With some 6,700 hotels and resorts across the globe since its acquisition of Starwood Hotels & Resorts, and a new one opening every 14 hours, Marriott International’s market dominance is a force of nature never witnessed in the hospitality industry, and it just keeps gathering strength.
But with its market dominances has come a variety of challenges in the last year, with the April 2018 commission cuts for independent meeting planners and the more recent wave of strikes by the UNITE HERE labor union in eight U.S. destinations perhaps being the proverbial gnat disturbing the elephant.
Meetings Today had the opportunity participate in a dinner at IMEX America with Steve Heitzner, chief marketing officer, Americas, for Marriott International, who filled us in on the amazing pace of the hotel giant’s continuing ascendancy as well as address some of the challenges it has faced since the epic merger.
“This has been the most difficult but most rewarding year in my career,” the 33-year Marriott veteran Heitzner said from the head of the table at Scarpetta Restaurant, located in The Cosmopolitan of Las Vegas, a Marriott Autograph Collection property. “We’re in the throws of converting all brands into news systems that will train 650,000 associates into new systems such as loyalty programs, reservations and sales and catering systems.”
Aside from the massive training mission that must cross a multitude of cultures and languages—in true Marriott procedural proficiency it has developed a virtual training solution to tackle the problem—the company took a image hit in April 2018 when it cut non-affiliated independent meeting planners from the traditional 10 percent to 7 percent commission rate, causing an uproar in the meetings industry.
The move also sparked Hilton Hotels & Resorts to cut commissions in concert.
Marriott on Navigating Commission Cuts and Strikes
“Obviously, [moving] from 10 percent to 7 percent is less compensation, but it was a time in the industry when we thought it was time to make a decision,” Heitzner said of the April 2018 commission cuts that sent shockwaves through the meetings industry. “It was a tough decision, but we were looking at a compensation level that’s right for our owners and franchisees.”
The recent spate of strikes by hotel workers at Marriott properties in several major U.S. destinations has also provided a challenge for Marriott, but has not affected hotel operations, according to Heitzner.
The total number of UNITE HERE workers on strike at Marriott properties stands at approximately 7,700 in eight destinations: Honolulu, Maui, Boston, San Francisco, Oakland, San Jose, San Diego and Detroit.
“Our hotels are operating as if there weren’t any strikes,” Heitzner said, adding that the company has had a lot of its employees volunteer to fill in for their striking associates.
“We’ve met most of the demands of the unions and we’ve had little interference [for guests] at our hotels, but it is something that is very concerning to us and we want to resolve it as quickly as possible," he added. "We want to focus on our associates and take care of our guests at the same time.”
Marriott and Starwood Merger Highlights and Future Plans
Heitzner said the marriage of Marriott International and Starwood Hotels & Resorts has filled a need for both hotel companies, with Marriott’s historic skill at managing major projects to fruition and Starwood’s adeptness at offering convivial public spaces in its properties complementing each other.
“One thing Starwood did very well was activate public spaces—such as at its W hotels,” he said. “The success of a hotel is not just due to people who stay there; it’s making hotels more experiential.”
While being a bit coy by not wishing to reveal his actual favorite Marriott property, Heitzner did point out that the brand’s luxury lifestyle EDITION offering is the individual brand that appeals most to him. He said that Marriott expects EDITION to triple in number in the next three years.
Heitzner also called out a few other big-picture Marriott moves in the meetings segment.
Marriott’s taking the reins of the troubled Las Vegas Fontainebleau development, which famously sat idle for years following the 2008 economic collapse, will soon bring two more hotels to the largest hotel market in the world after the company was hired by owner Steve Witcoff to manage the reanimated project.
The development is now named The Drew Las Vegas and is expected to open in 2021, offering a 3,200-room JW Marriott and a 600-room Edition hotel, and approximately 500,000 square feet of meeting space attached to the expanded Las Vegas Convention Center, along with five acres of pools and a 160,000-square-foot casino, which is among the biggest, if not the biggest, in Las Vegas.
The 1,500-room Gaylord Rockies convention hotel is set to open near the end of 2018 close to Denver’s international airport, offering 500,000 square feet of meeting space.
Contrary to worries in the local hotel community that the new Gaylord will cannibalize its business, Heitzner said that 80 percent of the business booked as never met in Colorado before, and that because of the phenomenal booking success, Marriott is already planning an expansion to the property.
Heitzner said that half of the former Starwood’s Sheraton brand will be “reinvented” over the next two years.
“After the acquisition of Starwood, we became the largest operator of luxury hotels in the world,” Heitzner said of the combined brands' luxury segment offering. “We’re opening 40 this year and have 200 in the pipeline.”
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