The hotel sector is coming back slowly in the United States, led by business travelers, but the majority of the growth in the full-service hotel market is overseas, said Bill Marriott, chairman and chief cexecutive officer, Marriott International at ULI’s 2010 Fall Meeting. Marriott described how his firm is adapting to changing market conditions and shared his views on U.S. policies affecting the business community. Here’s a summary of the key topics he touched on.
New product strategies: Marriott described the “Autograph Collection” – independent hotels that Marriott has been adding to its family since 2009, most recently with the Algonquin Hotel in New York City. “It’s a great way for the owners of these properties to increase their occupancy and lower their costs,” he said. The occupancy boost comes via the Marriott Rewards program, which accounts for 50% of Marriott’s customer traffic overall, delivered 37% of the traffic for a recent Autograph property during its first month in the program. The cost reduction comes via the Marriott online reservation system, which eliminates the need for these hotels to contract with other Internet services. The firm also recently announced a new line of “Edition” hotels – boutique properties, with the first opening in Waikiki, Hawaii this week. The next Edition opens in Istanbul in 2011, to be followed by Barcelona, Bangkok, Mexico City and Miami.
New Uses of Space: Marriott said he’s pulling the restaurants into the lobbies of some hotels. “The lobby becomes more of an action place. People can come in, set up their laptop, get something to eat.” New room designs are also being tested. “Our number one job is to strengthen our brand, “ he said.
Sustainable Development: “Our customers want green,” said Marriott. “They want to know that the management of the hotel cares about the environment.” He mentioned a LEED Gold certified hotel recently opened near Baltimore-Washington International Airport, and a program to educate Courtyard owners how to build LEED-certified facilities for that brand, too. “It’s becoming a core competency at Marriott to do sustainable development.”
Growth in Overseas Markets: Marriott has more than 50 hotels in China, and will double that presence in the next five years, said Marriott. In India, the firm is building properties with the Fairfield Inn brand. “You think we’ve got it bad in the United States?” he asked. “It takes 80 approvals to get a hotel built in India. But we work with local partners who know how to get things done, and that’s key.” In Europe, which has more unbranded hotels, Marriott is seeing a lot of interest in the Autograph Collection product line. However, the firm also announced this month that it’s buying an equity share in AC Hotels, a chain with 90 properties in Spain, Portugal and Italy.
Obstacles to Foreign Travel to the U.S.: “The size of the hotel industry worldwide has grown 7% since 2000,” Marriott said, “but the U.S. hasn’t grown our market share since 2000.” He attributed this partly to the difficulties faced by foreigners who want a Visa to visit the U.S. – a face-to-face interview is required. “In Brazil, a country about as big as the United States, there are only four places where you can get interviewed,” he said. “If you have to drive your family for six hours just to get interviewed, and there’s a chance that one of you might get turned down, some people may decide it’s just not worth it.” Marriott said his firm is in discussions with the State Department and Department of Homeland Security to see what can be done to make the Visa process more convenient.
Politics and Policy: “There’s too much money sitting on the sidelines, and it’s mostly due to uncertainty,” said Marriott. “The federal deficit is hanging over us like a dark cloud. And there’s uncertainty about the costs of health care,” he said, and noted what he sees as an “anti-business climate in the White House. You don’t grow jobs by raising taxes,” he said. “If you raise taxes on capital gains or dividends, that stifles investment.”
Developing and Retaining Talented Employees: “Fifty percent of our General Managers (GM) started as hourly employees, and our GMs have been with Marriott an average of 25 years,” said Marriott, with many working their way up from positions in building services or front desk staff. “I think the most important thing a leader can do is listen,” he added. “Ninety percent of the great ideas don’t come from my office, but from management and the rank and file. So it’s important for a good leader to really listen, ask follow-up questions and explore the ideas you hear from your employees.”