The Marriott Formula

From nine stools in a root-beer diner to half a million lodging rooms? Yes, it can be done. In fact, it has, thanks to the long-time, time-tested successful branding strategies that have built Marriott International Inc. into a hotel/resort industry powerhouse.

To think it all started out so small in 1927, as J. Willard Marriott and his wife, Alice, opened up an A&W root beer stand in Washington, D.C. called “The Hot Shoppe.” From there came food-service management contracts with the U.S. Treasury. Then came the lodging expansions and public stock offerings, and finally the multiple brands all under the same Marriott name, a “family of hotels” concept that targeted all segments of travelers.

Today, these strategies remain firmly in place, and growth targets remain steady and well within reach: Add 25,000 to 30,000 rooms every year — regardless of how many properties this entails. And its executives pursue this strategy with the company’s customary due diligence.

They scour market-research reports to pinpoint cities that are the healthiest for the travel industry — especially when it comes to expansion — yet are being underserved. They go to local convention and visitors bureaus to get a sense of future travel demand in the region. They visit the properties they’ll be competing with to get a sense of whether Marriott can enter the market with, say, better furnishings and amenities, a more welcoming lobby or even rooms that will bring high-speed Internet access to a city where hotels offer none. (Bill Marriott Jr. is known to conduct these “walks” himself.)

Because Marriott manages and franchises its properties, its development team has taken in valuable information from potential partners in expansion communities as well. “They’re a great resource,” said Steve Joyce, the Marriott executive vice president who oversees owner and franchise services, as well as North American full-service hotel development. “They live in the market and know it well. They know what office buildings are going to be built there. And they can help us decide what kind of Marriott property should be there.”

Even after Sept. 11, the short- and long-term plan has remained steady. True, there was a 30 percent dip in hotel expansion planning at first. But, after six months, Marriott has held true to the high-end of its goals, by adding 30,000 rooms per year. And that counts for its luxury properties as well, especially JW Marriott Hotels, which now totals 37 properties and is on target to grow to 50 properties within five years.

“In periods of uncertain times like 9/11, people look for the surest bet,” Joyce said. “Our brands are as sure a bet as you can get in the lodging industry.”

Chalk it up to the Marriott formula: Offer a wide range of accommodations and services to the business and leisure traveler through a remarkably eclectic lineup of distinct brands, but make sure that all properties hold up to fundamental values that travelers expect from a quality chain, regardless of brand positioning and room-pricing strategies. It’s a formula that has proven itself through the decades. There are now 2,800 Marriott International properties with 500,000 rooms — including more than 8,000 vacation ownership villas — in the U.S. and 69 nations and territories around the world.

At the top of its high-end offerings remains JW, launched in 1984. Like other Marriott brands, JW has cultivated a distinctively global market, since its first international property opened in 1989 in Hong Kong. It now features properties in such locations as Chongqing and Shanghai in China; Seoul, Korea; and Bangkok, Thailand. In the U.S., properties include those in Las Vegas; Palm Desert, Calif.; Phoenix; and Oahu, Hawaii. The latter property, the 387-room JW Marriott Ihilani Resort and Spa, is a prime example of Marriott’s approach to expansion and high-end brand strengthening via attention to acquisition positioning, property presentation and marketing. It also presents an interesting case history, shedding light on how Marriott introduces a luxury brand to a region where it’s also positioning other products.

The Big Picture — Increase Marriott Visibility Overall
After seeing tremendous success with its growth in Asia, Marriott realized in the 1990s that it had great expansion opportunities in Hawaii. After all, there was only one Marriott property there, in Maui, and that opened in 1981.

Real estate prices dipped and Marriott moved quickly. It had four properties in Hawaii by 1999 and now has 15 properties there today.

“For 14 years, the Maui property was the only one we had there,” said Stan Brown, the Marriott vice president who oversees all of the company’s operations in the Pacific Islands and Japan. “So we knew we had an opportunity to grow. We found that owners of non-Marriott properties were eager to join us, and they immediately saw immense growth in occupancy and returns. After converting to us, these owners are seeing a 20 percent increase in revenue per available room [RevPAR] within the first 12 to 18 months. With that kind of upside, our phones keep ringing.”

The original Ihilani property opened in December 1993 as a non-Marriott operation. By 1999, Marriott International was awarded the management contract for the hotel, and it was then rebranded as a JW property.

As with other converted properties, Marriott development staff made sure it remained consistent with JW’s higher-end market. More natural woods were added to the decor, as well as elegant, crown molding in the rooms. Hotel staffers were trained on more effective ways of interacting and servicing guests — such as escorting guests from check-in to room entry. Rooms were renovated in what Brown calls “Conde Nast” proportions, as large as 700 square feet.

Perhaps not coincidentally, at about the same time of the conversion, JW landed the NFL as a top, annual guest customer for the Oahu property, when the very best pro football players in the sport gather for the nationally televised Pro Bowl, held just after the Super Bowl. Demonstrating dedication to a prime client, JW even built a football field at the property for practices.

As a result, the week leading up to the game is a prime marketing opportunity, with cocktail parties and media events held at the hotel, building big buzz.

“We get exposure during the game and throughout the entire week,” Brown said. “And our word-of-mouth has lead to great success. This property has gone from the high 40 percent range in occupancy to the low 80s since we’ve had it.”

Know the Customer
Not to detract from Marriott’s other brands — the solid and business-traveler friendly Marriott, Renaissance and Courtyard properties, as well as the comfortable, clean suite/extended-stay segment represented by brands such as Residence and Fairfield Inns, and SpringHill Suites — JW is specifically targeted to a decidedly high-end traveler. It has expanded properties as the market has grown — the new luxury customer is growing at up to 15 percent annually by some counts. According to the company’s own research, JW’s guests, in particular, favor high-end brands such as Rolex. They seek the best and, if a hotel stay falls short, they don’t come back.

