Brand loyalty programs appear to be driving an increasing number of guests toU.S.hotels. However, this increased volume of room nights comes with an increased cost.
To gain an understanding of the costs associated with guest loyalty programs, PKF Hospitality Research, LLC (PKF-HR) analyzed "Loyalty Programs and Affiliation Fees" (guest loyalty fees) data from our annual Trends® in the Hotel Industry survey. The sample consisted of 1,583 hotels that reported guest loyalty fee payments each year during the period 2007 through 2011E[1]. Hotels that are operated directly by a national chain, and hotels operated by a non-branded management company, were included in the sample since both types pay guest loyalty fees. Costs Outpace Revenue From 2007 to 2011E, guest loyalty fees increased at a compound annual rate (CAGR) of 3.4 percent for all hotels in the research sample. Concurrently, the number of rooms occupied at these same hotels declined at a 0.2 percent CAGR, as did rooms revenue which decreased at an average annual rate of 2.4 percent. Underscoring the imbalance between annual changes in costs, occupied rooms, and revenue, guest loyalty fees measured on a dollar-per-occupied room basis have increased from $2.48 in 2007 to $2.87 in 2011E, while the average daily room rate declined from $108.95 to $99.07. As a percent of rooms revenue, guest loyalty fees have risen from 1.6 percent in 2007 to 2.1 percent in 2011E.
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