I am back on the blogging bandwagon. Did that headline get your attention? I thought it might. So, what was the impetus for the headline? Well, it is in response to my colleague Jackson Shaw’s blog entry indicating that Marriott is losing millions by not supporting claims. Matt Flynn then chimed in and said that $$$ = motivation and perhaps that would spurn them on to support claims.
Well, I have a different spin on this and I’ll attack this in a two part blog. Part 1 is here and outlines why Marriott (in my opinion) is not losing millions by not supporting claims. First of all, I want to say that I like the claims model and it works in many situations. In fact, Optimal IdM will soon announce some very interesting news around our further integration with the claims model, but that is a topic for another day.
Now on to my theory. As with politics, two things are important to remember. One, follow the money. Two, the devil is in the details (Yes, you should read bills prior to passing them). Let’s look at Marriott’s business model. They sell hotel rooms. There are a finite number of rooms in a given hotel. There are fixed costs of the hotel (taxes, wages for staff, etc.). Whether Jackson stayed at this hotel that night or not is not going to change this hotels fixed costs. There are, however, variable costs. For a typical hotel like a Marriott Courtyard it costs about $20-30 to cover the costs of housekeeping, soap, coffee in room etc. That is “basically” the cost of goods sold. Therefore, selling any room over the variable cost makes good business sense as it is profitable. The only question is how much of a profit.
The fact that Jackson used to work for Microsoft and they are giving him a $10 discount is moot. Why? Because if they set up this grand federation scenario where they would now Federate with Quest (his current employer), they would likely have to give that same $10 to Quest. There is NO net revenue gain. Only if they could guarantee that they would not have to give the discount would it make sense to spend the bucks to re-do what they already have in place. And then you would have to (or really should do) a cost benefit analysis and a payback scenario. Plus, in part 2 I will outline the gotchas that this would add.
I almost always check the check box to get the AAA discount, but very rarely am I asked to prove it with my card at hotels. The fact of the matter is these discounts are factored into their business. Marriott would far rather have $10 less from me or Jackson then to have us go to Hilton or some other chain.
One other thing to think about. Those discounts go out the door when the hotel is at maximum capacity. At that point, everyone including road warriors with the highest status pay the rack rate. It really is simply a matter of supply vs. demand. Sorry Jackson I agree with you on many things, but this is not one that I can agree with. This is one thing that claims will not solve!
Stay tuned for Part 2 of all of the reasons I believe Federation/Claims is a poor choice for this scenario. I am sure I will use this as an example of when someone should not Federate in my speaking session at Quest’s The Experts Conference. My topic is When to Synchronize, When to Virtualize and When to Federate – Which is the Right Solution and When?
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