Betting on the Law of Large Numbers

This comprehensive report by CBRE sheds light on the significant impact of hotel loyalty programs on hotel performance, providing valuable insights for hotel industry professionals, marketing and sales teams, and business analysts.

Notwithstanding the 5% growth in U.S. hotel supply last year, an 11% increase in hotel loyalty program members resulted in a 2.5-percentage-point (pp) increase in loyalty points’ share of total hotel occupancy.

Loyalty programs are becoming less dominated by frequent travelers. The percentage of membership comprised of heavy users (30+ nights a year) is declining 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.

Download the report here.