Best in Class: What Hotel Name is Worth Checking Into?

This is a breakdown of the hotel sector. The companies that carry the famous brand names are no longer real estate businesses; they are membership and brand licensing companies whose loyalty programs are customer acquisition channels. The hypothesis I lay out below is that Hilton is the best of them. The numbers below test it.

On August 3, Marriott disclosed the royalty rate on its co-brand credit card, 26%, a number it had not published before. The rate came attached to newly signed agreements with Chase and American Express that add roughly $30M of card fees in 2026 on a partial year and $100M to $125M annually by 2028. The card book those deals sit on top of was already public and already large: $716M of co-brand card fees in 2025, guided to grow in the high 30% range this year, which puts it near $966M, about 16% of Marriott’s $6.03B to $6.06B of guided gross fees, and the fastest-growing fee line the company has. The same day, Marriott launched a rebate program for its hotel owners. In March, 51 owners representing nearly 1,000 Marriott-branded hotels had signed a letter asking for a share of the card money. Nobody writes that letter about a side business.

On the other hand there is Hilton, which acts as a membership and brand licensing business whose loyalty program is a customer acquisition channel, not a credit card company that happens to own hotel brands. Hilton to this point has not disclosed its numbers to the extent that Marriott has. Its card economics sit inside a combined line item, its agreement with American Express has no published term or expiry, and its loyalty program reports no room-night contribution. The starting point for sizing any of it is the revenue mix.

Explaining The Businesses

Cost reimbursements are excluded above. Hilton collects roughly $2.0B a quarter from its owners and spends it on their behalf on marketing, the reservation system, and shared services, at basically no margin. Including it would make the revenue base roughly two and a half times larger. Excluding it leaves ~$1.36B, of which 59% is a royalty and license fee stream calculated on other people’s buildings. Marriott’s fee engine is larger in absolute terms, $1,578M of gross fees in the quarter against Hilton’s $976M, on a system about a third bigger.

Owners pay a royalty calculated on room revenue. The franchisor’s revenue scales with how many rooms carry its brands and what those rooms bill, not with who owns the buildings. Here is the whole sector that publishes their numbers:

Room counts and membership figures are as of June 30, 2026 disclosures; membership counts are unaudited marketing numbers with no stated activity threshold, and growth figures mix guidance with trailing actuals as labeled.

Why Did They Sell The Real Estate?

Marriott went first, and its trigger was distress. Through the 1980s its model was build, sell, and keep the management contract. The savings and loan collapse and the real estate recession took the buyers away, leaving Marriott holding 139 hotels it had built to sell and roughly $3 billion of debt. Stephen Bollenbach, who joined as chief financial officer on March 1, 1992 and began working on a separation within days of arriving, split the company on October 8, 1993: Host Marriott took the real estate and about $2.1 billion of the debt, and Marriott International took the management and franchise contracts close to debt-free. Bondholders sued. The fix for a broken exit market became the industry’s template.

IHG’s was a choice. After the April 2003 Six Continents separation, it sold roughly 200 hotels over twelve years into a functioning market, collected almost $8 billion, and returned capital to shareholders along the way, including a $750 million special dividend and a $500 million buyback in 2014 alone, ending with seven owned or leased properties. Its stated rationale is the one the model is named for: fee income is less volatile than ownership, and return on capital is higher when the capital belongs to someone else.

Hilton’s was the endgame of a leveraged buyout. Blackstone took Hilton private in October 2007 for $26 billion, $20.5 billion of it debt, closing months before the credit markets seized. After the 2013 IPO, the January 3, 2017 three-way split finished the exit: Park Hotels & Resorts took the real estate as a REIT, which pays no corporate income tax so long as it distributes at least 90% of taxable income, Hilton Grand Vacations took the timeshare business, and Hilton kept the contracts. Nassetta’s stated rationale was three pure-play companies with dedicated management teams and the capital markets and tax efficiencies of each structure.

The rest of the industry has made the same trade or they never needed to. Hyatt is the only major player still partway through the conversion, and it ran the full playbook inside a single deal last year: it acquired Playa Hotels & Resorts in June 2025, sold the real estate from that deal to Tortuga Resorts for $2.0 billion in December, and kept 50-year management agreements on 13 of the 15 properties, leaving the net price of the management business near $555 million. Hyatt has committed to at least $2 billion of further asset-sale proceeds and expects its earnings mix to be more than 90% asset-light in 2027.

