A group of 51 hotel owners who together run close to 1,000 Marriott-branded properties has told the company it wants a larger share of the money flowing through its Bonvoy rewards program, according to a letter the owners sent in March that became public Tuesday.

The letter went straight to the top, addressed to Chief Executive Anthony Capuano and Chairman David Marriott.

The fight comes down to a simple question: who pays when a guest cashes in points for a free night, and who pockets the profits the program throws off.

Most Marriott hotels are not owned by Marriott. They are owned by independent operators and franchisees who run the buildings, employ the staff, and pay Marriott for the right to fly its flags and tap into Bonvoy, one of the largest loyalty programs in travel.

When a member redeems points for a free stay, the hotel that hosts that guest gets reimbursed from a shared fund. Owners say that reimbursement often falls short of what the room is really worth.

Here is what changed.

For years, owners believed Bonvoy roughly broke even — a marketing engine that filled rooms without making anyone rich.

Now they have learned the program is a serious money-maker, and they feel cut out.

Marriott has said it expects fee revenue from its co-branded credit cards to climb about 35% this year, approaching $1 billion.

Much of that comes from card partners paying Marriott for the right to issue Bonvoy cards.

Owners argue they help create that value every time a guest stays, yet little of the windfall reaches them.

Their core complaints are about money and transparency.

They want higher payments when members redeem free nights — at least matching what they would earn from an online travel site like Expedia — and they want to see the program’s books, which Marriott has historically kept close.

Under the old setup, owners got a low base payment for an award night when the hotel had empty rooms to spare, on the logic that a free guest in an otherwise unsold room costs the hotel nothing.

When a property filled up, the payment rose toward the hotel’s normal nightly rate.

Owners say that formula no longer reflects how much Marriott earns from the credit-card side of the business.

Marriott has made some moves to ease the tension.

The company says it recently raised what owners are paid for loyalty stays on busy, high-demand nights, trimmed certain charge-out rates, and for the first time shared some Bonvoy financial details with owners.

It is also renegotiating agreements tied to the program.

The stakes are large because loyalty has quietly become one of the most profitable corners of the hotel business.

Bonvoy added roughly 43 million members last year and counted about 283 million members by the end of the first quarter.

Every one of those members is a reason for a traveler to book a Marriott instead of a competitor — but the value created sits at corporate, in the form of high-margin card fees, while the cost of honoring free nights lands on the individual hotel.

For travelers, the dispute could eventually show up in the value of their points.

If owners win bigger reimbursements for award stays, Marriott has to find that money somewhere.

The most common way hotel programs cover rising costs is by raising the number of points needed for a free night, which quietly erodes what each point is worth.

Nothing has changed for members yet, but a richer payout to owners tends to flow downhill to guests.

There is also a business-model question for investors.

Marriott International (MAR) has long sold Wall Street on an “asset-light” story — it manages and licenses brands rather than owning buildings, and loyalty and credit-card fees are a big part of that pitch.

A revolt by the people who actually own the hotels puts a spotlight on how durable those fees are, and how much Marriott may have to give back to keep its franchise network from walking.

For now, the two sides are negotiating.

The owners have leverage in numbers and in the simple fact that Marriott needs them to run its hotels.

Marriott has the brand, the members, and the card deals.

Somewhere between those positions is the new split of a billion-dollar pot — and the answer will ripple from hotel balance sheets all the way down to the points sitting in travelers’ accounts.

Bethesda, Md. — JBizNews Desk

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