Major hotel chains disclose more than $11bn in outstanding points liability. The chains want those points to devalue. You want them to hold value. Guess who’s winning.
The Number Hiding In The 10-Ks
Marriott’s most recent annual report lists roughly $3.99 billion in deferred revenue tied to Bonvoy’s outstanding points liability. Hilton’s figure is approximately $2.91 billion. Wyndham Rewards sits at around $1.5 billion. The other major chains, IHG, Hyatt, Choice, Accor, add several billion more. Total unredeemed hotel points across the big public chains run north of $11 billion and the number grows every quarter.
This is what your loyalty looks like on the other side of the balance sheet: a liability the hotel company is obligated to honor someday, in some form, at some rate. They don’t get to write it off. They do get to change the rate, and thus a hotel loyalty program devaluation is 2026’s destiny.
Points Are A Liability That Devalues By Design
Here’s the structural problem most members miss. Every year a points program operates without raising award chart redemption values in lockstep with nightly rates, the real value of each point in the outstanding liability pool falls. Marriott’s recent shift to dynamic pricing in which a property that cost 50,000 points three years ago now requires 75,000 or 90,000 points at the same cash rate is the mechanism by which $3.99 billion in liability gets quietly converted into $3.2 billion or $2.8 billion of real redemption value, without a single accounting adjustment. Though it’s been harder in the last few years to keep genuine pace with inflation rates for cash stays.
From the hotel’s perspective, this is rational. The liability is real dollars and cents and it’s on the books, but the unit of that liability (the point) is a currency they control. Every devaluation is a balance sheet improvement, and revenue they can recognize when points are redeemed at lower real value, or inflate away over time as dollar inflation erodes what a loyalty night is worth even if the point count didn’t change.
Hyatt has done this less aggressively than Marriott, however, it kicked off the year drawing the first blood. The Hyatt award chart raised award prices for the highest peak redemptions. Hilton has done it aggressively. Wyndham, which capped redemptions at a flat rate on its published award chart for years, has started blending in dynamic pricing on premium properties. There’s no program in this category that isn’t on the devaluation trajectory over a long enough window. Most surprising of the entire segment was that of all major hotel chains, Wyndham had a shockingly high balance.
Liability Is Outpacing Redemptions
With the ever growing pool of points, credit card sign-ups, and bonuses, hotel chain point liabilities are outpacing redemptions. These mega businesses simply won’t allow that. They control the currency, they control the value of those redemptions, and the number of points going into the system. There’s no question that they all want to sell more points to bank partners. And they all want consumers to create further demand for their points. But in a pen stroke, each of these companies can reduce their liability drastically and they will.
What This Means For How You Should Use Points
The correct posture for hotel points is that they are a depreciating asset, just like airline miles. Every quarter you hold them, they lose real value relative to the nightly rate they were nominally equivalent to when you earned them. The time to redeem is as close to earning as the trip you actually want allows. Earn and burn.
Three rules that follow from that. First, earn points for specific trips, not as a store of value. If you’re earning Bonvoy or Hilton points without a trip in mind in the next 12-18 months, you’re sitting in a currency whose issuer has an incentive to devalue it, and they do unpredictably.
Second, when a program announces a category shift or chart change, the window between announcement and effective date is the single best redemption moment in that program’s year. Marriott has historically given 3-6 weeks advance notice. Hilton gave shorter notice in their 2023 changes. Both of these examples make the apocalypse of World of Hyatt points price increases look downright generous.
Last, the transfer partner flexibility matters more than it used to. World of Hyatt transfers in from Bilt at 1:1, from Chase Ultimate Rewards 1:1, and has held the line on Category 1 and 2 properties better than peers. (Don’t tell the angry mob with pitchforks that several categories also decreased for the lowest demand periods.) Amex Membership Rewards transfer to Hilton at 1:2 (worse than it looks, but often bonused at another 10%) and Marriott at 1:1 (similar bonus offers persist with both AMEX and Chase.) The ability to move a points balance from a program that’s devalued to one that hasn’t is an underrated hedge.
The Cash Back Comparison
There’s always the cash back crowd that claim it’s better to take the cash than a devaluing currency. But the math falls apart once you use the actual earning rates these cards advertise.
A more honest comparison, and one that’s harder to dismiss, many hotel co-branded cards earn 5x to 6x points per dollar on everyday spend. Put $50,000 a year on a 6x card and you’re sitting on 300,000 points. At a realistic redemption value of roughly 0.7 to 0.8 cents per point with Marriott Bonvoy at mid-tier properties, that translates to about $2,100 to $2,400 in usable value. That clearly outpaces a flat 2% cash-back card, which would return $1,000 on the same $50,000 in spend.
But that’s only part of the story. Those elevated earn rates typically apply to specific categories (like spend incurred on hotel stays or on-property spending) not across the board. Once you strip it down to non-bonused spend, many of these cards fall back to 2x or even 1x earning. Run that same $50,000 through a non-bonused rate and you’re back in the $700 to $800 range in redemption value, which is where a simple 2% cash-back card starts to look a lot more compelling.
Where cash back credit cards also suffer is in the extra perks they offer. Accelerated status translates to real value for travelers along with free night awards for standard rooms worth more than the value of the annual fee.
Points win when (a) you’re transferring strategically into a program that hasn’t fully devalued, or (b) you’re redeeming at aspirational top-tier properties (St. Regis, Ritz-Carlton, Waldorf-Astoria, Park Hyatt, or luxury all-inclusive properties) where cash prices are anomalously high relative to points requirements. Both are getting harder to find every year.
