Executive Summary: Despite 5% growth in global room count last year for the five public hotel companies we analyzed for this report, an 11% increase in hotel loyalty program members.

This increased resulted in a 2.5-percentage-point (pp) increase in total hotel occupancy attributable to loyalty member bookings.

• Loyalty programs are becoming less dominated by frequent travelers. Heavy users (30+ nights a year) comprise a declining percentage of total membership as the earning of loyalty points has become more tied with credit cards and affiliate programs and less directly with just frequent travelers.

• Loyalty program redemption revenues increased by 11% year-over-year in 2023 to a record $1.1 billion, likely from a mix of increased travel and redemptions, higher ADRs and more points needed to earn a free night.

• Loyalty program liability per member—the average dollar value each member has accrued in unredeemed points— ended 2023 at 87% of pre-pandemic levels.

• Total fees assessed to hotel owners for loyalty program participation increased by 14.3% in 2023, above the 9.4% rate of total hotel revenue growth. The increase was likely due to higher room rates, increased loyalty member occupancy and higher program fees per occupied room. Nevertheless, the average cost was a relatively modest $3.59 per available room per day.

U.S. hotel revenue per available room (RevPAR) growth has normalized following a sharp post-pandemic acceleration. RevPAR fell by 2.1% year-over-year in Q1 2024, with the U.S. portfolios of some of the large publicly traded hotel C-corporations decreasing by as much as 5%.

Loyalty programs are a key contributor to occupancy growth for hotel brand families, particularly during shoulder seasons and periods of economic uncertainty. To determine the hotel loyalty market’s growth and overall health, we analyzed the loyalty programs of five major U.S. public hotel companies (Choice, Hilton, Hyatt, Marriott and Wyndham).

Growth in several key metrics slowed last year, but loyalty members' overall contribution to occupancy increased despite lower marginal contribution per member.

The average number of loyalty members per room rose to 128 from 120 in 2023; however, this 6.4% year-over-year growth was well below the 8.2% five-year compound annual growth rate (CAGR).

Figure 1: Growth in Hotel Loyalty Program Membership

Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filings.

Figure 2: Annual Growth of Loyalty Program Members & Number Per Room

Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filings.

Loyalty members’ average contribution to occupancy grew by 2.5 pps to 51% in 2023. The increase in membership, higher ADRs and higher occupancy contributions all combined to drive a 9.3% increase in the balance sheet liabilities associated with loyalty point accruals available for future use.

Relative to 2019, loyalty balance sheet liabilities were up 31% at the end of 2023. With balance sheet liability growth exceeding the 16% nominal ADR growth vs. 2019, loyalty member guests appear to have more points on a combined basis than they did before the pandemic, which could support room demand during an economic downturn.

The average hotel balance sheet liability per loyalty program member fell by 1.7% year-over-year in 2023 to $18.86 from $19.19. Liability per member stood at 87% of 2019 levels in 2023, suggesting that members are either staying less on average, redeeming more or a combination of the two.

Figure 3: Occupancy Contribution From Loyalty Program Members Continued to Increase in 2023

Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filings.

The number of room nights stayed by the average loyalty member returned to 2019 levels last year at 1.1. This is below 2016’s 1.8 nights per member, suggesting that the percentage of membership comprised of heavy users (30+ nights a year) is declining as the earning of loyalty points has become more tied to credit cards and affiliate programs and less directly with just frequent travel.

This doesn’t mean that the members are less valuable, as they could have different travel patterns and fill seasonal dips or weak demand periods; it indicates a broader base of loyalty members overall, who, on average, contributed fewer nights than they did in 2016.

Figure 4: Room Nights Booked by Loyalty Members Return to Pre-Pandemic Levels

Source: Marriott, Hilton and Hyatt public filings.

Loyalty point redemption revenues increased by 11% last year to $1.1 billion from $982 million in 2022. This could indicate that more points were redeemed to book rooms in 2023; however, it could also partly be due to the 4% rise in ADR or the devaluation of loyalty points needed to earn a free night.

Figure 5: Loyalty Point Redemption Revenues Increased by 11% Last Year

Source: Marriott, Hilton, Hyatt, Wyndham and Choice public filings.

Brand affiliation can offer hotel owners and operators many benefits, including key money,1 mezzanine loans, favorable management terms and access to the brand’s loyalty member base.

Loyalty program costs are reflected on hotel owners’ profit and loss (P&L) statements. P&L data from CBRE’s Trends® in the Hotel Industry show that loyalty point expenses increased by 14.3% last year, well outpacing room revenue growth of 8.3% and total revenue growth of 9.4%.

This suggests that loyalty members accounted for a greater percentage of overall occupancy and that higher rooms rates and fees potentially increased costs. While loyalty program fees are increasing, the benefit of greater guest loyalty to the hotel brand should offset the cost by increasing both occupancy and ancillary revenues.

Figure 6: Loyalty Fee Growth Outpaced ADR Growth in 2023

Source: CBRE Trends® in the Hotel Industry.1 Payments made by the franchisor to the hotel owner to secure the hotel management agreement.

Christine Bang is a Research Manager for CBRE Hotels Research. Since joining CBRE in 2021, Christine has created thought leadership content for the CBRE Hotels Research team and has assisted in producing quarterly Hotel Horizons® forecasts for three price tiers in 65 markets. Before working at CBRE, she spent years covering gaming and lodging companies, commercial REITs, and big-box retail as an equity research associate analyst at Credit Suisse and Morgan Stanley. She has also worked as a portfolio manager at Avalon Bay Communities, a leading publicly traded multi-family REIT. Christine has a Bachelor of Arts in Urban History from Cornell University, an MBA from Columbia University in Real Estate Finance, and a Master of Science in Urban Planning from Columbia University Graduate School of Architecture, Planning and Preservation.

As CBRE’s Head of Hotels Research & Data Analysis, Rachael Rothman, CFA, ISHC, is responsible for forecasting, thought leadership, and consulting. Ms. Rothman joined CBRE in 2021 after a 20-year career as a public hotel company executive and equity analyst covering the hospitality, consumer, and REIT industries. Ms. Rothman is a Board member of the International Luxury Hotel Association, a Member of the Cornell Hotel Society, a CFA Charter holder, and a member of the New York Society of Securities Analysts. Ms. Rothman holds a Master of Arts in Economics from the University of Virginia, a Masters in Hotel & Restaurant Management from Cornell University, and a Bachelor of Arts in Romance Languages from Bates College.

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