How Loyalty Points Programs Could Be Impacted in Starwood-Marriott Merger

PHOTO:A sign is posted in front of a Marriott hotel, Nov. 16, 2015, in San Francisco. PlayJustin Sullivan/Getty Images
WATCH Marriott Signs Deal to Acquire Starwood Hotels

Marriott and Starwood customers will soon get some clarity about their loyalty hotel points after the two hotel giants agreed to merge.

Marriott International announced today that it signed a deal to acquire Starwood Hotels for $13.6 billion, creating the world's largest hotel company. The news comes after Marriott first made a $12.2 billion offer last November, followed by a $14 billion offer last week by a consortium led by Anbang Insurance Group in China. Starwood and Marriott customers will soon learn what happens to their hard-earned loyalty points after a shareholder vote.

Starwood signed a deal on Sunday that will renovate and operate three hotels in Cuba, the first U.S. chain that will return to Cuba since the country’s socialist revolution.

Starwood customers, who stay at properties like Westin, Sheraton, St. Regis and Le Meridien, should expect their points to be worth a lot less, according to NerdWallet credit card expert Sean McQuay. He anticipates that Starwood's points program will be devalued to what Marriott offers its customers. That's because Starwood's loyalty program is among the most competitive in the travel industry, offering about 2 to 2.5 cents for each Starpoint. Many hotels, like Marriott, offer customers about 1 cent for each point earned per hotel stay.

Starwood declined to comment. A spokesman for Marriott said the company is awaiting news for a shareholder vote.

Even if there are changes to both loyalty programs, McQuay said it will likely take a while for customers to see any difference. There isn't quite a precedent in the hotel industry for the merging of two brands with strong consumer bases and loyalty programs, McQuay said.

"It takes a couple years by the time the merger is announced to when the loyalty programs merge," McQuay said, drawing parallels to the American Airlines-US Airways merger. The airlines announced the merger in February 2013 and finally combined their rewards' programs in 2015.

Marriott Rewards and The Ritz-Carlton Rewards program has nearly 55 million members and Starwood Preferred Guest has about 21 million members, according to the companies. Marriott acquired The Ritz-Carlton Hotel Company in 1998, but the latter didn't have a rewards program at the time.

"I expect combining the brands will take a while, not to mention IT back-end systems," McQuay said of the Starwood-Marriott merger.

The newly combined Marriott and Starwood enterprise will likely try to keep customers happy with temporary promotions.

Back in November 1999, Hilton Hotel acquired Promus Hotel Corp. By the following year, Hilton's HHonors points program was available at the newly acquired Doubletree, Embassy Suites Hotels, Hampton Inn and Homewood Suites by Hilton. To promote the merged brands, the company offered a promotion in 2000 that allowed Hilton HHonors members to earn 2,000 points and 500 miles for every $2,000 spent at any of its properties.