Confirmed: 122 Will Depart From Marriott

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Geez, onetwo… and three posts about Marriott in the same day. Marriott is on a roll. 😉

Two weeks ago, I wrote about a potential large exodus of hotels from the Marriott brand because Marriott had fallen behind on a few bills.

Have these hotels been “Bonvoyed”…the loving moniker making reference to the hotels loyalty program and given by members because of canceled bookings, point grabs and poor customer service by the behemoth hotel brand?

MARRIOTT IS LOSING 122 HOTELS?

Generally, hotels are not owned by the brand but are rather owned by an investment group, with the hotel brand (Marriott in this case) having management rights.

Well, Service Properties Trust (SVC) is one such investment group and two weeks ago, the group sent a letter to Marriott International requesting $11 million to cover the shortfall between the payments SVC had received up to that point (from Marriott) and 80% of the priority returns due to SVC since the beginning of the year for 122 Marriott properties.

In other words, Marriott guarantees a certain minimum return to the SVC owners (and yes, this is standard practice), but since Marriott has fallen short of their contract obligations, there appeared to be trouble on the horizon.

If Marriott did not make the requested payment, SVC was threatening to transition management and branding of the 122 hotels from Marriott to Sonesta International Hotels Corporation.

THE BREAKDOWN

The 122 hotels being rebranded belong to five different Marriott brands, and the breakdown is as follows:

  • 2 Marriotts
  • 2 Springhill Suites
  • 12 TownePlace Suites
  • 35 Residence Inns
  • 71 Courtyards

CONFIRMED: MARRIOTT IS LOSING 122 HOTELS!

Yesterday, SVC stood by their word and announced they are, in fact, pulling the 122 hotels from Marriott before 31 January 2021 with:

  • 98 of the 122 hotels being transferred to Sonesta
  • 24 of the 122 hotels being sold for $153 million

MARRIOTT IS NOT ALONE

Marriott isn’t the only brand that is in hot water with SVC.

A month ago, SVC ended its management and branding agreement with IHG for 103 hotels. The contract will end as of 30 November 2020, at which point:

  • 3 InterContinentals
  • 3 Holiday Inns
  • 5 Kimptons
  • 11 Crowne Plazas
  • 20 Staybridge Suites
  • 61 Candlewood Suites

 …will all be run by Sonesta instead.

SONESTA…THE NEW “IT” HOTEL BRAND?

If you’re asking “who the heck in Sonesta?” you’re not alone. I am unfamiliar with them as well.

Sonesta has approximately 80 properties right now (and will have even more since it is transitioning, both, the IHG hotels above and now ex-Marriott properties).

Interestingly, according to Sonesta, the investment group manages 16 hotels that were rebranded from IHG in 2012 and since then total annual revenue at these hotels improved 14.4% which is a considerable improvement.

Understanding that Sonesta is acquiring nearly 200 hotels from IHG and Marriott, is Sonesta the new “IT” hotel brand?

FINAL STAMP

Marriott hasn’t followed through in its obligation to pay their hotel(s) and SVC has now terminated its agreement.

I totally understand why an investment group would transition to a new brand. If someone was $11 million short on a bill they owed me, I’d probably do the same thing.

Only time will tell if Sonesta is the new “it” brand. Perhaps, I need to do a deep dive into their loyalty program. 🥳

What do you think of this development?

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