I have to say, I completely understand where the hotel owners are coming from, and it’s almost certainly bad news for members of Marriott Bonvoy’s loyalty program.
In this post:
Hotel owners are really frustrated with Marriott Bonvoy
The Wall Street Journal has a story about how hotel owners are rebelling against Marriott’s loyalty program. Owners representing nearly 1,000 Marriott affiliated hotels are demanding that Marriott revise the rules of its popular Bonvoy program, to give them a bigger slice of the revenue.
The concept here is pretty simple — most Marriott hotels are independently owned, and operate either under a management or franchise agreement with Marriott. One of the things that Marriott brings to the table is its Bonvoy loyalty program, which has a very loyal customer base.
The concept of the loyalty program was supposed to be that hotels pay into the loyalty “fund” so that points can be awarded, and then when points are redeemed for hotel stays, the individual properties are reimbursed at a reduced rate.
I’ve written in the past about the economics of hotel loyalty programs. The idea is generally that Marriott reimburses hotels at a really low rate if the hotel isn’t otherwise full, just above the marginal cost of servicing the room. Meanwhile if a hotel is full, the reimbursement rate is much higher.
The issue hotel owners have is that Marriott has increasingly turned Bonvoy into a for-profit business, rather than a reward for loyalty that contributes to the core business. As a result, points are now often issued through non-hotel stays, and then in turn, are used for hotel stays where reimbursement rates are really low.
In other words, Marriott gets all the profits, while the individual hotels don’t. Marriott is basically acting as a consolidator for its own hotels, given that it has limited direct incentives for hotels to be profitable (rather than to just rack up as much in fees as possible, which are typically based on revenue rather than profit).
Per the story, here’s what hotel owners are looking for:
Hotel owners say they want more financial information and reforms to the program’s reimbursement structure. At a minimum, they say, they want compensation for loyalty-program stays to be on par with what they receive from third-party online travel agencies such as Expedia.
“Hotel owners are absorbing an increasing share of the program’s costs while Marriott captures an increasing share of its revenue,” the group wrote in the letter sent to Chief Executive Anthony Capuano and Chairman David Marriott.
In the past, hotel guests earned loyalty points primarily from staying at hotels. Owners paid into a fund, managed by Marriott, which was used to compensate them when guests paid for their rooms using loyalty points.
Hotel owners never got market-rate compensation for loyalty stays, but the program was seen as worthwhile because it drove loyalty and attracted new customers, hotel owners say.
This is going to be bad news all-around, but is fair
It goes without saying that the major hotel groups have really been cashing in on their loyalty programs as of late. That’s also why we’ve seen so many hotels do such a poor job with honoring elite perks, due to the amount of inflation of elite ranks.
The issue is that Marriott increasingly sells points and status and keeps all the proceeds, while the individual hotels are basically asked to fund that.
It’s not surprising to see Marriott do that. After all, the company is publicly traded, and investors always want better returns. There’s only so much appetite for new hotel development nowadays with interest rates not very low, which is why Marriott is looking to its loyalty program to increase profits.
The irony is that while hotels are mostly getting terrible reimbursement for award stays, we’ve seen massive inflation to award rates, so one assumes that Marriott has just really been cashing in.
So I really see where hotel owners are coming from here. Unfortunately it’s going to be bad news across the board. In the event that reimbursement rates do increase, you can bet that we’ll see Marriott proportionately increase award costs. Bleh.
I really do think we are in “late stage” miles & points, when it comes to value. These publicly traded companies are trying to milk the programs for everything they’re worth, and on some level, that growth just isn’t sustainable, if you want all parties to remain engaged.
Bottom line
Individual Marriott hotel owners are coming together to demand more money from Marriott for award stays. The frustration is that Marriott has increasingly been monetizing and profiting off of its loyalty program, not just making it about rewarding loyal guests, but increasingly making it about generating profits at the expense of hotel owners.
When hotels aren’t full, reimbursement rates for award stays are really low, which made sense at some point in the past. However, at this point, hotel owners are just frustrated, because they don’t feel like they’re getting an ROI on these stays.
What do you make of the frustration of Marriott hotel owners?
