Marriott looks to continue growth across Canada
 
Marriott looks to continue growth across Canada
22 OCTOBER 2019 8:38 AM

Although the company already has a good foothold on our northern neighbor, Marriott International has plans and room for growth from Vancouver to Quebec, from major cities to secondary and tertiary markets.

REPORT FROM THE AMERICAS—Marriott International has been in Canada for years, with several properties representing its brands north of the border.

In 2015, the company acquired Canadian chain Delta Hotels, which at the time operated 38 properties. Today, Marriott continues to expand, with more than 255 hotels across Canada.

Diane Mayer, VP and global brand leader for Residence Inn, TownePlace Suites, Marriott Executive Apartments and Protea Hotels, said Canada remains an important market for Marriott.

“I think there’s a lot of opportunity in Canada that has not been tapped into yet,” she said. “Obviously, our roots are in the United States, and we want to leverage that from an awareness perspective. There’s so much travel that goes back and forth between the two countries that it makes sense for us to have a strong presence here. And when we look at both our extended-stay hotel brands and our growth in general, we have very, very solid growth in the pipeline in Canada.”

At the moment, Marriott has roughly twice the development pipeline in both its long stay brands and upscale brands as its nearest direct competitor, Mayer said.

“So, we have a lot of strength in Canada that we’d like to continue to build on. A lot of the travel trends in Canada—international arrivals as well as overall demand—are really strong,” she said. “Canada travel is up quite a bit, year over year.”

Paul Loehr, Marriott’s VP of development in Canada, said that the outlook for the company in Canada is positive. In fact, Marriott has recently reorganized the Canadian Development organization.

The modern Residence Inn by Marriott Calgary Downtown/ Beltline District looks and feels like a high-end urban apartment tower. (Photo: Paul J. Heney)

“This is to better deploy our talent against our greatest opportunities to grow, namely the upper-midscale segment, select brands in general, soft brands, and luxury,” he said. “I love the positioning of our extended-stay brands. Residence Inn by Marriott is our upscale ‘classic’ extended-stay brand, well-known throughout North America. TownePlace Suites is positioned in the upper-midscale section and is currently our fastest-growing brand in Canada.”

Marriott’s upscale Element brand is also a significant part of its development plans in Canada.

“It has a distinctive ‘lifestyle’ extended-stay brand that’s quickly gaining traction throughout Canada, because it’s simply a beautiful product,” Loehr said. “Element offers developers the flexibility with regard to rooms mix, and the brand stands for wellness and sustainability—which resonate with today’s traveler.”

The new Residence Inn by Marriott Calgary Downtown/Beltline District illustrated the opportunities for Marriott to redefine extended stay north of the border. The property, a high-rise, urban version of a Residence Inn, opened in March and has a contemporary flair akin to a newer luxury downtown apartment tower. The property also holds the distinction of being the largest Residence Inn (in terms of rooms) in the world.

Eric Ashton, the hotel’s GM, said that Marriott, as well as the management company, Atlific Hotels, is doing a lot of things right with the property.

“This is a very special Residence Inn that maintained the history of this property’s roots—it sits on the site of the original Alberta Boot Factory—and you will see elements of that iconic western label throughout the hotel,” he said. “I think the company understands the traveler’s needs and desires and helps us build an architecture on-site that makes sense for our guests. … People are happy to see the evolution of the brand at Residence Inn Calgary Downtown, which fuels us to make them happy.”

Development opportunities
Atlanta-based management company Hotel Equities has 90 Marriott properties in total, with nine of those in Canada. Hotel Equities has six additional Canadian hotels in the pipeline: three in British Columbia and three in Alberta, including the Four Points by Sheraton and Residence Inn by Marriott dual-branded property located in Langley, B.C.

Joe Reardon, Hotel Equities’ chief development officer, said the company was first encouraged to enter the Canadian market because there was a void of high-caliber managerial expertise in the market.

“The ability to move the needle quickly and significantly by implementing our standard operating procedures at properties we manage gets us excited,” he said. “We are interested in joint-venture-acquisition opportunities and in-country investments. We think there is a vast amount of opportunity in second and tertiary markets both on the select-service and full-service side for growth.”

Reardon said that his company has made significant investments into scaling all departments, including operations, sales, revenue management, human resources, accounting, learning and people development.

“With the infrastructure and our regional office in place to support growth, we see tremendous opportunities to continue growing in Canada,” he said.

Loehr expects new opportunities for Marriott in Canada in the upper-midscale segment in secondary and tertiary markets.

“For us, this means Fairfield and TownePlace Suites,” he said. “We’re rolling out new small prototypes for Fairfield and Townplace Suites, 79 and 81 rooms, respectively, including a dual-brand prototype. The more compact models are allowing our development partners to introduce these brands into smaller markets at a lower overall cost, thereby enhancing their returns.”

Beyond that, he expects to see an uptick in conversion opportunities.

“When the economy is flying high, everyone generally does well; but when things tighten up, owners reach out to us to explore flipping their non-Marriott and independent hotels into a Marriott brand,” Loehr said. “The motivation is to tap into the power of Marriott’s sales and marketing engines, and in particular, our loyalty program (Marriott Bonvoy), which generally contributes greater than 50% of a hotel’s room nights. There are roughly 5.4 million Marriott Bonvoy members in Canada today, which represents roughly 15% of the Canadian population.”

Where will the growth be?
Loehr said that the urban and suburban markets of Toronto and Vancouver will always be a focus for Marriott, with great opportunities for growth.

“With our new development organization, we’ve been able to more effectively source select-service deals in secondary and tertiary markets with both our existing development partners, as well as new development partners—owners that have done deals with our competitors that are now trying a Marriott brand for the first time, or, first-time hospitality developers. Generally speaking, the oil regions are still soft, but we’re keeping a close eye on these markets via continual contact with our development partners and Marriott operators.”

Reardon said that Hotel Equities will continue to grow more on the eastern side of Canada, as the majority of the company’s portfolio is on the western side.

“We are currently seeking another smaller regional office out of the Toronto Mississauga area where we see some real growth opportunities,” Reardon said. “We are also looking at growth potential in Calgary, Vancouver and Quebec. Additional growth areas will be in second- and third-tier markets where we are seeking opportunities with some of our partners in Canada to develop a new portfolio of hotels.

“There are certainly risks investing in oil and gas markets. However, the business is cyclical like everything else in our industry and in business. We are comfortable saying that our growth will be doubled by the end of 2020 in Canada.”

1 Comment

  • Sreeraj November 7, 2019 11:21 PM Reply

    Question more than a comment, as yesterday's news has come regarding the Q3 earning and it was all down for company when compared with the last year Q3. Can the fast growth in numbers of hotels under the Marriott Brand has resulted in any kind of Drawback which is going unnoticed.?

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