Starwood Gets an Early Start at Easing Loyalty Program Tensions

With shareholder approval now on the books and the Marriott and Starwood merger succinctly moving forward, hotel executives have returned to the course of retaining their hand-wringing loyal customers.

To that end, Starwood’s loyalty team wrote an email to their customers on Friday, shedding light on the joint program’s future and attempting to soothe any anxiety.

While the email did little to forecast the ultimate construct of the joint loyalty program, it did give a few hints about the integration timeline. Chiefly, the groups plan to merge Starwood Preferred Guest (SPG) and Marriott Rewards in 2018, leaving the rest of this year and all of next year to iron out any kinks in the joint product.

Adopting a more conservative timeline for program integration also gives loyalty members the rest of this year to maintain their elite status trajectories for 2017 and then realign their goals for the 2017-2018 status years.

As the joint program takes shape, that alignment will be a particular challenge. Traditionally, SPG and Marriott Rewards have catered to different audiences. Starwood’s Preferred Guest features a wide range of transfer partners and a strong co-branded credit card, netting a near cult-like following among heavy travelers. Marriott Rewards, on the other hand, emphasizes strong hotel redemption options, earning strong support from the generalist, non-elite population.

Recent rankings from J.D. Power reflect the dichotomous nature of the two programs. Across the general population surveyed in that study, Marriott Rewards won top ranks for the favorite loyalty program, while Starwood ranked close to the bottom. Results from the 2015 Freddie Awards, in which frequent flyers annually rank loyalty programs, by contrast, suggested that Starwood had the best redemption options.

Given the speedbumps that may lie ahead in making the two new programs (and their communities) mesh, with this week’s message Starwood seems to be starting early in keeping its customers informed and happy. Key points in the email revolved around ensuring members retain their benefits, including Starwood asking:

• How do we continue to deliver the unique experiences, benefits and rewards you’ve come to expect both in and out of our hotels and resorts?
• How do we take full advantage of the extraordinary new range of hotels, resorts and destinations that will be the hallmark of a combined Starwood and Marriott to add new recognition and benefits for you?
• How do we protect the value of your currency and status, whether your Starpoints balance, lifetime status or membership level?

Eventually, changes to both programs are inevitable, and like in all mergers of past, both loyalty programs will have to give up portion of its benefits. But in starting the dialogue early, Starwood and Marriott are doing their best to soften the blow. If the two programs can keep up the communication and continue to listening to customers, they may yet keep a good portion of their loyal customers.

The full letter to Starwood’s Preferred Guest members is posted online at spg.com