The Wall Street Journal is reporting on a schism between Marriott and hotel owners who say they don’t get paid enough to host free award nights redeemed by Bonvoy members.
St. Regis Bangkok
Fifty-one owners representing 1,000 Marriott properties are demanding greater reimbursement from the chain when Bonvoy members redeem their points for free nights. They argue that Marriott increasingly monetizes the program, and they don’t get their piece.
Marriott has said that fee revenue from its co-branded credit cards is expected to jump 35% this year to nearly $1 billion. Owners say that they previously believed the program was only breaking even and that the hotel giant is ripping them off.
…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.
Westin Heavenly Bed
Some money from credit card deals goes into the money that pays hotels for free nights (value of the points) while some money goes to Marriott for licensing its brand. “Those fees totaled $716 million in 2025, up from $410 million in 2019.” Marriott announced an increase in hotel royalties this year as it attempts to pad its bottom line.
Owners seeing loyalty points redemptions as akin to third party OTA guests is telling. Marriott, for its part, says they “recently increased owners’ compensation for loyalty stays on high-demand nights. The hotel chain also shared some Bonvoy financial information with owners for the first time.”
Marriott Buys Free Nights At A Discount, And Those Don’t Cost Hotels Much
Historically, owners received a low base reimbusement rate for award nights when the hotel had plenty of vacant rooms on that night. This recognized that the hotel didn’t give up any revenue by hosting the award guest. It’s not a room they would have sold. But on nights that a hotel hit 90% occupancy, the payments went up (increasingly to as occupancy went up, and approaching the property’s average daily room rate). Hotels would therefore try to game occupancy levels to get more reimbursement out of Marriott for free night award stays.
Then three years ago they updated the reimbursement model to take “a single percentage applied to daily Loyalty RevPAR for standard award redemptions.” Each hotel is
assigned to an annual Redemption Reimbursement Policy in October for the calendar year ahead based upon brand tier, as well as redemption volume, and/or penetration as of Trailing Twelve Months
Elite Check-in, Westin Denver Airport
Marriott Is Making More, The Guest Gets Squeezed
One Mile at a Time thinks what hotel owners are saying is fair. He says that hotels aren’t getting much reimbursement for the rooms the Bonvoy program books, while points redemption prices have risen, and Marriott keeps the margin.
- Some of this is Marriott managing costs, and avoiding losses, when hotels are increasingly full
- And Marriott has driven down the cost of the program to owners. That was a key selling point of moving from Marriott Rewards and Starwood Preferred Guest to the Bonvoy program in the first place.
- While Marriott does increasingly earn a return on selling points and use of its data and brand.
Marriott Waikiki Beach Resort
Owners accepted the deal, though. They get guests from Marriott. Marriott uses the program, and free nights at hotels to do this. When a Bonvoy member stays, the hotel pays for the points. Marriott uses that money to pay the discounted rate when the member redeems the points.
They argue that Marriott’s monetization has grown, essentially liquidating the franchise owner’s distressed inventory for the chain’s profit. And they think the chain should hand over more of that profit. More likely than sacrifice margin, Marriott would first squeeze members by reducing the value of points.
If they have to pay a hotel owner more for a stay redemption, they’ll charge the member more for that redemption. Or they might allow even more hotels to bill guests for resort and destination fees directly when they redeem points – a deplorable practice that of the Marriott Bonvoy program that isn’t permitted by Hilton Honors or World of Hyatt (unlike Marriott, those fees are waived for all customers redeeming points in those programs).
This risks reducing the incentive that members have, though, to spend on their cobrand Marriott cards (already not a great idea – these can be good cards to have but are rarely good cards for spend). And that risks killing Marriott’s golden goose.
Marriott Waikiki Beach Resort
This Reveals A Broader Schism Between Chains And Owners – And The Potential Crackup That’s Coming
Marriott and hotel owners have different incentives. A fight over award night reimbursement rates is part of the general tension over owners wanting more and paying less. Marriott has largely created this system, because they own very little of the real estate, manage relative few properties themselves and just collect fees – they’ve tried to grow the footprint of hotels they license their brand to in order to maximize fees.
To do this they’ve appeased owners. And they’re experiencing their own version of “Munich syndrome” (appeasment = aggression; Neville Chamberlain, et al signing the pact with Hitler to annex the Sudetenland region of Czechoslovakia did not end Hitler’s appetite for expansion, the appeasement merely whet it).
- The only thing of value Marriott still has is Bonvoy members that they can sell to hotel owners and the value of their ‘brand’. Guests think they’re getting a consistent product booking through Marriott, when in reality they’re usually getting an independently owned and operated hotel that has a set of brand standards which seem to increasingly go unenforced.
- An owner wants Marriott’s loyal guests (“leads”) to put heads in beds. They want to pay as little for that as possible. The individual hotel doesn’t capture the benefit of treating a loyal guest well. That’s a public good for the hotels that increases the value of the program. So Marriott wants this – they’re the ones capturing the benefit of guest loyalty.
- Ultimately this is not a stable equilibrium. Marriott’s CEO has said ‘they’ll place “net rooms growth” on his tombstone’ meaning he’ll do anything to convince owners to fly the Marriott flag. That maximizes revenue from additional hotels now. To do this, it has appeared to mean letting owners get away with virtually anything they choose to do – rather than pushing an owner into the arms of another chain.
Marriott wants to be ‘owner-friendly’ but that means rarely taking the side of a guest. They’re milking the value of member loyalty for current revenue, at the expense of future loyalty – but since that’s the only thing they have to offer owners, by depreciating the value of that loyalty they’re degrading the future value of the company. They’ll no longer have that guest loyalty to sell to owners later.
