Less than four days after Marriott International closed on its $13.6 billion purchase of Starwood Hotels & Resorts, Marriott CEO Arne Sorenson found himself front and center at ASTA Global. In an interview with CBS News Travel Editor Peter Greenberg, Sorenson talked about his company’s merger, distribution strategy and relationship with travel agents.
With the Starwood merger, Marriott has 5,700 hotels, 30 brands, and a total of 1.1 million rooms, with another 370,000 under development, making it arguably the largest hotel company in the world.
Greenberg asked Sorenson whether the deal alters the landscape for the hotel industry for some time to come. “We’ll see,” Sorenson said, noting that “it’s transformative for Marriott…increasing our size by 50%.” He also said such mega-deals don’t come around very often, so competitors are not likely to rush to do the same thing.
Sorenson was quick to say the deal won’t necessarily affect hotel pricing. Though Marriott now controls 15% of U.S. hotel rooms, 65% of its hotels are franchisees that set their own pricing. “There’s total transparency in pricing,” he said. “The notion that we could drive pricing is not true. We do know we can drive occupancy. Hopefully, we get more share of wallet.”
Marriott will keep all 30 brands on its roster, including the 11 it just acquired in the Starwood deal. “These brands already exist in the marketplace…Every hotel is owned by somebody else and those people have invested big dollars in that brand. Instead what we want to do is…build big swim lanes between these brands.”
Of course, one of the biggest challenges travel agents have faced in recent times is being caught in the middle as Marriott tried to reinforce its relationships with existing customers, who often buy hotel rooms through online travel websites.
“Search engines can put themselves in the middle of every relationship we’ve got,” Sorenson said. “Every [search] result is somebody who is paid to be shown in search. We [even] have to pay for our own name.”
Given that, the challenge is how to maintain relationships with customers whose perception is that the best prices are to be found on third-party websites, even though that’s not true. “We thought the only way we could cut through the clutter is not that you get the same rate, but that you get a better rate,” he said. “So customers know it’s in their interest not to go through those [online booking] channels.”
Asked whether Marriott’s relationship with travel agents is more relevant today, Sorenson said, “I’m not sure it’s more relevant, but it’s just as relevant. Agents provide value to corporate and leisure customers. They help manage corporate programs or put together that special vacation”—while online players sometimes deliver value and sometimes don’t, and can translate into a threat when they start taking business from Marriott’s existing customers.
While Marriott’s relationship with travel agents may have faced some challenges in recent times, that didn’t stop ASTA from recognizing the hotel company for its support of the trade. At the end of the interview, ASTA president and CEO Zane Kerby emerged to name Marriott as ASTA’s 2016 Hotelier of the Year.
* * * * * * *
In an age of terrorism, natural disasters and other calamities, the State Department is urging travelers and travel agents to turn to its dedicated website and join the Smart Traveler Enrollment Program (STEP), said Karen Christenson, deputy assistant secretary of overseas citizen services. Travel.state.gov offers up-to-date information on travel to countries around the world; “We hope it’s the first place your travelers go, and that you go as well, to look for information about planning travel and assessing risks.”
Christenson cautioned that the State Department “is expecting a huge tsunami of?passport applications” in the coming year, and called on travel agents to advise their clients to apply as soon as possible if theirs are expiring. “Make sure there are two blank pages?in their passports and six months before the passport expires, as more and more countries are requiring that.” Indeed, she noted, a passport problem “is the kind of disruption to a?dream vacation that travel agents can help your clients avoid.”
She also said that many travelers mistakenly believe their credit cards cover their travel insurance needs, when that is simply not the case. Travel agents should ask customers about any health issues and even potentially dangerous sports in which they plan to participate, and suggest travel insurance that meets their unique needs. For scuba divers, for example, insurance that covers a hyperbaric chamber is perhaps the most important of all, and an emergency medical evacuation can run as much as $120,000, she said. In an emergency, she has seen travelers with insurance being whisked away from danger while those without it were left to fend for themselves.
* * * * * * *
ASTA’s International?Chapter Participation Award went to the Nigeria Chapter, which brought 10 attendees to this year’s convention. The International Chapter of the Year Award, for efforts and achievement?throughout the year in support of ASTA, went to the Kenya?chapter.
* * * * * * *
As consumers’ interests evolve and new travel trends emerge, it takes innovation to make agents shine in a changing market, said Gloria Bohan, president and CEO of Omega World Travel, who partnered with ASTA to present the 2016 Entrepreneur of the Year Award. “Agents are curators. The new distribution channels allow them to create unique programs, fresh marketing methods and new packages. And suppliers will continue to value this robust sales distribution channel,” Bohan said.
Bohan founded Omega World Travel in 1972. Since then, she’s transformed the one-person office into an agency with annual revenues in excess of $1 billion, 150 company-owned offices and 650 employees worldwide.
* * * * * * *
TMR’s Best Line of the Day comes from Jason Westbury, CEO of the Australian Federation of Travel Agents. The disruptions that affected travel agents in a year of terrorism did not deter travelers from Down Under, he said. No matter what, “Australians are always happy to give it a go,” he said. “Australian?travelers see terrorism as an adventure sport—it makes travel sound exciting to us.”
But seriously, he added, “the world needs us to keep traveling—and this room has a really important role to play in keeping travelers traveling in the face of all this.”?