Marriott CEO: Bonvoy and Breakfast, It’s All About Hotel Owner Costs

Marriott’s new CEO admits in an interview with The Points Guy‘s Scott Mayerowitz that Bonvoy isn’t as generous as Starwood Preferred Guest was. He dismisses guest desires for hotel services as customers having a “short memory.” And he explains lack of service and generous benefits as a need to hold down hotel owner costs.

That, along with $9 million total compensation, the CEO’s comments last week that potential hotel employees can make too much money working for Amazon, tells us where he stands I think and gives us a lens through which to understand the direction of the company.

Marriott CEO Says Guests Suffer “Short-Term Memory” Demanding Services Back

Marriott guests want hotel services because of their ‘short-term memory’ while hotel owners have ‘long memory.’ And Marriott needs to be “more sensitive” to owners.

“I just spent two days with my leadership team talking through a bunch of these issues. I’ve described this phenomenon as the friction that exists between the short memory of our guests and the long memory of our owners.”

…“And because of our short memories, you want everything to be the way it was. You want the restaurant open the hours that it was open before. You want the spa open with all the treatment rooms and all the technicians available. You want full service at the pool. You want daily housekeeping. You want all those things. And, in a way, that’s good because it means our consumers are anxious to get back.”

“At the other end of the spectrum, our owners and franchisees have borne a disproportionate weight, from the impact of the pandemic,” Capuano explained.

“They’ve lost billions of dollars of revenue. Suggestions about getting back to ‘normal,’ they look at you like you have three heads and they say, ‘You’ve got to be more sensitive to the steep climb we have in front of us.’”

Marriott’s previous CEO, the late Arne Sorenson, explained that the development of the Bonvoy program was about saving costs for hotel owners.

Remember that Marriott doesn’t own the hotels. Customers do not pay Marriott, owners do – in a percentage of revenue, management fees, and licensing. Hotel owners are Marriott’s customers, and hotel guests are the product Marriott delivers to those customers.

Marriott’s CEO Doesn’t Think Bonvoy Is As Rich As Starwood’s Program Was

Marriott Bonvoy isn’t as generous as Starwood Preferred Guest according to the CEO.

The integration of Marriott Rewards and SPG was a monumental task. And it’s quite interesting. You hear SPG loyalists say, ‘My goodness, what have you done to our program?’ The program was very guest-friendly. It was less owner-friendly.”

…“What some of those SPG loyalists may have lost, a bit, in terms of the richness of the program, we hope that breadth of choice, whether it be brands or geography, is a bit of a mitigating factor,” Capuano said.

I actually think Capuano misdiagnoses the issue here. Bonvoy as a program is in theory very generous, albeit with the best benefits harder to earn than under Starwood Preferred Guest (since 24 hour check-in is a 100 night benefit, and 100-night status has a spend requirement now too).

The problem isn’t the rules or structure of the program. The problem is implementation – hotels flout the program rules mightily. And Marriott customer service consistently delivers ill-informed answers. The website frequently doesn’t work (e.g. award availability calendar) and lacks features (like gifting an award to someone else).

Bonvoy is in many ways more generous than Marriott Rewards before it, though award charts have been severely devalued. And to be sure the Marriott co-brand credit cards don’t earn as generously as the Starwood Amex used to. But it isn’t about Starwood Preferred Guest being bad for owners – that’s just the mental model Capuano seems to apply across the board, since owners are his customers. He misses that the problem with Bonvoy is in execution not cost structure.

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