Hyatt’s Internal Owner Guide Shows Exactly What Your Loyalty Is Worth — And Why Elite Benefits Often Disappoint

Franchise disclosure documents are written for owners, not guests. But Hyatt’s internal Hyatt Place Franchise Document lays out, in black and white, how important World of Hyatt members are, what hotels pay on your stay, and – effectively – why owners really have so much latitude in how they treat elites.

World of Hyatt Is Half The Hyatt Place Business

Hyatt tells prospective owners that *more than half* of Hyatt Place revenue now comes from program members. Across all Hyatt Place properties (“Covered Hotels”):

• 51% of revenue comes from World of Hyatt members
  
• Members occupy 42.4% of room nights, roughly 15,331 nights per hotel per year

For franchised Hyatt Place hotels, the averages are almost the same: 50.7% of revenue and 42.0% of room nights, about 15,267 member nights per property.

Why is this?

• Members value their Hyatt points and status, so they stay at Hyatt Place over other properties. And they do so even when it’s less convenient and more expensive.
  
• At the same time, anyone going to Hyatt.com can get a slightly lower rate by joining the program. This creates a lot of noice – is it Hyatt members preferring Hyatt Place, or people booking Hyatt Place becoming members to save money as a one-off?

Hyatt also tells owners what the typical Hyatt Place looks like financially. Franchised hotels run 72% occupancy at an average daily rate of $158.98, for RevPAR (revenue per available room) of $114.45.

What Hyatt Skims Off Your Stay

Hyatt lays out all of the brand-level fees an owner pays for each dollar of room revenue. For Hyatt Place, the big ones are:

• 5% Royalty Fee on Gross Rooms Revenue
  
• 3.5% Commercial Services Fee — covers brand marketing, central reservations, revenue management tech, sales infrastructure, property management system hosting, and Hyatt.com / app infrastructure
  
• 2% – 4% World of Hyatt assessment: 4% of “eligible revenue” from stays by members who provide their number when booking and 2% for guests who enroll on-property.
  
• 1.35% Digital Acquisition Fee on Gross Rooms Revenue booked through Hyatt’s own digital channels (Hyatt.com and the app)
  
• ~$8.50 per reservation for GDS and other third-party reservations systems, passed through at cost to the hotel

For 2024, 60.3% of Hyatt Place revenue came from “Direct Channels” (Hyatt.com/app, global reservations centers, electronic group rooming lists) and 39.7% came from “Indirect Channels” (GDS and online travel agencies).

How Hyatt Actually Runs The Loyalty Program

To an owner, World of Hyatt is a line item. Hyatt spells out how it’s funded and where the money sits. A 2023 tax court ruling gives more of the backstory.

• Each hotel pays a 4% assessment on eligible revenue from World of Hyatt members, or 2% on the enrolling stay when a guest signs up on property.
  
• All funds collected for the loyalty program — including point sales and related fees — go into segregated accounts. Hyatt invests a portion in marketable securities, primarily fixed-income, run by independent investment managers.
  
• Those funds are used to cover all marketing, administration, and award redemptions for the program.
  
• An independent accounting firm audits the loyalty program annually. Hyatt tells owners they can request copies of those audit reports.
  
• When you choose airline miles instead of points, the hotel is told it must pay the actual cost of those miles that the airline charges Hyatt.

Owner Incentives For Elite Treatment — Tragedy Of The Commons Versus Hyatt’s Soft Stick

From the owner’s perspective, elites are both valuable and expensive. And maintaining treatment is a classic commons problem.

Hyatt is very clear that World of Hyatt is the core customer base. Roughly half of Hyatt Place revenue comes from program members, but a disproportionate amount of that comes from frequent guest versus one-off customers who join the program for a single stay.

They’re worth treating better – at least, they would be, if the same entity was bearing the cost of treatment and the benefit of their revenue. However,

• The benefit of a loyal Globalist is spread across the entire Hyatt ecosystem over years.
  
