5 things Marriott’s Sorenson has to say about hotels
5 things Marriott’s Sorenson has to say about hotels
20 JUNE 2017 7:49 AM

Marriott International President and CEO Arne Sorenson shared some of his insights on the hotel industry at the NYU International Hospitality Industry Investment Conference.

NEW YORK—Marriott International President and CEO Arne Sorenson is feeling optimistic about the hotel industry and in general, and speaking at the NYU International Hospitality Industry Investment Conference, he said it’s easy to lose sight of all the positives amid all the chatter about possible negatives.

Specifically, he said he’s heartened by the macro trends impacting travel.

“We have two really powerful tailwinds,” he said. “One is, around the world … we want more and more experiences, and we elevate experiences over the acquisition of things. … The second is this global growth of the middle class where we have hundreds of millions of people who want to travel for the first time.

Here’s five takeaways from his talk at the conference.

1. China represents biggest growth opportunity
The opportunities that arise from a growing global middle class can be seen most clearly in China, Sorenson said.

“China is the biggest single market for us, and probably for many, outside the U.S.,” he said. “We’ve got 260 hotels open today and maybe 300 in the pipeline. We’re opening in excess of one a week in China. They tend to be big hotels skewing toward the luxury tiers.”

He said the growth of the consumer economy in China will be a boon not just for destinations within the country, but at spots around the globe where Chinese travelers want to visit.

2. Convenience will drive tech in hotels
Sorenson said being better able to provide service for guests will be the guiding force as the role of technology continues to grow within the hotel industry.

“Think about that as opening your guest room door with your phone and not having to stop at the front desk,” he said. “Think about that as having room service waiting in your room when you arrive. Think about that as being at the beach in front of a hotel and wanting lunch and being able to get on the app and have lunch arrive as opposed to having to wait for the waiter who is trudging through the sand to try to take orders as well as deliver orders.”

3. Marriott wants more brands
In a back-and-forth that started as a question about if Marriott intends to keep all of its current brands (the company does), Sorenson noted that he envisions opportunities for the company to grow new brands at some point in the not-too-distant future.

He did note, though, the right number of brands can be a bit of a moving target.

“As early as a decade ago, I was asked frequently if I had enough brands, and I said, ‘Yes,’” he said. “And even before we got to the Starwood deal, we added five or six brands in the last five years. … In each one of those we found a reason to do that transaction.”

But he said at this moment, he’s confident there’s brand growth in Marriott’s future.

“We’re now at the remarkable number of 30, but we’re still just at 7% of the global lodging industry,” Sorenson said. “There are a lot of brands represented in this room and in rooms like this room around the world. As long as those brands can be strong and distinct, there’s no reason to think we won’t add some more.”

4. Jury is still out on scale versus OTAs
Sorenson said it’s yet to be seen how impactful his company’s newfound size will be on the next round of negotiations with online travel agencies like Expedia and Priceline, which he noted have not happened yet post-merger.

“We have each got areas where we want to grow our businesses maybe a little bit to the exclusion of the other,” he said. “And we each have areas where there’s work to do together. Where the OTAs are more additive to us is with the occasional leisure traveler who’s not a member of our loyalty program and may not know much about hotel brands.”

5. Starwood integration progressing, albeit slowly
Sorenson was quick to describe the effort to absorb Starwood Hotels & Resorts Worldwide as “a huge amount of work,” while also noting it’s gone fabulously well.

He said one thing that caught him off guard about the acquisition and transition has been how deep the devotion ran for Starwood Preferred Guest loyalists.

“Early on, the thing I didn’t appreciate that I should have was how rabid the SPG elites were about the program,” he said. “Maybe that shouldn’t have been that surprising.”

Sorenson said the company has held eight global general managers meetings in an effort to get the entire company on the same page.

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