A Post-Merger Q&A with Marriott’s Thom Kozik and SPG’s David Flueck

While many SPG members were dreading a doomsday scenario once the Marriott-Starwood merger became finalized, that’s absolutely not the case. With today’s news that the two brand’s loyalty programs can now be linked for status-matching, points transfers and more, we finally have answers to many of the questions that have been on our minds — and yours — the past several months. For instance, we now know that you’ll be able to move points from Starwood Preferred Guest to Marriott Rewards at a 1:3 ratio. Elite members will also get reciprocal status, so an SPG Platinum member gets Platinum status with Marriott Rewards.

While this is all good news, those with the highest-tier status in SPG’s program might assume that this status-match setup means properties will be flooded with elites, making rooms upgrades harder to come by. Thankfully, though, if you’re a 100-night SPG Platinum like me or a 75-night SPG Platinum, you’ll still have an edge over Marriott Platinums who are new to Starwood’s program, since they’ll have to earn status levels above base Platinum through actual stays. So while there will be more elites in both programs overall, any potential over-saturation is overshadowed by the Marriott benefits SPG members will now enjoy, and vice versa. If you’re concerned about not getting upgraded, it’s probably worth earning 75-night Platinum overall to maintain an edge over most other elites.

Overall, though, I couldn’t have expected more positive news! Marriott and Starwood are taking an additive approach to integrating their programs, and loyalists don’t have much to fear in the way of lost benefits.

To learn more about how the Starwood Preferred Guest and Marriott Rewards programs will look in both the short and long term, this morning I sat down with two very special guests: Thom Kozik, VP of Global Loyalty at Marriott, and David Flueck, the new head of SPG. You’ll find the transcript of our conversation below.

TPG: So welcome everyone. We’ve got an exciting Facebook Live today. Instead of me in an airport terminal holding a phone in front of my face and rambling on about the musings of the travel world, we actually have somewhat of a set and two esteemed guests with us today, and we’re talking all things Starwood and Marriott merger. As you guys read on the site, it is official: Marriott now owns Starwood, Starwood is a part of Marriott, however you want to say it. And today we have the heads of both programs. For Marriott loyalty globally, Thom Kozik and David Flueck, the new Senior VP of Starwood Preferred Guest. Welcome guys!

David Flueck: Thank you Brian, great to be here.

Thom Kozik: Thanks, Brian!

TPG: Congratulations! I know it’s been a long and wild ride, but it is official. As of today, Starwood no longer trades on the market. You guys are one big, happy company. How does that feel?

TK: Fantastic. It has been a journey, but what’s really been exciting is finding the places where we connect on our philosophies around taking care of the guests, taking care of the members. We have more in common than people outside would have otherwise guessed, but it’s been just a phenomenal journey.

TPG: This is the largest hotel chain in the world now, right?

TK: That’s right. By loyalty members, by rooms, by properties, everything.

TPG: So on the loyalty side, what’s been the biggest challenge getting this all together? I frankly was amazed that today you can actually link your Starwood and Marriott accounts, get a status match, transfer points at a reasonable ratio — every Starwood point is three Marriott points, and every three Marriott points is one Starwood point. We’ll actually be coming out with a post later today on when you’d want to transfer back — because obviously we’re The Points Guy, we like to maximize both sides. But I like the fact that it’s not a one-way transfer, and there are options. I think the changes today are additive instead of taking things away, although we will get into questions about that.

But back to my question: What has been the biggest challenge taking these two programs, these two companies with different cultures and making them one?

DF: The challenge was just being able to get ready for day one and be able to allow all of our members to link their accounts. We’re really excited to have done the hard work to allow that today.

TPG: And it’s instant.

DF: It is, and it really is the first time that companies of our size have managed to have linking on the day the transaction closes. As you said, today is when the merger’s official, and our members can already go on — they can go to the website members.marriott.com — they can link their accounts and they’ll get status-matched across the program, and they will also be able to transfer points between the programs.

