Hotel guests often forget that they’re not the real customers of the major hotel groups. Instead, it’s the hotel owners who are the customers, and us guests and loyalty program members are the “product” being sold to them.
Along those lines, Skift reports on how Hilton has just cut the fees that hotel owners have to pay to Hilton, in hopes of making it more compelling for owners to join the portfolio. The catch? Well, that money has to come from somewhere other than Hilton’s bottom line, and that’s not good for Hilton Honors members.
Hilton appeals to hotel owners with lower fees, better margins
During its Q2 2026 earnings call, Hilton CEO Chris Nassetta went over some initiatives that Hilton has recently introduced. He gets through these pretty quickly, so let me just quote this part of what he said:
“First, on fees, reflecting the continued growth and scale and efficiency of Hilton Honors, we reduced loyalty fees for most hotels globally. We also launched Hilton Rise, a program that provides program fee discounts when hotels consistently deliver an excellent guest experience. Second, we are taking a more flexible and tailored approach to renovations, balancing owner investment with guest expectations and hotel performance. Most recently, we initiated an intensive cross-functional review of hotel-level P&Ls to identify where Hilton’s scale, technology, and enterprise capabilities can drive incremental owner profitability. Through this work, we are exploring system-wide opportunities across workforce innovation, purchasing power, and brand cost discipline to strengthen hotel level margins, reduce complexity, and create even greater long-term value for our owners as well as all stakeholders.”
To summarize:
- Hotel owners pay loyalty fees that are a percent of revenue collected, which is largely how the loyalty program is funded; those fees have been cut by 0.3% (most brands pay in the 2.5-5% range)
- Hilton is introducing a program that provides additional discounts on fees when hotels consistently get good guest satisfaction scores, so that’s supposed to act as an incentive to provide good service
- Hilton is getting more “flexible” when it comes to brand standards, meaning it might not force hotels to renovate to remain compliant with brand standards, and might not require all brand standards to be followed by new hotels
- Hilton is now exploring ways to make things more efficient for hotel owners, including “brand cost discipline” to improve hotel owner margins
These changes are largely bad news for guests
On the plus side, I like the idea of the Hilton Rise program, where hotels have an incentive to get good customer satisfaction scores. In my opinion it makes sense to tie fees to customer satisfaction, because ultimately that’s a win-win. As far as the rest of the stuff goes… well, it’s probably not good news.
I understand how reducing loyalty fees is appealing to hotels (for obvious reasons), but it’s also how points redemptions are funded. So when Hilton keeps issuing the same number of points while getting less money from hotels for those points, it can mean only one thing — points will continue to be devalued. Hilton Honors points redemptions have been devalued considerably over time, and I expect that trend will only continue.
Having more flexibility with brand standards also isn’t ideal. Back in the day, the whole selling point of staying at a certain brand of hotel was that you’d sort of know what you could expect. That’s definitely not the case anymore, as the variability between individual hotels has continued to increase.
Bottom line
Hilton is trying to appeal more to hotel owners, through a series of initiatives. This includes a reduction in loyalty fees, meaning that hotels are paying less money for points to be issued, and that can only mean one thing — more points devaluations.
Hilton will further give hotels the opportunity to reduce the fees they pay by getting good customer satisfaction scores, which I think actually makes sense. Lastly, Hilton is committing to be more flexible on brand standards for hotels, so expect less consistency.
What do you make of Hilton’s initiatives for hotel owners?
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