Accor, the largest European operator, made the move in 2018, selling 55% of AccorInvest, a portfolio of 891 hotels, 324 of them owned, for 4.4 billion euros to a group led by sovereign funds. Wyndham and Choice had no meaningful real estate to give up in the first place; both are franchisors, and franchisees run effectively their entire system. Even the luxury tier runs asset-light, much to my surprise when doing research for this piece: Four Seasons owns almost none of its hotels, managing 121 of them for outside property investors, and when Bill Gates’ investment vehicle (Cascade Investment) paid $2.21 billion in 2021 to take its stake in the company to 71.25%, what changed hands was the management company, not buildings. The buildings themselves sit with owners built to hold them: Host, Park, AccorInvest, Tortuga, and the property investors behind nearly every luxury flag.

What each kept says what it is for. The handful of hotels the major brands still own or lease operate as test properties, where new products, standards, and brand concepts run before they reach franchisees’ buildings. Hilton’s 46 are what remained after the 2017 split. The FY2026 math of the trade sits down at the bottom of this report in Figure 16: the fee company guides to more than twice the EBITDA of the largest property company carved out of it, on a comparable asset base.

What a Points Company is, & is Not

Strip the branding away and a hotel sells one product: a room for a night. For most of the industry’s history, the company selling that night also owned the building it happened in, which meant the business lived and died with the value of its real estate. The sell-off changed what the product is. Hilton, Marriott, and IHG now sell three things, and none of them is a room: a brand that sets the standard, a reservation system that fills the building, and a points currency that keeps the guest inside the system, all licensed to the people who actually own the buildings under contracts that run for decades. The switch worked for three reasons this piece keeps returning to. A fee calculated on room revenue falls less in a downturn than the profit of the building underneath it. A REIT pays no corporate tax on the buildings, so the real estate is worth more in someone else’s hands. And every new room is built with an owner’s money, not the brand’s.

An obvious point is that the hotel companies are not the only players in the travel economy built on points and membership. The comparables pair off, two leaders to a field, and the differences between the models are mostly contractual:

The bookers: Booking Holdings, $26.9 billion of 2025 revenue on $186.1 billion of gross bookings across more than 1.2 billion room nights, and Expedia, $14.7 billion on $119.6 billion across 415 million room nights, the only booker with a cross-brand rewards currency in One Key. The rental marketplaces: Airbnb, $12.2 billion of revenue on $91.3 billion of gross booking value across 533 million nights and experiences, with no loyalty currency and a chief executive who has said whatever it builds will not be a points program in the Bonvoy or Honors mold, and Vrbo, which lives inside Expedia Group and shares One Key. The airlines: Delta, whose points business is the largest in travel, and United, which collects roughly $3.2 billion a year from Chase for MileagePlus. The marketplaces all charge roughly double the hotel take rate and control none of their supply, because a host or a hotel can delist tomorrow. A Hilton franchisee is in a contract measured in decades, and the airlines own their metal outright.

The travel card is the layer that connects all of it, and it is a partnership business, not a competition. The issuers pay the programs for their currency: Amex has been Hilton’s exclusive US issuer since January 1, 2018 and pre-purchased $1.0 billion of Honors points for cash in April 2020; Marriott just re-signed both Chase and Amex at the disclosed 26% royalty; Delta collects $8.2 billion a year from Amex, projected at $9 billion for 2026 on the way to a stated $10 billion target. The issuer’s side of the trade is the annual card fees, the discount revenue on billed business, and the interest on Card Member loans. The program’s side is remuneration for points and a customer the brand did not have to buy. Delta is approximately 13% of Amex’s worldwide billed business and 21% of its Card Member loans, which is what a travel card partnership looks like at its ceiling.

The Card Money

The August 3 disclosure was narrower than the book, and the distinction matters. The $30M for 2026 and the $100M to $125M by 2028 are the incremental fees from the newly signed Chase and Amex agreements alone, on top of a book that already existed. What was genuinely new on August 3 was the royalty rate, 26%, a rate Marriott had not published before.

