Luxury and leisure travel got us out of the pandemic: David S. Marriott

David S. Marriott, a third-generation hotelier and chairman of the board of Marriott who is visiting India to meet new and future hotel owners, said Mint The company has signed more than 5,000 rooms across 30 hotels this year alone, with an increased focus on leisure properties that will cater to millennial and Gen Z travelers. Edited excerpts:

Business travel, an important segment for most hotel companies, was completely eliminated during the Covid-19 pandemic. Has it grown back to pre-2019 levels?

In different parts of the world we see a different path in terms of full recovery. In the US, we are still at 10-12% in terms of volumes. Some companies have become more aggressive in requiring people to return to offices. However, in Asia Pacific excluding China, business travel is above what it was in 2019, and that applies to India too. We are still seeing some trail in Europe.

Its second-quarter results showed some decline in China, similar to most luxury companies. It has also reduced its RevPAR projections to 3-4% in 2024, down from 5% in May. Your comment?

China was a far cry from where we thought it would be this year, and the US is also moderating and returning to normal RevPAR levels from previously high levels. Approximately 6,000 of our 9,000 hotels are located in the US and Canada, and more than 600 in Asia Pacific (excluding China). But this part of the world, Asia Pacific, has been on fire. It has seen RevPAR growth of 14% year over year. Europe also had a very strong summer, with the Caribbean and Latin America performing better than expected. So, it’s really China and the United States. We have some hotels in Israel, Jordan and Egypt. Those are the three markets where we have seen the greatest impact of the unrest in that part of the world. But it doesn’t have a significant impact on us as a company. Obviously, that could change if the entire region becomes involved in this conflict. However, so far, the impact on our business has been minimal, but the impact on lives has been significant, and that is tragic.

Does a crisis in China mean they are now more focused on India?

This year alone we have signed more than 5,000 hotel rooms, with more than 30 projects in the pipeline in the country. But China is further along in its growth cycle in terms of travel and hotels, so there is huge growth potential in India, in some ways even more than in China now. India is also an incredibly important market for us. It is the fifth largest market for Marriott in the world. When I was here in 2008, we only had six or seven hotels here. Today we have 153 hotels here and 85 in our development portfolio. We haven’t even scratched the surface of the secondary and tertiary markets yet. So the potential is amazing. We have 25,000 employees in India and the success story is driven by domestic travel in India. That in itself is a big market and we continue to focus on it. However, we do not rely on inbound to drive hotel success or revenue. The growth we have experienced in India: We surpassed 2019 levels in 2022. Last year we saw exceptionally strong growth across India. It was a record year, well above 2019 figures and up 50% in terms of RevPAR. The second quarter (April-June) was not as strong due to the election, but demand is coming back very strong.

You have quite a few brands that are not here in India. Do you plan to introduce any in the next few years?

In 2023 we purchased the City Express by Marriott brand in Mexico. So, at some point, that brand will come to India. We also launched Four Points Flex by Sheraton, which we will launch in Japan in November. It is a mid-scale brand and we see a big opportunity for it to come to India.

What will the next five years look like for your business here?

Of the hotels we have signed this year, 80% are in the luxury and premium segment (Sheraton, JW Marriott, Westin). Before the pandemic, we were growing in the luxury category (like Fairfield by Marriott, Courtyard by Marriott, Four Points by Sheraton, Aloft, etc.). But in recent years, there has been a strong focus on the development of luxury, premium hotels, more so in tourist areas.

There is a huge talent shortage in hospitality. Your comment?

We had a mass exodus of talent within our industry during the pandemic. And then when business came back, it was much faster than expected. Staffing our hotels after the pandemic was a real challenge. In many ways, we now have a largely new workforce, having changed almost 50% of our workforce. That’s why training, retaining associates, and identifying different places to go for talent has become really important. This has made us really change the way we relate to talent. Providing a little more flexibility in how the workday is planned and hiring more part-time associates is the way we’re doing it. We’re also thinking non-traditionally about staffing our hotels. We are also working with partners in India to develop talent.

The pandemic had a great impact in many ways. A key learning is the importance of leisure travel

This year alone we have signed more than 5,000 hotel rooms, with more than 30 projects in the pipeline in India.

What sector of the hospitality industry is currently understaffed? Are they entry-level or mid-level jobs?

It differs in markets around the world, but the talent we have struggled with the most since then is food and beverage, cleaning and engineering. However, we have worked with partners to help us overcome some of these challenges. We have had to outsource in different parts of the world.

Is there any fundamental change in how hotels are perceived or how they operate?

The pandemic had a great impact in many ways. A key learning is how important leisure travel is. We used to rely quite heavily on business travel and group business, and the pandemic really reinforced the importance of the leisure traveler. This is a segment that has been growing and business trips have decreased slightly. Therefore, there is an increased focus on leisure travelers coming out of the pandemic. Luxury and leisure travel got us out of the pandemic first. The strength on the luxury side has been a wonderful surprise.

In India, consumers spend less on goods and more on experiences. Do you also see that in the hospitality industry?

Yes, it is something they want to invest in. They want to see the world and have those Instagram-worthy moments. As a result, we are in the midst of a major technological transformation. We are replacing our reservation and property management system, and we are replacing the backbone of our loyalty program. That will give us the ability to be more specific in the services we provide to our customers, learn more about their preferences, and incorporate artificial intelligence so we can understand their needs a little better.

Aren’t loyalty programs becoming less and less relevant? Aren’t customers much more price sensitive and less loyal to brands?

In fact, they are becoming even more important. We now have 210 million members in the ecosystem. They’re looking for creative ways to redeem their points, like seeing Taylor Swift, Ed Sheeran and others at concerts. If a loyalty program offers people the options and opportunities they seek, and if they perceive it as a real benefit to them, they are likely to be more loyal.