If you’re earning points on your hotel spend and general spend without a specific redemption thesis, you’re likely leaving money on the table versus a high-earn cash-back stack. Hilton’s free annual night certificates remain a standout exception, the math on Hilton Honors Aspire’s free night certificate is legitimately strong. But it’s an exception, not a rule.
Why The Chains Don’t Mind You Knowing This
Major hoteliers like Marriott, IHG, and Hilton have intentional plans to devalue their currencies. They also surmise that a slim minority of members do the math this coldly. The vast majority casually earn, hold, and hope, and the earn-and-hold behavior is exactly what makes the liability manageable, because time erodes point value and many members never redeem at all (breakage rates on hotel points run 15-30% industry-wide.)
The programs don’t want consumers to stop participating. They need you to keep earning and redeeming at a rate where the liability-to-revenue ratio stays healthy. Your individual rational move is to redeem fast. The aggregate math works for the hotel either way.
The Bottom Line
The larger the liability column, the more likely further devaluations will occur. It’s too easy for these brands to make significant changes and improve their balance sheet without investment, time, or penalty. They can’t reduce the liabilities too fast by ridding programs of all of their value, but $11.6bn cumulatively is among the highest in history for point liabilities. Hyatt has led the way with significant increases while still remaining at the head of the pack, but Hilton, IHG, and Marriott will almost certainly follow suit and restore some of Hyatt’s lead. If I’m right, it’s not good for points holders, and it’s my prediction that 2026 becomes a year of significant devaluation.
What do you think?
Yup. Kyle, these unregulated pseudo-currencies are completely controlled by these corporations; the values, redemption rates, even access to ‘your’ points can change on a whim, with limited protection or recourse for consumers. We really do need some guardrails here, if our elected representatives are ever willing to actually do something for their constituents instead of just accepting donations from industry super-PACs…
No. Keep the elected representatives out of the point game. There’s still tremendous value in it and it’s meant to be a purely optional, buyer beware, market.
Accor haven’t devalued in about twenty years, and they’ve got less than half a billion Euros in outstanding points – that’s barely one month’s worth of turnover. Why would a devaluation be ‘inevitable’ in 2026?
I have top status with GHA Discovery and Accor. The former has a specific dollar balance as my reward. The latter has a point to euro ratio they could change. But, such a devaluation is not as easy to hid as other devaluations. I like these programs because of this.
Exactly, that’s what I’m doing as well. Plus status is relatively easy to maintain and usually does yield upgrades etc
My Accor time is almost always long term at Adagio (their serviced apartments). I get a lower earning rate (but same status level) from stays. But I get the two night suite upgrade veach yesr that I can use on positioning nights.
What is the corresponding asset account(s) that the hotel chains book to balance the liability from the accumulated points? Do they really use deferred revenue?
I think this is what happens. You stay a Marriott hotel. The hotel pays Marriott $ for the points you just earned. Marriott debits cash and credits the liability deferred revenue. When you use the points at a hotel, Marriott gives the hotel $. Marriott debits deferred revenue and credits cash. I assume if points are devalued, Marriott must debit deferred revenue to recognize their liability is less. The credit would be to some other gain or revenue account.
TL,DR (yet) – but how many outstanding points will never be used?
how many of those loyalty accounts never accumulate enough points to be used for anything meaningful and just sit there – if Marriott has >200M accounts and points expire if unused after 2 years, how many of those billions of points are on “the books” but then disappear (rinse and repeat)?
TL,DR (yet) – but how many outstanding points will never be used?
how many of those loyalty accounts never accumulate enough points to be used for anything meaningful and just sit there – if Marriott has >200M accounts and points expire if unused after 2 years, how many of those billions of points are on “the books” but then disappear (rinse and repeat)?
It is possible that (say) Marriott will value the liability not for how much they might be liable, but how much they expect to pay net of expiration. So, GHA Discovery has a client earn $500 on a stay (they don’t have points, but real US$). It expires in 1 to 2 years depending on your status and cannot be extended. If they estimate there is a 10% chance it will expire unused, they could record the liability at $500 and then have a gain if it later expires (and no gain/loss if used). Or, they might just record the liability at $450. The gain on expiration is smaller, and there is a loss of $50 if it’s used (but those gain/losses are expected to net to zero if there 10% estimate is good).
As soon as I hit ‘submit,’ I realized I was focused on mechanics. Almost certainly, a hotel with value the liability at net expected outlay, meaning expected expirations are taken into account. The company would like that (lower liability) and it would be consistent with basic accounting valuation. Note that unlike DL and UA, AA still has mileage expiration, meaning they would, everything else being equal, show a lower liability.
Over time the value of your points is diminished twice – firstly by devaluations and secondly by the gradual decline of the hotels themselves, especially in North America. So even it’s the exact same rate as last year, whether it’s points or cash you’ll find your hotel has got worse: dirty, less staff, broken fixtures, no-one answering the phones.
Of course this gradual ensh*ttification applies not only to hotels but to most goods and services supplied by large corporations. Any small competitor with a better offer is soon taken over and its products ground down to the same sh*t.
You unfortunately make a great deal of sense. The one requirement that should be in place is that points and miles should be redeemable at the rate in effect when they were earned. That would ease a lot of the “gotcha” we all get.