USA TODAY International Edition
CEO TALKS ABOUT MARRIOTT’S FUTURE QTHE COMPANY IS NOW THE LARGEST HOTEL COMPANY IN THE WORLD. WHAT DOES THIS MEAN FOR PRICING OF HOTEL ROOMS?
World’s largest hotel company looks at how to integrate Starwood
Now the integration begins.
Marriott International is now the largest hotel company in the world after completing its near $ 14- billion acquisition of Starwood hotels and Resorts Friday, combining two very different brands. The merger brings together Marriott brands such as Ritz Carlton, Courtyard and Residence Inn with Starwood brands including W Hotels, Westin and Sheraton. Members of both loyalty programs now have access to 5,700 hotels and 1.1 million rooms in more than 110 countries.
I caught up with Marriott President/ CEO, Arne Sorenson, to find out what other changes travelers will see. Our interview follows, edited for clarity and length.
Q CONGRATULATIONS
ON COMPLETING THE DEAL. WHAT DOES THIS MEAN FOR THE COMPANY? A: It’s hugely transformative for us. It will make Marriott about 50% bigger overnight both in terms of number of hotels rooms and number of brands. We’re adding 30 new countries to the portfolio as well. It sets us up to double down on our investment in loyalty particularly, and the technology relating to loyalty to make sure we’ve got as vibrant and large an ecosystem of loyal customers as possible.
Q CUSTOMERS
WANT TO KNOW THAT THEIR REWARDS PROGRAMS WILL STAY IN PLACE. A: We think that SPG and Marriott Rewards are the two strongest loyalty programs in the hotel space. Customers will be able to go to a dedicated site and link their accounts if they already have accounts in both programs. Most importantly, they have the ability to redeem points from either program in any hotel in the system. So we’re delivering strong functionality between the two programs. From the moment we announced the deal there was chatter saying “OK, what’s gonna happen to our program? Is Marriott going to make it worse for us at SPG?” So we are very eager to win those customers over and we’re going to be very cautious about making changes. A: Even though we will be the biggest hotel company in the world, we only have about a 15% share in the USA, which is where our share is the biggest. So that gives you a sense that there is still plenty of competition around rates. Having said that, we should be able to drive top- line performance of the hotel through occupancy. Because we should be able to command that much more share of wallet from our loyal guests because the loyalty program is going to have more places to earn points and redeem points. We know that SPG members have stayed in competitors’ hotels in many markets where Starwood Hotels did not exist. So by having those hotels we think we’ll be able to drive incremental share. QYOU WILL COMBINE TWO DIFFERENT CULTURES. WHAT ARE YOUR PLANS FOR GROWTH? A: We’re gonna keep growing everywhere. Our organic growth over the last couple of years has been about 100,000 new rooms each year. Obviously the pace will depend on economic conditions around the world. 2016 has been fairly anemic from an economic perspective, but we’re still proceeding at thepace we did last year. China is trying to shift to more of a consumer economy. We are in the consumer space and so our business is growing faster in China than the Chinese economy is growing generally. Japan, from a travel perspective, is doing great. And, a piece of that is China, too. Japan is a great destination for the Chinese. The new Chinese middle class wants to increase its experience with things outside China and inside.
QWHAT ABOUT THE U. S.?
A: The U. S. consumer is very steady and reasonably strong. I think the U. S. business traveler is cautious. You put those two things together and we end up with pretty modest growth. We’ve looked at same store sales of about plus- 3% year- to- date, which is not very exciting. It could be worse. But we think that reflects what we’ve seen in GDP growth, which is 1%- ish kind of performance in the first two quarters of the year. And that really takes a toll on the way businesses spend for travel. Because if their profits are under pressure, they’re gonna be a bit
more cautious about putting people on the road.
QWHY
DO YOU THINK WE ARE SEEING THIS SLOW GROWTH? A: Growth is anemic. There are uncertainties to be sure. Obviously, there’s a big election uncertainty. I don’t know whether that’s driving corporate decisions actively today, but I think you look around the U. S. and you see a number of industries which are under broad pressure. Think about energy. Think about finance. Both have significant pressure on profits. And they’re being a bit more cautious. And then I think you’ve got tech which is relatively stronger and performing fairly well, but generally I think profit growth is fairly anemic.
QWHAT’S
NEXT IN TERMS OF INTEGRATING THESE TWO COMPANIES? A: The two remaining places would be our hotel owners to make sure we’re driving results for them from the get- go. And then technology.
We have dozens of technology tools that are used across the company. And there’s no sense having two sets of emails or two reservation platforms or two accounting report platforms. And so there’s a lot of work to do around technology.
Q YOU HAVE IMPLEMENTED LOTS OF NEW INNOVATIONS AND TECHNOLOGY IN ROOMS AND THE HOTEL PROCESS. WHAT DO CUSTOMERS WANT AND/ OR EXPECT? A: They want intuitive, instant ability to connect with their hotels. And to do that on their devices. That can be about texting messages, about opening doors. It can be about having room service waiting in your room when you arrive. Just back a couple of years ago, you couldn’t call a hotel — let alone text one — unless you were in your guest room and you picked up the phone next to your bed.
Think how unusual that is in the world we live in today in which you can pull up any restaurant or business that you want to visit or talk instantly and get them on the phone.
We’ve been rolling out something we call mobile services. This is a way for you to use our app and texting feature in order to make special requests before you arrive at a hotel, to check in before you arrive and/ or to open your door without ever stopping at the front desk.
I think once you’re in your hotel, you want to be able to connect instantly with that device. If I have a problem in my room, or where can I go for dinner? Or can I extend my stay? Or can I get a burger sent to me at pool side without having to leave my chair? And so all of that is well under way. In some areas we probably have a couple hundred hotels today that offer keyless entry. Bartiromo anchors “Mornings with Maria” on the Fox Business Network weekdays 6- 9 a. m. ET