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Marriott – Starwood merger offers an opportunity to boost Starwood brands

Based on guest feedback from J.D. Power’s annual North American Hotel Studies, Marriott Hotels has always ranked among the best, not just in satisfaction, but just as importantly, in consistency. J.D. Power looks at both satisfaction ratings and the variability among those customer ratings. Starwood Hotels, by contrast, rank among the least consistent, and therefore tend to be in the lower half of the satisfaction rankings as well.

Marriott’s acquisition of Starwood offers a number of interesting possibilities, particularly since there is quite a bit of overlap among their respective brands within tiers. For example, Ritz-Carlton and J.W. Marriott are both counted among the ‘luxury’ brands by Smith Travel Research, as are Starwood’s W Hotels, along with St. Regis and The Luxury Collection. Similarly, full service Marriott Hotels, Renaissance, and newly acquired Delta Hotels are upper upscale brands, as are Starwood’s Westin, Sheraton, and Le Meridian hotels; and Marriott Courtyard and SpringHill Suites fall into the upscale category as do Starwood’s Aloft and Four Points. That’s a lot of brands competing in the same markets at similar price points.

While the hotels within this newly blended family of brands have some similarities in how they are classified, there are significant differences in the experiences guests can expect. Based on guest feedback from J.D. Power’s annual North American Hotel Studies, Marriott Hotels has always ranked among the best, not just in satisfaction, but just as importantly, in consistency. J.D. Power looks at both satisfaction ratings and the variability among those customer ratings. Starwood Hotels, by contrast, rank among the least consistent, and therefore tend to be in the lower half of the satisfaction rankings as well.

As the data shows, the Marriott brands usually show up in the top half of the consistency rankings within their respective tiers, while Starwood brands tend to be in the bottom half of consistency rankings. The exceptions being full service Marriotts, which are the least consistent among the Marriott brands, and Westin which tends to be the most consistent of the Starwood brands. It should be noted, however, consistency isn’t always desirable as Marriott’s Delta Hotels are consistent, but fall into the lower half of the guest experience rankings (e.g., consistently mediocre), as does
Westin.

From an investor perspective, brands lose equity due to inconsistency, particularly within North America where predictability is highly valued. Now everyone likes McDonald’s, but you always know what you are getting, which is a primary reason for their success. Similarly, Marriott brands generally deliver a consistent experience through a high rigorous quality assurance program. This is something, for whatever reason, Starwood brands have generally lacked. The fact that the Starwood hotels are now part of the Marriott family bodes well for improved quality and consistency of guest experience, and therefore, suggests a more positive financial outcome.

Rick Garlick is the Global Travel and Hospitality Practice Lead at J.D. Power. He is responsible for providing industry thought leadership to the company’s clients in the hotel, rental car, airline, and cruise line industries, among others, as well as creating new products and revenue opportunities to grow the practice. A frequent conference speaker, Dr. Garlick has published numerous articles in industry and academic journals. He has also appeared on such national media outlets as MSNBC, CNBC, CNNfn, Bloomberg Television, and National Public Radio, as well as being quoted in a number of national publications. Currently, Dr. Garlick serves as chair of the Research Committee for the Hospitality Sales and Marketing Association (HSMAI) Foundation Board. Previously, he served in a similar function for Meeting Professionals International (MPI). Dr. Garlick received a Ph.D. in communication studies from Michigan State University.

 

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