When Marriott acquired Starwood, everything changed. The chain had been known to promise very little, but always deliver. Their sine qua non was consistency. The model flipped. They promised everything to everyone in the name of growth.
I sat down with Arne Sorenson at the time and he asked me point blank, why don’t you believe me that I want to have the most valuable hotel loyalty program? His case was that with 30 brands he could either spend on marketing every one separately, or spend on a loyalty program that brought guests to Marriott.com to book the hotels the chain showed to them.
But at the same time he was promising owners that the launch of the new Bonvoy program would mean lower costs to them. You can’t simultaneously give lower costs to owners and more value to guests. It doesn’t math, though they also had a lucrative credit card deal that kept partnerships with both Chase and American Express.
Resort Fees Gut The Value Of Marriott Free Night Awards
One of the tricks they Marriott pulled to accomplish ‘more money to owners, more perceived value to guests’ was charging resort fees on free night awards. Marriott actually has standards for hotels charging resort and destination fees and hotels have to pay to be able to do this. It’s even in the basic franchise agreement that Marriott has the right to tell hotels not to charge one or to waive these fees for Bonvoy elite members. They just don’t do it.
This is a core element that makes Marriott Bonvoy a low value program: free nights often aren’t free. Passing on these fees when redeeming points not something Hyatt does or Hilton does – your points actually pay for the room. But at Marriott there can be an add-collect at the hotel.
Reader Scott writes about Mauna Kea Beach Hotel,
really a grand dame redemption with Bonvoy. Now charging a resort fee of $60 + tax for points bookings only starting in 2027. Just a pure money grab to get back at points redeemers.
At $60, this hotel management is just a bunch of pikers. Ritz-Carlton Reserve Dorado Beach in Puerto Rico charges a resort fee of $175 per room ($190.75 per night including Puerto Rico’s 9% hotel tax). The Ritz-Carlton Grand Cayman, the property where I coined the term ‘resort factory’ about 15 years ago, charges $110++.
Of course, resort fee inflation hasn’t stopped points inflation. The hotel charges the guest more for the stay (because of the cash co-pay) and Marriott charges the guest more for the stay too (more points for the payment they make to the hotel on the guest’s behalf).
When Bonvoy launched, the most expensive points redemption was 60,000 per night. Now, the St. Regis and Ritz-Carlton in the Maldives run 220,000; J.W. Marriott Masai Mara Lodge runs 236,000; Ritz-Carlton Reserve Dorado Beach can be 278,500 (and as-noted, you’re still out of pocket nearly $200 per night cash); Ritz-Carlton Reserve Nujuma hits 362,500.
The Deep Flaw In Hotel Loyalty
Airlines generally own both the loyalty program and the product. They fly planes and reward customers for buying tickets (and spending on their cards). Hotel chains no longer own the hotels themselves. They have a brand but not a product, and that misaligns incentives.
Airlines have tried this too. For instance, Air Canada spun off its Aeroplan program two decades ago. That raised cash, but despite detailed contracts the incentives of the airline and loyalty program were different. Air Canada couldn’t even get change fee waivers on award tickets without paying the full cost of the fee to the loyalty program.
At the end of the 15-year deal, Air Canada did not extend the agreement. They bought back the program, and that fixed the misalignment problem (and gave them the upside of credit card deals, which had grown substantially since Aeroplan had been sold off to Aimia).
Marriott squeezes guests in order to lower costs not just for themselves but for hotels. That’s reflective of a deep conflict within hotel loyalty.
- Loyalty programs are how chains deliver customers to hotels. That’s what hotels pay the chains royalties for. Hotel owners even refer to program members as “leads.” The chain needs the program to have value for this to work.
- There’s a public goods problem. Each hotel values a strong loyalty program for the customers it brings them. But contributing value to the program benefits the whole (and the chain) more than it benefits the individual hotel. So the incentive each hotel has is to skimp on delivering benefits.
- That’s why chains have brand standards. They need to enforce benefit delivery, or hotels will defect, dragging down the value of the program.
- But chains haven’t been enforcing those brand standards. Enforcement is costly to hotels and makes owners mad. It risks pushing hotel owners away to other chains that deliver customers without imposing the smae costs. Once some chains are willing to be lax with enforcement, other chains follow out of fear of losing hotels.
Marriott’s CEO once said they would put ‘net rooms growth’ on his tombstone. He cares about getting the most hotel rooms under the Marriott brand, because that delivers the most fees. But it’s short-term thinking. By cutting benefits, relaxing standards, and devaluing points they save costs for themselves and for hotels, but that pushes away guests. It trades current revenue for future revenue.
The thing of value Marriott has is its brand, which requires consumer trust and delivery on promises. So in the long-run they are risking the entire core proposition of their business, which is consumer willingness to invest in Marriott, to trust them to deliver consistent hotel experiences and promised benefits. Without that, they don’t have customers to sell to hotels, and hotel owners will abandon them anyway.
Owners Are Still Unhappy Over Bonvoy
It’s not just guests that Marriott is playing hardball with. The crux of the hotel owner lawsuit over Marriott Bonvoy is that hotels offer discounted rooms to Marriott for award redemption – it’s supposed to all work out even over time, they pay Marriott for points, they get revenue back from Marriott on award stays, if they charged Marriott more they’d have to pay more.