TPG: That’s pretty amazing. So, if you don’t know, Marriott Platinum is 75 nights, no stays. Starwood Platinum is 50 nights or 25 stays of even one night each, and you can instantly get Marriott status. Now, I think as a Starwood Platinum and by means of — for those of you out there — there are a few more people out there with skin in the game — I’m a 100-night Starwood Platinum, I’m closing in on lifetime status, I’ve got both the Starwood Amex personal and the , I’ve got the Ritz-Carlton Rewards Credit Card, Ritz Platinum from spend there, I’ve been becoming more and more familiar with the Marriott family. So do you worry about a sudden influx? Can Starwood handle all of these new Marriott Platinums? Do you worry about the change in experience in the program with the scale on day one increased dramatically?

DF: On the Starwood side, I think your point about scale is really the right one. We are incredibly excited to welcome a lot of new members into our program so they can come and experience all of our hotels. Granted, we will have more Platinums, but when you think about the greater volume of hotels — at Starwood we had around 1,300 hotels; now there’s over 5,700 hotels around the world. So even though there will certainly be more Platinums, there are so many more places for people to go and stay. We think in total it’s going to be a tremendous positive for all our members.

TK: And on the Marriott side, the same holds true, really in both directions. It’s not only having this broader distribution footprint that our members can go and enjoy, but even there partnerships as well. So now we’ve got entirely new partners on the Starwood side and on the Marriott side that because of the linkage members can go enjoy.

TPG: I’m a loyal SPG but obviously Marriott as well, so what would you say, Thom, to Starwood Platinums out there that haven’t dabbled in Marriott? Now they’ve got this big, brave new world in front of them. What is the experience — how would you set expectations for those Starwood Platinums that may start trickling or flooding into Marriott hotels, and the differences they might expect instead?

TK: Well, going back to something we were just talking about a moment ago, Brian, is that with the way we came out of the gate with this, there was a lot of skepticism around how we were going to treat the respective programs, and we wanted to send a really strong signal from day one of the respective we have for the members in each program, and the value we want to be able to show them. So for us, those new Starwood members who have started linking — as of a couple of hours ago we had thousands and thousands of members already link their accounts.

TPG: Have you seen the flow more one way than the other in terms of the transfer of points?

TK: It’s in the early hours, we’re going to watch the data closely. In the first three minutes of the site going live, at about 12:15am, a Starwood Preferred Gold member jumped on, linked their accounts, transferred 36,000 points and booked a stay at the Osaka Marriott.

TPG: Osaka’s a fun town. If you’re in Osaka, try fugu, the blowfish — we just did a TPGtv episode. So that really does encapsulate — on the earn and burn side there are so many more options, which is a net positive for consumers.

So I have to say, this week’s been big. David, congrats on your new role. Avianca was added Starwood, even the SPG Amex now has new offers. If you ask me, it seems like Starwood Preferred Guest is here to stay. I think that’s been the biggest worry, that this beloved program is going away. It seems like every major move is that it’s going to stay. Will we see Marriott Rewards, Ritz and Starwood Preferred Guest for the long haul?

DF: For now, certainly. The great news is that all the programs are going to continue to exist as they have. The only difference now is that for our members and for Marriott Rewards members is that they now have so many more benefits they earn when they travel across the portfolios — so many more redemption options.

In terms of Starwood Preferred Guest, I think you’re right. A lot of the DNA, a lot of the innovation, a lot of the things that our members love about SPG are things that we will continue to provide. Long-term, we’ll be thinking about how you bring the programs together, but as you know — you and I met years ago — I’ve been part of the SPG leadership for a long time. I most recently ran global revenue management for Starwood, but I’m thrilled to come back to the program and work with Thom on bringing these two programs together. I think that’s really not only symbolic but really indicative of how much we’re going to bring, what SPG created that’s so unique, into the combined program.

TPG: Obviously, some of the ways that SPG has been innovative — the Suite Night upgrades, the Ambassador program — can you scale all those programs to a larger pool to the Marriott side as well?

