Independent Hotel Rewards Program to Acquire Starwood Hotels?
If you're like us at Stash, you daydream about doing something boldly out-of-character, like buying a zoo, just so you can free all of the animals. So you'll understand why our imaginations went wild when we saw the news that Starwood Hotels & Resorts Worldwide was "exploring a full range of strategic and financial alternatives as a means to increase shareholder value". (Translation: Starwood is shopping itself around).
You may have also heard that Marriott is rumored to be on the list of potential buyers, as is Hilton. To clarify that speculation, Arne Sorenson, Marriott's president and CEO, noted that Starwood would not be a typical acquisition for Marriott, and thus they are treading carefully. Plus, an acquisition is only one of several potential outcomes for Starwood. In fact, doing nothing is also on the short-list.
All of this uncertainty and opportunity got us thinking. What if Stash Hotel Rewards were to whip out the checkbook and buy Starwood Hotels & Resorts? It may be a bit far fetched, but there are some undeniable benefits to the idea.
The first order of business? Dissolve Starwood and here's why:
Many Starwood hotels already know how to provide great service - Hotels like the St. Regis don't need Starwood to tell them how to take care of guests. We'd cut them loose from the rigorous demands of the franchise. A lot of time and money is wasted on complying with needless mandates. Instead, the newly liberated Starwood hoteliers would have the opportunity to channel their franchise fees into delivering a unique guest experience.
For example, let's say these Starwood properties are paying franchise fees of 12 – 15% (average for a major brand according to HVS). If one property is seeing $20 million in room revenue each year, they'd save $3 million by de-flagging. Imagine the possibilities for channeling that revenue elsewhere. Hotels could offer hand massages to arriving guests or maybe hire a bubble bath butler to advise on a selection of scented and bubbly delights.
Travelers are increasingly rejecting cookie-cutter experiences - Nobody wants the same-hotel-different city experience anymore. In the age of TripAdvisor, you don't need a big brand name to communicate quality. The big chains know this as well as you do, which is why we've seen so many "fauxtique" hotels pretending to offer an experience that only truly independent hotels can.
Liberated Starwood properties can look forward to more delighted guests. For the same reason more people are choosing to buy their vegetables at a farmers market instead of the supermarket, travelers are starting to gravitate towards independent hotels that offer true, local experiences rather than the same old chain hotels.
Freedom to continue to build loyalty – Arguably the one real benefit that Starwood brings to the table is their Starwood Preferred Guest program. Like most loyalty programs, SPG is good at getting travelers to invest in staying in your hotel. It's important to remember though, there are other rewards programs out there that pay full rate on redemptions - and at a fraction of the cost of a soft brand or a chain "independent" collection.
Once Starwood hotels are set free, they are at liberty to join loyalty programs that cater to their specific needs. For example, some of the newly independent hotels might be invited to join Stash and still attract points junkies. Stash members increase visits and spend to a partner hotel by nearly 50%. These former Starwood properties could keep OTA share down by helping guests book directly and a loyalty program like Stash helps hotels win groups and meetings by using points to compete with chains.
Although it's doubtful that Adam Aron will be calling us or that Starwood will ultimately be dissolved, it's important that hotels begin to realize the value in independence. Businesses don't need a big brand name or a franchise structure to be successful. In fact, consumers are trending towards authentic, local products and Stash has the loyalty network to prove it.