Marriott’s Arne Sorenson on the hospitality business, government shutdown


Arne Sorenson, chief executive officer of Marriott International. (Simon Dawson/Bloomberg)

When Marriott International created Courtyard by Marriott in the 1980s, the company had one customer in mind: the business traveler.

The no-frills chain offered a lower-priced option for those traveling for work. Courtyard hotels were mostly in the suburbs in close proximity to business centers, hospitals and highways.

Today, Courtyard’s 900-plus hotels have shifted to accommodate a growing number of leisure travelers and families as well. Most recently, the Bethesda-based company spent nearly $1 billion sprucing up lobbies and adding bistros to keep up with changing demands.

The brand, which turns 30 this week, has evolved throughout the years. The company’s anniversary comes at a time when Washington area hotels are looking for ways to stay relevant in the business world as the government shutdown continues to batter the local hospitality industry.

During the first week of the shutdown, revenue per available room, a key industry measure, fell 12.1 percent in the Washington area, according to research firm Robert W. Baird and Co. (Nationally, revenue per available room increased 0.1 percent.)

How the shutdown will affect Courtyard and other Marriott hotels is yet to be seen, said Arne Sorenson, Marriott’s president and chief executive.

Sorenson sat down with Capital Business last week to discuss business travel, the government shutdown and how the hospitality industry has changed in the past 30 years. What follows are excerpts from that conversation.

Courtyard by Marriott was the company’s first move toward creating a brand that catered to a new market. Today the company has more than 18 brands — ranging from the low-end to luxury. Why did the company initially make that move to branch out?

When Marriott opened Courtyard, it was the first to say, ‘We actually think we can have an umbrella of brands in distinct places.’

Courtyard was very much designed by the book. We went out and talked to customers, studied what is it they really needed when they travel. It was built for business travelers but also, to some extent, to provide a hotel in suburban markets where choices were dramatically lower [than in urban areas].

How has the mix of business and leisure travelers changed over the years?

If you look at the industry as a whole over 20 years, leisure travel has grown faster than any other segment of travel.

When I was growing up, we didn’t really stay in hotels when we went on vacations. We would maybe stay with relatives, maybe we would get a cabin someplace, maybe occasionally a hotel, but that would be a rare occurrence.

Today people tend to stay in hotels every time they take a vacation. That is partly a function of wealth, but I also think it’s a function of practice. People are much less likely to sleep on a relative’s floor or their friend’s floor, which would have been the case a generation ago.

How have customers’ habits changed in that time? And how have hotels changed to accommodate those changes?

Twenty or 30 years ago, the typical traveler would come to the lobby, get their key and go to their room.

Today what we see is that people come in, get their key, they go to their room and drop their bag off. But they would rather do their work in the lobby, even if they’re traveling alone.

It’s affected everything from food and beverage service to the furniture that is used. [Our lobbies and common areas] tend to be a brighter spaces, with more natural light during the day than would have been the case before. They are set up to be a little bit more welcoming.

We also have new casual bistros in nearly 85 percent of our Courtyard hotels.

The first restaurants that were built in the Courtyards were very traditional looking: Dark wood, upholstered chairs, big plants.

I think today people prefer much more casual, multipurpose space where you can have a drink or a meal while you work on your iPad or phone.

As far as business travel, how have recent government budget cuts and per diem reductions affected Marriott hotels?

That’s more market-by-market driven than brand-by-brand. Washington, obviously, has a bigger government connection than any other market in the United States. For the last few years, that has been a bit of a downer.

To be sure, it’s probably more likely to impact Marriott and Courtyard brands than the Ritz-Carlton. Luxury travelers tend not to be traveling on the government per diem.

What about the current government shutdown? Do you have a sense of how that will impact local hotels?

It won’t be good for the Washington market. It’s still too early to have any real data but you know, when government people have been furloughed and are home, there are fewer people coming in to meet with them, and they are obviously not traveling for business.

Abha Bhattarai covers local banking, retail and hospitality for The Washington Post’s Capital Business section. She has written for The New York Times, The Wall Street Journal, Reuters and the St. Petersburg (Fla.) Times.
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