Don’t worry Starwood (HOT) customers, your loyalty points are intact, says Marriott International (MAR) CEO Arne Sorenson.
“I think we can make sure the benefits stay the same or get better, but offer them a broader selection,” Sorenson told CNBC Friday in an attempt to calm a major fear among Starwood investors: that their loyalty points could be worth less after Marriott buys its rival in a $13.6 billion deal.
Sorenson’s interview came a day after Starwood’s other suitor, Chinese giant Anbang Insurance, abruptly abandoned its $14 billion bid late Thursday—ending a bidding battle that had been going on for weeks.
One reason Marriott has been aggressively campaigning for the deal was Starwood’s highly successful loyalty program and customer base, but Starwood customers and investors have been way. The latter group have noted that Marriott’s reward program offers less money per point—an estimated 1 cent a pop— than Starwood’s, which offers roughly 2 to 2.5 cents. That has caused concerns that Marriott could lower the worth of Starwood’s loyalty points after the acquisition.
Marriott’s loyalty program is tied to J.P. Morgan Chase (JPM), while Starwood’s is tied to American Express (AXP)—which makes the specifics of a new loyalty program even more complex.
“The most important thing for us to succeed at is the loyalty program you’ve got with [Starwood Preferred Guest] and Marriott Rewards—two big groups of very loyal customers,” Sorensen said on CNBC. The combined loyalty program would be the biggest in the hospitality program.
Marriott originally offered $12.2 billion to buy Starwood in November before it was forced to up the bit to $13.6 billion when Anbang made its own offer for Starwood. Anbang in turn decided to throw in a higher price tag before it decided to walk away.