Rapid Travel Chai

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:

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:

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?