Not that kind of budget 

For those of us living in the UK, the concept of a u-turn is not beyond our realms of understanding. Fortunately the hotel sector is not prone to flightiness. Indeed, once it has an idea in mind, it tends to stick with it. Often because it signed a long-term agreement to a service provider which it can’t get out of. Anyone changed the lighting in their rooms via an iPad recently? Thought not.

Meanwhile at Marriott International, there are no u-turns. The company has devoted itself to the idea of luxury and won’t be for turning. And why would it be? In Q1 it reported that luxury ADR was 27% above pre-pandemic rates. Over 55% of incentive management fees were earned at luxury properties.

This time last year CEO Tony Capuano spelled it out: “We see about 10x the fee potential in a luxury hotel that we typically achieve in a select-service hotel. They are more complex projects. They are more capital‐intensive projects. The complexities of getting them financed are not insignificant. But as evidenced by the volume of luxury and upper upscale in our portfolio, the strength of our brands, I think, command pretty effective ability to source debt for those projects.”

And this week we saw more evidence of luxury enthusiasm with the launch of Evrima, the Ritz-Carlton yacht, which set sail from Barcelona. Evrima is from the Greek for ‘discovery’. It is not an amalgam name such as one might find in popular teen vampire series, Twilight.

And now, as we approach the third quarter, the group is investing $100m for the 152-strong Hoteles City’s brand portfolio (City Express, City Express Plus, City Express Suites, City Express Junior, and City Centro), which is found across 75 cities in Mexico and three additional countries in Latin America. 

I know what you’re thinking; ‘THAT’S NOT LUXURY’ and Capuano isn’t saying it is. What he is saying is: “We’re excited to enter a new lodging category – the popular affordable midscale segment where we see significant potential. With City Express by Marriott, we will be providing our customers with more choice through a new, approachable, moderate-priced offering, increasing opportunity for owners and franchisees as well as associates.”

The group wants to take the brand global. On the Q2 call, Capuano said that owners of select‐service hotels were gearing their development organisations back up. So it doesn’t hurt to have a lovely new brand to offer. 

The deal will also push Marriott closer to to becoming the largest hotel company in the Caribbean and Latin America (one of the group’s one of strongest performers as it came out of the pandemic travel restrictions). Regular viewers will recall that Latin America is one of Accor’s favourite locations, where brands such as Ibis lead the way. Despite Accor’s similar swivel to luxury, it remains a force in the lower end of the chain scale, most-notably in Europe, where it dominates.

Marriott International has spent much of the last year talking about how robust the global economy is. Not to the same fervent level as sector Golden Retriever Chris Nassetta, but with certainly with a positive glint. We all know now that things are not so chipper. And that leisure market on which the sector has been leaning is the first to feel the pinch. 

Marriott International is nothing if not pragmatic. Fees be damned, it needs to think of its share price and keeping the pipeline and investors on side. This means looking away from the marble-sodden receptions for a moment and doing what it needs to keep things moving. 

Wyndham, Choice and Accor appear to have the affordable market sewn up, but Marriott will use its market-leading position to ensure that City Express by Marriott is taken seriously by its current and future owners. Strong leadership means giving an organisation what it needs to flourish, personal tastes aside. 

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