TK: The way we’ll scale is the hard work that starts today. You saw us earlier this year launch our new concierge service for our elite members akin to the ambassador program. You saw us do the matching of the late checkout, you saw us launch our equivalent of the Moments platform with our Experiences Marketplace. So we’ve already started to try to do a lot of the harmonization work earlier this year to lead up to this moment, and now we can actually get under the covers and start doing the real work that’s necessary to get to a unified program that has the right benefits — as we’ve said from the very beginning, the best of both programs.

TPG: So it’s the end of September 2016 now. What do you think is a rough timeline with that rough harmonization of benefits. In your eyes, what would an ideal one be?

TK: Well, it’s really too early to tell. That work starts today, so we’ll start to harmonize different pieces of the program as we go, and if something’s ready we’ll bring it to the members as soon as we can. But, we’re not so much worried about the date as much as we are worried about what is the right set of benefits and the right way the program is restructured.

TPG: Can you speak at all about the co-brands? So the beloved Starwood card, the beloved Marriott Rewards Premier Credit Card and the Ritz card — any insight into whether they’ll stay as separate products or are you going to try to stick with one bank going forward?

DF: The good news is that for the foreseeable future we’re going to still have our existing portfolio of co-brand cards. As you mentioned, the Starwood Preferred Guest Card from American Express is loved by many, the same with the Chase card for Marriott Rewards. I think over time, not only for the credit card but for all of our partners, we’re going to have to figure out how you bring the best of both worlds together. And I think your earlier point on scale is really what we’re incredibly excited about, which is when you think about unlocking the partnerships that we have today, the amazing thing is that on day one, now our members can take advantage of partnerships on both sides of the loyalty programs. So if you’re an elite SPG member and you link your accounts, you’re now going to get the benefits that Marriott Rewards elite members have with United, and vice versa with Delta. So you already start to see how the partnerships are benefitting our members, and I think that that scale is going to help us going forward. We’re going to be probably the most valuable partner for all of the incredible travel partners out there. They’re going to want to be a partner with our new portfolio given the scale of members, and I think that’s going to end up benefitting all of our members down the road.

TK: Numerically, you look at that, Brian — we’re at 85 million plus members combined between both programs. And that puts us at the scale of many of the large airline programs. So it affords us an ability to establish those kind of benefits and those partnerships that neither one of us could have done individually.

TPG: Speaking of airlines, one of the best parts of the Starwood program and the reason why it’s the most valuable currency in our monthly valuations, is the ability to transfer to those airlines. You just added Avianca… I know people are angsty about that going away or the ratio changing. Can you calm any nerves for those who love to transfer their Starwood points to airlines? Is that program changing at all in the foreseeable future?

DF: I would definitely calm everyone’s nerves. I think members are already taking a lot of solace in the fact that when they look at all the benefits we’ve announced, they really are all net benefits to them, just increasing the rewards options, the partnership options. What we’ve been very proud of is we spent a lot of time listening to influential leaders in the industry and our members and designing a program that really works for them. And that principle is going to continue to guide how we bring the programs together over time.

TPG: So lifetime status is really valuable. Marriott had a different approach than Starwood. At Marriott, the Platinum status matches — will that Platinum count toward the 10 years of Platinum for lifetime, or how does this new merged world work with lifetime status?

TK: Great question. Lifetime status earning is going to continue within each respective program the way it does today. As we come together to merge the programs eventually to a unified program in the future, we’ll treat the lifetime status very carefully, as we always have. If you look historically at the acquisitions that SPG has done over the years, if you look at the acquisitions Marriott has done over the years, we’ve always encompassed new programs or an existing program, whether it be from Delta or Protea or any other brand. And there’s always people with a lifetime status at some level within those programs. So we’ll take that same care of “how do we preserve your status and recognition?” Because recognition is the number one pillar on our strategy for Marriott Rewards. So how do we preserve that recognition and take that forward? What that formula will look like, it’s way too early to tell, but it’s important to us.

TPG: For those worrying about that down the line, at least today I think you’ve shown that you do actually have the guest in mind, so I like to give kudos where it’s due. I’ll complain when it’s relevant, but I think there, the approach you guys are taking is in general very consumer-friendly.

