Marriott To Focus On Driving Average Daily Rate In 2005
Orlando - Marriott International chairman and CEO J.W. Marriott Jr. this month told more than 600 general managers of the company's full-service hotels gathered here that driving average daily rate was a key 2005 objective. The higher prices would affect 2006 negotiated rates. Increases achieved in 2004 for 2005 rates were insufficient for the large, multi-brand company to meet its earnings projections. Marriott's message is sobering news for travel buyers still absorbing the aggressive rate increases Marriott and other hotel companies negotiated for 2005.
Marriott also used the meeting to unveil a series of improvements in technology and guest room décor intended to give its core Marriott Hotels & Resorts, J.W. Marriott Hotels & Resorts and Renaissance Hotels & Resorts brands more individual and contemporary images. A more distinctive image supposedly will enable them to be more competitive in the crowded upscale and upper upscale lodging categories.
"Since the downturn began in 2001, our margins have been down an average 6 percent. Now that we have regained a degree of pricing power in the rebound, we're going to try to make up for it by driving rate," Marriott told Business Travel News. "The cost of energy, insurance and labor have all increased significantly since 2000. We want to be able to recoup some of those increases."
Business travel bookings rose in 2004 and Marriott expects continued growth in 2005. He expressed confidence in the overall economy, citing strong employment numbers.
"The only dark cloud is energy costs," Marriott said. While the lodging industry is not as vulnerable as the airlines to the high price of fuel, oil needs to be below $40 a barrel for hotels to operate cost-effectively.
Marriott addressed the gathering of general managers in pajamas and a bathrobe to underscore the bedding program the hotel company launched last month. He acknowledged that competitors had rolled out new beds, but said none of their programs were as extensive or implemented in such a short timeframe.
Marriott's effort, which focuses on linen and comforters, rather than new mattresses, will upgrade 628,000 beds in 2,400 hotels across eight brands by year-end. At Marriott, J.W. Marriott and Renaissance hotels, 300-thread count linen, thicker mattress toppers and additional pillows now are the brand standard.
As it plans to dramatically update the look of its hotels, Marriott unwittingly has become a victim of its own success. Most important to the chain through the 1990s was consistency, so travelers basically knew what to expect when they checked into a Marriott brand hotel anywhere in the world.
That predictability eventually had a downside, according to Amy McPherson, Marriott executive vice president of sales and marketing.
"Too often, business travelers tell us they like Marriott, but they don't love us," McPherson said. "Travelers are more sophisticated today. Generation X travelers especially indicate they're looking for a hotel to be distinctive in some way. With the competition out there increasingly stiff, we needed to overhaul our image."
Accordingly, room décor has been updated to appear more stylish and contemporary. Lighting has been improved. Data ports have been positioned more prominently in the room, including within reach of the bed. This was done in response to many business travelers' preference of being able to work at their laptops while in bed.
"Consumer research told us that guests had upgraded their living environments at home and expected the same, if not greater, sense of style and freshness in the hotels where they stay," according to Mike Jannini, executive vice president of lodging brand management.
Guest expectations of the bathroom have gone up the most, Jannini said. Consequently, Marriott has rolled out curved shower rods, fluffier towels and as a more sophisticated line of bath amenities.
Depending on the location and the percentage of anticipated business travel bookings, some new hotels will include rooms with showers, but no bathtubs.
Following the lead of other hotel companies, Marriott this summer expects to begin testing lobby checkin and checkout kiosks.
In partnership with LG Electronics, Marriott has developed a customized 32-inch flat panel television. Through a proprietary application, business travelers now can connect their laptops to view their e-mail and the Internet on the bigger screen of the television monitor.
Given that many businesspeople like to multi-task, the system employs a windowing technique, so travelers can work on their laptop at the same time they view movies or other programming on another part of the screen.