Marriott Scales Back, But Puts Emphasis On Business Traveler

BETHESDA, MD— Marriott International has made quick moves from the corporate level to assist its franchisees through the downturn spurred by the terrorist attacks. The company quickly after Sept. 11 revamped all of its brands’ standards, with input from owners and franchisees. “The real important thing for owners and franchisees is to be able to restructure their hotels both from a staffing outlet standpoint and amenity basis that makes sense for some fairly dramatic differences in occupancies,” said Steve Joyce evp/owner and franchisee services. Joyce said his company wanted to be sure brand modifications were made as a system, “since our hallmark is consistency. So we didn’t want each hotel deciding independently what they would do and not do.” Marriott quickly made the decision to focus on the needs of the business traveler in making the changes across all of its brands, said Joyce. “We said, we’re a business person’s hotel, more or less throughout our brands, so we need to make sure we are taking care of those customers. So let’s focus on what’s important to them and then let’s adjust the standards on what’s less important.” As a result, Marriott is keeping all of its concierge floor and club lounges open at its properties without modifying services, since they accommodate the business traveler. “The person that uses the club floors is the one that is still traveling, so we need to take better care of those folks than ever,” said Joyce. Marriott has also told franchisees that at least for the time being, it is not expecting them to go forward on a number of capital expenditures in order to conserve cash. “We are going through the capital expenditure budgets with owners and franchisees, discussing what needs to be done,” said Joyce. “People need to know for the next three months, six months that it’s prudent to try to conserve cash. We are telling them, ‘run your hotels in an appropriate way for the guest but also minimize your exposure to losses.’” In some cases, said Joyce, franchisees are closing down one food and beverage outlet if they have two or three at a property, and curtailing the hours at gift shops; wings of some hotels are also being closed down if they are not being used. At the corporate level, Marriott is tabling some marketing initiatives in order to curtail charges that may have been passed on to the property level. As business recovers, Marriott will remodel its property-level procedures to create a more efficient and profitable operating model, said Joyce. “I hate to say this is an opportunity, but because we had to reduce costs so quickly, we will be learning as we add things back more prudently. For example, in the case of amenities, we all know we threw amenities in without a strong business case that demonstrated that putting in the shower cap and the shoe mitt drove customer satisfaction. Now you’ll be able to say what is really important to the customer and let’s put those in as opposed to throwing amenities into the mix and see whether or not anything happens.” Meanwhile, Marriott is trying to build up the working capital position at its managed hotels, “so that our owners have the maximum amount of cash available to be able to meet their mortgage obligations,” said Joyce.