Much market research at the corporate level breeds results at the individual property locations. Guests are invited to weigh in on their preferences, whether meeting in small groups or over a private lunch. After talking to meeting professionals, for example, Marriott built an 18,000-square-foot pavilion at the JW property in Oahu, resulting in expanded space for business gatherings.

And JW management is constantly looking to one-up its high-end amenities for these customers. Room service and concierge are available 24/7. The dining establishments are the kinds featured in the pages of Conde Nast Traveler and Travel + Leisure magazines. So is the golfing — Golf Digest has named the courses at the Ihilani and Desert Springs resorts as among the 75 best in the nation.

Check in with a property and you’ll universally see fine mahogany and cherry wood — as well as natural stone and granite — pretty much everywhere you look. You’ll also often get a CD player; marbled floor, spa-style bathroom with Egyptian cotton robes; telephone and lighted mirrors; and luxury bedding with custom-made duvet and feather pillows.

And properties don’t simply offer spas, they offer spas with thalasso treatments and herbal wraps of chamomile and linden flowers. You prefer a peppermint treatment? JW staff is ready to provide this as well.

“The whole idea behind a JW is that you’re going to get a customer segment that’s willing to spend beyond what a typical Marriott customer will pay,” Joyce said. “We have other Marriotts that are very, very nice. But JW is consistently right there at the five-star level. These services cost more, and the owner is looking for a healthy return whether it’s a JW or a Courtyard. That’s why we do all the feasibility research that we do before expanding into a new market.”

Continued Improvements
So far, so good with JW. But when it comes to brand recognition and acceptance, more work needs to be done, Marriott executives say.

“We have many layers when it comes to getting customer feedback and it’s reviewed at the highest levels of our company,” said Susan Thronson, senior vice president of Marriott’s international marketing. “This includes our guest surveys, which provide valuable information about how we’re doing and whether our guests intend to return. We also work with a London-based company that does global brand tracking for us — a proprietary study that focuses on our brand-equity drivers: awareness, trial and preference. We invest much time into finding out how to turn high preference into loyalty.

“In the U.S., for example, awareness is high. Eight of 10 business travelers will stay at a Marriott within a year,” Thronson continued. “With JW, however, we need to do more work when it comes to the customer recognizing that brand as one of distinction.” Globally or domestically, travel agents are a key audience to reach. To do so, Marriott is proactive when it comes to organizing group property visits and, in some cases, comp stays, as well as trade show and direct marketing presentations.

“We really fight against the blur when it comes to all of our properties,” Thronson said. “We take our message to the travel agent before we take it to the end user. So we really need for them to understand our products.”

Clearly, something is working right. In a recent survey of more than 200 JW Marriott Hotel guests worldwide, 96 percent said they’d not only return to the hotel, but they’d recommend it to a close friend or relative. Fitness facilities, staff/service, location, lounging and business center resources were all listed as appealing amenities by participants. And JW has been ranked an overall competitor in the category of the top hotel/resort company for the “upper upscale” traveler by Business Travel News.

“Marriott is very smart at understanding how to ‘signal’ that they play in the high end,” said James Chung, president of Reach Advisors, a top marketing strategy and research firm for the travel industry. “At their high-end properties, it’s more than about the room furnishings. It’s the over-investment in an extraordinarily high level of service detail, from check-in to checkout.

“They’ve also segregated their brands to deliver the precise combination of service, amenities and pricing for those specific properties,” Chung continued. “And, even though Marriott is a massive chain, many properties have that imposing portrait of J.W. Marriott in the lobby. This is smart branding too. It assures the guest that there’s a steady hand providing quality control.”

JW’s success has mirrored the overall fiscal success of Marriott International. Marriott properties in general are perennially at the top of the “best hotel chain” list, snagging such honors in Business Week and InformationWeek, with similar top marks in customer satisfaction in the pages of the Wall Street Journal and other publications.

Ever eager to not only maintain but grow its current hold on business travelers, some 2,200 Marriott properties offer high-speed Internet access. And Marriott has taken the lead when it comes to wireless Internet access in lobbies and meeting rooms, which it now provides in 1,700 hotels.

The surge of investment into high-tech also comes out of the company’s research with customers. Five years ago, guests cited high-speed Internet access in rooms as a top priority. Less than three years ago, it was wireless. Now, both services are becoming the norm at the properties.

“With wireless, customers aren’t confined to their rooms when they’re doing work,” Joyce said. “They can walk into the lobby, meet a client and pull up research on their laptops just as if they were in their home office. They can get more business done this way. It’s important to our customers so it is a priority with us.”

Popularity has resulted in a bottom-line boom as well: In a recent release, Marriott reported third quarter revenue of $2.3 billion, up 9 percent from a year before. For the year, Marriott expects revenues to grow up to 24 percent over 2003, when the company reported a net profit of more than $500 million.

Pretty impressive when you take the company’s modest beginnings as a small diner into account. The first hotel didn’t even open up until 1957, with the 365-room Twin Bridges Motor Hotel in Arlington, Va. — hardly the stuff of herbal wraps and five-star dining. Still, growth continued on a worldwide scale, with the first international hotel opening up in Acapulco, Mexico, in 1969; the first European hotel in Amsterdam, Holland, in 1975; and the 500th hotel overall in Warsaw, Poland, in 1989. By the start of the 21st century, Marriott had 2,000 properties.

As for how much larger Marriott and its complete family of brands can get: The realities appear limitless. Today, the luxury Marriott brands are serving champagne and cognac at their mahogany-paneled lounges, but the guiding principles behind that nine-stool root beer stand still apply: vision, determination and the ability to bring to market what the customer needs.