Marriott continued to cement its position as the market-leading brand house which isn’t going to freak you out at this week’s analysts’ meeting, where it talked about exactly that which analysts like to hear: pipeline.
It plans to add 230,000 to 270,000 net rooms over three years, expanding its portfolio to nearly 1.8 million rooms by year-end 2025. This represents a three-year CAGR for net rooms of 5.0% to 5.5%. In addition, the company’s model assumes global revpar growth at a two-year CAGR of 3% to 6% from 2023 to 2025, after rising 12% to 14% percent this year.
All sober, achievable stuff, which was based on what Tony Capuano, president & CEO, described as being “in more places around the world”. You can’t fault that logic. If you have more hotels you will make money and also; you will have more hotels.
He also talked about the importance of brands and experiences and loyalty. Marriott planned to grow all of them and didn’t delay by announcing the launch of Four Points Express by Sheraton, designed for the midscale segment. One sector observer pointed out to us that anything with ‘Express’ in the title leads one’s thoughts to Westerns, but that could well be a load of old pony.
One place Marriott is not, is the Wild West, and for owners, this is very much the appeal. The company has already signed three deals across the UK and Turkey for midscale joy and has signed letters of intent for future Four Points Express hotels in markets such as Poland, Belgium and the UK.
Conversions, particularly multi-unit conversions, are also a critical piece of the company’s overall growth strategy. In the first six months of 2023, conversions accounted for 63% of room signings, including the MGM Resorts transaction, and 25% excluding MGM. The delight of being at the top of the food chain is that you can feast on those below you and Marriott’s shareholders are expected to reap the meaty rewards.
The presentation was not just a delirious parade of Things To Make Analysts Happy, there was also mention of the group’s technical ambitions (but described in the way analysts can understand it and translate it to their clients).
Peggy Roe, EVP & chief customer officer, talked about creating the most “valuable customer base in the world”, where the more customers love the brands, the more they spend, a strategy Roe described as “love and money”.
“Our goal is to have something for everyone”, she said, with “people and service at the heart of the mission”. And for owners, that meant harnessing that scale and centring the group’s strategy around Bonvoy. The group’s size was, Roe said, why it had the lowest loyalty charge out rates in the industry. And the group piles it on with credit card fees, something you can only do with volume – and if you have a big US footprint.
Marriott was keen to stay ahead with all the hip words the youth are using, and will, of course, be using AI. Roe said: “According to our data, service is the biggest driver of customer satisfaction. For 96 years we have built our reputation on service and we believe that, in the future, it will be human centred, data driven and tech enabled.
“Customers and owners expect us to lead the way operational experiences and targeted and personalised experience and as we look to enhance the experience for customers we have invested in building our data activation capabilities, moving towards innovating further with AI.
“Data will unlock significant advantage for Marriott and for our industry in the future, in the areas of real-time reporting, targeted marketing, and personalised experiences. Large language models and AI will bring more efficiencies to press where we can leverage data and rapid generation of ideas of our brands, customers and hotels.”
The group created an AI incubator earlier this year, which allowed it to identify what Roe described as three key areas for the industry: “accelerated content generation, elevated customer experience and augmented intelligence for associates”. The group launched several pilots on the back of those, including a concierge service, trip planning and room design.
“We’re only scratching the service,” said Roe.
So if you’re not Marriott and you don’t have an AI incubator, how do you avoid wanting to throw in the towel and head off down the saloon to hit the moonshine? Marriott is the big dog (apologies to followers of UK politics shuddering at the misuse of that description) and you can’t all be the big dog. There’s just the one. In a big kennel.
The answer is either to sweep past it in size and dog it up yourself – and those of us who follow the sector do ache so for a large merger, so hop to it – or you do what they do in the music industry and play to your niche. Hotels are hard. Getting, say, serviced apartments right takes expertise. As we have seen time and again, boutique hotels do not scale.
The level playing field (again, apologies to UK readers) is technology and that route to market. For some hotels it means joining Marriott. But there is the chance for all voices to be heard if distribution is done correctly. Your bark can be so much bigger than your bite.