Marriott vs. Hilton: A Fee Fight for Hotel Dominance
While analysts fixate on room count and loyalty program growth, the real battle between hotel giants Marriott and Hilton is over the fees they charge owners and credit-card issuers.
Marriott and Hilton appear to be neck-and-neck in the race to expand their footprints and loyalty programs. But if you look at the more important metric of fees earned for services they provided hotel owners, you’ll see Marriott far ahead.
Hotel groups charge owners fees for managing or franchising hotels. This fee revenue is critical. Hilton’s fee revenue drove about 95% of its adjusted EBITDA in the first quarter.
Fee revenue also has the virtue of being subject to auditing — unlike metrics like net room growth and loyalty program membership, which don’t have agreed-upon industry standards.
Marriott vs. Hilton, over fees
Skift compared the fees Marriott and Hilton earned in the past 26 quarters, from the start of 2018 through the first months of this year. Here are a few takeaways:
- Hilton has grown its franchise and licensing fees at 5.57% yearly, while Marriott’s pace was 4.28%.
- But Marriott is far ahead in total fees. Marriott generated $1.24 billion in gross fee revenue last year, while Hilton generated only $773 million.
- Hilton’s fees are growing faster, but Marriott’s fee volume lead is so large that — if current trends stayed the same — it would take Hilton 40 years to catch up.
