Marriott Sees Downturn As Chance To Prove Its Model

WASHINGTON, DC— Marriott International execs at its recent Security Analyst Meeting, held here at the new Ritz-Carlton, told Wall Street analysts that they see the current soft economy as an opportunity to prove its business model. According to Executive VP/CFO Arne Sorenson, “We believe this year will be rich in potential and opportunity. It will be a year to prove our model, one that’s commensurate with lodging and global brand companies.” Starting with Ritz-Carlton President/CEO Simon Cooper, Marriott International outlined its game plan for the next year— one that Marriott execs view with both caution and optimism, and one that will see growth despite the soft economy. To that, Cooper noted Ritz-Carlton is planning on “opening 12 hotels in the next 12 months,” in locations including Georgetown, Boston, New York’s financial district and New York’s Central Park South areas. He further noted that Ritz-Carlton is adopting “a sense of place, a relaxed elegance. We are anchoring lifestyles, [such as]with the sports club here” in the Ritz-Carlton, Washington, DC. He also cited the recently opened Half Moon Bay property in California as an example of the new atmosphere, noting that, “It had the highest pre-sale of all the Ritz-Carltons.” He explained that the brand is working on future projects that will include “hotels, residence clubs and retail space to make the economies of the projects work.” The Ritz-Carlton strategy also includes “opening spas and including golf,” said Cooper, pointing again to Half Moon Bay, as well as to Montego Bay and the Reynonds Plantation, which will “open in February.” Cooper also stated that Ritz-Carlton is “working with Marriott to add value and quality. It’s vital to stay true to our mission, so balancing motivating employees and delivering the highest level of service with the need to turn revenue into profit [is key]. We have a strong bias for action, and [will continue to]focus on synergies.” Strong Bias For Action Indeed, synergies, a strong bias for action and continuing to deliver service without sacrificing quality in a soft economy were the common threads that ran through the rest of meeting’s presentations. President/COO Bill Shaw noted that, “We offer investors security and opportunity for the long run. We [also]offer opportunities for the near-term and the long haul. We are confident we can hold our own. [Thus], we are using this downturn to reach out to new customers. We have an aggressive sales plan in place.” The plan, as outlined by Executive VP/Sales and Marketing John Marriott III, calls for separating sales from service; centralizing customer data to capture more business; and doing plenty of cross-selling. The short-term sales initiatives include direct sales, revenue management and marketing, he said. On the revenue management side, Senior VP/Revenue Management Amy McPherson noted that Marriott “is selling the right product to the right person at the right time,” thereby giving the company “a competitive advantage in the soft economy.” She explained that philosophy as one that allows Marriott to set “market-qualified, non-discounted rates” in order to be able to offer special discounted rates and upgrades as perks, rather than as an across-the-board standard, based on the needs of their various clientele. Centralized revenue management also allows the company to maximize its supply of rooms and cross-sell its brands, McPherson said. Marriott III further noted that the new sales plan allows the company to “better leverage its portfolio… [and]increase sales productivity.” He explained that the company has implemented “29 market-based sales teams” to eliminate overlap among brands so that the same customers no longer receive phone calls from several different salespeople. Prior to that, Marriott III said that the system wasn’t centralized, and the way it was set up “wasn’t the way our customers wanted to do business.” According to Senior VP/Distribution