Marriott Bonvoy operates in the hotel and travel industry, which has been suffering from a downturn this year. This is because many people are halting their vacation plans due to fear of terrorism. Marriott hopes that by leveraging blockchain technology they can help alleviate some of these fears and allow more travelers to take vacations when they want without worrying about safety concerns.
Marriott Bonvoy has released their 2018 annual report, which shows that the company is cashflow negative this year. This means that they are spending more than they are making. The company expects to continue this trend for the next few years.
This year, Marriott Bonvoy has been cashflow negative, and that trend is expected to continue.
on November 3, 2021 by Gary Leff
Several fascinating data elements concerning the Marriott Bonvoy program were presented during the company’s third-quarter earnings call.
- Enrollment “increased throughout the quarter” due to “digital signups,” and they had 157 million members at the end of September. This is not the number of active members, but the number of guests in their loyalty marketing database.
- “Status, award, and point extensions” are being promoted as a way to “encourage members to continue with [Marriott] until global travel recovers.”
- Direct channels account for more than 76 percent of worldwide room nights, with digital channels accounting for half. As the number of online direct reservations increases, it’s likely that they’ll be the best at capturing program signups.
“Credit card branding fees of $113 million, up 11% compared to the 2019 third quarter on the strength of strong new account acquisition and robust” card spend, they’re seeing growth from their credit card issuers at least.
This is income distinct from the purchase of points for future travel — credit card agreements regard certain revenue from issuer banks as compensation for the use of the brand, mailing lists, and other services supplied to cardmembers.
The loyalty program, on the other hand, is cash flow negative this year. Because they extended their co-brand arrangements throughout the epidemic, they received paid up advance. Banks handed them money ahead of schedule, and that money is no longer flowing in. So far, they’ve “essentially repa[id] one-third of the $920 million received in 2020,” and because of these partnerships, Marriott “continue[s] to expect mildly negative cashflows from loyalty.”
Marriott will demand over a billion dollars from its credit card partners in May 2020.
- $350 million from American Express, mostly for point pre-purchase.
- Chase has agreed to pay $570 million, which includes “$500 million in prepayment of some future income” and a $70 million early payment of their card deal signing bonus.
Eliminating reward charts should help Marriott achieve two goals: reduced costs for owners (despite the fact that Bonvoy is less costly for owners than the prior structure) and lower expenses for the program as a whole, both on the backs of members. Of course, this works until and until people believe they are receiving a bad price and seek out alternatives. However, because Hilton and IHG do not provide better offers, it seems that there is no viable worldwide chain for consumers to go to.
As Mark Ross-Smith often points out, this demonstrates that the CFO has triumphed and is in charge of the loyalty program.
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The “marriott suite upgrade” is a hotel chain that has been in the business for over 50 years. They have had to take measures such as cutting back on staff and reducing their marketing budget. This is because of their poor cashflow which is expected to continue into next year.
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