Marriott CEO Talks With ASTA Agents
by James Shillinglaw /Sorenson at the AGC.
Less than four days after Marriott International closed on its $13.6 billion purchase of Starwood Hotels & Resorts, Marriott CEO Arne Sorenson found himself in front of ASTA travel agents at the ASTA Global Convention in Reno. In an on-stage interview with CBS News travel editor Peter Greenberg, Sorenson talked about a wide range of topics, including the merger and his company’s distribution strategy.
With the Starwood merger, Marriott now has 5,700 hotels, 30 brands, and a total of 1.1 million rooms, with another 370,000 under development, in more than 100 countries, 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 about it,” Sorenson said. “It’s transformative for Marriott…increasing our size by 50%.” He also said such mega-deals don’t come around that often, so competitors won’t rush to do the same thing and trigger a lot of similar mergers.
Sorenson was quick to say that the deal won’t necessarily affect hotel pricing. With Starwood, Marriott now controls 15% of the hotel rooms in the United States, or one in seven rooms, but 65% of its hotels are franchisees that do their own pricing. “There’s total transparency in pricing,” Sorenson said. “It’s available to the entire industry. The notion that we could drive pricing is not true. We do know we can drive occupancy. Hopefully, we get more share of wallet.”
Sorenson also said Marriott will keep all 30 brands on its roster, including the 11 it just acquired in the Starwood deal. “In an abstract world, 30 brands would be too many,” he said. “[But] these brands already do 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 that they’ve been caught in the middle as Marriott has tried to reinforce its relationships with existing customers who end up buying hotel rooms through online travel websites and search engines. “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, Sorenson said the challenge was how to maintain relationships with customers when the perception is that they can get the best price with third-party online websites, even though that’s not true. “We thought the only way we could cut through the clutter is not that you get 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.”
Greenberg then asked about whether Marriott’s relationship with travel agents is more relevant today. “I’m not sure it’s more relevant, but it’s just as relevant,” Sorenson said. “Agents provide value to corporate and leisure customers. They help manage corporate programs or put together that special vacation.” On the other hand, he contrasted that with online players who sometimes deliver value and sometimes don’t. That can translate into a threat when they start taking business from Marriott’s existing customers, he said.
While Marriott’s relationship with travel agents may have faced some challenges in recent times, it apparently didn’t stop ASTA from recognizing the hotel company for its support of the trade. At the end of the interview with Sorenson, ASTA President and CEO Zane Kerby emerged to announce that Marriott had won ASTA 2016 Hotelier of the Year award.