The papers might be signed, but the real work starts now when it comes to addressing owner concerns.
It’s taken nearly a year to get from point A in Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide (last November’s announcement) to point B (today’s official word that the deal is done).
But wait a second—that word, “done.”
Nothing’s “done” yet. Sure, papers have been signed, some details are set, but the hardest part has just begun, and the real news will happen over the next few months, even years, as these companies come together.
So many times over the past year we have heard executives from both companies say variations on the same lines: “It’s business as usual for now” and “We can’t begin to merge X and Y until the deal is actually done.”
Well, it’s go time, Marriott.
We have lots of resources on Hotel News Now to get you up to speed on every bit of news throughout this whole process (check out our “What to know about Marriott’s Starwood deal” page here).
In the year since we’ve been covering this ongoing news story, we’ve heard a lot about the pros of a deal like this, including size, scale, ability to negotiate, etc.
But I’ve found myself paying the most attention to the challenges associated with a deal of this magnitude.
Of course there are huge changes and challenges at play—what will happen with all the brands? How will the loyalty programs merge? But the relatively smaller-scale challenges are the ones I think that will cause the most headaches. Here are two that owners keep raising questions about, that I think might be the most worrisome:
- Technology: The hotel industry is already behind when it comes to having flexible and nimble technology to run the business of a hotel. Add in the necessary elements of card security, two very different, very proprietary systems, and the result could be tech vulnerability. No hotels or companies need that sort of vulnerability right now. And what will that mean for owners? Heaven help the owner who just invested in Starwood technology for a recent opening and now will have to shell out again for the switchover.
- Owner costs: That leads right into owner costs. Will Marriott cover costs like signage and other branding changes? Inevitably some of that will have to pass on to the owners, won’t it? And don’t forget capital costs, and fees that Marriott will put on owners. How will they change? Theoretically, a new, giant Marriott will save tons of dough by negotiating with online travel agencies and other vendors using their new scale, but will those savings ever pass down to owners? Will those owners still pay ever-increasing franchise fees, marketing fees and so on?
I have no doubt Marriott can and will address these challenges. Most reaction, since the deal first was announced last November, has been positive. I have no reason to doubt the end result will be positive, too.
However, my warning is this, Marriott: Don’t overlook your owners and the power you’ll have. You’re not a real estate company anymore—well, you won’t be after you sell off those last pesky Starwood assets. You’re a brand company that franchises. Your owners ARE Marriott. Be good to them.
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