Interview: Marriott COO Bob McCarthy - Business Travel News

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Interview: Marriott COO Bob McCarthy

October 28, 2013 - 03:50 PM EST

Bob McCarthy

Bob McCarthy

Marriott International COO Bob McCarthy in February will retire after nearly four decades with the company. McCarthy spoke with Business Travel News lodging editor Michael B. Baker to provide an update on the sales team reorganization that Marriott began several years ago, recent meetings product initiatives, the company's global growth opportunities and other topics. Excerpts follow.

How is the sales transformation progressing?

We're still working through all the applications to it. Our takeaway, having talked to customers over the years, is they did not necessarily want to buy from each hotel individually when they're dealing with multiple chains of thousands of hotels. The group planner or the special corporate planner has got competing priorities. They're doing more with less, and they've lost some of their staff. In some cases, they've been outsourced altogether to HelmsBriscoe or similar companies that do group bookings. One thing that is incumbent on all of us in the hotel industry is to be able to sell the way the customer wants to buy. They want better leverage across a system or chain, and they want to have one person, or no more than a couple of people, represent their interests. They'll give you 10 or 15 training programs for the year and say, "Take it back to these locations and give us back your best offers." If they have to deal with 15 different hotel people, it's not very time-effective. We've had some hiccups and we're working through some challenges, but the group customer and transient customer are going to buy from those who make it easier on them. That's going to be one of the biggest changes going forth in our industry. The independent hotel or the chain with 10 hotels is not going to send 10 people to meet with the meeting planner for IBM. It's just not going to be accepted.

What were some of the lessons learned from those hiccups?

The biggest lesson is being able to cover what we call backyard accounts. When you take the proactive sales side, calling on accounts, we're doing an excellent job on the national accounts: national associations, big corporations. We're actually calling on 10 times the number of accounts than we were before. Where we need to focus is on the local markets and having more salespeople in those local communities. On the reactive side, it's working very well with our sales offices around the U.S., where a call will come into a hotel and be sent to a sales office where they have a pod of people who are specialists in that geographic location, and they will try to book the customer or refer the customer. We're going to do almost $300 million in cross-sell this year, which means the customer calls the Bethesda Marriott, and the call is intended to be booked for the Bethesda Marriott space, but Bethesda is booked or the arrival/departure pattern doesn't work or the rates don't work, so we can easily sell other hotels within that geographic area based on what the customer wants to do. We don't just tell the customer, "We're sold out; goodbye." We try to book them, and that's been a very effective part of sales transformation.

What are some of your initiatives on the meetings side?

One is called Red Coat Direct, which will be rolled out fully in the United States in another quarter or so. In the meeting space at Marriott, when you look around, you see somebody in a red coat. If you want to change your break, you want more coffee or the temperature is not right, they would be somewhere in the public space, but they were not always easily reached. Now, through your digital device, we have the ability to contact the people a couple of days before they come to the hotel and say, "Here's the number of [the contact], and you message him/her, and he/she will take care of everything immediately." It's [improved] response times to taking care of problems very quickly—temperature being the one that's most prominent. It's also given us incremental revenue from people adding breaks or other items onto a meal or a break. In the past, we might not have even documented it. We would just be getting the product to them. We're getting extremely good feedback from those meeting planners and customers, and we are the only company at this point doing something like this, which directly impacts the satisfaction on the group space.

The other thing is workspace on demand, which is basically taking unused or under-optimized spaces, whether it be a great room [Marriott's social space lobby design] in a hotel or a small meeting room, and we put it online and make it available in some cases for fees and in other cases for free. You can book a space in a great room in one of our hotels, which will give us more food and beverage business, and it will bring the lobby to life. The most obvious relevance is in Courtyard. At Courtyard now, in the lobbies, you'll see three or so work stations with TVs and meeting space, and you'll see people having meetings or interviews in there. Before, we did not have space that was conducive to that.

Is the Asia/Pacific region still the hot spot for Marriott's hotel development?

Growth's a little softer, moderated right now, partly because of government practices and a cutback of expenses throughout the Chinese government as they've had new leaders come in. Long-term, Asia is one of the biggest growth opportunities in the world, and our brand is well-respected there. We have some of the most beautiful Ritz-Carltons that you'll see anywhere, and we're building great brands in Asia and great customer loyalty focusing strongly on our Marriott Rewards program. Over time, it will be one of the biggest markets in the world. It's certainly the largest population in the world.

What about Africa?

We're not yet well-distributed in Africa, but it's on our radar screen. There's a large population, economic growth in some parts is very strong, and we have resources on the ground there working on opportunities as we speak.

What are some of the challenges when introducing your brands to these regions?

The biggest thing is to make sure we customize our product and services to those parts of the world, in terms of what they demand. We have a new Fairfield Inn prototype in Brazil and also in India. They're not the same. The room sizes are different, the food and beverage offerings are different and it's tailor-made to what customers in that part of the world want. We have a brand, Moxy, which we announced in Europe with smaller rooms, with Inter Ikea. We think this is going to be a great play in the economy/lower-moderate category in Europe. Conversely, we took another brand, AC, that's primarily in Spain, and we're bringing it to the U.S. We already have about 15 deals. It will be an alternative to Courtyard, more lifestyle, more food and beverage and more urban.

About three or four years ago, we looked at our brand portfolio, where the gaps would be, and we conceived Autograph. We realized there were independent hotels out there that had panache or positioning, an iconic stature to them, but they weren't hooked up into any major systems for demand generation. We now have 50 hotels in Autograph. They're as diverse as the Cosmopolitan in Las Vegas or the Algonquin and Carlton in New York. You don't see Marriott on their signage or anywhere in their collateral. It hooks into the Marriott system, which is one of the top 10 consumer sites in the world, and it speaks again to the cross-sell. When I go into a market like New York, I can look at all the brands and hotels we have in New York, and based on my budget or trip purpose, I can pick where I want to stay. That ranges from the JW Marriott Essex House down to Fairfield Inn.

What's your outlook for 2014?

It's much like this year. The one unknown or caveat is that this governmental shutdown issue, and government retrenchment in the last couple of years, has hurt Washington more than any other place. Outside of that, it's steady growth for the economy, and the market will continue to rebound and recover just like it has in the last couple of years.

How about on the group side?

We feel pretty good about next year in the group side. It's been a little choppier than we like, but we feel fairly positive about it. You can't replace one-to-one contact with teleconference. Many of the associations, the biggest groups in the U.S., continue to want to reward people and celebrate success. We have about 20 hotels that can handle the largest conventions and meetings, four in particular with the Gaylords, and their economics are tightly tied to that group demand, and it's solid.

What effect are you seeing from remote conferencing technology?

Every four or five years, the cycle comes out with another technology. About a year ago, we had TelePresence. We added about six or eight locations, and it did not pay for itself. It just was not economical. Many corporations have this on the lower level, working on the teleconference switch with London or Paris or Dubai, but it does not replace celebrations, rescue missions and communications. It makes the updates better. When we were doing quarterly P&L reviews, if we did not have teleconferencing, we would not be flying to Dubai or having them fly here. We'd be doing it on a conference call. It may evolve as the technology get better, but it's never become what it's been prognosticated to become not only in the last five years but in the last 15 or 20 that we've been talking about it.

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