Let’s be clear — when was the last time a merger was actually beneficial to customers on the loyalty front? Northwest and Delta merged, and we lost a great Northwest loyalty program and website. The new carrier took the worst elements of both programs and benefits continue to erode. United and Continental merged, also taking the the worst aspects of both programs. Now US Airways and American have merged, and we have lost a premier loyalty program in US Airways Dividend Miles. Have you heard the old idiom fool me once, shame on you, fool me twice, shame on me? That applies here: don’t be fooled, mergers do not benefit consumers. If we’ve learned anything over the last few years, we have certainly learned that.
The idea of a combined Starwood/Hyatt brand certainly has some appeal. The two chains boast great independent loyally programs and a wonderful, albeit limited, portfolio of properties around the world. Were the combined loyalty program to merge the best of both worlds (complimentary suite upgrades plus free breakfasts for top tiers) and leave intact attractive award levels plus cash+points, well…then we’d all be happy. But has a merger ever preserved the best of both worlds?
I am a very happy Hyatt Diamond right now. Great breakfast, great rooms, great properties — I have been fiercely loyal to Hyatt this year because the loyalty program is just that great. Were that to change, I also have gold status at Marriott and Hilton as well by virtue of my United status and AMEX Plat card, and it would then seem silly to go out of my way to stay at Hyatt/Starwood if the loyalty program is no better than Hilton or Marriott.
The Greatest Concern of a Hyatt – Starwood Merger
Here’s my primary concern. We have two great products right now — Hyatt Gold Passport and the Hyatt co-branded credit card from Chase and Starwood Preferred Guest and the Starwood co-branded card from American Express. It seems unlikely that both cards and both programs would survive a merger and that really hurts discerning consumers.
Starwood offers an incredible value in its broad range of airline partners and lucrative transfer ratios, generally 20K Starwood for every 25K airline points. Hyatt Gold Passport has a terrible ratio of 50,0000 Hyatt Gold Passport points for every 25,000 airline miles. Wonder which policy would survive a merger?
Chase Ultimate Rewards transfer at a 1:1 ratio in the Hyatt Gold Passport program — talk about a great deal when redeeming for pricey Park Hyatt properties. If the combined Starwood/Hyatt were to go with American Express, those Ultimate Rewards points would suddenly become much less valuable.
Mergers often sound good, but the last several years have shown us that mergers don’t really benefit customers, or at least the benefits do not outweigh the drawbacks. Of course loyalty programs are never static and it is unreasonable to assume that sweet spots in any program will ever stick around on a long-term basis. Nevertheless, I would be quite hesitant to proclaim any good news from the revelation that Starwood and Hyatt are in advanced merger talks.
The silver lining to this is that Jeff Zidell sits at the helm of Gold Passport and I really do trust him — we may not like everything that comes from a merger (in fact, I know we won’t), but Zidell does understand the importance of loyalty and the importance of the Gold Passport program in its current form. I am betting that the merged program would be bad news, but not disastrous. In any case, I’m rooting for the Chinese buyers rather than Hyatt to acquire Starwood. Let’s see how this plays out.