BTN Editor Elizabeth West moderates Liberty Mutual’s Michelle DeCosta, ACT’s Jennifer Steinke and Roadmap’s Jeroen van Velzen
Travel News this month inducted Bill Marriott, son of Marriott International
founder J. Willard Marriott, Sr., into the Business Travel Hall of Fame. Prior
to his induction, the current executive chairman of the hotel company's board
spoke with BTN hotel editor Michael B. Baker about his outlook for the industry
and his perspective from more than a half century in the business.
What is the outlook for the hotel industry next year?
We're all somewhat concerned about this fiscal cliff situation, what that really means and how much the taxes are going to go up. What's the government going to do about the deficit and deficit ceiling, and are we going to have a country that continues to be the leader of the world, or are we going to go into second or third place? These questions are weighing Corporate America as to how they invest their dollars and whether they invest or not. You can't bring your money back from overseas without paying a huge tax on it. Companies are sitting on a lot of money overseas they'd like to invest in America, but as long as they have to pay a big tax to bring it back, they're not doing it. These are the concerns we have about the economy. We see housing picking up, which is good, and employment will pick up as housing picks up. We're seeing manufacturing improve in China, and they're feeling better about their economy. 2013 is going to be pretty good. It's going to be probably about the same as this year in terms of GDP growth. Lack of supply in the United States is going to be a big driver of revenue per available room night in this country. Very few hotels are being built, and occupancies are back where they were in 2007. They're not quite back, but they're close. There's been a growth in cost. We're paying more for housekeepers today than in 2007, and more for everything else, so margins are going to be a little tighter than 2007 but we're looking to come back pretty good in 2013.
How about the long-term?
There's going to be a lot more travel and a lot more international travel. You see a tremendous number of travelers coming out of China, more out of India and Brazil and developing countries with a developing middle class who want to travel and want to travel the world. The international travel scene is going to explode, and the efforts we're making in the United States to attract global travel are extremely important. The efforts to grow world travel is such a wonderful thing for people to visit countries and understand their culture and understand more about life in other countries. They broaden their base, increase their education, and they're more tolerant and understanding. They think globally instead of just what's going on in their own backyard.
What’s Marriott's focus in terms of technology right now?
Everybody wants to go mobile, and we're all scrambling to be able to take care of our guests and their mobile devices and give them the kind of service they'd expect. It's a costly but very important thing to do. That's going to be very important. We've got the broadband bandwidth in our hotel. We have to service their technology and give them access to the Internet. For them to check in from their car with their mobile device ... we're working on that. And a lot of other technology that will improve their stay. The most important thing of all is the people on the other end when they get there: there's someone there to greet them and help them with their needs.
What's the path from a single hotel to one of the largest multibrand hotel companies in the world?
We opened our first hotel in Washington at the 14th Street Bridge and called it Twin Bridges. At 365 rooms, it was the largest motor hotel in the world at the time. It was a big deal, for us anyway. It cost $8,000 a room, and we had to borrow $3 million to build it. My father said, "That's too much to borrow, and if that's the case, I'm going to take the company public. I don't want to have $3 million of debt on our books." We had an outdoor drive-up window, we had boys on bicycles to take the guests to their rooms and we had revenue management: We looked in the car on busy nights, and if there was only one person in the car and we were going to fill up, we'd tell them we were full. If there were three or four in the car, we'd get an extra dollar for each one. We had an $8 average room rate back then, and if we added each person, we'd get up to $12 a night for each room, and that was a big deal. We opened our next hotel next to the other bridge in Washington, called Key Bridge, and that one is still there. It's our oldest hotel and is doing well.
We made a lot of innovations along the way. One of our very first decisions in the early '80s was to go to the limited-service brands. We were probably the first big hotel chain to go down-market. Holiday Inn was already out there with motels, but they didn't have any big city convention hotels. In the early '80s we had a lot of big city convention hotels, and we said, "We can't continue to build these hotels. There are not enough markets for them all. What are we going to do to build the business?" We decided that we’d attempt to build a 150-room motel, basically, and we named it Courtyard. We said it was going to be no frills: no room service and no bellmen. We did research and asked our customers what they wanted. They said, "A very nice room at a low price." I told our people, "We didn't need a million dollars to find that out. We gave them that!"
As we went along, we started Residence Inn, Fairfield Inn, SpringHill Suites and TownePlace Suites. Then we acquired Renaissance and Ritz-Carlton, so the number of brands continues to grow. As we got going in the late '80s, we decided we'd better do something to continue to build brand loyalty, so we put in our Marriott Rewards program, which I think was the first hotel loyalty program. One of my competitors called me up and said, "You're crazy. I'm spending my money on advertising. Nobody wants to be in a loyalty program for hotels." Now that company is spending as much money on their loyalty program as we are on ours. It's been a lot of fun and a good ride.
We're continuing to grow our brands as well. We're adding in the Edition brand, with about six hotels under construction, and we just acquired Gaylord, so we're continuing to move ahead. We're building the tallest hotel in the world in Dubai.
Even though you passed on the CEO torch a few years ago to Arne Sorenson, how involved do you remain in Marriott's daily operations?
I'm still day-to-day. I visited over 200 hotels this year. I've been to China. I've been to Europe. I've been to the Caribbean and Latin America, and I love what I do. I've got a great CEO in Arne Sorenson. He’s doing all the work, and every now and then, I peek over his shoulder and offer a word of advice or two, and he’s very receptive to it, for which I'm very grateful.
How have corporate travel needs changed over time?
They still want a nice room at a low price. We spent a lot of time building big desks in our rooms and the workspace, and now they don't need a lot of workspace, so we're figuring out a way to redesign our rooms to make them more comfortable for people who bring three or four electronic devices with them. That's one of the big changes. The other: In the lobbies in our full-service hotels, the customer wants to get something to eat, they want to use their computer and visit with their friends and do business, so we're redesigning our lobbies to make them more customer-friendly and user-friendly.
Marriott International today celebrated its 75th anniversary, as chairman and CEO J.W. Marriott Jr....
Marriott International Bolstering European Presence By Bruce Serlen In a briefing late last month in...