During the Marriott third quarter earnings call they shared several interesting data points about the Bonvoy program.
- Enrollments “driven by digital signups accelerated during the quarter” and they have 157 million members as of the end of September. This is the number of guests in their loyalty marketing database, not the number of active members.
- They’re presenting “status, award and point extensions” as something that will “ncourage members to stay with [Marriott as global travel rebounds”
- More than 76% of global room nights are booked through direct channels, half through digital channels. As online direct bookings grow, then, presumably they’re best able to capture program signups.
They’re seeing growth in one element of revenue from their credit card issuers at least, “credit card branding fees of $113 million up 11% compared to the 2019 third quarter on the back of strong new account acquisition and robust” card spend
This is revenue separate from the purchase of points for future travel – credit card deals treat some revenue from issuer banks as for use of the brand, use of mailing lists, etc. apart from payment for the benefits and points provided to cardmembers.
They are actually cash flow negative on the loyalty program this year, though. That’s because they got cash up front during the pandemic by extending their co-brand deals. Banks gave them money early, and so that money isn’t coming in now. They’ve “effectively repa[id] one third of the $920 million received in 2020” so far and Marriott “continue[s] to anticipate modestly negative cashflows from loyalty” because of these deals.
In May 2020 Marriott hit up their credit card partners for nearly a billion dollars
- $350 million from American Express primarily for pre-purchase of points
- $570 million from Chase which involves “$500 million of prepayment of certain future revenues” along with $70 million early payment of their card agreement signing bonus.
Eliminating award charts should help Marriott accomplish two things: lower costs for owners (owners keep complaining about costs even though Bonvoy is less expensive for owners than how the program was previously structured) while reducing costs to the program, both on the backs of members. This works out, of course, unless and until consumers feel they’re getting a raw deal and look elsewhere. But Hilton and IHG don’t offer better deals, so the bet seems to be there’s no viable global chain for customers to move to.
As Mark Ross-Smith often says, this shows that the CFO has won and is driving the loyalty program.
[…] So the real reason is that Marriott chooses not to do work to preserve member value while devaluing its points for its own balance sheet purposes. […]