In May 2022, Marriott launched the Marriott Media Network: The goal had been to let non-hotel marketers place ads on the company’s website and app, its marketing messages to guests, and eventually on in-room TVs and digital screens in lobbies.
Marriott’s 3 Big Challenges and the CEO's Case for Optimism
23.01.2024 - 08:08 / skift.com / Anthony Capuano / Sean Oneill / Marriott International
Marriott CEO and president Anthony Capuano faces a pivotal point in the growth trajectory at the world’s largest hotel group.
He is focusing on filling out the map worldwide with various types of properties so that Marriott always has a property to offer its most loyal guests for every type of trip. The CEO is betting specifically on the luxury hotel category because he believes it will generate fat fees that could compensate for the company’s expansion into lower-margin mid-tier brands.
Marriott has also launched a multi-year technology revamp that should help its staff become more efficient and encourage more guests to buy more services.
“I can’t see the end of the runway for growth,” Capuano told Skift Monday during an interview at the Americas Lodging Investment Summit (ALIS) in Los Angeles.
Still, the challenges are real – here’s how Capuano said he’s handling them.
The challenge: Marriott has more than doubled its room count over a decade. It’s gone from managing 675,000 rooms at the end of 2013 to 1.59 million at the end of last year. Can it keep up the pace?
Some skeptics say Marriott has put hotels in all the key cities it can by now — grasping the low-hanging fruit of prime locations. Future development may be in third-tier markets generating third-tier margins.
Capuano’s optimism: “Some have asked us, ‘Aren’t you running out of street corners here at home?’ The answer is a resounding no.”
Marriott said on Monday it added 91,000 rooms in the U.S. and Canada last year. Roughly a third of that came through a licensing deal with MGM Resorts.
Marriott had a 16% share of open hotel rooms in the U.S. and Canada as of September 30.
Outside the U.S. and Canada, Marriott added 73,000 rooms last year. It only has 4% market share outside of North America.
Capuano’s re-tooling: The CEO has ensured the company has enough development staff dedicated to the markets with the most opportunity to scale quickly.
Exhibits A and B are China and the Middle East. Many owners in these markets are accustomed to hiring third parties to manage properties on their behalf and opportunities for scale because of uniform languages, laws, and methods of doing business.
“You’ve got some markets where you have this wonderful combination of long runways for growth and a much higher intensity owner desire than in the U.S. for management contracts,” Capuano said.
So Capuano is concentrating forces in these markets. He’s also emphasizing Europe, which remains in high demand from travelers and where management contracts are also common.
The challenge: One of Marriott’s most lucrative business lines is charging owners fees for managing hotels on their behalf. Yet as Marriott adds mid-tier brands, its average rates will drop —
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