Welcome to Trip Essentials!

Marriott’s CEO on new brands, Bonvoy growth and keeping things cool at W

[ad_1]

Cynics typically say that bigger doesn’t always equal better when it comes to major corporations like Marriott International.

Yet Marriott, the world’s largest hotel company, has clearly tried to maneuver a tricky dance in recent years so its brand and loyalty strategy make it the go-to brand for a wide swath of customers.

Considering booking a vacation rental on Airbnb? Why not try Homes & Villas by Marriott Bonvoy instead. Want to unwind with the see-and-be-seen scene? You have Edition and W on the luxury end (more on that later) while Moxy increasingly becomes a formidable player (and TPG Award winner) in the select-stay space.

The company is on track to be a dominant force in Las Vegas thanks to a partnership with MGM Resorts International that is expected to officially launch in the coming months. Over the last year, Marriott also did what most pundits thought the company was trying to avoid all this time: offer a robust lineup of affordable brands with newer acquisitions and organic launches like City Express, StudioRes and Four Points Express by Sheraton.

“It’s absolutely not a pivot, and from a strategy perspective, it is not a binary. It’s not a case of, let’s shift resources away from luxury towards midscale,” Marriott CEO Anthony Capuano said this week during a press breakfast at the Americas Lodging Investment Summit in Los Angeles. “They can coexist and grow and thrive in parallel.”

TPG later caught up with Capuano for a one-on-one interview to get the latest on what all these expansions and partnerships mean for the future of the hotel behemoth.

CAPRI WHITELEY/THE POINTS GUY

The midscale brand explosion

Marriott added three affordable brands last year with the acquisition of Mexico-based City Express, the launch of Four Points Express by Sheraton and the StudioRes extended-stay brand.

This comes amid a broader industry push into the affordable space with Hilton’s launch of Spark and LivSmart Studios, IHG Hotels & Resorts debuting Garner and the creation of Hyatt Studios.

It might be a bit of a head-scratcher for some, as the leaders of many of these companies in the past seemed to think limited exposure to the economy and midscale space was a strength rather than a weakness.

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

But Capuano noted travel and lifestyle shifts during the coronavirus pandemic made the expansion into midscale a no-brainer.

“If you’re a sociology professor, you have 100 years of research you’re going to be able to publish on. The far-reaching impact of the pandemic is going to be studied for the next century,” he said. “One of the byproducts is this view that you can live this transient nomadic lifestyle: The attitude of employers has changed. The attitude of employees has changed.”

But those living a nomadic lifestyle probably don’t want to spend $150 or more a night on the road for Marriott’s existing extended-stay hotel brands like Residence Inn or TownePlace Suites.

The company previously indicated that StudioRes hotels will average around $80 per night and target guests who stay for 20 nights or longer.

“There is a big portion of the population that likes this idea of not working for the same company for a long period of time — in fact, maybe not even being an employee but being a contractor, being a little more transient, being able to move to different areas of the country,” Capuano said. “That has driven this demand that we see in spades for efficient temporary housing.”

This is a lifestyle shift Marriott leaders expect to be permanent, he added.

The first StudioRes broke ground earlier this month in Florida, and the brand is expected to quickly ramp up. Discussions are underway for hundreds more. The ownership group of the first StudioRes underway in Fort Myers, Florida, alone plans to open 50.

Both StudioRes and Hilton’s LivSmart Studios are slated to have different loyalty earning structures than other pricier brands in their respective networks. While a stay at a StudioRes won’t earn a Marriott Bonvoy member points at the same rate as a stay at one of Marriott’s luxury brands, Capuano still sees this as an important on-ramp to the broader Bonvoy network.

“Is the earning the same as staying at a Ritz-Carlton? Of course not. It’s scaled appropriately for the price point of that platform,” he said. “But is it a good entry point for somebody that we might not have captured previously? Absolutely.”

Four Points Express by Sheraton. MARRIOTT INTERNATIONAL

Bonvoy’s leadership position

In recent weeks, there has been industry chatter about whether Hilton Honors is on track to somehow overtake Marriott Bonvoy in terms of member count this year.

There was significant debate at the ALIS conference over whether that would actually happen, with analysts pointing to Marriott’s MGM partnership — which will bring MGM Rewards loyalty members into the Bonvoy network — as well as the company’s growth of cobranded credit cards overseas as maneuvers to thwart Hilton’s advances.

Capuano noted the company’s lean into experiences for Bonvoy members represented another way the loyalty platform would continue to draw in new members and maintain a leadership position.

“To me, there’s a benefit to scale, to be sure. But, boy, are you shortsighted if all you focus on is absolute max, gross number of members,” he said. “Our focus is really on building out the suite of value.”

Marriott Bonvoy promotions and redemption opportunities for events like Formula One racing, Taylor Swift concerts and the Super Bowl are a way to differentiate from other loyalty programs. The pending MGM Resorts partnership unlocks more redemption opportunities where the casino gaming giant has properties in the U.S., such as Las Vegas, Detroit and Atlantic City, New Jersey.

“You throw all of that together, and it goes back to what I was saying earlier: The access we’re going to provide our 192 million members to content, to once-in-a-lifetime experiences … to me, that’s the magic of Bonvoy.”

MGM GRAND/MGM

Keeping it cool at W … and Edition and Moxy

Capuano alluded earlier in the day to the ongoing brand transformation underway at W, which includes significant renovations to existing hotels in New York City’s Union Square and Hollywood in Los Angeles.

Some of the brand’s refreshed vibe can be experienced at the W Rome, the W Algarve in Portugal, the W Edinburgh in Scotland and the W Chengdu in China.

“One of the things I’m maybe most excited about is W, which was one of the brands that maybe I had the least understanding of prior to the Starwood acquisition,” Capuano said. “But the direction and the momentum we have with W is pretty remarkable.”

W Rome. CAPRI WHITELEY/THE POINTS GUY

W’s refresh is a reassertion of sorts for the brand in the luxury lifestyle space at a time when there are many new competitors from the likes of Hyatt and IHG, plus a Hilton brand expected to debut in the next year. It even has a luxury lifestyle sibling within the Marriott portfolio in the form of Edition.

But it’s not just the luxury end of the spectrum getting the lifestyle treatment at Marriott. Moxy has morphed into an impressive lifestyle hotel product with an array of destination dining in markets like downtown Los Angeles and Brooklyn, New York. The brand even gets pop culture credibility for serving as the backdrop to singer Tate McRae’s performance at the 2023 Billboard Music Awards.

“We are deliberate within certain tiers of recognizing there is an increasing segment of the traveling public that likes a lifestyle component to their lodging experience. What’s nice is now we’ve got it across price tiers,” Capuano said. “That’s what the breadth of the portfolio allows us to do.”

Related reading:

[ad_2]

We will be happy to hear your thoughts

Leave a reply

Tripessentials
Logo
Compare items
  • Total (0)
Compare
0