What Would a Starwood – IHG Merger Mean for Award Travelers?

May 1, 2015

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After hiring a financial advisor, Starwood Hotels has rekindled speculation that the company is interested in acquiring IHG. Board Chairman Bruce W. Duncan neither confirmed nor denied that any formal merger discussion was in the works, but explained that Starwood would “explore a full range of strategic and financial alternatives to increase shareholder value.

W beijing
One of my favorite Starwood properties is the W Beijing.

Hotel mergers are nothing unusual — just in the last year there were similar rumors about an IHG takeover, first by Starwood and then by Wyndham. While neither of those deals panned out, IHG acquired Kimpton Hotels in December, and Marriott Rewards brought 26 South African Protea properties into the program shortly after.

InterContinental Hotels Group is currently the third largest chain worldwide in terms of properties, and the largest in terms of the total number of rooms. Starwood ranks ninth and seventh, respectively. A merger between the two would pair IHG’s reach and sheer size with Starwood’s more luxurious reputation to create a true colossus in the hotel industry. While Starwood’s board ponders whether such a move would improve the company’s bottom line, SPG and IHG Rewards members are left wondering what it would mean for their own.

Could properties like the InterContinental Budapest be brought into the Starwood Preferred Guest program?

I think Starpoints are the most valuable loyalty currency out there, and I use my Starwood Preferred Guest Credit Card from American Express for the bulk of my everyday spending (when it doesn’t fit into other bonus categories). Starwood lets you transfer points to airline partners, and has some great hotel properties like the St. Regis Princeville on Kauai, a number of good options in New York, and many others. Basically, I’m a huge fan of Starwood Preferred Guest, and I’m not shy about it!

IHG Rewards, on the other hand, is thoroughly a second-tier program. While I just recently applied for the co-branded IHG credit card from Chase, I did it more for the annual free night benefit than for the sign-up bonus or any points I’ll earn otherwise. While I think IHG and Starwood would make good bedfellows in building a hotel empire, the loyalty programs are terribly mismatched, in my opinion, and I’d be disappointed if there was a move made to integrate them.

A merger wouldn’t necessarily spell the end of either program; after all, Kimpton Karma Rewards is still going strong after being acquired by IHG. If brands like Westin, St. Regis, and W can remain independent from InterContinental, Crowne Plaza, and Holiday Inn, then it seems like SPG and IHG Rewards could do the same. Starwood could leave the two intact and simply create a transfer option between them. That seems like a pretty tidy solution, but if Starwood wants to assimilate IHG properties into its own brands, then the loyalty programs will have to follow suit.

Again, this is all speculation about a business deal that isn’t even being discussed publicly, but it’s events (or non-events) like these that remind me how fluid loyalty programs are, and why it’s important to use your points and miles rather than hoard them.

The W South Beach is great Starwood propriety in terms of Platinum upgrades, due to the number of suites they have.

If I had to guess, I’d say that Starwood’s loyalty program has helped turn the brand into a rock star, and there’s too much at stake to jeopardize it by watering it down. On the other hand, IHG Rewards is massive, and I don’t think Starwood would want to scrap it entirely. The most likely outcome in my opinion would be for the two programs to remain separate, though that could just be my own hopes and self-interest talking.

I’m curious to hear what readers think of this potential merger, so please share your thoughts in the comments below. What would a SPG/IHG program look like, and how would it influence your award travel strategies?

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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