Marriott’s Plan To Turning Your Hotel Stay Into An Airline Ticket With More Upsells, Fewer Upgrades, Less Hospitality

Marriott is investing billions of dollars to rebuild its property-management, reservation and loyalty systems. That’s a huge effort, and it’s going to effect every stay. CEO Anthony Capuano says hotel owners are focused on the cost savings, but he is most excited about how much more revenue they’re going to get from guests: “the ability of our teams and our partners to be able to merchandise what we’re selling.” In a Wall Street Journal interview, he explained a 150-room Autograph Collection hotel in an old European building might have 130 different room types. Marriott’s current system doesn’t optimize how those are sold, but the new one will. Now guests get better rooms than the minimum they’ve paid for, because the system treats rooms as alike. In the future, guests will pay. Marriott also wants to sell restaurants, spas, and golfduring the booking process. It’s the airline retailing model on steroids. It’s The Progression That Began With The Starwood Merger This strategy has been building for a decade. In 2016, then-CEO Arne Sorenson explained why Marriott could have more than 30 brands without spending heavily to market each one separately. Marriott’s “principal model” was to go to market through its loyalty platform, website and app. The idea was that customers would start with Marriott, and they’ve book the hotels Marriott showed them. The brands almost didn’t matter (except that separate brands meant they could have more hotels in their inventory, and earn revenue from more rooms). They’re just labels and filters in Marriott’s booking engine. Marriott only owns about 20 of its 10,000 hotels. It’s basically a brand (built on a rewards program) and a technology stack for the hotels it does not manage. Bonvoy supplies the audience, or what some owners refer to as “leads.” Now, the new technology stack will sell more than just rooms to the Bonvoy audience. Marriott is using Amadeus to supply the new central reservation system that supports room attribute selection and sales of amenities such as spa and golf. Amadeus compares the broader shift with airline retailing, while it lays out the revenue opportunity. Merchandising opportunities include: The room: bed type, view, floor, balcony, layout, connecting rooms, distance from the elevator and perhaps the exact room. Time: early check-in, late checkout and longer day-use windows. Buy ups: faster internet, breakfast and lounge access. Activities: dining credits and reservations, spa treatments, golf, parking, cabanas and other resort activities. Amenities: flowers, food and beverage, family amenities and celebration packages. Upgrades: a better room or suite sold before arrival, at check-in or through an auction. A family might pay to guarantee connecting rooms (even though Hilton has this functionality without an explicit upcharge) rather than take their chances at the front desk. Another guest might value a room away from the elevator rather than booking a “standard king.” But feature turned into an ‘attribute’ becomes a separate decision, upcharge, and more difficult price comparison across hotels. More Paid Buy Ups Means Fewer Upgrades Marriott has been developing digital cash-upgrade placements and new merchandising. Some elite members are already being asked to bid for suites they are supposed to receive as complimentary upgrades when available. Once each better room gets sold continuously, the inventory will be held back from free upgrades. Marriott’s Nightly Upgrade Awards are already cleared only from restricted inventory the system forecasts that it can’t sell. The new technology should improve the forecast and create more chances to collect cash. Airlines followed this path. They used to offer upgrades into 90% of domestic first class seats. At Delta it’s now about 12%, as the airline sells the seats to coach passengers for as little as $26 rather than making them available to $30,000 a year passengers. Marriott is planning to sell you ‘more control’ and ‘more choice’. It means paying more for the stay than you do today. And that comes out of the exact inventory guests currently receive their Bonvoy benefits – which means the value of Bonvoy itself will fall, and Marriott will have less to offer owners going forward. Topics on this page