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.
In this post:
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?
So basically Hilton is trying to become the next Marriott :(
Loyalty to one-way Hilton has become a real issue. At 990 nights and 20 years Hilton is blocking access to my account and playing games with a Bora Bora reward previously booked. Diamond for Life and Reserve seem to be unavailable as I reach the threshold. Like firing people at 64 when pension plan becomes active at 65.
Should have stayed with Starwood/Intercontinental Club though they did morph.
From being Bonvoyed to being Dishonored...
First we were Bonvoyed, now we're being Dishonored...
Loyalty - Airlines/Hotels/Cars - is moving quickly to almost zero. As airlines sell upgrades to FC seats for anyone vs free upgrades, hotels charge so many points that collecting them is silly, people will just move to the low cost provider. This will force these travel pros to compete on price. That could be good.
Hilton RISE is a money grab. The discount is true but the bar is high and if a hotel doesn't hit it they are forced in to a remediation program that Hilton charges $22K for. Hilton is placing greater emphasis on guest service vs. product which might be a bad thing for guests in the long run. It's easier and cheaper to move a service score than it is to spend millions renovating to move a product score. Branded hotels are universally behind in renovation.
These fee reductions are not for everyone. They are for hotels that guests rank highly or that are in process of improving the hotel. This article is slanted, they are incentivizing good hotels or hotels that are trying to be better.
This was coupled with a stealth devaluation. I was a couple weeks away from being able to book hotels for my honeymoon in mid-2027 and I just saw award prices jump 5,000-25,000 per night at all of the properties we had in mind. This pushes rates back to where they were at those properties after the last stealth devaluation, prior to when they walked back some of the worst changes. So frustrating.
Just buy more points and lock up the reservation. Everyone knows points and miles are a rapidly declining currency. Never horde points/miles. Always book what you can. I used all my Hyatt points booking hotels through next Spring before the award chart changes. No downside - can always cancel and get the points back if needed.
*hoard
(Not a bad take, otherwise.)
As a longtime Hilton loyalist, the most concerning signal in Nassetta’s comments isn't the fee tweak—it’s the explicit pivot toward "flexibility" on brand standards and renovation cycles.
We’ve seen this playbook before with Marriott. When a brand prioritizes franchisee acquisition and reflagging speed over rigorous brand enforcement, the brand standard becomes a suggestions list. The primary reason road warriors choose a specific flag is predictability: knowing that a DoubleTree, Embassy Suites, or Conrad in one...
As a longtime Hilton loyalist, the most concerning signal in Nassetta’s comments isn't the fee tweak—it’s the explicit pivot toward "flexibility" on brand standards and renovation cycles.
We’ve seen this playbook before with Marriott. When a brand prioritizes franchisee acquisition and reflagging speed over rigorous brand enforcement, the brand standard becomes a suggestions list. The primary reason road warriors choose a specific flag is predictability: knowing that a DoubleTree, Embassy Suites, or Conrad in one city delivers the same core experience as one three states over.
The moment you start softening PIP (Property Improvement Plan) requirements and giving individual owners wide latitude on capital expenditure and standards to protect their P&L, you dilute brand equity. The end result is a ecosystem where booking a stay becomes a roll of the dice—you don't know whether you're getting a newly refreshed flag or a tired property clinging to a logo.
Tying fee discounts to guest satisfaction scores (Hilton Rise) sounds good on paper, but survey metrics rarely compensate for deferred deferred maintenance, outdated hardware, or inconsistent soft product. Hilton may win the short-term arms race for franchise unit growth, but they risk losing the long-term trust of their most loyal guests.
Rigorous brand enforcement went the way of the dodo. It's now how far off a hotel is before a brand intercedes. They are more concerned about any and all fees they can charge and that the owner pays their brand statements on time. In fact, the latter is a gatekeeper for any incentives including those introduced here.
These are not new announcements per se - it's the result of cutting earnings on Select Service brands and the roll out of the incentive for increased service scores which was in 2024. The lack of promotions and increase redemption cost are the results of those, not something new coming.