However, Marriott uses access to their discounted inventory to sell that inventory direct to customers (via points sales) and to Chase and American Express (through the cobrand credit cards). That’s not directly benefiting the hotels, which is the entire purpose of that discounted redemption inventory.
So hotels are big mad that they aren’t cut into the cobrand profits in the same way (although cobrand cards are a big part of how Marriott was able to lower owner costs in the first place, how quickly they forget).
This is the definition of a SCAM. No wonder the CC bonus is so high. The point value at these hotels are worthless.Don’t reward corporate greed- vote with your feet.
My problem is not only the new point rates for high end hotels 100’s-200’s thousand each night ! The so called high end in the us suck compared to overseas! The hotels nor Marriott really care
take it or leave it! The bastardized of elite benefits! U use to get a REAL BREAKFAST From St Regis
in the US Now it’s a$100 donut/continental for your 1K room. Marriott not only told me it was always that, was not, but then it was up to each hotel?
British Airways must be the “Marriott of the Skies” with their award redemption “Fuel Surcharge”. Result? I avoid Avios like the plague and have never applied for one of their cards. Their reward rates are about on par with other programs…and then have a “fuel surcharge” that is the same cost as an economy ticket, erasing 100% of any value one might get from a “reward flight”.
Until corporate profits and executive incentive plans are paid out over the long term, corporations will continue to submarine their own efforts by pushing away their customers. Look at what SaaS companies have accomplished in the last 10 years going full hostile towards customers. People largely dislike their phones, are suspicious of companies and hate feeling hemmed in by software and invasive practices. Tech was exciting 15 years ago, now both customers and the employees hate the companies and their owners.
Marriott and Delta screw their loyalists. Now someone staying in Atlanta may not be able to avoid Delta. But you can definitely avoid Marriott properties.
There is no “free lunch”. Just factor in the resort fee and you are still getting good value. All about comparing rates and award value. When you do the math factor I. Coat of cash versus points+resort fee to see if value still works. If so no big deal. Otherwise stay somewhere else or pay cash.
I completely ignore hotel loyalty programs. They don’t exist in my universe.
You know when the FTC cracked down on resort fee disclosure and everyone predicted that would be the end of them? Not at Marriott.
Sadly the hotel loyalty program is kaput. Dead. Mort.
They let the franchisees laugh at the reward portion of it. The ha-ha rooms, the view of the parking lot and the quintessential Maui ground-floor-looking away 5 rooms for reward redemption only has done it for me
I am now a free agent. I book what I want. If I happen to be in El Paso or Bangor or Moose Jaw and can redeem points I will but I am paying for a decent room in Sanja and Aruba. It is what it is.
Read the room, @Retired Gambler. You’re one of the only people cuck-ing for corporate on here. These absurd fees are a farce. @Gene, I think Nancy was onto something… just say no.
@ 1990 — Or maybe what Obama sang “Call me. Maybe?”
The fees may be absurd but it is supply and demand. Hilton points have been devalued to absurd level of about 0.30 cdents each on mid level hiltons. Marriott points are slowly devlaued each year and even Hyatt started serious devaluations this year. The othge rhotel programs including IHG are really seocnd or thrid rate basedon ehat they give you. So maybe there is room for a new loyaylty player but for now Marriott is till one of the best. Probably only second to Hyatt
Unfortunately despite all of the complaints, the Leadership of Marriott, just like the leadership of virtually all large corporations, really only on focus on their own compensation and advancement and couldn’t care less about their customers. Seriously that is the truth and why things will not get better. The top leadership are not only already wealthy, they know their time at the top is limited before moving on to other jobs, thus they only have a short term perspective of milking everyone. Once they leave, if the company goes downhill it is of no concern to them. Complaining on online forums is pointless.
I can’t bring myself to muster any pity for the hotel owners who, after colluding with Marriott for years to screw over loyal guests, suddenly cry crocodile tears of self-pity over the fact that the disreputable company they chose as a partner is screwing them over as well.
@Christian — Preach! 100% “crocodile tears”… Marriott treats those owners as their customers. Guests are the product, and this ‘product’ is getting ripped apart.
I haven’t seen a worthwhile hotel redemption in years. Completely uninterested in hotel points and status.
@Sue – If Hotels.com would return to the 10% rebate on stays at competitive rates I’d agree completely. As it is I’m a value hunter and do find some value in many programs, just a whole lot less than previously.
Lifetime Titanium “Elite” here – the loyalty program has been completely en$hittified. Crappy Springhill and Towne Place suites in not popular/not touristy areas are running 40k points a night, plus taxes and fees and parking. It was only about 7 years ago we could book a low season Ritz or Renaissance or JWM in Hawaii or Barcelona for 50k points per night. At this point we mostly use points for staying at hotels near an airport for an early a.m. departure, or when heading to a family event out of state. For vacations we just pay for whatever we believe to be the best hotel for our needs is, Marriott or not.
SPG made it difficult to earn points but also worthwhile to use them. I would go out of my way to earn with the program. Bonvoy doesn’t move the needle at all. The points are worthless so every few years I check the balance and transfer them to United.