• The cost of honoring elite benefits on a given night — room upgrades, late checkout, breakfast (now that it’s not provided to every guest at every Hyatt Place), extra staffing time — is borne almost entirely by that night’s property.

That’s classic tragedy-of-the-commons economics. If a hotel cuts corners on elite benefits, they still get the guest night. They want the guest without the cost. The long-run cost of that behavior shows up in the loyalty program as a whole, not just at that one property.

And that’s why there are standards that franchises are obligated to follow, at least in theory. Hyatt runs a formal Quality Assurance and Compliance Program. Properties must participate in inspections, guest satisfaction initiatives, and data security and best rate guarantee programs.

When a hotel underperforms on QA scores (which include guest satisfaction), it’s placed into Focused Improvement Policy protocols. Hyatt charges escalating administrative fees per 6-month stage of that program:

• Stage 1: $5,000
  
• Stage 2: $15,000
  
• Stage 3: $20,000

If the hotel is still failing after Stage 3, it enters the Brand Protection Program and pays $45,000 per year in additional fees, plus the cost of extra training, inspections, and guest recovery actions. Hyatt can reduce or refund these fees up to 100% if the property fixes its issues quickly, but the financial threat is contractual.

They also conduct training and sell owners on the valu eof compliance based on how much incremental revenue comes from members, and how much of their business is coming direct versus OTA or GDS. Put together, this is Hyatt trying to fix the commons problem with contract and cash:

• Hotels are required to honor brand standards, including elite benefits
  
• If your guest satisfaction scores slip, fees rise quickly
  
• Satisfied elites stay more and generate more revenue.

Hyatt Place properties don’t have as much that they need to do for elites. They aren’t required to provide suite upgrades. There’s no full breakfast. So the expectations, like late check-out, are fairly modest as well.

More Interesting Facts About Franchising Hyatt Place

Hyatt estimates $638,600 to $777,650 to acquire and install tech for a typical Hyatt Place: Opera property management system, point of sale, revenue management, key locks, phones, in-room entertainment, high-speed internet, guest computers, hotel music, digital surveillance, and scent systems.

Hyatt takes vendor rebates, but says how they’re used. Hyatt requires most purchases to meet its “System Standards” and often steers owners to approved suppliers. It also admits:

• Hyatt and affiliates **may receive rebates, commissions, and other consideration from suppliers.
  
• But it says it will not take rebates based solely on an individual hotel’s volume unless it either forwards them to the hotel, uses them to reduce system services costs, or spends them for the benefit of the brand network.
  
• In 2024, Hyatt Corporation received $529,077 in rebates from food, beverage, and office suppliers to franchised Hyatt Place hotels and used the entire amount to offset system services costs.

Famously, a consortium owned by major hotel chains was sued over requiring francises to make purchases through them, allegedly taking kickbacks from vendors and keeping the money for themselves.

Hyatt gives owners a defined “Area of Protection” (exclusivity over a territory), but it’s narrow and short-lived.

• It’s typically just a few blocks in an urban core or up to about a 3-mile radius in some suburbs.
  
• It only lasts for a specific term, which usually ends three years after opening. After that, owners have zero territorial protection — Hyatt and its affiliates can approve other Hyatt Place hotels inside the vicinity.
  
• Even during the term, Hyatt carves out a portfolio-acquisition exception: if they or an affiliate buy a group of at least four hotels and one of them sits in the territory, they can convert that property to Hyatt Place and operate it as a direct competitor.
  
• There’s no protection from other brands, including future brand concepts – this is one reason hotel chains love adding brands so much.

If a Hyatt Place owner (or their affiliates) control the larger property footprint the hotel sits on, they can’t place porn shops or strip clubs next door. No pawn shops or check cashing businesses, liquor stores, marijuana dispensaries, or gaming businesses either – without written consent from Hyatt.

In addition, no bar, lounge, or similar venue can sit within 300 feet of the hotel’s interior footprint if more than 50% of its revenue comes from alcohol with Hyatt signs off, though they say they’ll only withhold consent if they reasonably think it will materially hurt guest experience.