The hotel deal to end all hotel deals is done with Marriott International on Friday completing its acquisition of Starwood Hotels & Resorts Worldwide, creating the world’s largest hotel company with more than 5,700 properties and 1.1 million rooms, representing 30 in over 110 countries.
The deal more than doubles Marriott’s distribution in Asia and the Middle East & Africa combined, and it presents Marriott’s Executive Vice President and Global Chief Development Officer Tony Capuano with the opportunity and challenge of a life time. In total, the new Marriott pipeline stands at more than 333,000 rooms.
HOTELS spoke with Capuano on the morning of the historic day to talk about, among other things, his thoughts on what the deal means to his newly expanded development team and the owner community they service.
HOTELS: The deal is done, Tony. How does it feel? Does it at all feel like a big burden going forward?
Tony Capuano: Quite the contrary. From a global development organization’s position, it is a little like the start of the Kentucky Derby – you can almost tell which horse is going to win because it’s the one chomping at the bit to get out of the gate, and that is precisely how our combined development team around the world feels.
We are now unburdened by some of the restrictions we had from an anti-trust perspective. As I am in New York City today for all the events, literally my team around the world is starting to dig into their respective pipelines, prioritize opportunities, look for opportunities to accelerate growth and continue to fine tune the development organization. With some of the regulatory delays, we knew precisely what work we wanted to start and finally at long last today we get to do exactly that.
H: How do you convince owners and developers the new Marriott is the place to be?
TC: Really, this is the most important question. We make that case on two fronts: We talk about the extraordinary new revenue synergies that emerge from combining the two companies, creating this extraordinary set of revenue engines, a loyalty platform and getting owners and franchisees excited about the prospects scale can drive on the revenue side. At the same time, you get more granular and highlight the real economies of scale and benefits as it relates to operating margins.
Having a 30-brand portfolio allows us to fill in gaps. There were instances in past where we didn’t have the right brand solution and at this point it is hard to imagine we won’t have the right opportunity for everywhere partners want to grow with us.
We have a long legacy of being keenly focused on collaborating with our partners. There will be complexities and some riddles to solve, and they should count on us for having that same level of focus on their interests and collaborating with them to find solutions.
H: What is the initial development action plan?
TC: We continue to do the work we have been preparing to do, and now we are unburden by restrictions. Almost immediately in every corner of the world the legacy Marriott development teams and legacy Starwood development teams are having conference calls and meetings and getting to the work of growing the combined company. We are reviewing pipelines, organization structures and cross training across the brands.
H: How will your team shake out?
TC: It will increase in size without question. As of today, every Starwood developer is part of the team and will be through at least end of calendar 2016. While we are just starting the heavy lifting on the organization’s design, it is our hope and expectation that a significant portion of legacy Starwood team will become a permanent member of the combined company’s development team. We will grow significantly with our staffing.
H: How is Marriott going to differentiate its brands to development community?
TC: The good news is that among the many attributes of Starwood we found so compelling is that many of the Starwood brands were quite compatible with the existing Marriott portfolio. There are a handful of instances where we have work to do to make sure in the eyes of consumers and developers we have developed and articulated clear and distinct positioning. St. Regis, for example, is a great compliment to the Ritz-Carlton brand, but to really accelerate growth of St. Regis we have to put forth a distinct positioning and help owners and customers understand expectations of both brands and how they are distinct. Tina Edmondson (Marriott’s global brand officer, luxury and lifestyle brands) and her team are hard at work on the positioning statements.
H: Will any brands be repositioned?
TC: It is a little early to say. As we sit today we think we will keep the entirety of the brand lineup, so we think it is more tweaking rather than wholesale repositionings.
H: Will individual assets change flags?
TC: That will ultimately be done in collaboration with owners and the franchisee community, but certainly we are open to discussions if owners or franchisees think one of the new brands to portfolio might be a better fit for their asset.
H: What are your pipeline priorities?
TC: I don’t know if broad philosophical priorities shift that dramatically. In some ways our charge is simple: We want to have the right brands in the right places where are customers want to go. As we wake this morning, there are a lot more street corners we can offer to those customers, but we are still under represented in many geographies and segments.
So, if you look at the brands we are inheriting, a few things stand out to me. I think Aloft and Element, which we are very excited about, enjoy relatively modest distribution today and a tremendous opportunity to accelerate growth. We also have the ability to offer a pretty extensive and unique stack of soft brands with Luxury Collection, Autograph and Tribute. Tribute particularly is in its infancy and there is opportunity to accelerate growth there, as well.
H: How much emphasis will there be on select-service versus full-service growth?
TC: One of the trends we are seeing is the explosion in interest in select-serve platforms around the world. In the coming years expect to see rapid acceleration of growth of our select-serve brands in Asia, Europe, the Middle East and Africa. Adding Element, Aloft and Four Points to the portfolio only enhance our ability to take advantage of developer interest.
H: How are you welcoming your new development colleagues from Starwood?
TC: The process is well underway. After we signed the agreement last November, I started traveling around the world, doing town hall meetings in every Starwood development office and I had one-on-ones with all Starwood developers. That ‘welcome to company’ and get-to-now-each-other period is well underway.
I have scheduled combined regional meetings to do deep dive reviews of our pipelines. We will spend a lot of time with the brand organizations to make sure we are all aligned in relative positioning of the brands and then train to harmonize the two company’s philosophies about deal making to have a consistent view of how we want to grow our platforms around the world. We will have all those meetings over the next few weeks.