Marriott's stewardship of 30 brands a juggling act

NEW YORK — Is 30 brands too many? At Marriott International’s 2017 Investor Day, at the New York Marriott Marquis, that question was addressed head-on.

Turns out, it has to be, now that Marriott's portfolio—ever since it's acquisition of Starwood—totals that many brands. 

It's a question Stephanie Linnartz, Marriott International's EVP and global chief commercial officer, posed to Tina Edmundson, Marriott’s global brand officer: Should the company keep all 30 of its hotel brands?

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Edmundson answered with another question: “How many brands are too many?”

While Marriott would not have planned for 30 brands, she acknowledged, the combination “really does work,” and the company has considered every brand and their possibilities. Size, scale and choice matters, she said, especially as the OTAs, Airbnb and Google take up more of the travel space. “Having more hotels, brands and choices makes us more competitive,” she said. “It makes loyalty more compelling. It makes us more attractive to guests, and reduces costs for owners and franchisees.”

Similarly, Marriott is seeking growth in certain segments where different brands can compete with one another. “Delta allows us to put a hotel in a market where we cannot plant another Sheraton flag,” Edmundson said. “Other brands can cover the white space that Marriott did not cover, like Westin or the Luxury Collection or the Tribute Portfolio. Positioned appropriately, brands provide choices for guests.” Combined, the Marriott and Sheraton brands account for 30 percent of Marriott International’s rooms, 17 percent of its units and 29 percent of its total revenue. 

In the new portfolio, Edmundson said, Marriott has kept similar brands together in order to keep them apart. For example, Ritz-Carlton and St. Regis are both luxury brands, but with distinctive elements that attract loyal guests. In some segments, she said, the company will lead with one brand over another based on what kind of presence the brands have has in any given location. 

Soft Brands

Marriott now has four “soft brands” in its portfolio: Design Hotels, the Autograph Collection, the Luxury Collection and the Tribute Portfolio. 

Brian Povinelli, SVP & global brand leader for the Autograph Collection, Tribute Portfolio and Design Hotels (as well as Westin, Le Meridien and Renaissance), noted the appeal of these independent collections for different types of hotel owners. “There are two types of owners and developers,” he said. One kind wants the parent company to do the “heavy lifting” and is happy to work within brand standards. The other, meanwhile, wants a more hands-on approach and does not want the restrictions of standards. This is the type of owner who would appreciate the support of a soft brand, Povinelli said. 

Playa Largo, an Autograph Collection Hotel

While that freedom places a greater responsibility on the owner, he said, it has also attracted an ever-growing number of hoteliers. “There’s no slowdown in the segment,” he said. “It’s proof as to why 30 brands make sense. There’s a solution for everybody.” 

In order to differentiate among these soft brands, Marriott has placed them in tiers with the Luxury Collection at the top. Hotels in this portfolio must provide a full luxury experience for guests and require the kind of investment a branded luxury hotel would have for both physical assets and for service. The Autograph Collection is upper-upscale, but about 10 percent of its hotels would count as luxury, he continued. Beneath that is the Tribute Collection, also in the upper-upscale segment. 

The Luxury Segment

“It’s a great time to be in the luxury space,” Lisa Holladay, VP & global brand leader for Ritz-Carlton, Ritz-Carlton Reserve and St. Regis, said. Over the last five years, Marriott has seen 50 percent growth in its luxury space, which Holladay credits to the rise of overall global wealth and improved connectivity thanks to technology. “It sets us up for travel patterns,” she said. “We see luxury travelers wanting to explore the world.” Information from Marriott Rewards guests has helped the company better understand what’s happening in the luxury space and what customers want, which provides an advantage, Holladay said.

The appeal of a luxury hotel in an attractive destination inspires travel, she added, and the properties serve as a lure for Marriott Rewards members. Marriott’s luxury pipeline has 200 properties and is extending into 20 new countries, including Nepal, Cuba, the Philippines and Iceland. 

While Ritz-Carlton and St. Regis are both legacy luxury brands, Marriott is taking care to let each one cater to its unique niche. Ritz-Carlton finished last year with a RevPAR index of 137, Holladay said, and attracts guests who want “a personalized connection with attentive, anticipatory service.” St. Regis ended last year with a RevPAR index of 122, but has a quarter of the room distribution of Ritz-Carlton. There are plenty of opportunities for both brands to distinguish themselves, she said, and that will be a priority for 2017. 

The Beta-Test Brand

The W Goa is the brand's first hotel in India.

The quirky, ultra-hip W brand thrived under Starwood for the last 20 years, growing first domestically and then internationally. As part of Marriott, Anthony Ingham, VP & global brand leader of W Hotels Worldwide is “confident that W is really going to thrive.” The brand leaders are aware that being just one of 30 brands could dilute W’s “edginess,” but those leaders are already focusing on a “provocative” approach going forward. 

“The resources of Marriott International will allow us to tackle the business challenges we face,” he said. For example, the brand’s North American portfolio is significantly older than its international collection—so the brand will begin pushing the North American hotels to match their international siblings. 

“The commitment to innovation is also very powerful,” Ingham said, and called W “a perfect test ground for innovation” in terms of technology, particularly when it comes to mobile devices. “Using W as test ground for the organization means that it will push the brand further in terms of what’s next, and benefit the whole organization down the track.” 

With a RevPAR index of 116 and a high-tech, innovative culture, Ingham is confident that W will continue to attract investors—especially those who had not previously considered W. Even better, with the backing of 29 other brands, W can be more selective in finding the right owners to fit each hotel. “Every W we do is taking the brand to the next level,” he said. “When it comes to development, we will grow the brand faster and strategically with resources.” 

To that end, W is being very careful about selecting locations. “We look for global, regional cities with business and creative hubs that attracts corporate travelers,” he said, noting that unlike the “more classic luxury brands,” W can go into emerging markets where the tech industries and creative industries are booming. “We do avoid putting hotels in areas that are yet to see that social and creative business hub evolve,” he cautioned. Two models have been working well for the brand—moving into established leisure destinations with larger hotels, or gaining a foothold in “aspirational remote escapes” like the W Maldives or the W Koh Samui in Thailand. “Both models work very well,” he said. “The future for W is super-bright in the organization.” 

The 50th W hotel has opened in Goa, India, bringing the brand to a new country and one property closer to having 75 hotels open and operating by 2020.

Improving Loyalty

With hotel loyalty programs constantly trying to one-up one another and attract new members, Marriott Rewards and the programs the company acquired from Starwood are faring well. Membership in Marriott Rewards—which includes The Ritz-Carlton Rewards and Starwood Preferred Guest—has now surpassed 100 million members.  

Last year, Marriott Rewards members redeemed points for about 6,000 travel experiences on the Experiences Marketplace. “We’re sharing assets as we harmonize benefits,” David Flueck, SVP of loyalty, said, adding that this year and next, the loyalty team will focus on harmonizing the tech elements of booking experiences. “We can’t unify the programs until we get through the  technology.” 

While the incorporation of Starwood’s loyalty members threatened to overwhelm the top-tier Elite membership level, Flueck said, satisfaction of Elite members is up year-over-year, indicating that the most loyal members are still getting the benefits and perks that they want. 

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