The owners have a choice. They could quit and become an independent hotel but they would have a much harder time to draw traffic. Some of the owners do not allow use of points douring the in season.
"It goes without saying that the major hotel groups have really been cashing in on their loyalty programs as of late. That’s also why we’ve seen so many hotels do such a poor job with honoring elite...
The owners have a choice. They could quit and become an independent hotel but they would have a much harder time to draw traffic. Some of the owners do not allow use of points douring the in season.
"It goes without saying that the major hotel groups have really been cashing in on their loyalty programs as of late. That’s also why we’ve seen so many hotels do such a poor job with honoring elite perks, due to the amount of inflation of elite ranks."
--> This is incorrect. The reason that the individual hotels are not providing as much elite benefits is because the big brands are not enforcing it and because there are too many elite members.
So am I understanding that I used to burn say 25000 for a night and the hotel got $40 and now I burn 50000 for the night and the hotel still gets $40.
Yeah, I'm with the hotels on this one then.
As a former, still have points to spend,Bonvoy member, I gave up on Marriott last year. Since the locations are franchised, and usually managed by a third party, the redemption was usually for an inferior room, and good luck getting an upgrade upon check in, even if the building is only half booked. The venue may have a Marriott sign out front, but the staff in the building have no ties to that name.Post pandemic,...
As a former, still have points to spend,Bonvoy member, I gave up on Marriott last year. Since the locations are franchised, and usually managed by a third party, the redemption was usually for an inferior room, and good luck getting an upgrade upon check in, even if the building is only half booked. The venue may have a Marriott sign out front, but the staff in the building have no ties to that name.Post pandemic, the hospitality industry realized they could charge more for less amenities and still turn rooms over.
This is really more true of IHG, Wyndham, Choice etc who have become points-selling businesses with low award rates. Marriott is expensive for awards in points.
I hope this leads to breaking down these large chains - as a Bonvoy ambassador for the past few years and a lifetime platinum (I think), I don’t count on receiving any of the benefits as the experience isn’t consistent and it really takes away any joy and leads to frustration.
Smaller groups, smaller chains, full ownership and consistency is the way to go!
It might actually be a good thing for customers if 1,000 hotels owned by the cheapest, worst owners left Marriott and joined Sonesta or Wyndham or whatever.
I'm not a hotel owner, I'm a classic travel for work and redeem for vacations type of guy. But I see the hotel's point. Ben, correct me if I'm wrong, but when you say hotels contribute to a Marriott fund, I'm assuming the mechanism is, they buy points from Marriott to award to their guests. So e.g. if you pay $X for a night at a hotel and are owed Y points in return, the...
I'm not a hotel owner, I'm a classic travel for work and redeem for vacations type of guy. But I see the hotel's point. Ben, correct me if I'm wrong, but when you say hotels contribute to a Marriott fund, I'm assuming the mechanism is, they buy points from Marriott to award to their guests. So e.g. if you pay $X for a night at a hotel and are owed Y points in return, the hotel pays Marriott some amount to award you those points.
As long as points were almost all from cash stays, this was a self-regulated pool: if redemptions went up system-wide, it's because more cash stays were being booked system-wide so everything balanced, and the actual room reimbursement didn't matter (which is why it was kept at the marginal cost of the room). The goal was to get more people paying for cash stays. That was the real "reimbursement" of being a Marriott brand.
Now that Marriott is selling points through their CC partnerships, this self-regulation is gone. Redemptions were going up *without* a commensurate increase in cash stays, because people are earning points through non-hotel means. All of a sudden the only benefit a hotel is getting from a redemption is the cash Marriott is paying them for it. No longer can they assume those points came from some earlier cash stay.
So I can see why they're asking for a higher reimbursement rate. It's to compensate for the fact that those points didn't come from a previous cash stay.
Thanks for regurgitating Ben’s post!
Not sure that is a problem for a hotel though. They didn't have to buy points for the $$ stay, service that stay etc and now they get money for the point redemption.
