We often hear speculation about what a hotel company really is. Is it a property play? Is it a distribution platform? Is it a home-from-home providing solace and security for the weary traveller? We’ll have to hear the ROI on the latter before we go any further, seems a bit far fetched.
At times like this it’s a good idea to see what the biggest of them all is up to and this week’s Marriott Q3 results confirmed what we already knew; it’s a credit card company.
CEO & president Tony Capuano said all the right things about hotels, like “our portfolio is well positioned to benefit from outperformance at the upper end as 10% of our rooms are in the luxury segment and another 42% are in the full service premium segment” and “full-year 2025 revpar is still anticipated to rise between 1.52.5% year over year” but no one was fooled.
The comments which garnered the most interest were those around the intermeshed credit card and loyalty card setup the group has been benefitting from. CFO Leeny Oberg told analysts: “It’s really worth remembering that the co-brand card payments actually account for more than half of the Marriott Bonvoy programme funding.
“In 2024, our credit card branding fees were $660,000,000 And we’re looking at that growing this year 9% in 2025 from, again, the continued powerful combination of the credit card partners and Marriott Bonvoy.”
It tuned out that no one actually needed reminding on that front, they already knew. This meant that when Capuano started talking about new deals “that reflect the increased relevance of Marriott Bonvoy and the significant growth of our global lodging portfolio”, the dollar signs were rolling about what this means for the credit cards.
He was happy to spell it out: “As Bonvoy continues to grow, that growth translates to more cardholders, more spend, and we expect to see that reflected in growing co-brand credit card fees”.
Marriott’s credit card/loyalty programme ecosystem is the envy of the rest of the sector and various other hotel companies have tried to embrace similar economics, but have been stymied because of Marriott’s first-mover advantage and its geographical location. The model works in the US in part because of the central role credit cards play in the country’s economy which you don’t see anywhere else.
While other groups talk about earn and burn with loyalty programmes, that is the reality for Marriott, because of the number of deals it has with the likes of Uber, Starbucks and the rest. The rest being added to by the day. The credit card and the loyalty programme feed each other and the result is both enthusiasm for Marriott’s hotels and a whole stack of fees.
This means that it makes sense for Marriott to get its tentacles in everywhere. At the recent Skift Global Forum Capuano floated the idea of getting into airport lounges, telling delegates: “I had my senior leadership strategy retreat this summer, and it was one of the topics that came up as really interesting. It’s an intriguing thing.”
Intriguing it is, given that Marriott already has 35 airline partners as part of its many, many partnership deals. Would this extend to the airlines’ own lounges or the independents? Lounges are a perk for frequent flyers, would there be crossover or cannibalisation with Marriott’s own higher-tier members?
That takes us back to the more hotel operation side of the business – like, what?! – where the CEO commented that business transient revpar was flat. This would be a point of concern for the other branded players who, as we saw during the pandemic, can’t actually identify the leisure market. For Marriott, where you can earn points with a latte, they are likely to be saddened by the current issues around business revpar, but it’s unlikely to provoke panic.
Does the rise of agentic AI pose a threat? How will Bonvoy’s 260 million members respond? We commented last month about how the latest Marriott platform would help the group stay ahead as AI comes into the distribution picture and Capuano wasn’t phased this week, commenting: “While the search and the commerce models are still in their infancy, we are certainly optimising the content across our platforms to take advantage of Gen AI services. Our channel strategy is designed to ensure we’ve got broad reach across all traditional and emerging channels.”
And with customers locked in by the combination of Bonvoy and credit cards, there’s no reason to expect guests will be distracted by this brave new world. Marriott really is holding all the cards.
