A fee fight for hotel dominance
How Marriott and Hilton aim to optimize their fee structures to max out profitability while maintaining competitive pricing for hotel owners
Marriott and Hilton compete closely to expand their footprints and loyalty programs. However, in terms of fees earned for services provided to hotel owners, Marriott has a significant lead.
Key takeaways
- Marriott and Hilton charge hotel owners both base (static) and incentive (performance-based) fees. Higher average daily rates and improved occupancy can increase both types of fees;
- Hilton generated 80% of its first-quarter fees from base and incentive fees for franchised hotels, typically about 5% of a franchisee's room rate, which varies by contract;
- Both companies are refining their fee structures to maximize profitability while keeping rates competitive for hotel owners. This includes balancing base fees, incentive fees and additional revenue from loyalty programs.
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