Marriott's Capuano discusses:
- Shifts in corporate traveler behavior
- "Ongoing" sales organization restructuring
- Improving relationships with travel management companies
Marriott International last week detailed full-year 2024 growth numbers that included a record number of gross openings, 123,000 total rooms, pushing total new rooms in its portfolio up 6.8 percent year over year. That growth trajectory is continuing with a record 1,200 deals signed in 2024, representing 162,000 total rooms, and more than 577,000 rooms in Marriott's pipeline at the end of 2024. Marriott president and CEO Anthony Capuano spoke with BTN executive editor Michael B. Baker during the recent Americas Lodging and Investment Summit in Los Angeles about the breadth of Marriott's development plans as well as the company's work in sustainability, its relationships with travel management companies and the impact of a recently announced restructuring. An edited transcript follows.
BTN: What are some of the highlights from Marriott's development over the past year?
Anthony Capuano: Our strategy broadly is to ensure that we have the right product offer everywhere they need to travel for every trip purpose. In all the wonderful news of our growth release, what was most exciting to me was that we saw extraordinary growth trajectory in every geography where we operate and across every quality tier where we operate. The implications for the business traveler are exactly that. Sometimes they're planning a board retreat and need a luxury destination. We have the industry's largest portfolio and pipeline of luxury. Other times, it's a single business traveler arriving at midnight and leaving at 5 a.m. All they need is a comfy bed, hot shower and good Wi-Fi. We have large and growing midscale portfolio that can accommodate those needs as well.
BTN: What are some of the trends you are seeing in corporate traveler behavior?
Capuano: A couple trends we see from earlier in the recovery from the pandemic that seem to have some legs. One, people are taking fewer trips but longer in duration. There were people who used to take a one-day trip here and there. Maybe they're being a little thoughtful. They're still going to be gone in three nights, but they do it in one trip, so they're only buying one roundtrip airline ticket. Then, this idea of blended trip purpose: If you go to the main ballroom tonight, and you ask for a show of hands on: How many tacked on the weekend at the start of this conference or are going to stay through the weekend? My guess is that two-thirds of the hands would go up. That seems to be a permanent change, and that's great for business as well.
BTN: What about the increase in dispersed workforces?
Capuano: That's part of the reason you've seen such a big pickup in group. Even if you're slowing or pulling back a little on conventional business travel, the constituents they serve need to be in-person either with their colleagues or their customers. So, they're accomplishing that same objective by maybe doing more group meetings. I expect to see growth in every segment.
BTN: With the restructuring announced late last year, will there be any impact to sales?
Capuano: Sales is in some ways still an ongoing exercise. The entirety of the exercise was not simply a cost-cutting exercise. It was a recognition that we were in 70 more countries than we were the last time we looked at the organizational structure. We had 4,100 hotels the last time we evaluated our org efficiency. Now we have over 9,000. So, we really just looked and said, "Are we empowering our leaders in the field so that we can streamline decision-making? Are we optimally organized? Are we focused on the right [key performance indicators]?" That was really the driver of the work. There were some modifications to sales, but some of that evaluation is still ongoing.
BTN: You've recently launched an SME program within Bonvoy. What is the role of Bonvoy in business travel?
Capuano: Bonvoy has so many facets. For sure, it started as a transactional platform for our guests, for them to earn points and redeem those points. It has evolved dramatically since then. Of course, all that functionality still exists, but it's a portal to educate our loyal members on the breadth of the hotel portfolio. It's a portal to educate them on all the areas of alternative accommodations where we're planting a flag, and it's a portal to help them understand the access they have to this rich set of experiences that are a benefit of membership.
BTN: Is it in some sense replacing the function of travel management companies for those smaller programs that might not be managed?
Capuano: Particularly, if you reach the highest tier of Ambassador, you have a dedicated ambassador. You know if your ambassador is Melissa, you have her mobile number, you call her 24/7 and she will help you navigate this amazing portfolio of 9,000-plus hotels.
BTN: But are TMCs still an important part of your corporate business strategy?
