As one might think, the majority of conversation on Marriott's earnings report last week was about the integration of the Starwood merger.
Since it's probably worthwhile for us 'loyalists' to know where we're headed, here are some of the highlights;
1) The success of the loyalty program was stated as the most important goal (as I wrote last week, Arne said "our most loyal members love the matching program", now a snarky guy might observe, because if you don't, you aren't our most loyal customer - but for me, so far so good )
a) 3.3 billion points have been transferred so far (no, I don't know which way)
b) only 16% (13.6 million out of 85 million) of members were in both programs - tremendous potential/challenge
c) holding on to loyal SPG and Marriott Rewards members is crucial (competitors already approaching/poaching - emphasis on and is mine)
d) loyalty reduces OTA bookings (financially significant) and provides more negotiating leverage (it's not just warm fuzzies)
e) around 900,000 new members have joined since merger
2) Current plans are to promote overall portfolio of brands and loyalty (vs. aggressive individual brand marketing)
a) gave the impression that dissolving brands not a major focus, but will see what they see (my wording)
b) made a point of mentioning their interest and intent on growing Aloft and Element (my thought - Airbnb defense)
3) Immediate priority - (sound the trumpets) Implement same technology system at all 6,000+ hotels in 120 countries
4) The majority of the $250 million cost savings through 'synergies' should be captured by September
Overall, nothing shocking and per usual, Marriott will do what's best for it's bottom line: nothing radical, nor IMO, as a shareholder, wrong there; it just points out to me the need for the traveler to observe whether a) it's short term tactics or long term strategy and b) how best can we, the traveler, align with the direction of the company to optimize our travel experience (realizing it's not about love, kindness, unicorns, and rainbows, but financial performance). We have already seen some benefits of Marriott courting SPG (late check out, Concierge/Ambassador), let's keep our eyes open (and share) for others.
and since I'm serving today as a quasi P.R. rep for Mother Marriott, here's Arne's open letter to President-elect Trump in case you hadn't seen it; feel free to treat it as one of your 30 days of holiday rewards
Iinteresting enough but nothing really new here, other than the 3.3billion points transferred - that's a goodly number!
As you say, we've seen some nice benefits of the merger, in particular the 4pm late checkout which I have to say I have got without hesitation whenever I've asked for it, though I don't use it much, all the same a hat-tip to Warsaw, Houston North, Budapest and Peterborough Marriott's!
Whereas, as stated, there's not too much new information revealed, a little digging into the nuances provided me with a renewed perspective about the future of loyalty, digital marketing. 900,000 new members in a few weeks, is a material number. With all the emphasis Marriott has placed on its loyalty program, we see more and more the importance of the gathering of data and the use of metadata.
Big Thom in Houston made clear, even highlighting the new instrument coming soon for gathering additional travel habits, that knowing the customer and their interests is vital to Marriott's future target marketing (nothing really new there either, except the thoroughness and efficacy of the approach).
Netflix is a prime, successful example of this - having 33 million subscribers (at the time, now over 47 million), they preempted any network offer of a $5 million pilot for House of Cards by ordering 13 episodes for $100 million (they already knew their subscribers liked Kevin Spacey and David Fincher products and many had enjoyed the British version).
Marriott, by offering points, contests, and interaction has been successful in increasing their customer data base. I happened to look at #MembersGetIt the current promo, clicked on the Google link and was surprised to see six or seven Insiders accounts come up, one with a picture of all of us at Tipple. Going deeper into the 'tweets' there was all types of info there, and I'm just a technoslob, imagine the clever folks usage - wow.
It would be interesting to see if each of us got different folks accounts (I got Waynesboro, Canada, Columbus, Fresno etc) based on who we were clicking the link. It's a brave new world out there. I have hedge fund pals that actually use social media posts for trading trends. I'm like Bill Marriott, preferring to be a late adapter, he liked to say, there's a lot of dead pioneers. But like Bill, I keep an eye on things (like mobile check in and keyless entry) so I'm ready to utilize when I finally (granted, late to the game) feel the bugs have been worked out.
The one question that pops into my mind about the 900,000 new members is are these really new members or are they current SPG or Marriott members who are just now opening accounts in the other program?
I still have not signed up for SPG, but if I decide to do so, will I count as a new member?
Now if we're talking new members who have not been part of either program, that's some serious marketing success.
Since the 85 million was a combined number of the two programs, I (and my fellow listeners) took the 900,000 as being new members outside the combination added since the merger.
The absorption of all of this is probably why we're seeing some of the redundancy we see in the 30 Days of Members Get It / Holiday Rewards.
Edited note: I just chatted with a fellow listener - actually it's 900,000 new members since the implementation of Members Rate (just imagine if they were real deals ), so it's a bit longer period, but still an impressive number and who knows what they'll add once they really start cooking in China and India. Once again, another reason not to threaten "to take our business elsewhere" as an individual, but rather, learn as much as we can and optimize our travel through shared info. Keep on keepin' on Insiders
Aloft isn't a total Airbnb defense. Element, a bit more. I think Aloft's space is very small for many users. While lots of "hipsters" are Airbnbing, I'm seeing more families and older people spending a week or two in a destination using Airbnb (I'm not hip and Airbnb serves 1/2 of my hotel needs) We also Airbnb our house out, and nobody has been less than 50 who has rented so far in 3 years. Purely anecdotal, but interesting, nonetheless, I think.
Also, if Aloft/Moxy is trying to compete with the younger crowd, they need to get in there more. I work a lot with that younger crowd and they don't know much about these brands until I tell them. I think they could do some really creative marketing in this sector, because once you get hooked as a marriott user, as all of us here know, it's hard to leave.
Well you know things are looking up when The Motley Fool says "buy" .
Thanks for the breakdown. 900k new members is pretty amazing.
Yeah I agree with homoviator, I don't think the younger crowd knows much about Moxy and Aloft. They use Airbnb, Expedia, and TripAdvisor.... it amazes me how many people use 3rd party sites. Then again... they advertise on TV and I see the ads ALL THE TIME!
The stock has gone up over 10% since the Nov. 7th release; 5% today alone hitting a 52 week high (the market, no doubt responded to our Insiders discussion ).
Here's some more fun facts to know and tell that I didn't post earlier (because I already had made folks eyes bleed), but I decided to share after reading of three more posters writing in to say that they had enough and were leaving Marriott, some implying that "that oughta teach 'em!".
I'm not saying that Marriott has the right to mishandle customer service situations; I'm saying if anyone has a beef, address it either with the operator, the hard working moderators, or the social media teams on Facebook or Twitter (Marriott is actually quite responsive); don't threaten a departure as if, the lost revenue will make Marriott jump to it.
Take a look at these numbers versus the impact of a departing individual
Marriott International Inc. (NASDAQ: MAR) spent $237 million on merger-related costs in the third quarter, $186 million of that on severance and employee retention, Marriott CFO Leeny Oberg told shareholders Nov. 8. There were also $24 million of transition costs, $18 million of transaction costs and $9 million of interest expenses.
Yes, I don't think a few people leaving will phase Marriott. I feel like Marriott has one of the better customer services out there. The mods here are amazing in getting in touch with the proper Marriott teams to handle things. Patience is also key!
Glad I bought a few shares of Marriott when I did, not sure I could hang right now with current prices.