Marriott's afire
When J Willard Marriott opened his first Hot Shoppe restaurant in downtown Washington DC, he did so just before the Great Depression of the 1930s started to bite. It was perhaps not an auspicious time to start a business, but Marriott bucked the trend, doubling profits every five years up to the Second World War.
Several decades later, JW Marriott Jnr (chairman and chief executive, Marriott International) and his son John W Marriott III (the company's executive vice-president sales and marketing) are once again doing business during an economic slowdown in the USA which, if nothing like as devastating as the Great Depression, is serious enough to cause jitters around the world.
The company recently announced plans to expand as forcefully as ever, with the addition of 35,000 rooms this year and a further 35,000 in 2002. "It's sometimes the best time to grow," says John W Marriott. "When the economy is soft it's less expensive to develop, because land prices and construction costs are lower."
The company is clearly doing something right. The first quarter of 2001 saw the number of Marriott rooms worldwide top 400,000 in 2,200 hotels in 60 countries, and sales during the same period were 11% higher than in 2000 at $4.7b (£3.3b). Sales for the whole of 2000 reached $19.8b (£14b), 12% up on 1999.
Marriott admits that occupancy has slowed a little, particularly in the business side as clients have trimmed budgets, but he's not particularly concerned. "Occupancy had been 80-85%, now we're in the 70s. That's a good 10 points above our competition, so all the hotels are still doing pretty well," he says.
Ed Fuller, president and managing director of Marriott's international lodging operations, adds: "In the lodging business you have to think years ahead of the curve or you'll miss the opportunities. It takes two to three years to build a hotel once the contract is signed. We do not worry about there being too few travellers once the hotel is opened because for every new hotel that opens others become tired and are taken out of the supply."
One of the key protectors against a soft economy is the brand, argues Marriott. "When hotels rebrand from competitor brands to ours, revenue increases on average by 15%, so it's not surprising that in tough times we see more people convert to Marriott brands. Forty per cent of the hotels that joined Marriott since the beginning of 2001 were conversions."
Given Marriott's expansionist aspirations, losing out to Nomura in the bidding for Granada's Le Méridien hotels must have been devastating. Not so. While Marriott admits there was some disappointment, he insists that the deal wasn't so important: "They had some great hotels and we would like to have had some of them as Marriotts but we were a financial buyer more than a strategic buyer."
There will be no shortage of new Marriott-branded hotels in the UK, however, thanks to the activity of Whitbread, Marriott's UK - and largest international - franchisee. Following Whitbread's £600m acquisition of Swallow Hotels in January 2000, the group has sold 12 of the properties and is converting 26.
By the end of the £50m conversion programme, Whitbread will operate 61 hotels under the Marriott, Renaissance and Courtyard brands, a total that will grow following a series of new-builds such as the recently opened 164-bedroom Marriott Liverpool South and a 220-bedroom Marriott in Leicester due to open next year.
There are also plans to expand beyond the UK and raise Marriott's market share outside the USA from its current level of less than 1%. The strategy, says Fuller, is for Marriott's four- and five-star brands to be represented in all major cities and resort destinations. "We will follow this up with the introduction of our mid-priced and extended-stay brands in secondary and tertiary markets." Growth, he adds, is progressing equally throughout Latin America, Europe, Asia, Australia, the Middle East and Africa.
But a brand is only as strong as the people - or Web sites - that sell it. Enter www.marriott.com, which has proved an invaluable sales tool since it was launched four years ago. According to Marriott, the company sold $150m-worth (£106m) of rooms three years ago, $430m (£303m) in 2000 and expects to do more than $800m (£564m) this year via the Web site. "Last week we did our first 10,000 reservations on the Web in one day, which was a milestone. It has been pretty effective," he says.
Sales via the Web site - which apparently receives three million visits a day - still account for only 3% of business, but Marriott expects that to grow to about 10% over the next few years.
About three-quarters of Marriott's Internet bookings come through www.marriott.com, the remainder from specialist sites such as www.travelocity.com, but as the Marriott sales philosophy is to "sell the way the customer wants to buy", the traditional telephone is still necessary.
That, too, has been made more effective through the creation of a central reservation system in the USA designed to maximise cross-sales. Marriott explains: "Calls are transferred to an area reservation office and answered as if on-property. If that property is sold out an alternative is offered. Last year we did more than $500m (£353m) in cross-sales and we do five to 10 times as much as our competitors because we've co-ordinated our efforts. Others might cross-sell from their central booking number but a lot don't do it from property calls because they're busy looking out for their own hotel."
Another element of the Marriott sales system is its loyalty scheme that signed up its 15 millionth member at the end of May. According to Marriott, members of the scheme - they earn Air Miles or points that can be redeemed against a holiday in a Marriott property or merchandise - are twice as likely to stay at a Marriott hotel than other guests, so the company is understandably keen to increase membership.
"In the USA we're rolling out a programme called Rewarding Welcome. When a Marriott Rewards member checks in, the computer gives information about that guest's references so that frequent guests don't have to give the same information every time," says Marriott.
But isn't that the sort of customer service that many organisations in the hospitality industry now offer? Marriott insists his organisation stands out: "Senior management has spent time in operations. It's not just the family thing - the head of domestic operations and Ed Fuller, for example, both came up through operations. From the chairman right the way down we have all worked in the business, and we all have a passion for it."
Marriott timeline
17 September 1900: J Willard Marriott born in Marriott Settlement, Utah.
20 May 1927: J Willard and wife Allie enter business with a nine-seat root beer stand in Washington DC. Hot food later added and name changed to the Hot Shoppe.
19 January 1957: Marriott opens first hotel, the Twin Bridges Marriott Motor hotel in Arlington, Virginia.
21 November 1967: Corporate name changes from Hot Shoppe to Marriott Corporation.
November 1972: JW Marriott Jnr succeeds his father as chief executive officer.
13 August 1985: J Willard Marriott dies, aged 84, at home.
3 October 1985: JW Marriott Jnr named chairman of the board.
4 August 1986: Marriott acquires Saga Corporation, a food service management company. It makes Marriott the largest company in food service management in the USA.
8 October 1993: Marriott completes the split of the company into Marriott International and Host Marriott Corporation.
6 February 1997: William J Shaw named president and chief operating officer of Marriott International. JW Marriott Jnr retains position of chairman and chief executive officer.
31 March 1997: Marriott International acquires Renaissance Hotel Group for $1b (£0.7b), adding Renaissance, Ramada International and New World brands.
2 December 1999: The last Hot Shoppe restaurant closes.
26 April 2000: Marriott International celebrates 2,000 properties worldwide.
Marriott International
Marriott Drive, Washington DC 20058, USA
Tel: 00 1 301 380 7770
Web site:www.marriott.comChairman and chief executive: JW Marriott Jnr
Executive vice-president sales and marketing: John W Marriott III
President and managing director, Marriott International lodging operations: Ed Fuller
Turnover 2000: $19.8b (£13.94b), 12% increase on 1999
Turnover first quarter 2001: $4.7b (£3.31b), 11% increase on first quarter 2000
The family's business
Marriott International has operations in the USA and 60 other countries and territories and is made up of three main businesses:
Marriott Lodging: manages or franchises 2,200 hotels and resorts, of which 300 are outside the USA. Brands include Marriott Hotels, Resorts and Suites; JW Marriott Hotels; Ritz-Carlton; Renaissance Hotels, Resorts and Suites; Courtyard by Marriott; Marriott Executive Apartments; and Ramada International.
Marriott Senior Living: operates 152 senior living communities in the USA.
Marriott Distribution Services: provides food and related products to Marriott operations and external clients.
