Skift Take

A dozen things jumped out at Skift when looking at Marriott and Hilton's annual financial filings. Points range from the performance of their loyalty programs to how they're taking market share.

Marriott International is the world’s largest hotelier, but Hilton Worldwide is a close rival. The following are noteworthy details from the latest annual 10-K filings for Marriott and Hilton.

1. A rivalry in signing up loyalty members.

As of year-end 2023, this was the state of the race on loyalty program membership:

  • Hilton had 180 million members in its loyalty program, a 19% year-over-year increase.
  • Marriott had 196 million members in its loyalty program, a 10.7% gain.

Hilton grew its program more quickly, though from a relatively smaller base. If the companies retain their one-year growth rate in the coming year, Hilton may overtake Marriott in loyalty member count when they report figures in early to mid-2025.

2. Marriott’s loyalty program generated a far higher total volume of rewards for members than Hilton’s did.

As of the end of 2023, Marriott’s program generated a much higher volume of rewards owed to loyalty members than Hilton’s had. Its program is simply bigger and more heavily used.

Hotel loyalty programs are complex. Hotel owners pay into in a fund when they receive paying guests. They take money out when they serve guests redeeming rewards. Both Marriott and Hilton ensure hoteliers set aside enough money to cover all the rewards promised to guests. These showed up as liabilities on the 10-Ks.

Marriott has a short-term liability of $3.33 billion for its guest loyalty program and an additional long-term liability of $3.67 billion. Those numbers are a proxy for how much its guests have effectively earned in the company’s loyalty program.

In contrast, Hilton had a short-term liability of only $1.2 billion for its guest loyalty program and a long-term liability of only $1.53 billion.

3. Marriott and Hilton are notably more profitable now than six years ago.

There are different ways to measure profit, but let’s look at adjusted EBITDA.

In 2017, Marriott produced adjusted EBITDA that amounted to 62% of its net revenue after reimbursements to hotel owners.

In 2023, its comparable adjusted EBITDA margin was 72.9% — an approximately 11 percentage point gain.

In 2017, Hilton’s full-year adjusted EBITDA was $1.965 billion, or a 56% margin.

In 2023, Hilton’s adjusted EBITDA was $3.089 billion, or 69% — an approximately 13 percentage point gain.

4. Marriott’s vacation rental business remains small.

Marriott’s Homes and Villas business generates such a small amount of revenue and earnings that Marriott didn’t need to materially report it in its 10-K. Airbnb needn’t feel threatened.

But it did have this to say:

“We encounter strong competition in the short-term lodging market from large national and international chains that operate hotels or franchise their brands, unaffiliated hotels, and online platforms, including Airbnb and Vrbo, that allow travelers to book short-term rentals of homes and apartments as an alternative to hotel rooms,” the Marriott 10-K said.

Hilton has avoided the alternative accommodations segment.

5. Hilton touts its diversity and inclusion goals.

Hilton said that, as of year-end, its workforce worldwide that it directly employs or manages through third parties was 43% women. Its corporate leadership was approximately 42% women and its hotel leadership was 24% women.

Its U.S. corporate leadership was “approximately 20% ethnically diverse” and its U.S. hotel leadership was “approximately 29% ethnically diverse.”

Marriott didn’t supply comparable data in its 10-K.

6. Hilton has a relatively higher debt load than Marriott.

A company’s debt burden can be measured in different ways. One way is as a share of assets.

Hilton’s year-end long-term debt amounted to $9.15 billion, or 59% of its total assets.

Marriott’s long-term debt amounted to 46% of its total assets.

Credit agencies estimate that Marriott has a somewhat better ability to repay its debts. Hilton, has a BB+ credit rating from S&P Global Ratings, while Marriott has a one-tier higher credit rating of BBB. This is in line with the view of other credit agencies.

7. Hilton and Marriott are less global than they like to imply in their marketing.

Hilton generated $7.98 billion in revenue from the U.S. last year, or 78% of its total revenue.

