Starwood May Be Next As Marriott Wi-Fi Move Catches Corporates In OTA ‘Crossfire’

By | November 14, 2014

Starwood Hotels & Resorts appears poised to drop Wi-Fi fees for loyalty program members booking through its apps, websites and call centers. A similar plan at Marriott International announced last month and due to take effect Jan. 15 is upsetting many travel management professionals. This is collateral damage for Marriott, which is aiming to build traveler loyalty and better compete with online travel agencies.

Starwood officials did not respond to inquiries about its plan, which six industry sources mentioned in general terms during the past week.1

wireless-150420_1280Supplier moves to enhance direct channels at the expense of corporate ones frustrate travel managers and travel agency executives. Along with smartphones, Wi-Fi is just about the most essential business tool for travelers. Companies with clout already convince hotel properties and chains to include it in negotiated rates. Travelers staying at certain limited-service and full-service brands often get it for free anyway. There is good reason to believe that the days of paid basic Internet access at hotels soon will be over, across the board.

But not yet. There still is some money to generate from this captive audience. So, for now, some of the higher-tier chains that still charge guests for Wi-Fi are using loyalty programs as a means to provide a value-add. InterContinental Hotels Group offers free Wi-Fi to all loyalty program members with no channel conditions.

There are indications that Marriott and Starwood are assuring some corporate accounts that 2015 preferred rates would include Wi-Fi for all their travelers. Why not just advance the inevitable and make it free for all? For starters, property owners want to see a return on their technology investments. Increasing membership in loyalty programs also is an obvious goal. Providing greater value through such programs can mean deeper relationships with customers. When available rates are at parity, perks in lower-cost direct channels can make the difference.

“There is a good economic justification for giving up the high-speed Internet access revenue but decreasing the cost of the transaction,” said NYU hospitality and tourism professor Bjorn Hanson. “From the traveler view, though, it just looks like the brands are being too directive, too controlling in how the reservations are made.”

Marriott’s Gold and Platinum-level members already get free “enhanced” Wi-Fi, regardless of booking channel. The new policy impacts basic and Silver-level members. Marriott officials told some travel management sources that about 15 percent of bookings through global distribution systems for Marriott-brand properties are by nonmembers or basic or Silver-tier loyalty program members. Marriott’s public relations department declined to confirm the figure.

“Since we handle small and midsize accounts, we’re running anywhere from 20 percent to 25 percent that are affected,” said Travel and Transport Partner Solutions Group general manager Donna Brokowski.

Caught In The Crossfire

Christopherson Business Travel CEO Mike Cameron referenced a “constant negative tension” between travel suppliers and online travel agencies that spills into corporate travel. “We get caught in the crossfire,” he said.

Travel management pros struggle to understand why Marriott would disadvantage higher-yielding corporate booking channels. They say suppliers should favor tight programs with strong policies facilitating mutually beneficial relationships.

Given that travel buyers and hoteliers are in the midst of negotiations for next year’s rates, the “timing couldn’t be worse,” Brokowski said. “Most customers are trying to wrap up acceptances right now, so they can get rates loaded and audited and maximize savings for bookings starting January 2015. This is extending our negotiations. If you extend even by a week or two, it’s going to push your rate loading into January. That’s lost savings.” Travel and Transport is advising small and medium-sized accounts to negotiate property by property for Internet access. They might also reconsider their preferred suppliers or use mobile data plans for tablet and laptop tethering, Brokowski said.

Carlson Wagonlit Travel Hotel Solutions global project manager Lisa Maloney said large global accounts “almost always” get Wi-Fi in negotiated rates. Some smaller-volume clients already have switched to brands in lower tiers that provide free Wi-Fi to all guests, she said. “In general we have not yet seen the impact [of the new Marriott policy] on smaller-volume accounts but it’s still to be determined,” Maloney said. CWT is a subsidiary of Carlson Companies, which also owns the Country Inn & Suites and Radisson brands, among others.

Though Marriott did not make available an executive to help explain its thinking or confirm attempts to appease corporate buyers, a spokesperson wrote in an email that “we respect the responsibility travel managers have with duty of care for their travelers, as well as executing all aspects of a managed travel program. Our announcement is a Marriott Rewards member benefit for those to who can choose how they book travel. It is not to encourage travelers to break company policy and book out of compliance.”

According to an initial prepared statement attributed to Marriott International chief marketing and commercial officer Stephanie Linnartz, “Free Wi-Fi is a meaningful way to reward our most loyal customers and continue to attract next-gen travelers.” The “next-gen” reference is about “a lifestyle of people who are most dependent on mobile technology in their daily lives,” the spokesperson said.

That sounds like business travelers of all ages. But not all will receive the benefit, at least until complimentary Wi-Fi is ubiquitous.

1 A senior Starwood official subsequently responded by email: “At the present time, we are not in a position to comment on our Internet stance. Like all companies, we continue to look at this and will have our position clarified in the near future.”

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