Interesting article with some information about how the Bonvoy program works on the property owner group side.
Interesting, the article totally failed to mention the millions it cost Marriott to rebuild after several natural disasters in their 18 years of contract. Marriott has also invested heavily in the region's tourism to help bring back customers.
That being said, these types of management disagreements happen often as a way to either get out of contracts or as part of re-negotiations.
Thanks for sharing.
Are you saying marriot corporate pays for damage to its member hotels as a result of natural disasters or other damage?
I dont know about how it works but I would find that hard and almost impossible to believe that anything to do with the real property upkeep or repair costs are a part of their management agreements. Real property minimum standards and the costs being the sole responsibility of the owner to maintain those standards I could see in the contract, but upkeep or repairs at Marriott's expense I couldn't imagine.
I agree these disagreements are common, but rarely do we get to see the details, such as what the reimbursement rate is for award night redemption at one of the most blogged and asked about properties in Marriott portfolio, and what the ownership feels about reward redemptions effect on their bottom line.
Marriott APAC entity pays not US corp. The owner and Marriott paid big time to bring the property back on-line.
The details of these disagreements are found in the entity fillings and annual reports.
Its always easier to say we don't need the management company charging us fees when the economy is doing well but when the economy sucks and nobody stays at the properties or a force of nature kills the island tourism, then we really need the help of the management company for cash and stability.
There are always 2 sides to these stories and the Skift article only discusses one side.
Ok. I just dont see anything indicating a program management company incurs costs to real property damage.
I'm not advocating for either side, the interesting thing to me and what I thought would be of interest to the community, was the unveiling of specific dollar amounts for redemption stays in the contractual agreements concerning award redemptions, how it relates to rack rates, and how the ownership entity feels this hurts them, and after that thought, the implications for other properties.
I think the number was something like 49 dollars per night for this property, without going into a 5 page discussion on hotel economics, that number is interesting on many levels. 49 bucks. I have no idea what the value of bonvoy marketing is, undoubtedly it differs by hotel.
Would I have that hotel on my horizon if I was traveling there for a paid stay and it didnt pop up in my Marriott search? Probably not.
That's the essence of their primary complaint- They could do better on their own or with a companythat didnt market directcompetitors. The economics are interesting. To me at least.
Its a crown jewel in Thailand. A very special place in the portfolio. I encourage everyone to visit this amazing property.
With the caveat that I haven't personally staid there, I say I agree based on the number of mentions in forums such as this and flyertalk, I've read wonderful things about it. Which only fuels my interest that it gets reimbursed about 49 bucks a pop for an award night redemption.
One can not help but consider the economics of that against what Marriott brings to the table in the way of exposure and client base, and how it may be the same for other similar high end properties, and ultimately what that means for these kind of high end or special properties staying in the program for the long haul.
If, in their opinion it's not profitable or sustainable for them, others are surely in the same boat.
Yes, very enlightening indeed.
Now obviously I’m talking from zero knowledge about this litigation but it seems to be about the fact that the hotel owners believe the hotel management team run by Marriott are underperforming hence no increase in turnover since 2013.
As a lawyer I can certainly say that statistics can be used in opening statements to allege almost anything but of course the reduction of Redemption rates from an average of $120/nt to $49/nt could be caused by closure due to storm damage, reduced tourism in the area, a softening of rates due to many new openings leading to a supply and demand imbalance, or many other possibilities.
I can well see why Marriott would want to keep this out of open court and within confidential arbitration, there are plenty of other Bonvoy properties in Thailand who will be very interested in the nitty-gritty granularity of this long-standing contract to compare it with their own. For the same reasons Marriott will want to keep the nitty gritty secret, which is of course the reason the owners have issued open litigation in the first place and made public some juicy figures - their threat to Marriott is obvious, negotiate an out, or face line-by-line publication of the contract. If the Thai Judiciary decide they have jurisdiction then Marriott will feel very pressured to settle rather than make the public disclosure. Likewise if the decision is that the Contractural obligation to resolve disputes via Singaporean arbitration negates local jurisdiction then the owners will feel the pressure as their “washing dirty laundry in public” gambit will have failed and it will of course indicate that the judicial view of the contract favours its binding nature, giving the owners a bigger mountain to climb with the arbitrator.
I also think the other arguement they appear they will make, one with more far-reaching consequences, is that Marriott has conflicting interests andvthey are not (and possibly cannot) be faithfully acting in the hotel's best interest while also acting in the best interest of the other Marriott properties in the same locale.
If they were able to successfully argue that and win, the impact to the hotel management industry would, in my opinion, be quite huge. I believe that in turn would change the loyalty program model.
Absolutely, Marriott has nothing to gain and everything to lose from a public trial and result. If it “wins” but has to disclose it ends up with its business partners far more knowledgeable about its contracts with others. If Marriott loses then it adds the possibility that the loss could encourage other owners/franchisees to seek freedom from underperforming contacts by duplicating the successful grounds (be they new Bonvoy T&Cs, failure to achieve targets or conflicting interests, or really whatever ground the owners succeed upon) and issuing their own court proceedings.
Whatever, it’s easy to see why the owners want a public case before the Thai Courts and Marriott wants to enforce confidential arbitration.
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