Should Marriott get rid of Design Hotels?

Our own experience leads us to believe that Marriott should absolutely spin off Design Hotels. The story of a graft that never succeeded and lessons on the centrality of the loyalty program in the relationship between a hotel group and its customers.

Design Hotels and Starwood/Marriott: a part-time union

You may not know Design Hotels by name, but you certainly know a number of their properties. It’s not a hotel chain per se but rather a grouping of independent hotels that benefit from being grouped behind a common “over-brand” that serves more as a label.

The point? Create brand synergies between independent hotels which, even if they have nothing to do with each other capitalistically, share a certain number of values and concepts. It is not always easy to be independent and to be a member of a larger network reassures the customer, allows him to benefit from the aura of the most renowned members, has a marketing effect on the customer who is satisfied with a Design Hotel and will look for others in the future, even if he is not aware that it is not really a chain. Especially since Design Hotels is a selective grouping that accepts only a few pretenders, which, beyond a name or a brand, makes it a priori a quality label.

Behind the raison d’être of Design Hotels we can already see one of the major themes of this article: the necessity of the network effect, of the mass effect, of the brand effect for a hotel in order to gain sufficient commercial traction.

At Design Hotels, you will find high-end, boutique hotels that place great importance on design and customer experience, cultivating a strong individual identity. In Paris you will find for example the Roch, the hotel de NELL…

What was missing at Design Hotels? The traction of a large loyalty program to retain customers or attract new ones. Hence the “partnership” initiated in 2017 with Starwood

Design Hotels was part of the SPG (Starwood Preferred Guest) program. This allowed Starwood to expand into boutique hotels and Design Hotels to “exist” in the eyes of the customers of a major global group and the world’s best loyalty program since its hotels were offered in the SPG booking engine.

The counterpart was of course that SPG members who booked at a Design Hotel received credit for their nights on SPG and received the benefits of their loyalty program from the hotel. We all still remember the huge mistake of AccorHotels who had both the brilliant idea to propose to independents to be distributed on its site and the stupidity of not daring to impose them to participate in its loyalty program. No profit for the customer, negative sum game, lose-lose.

Well, that was in an ideal world.

The truth is that only those Design Hotels that wanted to join the program did so. It’s still okay, why not.

On the other hand, the Design Hotels displayed “limited participation” in SPG: in other words, they reserved the right not to give the customer all the benefits normally associated with the loyalty program.

A kind of free union.

Limited participation in the loyalty program: a bad message for the partner and for the customer

At TravelGuys we understand that some hotels are exceptionally allowed to deviate from the terms of a loyalty program. But when it becomes a rule it is much more worrying.

This sends a double bad message to the customer.

1°) We can’t guarantee what you will get, you’ll see on the spot. Whereas what the customer is looking for is the guarantee of a systematic mechanism.

2°) We are not strong enough (or brave enough) to impose our conditions on our partners (Design Hotels not being strictly speaking owned by Starwood). This is the drama of AccorHotels, which does not know how to make its franchisees respect it, which penalizes its loyalty program.

And a bad message to partners: “we are ready to negotiate on what is at the heart of our strategy: loyalty and customer experience”.

In short, a situation that can only be exceptional and/or transitory.

Design Hotels, both in and out of the program

This gave rise to a period of vagueness from which we have not yet really emerged.

1°) Some hotels participate in the program and others do not.

2°) Some hotels give only a part of the benefits of the loyalty program, others all, others it depends.

Totally unreadable for the customer, especially since, to be honest, the promise was not always there. We frequented a few design hotels to draw the following bottom lines:

1°) Knowing that the hotel has “limited participation” in the loyalty program is of little use if you don’t know the extent of that participation. Automatic upgrade or not? Late checkout? We won’t know until we arrive at the hotel.

2°) Almost total absence of recognition of the member and the loyalty program in most cases. “It’s because of SPG that you come to us but we only value our hotel and design hotels”.

3°) Under the pretext that the luxury boutique hotel is fashionable, the rates have no relation with the service delivered nor the local competition. I like the Palau de la Mar in Valencia but someone explain to me why it is more expensive than the Westin? Le Klaus K in Helsinki remains one of my worst hotel experiences ! More boutique than hotel, “design” more than questionable, dungeon room, smaller than my bathroom in Paris (that’s saying something) with a vision of luxury totally Scandinavian (ie non-existent) for a 5* at nearly 200 euros per night for 12m2!

Only the Altis Belém in Lisbon and the Dominican in Brussels convinced us. And yet… One year after my enchanting stay at the Altis Belém Olivier came back with a terrible experience…which we will talk about later.

In short, we have been sending messages of distrust to Design Hotels for quite some time.

For us Design Hotels was to SPG what England is still to Europe: a “member” who wants to use the collective without giving too much in return.

But it’s worse than that.

Design Hotels not so independent

While Design Hotels only visibly arrived in the Starwood galaxy in 2017 the fact remains that Starwood had owned 49% of Design Hotels since…2011. So he was in control!

It’s an absurd situation where Starwood controls Design Hotels, but …. does not control its members. Even worse than the case of AccorHotels franchisees who do as they please but are still subject to a minimum of rules from which they cannot deviate.

And that’s the situation Marriott inherited when it bought Starwood.

Design Hotels: the wart of Marriott Bonvoy?

Where do we stand today? If you read the terms of the Marriott Bonvoy loyalty program, Design Hotels is part of almost all exclusions ! Of course these are not the only hotels that are exceptions, but all the others are long stay hotels, or vacation residences, apart from the Ritz-Carlton which always tends to think they are a little more than they are.

But the status of no Design Hotel justifies a derogatory status outside the fact…. that, although controlling the group, Marriott does not control the hotels which continue to do as they please.

We were talking about the Altis Belém. Like a dozen other hotels in Portugal it will leave Marriott Bonvoy without knowing if it also leaves Design Hotels…. which surely explains the change of behavior between my visit and that of Olivier.

As I said a while ago, Design Hotels does not play the Best Rate Guarantee game either.

All of this would just be the vagaries of managing a partnership if Design wasn’t owned by Marriott and as I said all of this sends the wrong message to the customer as well as to other hoteliers. And we know that a loyalty program that is not uniformly applied loses value for the customer who no longer judges the promise but the experience!

What solutions for Marriott with Design Hotels?

Today we have a group of hotels that does not fully participate in the partnership and, when it does, it does so on its own terms and takes advantage of the partnership to attract customers. Whether it’s Marriott or the customer, it takes more than it gives.

I don’t know if it’s a problem for Marriott, but when you read the specialized forums, it’s in any case a matter of dissatisfaction that is coming up more and more among customers.

I was reading recently that the best solution was to convince more and more Design Hotels to join the Marriott loyalty program. It’s difficult when you have no power of coercion and when you come across independents who don’t understand the interest of playing together.

On the other hand I see that after the Starwood buyout investors would like to see Marriott “clean up” its brand portfolio. I don’t think the sale of Design Hotels would create an unfillable hole in the Marriott offering.

Moral: no à la carte partnerships

All this to highlight one thing: in an alliance, in a loyalty program, creating exceptions and leaving the door open for à la carte partnerships always ends up creating both frustration for clients and precedents that may one day be regretted.

The story of Design Hotels in Marriott is a bit like that of England in the European Union, except that the consequences of a “Dexit” would not be so bad for the collective.

Bertrand Duperrin
Bertrand Duperrinhttp://www.duperrin.com
Compulsive traveler, present in the French #avgeek community since the late 2000s and passionate about (long) travel since his youth, Bertrand Duperrin co-founded Travel Guys with Olivier Delestre in March 2015.
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