 2016, see overview and FAQ. The transition period in general preserves benefits of the two programs while adding elite recognition at the other’s properties. Full, reciprocal earning and redemption launches next February. Marriott has made efforts to communicate changes in detail as shown in the FAQ.

Protea Slow-Go or Delta Rush?

Will a Starwood Preferred Guest integration be prolonged like Protea or within a year as Delta? Starwood is much bigger and stretches across the globe. Customers are deeply loyal to SPG and the costs of messing up will be high. Much will also depend on systems. Protea Hotel Long Beach had enough trouble finding our reservation from Orbitz and it appeared they manage by spreadsheets. Starwood properties presumably have better systems.

Without inside knowledge, I anticipate communication ready to go immediately after deal close, quick addition of elite recognition, followed by earn and redeem as early as February 26, 2017 though quite possibly later. Ritz-Carlton has retained its own branded version of Marriott Rewards, so that might be in the cards to not force SPG fans to full trade purple for maroon. The huge Amex SPG credit card portfolio may help prolong the life of SPG.

My Plan:

I won’t be in a rush to liquidate my Starwood points. I will take it as given that they will become less valuable to me once Marriott takes over. I believe Marriott will announce changes in advance. I will closely watch developments on airline transfers. I hope some form of Delta Crossover Rewards survives.

I am glad I never chased SPG lifetime status, maybe I would have if I had been a consultant. I have stayed at SPG properties on occasion for business, had several of their credit cards, though never have been willing to pay their rates for personal travel. Similar to many of Marriott’s brands, I find Starwood’s mid-range properties poor value for me compared to alternates and SPG has not been rewarding for stays to justify extra effort.

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  • Jim

    I’ve been wondering if the DOJ will block such a buy-out?

  • Rapid Travel Chai

    @Jim – I don’t know the intracacies, if I were Marriott I would hold up a big sign with the AirBNB logo.