Marriott Continues to Bang the Bonvoy Drum Ahead of Planned Brand Expansion

Marriott International’s aggressive portfolio growth strategy is fueled by company ambitions to make its Bonvoy loyalty program as complete as it can be.

Speaking at the 2019 Skift Global Forum in New York City Thursday, Marriott Chief Financial Officer Leeny Oberg referred to Bonvoy as the perfect antidote to lure customers into existing and pending Marriott properties, even as both its largest market of the U.S. and its fastest growing market, China, face economic uncertainty.

“It’s about how well we pull the customer in so that they choose our brands as opposed to others,” said Oberg. “The travel landscape going forward is positive because people have a desire for experiences over things, so the importance of Bonvoy being the halo brand makes us feel confident about the future.”

Marriott launched Bonvoy, currently at 133 million members worldwide, earlier this year to mark the completion of the chain’s integration of its rewards program with Starwood Hotels. The transition was not easy, Oberg conceded, as many Starwood loyalty members have been vocal about losing points and loyalty status in the consolidation.

“We are 100 percent confident that was a transitory phase,” she said referring to work done in 2018 by the company. “We made great strides and are back to a much better place.”

About 70 percent of Marriott’s business to date comes from direct bookings, Oberg added. One of the chain’s newest ventures, Homes & Villas by Marriott International, is helping to grow that number.

“Home rentals are an important element of Bonvoy,” she said. We did a proof of concept last fall, and it was clear having a choice to redeem points at a rental home was important to them.”

Stays at home rentals by Marriott Bonvoy members are on average longer than five days. The company currently has 2,500 homes available in 150 markets. About 60 of those markets are new to Marriott. The venture, however, will remain insignificant to Marriott’s financial performance for the time being, according to Oberg.

Aside from Marriott’s direct booking business, the chain still predominantly relies on online travel agents to fill about one third of its hotel rooms. The company announced a new agreement with Expedia this week, giving the company full distribution rights for the brand’s wholesale business. The rooms, often bought in bulk, are often heavily discounted by wholesalers, which can cause confusion for customers about rates.

Both Marriott and Expedia signed a new multiyear retail distribution agreement earlier this year. Discussions to give Expedia exclusive rights to Marriott’s wholesale business began shortly thereafter.

Asked what the agreement means for other online travel agents, Oberg said, “Certainly from the standpoint of the way we are going to go, where people shop, it will be through this channel.”

“We are creating a one-stop shop for hotels to load inventory and prices,” she added.