Woody Allen informs us that 80% of success is showing up. And if we do make it, we’re told, it’s better to be late than never. Fewer idioms, I now realise, are coined about the pitfalls of being too early.
The plan was simple: fly out to Chicago for the mid-November grand opening of Marriott’s 700th and largest Residence Inn; attend a raucous bash replete with free-flowing cocktails, live music and the doyens of the Windy City; and, most importantly, sit down with Marriott International’s president and CEO for a one-to-one chat encompassing everything from Airbnb to the evolution of his leadership style during his first four years in the gig.
Well, I turned up. No problems with the flight. The party was a hoot. And the 381-suite Residence Inn Chicago Downtown/Loop is a real dazzler – a 34-storey gothic skyscraper, complete with bell tower, returned to its former glory following an extensive renovation programme, and a marked move upscale for the extended-stay brand. Highly recommended.
But, most importantly, I got my sit-down with Arne Sorenson. It had been more than three years since we last spoke and, ever charm personified, the CEO could not have been more generous with his time. We had a great conversation.
The threat of Airbnb? "We need to pay attention to what’s making them so attractive, but the impact has really not been significant so far." European opportunities in the extended-stay space? "Up until now, it’s been more of a question of partners coming to us, but the hotels have opened extraordinarily well and that’s focused our minds. Expect much more international growth over the next decade." The biggest surprise of his tenure? "It’s been the speed of change more than anything else. Just look at the adoption of new technology. We might have speculated about keyless entry three years ago; today, it’s a near certainty."
I flew home to London happy with my lot, a cheerleader for Chicago and the latest addition to its hospitality scene, ready to write our cover story.
Then, four days later, everything changed. The next time I hear Sorenson’s voice it is in the rather less intimate environment of a conference call.
"The transaction offers meaningful opportunities for enhanced growth and efficiency," he is saying. "The economics of the deal are attractive and the strategic benefits are compelling as they enhance our competitiveness vis-a-vis other travel companies," he continues.
"What about Chicago?" I’m thinking. "Why couldn’t you have just told me in Chicago?"
Because Marriott International has just announced the acquisition of Starwood Hotels & Resorts in a $12.2-billion deal and, in the process, created the world’s largest hotel company. And how was I to know? We all expected Starwood to be bought soon – it has been on the market for seven months – but few thought the buyer would be Marriott. Hyatt or IHG, sure, or perhaps one of the circling Chinese conglomerates. Sorenson had even gone on record declaring a lack of interest.
But the president and CEO didn’t get to where he is today by revealing plans for the biggest deal of this, or any other, year before all the documents are initialled and signed. Sometimes, it’s simply a question of being too early.
Extension of a lifestyle
Back in Chicago, we’re discussing Marriott’s growing presence in the lifestyle arena, the speed of which, the CEO admits, he would not have imagined four years ago. "We could get some blame for being slow to pick up on the trend initially," he acknowledges. "We watched the industry evolve, but it moved so quickly. Working with [Edition Hotels partner] Ian Schrager was a big step, but brands like Moxy also sit in that space. AC is a lifestyle brand here in the US – it only arrived in June 2014, and we’ll have 85 hotels signed by the end of the year.
"Even our established brands have had to become different market by market, displaying variety in terms of product, food and beverage, design and so on. What guests expect in those areas has shifted markedly and quickly."
The growth of the lifestyle segment, and the impact of that growth on the market at large, goes some way towards explaining why the Starwood deal eventually looked too attractive to miss.
A few days later, it is clear that Marriott is making up for any initial hesitancy in this pace on a quite epic scale.
"Even before our discussion with Starwood, we were focused on increasing our appeal to younger travellers, expanding our lifestyle-brand offerings and introducing new designs to appeal to changing customer expectations and tastes," Sorenson reiterates. "Given Starwood’s leadership in this area, we expect the combined companies will be even stronger… Following the transaction, Marriott will be better able to compete in an evolving marketplace."
It is a huge deal to oversee and a massive new component to integrate. Prior to the deal, Marriott International already boasted 19 brands. Starwood arrives with a further 11, if you include the partnership with Design Hotels announced in October.
Asked in Chicago how his leadership style has evolved over his four years in office, Sorenson provides an answer that perhaps lends some insight into how he will tackle the challenge. "I learn every day and probably suffer from not being as deliberately long-term focused as I might be," he acknowledges. "One of the biggest challenges is being as thoughtful and deliberate as possible about how you spend your time and not always reacting to events.
"Five years ago, when I became president, although not yet CEO, we started distributing a lot of our authority away from headquarters. I was convinced that this was the right thing to do and, if anything, am more certain now than ever. There were too many decisions coming back to headquarters – decisions we had absolutely no business making."
Associate with the best
An ability to delegate responsibility seems like a pretty useful attribute for a guy who’s about to lead 30 brands. For Sorenson, empowering associates is also a fundamental of the Marriott culture. Preserving and consolidating the corporate ethos will be one of the biggest challenges. As only the third person, and first non-Marriott family member, to sit in the CEO’s chair, it is a legacy of which Sorenson is all too aware and protective.
"We say, ‘Take care of your associates and the associates take care of the guests’. That might sound a little soft, but it comes down to a culture of building careers for people, enabling them to take responsibility and grow in their jobs," he explains. "But we’ve gone out and surveyed our associates about what they think our culture stands for, and one response kept coming back: we have a culture of people who want to win.
"That means performing better than our competitors, growing faster, having more guests. There are a lot of things that are very measurable and tangible. Regardless of where you are in the world, fundamentally people want to succeed. If they feel empowered, proud of their work and committed to winning, you have the makings of a great team."
Well, if establishing yourself as the largest hotel operator on the planet virtually overnight doesn’t look like winning, then Sorenson must have some pretty demanding associates. Scale certainly brings a lot of advantages – "We’ve become more impressed by what we can accomplish by being bigger," reveals Sorenson, when asked how his mind has changed over the course of the seven months since Starwood came on the market – but there are also industry trends and developments that one cannot predict or prepare for, regardless of size.
"I think we can sound a little optimistic," he tells me when asked about the current sense of bonhomie within the hotel sector, "but there has never been a supply-driven downturn. Now, neither I nor anybody else can tell you what’s going to happen with demand; that’s driven by the economy writ large.
"But in the US, we’re in the sixth year of a demand-driven economic recovery – GDP hasn’t grown all that quickly, but it’s steady. I think we still have a few years left – there are more reasons to be optimistic, despite already being in year six."
Europe is more of a mixed bag, with Marriott performing well, but the number of known unknowns a worry. Sorenson has just returned from meetings at the Brookings Institute think tank – he’s on the board of trustees – where the continent featured high on the agenda.
"We had a couple of foreign policy conversations, and one argument put forward was that, for four reasons, this is the most trying time in Europe since 1945," he begins. "You have Russia reasserting itself as a local player with some strategies reminiscent of the Cold War; there’s a marked rise in nationalism; the euro issue still hasn’t been properly resolved; and then there’s the refugee crisis.
"We’ve just had our strongest year in Europe since the Great Recession, by some distance, but, unlike the US, you can’t really make sweeping generalisations; it’s a question of going market to market. On the whole, I’m optimistic but, like everyone else, also don’t know how a number of factors will play out."
We could say the same thing about this Starwood acquisition – and press trips to Chicago, for that matter. One thing is certain: it’s going to be extremely interesting finding out.
