Why time’s running out on hotel alarm clocks — and other takeaways from my breakfast conversation with Marriott's leaders
Do hotel guests still need bedside alarm clocks? Probably not, given how many of us use our own smartphones.
Yet just about every major hotel chain still requires an alarm in every room. Now, the pandemic might be changing that.
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Right now, 2,000 developers, lawyers, bankers and hotel executives are meeting in Los Angeles, talking about the future of the industry and trying to close deals over fancy lunches or cocktails.
This is my fourth time attending the massive Americas Lodging Investment Summit. But it's the first time I’ve ever heard talk about small details like alarm clocks.
That’s because the hotel industry has had nearly a decade of unprecedented growth. Now, after the horrors of COVID-19, the industry is trying to find its footing. And the decades-old struggle between the big chains and the thousands of individual hotel owners, developers and investors who actually own the properties is front and center.
Marriott International invited a few members of the media to a breakfast Monday morning with its new CEO, Anthony “Tony” Capuano, and some of his top executives. The discussion covered many topics, including future mergers and acquisitions, converting independent hotels to Marriott and how to provide hot breakfasts.
Liam Brown, group president for the U.S. and Canada, oversees Marriott’s largest market. He spoke about challenges hotel owners have, not just with staffing shortages or a lack of job applicants, but also some wild swings in occupancy.
“You're running 10%, 15%, 20% during the week and running 90% or 100% at the weekend. So those are unique challenges just in terms of staffing and servicing the guests that we have,” Brown said.
Until there is a constant stream of business travelers and group events, some owners are going to struggle.
So Brown sees this as a chance for Marriott to revisit what it does.
“The key thing is we have to be able to figure out how to service our guests at the end of the day. And the vast majority of our owners would agree with us,” he said, noting that it isn’t about cuts but about practical needs, such as the alarm clock. “It’s been a wonderful opportunity to look at some of those things that are historic in nature and have no application in terms of the real life we live in today.”
Marriott is restarting its brand standard audits during the second half of this year but won’t impose any penalties against owners until 2022. It’s a way to get owners back into understanding the needs of guests but being mindful of their depleted balance sheets.
Brown reiterated that it isn’t about cutting, especially when it comes to breakfast.
“It's more about how do we make sure that what we're offering is the best. So when you think about it across our free breakfast brands, how do we simplify the breakfast offering? Breakfast is king across all of our brands,” he said. “How can we do it in a more cost-effective way? And at the end of the day, perhaps even deliver a better product and a better experience?"
Marriott’s big growth area
This conference is all about deal-making. So Capuano, who was until recently the head of Marriott's development team, is very attuned to how those deals have shifted during the pandemic.
His prediction: “If I had to bet on what will be the most used word at this conference, it'll likely be 'conversions.'"
In other words: Hotels that are part of Hilton, Hyatt or InterContinental might jump over to Marriott's 30 brands. But more likely, that long-time independent hotel will join Marriott's Luxury Collection, Autograph Collection or Tribute Portfolio. (Or they might go and join Hilton's Curio Collection — but nobody from the Marriott team was talking about that possibility.)
Marriott is also looking to gain more hotels in its Delta and Four Points brands, added Noah Silverman, Marriott’s global development officer.
“This is really the first cycle since we launched Autograph Collection in 2010, where we have the opportunity to sell our soft brands in a downturn,” Silverman said.
Capuano noted that many small hotels can't afford to make the technology upgrades necessary to compete today. And he noted that Marriott's loyalty program, Bonvoy, gives these hotels access to a group of travelers always looking for new ways to earn and redeem their points.
Will there be more hotel mergers?
Marriott became the largest hotel chain in the world following its acquisition of Starwood in 2016, with 7,600 properties around the world.
Since then, the industry has been wondering if there is going to be another megadeal.
Marriott's leadership team Monday morning dismissed that idea.
“There's going to be some that people will analyze and pursue out there, but I don't see a lot of traction happening in the near future,” said Timothy Grisius, who oversees mergers and acquisitions for Marriott.
“First of all, you need to have a big checkbook if you're gonna try and get one done. I think people are trying to keep their house in order today and make sure that they act in a really well financially disciplined way,” Grisius added. “There's not a lot of need to grow even larger for a company like us. We'll do that organically. We don't necessarily need to buy additional brands. We have 30 obviously.”
Kathleen “Leeny” Oberg, Marriott's chief financial officer, predicted that there might be some more “one-offs” that fill a specific need. She doesn’t expect a large “transformational” deal like the Starwood-Marriott one.
“The biggest thing right now is the difference between buyer expectations and seller expectations,” she added. “You've got right now, a view that the sellers are in many cases saying: I still want top, top dollar.”
Capuano added that there could be some small deals to help the larger chains, like Marriott, gain a foothold in a new market. He likened those to Marriott's purchase of AC Hotels to gain a foothold in Spain and Protea Hotels to expand Marriott’s presence in Africa. (He also mentioned that specific use case in an interview with me two weeks ago.)
Hotel leaders are very excited to be back meeting owners in person. Masks are now required indoors — again — in Los Angeles but the 2,000 people gathering here are happy to see such a large event still happening, even with the new mandate. They had feared it would scare off some attendees.
There is normally a slew of announcements and splashy prototypes of new rooms. This year, everything is much more subdued.
Now, let's just hope the keynote speaker doesn't oversleep because they forgot to set an alarm.