Upcoming Changes for Former Starwood-branded Hotels
Since the completion of the merger, our teams have been working diligently to develop the long-term strategy for integrating former Starwood properties into the Marriott International portfolio. In support of our Owner & Franchisee Value Proposition, much of this effort has been focused on identifying opportunities to achieve cost synergies. We are working on our broader strategic roadmap outlining the many anticipated benefits and plan to share an update with you in the coming weeks. In the meantime, we have identified a few near-term areas of work that will be implemented in the coming months in order to allow properties to begin realizing initial benefits, and we wanted to share the key tactical details of those changes with you.
Procurement: Leverage Volumes and Strong Supplier Relationships to Improve Cost Efficiencies
With the increased scale of our combined purchasing, we see the potential for significant savings in the area of procurement. Starwood’s existing process will be phased out by December 31, 2016 and Marriott-managed hotels in North America will begin transitioning to Avendra, Marriott’s supply chain and procurement partner, during Q4 2016. In preparation for this, beginning this week, Avendra will be reaching out to Marriott-managed properties to begin the transition process.
Franchised hotels using Starwood’s procurement process are encouraged to begin planning any necessary transitions related to their purchasing platform and procurement contracts as well. These hotels are able to purchase goods and services from any supplier as long as the supplier fully complies with Marriott’s specifications and standards. For any hotels under current Starwood contracts, Avendra will provide access and support. Additionally, hotels that previously used StarSource as an ordering platform can choose to leverage one of Avendra’s multiple eCommerce options. Hotels interested in working with Avendra should visit www.avendra.com for more information.
OTA Agreements: Migrate Existing Agreements to Reduce the Cost of Sale for Bookings
We believe Marriott has negotiated the lowest average cost of sale through intermediaries. Over the next few months, we will migrate Starwood’s distribution agreements to Marriott’s terms with OTAs, TMCs and GDS. The first agreement to be migrated will be Expedia, and earlier today Revenue Managers at former Starwood-branded hotels received instructions on the technical steps needed in order to begin the process of conforming to the technical/business requirements for the migration to Marriott’s agreement. The migration to Marriott’s Expedia agreement will take place in phases. It is anticipated that the complete portfolio of former Starwood-branded hotels will be able to realize the benefits of the new agreement by the end of Q1 2017. In order to maximize potential savings for hotels, the timeline and procedures for migrating other OTA agreements, including Booking.com, are being developed and will be shared as they become available.
Risk Management: Transition to Marriott’s Risk Strategies and Solutions
Marriott-managed hotels will leverage Marriott’s Risk Management structure, which includes Insurance, Global Safety & Security, and Fire Life Safety services. This structure is designed to protect the company, owners, associates and guests, while also achieving optimal operational efficiency and cost savings. Formal communication regarding the risk management programs will be forthcoming. For general questions, please contact risk.management@marriott.com.
We anticipate each of these programs will generate benefits for former Starwood-branded hotels and owners, and we look forward to providing a more comprehensive update on our longer-term strategy and additional areas of opportunity. Should you have any questions about these upcoming changes, please let us know.
