If you’ve ever proclaimed the adage, “you can’t be all things to all people,” Marriott President and CEO Anthony Capuano begs to differ.
Hotel Management caught up with Capuano for a one-on-one interview during the Americas Lodging Investment Summit in Los Angeles in late January, and the company’s development focus for the year ahead was the first topic of conversation.
Product and Purpose
“In some ways, our development strategy is the easiest question to answer,” Capuano said. “I want to capture as much of your travel wallet as possible. The way to do that is to make sure I have the right product everywhere you want to travel for every trip purpose.” For Marriott International, that means having a broad enough portfolio of products, being in every destination travelers want to visit and adding adjacent products wherever the needs present themselves.
From guest forums and guest satisfaction surveys to the “thousands” of guest emails Capuano and his leadership team receive daily, guest feedback is critical, heard and acted upon.
“We heard from our guests that sometimes for very specific trip purposes, a multibedroom luxury home—think generational travel—better fits their needs. That really was the catalyst to launch a platform like Homes and Villas [by Marriott Bonvoy]. We saw a lot of our guests saying, ‘we love your resorts, but every once in a while, we want an experience at sea.’ That was the catalyst to launch the Ritz-Carlton Yacht Collection. We heard from our group customers—'we book four, five, six years at a time and we rotate—and we love the options you offer us.’ But increasingly, we heard [guests wanted] Las Vegas as part of that rotation. The Cosmopolitan is a great hotel, but for the bigger groups that didn't have enough meeting and convention space, that was one of the catalysts for this MGM transaction [announced in July]. Now we have five million square feet of meeting space to offer on that mile-and-a-half strip.”
“[We] will add new platforms, new brands, new products if we think there is a gap,” he continued. “That could be a gap in our brand architecture, that could be a gap in our geographic footprint. Today I feel really good about the breadth of our brand portfolio. Am I actively working on another new brand? No, but we will be opportunistic.” And, given that customers are a driver of strategy, if the company starts to hear from customers that one of those gaps exists, “we will react accordingly.”
Based on shifting consumer preferences and needs affected by COVID, one such identified gap recently was a new-build, midscale development platform in the extended-stay market. Starting 2024 off with a bang, Marriott broke ground on the first StudioRes hotel in Fort Myers, Fla., in January. Development partners expect to open the hotel in a little over a year, and a further 300 potential deals for the brand are under consideration in 150 markets.
What can Marriott bring to this crowded market segment? “I think there are lots of brands being launched today that profess to be competing in extended-stay that are just inexpensive, transient hotels,” Capuano said evenly. “One of the significant competitive advantages we bring to the space is a 40-year legacy of leadership in extended-stay. We understand what that customer wants, we understand the operating model, we understand the impact to the [profit and loss] of running a high percentage of extended-stay. We understand the unique, bespoke way you need to go sell to the extended-stay customer and we understand what owners and franchisees are looking for in terms of the business model and the product offering.”
Renovations and Expectations
It's well understood that the post-COVID hospitality landscape is rife with properties in need of a refresh. Setting new projects aside for a moment, we asked which Marriott brands are up and coming for renovations and how the company breathes new life into a brand.
“We use some of our formalized process, like QA audits, guest satisfaction scores and brand standard audits to make sure we're bringing the portfolios up to the level of expectation that our guests have. One of the terrific byproducts of the pace of recovery is we're seeing more and more of our hotels that perhaps were a bit behind on their renovation schedule getting renovated. One of the most remarkable things we've seen through this recovery is the pricing power that the industry has enjoyed, which is great news in terms of the financial health of the industry. But it comes with a set of heightened expectations from our guests.”
Guests today are paying rates “the likes of which they've never experienced before,” he said, adding that most sophisticated travelers understand supply and demand dynamics. “But if they are paying higher rates than what they've experienced previously, that comes with an expectation that product and service are going to be elevated, as well. A top priority for us is to make sure our hotels are getting renovated at the pace at which they should.”
To meet those expectations on the service and delivery side, Capuano said Marriott is ramping up training, noting that application volume is higher than it's ever been. However, the percentage of applicants who are “eager and energized and have bright, smiley faces and zero experience in hospitality” is higher than Marriott has ever experienced. As a result, Marriott has had to lean in hard on training, using both in-person and online training platforms, providing fundamental hospitality training and refreshing service training “even for seasoned professionals.”
Looking Ahead
Capuano readily acknowledges that Marriott’s success is directly dependent on its owners and franchisees and stressed that a look at the year ahead starts with a "thank you" to them. “Our business model is simple to explain,” he said. “We are a high-growth company, and that growth comes on the shoulders and the balance sheets of our owners and franchisees. It also starts with a recognition. We have to be very cognizant of the fact that the owner community is at a different stage in their recovery from the profound impact of the pandemic. … We've got to be laser-focused on driving top-line revenue and doing everything we can to impact their margins positively. We can never forget the fact that billions and billions of dollars of asset and enterprise value were destroyed by the pandemic, and in many instances that's not fully recovered.”
His advice for owners and franchisees? “Remind yourselves that you are in a cyclical industry. Be encouraged by the resilience that we've seen in travel. Remind yourselves that this psychographic shift we've seen away from the consumption of hard goods towards the consumption of experiences ... is a permanent shift, which is fabulous news for our business and your businesses. And, as you get on more and more solid financial footing, it is critically important to invest in your assets, because that will allow you to unlock the full potential of this extraordinary recovery that we’re all experiencing.”
As for Marriott being all things to all people, Capuano believes the company's leadership has that endeavor well in hand. “We'll continue to try to put the right products globally to make sure people don't feel the need to look outside the Marriott ecosystem for their travel needs.”