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US: Marriott will take time to get merger right

Over at the Boarding Area, Gary Leff reports on a speech by Marriott CFO Leeny Oberg at a Goldman Sachs event in which she outlined a rough timeline for and highlighted some of the challenges in integrating the Marriott and Starwood loyalty programs. Given the sheer size, complexity, and technical requirements of this intergration, Oberg’s message to the company’s customers and to industry observers can be summed up as: “Patience, grasshopper.”

By Rick Ferguson

Leff highlights two key learnings from Oberg’s remarks:
Marriott will take time to get it right. Because of the immense amount of work required to create both the common back-end IT infrastructure for a single loyalty program across all properties, as well as an integrated “front door” for the new unified program, we can expect that Marriott will err on the side of getting it right rather than adhering to any publicly-announced deadline. Money quote #1:
“[Oberg] expects that it will be ‘late 2018 for the ability to have one back engine’ running the two programs on a single platform. Then ultimately they want ‘one front door’ or single program for customers. While they expect bringing programs together ‘by the end of ’18’ (she describes that as ‘hopeful’ and says she is ‘not promising’). Although she notes that the two programs can change policies to become more alike in the meantime. IT projects, of course, rarely progress on hopeful timelines so pushing back farther shouldn’t be surprising.”
A new unified program credit card could be a boon for members. Oberg noted the challenge of aligning on new credit card offers for the new combined programs, but also noted the opportunity. Money quote #2:
“In addition to the IT, the biggest hurdles to a single program are the credit card deals that they have (Chase with Marriott and American Express with Starwood)… [Oberg] sees the credit card deals as easier because those are short term contracts, so everyone has an incentive to work together towards a re-up. Surprising no one, the bidding between American Express and Chase means that Marriott has ‘tremendous potential.. [for] a stronger credit card deal than we had before, good benefits for all constituencies.'”
Translation: With 85 million members in the combined program, Marriott has leverage with American Express and Chase, and they aim to use it. That bodes well for members of the two programs. They might have to wait a bit longer for a combined program – but when it arrives, it will have some serious firepower behind it.
Rick Ferguson is CMO and Editor in Chief of the Wise Marketer Group.
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