There's an argument that the feds are in response to their massive devaluations recently, not a sign of more coming. Have they changed the fee structure before this, sometime in the past few years?
Selling points to CCs has its limits and the hotel brands are finding them. The lack of new build from rising costs and regulations means they really need to rely on owners to Reflag.
It’s definitely a welcome site to the industry and my guess is this allows Hilton to move and keep past Hyatt as they chase Marriott. Certainly more compelling to think about their flag at limited service properties at a minimum....
Selling points to CCs has its limits and the hotel brands are finding them. The lack of new build from rising costs and regulations means they really need to rely on owners to Reflag.
It’s definitely a welcome site to the industry and my guess is this allows Hilton to move and keep past Hyatt as they chase Marriott. Certainly more compelling to think about their flag at limited service properties at a minimum.
Consumer counter is similar to the airlines, become a loyalty free agent, but with a twist! Like the old days you’ll be better equipped to make friends with a Hotel manager or GM for an individual property. All of our managers are enabled to reward loyalty for returning customers and from talks with other funds, they’re doing the same.
Is there really a lack of new build? The Renard Newsletter claims that at the end of 2024 there were over 15k hotels under construction globally, 10k of which were in the two biggest markets (USA and China) while the other massive country, India, registered a 35% YoY increase.
It really depends on what you consider the main benefit of a hotel loyalty program. For me it's always been more about status and making my stay better than about earn & burn rates, so creating a financial incentive for hotels to earn better ratings is a positive for me, even if I "pay" for it by being able to afford fewer redemptions.
I would also argue that this step goes against the "hotels are...
It really depends on what you consider the main benefit of a hotel loyalty program. For me it's always been more about status and making my stay better than about earn & burn rates, so creating a financial incentive for hotels to earn better ratings is a positive for me, even if I "pay" for it by being able to afford fewer redemptions.
I would also argue that this step goes against the "hotels are the real customers". While this is technically true to some extent, for hotels to be customers, the chain must deliver some goods (guests) to hotels and that can only be achieved if guests are motivated to stay with their brands. This step seems to recognise that.
Unless one goes to really unique/far-flung places (e.g. the GHA private island in Mozambique), there is often a plethora of decent options in most destinations that hotel status often doesn't make a difference. I'm not bothered about a foreign chain giving me a 'free upgrade upon availability' to a junior suite when the local independents will let me reserve one for the same price as the chain's standard room.
That’s true, but then why bother being loyal to Hilton (or anyone), if the individual relationship with the hotel and a phone call matter more?
@DantheMan, that is precisely the point. There is very little point in being loyal to one of the biggest chains. As a free agent, booking via Hotelscom, I get a 10 % cashback of sorts and can choose whatever hotel suits me best based on location, amenities etc, not on which chain it belongs to.
And for destinations that I frequent, I have my favourites and am treated like a real VIP because they actually remember me even if have no fancy palladium cards.
I still find benefits of status worth it. When booking via third parties, I get what I pay for. Status pretty much guarantees me one of the better rooms even if no upgrade is involved, occasionally I get a rare very memorable upgrade (suite with a balcony at Hilton Dubrovnik comes to mind), and lounge access is a godsend when not traveling solo. So for now I still see value in loyalty, although my loyalty...
I still find benefits of status worth it. When booking via third parties, I get what I pay for. Status pretty much guarantees me one of the better rooms even if no upgrade is involved, occasionally I get a rare very memorable upgrade (suite with a balcony at Hilton Dubrovnik comes to mind), and lounge access is a godsend when not traveling solo. So for now I still see value in loyalty, although my loyalty no longer belongs to Hilton specifically (I prefer IHG and Radisson for much better status recognition and footprint).
“Hotel guests often forget that they’re not the real customers” … yup. Hilton, Marriott, etc. sells ‘guests’ to property owners/franchisees. Likewise, as airlines shift to banks with wings, they prefer to just sell points, not actually fly. Pesky passengers and workers…