Marriott initiatives reflect new economy

National Report–Hotel companies did a lot of assessing in 2009, and Marriott International was no different. There is much happening at Marriott these days, but two key moves emerged at year’s end, one involving the world-renowned Ritz-Carlton brand and the other involving a completely new venture. Both moves were motivated in some way by the economy, the present state of lodging and Marriott’s role in it.

Autograph Collection
Freed from the traditional Marriott brand standards, the company’s newest venture, Autograph Collection, gives independent  hotels a chance to benefit from the deep Marriott system without having to reinvent name, design or identity. The collection will be structured similarly to Hilton’s Waldorf=Astoria collection and Starwood’s Luxury Collection.

“There were a lot of lifestyle hotels built in the six-year run after 9/11,” said Don Semmler, EVP of global brand management and lodging operations for Marriott. “And they all can do pretty well in a strong  market, but as [the economy] turns down, they don’t have the power and strength to endure.”

Semmler said Marriott’s revenue engines, purchasing power and customer base will help these independent hotels survive and prosper in any economy, but the move also is motivated by what the company sees as the current lodging climate.

“We’ve had research for a while that [shows] people were interested [in staying at independent hotels] but needed a navigator,” Semmler said. “And every time we redo that research it keeps coming up.”

The collection will be divided into separate categories that define the type of boutique property—urban edge, iconic, historic, etc. Semmler compared the collection to an iPhone and the categories to the applications. He estimated about 25 to 30 Autograph properties could debut in 2010.

Ritz-Carlton
Ritz-Carlton president and COO Simon Cooper admits 2009 wasn’t the best year to be a luxury brand, but he said the reality isn’t as bad as the perception.

“I’m not unsure of luxury’s future,” he said. “Uncertainty is more around pricing.” He said Ritz-Carlton saw more leisure travelers in 2009 than 2008. Any dropoff came solely from group demand.

“So is luxury dead? No, you’ve got to be affordable and have the value proposition the consumer wants to buy,” he said.

That value proposition has to be there for the company as well, which is why Ritz-Carlton moved under the Marriott operational umbrella. Cooper said there were certain positions and tasks it used to do that no longer make financial sense. 

For example, the company used to have a single head of maintenance and a single head of loss prevention for all 75 properties around the world.

Those are the types of duties that will now be handled by Marriott’s corporate team. Cooper said the move is meant only to make the organization more efficient and will not affect anything guest-facing. Cooper said even though the economy may have pressed these moves, the decisions are permanent because they make sense regardless of the economy.

The structural change Marriott implemented in 2009 helped make this new arrangement possible. The company became decentralized, dividing into four continental regions versus a U.S. and international base. Cooper said it will help the company during an increasingly global marketplace.

“I think that’s the right thing,” Cooper said. “For too long, it was U.S.-based with an international operation as opposed to a global company.”

Edition update
Because of developer Ian Schrager’s involvement, Marriott’s Edition brand intrigued the industry when announced in early 2008. Nearly two years later, the brand still sits in the on-deck circle.

“It was a bad time to announce [the brand],” Semmler said.

There are five Editions under construction and another 10 in the pipeline in major markets, according to Semmler.

“Waikiki will open in early summer, and Istanbul shortly after, and Barcelona in early 2011,” he said.

The others under construction include Mexico City and Bangkok—which will be a combination of Edition and Ritz-Carlton residential units, and it will be the tallest building in the city if it stays on course.

The brand’s near-term growth further illustrates Marriott’s structural changes, as it is almost exclusively international.

Other brands
Courtyard by Marriott is in a different situation, with updates being the focus over growth. At press time, there were 79 properties that had renovated and upgraded to the new “Courtyard refreshing business” lobby and public space design concept. There should be 240 more completed in 2010, according to Liam Brown, COO for the Americas at Marriott.

“This concept had been tremendously well received by our guests,” Brown said.

Semmler said Courtyards with the new lobby have experienced a four- to seven-point revenue per available room jump.

Fairfield Inns is another brand spreading its wings outside the U.S. At the end of 2009, a deal was announced to open 36 Fairfield Inns in various cities throughout Mexico during a 10-year period.

Overall, Marriott seems content with its brands heading into 2010 and is pursuing ways to capitalize on them.

“Our focus in 2010, which we anticipate may still pose some challenges, continues to be the pursuit of optimizing the guest experience in each of our brands, seeking opportunities to drive top-line revenues and to manage costs,” Brown said.

http://www.hotelworldnetwork.com/brand-updates/marriott-initiatives-reflect-new-economy