Marriott reports award redemptions are up 20% in 2019

Marriott's acquisition of Starwood greatly increased the size and range of its hotel portfolio worldwide.

During the sometimes painful integration, loyal Marriott Rewards and Starwood Preferred Guest members got the first chance to look at this extensive collection of hotels and resorts where they could now redeem points. At first, those steps may have been tentative (or tenuous).

But according to Marriott, at least, things are changing.

On Nov. 5, during Marriott's 2019 third-quarter investor call, CEO Arne Sorenson discussed, among other things, the state of loyalty redemptions. According to Sorenson, customers are redeeming their Marriott points at a steady clip, with year-to-date loyalty point redemptions up over 20%, driving better results at resorts and leisure destinations around the world.

Sorenson also noted that Marriott Bonvoy members represented 58% of all the rooms booked across the chain for the first nine months of 2019.

He also took the time to call out a unique situation in the program that was part of the integration of the two loyalty programs. As quoted from the transcript of the investor call this week:

I think some of the bookings that could have been made through the first part of 2019, probably not into the middle of 2019, allowed some of the highest category hotels to be [booked at lower prices than normal]. And this is not about peak/off-peak pricing, but it's about the former highest-category hotels. They were on sale a little bit based on the way the minutiae of those formula work.

And I think you have some extraordinarily sophisticated folks who watch these loyalty programs and thought, this is a good time to reserve some of those redemption stays for that kind of hotel. But I suspect we will see pretty robust redemption activity as a steady state aspect of a loyalty program going forward.

I think Arne just called us extraordinarily sophisticated.

Indeed, astute Marriott Bonvoy members will most certainly recall the opportunity to book some of SPG's best properties at a significant discount over the previous and future award rates while the Marriott award chart topped out at 60,000 points per night. Many a TPG reader (and staff member) took the opportunity to book The St. Regis Maldives, The St. Regis Bora Bora, Al Maha and more at that once-in-a-lifetime award rate.

That opportunity ended in March of this year, pretty much in line with Sorenson's comments.

Leeny Oberg, Marriott's CFO, noted that "extraordinarily sophisticated folks" aren't the only reason for an increase in redemptions.

"And there's meaningful crossover which is great to see," Oberg said. "So you've got former Marriott Rewards members going to legacy Starwood hotels and vice versa in meaningful nights."

Bottom line

Marriott Bonvoy members are using their points to book more rooms in 2019 than in 2018, by a large percentage. But how much of that is due to the incredible deals on those legacy SPG luxury properties? And how much is the result of member excitement for the new program?

Or, are we simply seeing travelers in the "let's burn the points we've got and move on" frame of mind?

It sounds like we'll have to wait until at least the first quarter investor call of 2020 to get a better idea of the year-over-year comparison. A drop in Q1 year-over-year redemptions would be a sure sign that those "extraordinarily sophisticated folks" took advantage of a once-in-a-lifetime deal with such vigor, they skewed Marriott's redemption predictions ... and, perhaps, emptied out their accounts.

You can read the transcript and listen to a recording of the Marriott investor call here.