The merger between Starwood and Marriott International sent shockwaves through the industry last September. But now that the dust has settled, what exactly has been the impact? Patrick Ryan finds out in an exclusive interview with Marriott International president Middle East and Africa Alex Kyriakidis
Marriott International has been the talk of the industry since last year’s historic merger with Starwood. The implications of the merger are huge as Marriott International essentially more than doubled in size overnight going from 25,000 rooms in the region to 52,000. Today that figure is almost 54,000. The company now has 17 brands in the region when, as recently as last September, it only had nine. Twenty-nine Marriott International properties are due to open in the Middle East and Africa region this year alone.
The same merger has led to suggestions that one global loyalty programme will be created with over 100 million members. Kyriakidis, pictured right, says: “We will have updates about timing in the future but right now we can confirm we will not introduce a unified programme this year.
“Right now if you were to take the Marriott rewards programme and put it alongside the Ritz-Carlton rewards programme, and the SPG (Starwood Preferred Guest) programme you would come pretty close to 100 million loyalty members worldwide.”
The merger, Kyriakidis says, will give guests a range of options like never before, at every price-point whether it be for business or leisure.
“That is a very powerful proposition because it means our members can stay with us in our business hotels during the week, and through our loyalty programmes, enjoy a weekend away at any of our resorts across the Middle East and Africa,” he says.
It’s impossible to speak with anyone in the hotel industry about the business without the spectre of the online travel agents (OTAs) looming in the background, so it is no surprise that the conversation turns to the impact the merger has had on the relationship between Marriott and the OTAs.
He adds that it is important to take a hard look at the relationship between hotels and OTAs, especially since the merger has strengthened his company’s position.
“I need to put the OTA business in context,” he says.
“If I look at my region, the OTAs across the board in Middle East and Africa, how many of those room nights are actually coming from OTAs. It’s a very important partnership because we value each and every room, we value the partnership. The OTAs have a role to play, they have gazillions to spend on online marketing and distribution and that’s great.”
According to Kyriakidis, the merger has allowed Marriott to negotiate a better rate with the OTAs and that is a win-win for all parties.
“One of the things we are focused on through the loyalty programme is encouraging more and more of our loyalty members to book with us through our direct booking channels and one success we have had in this area is member-only rates,” he says.
“There is a perception that if you go to an OTA you get a better rate but actually no, we have very strict rules about the price of our rooms with the OTA and distribution partnerships where it cannot be a better rate through the OTA.”
Being able to tell people they get a better deal directly through a hotel’s website than going through an OTA has been a massive boost, according to Kyriakidis.
“That has stimulated a lot of interest in direct bookings. In 2016 we launched some great campaigns such as a 3-for-2 stay which meant in the summer months, in the holy months of Ramadan, when things generally go quiet, our hotels were buzzing because we went for marketing campaigns aimed strictly at our loyalty
members,” he says.
“The OTA relations in summary is valuable to us but the mission for Marriott International is to make it a win-win for the owners and the OTAs.”
In addition to the benefits increased scale has had on relationships with the OTAs, Kyriakidis highlights other positive effects, such as maximising market share and increasing opportunities for staff.
“We are the number one hospitality provider to Dubai for the Expo 2020 by some measure, so now we are in a great position to work with the Dubai Tourism and Commerce Marketing (DTCM) to promote Dubai because now with Starwood we have a presence in most of the emirates and that’s the kind of top line synergy that’s important,” he says.
“It helps us maximise our market share so in 2016 while the UAE and Dubai lost 10 percentage points per available room we actually gained 6% revenue per room.”
The first people to benefit from the merger, Kyriakidis says, are the staff who will now have opportunities that would never have previously been presented.
“Scale for the sake of scale means nothing but what it means for our associates is that today we have 65,000 associates in the region and an expansion in the region,” he says.
“It means the career growth for our associates is better than ever before. The more openings we have coming up means there are more opportunities to manage the business and for people to grow with us and be promoted in the region, so the first thing is the associates. We are looking to grow to cope with the pipeline increasing from 65,000 to 100,000 by 2020 so that means an extra 35,000 associates will join the company in the next four years.”
