Sean O’Neill from Skift interviewed Marriott CEO Anthony Capuano and the whole thing struck me as.. strange?
He incorrectly claims Marriott had the first hotel loyalty program. He talks about resort fees as incredible for customers. And he talks about how much control is necessary over hotel stays, even as they defer more and more to individual owners.
Early on Capuano noted that group business has returned faster than transient business travel, and this wasn’t what was expected early in the pandemic. That’s an important observation: everyone expected large gatherings to come last, because super spreader events would remain a concern. However people are going back to conferences, but they aren’t going back to offices. That’s not out of fear of Covid (travel and dining out have recovered, while major city office occupancy has not).
When employees aren’t in-office, not only don’t you visit clients in their offices to the same degree but consultants don’t do their typical client-site Monday – Thursday work weeks. So those consultants aren’t staying in hotels.
So far, so good. But he incorrectly claims that Marriott had the first hotel loyalty program. Someone probably told him that Marriott has the oldest continuously-run hotel program, and he lost some of the nuance. Holiday Inn was first, but their program was too generous and they shut it down before rebooting it. So in a sense Marriott, tracing back to the Honored Guest program, is the oldest. But it wasn’t first.
- Holiday Inn’s Priority Club launched January 1983
- Marriott Honored Guest began in November 1983
- However Priority Club was closed, and then relaunched, in 1986.
He talks about how resort fees at Marriott are overwhelmingly positive for the customer without acknowledging their deceptive nature or if they were actually positive they could be voluntary.
O’Neill then asks Marriott’s Capuano why they don’t do codeshares with hotels the way airlines do with flights. Hyatt, for instance, effectively does this with MGM resorts and with SLH hotels (and I called it code sharing when the MGM relationship was introduced 9 years ago). Capuano explains,
[W]e all want to own that relationship with the guest. There are lots of intermediaries, lots of disruptors. When we think figuratively about the moat that protects us, it’s the ownership of the stay. And so I think we are hesitant to let somebody participate in that stay.
What a strange answer – Marriott doesn’t ‘codeshare’ with hotels because the most important thing is for Marriott to ‘own the stay’. And yet,
- Marriott does, effectively, codeshare with Design Hotels. A legacy of their Starwood acquisition, where Starwood acquired a stake in the chain and became only partially involved, Marriott acquired the full stake but it continues with only partial participation in Marriott Bonvoy and treating each hotel as independent.
- Other ‘soft brands’ consisting of independent hotels where Marriott doesn’t own the stay experience the way they do with most of their hotels include Autograph Collection, Luxury Collection, and Tribute Portfolio.
- Marriott has degraded the stay experience with cost cuts to breakfast and housekeeping, and seems to let franchises get away with virtually anything until called out publicly – be it passing along property tax expenses as a fee to guests, the hotel fee equivalent of the Human Fund, extra fees for electricity in your room, or fees to settle a bill with your Marriott co-brand credit card.
- They pitch Homes & Villas which is just a service where they take a commission booking homesharing properties listed through other networks like Vacasa and where properties may not even conform to their published standards. (Marriott hotels also undercut Marriott.com pricing, selling their rooms for less through Airbnb.)
Rather than ‘owning the stay experience’ Capuano actually points out that out of “8,100 hotels, we own 20 today.” They have a brand they license to other owners. And they’ve seemed more interested in placating owners and generating short-term fee revenue than protecting the brand.
So why does Marriott still have 30 brands? The true answer is that it means they can sell more contracts to hotels, both having more products to offer at different price points to owners and because those contracts generally only include exclusivity over a given area for that individual brand. More brands = more hotels = more fees.
Capuano though says that he can’t sell brands because he doesn’t own the hotels (yet it happens all the time) and that individual owners would be unhappy leaving Marriott because of the strength of Bonvoy, and they’d have to be let out of contracts. For Bonvoy, by the way, he’s now citing a figure of 170 million members. You’d certainly lop off a large portion by asking about active members that have transacted in the past couple of years.
Here’s the talk, and I did learn that the Moxy Nashville doesn’t just lack desks in rooms, they have rooms with no windows as well – and argue that it’s a selling point.
As I was touring the hotel, the general manager said “Do you want to see any of the vampire rooms?” I said “I’m not sure.” But these are… The Moxy rooms are 140ish square foot rooms. These are rooms with no windows. They were programmed deliberately because the musicians that are out (until) five in the morning, they wanted this little sanctuary to come in.
At least this time he wasn’t arguing China has the model Covid response, that workers are paid too much or that guests have a ‘short-term memory’ and should be more ‘sensitive’ to the needs of owners to earn a buck off of them.