The money is large enough that Marriott’s owners organized over it. The March letter from 51 owners representing nearly 1,000 hotels asked for a share of the card economics and revised redemption reimbursement; the rebate program Marriott announced on August 3 is the response. A fee line does not generate an owners’ campaign at $125 million. It will at a billion.

Hilton’s disclosure does not permit any of this math. The Q2 2026 10-Q attributes a $34M quarterly and $42M half-year licensing increase to co-branded credit card arrangements, Hilton Grand Vacations, and branded residential fees, combined and unseparated. There is no disclosed term or expiry on the Amex agreement. Amex’s financial disclosures name Hilton as a partner and quantify only Delta. Hilton’s Q2 2026 earnings call did not mention Amex once.

Points as the demand channel

The loyalty program shows up on the balance sheet before it shows up anywhere else. Hilton carries two separate loyalty-related liabilities, and they are different items.

The clearest public marks on what these programs are worth as assets came from the pandemic. Between June 2020 and March 2021, the three US legacy carriers raised $25.8 billion against their loyalty programs: $10.0 billion by American against AAdvantage, $9.0 billion by Delta against SkyMiles, and $6.8 billion by United against MileagePlus, with United’s financing valuing the program at $21.9 billion, 12 times its 2019 EBITDA. Hilton pre-sold $1.0 billion of Honors points to American Express for cash in April 2020. Third-party estimates published in 2026 put SkyMiles at $31.7 billion, AAdvantage at $26.7 billion, and MileagePlus at $25.3 billion; those are appraisals, not transactions.

What the program does to occupancy is disclosed by exactly one operator in the peer set.

A room booked through an online travel agency carries a commission to that agency. A member booking through the brand’s own channel does not, and the difference lands in the owner’s margin. Hilton makes no comparable disclosure of member room-night share; the IHG figures above are a peer proxy.

The membership counts are unaudited marketing disclosures with no stated activity threshold, and they are not defined consistently across companies. A member who enrolled once and never returned counts the same as a weekly guest. IHG is the only operator in the set that discloses what share of room nights members actually book.

Unit growth is the whole premium

Membership density and monetization are different measures, and on monetization Hilton trails.

The inputs are not perfectly matched. Occupancy and room revenue metrics are reported on a comparable-hotel, currency-neutral basis while room counts are total system, and Marriott’s count includes timeshare and residences while Hilton’s excludes Hilton Grand Vacations. Both mismatches favor Hilton’s figure, so Marriott’s advantage here is a floor, not a ceiling.

Net unit growth is gross room openings less exits, as a percentage of the existing system. Hilton guides to 6% to 7% for 2026. Marriott has guided toward the low end of 4.5% to 5%. At the midpoints, 6.5% adds roughly 90,000 rooms to Hilton’s base in a year and 4.75% would add about 66,000. Signed rooms open years after signing, so the guidance line is contractually forward-looking.

Valuation

Three conditionals, with no rating and no price target attached to any of them. If Hilton holds 6% to 7% net unit growth alongside mid-single-digit fee-per-room growth, fees compound near 10% and 21x against Marriott’s 18x is defensible; that is paying about 16% more for about 37% more unit growth. If net unit growth converges toward Marriott’s 4.5% to 5%, the differential funding the premium is gone and the multiple should sit at Marriott’s, near 18x, roughly 14% below where the enterprise value trades today. If the loyalty channel weakens, meaning member room-night share erodes or Amex renews on worse terms, Hilton should trade below Marriott, because Marriott has two issuers competing for its portfolio and Hilton has one with no disclosed expiry.

Where today’s enterprise value sits between those cases is a two-point interpolation between the first and second. It is not a market-implied probability.

Is Hilton #1?

The sector scorecard, from the numbers above.

The hypothesis holds on the inputs that compound. Hilton has the densest membership base, the fastest guided system growth, and the only brand engine in the group that has never bought its growth. Those are the three lines that decide what the company earns in 2030. Marriott leads on what the system monetizes today, fees per room night and take rate, and on disclosure, where its card book, royalty rate, and growth are public while Hilton’s are bundled into a single undisaggregated caption. The market has already graded the group this way: Hilton carries the highest multiple in the sector, which is both the strongest endorsement of the hypothesis and the cost of acting on it.