Marriott similarly generated 78% of its total revenue from the U.S. last year.

The companies would point out that the U.S. has some of the highest room rates in the world and one of the strongest currencies, distorting the picture. Roughly 70% of Hilton’s room count is in the U.S., and roughly 67% of Marriott’s is in the U.S.

8. Marriott took some share from independent hoteliers.

Marriott said that as of year-end 2017, about 71% of U.S. hotel rooms were affiliated with national brands. It also estimated it had an approximately 15% share of the U.S. hotel market as measured by room count.

At the end of 2023, it estimated that the percentage of U.S. hotel rooms affiliated with a national brand had increased by one percentage point. And it estimated that its share of the U.S. hotel market rose by 1 percentage point, to a 16% share.

Hilton didn’t provide comparable figures.

9. Marriott’s overhaul of the Sheraton brand has underperformed.

Marriott in 2018 launched an overhaul of Sheraton, a brand it acquired as part of its Starwood merger that closed in 2016. Marriott coaxed owners to commit $500 million to invest in renovations based on its blueprints for a modernized look and feel.

But did the work produce results?

In 2017, before the renovation, Sheraton’s North American revenue per available room was $116. In 2023, Sheraton’s North American revenue per available room was $118.69. Given U.S. inflation of about 22% over that time, that’s unimpressive.

As of December 31, the company had 436 Sheratons worldwide. The owner of the Sheraton Grand Chicago has acted on a lawsuit that has essentially required Marriott to buy it from Tishman Realty at a total cost of $500 million this year, executives said on Tuesday. That’s not ideal for a company like Marriott with an asset-light hotel ownership model.

Sheraton is still a name with brand equity. Last year, Marriott introduced a select-service brand in Europe called Four Points Express by Sheraton. Clearly, it believes the Sheraton name helps attract guests. The jury is still out on the overall, all-in benefit to Marriott of its Sheraton acquisition.

10. Marriott gave details on its City Hotels acquisition.

When Marriott acquired the City Express brand portfolio from Hoteles City Express in Mexico, it said the purchase price was $100 million.

But the 10-K gave a bit more color. The portfolio of 149 properties located in Mexico, Costa Rica, Colombia, and Chile cost approximately $85 million, while the franchise contract assets, typically on 20-year terms, were worth $21 million. The final cash outflow was $101 million.

In 2022, Marriott’s hotel franchising arrangements involved charging royalties of 2% to 3% for food and beverage revenues for certain full-service brands. Last year, it raised that range to “up to 4%.”

Marriott president and CEO Anthony Capuano told Skift last month that one of his priorities is helping owners boost the restaurants and bars at the group’s luxury hotels because guests and locals increasingly make reservations based on the reputation of a hotel’s bars and restaurants. Marriott created a test kitchen at its headquarters and has experts at its leading brands providing guidance on how to improve the offerings.

12. Hilton specified its climate goals.

Hilton included 800 words on its climate plan in its 10-K. It described how, in 2022, it had set verified science-based targets to cut its carbon emissions intensity of its managed hotel portfolio by 75% and of its franchised hotel portfolio by 56%, with 2008 as its baseline, to help it stay in line with targets for 2030.

Marriott merely said: “Our climate action efforts include committing to set a near-term science-based emissions reduction target and a long-term science-based target to reach net-zero value chain greenhouse gas emissions by no later than 2050. In September 2023, we submitted our emissions reduction targets to the Science Based Targets initiative and are awaiting validation of the targets, which we expect later in 2024.”

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.

Have a confidential tip for Skift? Get in touch

Tags: earnings, future of lodging, hilton, Hilton Hotels, hotel development, hotel earnings, loyalty, marriott, Marriott International, sheraton, sheraton hotels

Photo credit: The living room of a one-bedroom "dune villa" at The St. Regis Red Sea Resort. Source: Marriott International.

Up Next

Loading next stories