Starwood Hotels and Resorts Worldwide (NYSE: HOT) is merging with Marriott for $12.2 million, which will rocket the company aboard the world's largest hotel chain. The majority of Starwood's business comes from its most loyal customers, not the breadth of rooms booked. Using analytics, Starwood published a report that 30% of its profits came from 2% of its customers. The loyal Starwood Preferred Guest is the driver of the chain. As an example, the SPG app is specially designed to give a customer a personal experience. The app allows preferred guests to use their phones as room keys, bypass check-in, or request a meal in your room on arrival. So, with these personalizations and technological gold touches, can Starwood stay connected as it merges with Marriot?
Sheraton, St. Regis, the W, these are just a few of the 1,270 properties that Starwood owns worldwide. After the merger, Starwood will be apart of a chain that has 5,500 properties. A New York Times article recently detailed a few guest concerns about the merger, including a infamous chocolate and raspberry mousse dessert. The Starwood Preferred Guests were slightly ridiculed in the article for their unreal expectations of luxury treatment. It is possible that the merger with Marriott will allow the company to temper expectations and pull revenues from more than just its loyal 2%.
The merger between Starwood and Marriott is going to be a very complicated move. There are 19 full-service brands that are in question here. Ironically, loyalty reward points post-merger are already in question.
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