Someone asked in the comments on our post yesterday: Will Amex Platinum still offer free SPG Gold once the merger’s complete?

DF: They will. What’s amazing is that a lot of these partnerships work in both directions, so we have valuable members who are part of the American Express portfolio that have gold, and they now can status-match into Marriott, which is I think really exciting news for them as well.

TK: And you see on our side, with the Chase card, the earning accelerators that we have gives members the ability to take those points and move them into the SPG matched program and enjoy the benefits on that side.

TPG: David, I guess this one’s for you. Jessica asks on Facebook: Will you be able to redeem seven-night stay and flight packages for Starwood? So as the head of SPG, do you see adapting the same sort of packages, or will they stay in Marriott?

DF: So for now, members can transfer their points into SPG and they can take advantage of all of the existing redemption programs that we have. 5th night free is something our members love, and obviously that will be available to them. We’re not changing the existing benefits. Today, as Thom mentioned, the hard work begins of “how do we take the best of both programs and think about what the combined program would look like down the road?” And that’s where we’ll be examining things that have been so successful for Marriott, to think about how that fits into the new program.

TK: Building on what David said, we saw a lot of chatter over the last 24 hours, people asking about the hotel and air packages which they tend to love in the Marriott program. So, again, bring your points over, go ahead and be able to take advantage of the hotel and air packages that we’ve been able to offer.

TPG: Chrissy asks a question that is also from me, as someone who likes fancy-pants properties. Why can’t you redeem points for Ritz-Carlton Reserve properties? Is that something that you want to add in the future? The Bulgari in Bali is one that I have my eye on.

TK: We’re always working with our owners to look at where we can incorporate them into the program in the right fit. The great news I think now with the bringing together of the two programs is, just as much as it affords us an ability to have a new set of discussions with partners, it affords us the ability to give a new value proposition to owners and bring them into the fold in a way we haven’t had the power to do before. So I think you’ll be surprised at our ability to bring more owners along, be it properties like Bulgari or Boscolo or any of the high-end properties we have across the portfolio.

TPG: If you need me to test out any of those…

TK: I’m sure you’ll be first in line!

TPG: I don’t take free hotels if you’re watching — I pay for my own travel. I wasn’t asking for a freebie.

DF: Personally I can’t wait to start trying out all the new properties we have in the combined portfolio.

TPG: I have to say, I was Starwood for years and I’ve been trying Autograph Collection hotels, AC Santo Mauro in Madrid, amazing properties… So if you are a Starwood member who’s been focused on SPG, I really would look at — there are 30 brands now, right?

TK: All told now, right.

TPG: Autograph, AC Hotels, Moxy — there are so many plans… there are no plans to cut any, right? I remember hearing rumors about selling off Sheraton for the assets, so there’s no plans right now to get rid of any of the combined brands?

TK: No, Arne’s been very clear on this. Each brand has its own unique value propositions to the guest, to the members. The power of this coming together really is that degree of choice we’re giving everybody. And again, if you look geographically, to what David was saying, where we have strengths in the Marriott portfolio, we’re countered by excellent strengths in the SPG portfolio in other geographies.

TPG: Where is the biggest growth now for the combined company? Is it still Asia Pacific?

DF: The growth in Asia is tremendous, but not only just Asia. You look at the growth in the Middle East, also actually in South America. The growth there is extraordinary. In fact, as you can imagine we also love to travel — I love to travel as you do, as a lot of your readers do, so rather than being here with you in New York I was actually supposed to be on the overnight flight down to Lima. My wife and I were going to the Tambo del Inka.

TPG: That’s a member favorite, that’s been on my list for years.

DF: It is, it’s an amazing, amazing resort.

TPG: So are you trying to guilt me because instead of being in paradise you’re here in the Financial District?

DF: I’m here with you! So we were going to go and see Machu Picchu, and there’s a Luxury Collection resort which is in the Incan Sacred Valley there, which is incredible. And I think for me what’s amazing is that all the Marriott Rewards members who have the dream of exploring the amazing places in South America, there are incredible SPG resorts for them to experience. And the same for our members. My family’s actually never been on a safari, and Thom and I have been talking about getting to Kruger National Park where they have the Protea.

