Luxury and leisure travel brought us out of the pandemic: David S. Marriott

David S. Marriott, the third-generation hotelier and the chairman of the Marriott's board who is visiting India to meet new and upcoming hotel owners, told Mint the company has signed over 5,000 rooms in 30 hotels this year alone, with a greater focus on leisure properties that will cater to millennial and Gen Z travellers. Edited excerpts:

Business travel, an important segment for most hotel businesses, was completely wiped out during the covid-19 pandemic. Has it grown back to pre-2019 levels?

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In different parts of the world, we see a different journey in terms of its full recovery. In the US, we still trail 10-12% in terms of volumes. Some companies have been getting more aggressive about mandating people to come back into offices. However, in the Asia Pacific, excluding China, business travel is above what it was in 2019, and that's also true for India. We're still seeing some trail in Europe.

Your second-quarter results showed some degrowth in China—similar to most luxury companies. You've also pared down your RevPAR projections to 3-4% in 2024, down from May's 5%. Your comment?

China was way off where we thought it would be this year, and the US is also moderating and getting back to normal RevPAR levels from the earlier high levels. About 6,000 of our 9,000 hotels are in the US and Canada and over 600 in the Asia Pacific (excluding China). But this part of the world—Asia Pacific—has been on fire. It has seen 14% year-over-year RevPAR growth. Europe also had a very strong summer, and the Caribbean and Latin America have done better than expected. So, it really is China and the US. We have a few hotels in Israel, Jordan and Egypt. Those are the three markets where we've seen the greatest impact from the unrest in that part of the world. But it doesn't have a significant impact on us as a company. That could change, obviously, if the whole region gets involved in this conflict. However, as of now, the impact on our business has been minimal, but the impact on lives has been significant, and that is tragic.

Does a slump in China mean you are focused more on India now?

We have signed more than 5,000 hotel rooms this year alone, with over 30 projects in the pipeline in the country. But China is further along in its growth-cycle in terms of travel and hotels, and so there is huge growth potential in India, in some ways even more so than in China now. India is an incredibly important market to us as well. It's the fifth-largest market for Marriott in the world. When I was here in 2008, we had just six or seven hotels here. Today, we have 153 hotels here and 85 in our development pipeline. We haven't even scratched the surface of the secondary and tertiary markets yet. So, the potential is amazing. We have 25,000 employees in India, and the success story is being driven by India's domestic travel. That in itself is a big market, and we continue to focus on that. However, we are not reliant on inbound to drive hotel success or revenues. The growth we've experienced in India—we exceeded 2019 levels back in 2022. Last year saw exceptionally strong growth across India. It was a record year, well north of 2019 numbers and 50% more in terms of RevPAR. The second quarter (April-June) wasn't as strong because of the elections, but demand is coming back really strong.

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You have quite a few brands that are not here in India. Do you plan to introduce any in the coming years?

In 2023, we bought City Express by Marriott brand in Mexico. So, at some point in time, that brand will come to India. We've also launched Four Points Flex by Sheraton, which we are launching in Japan by November. That's a mid-scale brand, and we see tremendous opportunity for that to come into India.

What will the next five years look like for your business here?

Of the hotels we've signed this year, 80% are in the luxury and premium space (Sheraton, JW Marriott, Westin). Before the pandemic, we were growing in the upscale category (like Fairfield by Marriott, Courtyard by Marriott, Four Points by Sheraton, Aloft, etc.). But in the last couple of years, there's been a real strong focus on luxury development, premium hotels, more so in resort areas.

There is a huge shortage of hospitality talent. Your comment?

We had a mass exodus of talent within our industry during the pandemic. And then, when business came back, it was much faster than expected. Staffing up our hotels coming out of the pandemic was a real challenge. In many ways, we now have a largely new workforce, having turned over almost 50% of our workforce. So training, retaining associates and identifying different places to go for talent has become really important. This has caused us to really shift the way we engage with talent. Providing a bit more flexibility in the way the workday is planned and hiring more part-time associates is how we're doing that. We are also thinking non-traditionally about how we staff our hotels. We're also working with partners in India to develop talent.

Which section of the hospitality sector is understaffed now? Is it entry-level jobs or mid-level?

It differs in markets around the world, but the talent that we have struggled with the most since then is in food and beverage, housekeeping, and engineering. However, we've worked with partners to help us through some of these challenges. We've had to outsource in different parts of the world.

Are there any fundamental changes in how hotels are perceived or how they work?

The pandemic had a big impact in a lot of ways. A key learning is how important leisure travel is. We were earlier pretty reliant on business travel and group business, and the pandemic really reinforced the importance of the leisure traveller. That's a segment that's been growing, and business travel has been declining slightly. So, there's a greater focus on leisure travellers coming out of the pandemic. Luxury and leisure travel brought us out of the pandemic first. The strength in the luxury side has been a wonderful surprise.

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In India, consumers are spending less on goods and more on experiences. Do you see that in hospitality, too?

Yes, it's something that they want to make an investment in. They want to see the world and have those Instagrammable moments. As a result, we're in the midst of a big technology transformation. We're replacing our property management and reservation system, and we're replacing the backbone of our loyalty programme. That's going to give us the ability to be more targeted in the services we provide to our customers, to know more about their preferences, and to incorporate artificial intelligence so that we can understand their needs a bit better.

Aren't loyalty programmes becoming less and less relevant? Aren't customers far more price-sensitive and less loyal to brands?

Actually, they are becoming even more important. We now have 210 million members in the ecosystem. They're looking for creative ways to redeem their points, such as to see Taylor Swift, Ed Sheeran, and others at concerts. If a loyalty programme provides people with the choices and opportunities they're looking for, and if they perceive that as a real benefit to them, they are likely to be more loyal.