We know who is going to win this. It’s going to be the owners.
A lot of Marriott’s brand loyalty is built through corporate travelers who dont have many options for chains. A company I know only allow its employees to book Marriott and Wyndhams. Those travelers have no choice but to use those Bonvoy points they earned. The question is what about non coporate loyalty travelers where Marriott previously placed emphasis on growing. If their “loyalty” erodes, so does the incremental value of Bonvoy.
Marriott’s “customers” are the hotels/owners, not the guests/consumers, and certainly not their minimum-wage workers. So, when we we rightly complain that their program keeps getting devalued and elite perks not honored, it’s because we aren’t the actual customers.
The Amex hotel program is superior to Marriott/Hyatt/Hilton for higher end hotel stays (especially when abroad). I think there’s further room for disruption from the premium credit card issuers in the hotel space.
With the recent death of Hyatt’s award program, there’s really no reason to be loyal to a hotel brand anymore.
@Will — Yes, especially if booking via FHR and using the guaranteed 4PM late checkout.
This is case of be careful what you ask for. These programs are already diluted enough. The owners may end up facing Bon-Bye-Bye if travelers lose more reasons to stay Loyal.
The comment on Corp travel is real. My company aligns with Marriott so I am going to stay 25-30 nights at a Marriott just on that. I will bank the points on this and use it on a trip later. Most people I talk to know Marriott program isnt great but they still stay which tells me they are after safety and convience vs “maximizing points” When the casuals and Credit card spenders start dropping Marriott then they will have to change. That clearly isnt happening right now
The solution to this issue is to internalize the tension between each hotel’s incentive structure and the incentives of the chain as a whole (either through direct hotel ownership or long-term management rights contracts). If Marriott leadership really thinks that its customers are just the hotel owners then it is deluding itself. Its customers are BOTH hotel customers and hotels. It is a two-sided market matchmaker.
The key problem here is the revenue metrics that are used as a compensation benchmark for free nights. The revenue mark that should be compensated is not the average daily rate. It is instead the but-for average daily rate (the daily rate the hotel could charge if it were independent instead of part of the Marriott ecosystem). For the vast majority of high-end Marriott hotels the but-for average daily rate would be a lot lower than the actual ADR (in the very rare cases where they are the same a hotel should consider going independent). Honoring points redemptions at reasonable rates is a key part of being in a hotel chain. Hotels that whine and complain about them (or try to skirt the rules through shirking elite benefits) should be publicly shown the door and kicked out of the program to keep other hotels in compliance.
I no longer see marriott as a brand but as a catalog of random hotels with a common point system. I dont bother booking them through bonvoy as other rewards seem better, though I still am a bonvoy member to get free internet. But I have zero “loyalty” since their name on a product has little meaning.
As long as Marriott doesn’t devalue the points transfers to airline FFPs, I won’t lose sleep. I would lose sleep if Marriott continues to water down elite benefits and does even less to enforce the benefits they publish for guests. Marriott is good at making disappointed (often reasonably) guests pound sand; now its the hotel owners who can pound sand.
As I wrote at Ben’s blog…
After years of ignoring or refusing Bonvoy benefits, these properties can go phoucke themselves.
Everyone should immediately sign up for multiple credit Marriott cards for amazing Platinun elite benefits that will be easily obtained.
@OtherSteve — “phoucke” is that one of those Vietnamese soup places? Pho King? Yum!
@Gene bahaha!!!
I think the expansion of partner rewards and the transfer points explosion are creating a bigger problem. If points were linked to stays, then there would be a pretty stable compensation equilibrium (every x nights paid or $x spend yields a free night). Since the hotels are basically compensated at cost, the hotel is basically giving away empty rooms on occasion to foster loyalty ( and drive revenue). But points generated through card spend and partner rewards (like Uber) compete with actual consumer spend — the customer has more smoothies delivered to their house, but spends less in cash on vacation hotels. In essence, in selling the points to the bank/marketing partner, the flagged hotels are covering Marriott on the back end.
Add to this the diminishing marketing returns — if there are 12 flagged properties in a 2 mile city centre, the program is spreading itself too thin to drive good marketing “leads.” In essence, the hotels are getting less marketing (because every other hotel is on Bonvoy), and Marriott is then “borrowing” your extra rooms at cost to house occasional travelers with a credit card and an Uber Eats addiction to pad its own bottom line.
In that world. The Expedia-style marketing proposition begins look good (as does any FHR style program that pays you a meaningful percentage of the current cash rate).
Yes the owners hate us point redemption folks
we are looked upon as welfare food stamp customers bottom feeders
Marriott is there to bleed to death all parties like Uber does to their drivers some who work @ or below min wage when the smoke clears
I went from 100 nights a year with Spg to 5 nights a year when Bonvoy starting bending over their guests in greed and shafting them routinely especially in North America
Unfortunately there are some very wealthy guests that drop absurd amounts of cash which simply empowers Marriott to not give a rats A$$ about those leaving the chain and denying benefits.Rip SPG 🙁 They likely will quadruple redemption until folks bleed the last cent out of their wallets.We appreciate your loyalty Bonvoy suckers. Whats for elite breakfast? Yes we have limited participation
Curated farm to table Nutri grain bars enjoy! Do your prefer wrapped or unwrapped?
Very sad how all the programs: Airliner, Hotel, Car; are getting worse and worse. A shame. Greed seems to win every time, but they lose our loyalty.
The enshittifaction of america.
Draw them in , then make is shiiit
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.