TPG: Can you use Marriott points to stay there?

TK: Yes, you can use Marriott points to stay at the Protea, at the lodge right outside Kruger. We’re looking forward to exploring the portfolio as well.

TPG: As Marriott employees, what’s your travel benefit like? Do you get free nights? I remember Starhot or whatever…

TK: Both companies have had associate rate discounts where they’re available, but what your readers and some other folks might be surprised to hear is that it’s not automatic for us. It depends on occupancy, it depends on capacity. We’d rather fill our hotels with paying guests when we can.

TPG: I’m going to ask a question about a topic I know nothing about really. So Rosemary asks on Facebook: How will Marriott vacation owners and Starwood vacation owners be affected?

TK: One smaller wrinkle with folks who are timeshare owners in both programs is the points that you were granted for your ownership of a timeshare can’t be transferred into the respective program. Any of the points earned for your stays and on the credit card are absolutely transferable, but the points that were granted for you as an accelerator on purchase are restricted to within your home program.

TPG: Are you considering adding an option to confirm a suite at the time of booking, as Hyatt offers to members?

DF: Everything is on the table at this point. When you bring the scale that we’ll have together, it unlocks a lot of opportunities that we haven’t had before. So as you think about how you bring the best of both programs, not only is it the best of our existing programs, but it’s also to look further afield and say, “look, what is it that members care most about and how do we figure out how to bring that into the program?” So that hard work is to come, but I’m very optimistic that in the next — whatever the time frame is — we’re going to have some great news for our members.

TK: If you go back to the conversation we had down in Grand Cayman, Brian, both companies weren’t standing still. We have our own respective road maps and now we start to get to mesh those a little bit and look at with this new capacity, with this set of teammates, how we can start to tap into these capabilities, how we can build things that we didn’t have the scale or the capability to build before. We now have more hands on deck to do that.

TPG: I think the biggest concern about consolidation — whether airlines or hotels now — is devaluation. The points become less valuable, less competition in the marketplace… The way hotels devalue is every year you reset categories, right? Some go up, some go down. How will that process now work?

TK: The category changes that happen every year in the February timeframe will still happen respectively within each program for 2017. We would hope that by 2018 we get more of a unified view of what that should look like. But we’re far enough along through 2016 that the data is what the data is. Those are adjusted, as you know, every year based on average daily rate and the member uptake of redemptions in those properties. That’s what drives the formulas on our side to determine what the category level should be. That data’s already there. More importantly, if you look at the last three years with Marriott Rewards and Ritz-Carlton Rewards, we’ve done less and less increases in categories.

TPG: Yeah, they’ve been pretty reasonable. So I guess there’s no major category restructure?

TK: Not today, no.

TPG: I’d like to take it now to live questions. TPG reader Chrissy who’s watching on Facebook Live asks: Any timeframe for when Marriott seven-night point and hotel redemptions will be valid at Starwood properties?

TK: Great question. So again, we’re going to keep the programs separate for the time being, but it’s one of the areas — we know these packages are very valuable and very popular with our members, so it’s high on the list of things we’re going to harmonize as we look at bringing the two programs together in the future.

DF: But here’s the great news. The great news for all of your readers is that if they have redemption options they love in Marriott, they can take their SPG points and they can transfer them to Marriott Rewards and they can then use them for that, and vice versa.

TPG: Right, you just won’t be able to use it for Starwood hotels. You can do the nights and flights like I did at the JW Marriott Cannes during the film festival, and then I transferred and got a Southwest Companion Pass, one of the most amazing travel benefits. But you won’t be able to do that for Le Méridien, it’s just the current Marriott properties.

TK: Yes, currently.

TPG: At least they’re not going away, you can still use them and you can transfer points. We’re not getting everything on our wish list, but…

TK: It does take a little time to put all this together.

TPG: Yes! TPG reader Alejandro N. asks: If I have 75 plus nights at Marriott, would I qualify for SPG Platinum 75 nights?

