Originally Posted by
Raffles
Hilton couldn't give a monkeys about the cash rate though, because (unless the hotel is full) the amount it pays for a reward is in the management contract - usually $50 or so.
The other thing people forget is how system funds work. Hilton is not allowed to profit from the loyalty scheme. The hotels pay money in from every say, the hotels get money back via redemptions and marketing. It's far more likely that Lando Norris's success and the increased cost of funding F1 etc is the reason for these changes.
The real issue is when (as Marriott has publicly stated it is doing) you cut the % fee charged to owners for loyalty / marketing to encourage more hotels to join you. You're struggling then because there is far less money in the pot.
Yes, the fixed reward cost is generally fixed. But the amount going into the pot is variable - a % of revenue. So "Honors revenue" is going up, but its costs are fixed. Sure there might be more $50 reward nights, but the ratio of Hilton points to $50 reward nights should still be fixed, all other things being equal.
The variables that would suck money out of the ecosystem are:
1. increasingly full hotels --> more reimbursements of average room rate
2. unexpectedly high redemptions at SLH hotels bankrupting the system
The costs of partially sponsoring an F1 team ought to be a rounding error for a major hotel chain, even if for some reason the loyalty programme is actually paying out of its own stand-alone revenues. Marketing is marketing, and if F1 costs more due to success bonuses, then they can cut back on other marketing channels
But, sure, if any hotel chain is taking shortcuts with charging hotels for marketing, the loyalty programme is doomed...