Last month, I redeemed a 85K "free" night certificate plus a 22,000 Bonvoy point top off at a property in Tokyo where the paid rate for a night was just underthe equivalent of $1,000 USD. When I checked out, the front desk mistakenly put the 15,000 YEN ($93) charge to Marriott on my folio for the night that I had to ask to have removed. It's no small wonder that Bonvoy properties are both hopping...
Last month, I redeemed a 85K "free" night certificate plus a 22,000 Bonvoy point top off at a property in Tokyo where the paid rate for a night was just underthe equivalent of $1,000 USD. When I checked out, the front desk mistakenly put the 15,000 YEN ($93) charge to Marriott on my folio for the night that I had to ask to have removed. It's no small wonder that Bonvoy properties are both hopping mad at Marriott over the lack of reciprocity as well as resentful of folks redeeming their points. Oh for the days of SPG! #everyonebonvoyed
I'm sorry, this seems absurd. If you don't want to deal with the drawbacks of a program don't affiliate with it. You can't get the reach of a distribution and marketing loyalty system without giving anything back for it.
Hotel owners have done nothing but whine and moan since COVID and I'm sick of hearing it? You don't pay your employees, you cut half of them and staff entire hotels with a single outsourced Indian...
I'm sorry, this seems absurd. If you don't want to deal with the drawbacks of a program don't affiliate with it. You can't get the reach of a distribution and marketing loyalty system without giving anything back for it.
Hotel owners have done nothing but whine and moan since COVID and I'm sick of hearing it? You don't pay your employees, you cut half of them and staff entire hotels with a single outsourced Indian or Filipino via an iphone FaceTime glued to a Roomba, get rid of housekeeping, skimp on benefits, close club lounges, etc. etc.. If you hate the hospitality business so much and can't make a profit despite all of this get out of it and stfu.
After years of ignoring or refusing Bonvoy benefits, these properties can go phoucke themselves.
I stayed for 100 nights, on and off last year, at a Residence Inn, paying a competitive rate.
For several months, they had kids on travel ice hockeys teams, paying much less than travel or personal travelers. They were generally unsupervised, their parents were often drunk, and the hotel didn’t control them. The night they used my room door as a goal post, and their parents swore at me for requesting they stop, I...
I stayed for 100 nights, on and off last year, at a Residence Inn, paying a competitive rate.
For several months, they had kids on travel ice hockeys teams, paying much less than travel or personal travelers. They were generally unsupervised, their parents were often drunk, and the hotel didn’t control them. The night they used my room door as a goal post, and their parents swore at me for requesting they stop, I left and never returned there.
The point I’m trying to make is that there are low group rates for obnoxious children, which the rest of us were subsidizing.
Both hotels and Marriott Corporation are taking advantage of customers who are not getting value for money. Hotels room are smaller and basic looking while nightly rates are off the charts. Basic rooms cost just as much as luxury rooms would cost not so long ago.
Anyone visited a Marriott, Hilton or Hyatt (formerly called Executive Lounge) now I don't know what they should be called.
Throughout Europe, including the UK, the lounges are scrimping to the a very deep extent 2 (squared). I know it is not just us, as we hear many folks making complaints about the offerings.
It just another great place for the industry to cut, besides their loyalty programs.
Oh where oh where is...
Anyone visited a Marriott, Hilton or Hyatt (formerly called Executive Lounge) now I don't know what they should be called.
Throughout Europe, including the UK, the lounges are scrimping to the a very deep extent 2 (squared). I know it is not just us, as we hear many folks making complaints about the offerings.
It just another great place for the industry to cut, besides their loyalty programs.
Oh where oh where is that Starwood founder man? Can he start another big hotel corp? We loved Starwood.
If credit card points are the problem, the pay yourself back by using points to pay your co-branded credit card at a good exchange rate would be fair.
Late stage Points and Miles? We’re in late stage capitalism bruh. And It’s going to get even way more uglier.
Yeah, I think that was the joke/point/allusion Ben was making.
“The issue hotel owners have is that Marriott has increasingly turned Bonvoy into a for-profit business, rather than a reward for loyalty that contributes to the core business.“
What a rich statement!! I’m not even going to bother. I will say I remember Marriott before the big acquisition and hotel owners weren’t very giving then!