TK: The easiest way for us to treat everybody fairly and to be recognizing the value that an SPG elite has been using in terms of their nights within their brand, we needed to make sure that we didn’t suddenly give somebody who walks in today everything that somebody’s been earning. So a Marriott Platinum who is now status-matched to a Starwood Platinum is a base Platinum within the Starwood program, and any nights they earn will count toward the benefits within the Starwood program.

TPG: So to get to an ambassador they would have to stay 100 nights?

TK: Correct.

TPG: It’s not like they get 50 night credits?

TK: Correct.

TPG: So it’s like how most status matches work. The actual status is switched to Platinum but your nights to requalification to 75 or 100 have to be earned. Which is frankly good — as a Starwood Ambassador member, I don’t want the ambassador program to be bursting at the seams and see the service go down. You have to earn 100 nights in SPG to get to that level. Sorry, Marriott Platinums.

TK: Well, we have our concierge program.

TPG: Well that’s true too. And that’s the same there.

TK: We don’t have the same earning tier, but that’s again on the road map of how we’ll map it together.

TPG: It’s not a complete dilution of benefits. It’s always hard to strike that balance, but I think that’s a fair approach.

TPG: TPG reader Jacob asks: Will I earn bonus Starpoints if I use my Marriott card at an SPG hotel?

TK: It’s one of the things we’re still looking at. It’s one thing for us to do the work we were able to do and, admittedly, to a certain degree, with our hands tied until we could get the regulatory approval. There was a lot we could not legally do to get ready for today. But you can imagine, take that one step further and extend that to our co-brand partners and our airline partners — they’ve got to get caught up.

TPG: So to answer the question, no. If you have a Marriott Rewards Premier Credit Card and you stayed at a W, you will not get the bonuses.

TPG: Good questions. One more. Until the programs are merged, how will earning elite status work? Will nights and stays in 2017 be additive between the two programs as customers try to requalify? So with 50 nights in a Marriott bed plus 50 nights in a Starwood bed, will you get Starwood ambassador? Will you be able to add to reach the highest level for next year?

DF: For 2017, the programs in terms of their earning qualifications remain separate and distinct. They won’t be additive, and as we’ve talked about a bit, that’s the work we’re going to start on. How do we bring those programs together? It won’t be for 2017, but we’ll hope to have something relatively soon that we can announce to members.

TPG: Well you guys are busy; it’s a busy, busy day for you. I really appreciate you coming out and answering these questions. Any last-minute thoughts for readers out there about the merger or how they can give feedback on these changes?

TK: First and foremost, if you haven’t already, go to members.marriott.com where you can do the linking of the accounts, you can be immediately status-matched, you can immediately start transferring points. And there are all the FAQs and answers to a lot of these questions and more that we posted there for people. In terms of feedback, we’ve got various social channels we’re monitoring live and in real time for both programs, as well as our forum, the Rewards Insider forum, where we have the most engaged members giving us direct feedback that we pay a lot of attention to.

DF: Yeah, I think that’s right. First of all I’d like to thank all your readers for their loyalty to us. We love how passionate they are about the programs, and we’re excited to have this news for them today. The one thing that I’d encourage them to do is to start going on the Marriott site and the SPG site and look at their favorite areas to travel. I think they’ll be amazed when they see what the combined portfolio of hotels looks like, and where their dreams can take them.

TPG: I’ll end on the same note. Like I mentioned earlier, I’m becoming more and more familiar with Marriott. There’s no one best program for everyone, and I think there are some incredible properties — you can even stay at Atlantis now, which is a Marriott property. So I think as consumers the best thing we can do is to educate ourselves about both programs. Like I said, we’ll be coming out with posts on how to maximize this new age of transferring in between, but I think in general from my perspective — and not just because we have our esteemed guests here — I could not have envisioned better news today in terms of Marriott members and Starwood guests. So we’re going to be doing posts later today. If you have more questions for us, we have access to these guys and we can get questions answered. So ask away, continue on social media and on our posts. And in the meantime, safe travels, enjoy Peru when you finally get there! Send us pictures of the resort, and thanks for coming!

Source: thepointsguy.com