Marriott Changing How Hotels Are Paid For Award Nights

Interesting. Thank you Ben, I really enjoyed reading while sitting on my porch with my coffee.

Free nights do present interesting economics. I recently stayed at a Hyatt Place (category 4) with a free night certificate. When I checked-out, the desk agent handed me a receipt for $35 + tax. I asked what it was, and the agent said, "oh, you do not need that, but that's what the hotel gets from Hyatt." Seems low to me for a room that was $150+tax per night

I possess a wealth of knowledge on the intricate workings of hotel loyalty programs. Through my vast experience and unwavering expertise, I have arrived at the indisputable conclusion that all other programs such as Marriott Bonvoy or World of Hyatt pales in comparison to the majestic splendor of the Hilton program.

The mind-boggling value offered by the Hilton program continues to captivate my refined sensibilities. Oh, by the way, allow me to regale you with my most recent triumph — I have achieved the illustrious LIFETIME DIAMOND status, a feat that eludes a staggering 99% of the readers who peruse travel blogs.

I take great delight in showcasing screenshots of my exalted status at every opportune moment, igniting an insatiable envy within those who dare oppose me

I couldn't agree with you more. Hilton is it, the others are sh*t.

Devaluation has recently been huge, and I am sure more is coming while quality and service is getting bad. From a more than 2500 nights patron.

Remember that RevPAR takes occupancy into account (I'm taking loyalty RevPAR to mean cash revenue from Bonvoy members divided by all rooms not occupied by guests who aren't Bonvoy members paying cash (viz. counting vacant rooms and rooms occupied by cash Bonvoy members), so a hotel that's consistently low occupancy but charges a high cash rate would have a low RevPAR (but a high ADR), so might not see much of an increase.

The big overall change is that the reimbursement rate is more continuous instead of jumping discontinuously at occupancy thresholds: I was a night auditor at a Hampton with about 75 rooms a decade ago and I was permitted by the GM to give out 50% walk-in discounts like candy if we were only a room or two away from crossing 90% occupancy and there was an award stay, as the difference in reimbursement was like $15 to $125 if we went from sub-90% to 90%-plus.

Really struggling to parse this sentence "...from Bonvoy members divided by all rooms not occupied by guests who aren't Bonvoy members paying cash". Do you mind explaining this further? Fascinated by this topic.

Also - since you seem to be knowledgeable - would you say this incentivizes high-end hotels to play more games with base room award availability?

Why did the desk agent hand that to you?

Just wondering.

No clue. I was wondering the same thing

Very interesting. Does anyone know how the economics work for elite breakfast? Some hotels give you a $0 bill in the restaurant that you have to sign while others have a buffet or restaurant meal where you don't have to sign anything. Some properties give you a muffin while others have an extensive buffet and others let you order anything off the menu. Who pays for the breakfast - Marriott, the hotel, or do they split it? How much do hotels get paid (actual prices or some fraction thereof)? Or is breakfast already included in whatever reimbursement Marriott provides for room rate with no additional money for breakfast?

@Levi

Hit me up if you ever need occupancy.
I'd gladly walk-in and earn the, per his famous quote, "illustrious LIFETIME DIAMOND status".

Tells me nothing about how Marriott reimburses a property with 95% occupancy five months of the year and 50% occupancy the rest of the year. But then, it doesn't look like Marriott is telling its owners how that works, either. They'll have to wait until October to find out?

Just stayed last night at a Hyatt Place in Pittsburgh right by the Taylor Swift concert. Cash room rates were $1999/night and it was 100% full. I used points for the last room available. I wonder what the reimbursement rate was!!

It was a bit tortured because I edited it a few times, I apologize.

Some background in hotel accounting:

ADR: Average Daily Rate - total room rate divided by number of rooms occupied. So at a 10-rooom hotel where three rooms are occupied at $300 each ($900 total) and seven vacancies, the ADR is $300.

RevPAR: Revenue per available room - total room rate divided by rooms that could have been sold (out-of-order doesn't count). In our example, assuming none of the rooms is out-of-order, the RevPAR is $90.

Then it's a question of what counts as loyalty RevPAR. I would guess that this is calculated to exclude non-member stays and if it's being used to calculate a reward reimbursement rate, counting the reimbursements for reward stays also gets complicated, so I suspect reward stays are likewise excluded.

So let's say in our ten room example, one of those cash rooms is non-member, and we replace a vacant room with an award stay. Loyalty RevPAR (by my hypothesis) would be $600 divided by 8 or $75, so Bonvoy pays some proportion (probably close to 100%) of $75. If Bonvoy targets a reimbursement cost per point of say 0.5 cents, this would tend to be a 15k point redemption (to the Bonvoy member, this might look like a not-too-bad 2cpp redemption), depending on how good the prediction logic is.

As with any metric, it's gameable given sufficient motivation, but this does probably remove an incentive for a low occupancy property to block award availability (under the previous system, the reimbursement would probably be $30-ish) unless they can sell a lot of rooms outside Bonvoy channels (but if they can do that, why are they flagging with Marriott?). But if it's an overall increase in reimbursement rates, point rates should be expected to increase as well. Marriott also probably wouldn't be implementing this unless they were confident that they can do a good job of predicting loyalty RevPAR, which perhaps means less expectation of an extreme value redemption.

Thanks for breaking it down like that! And extra thanks for being a good commenter. Should be interesting to see as forecasting models get better and better if outsized value redemptions get fewer and fewer.

Interesting that nobody commented on the "fifth night free" if you redeem points you get one night "free" if you stay for five. I wonder how this will affect things. If there is a devaluation, they will need to raise the credit card certificate values and they will need to raise the amount you can add to a certificate. Marriott does make it easier to use the certificates than IHG and other programs. The real value begins at Platinum level but the value at the specific hotel is inconsistent.