In November Marriott agreed to buy Starwood.
Starwood has some of the most loyal members in the industry and cried so much that Marriott came out and said to calm down as they weren’t going to kill that loyalty by devaluing the program.
But they were still going to convert the SPG loyalty program into Marriott, a far less generous elite stay program and points program.
On March 14th China based Anbang proposed a better offer and on March 18th Starwood accepted their deal. That would leave $400MM in Marriott’s pocket if they walked away.
They didn’t and on March 21st Marriott made a better offer. Starwood accepted that offer and agreed to pay Marriott $468MM if the offer fell through.
Today Anbang has once again outbid Marriott. We’ll know soon if Starwood accepts their new offer, but they likely will. Will Marriott take the breakup fee of $468MM and walk away this time?
It’s not often that I root for a Chinese based company to take over a US company, but I’m definitely rooting for that to happen this time. Some on DDF are taking a contrarian opinion. They’re afraid that similar to NYC based Blackstone’s raiding of the Hilton loyalty program that Anbang will devalue SPG.
That’s a possibility of course, though chains like Hilton, IHG, and Marriott have traditionally been far less generous than Starwood and Hyatt as they have a significantly larger hotel footprint. People need to stay in their hotels anyway, so there’s less reason to incentivize loyalty. SPG and Hyatt have fewer hotels and provide greater elite benefits to go out of the way to stay at their hotels. They have valuable point currencies and some of the most loyal customers in the industry. Would Anbang risk their massive investment in SPGs loyalty program by angering those loyal to it?
I’m betting they won’t, but even if there’s a 33% chance that they would, I believe that it’s lower than the chances that Marriott will devalue Starpoints when they get swallowed into the Marriott universe.
Additionally with the Anbang offer we would continue to have both the Starwood AMEX and the Chase Marriott cards. One of those cards will likely be axed in the case of a merger and both cards have unprecedented limited time offers as they try to build their book of business before a potential merger.
And as the airlines have shown, more consolidations just makes things worse for the consumer. Their loyalty programs could never have become as stingy and devalued as they are today without the massive consolidation that has happened in that industry.
I’m sitting on several million Starpoints, so I’m personally invested in the outcome of this battle. The great thing about Starwood is that it has built-in devaluation protection. If the points for hotel use isn’t worthwhile, there are dozens of airlines to transfer points to at favorable ratios. I’d rather keep them as flexible points, but I won’t hesitate to jump ship and convert them into miles if anything seems amiss.
What are your thoughts? Are you on #TeamMarriott or #TeamAnbang ?
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27 Comments On "Round 4: Anbang Outbids Marriott For Control Of Starwood; Are You On #TeamMarriott or #TeamAnbang ?"
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My biggest takeaway from the post: Dan is sitting on a few million (!!) Starpoints. :))
#teamanbang I rather go with the unknown than the known.
Anbang
SEVERAL MILLION starpoints? Dan– Can we be friends? friends share points, after all. all i would ask is a measly 20,000 points. it would go a long way. thanks Dan, excited for your response
How does one get a few million star points?
How in the heck do you casually just have millions of starpoints? What was the biggest contributor to that fat stack?
personally I don’t like Chinese buying all usa properties, and then all profits leave US. in china the government makes you partner up with local people to do anything.
For some reason I’m more comfortable with Marriott for it EXPANDS the selection of available hotels, even though most are garbage, but some are great.
I’m nervous about this. Should I stop using my spg card and use my freedom card on all purchases now?
@Shoshana:
No, worst case is you transfer out to miles.
#TeamAnbang why is everyone surprised at the number of Starpoints Dan has? When we all click referral links it goes a long way 🙂 Dan has to get paid for all he does somehow and with that I say thank you, I look forward to checking for the deals every day!
@Kim:
I don’t get points for my referral links. They do pay the bills though.
@Mahyar:
Thousands of credit cards make for great office wallpaper.
I know you don’t say this outright, but I want to make it clear that the bidding war has nothing to do with who will be better for Starwood’s loyalty program. It’s all about who will offer Starwood more $$$.
the annual fee of those millions of points is $$$
@EJB:
Of course.
@joe:
Who pays annual fees?
I agree with Dan. I hope for #teamanbang. Consolidation and less competition will probably not be a better outcome for loyalty programs. Unless maybe if someone is sitting on millions of Marriott points and hoping to get a good transfer ratio to Starpoints at the same time those starpoints themselves don’t get devalued. And how likely is that. The Chinese are not stupid they like to copy and paste whatever works. So my money is on them and Dan’s forecast.
If you had to jump ship today, what airline would you cash out to?
“The great thing about Starwood is that it has built-in devaluation protection. If the points for hotel use isn’t worthwhile, there are dozens of airlines to transfer points to at favorable ratios”
If SPG devalues their points somewhat it will be worth the same as transferring to airlines after all because the airlines raised their award point as well.
i have a delta amex with 7000 skymiles that i was offered to switch to amex spg.
@dan – what should i do?
@Dan: would love to come to a DD seminar but it seems that those are a thing of the past. I wasn’t in the loop yet when they were around. Any chance of another one soon? I’m in
Dan:
“@Mahyar:
Thousands of credit cards make for great office wallpaper.”
Mogro17:
POIDH
hi dan please respond. I have a flight on austrain and luftansa in l class. where would be best to credit the miles? Singapore or united? thanks so much
#TeamMarriott all the way. I am Marriott Platinum and Hilton Diamond. I can’t be bothered with small footprint chains like Hyatt and Starwood because they do not have enough hotels in crummy small towns I visit for work. But the addition of Starwood properties to Marriott’s portfolio would enhance my Marriott experience. Sorry about your 2Million points Dan. Marriott is pretty honorable and you should come out fine.
@dan in todays credit card game as a solo person what does it take to get those miles?
teamanbang!!
@bill: Ask here: http://forums.dansdeals.com/index.php?topic=43222.0
@Dan: Any DD seminars planned? Would like to catch one.
Marriott.. I know what I know, and Marriott is an excellent AMERICAN company, service oriented, and customer friendly..Platinum status helps, but I am Platinum member for a reason.
Do not want to get banged by Anbang…
TEAM MARRIOTT…..