Well no, hotel owners are in business to sell accommodation and associated services for profit, not to give them away for peanuts in reimbursement.
Lucky, one question, one thought, one request.
1. Do you see the new Starwood venture as increasingly viable given the deterioration of real competitor loyalty programs? It seems like that end of the market is opening back up (after Starwood was decimated and now Hyatt having the life squeezed out of it) in a way that people will start making the trade off again for smaller footprint but better recognition and value/benefits.
1....
Lucky, one question, one thought, one request.
1. Do you see the new Starwood venture as increasingly viable given the deterioration of real competitor loyalty programs? It seems like that end of the market is opening back up (after Starwood was decimated and now Hyatt having the life squeezed out of it) in a way that people will start making the trade off again for smaller footprint but better recognition and value/benefits.
1. I am strongly considering a decent sized investment into my small city's hotel ecosystem as a true luxury/boutique hotel is glaringly missing and the group has a clear vision toward what I'd liken to the old Starwood strategy. The market case is simple and obvious, previously only unexploited due to non-market forces (ie old money family holding an asset for the sake of tradition rather than community improvement or value add) which has been removed by careful relationship building from my group. It's a golden goose opportunity with unusually good guarantees due to the nature of the divestiture from the long-holding family.
1. The ask: You've written about where you think the aviation market could improve (and I think even the foundational basis for a new airline that you think would work), so would you have any interest in being involved at the ground level of a hotel brand that complements that airline concept? Equity is on the table for you, the group has some deep experience but also the financial chops to satisfy me as an investor, and I have a personal interest in the success of the area and market chosen for launch. It's a locally beloved jewel that all visitors are shocked exists in this small city.
Please reach out if you have any interest, either as a non-fiduciary advisor/consultant or contributing-investor. Funding for the real estate and building is secure (plan is to own the first few + any "flagships" and tightly franchise thereafter), but the rest is still on the table. Thanks Lucky!
What's the point of trying to reinvent the wheel? The likes of Capella, Kempinski, and even Anantara already do exactly that sort of thing reasonably well within the GHA ecosystem. They've got some pretty small chains participating in the Alliance so I'm sure that they would be interested in talking about that sort of thing.
My observation is only partially on topic, I admit that.
But my first thought is that it has not been all that long since the late CEO Mr. Arne Sorensen — after the merger with Starwood – assured us that he wanted only the latest and greatest, that this had been studied carefully, and a real prizewinner was on the way. Instead, we get a program that sounds like it’s been named after a rock...
My observation is only partially on topic, I admit that.
But my first thought is that it has not been all that long since the late CEO Mr. Arne Sorensen — after the merger with Starwood – assured us that he wanted only the latest and greatest, that this had been studied carefully, and a real prizewinner was on the way. Instead, we get a program that sounds like it’s been named after a rock ‘n’ roll singer, that has annoyed the members, and now is pissing off the owners as well. Some latest and greatest!
It doesn't help that Arnie unexpectedly kicked that can and the company was taken over by a bunch of Wall St and McKinsey hacks with no hospitality experience. Couple that with firing half the staff in Bethesda, it is clear what Capuano is chasing: his own paycheck
Rest in peace Arnie, we can't hate you anymore.
Late stage Points and Miles is spot on.
Bank issued, transferrable points is where the hotel game is headed. Why have a Co-Brand hotel card if it constantly gets nerfed, benefits are cut and generally get 'Bonvoyed' every six months?
Airlines are different, for now.
I was staying at an independent hotel thst was contracted with best western.
I git talking eith the manager snd they talked about a common promotion they dud which triggered free night certs to use at any hotel.
They were talking about getting screwed over based on the return rates they receive rates they received was way before market rate of a stsy, even st rack rate.
This was s big reason why nsny better...
I was staying at an independent hotel thst was contracted with best western.
I git talking eith the manager snd they talked about a common promotion they dud which triggered free night certs to use at any hotel.
They were talking about getting screwed over based on the return rates they receive rates they received was way before market rate of a stsy, even st rack rate.
