The credit-card deals bolted onto Marriott's loyalty program have become so lucrative that the owners of nearly 1,000 hotels want a bigger cut. That's their demand in a letter to CEO Anthony Capuano that Skift obtained and published on Wednesday.
The fight is over the cards, not the loyalty program itself, which is designed to run roughly break-even. Marriott collected $716 million in card-related fees last year and expects roughly $1 billion this year. Here are the owners' four demands:
Transparency: Owners want details on the card deals, claiming that Marriott enjoys direct benefits while they bear the direct costs.
Better reimbursement. Award stays should net owners no less than comparable OTA bookings.
Revenue sharing. A cut of the co-branded card income.
Fee relief. Restore owners' abilities to charge convenience fees on group contracts paid by card.
Marriott says it isn't doing anything unusual, and TD Cowen analyst Kevin Kopelman broadly agrees, noting in a report that the company's "practices are in line with competitors."
Marriott's average loyalty charge-outs, or what it bills hotels when guests earn points, are at or below those of its largest competitors, Kopelman estimates, with the sector's typical rates running 2% to 5%.
Owners may also be discounting the upside of belonging to a large loyalty program, including lower distribution costs than OTAs or going it alone on marketing, Kopelman notes.
Either way, it would be tough for Marriott to fork over card-related income, a high-margin stream that has led Wall Street to bid up its shares.
Send tips and scoops to Luke ([email protected]) and me ([email protected]).
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