What could go wrong

One. A broad travel contraction. I do not envision one hitting while this research is relevant; this is a bull market and the hotels are filling. If one comes, travel takes an outsized share of the hit, but these companies now run on something closer to a subscription model, with card partnerships collecting annual fees and issuer payments that do not reset with nightly demand, so a downturn should land on them more softly than the old ones did.

Two. Single-issuer concentration. Hilton’s Amex exclusivity dates to a 2017 negotiation with no disclosed term, struck before any public benchmark existed for what these contracts are worth. Marriott renegotiated with two issuers bidding. Hilton, whenever it renegotiates, has one.

Three. Owner economics. The card money is now big enough that owners are organizing over it: 51 Marriott owners representing nearly 1,000 hotels asked in writing for a share, and Marriott answered with a rebate program. Marriott also cut global loyalty charge-out rates roughly 5%, and Hilton cut loyalty fees and launched Hilton Rise, together worth 75 to 100 basis points of owner margin by Nassetta’s own estimate. Read generously, shared operating leverage. Read skeptically, the price of keeping the unit growth algorithm alive, paid directly out of the fee stream the premium capitalizes.

Four. Net unit growth deceleration. Guidance is 6% to 7%; the premium case in the valuation section rests on it holding.

Five. Interchange regulation. The Visa and Mastercard settlement preliminarily approved June 9, 2026 and the pending Credit Card Competition Act both target merchant interchange, not co-brand royalties. Transmission to Hilton runs through issuer reward budgets, indirect and slow.

What would change my mind

Hilton disclosing member room-night penetration comparable to IHG’s 67%, in either direction. Hilton separating its card economics from the bundled caption, which would let the book be sized against Marriott’s $716M for the first time. An 8-K announcing a renegotiated Amex agreement with disclosed economics. Net unit growth guidance cut below 6%. Or Marriott’s $100M to $125M landing early or larger, which would say hotel card royalties are repricing across the industry and Hilton’s undisclosed 2017-vintage deal is stale.

Why Hilton is My Choice

I think the argument in the hotel space boils down to two names: Marriott and Hilton. One can make an easy argument that Marriott is in the driver’s seat today, but I’d wager that Hilton is the better bet on what will be this sector’s top dawg by 2030.

If what you want is this year’s earnings, Marriott is going to be the better machine: more fees per room night, a higher take rate, faster fee growth this year, and a freshly repriced card book with two issuers just re-signed, all at a cheaper multiple.

What Hilton sells, as a legacy brand, is the future. The system is adding rooms more than 33% faster on a base 76% the size, and because signed rooms open years after signing, that gap is contracted, not forecast. The demand engine behind it is the densest in the sector, 188 members per room, and the flywheel those members drive is the business itself: members book direct, direct bookings improve owner economics, and better owner economics mean more owners signing up with more buildings. The brand engine has never needed an acquisition to grow, while Marriott needed Starwood. And the stale Amex contract, which the risk list counts against Hilton, cuts the other way too. Marriott just published what renegotiating a hotel card is worth, a 26% royalty and $100M to $125M a year on top of the old book, and Hilton is the one holding a deal that has never been publicly repriced. That is an option as much as it is a risk.

The price of the bet is the 16% premium. If net unit growth converges to Marriott’s, the multiple math above takes roughly 14% out of the enterprise value, so the compounding has to keep outrunning what is already paid for. The sector sold its buildings and kept the members, and Hilton kept more members per room than anyone while signing rooms faster than everyone. Growing faster than Marriott, not much smaller, more room to run. That is why Hilton is my choice.

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Suggested Citation: Rettke, Sterling. “Best in Class: What Hotel Name is Worth Checking Into?” sterlingrettke.com, August 17, 2026.

Disclosure: I do not currently hold a position in $HLT or in any of the comparison companies discussed ($MAR, $IHG, $H, $WH, $CHH, $HST, $PK, $AXP, $JPM, $DAL, $UAL, $AAL, $ABNB, $BKNG, $EXPE). This piece is for informational and educational purposes only and is not investment advice. It contains no buy, sell, or hold recommendation and no price target.