This was s big reason why nsny better hotel s exited best western and drove their reclassificstion explosion
Let's be innovative. Fuel surcharge for hotel redemptions?
You're a dinosaur.
They invented resort fee a long time before airlines.
We know who is going to win this. It’s going to be the owners.
Don’t underestimate Marriott. They will screw customers and come out on top, too. Get ready for point hyperinflation.
You're NOT their customer, never was.
It'd be interesting to see if story about hotels getting peanuts from the chain is the same with revenue-based programs such as Accor. I'm an Accor Platinum, I watch the whole Bonvoy/Honors saga from the sidelines as I rarely stay at Marriott/Hilton properties. At Accor each point has a fixed value (1000 points = 20 EUR) and it's been the same for years now. So in theory there's not as much of a chance of...
It'd be interesting to see if story about hotels getting peanuts from the chain is the same with revenue-based programs such as Accor. I'm an Accor Platinum, I watch the whole Bonvoy/Honors saga from the sidelines as I rarely stay at Marriott/Hilton properties. At Accor each point has a fixed value (1000 points = 20 EUR) and it's been the same for years now. So in theory there's not as much of a chance of hotels getting the sucker's end of the deal here. For the guest there are fewer arbitrage opportunities, for sure (odd promotion here and there for the most part), however I feel that there's much less drama around it too.
I see a bit of potential status inflation creeping in here – it's easy to get to Gold or even Platinum now, especially with Accor+ subscriptions (which stacked last time I checked, so technically you can become Platinum for just 493 EUR). Still no real way to get around Diamond though, as even with extra status points from Accor+Signature subscription one requires a decent level of hotel spending. I wonder when we're going to see subscriptions from Marriott and Hilton, that would be a next logical step…
We already gave subscriptions.
It's called "a cobranded credit card" in the US.
Accor doesn't suffer from this problem as points are just proxies for cash and hotels get reimbursed at a fixed rate of 2 euro cents per point when redeemed.
Hotels never care if you use points to pay at checkout (or to part pay) - it's just a calculation that each 1K points redeemed means 20EUR off the bill.
The upside to guests is you don't get treated any differently even if you prepaid...
Accor doesn't suffer from this problem as points are just proxies for cash and hotels get reimbursed at a fixed rate of 2 euro cents per point when redeemed.
Hotels never care if you use points to pay at checkout (or to part pay) - it's just a calculation that each 1K points redeemed means 20EUR off the bill.
The upside to guests is you don't get treated any differently even if you prepaid with points as there is no such thing as a 'redemption' in the sense you would have in other programs.
BTW, the Accor+ programs don't stack unless you include Accor China (and this loophole should soon be removed). So even if you include 2-3 subscriptions the number of status nights awarded is capped at 30 - so you still need 30 more nights to get Platinum.
There is no real inflation of status due to credit cards so generally if you have a top tier status you don't have to worry about dozens of people in the same hotel all being made up to the same tier as you just by holding the right credit card.
The program is still far from perfect though. Platinum doesn't get you free breakfast outside APAC and even the top tier Diamond (~10K EUR spend) only gets you free breakfast at weekends. Also, there are few lounges outside Asia and the Middle East.
1. Good point with the nights cap, it is indeed listed in FAQ.
2. I would love to see the breakfast included with the Platinum, however I do think that some hotels would try get the guests bonvoyed here. It's a tough spot to sort out and I rather would have limited access to a solid benefit rather than the situation where hotels try to game it by giving a voucher that is enough...
1. Good point with the nights cap, it is indeed listed in FAQ.
2. I would love to see the breakfast included with the Platinum, however I do think that some hotels would try get the guests bonvoyed here. It's a tough spot to sort out and I rather would have limited access to a solid benefit rather than the situation where hotels try to game it by giving a voucher that is enough for a coffee and maybe a croissant.
3. Biggest point of friction is when you actually try to pay at the check-in/check-out (flexible rate). Sometimes you need 2FA, sometimes not, sometimes the receptionist on duty isn't authorised to make payments with it. Otherwise it's fine.
4. I don't like how suite night upgrades work currently – I think too many properties list suites and then don't make SNUs available to be used with them.