Capuano: Absolutely. Whether it's the TMCs, whether it's the [online travel agency], I know there was a period in our history where there was a fair amount of friction in those relationships. To the credit of all involved, the nature of the discussions has become much more transparent. Each side has some threshold issues that they feel strongly about, and there's been no shyness about sharing those threshold issues. I would submit to you that our relationship with the TMCs and the OTAs are probably in as good of shape as they ever have been.
BTN: What's your strategy for managing distribution costs?
Capuano: A few ways, and this goes to my earlier comment about the transparency we have. We encourage all of our guests to book direct. We suggest to them that it's the most efficient way to access the portfolio in our negotiations with the OTAs, we have secured that ability to offer member-only rates. But the reality is, there are guests who either because they are not as sophisticated or they're very sophisticated and want to come in from a different direction, through a TMC or an OTA. Those are really valuable sources of demand for us. They are the minority of our demand. As the percentage of book-direct rises, that has a really powerful impact on the overall guest acquisition costs, and within those relationships, we leverage the industry-leading scale that we enjoy, so that we can pass on to our owners among the best if not the best rates in the industry
BTN: Is sustainability still a big part of winning corporate business?
Capuano: Absolutely, for a few reasons. In some cases, they themselves have set ambitious goals and they get credit for working with companies that are on the sustainability journey. Some of it is a business imperative. A decade ago, if you asked me that question, I would have said every year there might be half a dozen group contracts where the group says, "I want you to attach to the contract proposal a summary of the sustainability goals we are able to set and your progress against those goals." Today, I would tell you there are a half of dozen that don't ask that. So, it's just sort of table stakes.
The constituents we serve, we're all in a war for talent, particularly when we're looking to hire next-generation talent, they are trying to align themselves with the company whose values match their own. For sustainability, not just flowery language but real stretch goals and progress against those goals is often a gating factor as they consider employers. The same is true with our owner and franchisee community and our guests as well.
BTN: Is it still a challenge to have sustainability standards in the lodging industry?
Capuano: There are areas, like elimination of single-use plastics, water conservation and elimination of food waste, where I'm not sure there has to be a uniform system of accounts. You can just say, "We've eliminated food waste by 46 percent. We've reduced water consumption by X percentage, or by virtue of going to bulk amenities, we've eliminated 500 million single-use plastics ending up in the landfill."
BTN: We've seen some companies backing away from their diversity, equity and inclusion policies. Is Marriott making any changes in this area?
Capuano: For us, the company was founded on the notion of welcoming all and creating opportunity for all. Fifty, 60, 70 years before somebody dreamt up the DEI acronym, those were guiding principles that guided how the company conducted itself. Those will continue to be our guiding principles.
BTN: Where are you deploying AI technology at Marriott?
Capuano: We're running lots of proof of concepts. We're looking at the impact AI can have on the concierge function, which is quite intriguing but fraught with peril. I get these verbatims of how it's going, like AI sent somebody to a restaurant that hasn't been there for three years, so we have to be careful there. Maybe the most interesting piece to me is around trip planning. We have call centers all around the world. I went to Cork, Ireland, and spent a day at our call center, and as part of that day, I put a headset on for a couple of hours and listened. The one call that really stuck out to me was this lovely woman called, and she was planning a multi-generation vacation, four generations of her family. She said, "What I'm really looking for is, we love the beach and want to go to a beach destination. My mother gets carsick, so it needs to be within 20 minutes of the airport. We love Italian and Japanese food, so we want a resort that has that, and because of the size of our family, we're going to need at least four two-bedroom suites." Imagine absent the power of AI that poor agent sitting in Cork, Ireland, trying to navigate 9,000 hotels. Instead, literally, as the woman's talking, it's starting to narrow, and in the blink of an eye, this agent was able to say, "We have a number of hotels and resorts that meet those criteria. Let me walk you through them."
I think this idea of trip planning, particularly as we're in the midst of a huge technology re-platforming of our res system, our property management system and our loyalty platform, there will be more choices available to our guests. Having AI help inform those choices in a really time-efficient way is on lock for us.