Marriott Travel Packages Went ‘Worst-Case Scenario’ – Why? (A Cost-Benefit Analysis)

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Marriott PR and Marriott Insider on FlyerTalk have unveiled their old to new Travel Package mapping. It’s in line with the ‘worst-case’ scenario.

A range of theories were given as to why Marriott refused to announce this prior to August 18, 2018, when customers could still book or change under the old pricing.

Toss out the theory that they hadn’t decided this. They were ready to go and ready to disappoint.

Also toss out the theory that something extra generous was in store:

Marriott Travel Packages New 2018

Note: while Marriott had this news ready to drop, no existing packages can be attached to hotels until September 18, 2018 – they somehow need a month to get that ready.

Thinking in Categories or Points?

Thinking in category terms:

  • Category 1-5 holders get exactly what they expected: being able to book all new Category 1-4 hotels, even when peak pricing is implemented in 2019
  • Category 6, 8, and Tier 1-3 holders get hosed for paying more than was needed and arguably getting less value than prior categories
  • Category 7 and 9 holders do pretty well, though not as well as some had gambled
  • Tier 4-5 are ok for the rest of 2018, but in 2019 when Category 8 is introduced, they won’t then be able to redeem for those properties

There is no further statement from Marriott as yet, on, for instance if point difference refunds will be available to people with Category 6, 8, and Tier 1-3.

From Marriott’s initial spin, a point difference is not warranted because they are framing it in points instead of categories:

No existing Travel Package certificate is losing value in terms of points and, with the new Free Night Award Chart that goes live today, 70% of our hotels either stayed at the same redemption rate threshold or moved down. As we structured the conversion chart, we considered the introduction of peak and off-peak redemption rates, which will be introduced in early 2019. This means that if you have an existing Category 9 certificate, which converts to Category 6 starting today, holders will still be able to attach the certificate to a stay when redemption rates within that category are at their highest.

Losing for Thinking Positive

Last week I wrote about my decision to purchase a Category 6 package with a target of a hotel in Japan. Japan will only have one Category 4 hotel in Japan. It will be under snow in Hokkaido when we plan to travel in January.

I figured Category 7 was a safe map to ensure a new Category 5. I didn’t want to spend an extra 30,000 points that I might not need to, so I risked booking a Category 6.

Now I lost 30,000 points from what I could have paid for a Category 1-5, and we don’t have a viable option for our preferred travel plans.

Technically, Japan may still work out for us if Off-Peak pricing is introduced January 1 and we can confirm the package last minute. Even then, I’ll still be out 30,000 points that will be my first and dominant impression of Marriott-SPG going forward.

What Were They Thinking?

My thoughts are in line with reader Zed on One Mile at a Time’s post:

On the FlyerTalk forum there is the typical mix of outrage on the one hand and I-told-you-so-ers on the other hand.

To me, whether you gambled or not, the problem here is that Marriott decided not to communicate their decision in advance, though it is clear (now) that they had reached such a decision.

The prevailing commonsense indicated that Marriott didn’t want to communicate an generous decision in advance in order to prevent a huge volume of Travel Package purchases. That is logical.

What does not make much sense is for Marriott to have waited to communicate a not so generous decision until it was too late for customers to make any changes, in particular a decision that practically leaves three sets of customers (Cat. 6, Cat. 8 and Tier 1-3) in a worse position than customers who paid less for the same product. Marriott knew they were going to do precisely that, and could have given prior notice but chose not to (and if they had done so, they could have also stopped all of the speculation on this issue which has been flying around the blogosphere over the past 4 months).

Let’s see what happens here. Maybe they will come to their senses and offer 30k refunds to the customers which are worse off compared to their fellow customers (or some other solution).

Whether you think people were right or wrong to gamble on these packages, from a customer service perspective, Marriott has failed miserably in the handling of this component of the merger.

Does Marriott Win?

Marriott knew the Travel Packages were of limited general interest, yet of intense interest to 2 customer groups:

  • Ultra Marriott-SPG loyalists that are valuable to Marriott in terms of paid hotel stays
  • Points travelers like me that are not valuable to Marriott in terms paid hotel stays

Marriott has talked of their efforts to appease their SPG loyalists to not defect to another chain when the imperial purple of SPG is swallowed by the drab maroon of Marriott.

By actions such as reducing the earning on the Amex SPG cards, Marriott has signaled that their credit card users, and points travelers generally, are not of value.

A bit different from some airlines that happily make money from their credit cards and don’t mind if those card holders never take a flight with them.

Or, from Hilton, IHG, and even Hyatt, that seek to attract credit card-centric travelers. Compare the underwhelming Amex SPG Luxury Card to the Amex Hilton Aspire.

Both these groups of travelers were speculatively booking Travel Packages. Marriott did not have a way to segment them.

What’s a mega-size lodging company to do?

Marriott’s Cost-Benefit Analysis

I wonder the cost-benefit analysis of the decision. I don’t have any numbers, so can only speculate on weighting of these factors.