5. There's a few weird things deep in the benefit table. My favourite perk is Ironing service in Pullman hotels – only at Pullman and only one piece per stay. I would almost feel like a jerk if I requested this. It just feels like "why bother". I also think it's a missed opportunity. I think this could be developed so much more. E.g. I think that an objectively nice discount for M moments at MGallery or degustation menu at Sofitel.
6. I wonder how much hate Accor is going to get from their latest partnership with Uber as it also includes Uber Eats and dedicated spaces for food deliveries in hotel lobbies which would pretty much go against hotel restaurants.
7. I think they should also do some cleaning up in the back end. There's still plenty of hotels which are exempt from this or that benefit and their lists of properties with things like lounges can be quite outdated. Sometimes properties that are not otherwise part of Accor are still listed there for years!
8. At the end of the day, it's very much up to the hotel to make the guest feel special. I've been treated well at otherwise unremarkable Novotels, Mercures or even Ibis properties and relatively poorly at higher end ones such as MGallery. Heck, first time I got an upgrade I was still a lowly silver.
A number of reimbursements happen at my property just because we have a decent number of suites available and people are looking to use their points with NUA redemptions, or are hoping for a great upgrade, which makes sense. Regardless of the room type, our base reimbursement from Marriott is less than $40. Points redemptions have gotten worse for both Members AND properties, Marriott corporate is the only one winning.
Here's the thing though: you ever compared OneKey (Expedia's loyalty program) to Marriott/Hilton/IHG/Hyatt/etc? Since we're talking about hotel operators wanting to be compensated similarly to Expedia/OTA taking their excess inventory?
It's wildly uncompelling compared to everyone else, we're talking 2% kickback on stays + 3% on the card, zero ability at arbitrage.
I'm in it because, well, free money on stays I do through Expedia and sometimes Expedia is the play, but if that's the...
Here's the thing though: you ever compared OneKey (Expedia's loyalty program) to Marriott/Hilton/IHG/Hyatt/etc? Since we're talking about hotel operators wanting to be compensated similarly to Expedia/OTA taking their excess inventory?
It's wildly uncompelling compared to everyone else, we're talking 2% kickback on stays + 3% on the card, zero ability at arbitrage.
I'm in it because, well, free money on stays I do through Expedia and sometimes Expedia is the play, but if that's the future of hotel loyalty programs, because hotel operators need the cash that Marriott is giving to make their program remotely compelling, why on earth would I pick Marriott as a booking channel over Expedia?
And how naive of you to think a giant like Expedia isn't bullying hotel owners like what Marriott is doing.
I can confirm as our portfolio includes 22 properties across the major hotel chains. Marriott used to be the best with filling in 50-75% of the nights with no additional marketing but the combination of low reimbursement and swelling properties is reducing them to Hyatt status which is by far the worst hotel brand to own.
As I’ve said here before - the real rub at city or resort properties is now a combination...
I can confirm as our portfolio includes 22 properties across the major hotel chains. Marriott used to be the best with filling in 50-75% of the nights with no additional marketing but the combination of low reimbursement and swelling properties is reducing them to Hyatt status which is by far the worst hotel brand to own.
As I’ve said here before - the real rub at city or resort properties is now a combination of reduced reimbursement combined with limited upsell, points reservations on our calculations spend about 30% less than cash bookings and also a higher for longer rate environment is really squeezing margins.
Late stage points and miles is exactly the right way to describe it. Squeezing every dollar out of these programs by selling the points to CCs has killed the golden goose. But with today’s short term memory on Wall Street you can see why Marriott and the others feel this way.
Can you share more about the comment "Hyatt status...is by far the worst hotel brand to own"? Curious about the relative drivers from the owner side.
They reimburse less per point, they only fill 20-25% of the occupancy and the customers spend the least in F&B.
Additionally they’re competing with you as they own and operate a huge chunk of their portfolio so in locations with multiple options you’ll see the hyatt owned properties have higher occupancy.
I thought Hyatt only still had a few dozen properties in-house?
Hyatt manages more of its full-service hotels than Marriott and Hilton.
