Ensuring that hotel owners will not lose out in this merger is the challenge that the new hotel giant will have to face, Tasos Kousloglou, EVP-Asset Management, Jones Lang LaSalle (JLL) Hotels & Hospitality Group, and President, Hospitality Asset Managers Association of Asia-Pacific, tells Raini Hamdi
Tasos Kousloglou
Much has been made of the merger between Marriott and Starwood and how the new hotel behemoth will be received by guests, customers and the industry.
Yet overlooked in all this stir is one of the most important players in the industry – hotel owners.
As an asset manager who represents hotel owners with Marriott and Starwood branded properties in their portfolio, I have received and carefully read the letters sent by the CEOs of Marriott and Starwood to hotel owners that I represent highlighting the benefits of the “combined guest and customer base, loyalty program and powerful global platform” that are “expected to deliver more business to the hotels, increase efficiency, lower costs”, “enable increased investment in revenue-generating technology and innovation” and “lead to greater performance and profitability”.
The hotel owners are key stakeholders in this merger as they shoulder most of the property level risk. There is little doubt that the scale and breadth of the brands of the combined Marriott and Starwood company could create compelling advantages in marketing and distribution that may appeal to current and new hotel owners through eg. stronger negotiation position with OTA giants such as Expedia as well as economies of scale and potential re-branding opportunities leading to better performance.
However, there are also concerns due to overlapping of brand positioning, over concentration of brands and hotels in certain markets competing for guest loyalty, loyalty program benefits and the integration of the 54 million Marriott Rewards members with 21 million Starwood Preferred Guest members. Hotel owners may have to face competition from properties and brands of similar or stronger positioning under the same hotel group within the territorial restrictions agreed in their management agreements.
Hotel owners expect to see tangible benefits for the performance and profitability of their hotels as a result of the merger.
Will the combined Marriott-Starwood translate to stronger direct online bookings, repositioning opportunities, cost savings, lower reservation cost and premium pricing for their properties or will it result to additional competition and less attention to hotel owners?
The answer will largely depend on a successful integration plan that puts ownership interests at the same level with the interests of the newly merged company.
After all, the alignment of interests between owner and operator remains critical to the success of the hotels. A win-win relationship between owners and operators is always the best and augurs well for the future of the property.
Ensuring that hotel owners will not lose out in this merger is the challenge that the new hotel giant will have to face.
