November 30 2015
The recent acquisition of Starwood Hotels & Resorts Worldwide by Marriott International may have stunned the hospitality industry but it was not totally unexpected to me.
Mileage Communications was Marriott’s PR agency based in Singapore for more than 17 years, since 1994. When we were appointed, Marriott had just opened the JW Marriott Hong Kong, its first overseas hotel outside USA.
Look at where they are today in Asia. It grew over the last two decades, bringing its various brands – Ritz Carlton, Renaissance, Courtyard, and Marriott Serviced Apartments to China, India and South East Asia. We, like the other local PR agencies in the Asia Pacific countries, are glad that we had contributed to its phenomenal growth, a fact acknowledged by Marriott’s management at the annual PR agencies meetings that all the PR agencies attended.
This acquisition made Marriott the world’s largest hotel company with a mind boggling 1.1 million rooms, 5,500 hotels and 30 leading brands. What does this transaction mean for all its stakeholders when the two companies merge?
Marriott Rewards has 54 million members. Starwood Preferred Guest has 21 million members. As a member of both loyalty programs, I am now spoilt for choice – 30 brands to choose from! Hopefully my Starwood points are transferred over as 1-for-1 Marriott Rewards points.
Both chains are run by well-trained employees or Associates as Marriott would like to call them. It would be interesting to see how both their HR systems, training etc. will collaborate and morph into one with its own definitive character and yet uphold the high standards of customer care and operations that both brands are reputed for.
At first glance it would appear owners of hotels and franchisees would benefit from enhanced efficiencies (bulk purchases etc.) and revenue opportunities (marketing to two groups of loyalty program guests).
However, the proliferation of brands in a market will mean an overlap in brand positioning which may affect the market share of the hotel owners.
It would be interesting to see how this will evolve in cities with multiple competing brands.
It has a lot of positives for shareholders. For a start, revenue will increase when Marriott is expected to cut operating costs of the two combined companies.
Starwood has a higher proportion of millennials, deemed to spend more, and it would be likely Marriott will take this opportunity to tap into this group.
How will the other chains like Hilton, Accor etc. respond to this behemoth?
Hotel owners will be tempted to consider Marriott first because of their extensive portfolio of brands. The competitors will have to relook at their strategies on how to win hotel owners and franchisees over with their limited brand portfolios.
When Marriott came to Asia, their brief was clear. Use only local PR agencies who understand the cultures, norms and are connected to their own societies. They have avoided the big name agencies. I do not know whether this policy has changed. But clearly even if one big name agency were to be used to handle Marriott PR worldwide, the question is will they be up to the task?
There is so much to do, promote, publicise for every hotel on the ground. We know. We have been down that road.
I believe there will be opportunities for many local PR agencies worldwide that can be helpful to Marriott in their publicity efforts.
Until the merger takes place in mid-2016, we will have to wait and see how all these will pan out.
Yap Boh Tiong is the Chairman of The Mileage Communications Group with 15 offices in 9 countries in Asia.
The PR work executed for Marriott extended beyond the shores of Singapore where the agency is headquartered.
Mileage has organised media visits to hotels in Asia and Europe. It had done extensive publicity work for Marriott Group of hotels in F&B, spa, golf, weddings, H&R and The Spirit To Serve community projects.
Yap was despatched by Marriott to handle various crisis management situations, namely bombing incidents at Islamabad Marriott and JW Marriott/Ritz-Carlton in Jakarta and the tudung religious issue at Renaissance Kuala Lumpur in Malaysia.
For the agency’s sterling performances, Mileage Communications received many accolades from the Marriott management.
Official Website of The Mileage Communications Group: www.mileage.com.sg
Photo: Yap Boh Tiong