Maybe it's because F&B spend doesn't consistently earn points at Hyatt properties when compared to Marriott and IHG. That's my experience. I buy fewer drinks or consume fewer meals at a Hyatt because I know I won't get points.
I agree with @ND. I think is more of US hotel operatora complaining and personally believe they are just find quick ways widen their margin (short term vs long term) rather than improve their product/ service. I kind of see the same night and day with US AirBnbs trying to nickle and diming compare to those in Asia and South America.
This has me wonder if we might not see some sort of "meltdown" at a major chain where six figures worth of rooms go to re-flag/de-flag en masse. That's the risk of an "asset-light" model - you no longer reallg have the ability to stop something like that.
Host Hotels did reflag en masse to Sonesta a few years back, and most of those reflags were under the Marriott umbrella
This already happens, although not (yet) at six figures. I don't have data but it seems to me that hotel rebrandings are happening more frequently. And the companies are definitely creating "standards-lite" brands as a way to entice owners to switch over without having to do a major renovation.
And I agree, this is the downside of their asset-lite model that every private equity and management consultant told them to pursue. I'm waiting for...
This already happens, although not (yet) at six figures. I don't have data but it seems to me that hotel rebrandings are happening more frequently. And the companies are definitely creating "standards-lite" brands as a way to entice owners to switch over without having to do a major renovation.
And I agree, this is the downside of their asset-lite model that every private equity and management consultant told them to pursue. I'm waiting for the event you're talking about. And it will happen. When you don't own your own product anymore, it's all great until the people that do own the product start squeezing.
I may be wrong, but I heard this is what's happening in Vegas. All the casino companies like Ballys, Caesars, and MGM all sold their properties to private equity holding companies, and became asset-lite, just leasing those properties back to themselves (classic PE move). Now those holding companies relentlessly raise their lease rates, and the management companies are forced to jack rates up to comply, lest the properties re-badge with another group.
From a consumer standpoint never understood why people are still loyal to Marriott brand. Its even worse that the Delta loyalists. At the very least in Delta's case most people could be captive to the most dominant airline at their hub. But when it comes to hotels its easy to switch.
And, ironically, Marriott has a "Delta Hotels" within its portfolio... how appropriate...
My "loyalty" across chains is usually driven by a few key properties that I frequent, and that in turn helps drive miscellaneous stays. Marriott has some key full-service properties (and a few that conventions happen at). Hyatt has several I use a lot.
(Also, "distance to lifetime status" is a major element. I'm currently within ten nights of LTP at Marriott, so...)
Congratulations @Gray
You're 10 nights away from never staying at Marriott again because you will now aim for lifetime Globalist.
Greed is destroying loyalty programs from all sides.
Greed is destroying many things, globally, well beyond travel loyalty programs.
This is interesting, as it suggests both the guests and the hotel owners are getting squeezed. Marriott mints points at an immediate profit. They devalue the redemption to make the liability less, then compensate hotel owners very little. And selling points is very bad for the hotel owners, as the gambit from the loyalty scheme is that there will be enough cash stays to make up for the points stays. The credit cards and the...
This is interesting, as it suggests both the guests and the hotel owners are getting squeezed. Marriott mints points at an immediate profit. They devalue the redemption to make the liability less, then compensate hotel owners very little. And selling points is very bad for the hotel owners, as the gambit from the loyalty scheme is that there will be enough cash stays to make up for the points stays. The credit cards and the transferrable points disrupt that balance.
This also explains why I'm seeing a lot of Marriott and Hilton properties look very attractive on 3rd part platforms. Selling through those channels, even at a discount, helps with points compensation and profitability. I haven't booked a Hilton through that program in years, but I stay at a Hilton property 2-3 times per year. The discounts on 3rd party sites is stronger than the awards for CC and the points in program. And I rarely care about elite benefits.
One thing to ponder: What if hotels started honoring status benefits (but not points earning) via third-party channels?
If that were to start happening they'd be less exposed to the program in the scheme of things (given the relevant cuts of the pie).
Expedia has that (kind of) through OneKey (some of their "VIP Access" properties).
