By Rick Garlick, Ph.D., Global Travel and Hospitality Practice Lead for J.D. Power
Marriott's acquisition of Starwood offers a number of interesting possibilities, particularly since there is quite a bit of overlap among their respective brands within tiers. For example, Ritz-Carlton and J.W. Marriott are both counted among the 'luxury' brands by Smith Travel Research, as are Starwood's W Hotels, along with St. Regis and The Luxury Collection. Similarly, full service Marriott Hotels, Renaissance, and newly acquired Delta Hotels are upper upscale brands, as are Starwood's Westin, Sheraton, and Le Meridian hotels; and Marriott Courtyard and SpringHill Suites fall into the upscale category as do Starwood's Aloft and Four Points. That's a lot of brands competing in the same markets at similar price points.
While the hotels within this newly blended family of brands have some similarities in how they are classified, there are significant differences in the experiences guests can expect. Based on guest feedback from J.D. Power's annual North American Hotel Studies, Marriott Hotels has always ranked among the best, not just in satisfaction, but just as importantly, in consistency. J.D. Power looks at both satisfaction ratings and the variability among those customer ratings. Starwood Hotels, by contrast, rank among the least consistent, and therefore tend to be in the lower half of the satisfaction rankings as well. Here are the ratings and rankings within each segment.
Satisfaction Index Scores and Rankings (Based on a 1000 point Index Model)
Marriott
Starwood
Tier
Ritz Carlton (1 of 9) 892
St. Regis (*) 868
Luxury
J.W. Marriott (3 of 9) 869
The Luxury Collection (*) 844
Luxury
W Hotels (9 of 9) 840
Luxury
Marriott (4 of 11) 843
Le Meridian (*) 850
Upper Upscale
Renaissance (5 of 11) 841
Westin (T8 of 11) 832
Upper Upscale
Delta Hotels and Resorts (T8 of 11) 832
Sheraton (11 of 11) 811
Upper Upscale
Springhill Suites (3 of 11) 840
Aloft (9 of 11) 822
Upscale
Courtyard (5 of 11) 833
Four Points (11 of 11) 811
Upscale
*Not ranked due to insufficient market share
Consistency Rankings Based on Variability of Ratings**
Marriott
Starwood
Tier
J.W. Marriott (1 of 9)
W Hotels (8 of 9)
Luxury
Ritz-Carlton (3 of 9)
Luxury
Delta Hotels and Resorts (1 of 11)
Westin (5 of 11)
Upper Upscale
Renaissance (T3 of 11)
Sheraton (9 of 11)
Upper Upscale
Marriott (7 of 11)
Four Points (7 of 11) 822
Upper Upscale
Springhill Suites (3 of 11)
Aloft (11 of 11)
Upscale
Courtyard (5 of 11)
Upscale
**Ranked brands only
As the data shows, the Marriott brands usually show up in the top half of the consistency rankings within their respective tiers, while Starwood brands tend to be in the bottom half of consistency rankings. The exceptions being full service Marriotts, which are the least consistent among the Marriott brands, and Westin which tends to be the most consistent of the Starwood brands. It should be noted, however, consistency isn't always desirable as Marriott's Delta Hotels are consistent, but fall into the lower half of the guest experience rankings (e.g., consistently mediocre), as does Westin.
From an investor perspective, brands lose equity due to inconsistency, particularly within North America where predictability is highly valued. Not everyone likes McDonald's, but you always know what you are getting, which is a primary reason for their success. Similarly, Marriott brands generally deliver a consistent experience through a high rigorous quality assurance program. This is something, for whatever reason, Starwood brands have generally lacked. The fact that the Starwood hotels are not part of the Marriott family bodes well for improved quality and consistency of guest experience, and therefore, suggests a more positive financial outcome.
