Hotel Loyalty Programs: Betting on the Law of Large Numbers

Despite a 5% rise in global room count, 11% more hotel loyalty program members resulted in a 2.5percentage 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 share of total membership as loyalty points become more tied to credit cards and affiliate programs and less directly with travel frequency.
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.