"Get a perk when you stay at select VIP Access properties, such as free breakfast⁶"
That being said, it's a much worse joke than the "do I get a breakfast at Marriott" chart, your "perk" is probably going to be "here's your 6 euro bottle of prosecco" most of the time.
would love to know if there's data on this, but what percentage of guests at mid-tier sheratons/courtyards/aloft/moxy/etc around the globe stay at that specific hotel due to how nice the hotel is? or just because its a marriott property? I'd venture 50-60%+ is just because its a marriott. like be thankful you get any guests at all
I wish marriott would tell these hotels to F off and remove them from the program. Would be...
would love to know if there's data on this, but what percentage of guests at mid-tier sheratons/courtyards/aloft/moxy/etc around the globe stay at that specific hotel due to how nice the hotel is? or just because its a marriott property? I'd venture 50-60%+ is just because its a marriott. like be thankful you get any guests at all
I wish marriott would tell these hotels to F off and remove them from the program. Would be a much better result for everyone involved than harming the loyalty program.
Generally speaking with Marriott’s you look for 50% of the rooms to be filled via the program. It’s the biggest draw for the owners to the program. Hyatt is closer to 20%. Hilton in between. Highly valued properties do about 75% with Marriott.
Honestly, the benefits at a CY are so lousy that I'll happily book via AAH at this point unless I *need* a late checkout. I still get free wifi and I'd rather pocket 15-25 AA miles per dollar than bother with Marriott's points. What am I giving up - a worthless breakfast benefit?
The real kicker is that Marriott is fast approaching the point where dumping their miles to an airline might actually be a rational alternative.
I already do this. I get more value out of my Marriott points via conversion to airline miles.
I'd bet good money these aren't the hotels that are complaining. These midrange airport hotels and suburban roadside hotels probably don't get many redemptions. So they get the best of both worlds: Marriott drives in customers who are paying cash for the stays, banking points that they then spend on more aspirational properties.
It's probably hotels that have high numbers of points redemptions -- precisely the type of aspirational properties that Marriott needs in its...
I'd bet good money these aren't the hotels that are complaining. These midrange airport hotels and suburban roadside hotels probably don't get many redemptions. So they get the best of both worlds: Marriott drives in customers who are paying cash for the stays, banking points that they then spend on more aspirational properties.
It's probably hotels that have high numbers of points redemptions -- precisely the type of aspirational properties that Marriott needs in its portfolio to keep users loyal to the program -- that are complaining, and those are the ones Marriott can't afford to lose.
It was interesting that the WSJ article focused on the response from US hotel operators. That's not to say that international Marriott Bonvoy hotel owners don't feel the same way. Too many US hotel operators have been skimping on product and service, especially post-Covid. Their costs are too high, and they have had a difficult time passing on those costs to hotel guests. As a guest, the Bonvoy value to me to redeem points for...
It was interesting that the WSJ article focused on the response from US hotel operators. That's not to say that international Marriott Bonvoy hotel owners don't feel the same way. Too many US hotel operators have been skimping on product and service, especially post-Covid. Their costs are too high, and they have had a difficult time passing on those costs to hotel guests. As a guest, the Bonvoy value to me to redeem points for hotel stays is already questionable. Sometimes a good value, but most often not.
The only Moxys I've stayed were at airports, provided by overseas airlines when they had a mechanical breakdown. Lots of neon!
It seems to me that if the hotel owners get what they are asking for, the only thing they will get is a lot more empty rooms.
This is great news. Loyalty programs should become loyalty programs rather than CC schemes again.
This isn't going to end with stays being more rewarding
@ Samo -- Yeah, I agree with James K. I hear where you're coming from, but Marriott's answer isn't going to be "oh, okay, we'll just stop monetizing our loyalty program."
(Laughs out loud in what Expedia did to hotels.com)
Oh, you sweet summer child, I could pinch your cheeks for how absolutely naive you are here.
The money for franchisees is going to come out of the perks you get as a loyalty program member. The math pretty much demands it. If you love what Delta's turned into you will love how Marriot Bonvoy evolves.
"Where the hotels are coming from" is "Fees for more money" . Simple .