Will Hyatt Buy Starwood With Cash And Points And What Will That Mean For Mileage Junkies?

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Yesterday the rumor was that several Chinese firms were in talks to buy Starwood. I didn’t have much to add to that, so I just briefly posted it in on DDF in the “Interesting Articles” thread.

Today the rumor is that Hyatt will buy Starwood and that a deal could be in place in less than a week,

“Hyatt Hotels is in talks to buy Starwood Hotels & Resorts in a deal that is said to be as little as a week away, sources told CNBC.

Under the cash and stock agreement, Hyatt management would retail control of the combined companies. Talks between the two companies have been going on for weeks.”

A cash and “points” redemption does seem apropos 😉

If the deal goes through it will have massive implications for mileage collectors. Some quick initial thoughts:

As Hyatt will be the acquirer it’s possible that their policies will become the future policies going forward.

But it’s more likely that we’ll see a hybrid of policies from both companies. Luckily there is more competition in the hotel industry than the airline industry, so I don’t see them picking the worst of both worlds as we saw happen in the Continental+United merger.

Undoubtedly we’d see a massive battle between AMEX and Chase for the rights to be the card issuer for the combined chain.

For the short term they may keep both issuers, but long-term they’ll likely pick just one. When American and USAirways merged Citi won the contract over Barclaycard, though Barclaycard holders still have grandfathered AA mileage earning credit cards. That’s not always the case though. When Delta and Northwest merged, USBank Northwest cardholders had their cards turned into FlexPerks cards.

When the banks pay more money to keep Hyatt though, it may increase the value that Hyatt gives to their points.

As it stands now Starwood Starpoints are more valuable than Hyatt points. That’s primarily because of the ability to transfer points into dozens of airlines at a 20K:25K ratio. But Starwood also offers 5 night free awards that are quite valuable as well.

Hyatt does have some advantages over Starwood though. Their ultra high-end hotels are far more affordable (the maximum rate is 30K points) than Starwood’s high-end hotels that can cost as much as 100K points for a night. Time will tell if Starwood’s high-end hotels become more affordable, if Hyatt’s high-end hotels get more expensive, or if they meet somewhere in the middle.

While Starwood used to have an awesome cash and points award chart, they devalued it a few years ago and now Hyatt’s cash and points award chart is more lucrative.

Hyatt’s top-tier elite program is more generous than Starwood’s thanks to suite upgrades that are confirmed at the time of booking and the ability to get a full breakfast, including a free catered kosher breakfast at many properties.

However Starwood has a far more attainable lifetime elite program (10 years Platinum and 500 nights for lifetime Platinum) than Hyatt does (10 years as a member and $200,000 spent in Hyatt hotels.)  Which program will win out and how will those vastly different requirements be merged?

Mergers are rarely good for consumers. But I’m cautiously optimistic as Jeff Zidell, head of Hyatt’s Gold Passport program, has generally proven to understand that brand loyalty is a 2-way street. Hopefully he will manage to combine at least some of the best features that both programs bring to the table as cherry-picking the bad or just implementing Hyatt’s policies will just cause loyal elites to head for the exits.

Even if there are devaluations to the airline transfer program, there will almost certainly be a warning beforehand so that you will be able to transfer Starpoints into airline miles at their current favorable ratios.

What are your thoughts on the potential Hyatt takeover of Starwood? Hit the comments!