Announcing in advance:

Costs:

  • Extra redemption costs from Marriott Rewards to hotels for those booking Category 7, Category 9, and Tier 1-3
  • Possible extra airline mile costs if package booking volume is higher that when not announcing in advance

Benefits:

  • Minimal complaint handling
  • Good will
  • Neutral to positive media / social media coverage

A better-case scenario – shifting up a category:

Costs:

  • Extra redemption costs from Marriott Rewards to hotels
  • Complaints handling from people who booked higher than they needed to and want a points difference refund** (e.g. if Category 6 and 7 both mapped to the new Category 5, then the Category 7 customers would ask for a refund)
  • If points travelers are money losers for Marriott, then having them happy enough to stick around is a cost (especially if they empty the Club Lounge of food and drink every morning and night)

Benefits:

  • Lots of happy loyalists who think they got a deal to start off the new Marriott-SPG program
  • Good will
  • Positive media / social media coverage

The ‘worst-case’ scenario that they chose – shifting down a category:

Costs:

  • Complaints handling on a big scale**
  • Losing some loyalists who take this as their ‘last straw’ (many people routinely threaten this to airline and hotels, many fewer follow through in defecting)
  • Loss of good will
  • Negative media / social media coverage

Benefits:

  • Lower redemption costs
  • Get rid of some loss-making/low-value points travelers

*In the ‘best-case’ and ‘worst-case’ scenarios, mileage redemption costs could have been a cost or a benefit compared to if the mapping had been announced in advance and people did not need to speculatively book.

**Complaints handling could be reduced in ‘best-case’ and ‘worst-case’ scenarios by proactively offering refunds for point differentials, which will mean giving out a lot of points for people who don’t complain. Or, saying they will refund for anyone who follows through in requesting a refund. So far, these don’t appear to be on offer.

My Bias, Analysis, and Future

My thinking through this process led me to conclude that a Category 6 would be a happy win for me. It was not.

Stepping through the cost-benefit, without access to Marriott’s data, it seems the best for them should have been, i order:

  1. Announce in advance
  2. ‘Best-case’ scenario
  3. ‘Worst-case’ scenario

I was biased by my Northwest-Delta merger experience. In the lead up to the combination, and the first year of the combination, they did all kinds of things to keep frequent flyers happy. A year later, the communications, the promotions, the new benefits all dried up. I figured we’d have a similar buffer with Marriott-SPG.

In my individual case, Marriott probably gets the outcome they want. I have enjoyed Gold Elite with lounge access and breakfast via their RewardsPlus program with United.

That status will be Platinum Elite through January 2019. When it drops down to the new Gold Elite in February 2019, gone are the lounges and breakfasts, and gone am I.

Hilton’s hotel offering is to me comparable to Marriott-SPG, and I can much more easily get Hilton lounge and breakfast via credit cards.

At the no breakfast level, the footprint, range of brands, price points, and ‘surprise and delight’ moments of IHG work much better for my travels.

I also can’t stand the pillows in U.S. Marriotts. They are like trying to rest my neck on a sack of cotton candy.

Readers, do you think Marriott will stand firm or walk this back a bit?

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Tclayman
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Tclayman

Marriott Fraud Facebook page has over 4800 people on board. Fight Back!

https://m.facebook.com/pg/Marriottrewardfraud/about/?ref=page_internal&mt_nav=0

Tclayman
Guest
Tclayman

The only fair solution is to credit cat 6 and cat 8 holders the 30k back OR let them move one category up to the next level. I bought cat 8 for a fall 2019 trip, which could not be assigned to the property I wanted because Marriott doesn’t book that far out. Consulted with the CSR on what to do and followed his advise to book cat 8 for the property I wanted that is now cat 6 and not covered by my cat 8 converting to cat 5. Holding the conversion chart and having CSRs just wing it… Read more »

joeheg
Guest

As a leisure traveler who usually checks a bag, I bring my own pillow from home. Marriott can keep their pillows and the SPG AMEX card and Chase Marriott cards once I manage to find a redemption worthwhile. I’m sorry to see so many people get hosed on the “worst case” but it was always a possibility, just not one we thought Marriott would use.

Lynn
Guest
Lynn

You know what…I’m already sorry I was snarky. I still think you were playing a speculative game, but I agree 100% that Marriott knew in advance how they were going to handle these, and they should have done something weeks or months ago to account for it.

Lynn
Guest
Lynn

You were playing a game. You admit in your post that your purchase was “speculative.” Don’t complain that it didn’t go your way.

Tclayman
Guest
Tclayman

OK, Lynn let’s play a game. I put 8 cards on the table face down and ask you to pick the one that is the highest. You can ask my representative for assistance. My representative tells you that it is the 6th card from the right. I turn over the cards and you are wrong. YOU LOSE!

That is what Marriott did by not letting us know the category conversions and by having CSRs telling THEIR customers to buy this category and you will get it after the big reveal.

Nathan
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Nathan

It just proves what I thought a year ago…. I don’t like Marriott. I gave them a try this year (70 nts to date). But yes, Hilton here I come. Hilton is better too because when you play the couples game and need two rooms. You can have two Diamond reservations per the Ascend card. Can’t do that at Marriott. Yea I hit on Cat 8 and lost. But I already have both weeks planned and attached. But I still would like 30K returned!!!

iv...
Guest
iv...

The lack of transparency, communication, and false information from Marriott and it’s representatives on these travel packages that has dragged on for months has been frustrating and disappointing. They need to refund the 30K points.

Tclayman
Guest
Tclayman

Fight Back! Better Business Bureau complaint. File a letter to your state’s Department of Justice Attorney General’s Office Consumer Protection Division stating your case. Class action lawsuit is surely coming soon. FIGHT!

dale m
Guest
dale m

Stefan,

I’m in the same boat having bought a Cat6 package. Aargh – lets’ see what happens – a modest refund would indeed seem appropriate.

Also, this is the second time you’ve posted about the “through January” lounge access with Gold. Can you point me to where Marriott has documented that? (if it seems clear enough, it may influence me to book the package in Dec or Jan)

Thanks for the informative posts on this topic

Christian
Guest
Christian

Good post. The thing that I just can’t figure about this is why make all of the mouth noises about the value of SPG loyalists if you’re going to make moves like this that just piss the people off that you’re supposedly trying to convert?