Marriott’s new credit card agreements: What do they really mean?

Marriott International today announced it reached new agreements with JPMorgan Chase and American Express for its U.S.-issued, co-brand credit cards associated with its loyalty programs. MileCards.com Travel and Rewards analyst, Joe Cortez, analyzed the deal and here, he breaks down what it means for Marriott and Ritz-Carlton Reward Members.

After Hilton left their dual-issuer agreement with Citi to only offer co-branded credit cards from American Express, Marriott joins a small circle of travel companies with credit cards issued by two issuers, such as American Airlines.

Upping the perks stakes. With Hilton Launching a “super-premium” card with American Express in 2018, Marriott is following suit by launching its own super premium card from American Express. These cards tend to have high annual fees (often $450 or more) and offer more opportunities to earn status and points with the hotel brand. Additional benefits could include complimentary elite status (whether it’s mid-tier Gold status or top tier Platinum is unknown), free night awards, and select travel credits – like airline incidental credits and hotel incidental credits. The premium card from Hilton offers top tier Diamond status.

Lowering the cost of credit card rewards: Currently, cards that earn full value Marriott and Starwood points have annual fees. There are quite a few “mass consumer” credit cards that offer no annual fee to earn rewards, such as the Choice Hotels Visa Signature card and the Blue Delta SkyMIles Card from American Express. Therefore, it is plausible that at least one Marriott branded credit card would not have a fee to earn points for free hotel nights.

A ‘mass consumer’ card could be considered an ‘entry level’ credit card, which would earn less points per dollar spent and less benefits than those with an annual fee. The goal of this type of product is to introduce new markets to the value of Marriott points, in turn encouraging them to work up the chain towards bigger cards with better rewards.

How will this affect the value of Marriott Rewards® and Starwood Preferred Guest® Starpoints?

Marriott and Starwood are merging into a single program at an unspecified date after late 2018. One of the unique features of the Starwood program is a lower cost in points for many hotels. For example, in Maui, the Westin Maui costs 20,000 Starwood points, while the Marriott Wailea Beach Resort costs 40,000 Marriott points a night, double the points.

When Marriott and Starwood merge, these disparities will need to be reconciled. The most generous outcome would be for many Marriott properties to come down in price, but the least desirable outcome would be for Starwood properties to move up in price to match equivalent Marriott properties. Keeping point prices reasonable will be critical to keeping Starwood loyalists engaged in the new program.