There was a lot to discuss during Thursday’s earnings call with Marriott CEO Arne Sorenson.
With many in the industry worried about the ramifications of the recent travel ban, Sorenson said Marriott International has not seen a major impact and assured that the seven countries affected are not places that generate a lot of travel to the United States. Still, though, he noted that the move could cause a shift in perspective from international visitors.
“International groups are saying they don’t want to bring an international group to the U.S. We have some anecdotes about folks who reached out to us who said instead of the U.S., how about a place in Canada? I don’t think this is a measurable impact today… I don’t think it would have much impact on transient business at all, because that is the type of travel that is most resilient.”
Sorenson also discussed the progress of integrating Starwood Hotels & Resorts, after acquiring the company last September. While Marriott has repeatedly said it will maintain all 30 distinct brands, Starwood’s Sheraton brand may decrease in the United States as Marriott looks to focus on strengthening its upper-upscale segment. Marriott began surveying Sheraton properties in the U.S. to better define brand standards and “where that brand should go,” Sorenson said.
“I suspect, however, we will see in 2017 that some of the hotels are most obviously at the bottom end of the brand; in other words, they didn't meet whatever standards were in place already,” Sorenson said. If “they don't meet any likely standard that we end up with, we'll see that renovations actually occur in some of those or some of those actually leave the system.”
It’s the strength in the luxury and lifestyle segments, Sorenson said, that’s going to draw in travelers and keep the company relevant in a shifting marketplace. Marriott now owns Starwood’s iconic W brand, as well as recently added lifestyle brands Aloft and Element, in addition to its EDITION, Moxy and AC Hotels.
“When you think about luxury and lifestyle particularly, these are places that travelers, when they dream about travel and when they think about the experiences they most intensely want to have, they are focused on brands like that,” he said.
The company linked its three loyalty programs, Marriott Rewards, Ritz-Carlton Rewards and Starwood Preferred Guest, but combining the technology platforms is still a work in progress, Sorenson added. In addition, determining the fate of their loyalty credit cards is another factor the company is working through. Sorenson said solutions to these issues will hopefully be completed for 2018.
Beating Wall Street expectations, Marriott’s fourth quarter earnings for 2016 were $244 million, up from $202 million in the same period last year, and revenue increased to $5.46 billion from $3.71 billion.