Managing Marriott's Market Muscle: One-On-One With Amy McPherson

Amy McPherson, Marriott International executive vice president of sales & marketing and a 20-year veteran of the chain, this month sat down with Business Travel News senior editor Jay Boehmer to discuss the current climate for corporate hotel buyers, advancements in electronic hotel folio use and the ongoing demand market in the U.S. hotel industry.

BTN: You mentioned last year that Marriott would look to limit corporate inventory. Have corporate contracts in the past year comprised a smaller piece of the Marriott pie?

Amy McPherson: Going into this year, the mix is shifting. We wanted to be more strategic and selective about that, but absolute corporate volume we expect to go down, especially since it's last-room availability. Given the demand environments, we wanted to make sure about whom we kept—not only to receive good rates but also so that we were strong partners with them. The people who were with us in the downtimes, we want to take care of in demand times too, and keep their volume in our hotels, but there has been a shift and we expect to continue to see a shift. Salespeople are saying that we have to take care of our best customers, and we're going to do that while being strategic and selective. But the revenue people are saying that we have strong demand, and we want to be sure that we're maximizing our rates. There's definitely a balance. In terms of a percentage of business shifting, it's hard to see the aggregate. Every market is different and every hotel is different. Demand even within a market can be different if you're in Midtown versus Downtown in New York.

BTN: Do you have to prove to revenue people that in the long term it's better to hang on to key accounts, as opposed to taking full advantage of the market upswing?

McPherson: That's the whole value base. You have to look at partnerships in terms of value. If you're looking at value, you don't just look at short-term, and you don't just look at volume, because the biggest isn't necessarily the most valuable. It's more about travel patterns and when they come to stay in hotels, whether they're coming in need times. We look at it in terms of that incremental business.

BTN: Some hotels are turning away groups in favor of transient. Has that mix changed at Marriott?

McPherson: That's more hotel-specific and varies market to market. For example, when you look at the Marriott Marquis in New York, we have strong transient demand. While that hotel's strategy is to move group down some, it's not the case where we don't need group any more. Particularly with convention and resort hotels, we're generally disproportionately larger than our competitors in certain markets, so we still depend heavily on that. Group demand is pretty good and we're still filling up hotels with groups, so we haven't seen so much a significant shift in aggregate group volume. In certain hotels or a market like New York, where transient demand is strong, we have some shift. In terms of how it plays in aggregate, we're not seeing much shift.

BTN: By how much did corporate rates rise this year over last?

McPherson: We've been saying all along that the increases would be in the 7 percent to 9 percent range and it's still preliminary right now. Most of them we lock in August or September. Of course, it depends on the market, but overall that forecast still looks good.

BTN: Do you expect that same trajectory to continue through this year?

McPherson: Yes.

BTN: There has been a lot of talk about dynamic pricing but more in concept than in practice. Are you looking to expand that type of pricing on a more formal basis this year?

McPherson: We're open to doing it but our customers don't want it. They want to know—and they want to be able to tell their boss—I locked in a rate and here's what the rate is. We were quick to do it and we actually have a small program that some companies do want, where we have a floating discount off of our benchmark rate, but it's not widely accepted. They really want to see their spend for the year. We have technology today that audits the rates overnight and if we were to have a floating discount we could move that overnight.

BTN: It could benefit customers. It's more responsive to the market.

McPherson: Absolutely. It's risk sharing.

BTN: Where does loading negotiated rates stand at this point with most of your clients?

McPherson: According to the last time I saw the report, I think only about 10 to 20 percent of customers had confirmed they were done. We're still pretty early in the process. We have the technology to actually do on-demand and to price any time during the year. We can essentially enable on-demand account pricing, but it seems like we're ahead of the industry and corporations to some extent because they're on a budget cycle. Again, we can enable and be much more dynamic and not go through this so cumbersome, time-intensive rate loading, negotiations and the back and forth that comes with it. We would love for that to be a lot easier.

BTN: Marriott last year began transmitting hotel folio data to corporate clients through credit card agreements. Where does that stand and has the program expanded since its launch?

McPherson: From a technology standpoint, something like business-to-business e-folio can help to get to a paperless environment and make companies more efficient. Everybody's looking to have more operational efficiencies, so they're looking at accounting practices and expense reports. Something like that, they love. We launched our e-folio program in April of last year. We started with Marriott, Renaissance, Courtyard and Residence Inn. We've expanded to SpringHill and TownePlace and Fairfield Inn. We have agreements with American Express, MasterCard and Visa. We have more than 100 companies on board and it's moving every day. It's mutually beneficial. It's easier for us. A lot of times, people leave the hotels and they have adjustments to the folio, or they grab something from the mini-bar on the last day. Trying to reconcile that takes a lot of time. The guests hate that because they're trying to figure it out from a company standpoint. It's eliminated a lot of that stress on the system. We have about 400 top accounts and 100 of them are already using it, and I'm being told that people are signing up for that all the time.

BTN: There are groups of buyers trying consortium-type hotel purchasing programs. Have those been effective with Marriott? Do you see collective buying arrangements as legitimate?

McPherson: We haven't experienced it at all. I think it would be hard as a viable model because they don't have control over their buyers. We haven't been asked about it. It may work in other industries. With the bigger companies that are more established, they do have control over travel policies. It's completely different with a consortium.

BTN: Marriott just announced new personalized services for guests, one of which enables all brands to share personal preferences when guests book.

McPherson: We implemented what we call single guest image to get to that. We did that above the property level so that same profile can be transferred between properties and between brands. That same profile transfers whether you stay at a property in New York or a property in Des Moines. Obviously, the technology innovation was huge to enable us to do that.