Marriott International recently reported a fourth quarter in which business transient demand reached nearly 90 percent of 2019 levels, and the hotel company has said it was able to command year-over-year 2023 corporate rate increases in the high single-digit percentages. But increased blending of business and leisure travel is changing some Marriott strategy. The company’s CEO and recently named president, Anthony Capuano, joined BTN editorial director Elizabeth West during a virtual Business Travel Show Europe kickoff event. Edited excerpts follow. Check back later this week for the second part of this two-part Q&A.
Marriott’s Anthony Capuano discusses:
- 2023 corporate rate negotiations
- Marriott’s stance on the RFP process
- The chain’s plans for housekeeping service
BTN: I want to start with the addition of the president role to your title. Does that change your role at Marriott International?
Anthony Capuano: It really doesn’t change it too significantly. Obviously, I was humbled by the decision of the board, [but] what excites me is it gets me that much closer to our leaders around the world.
BTN: Marriott just had a positive earnings call, and you called out the idea of successful corporate negotiations for 2023. With high single-digit rate increases over what were largely sustained rates from 2020, how are you working with your corporate partners even though those rates are going up?
Capuano: In the face of the pandemic, one of the things we saw whether it was our relationship with our customers, our relationship with our owners and franchisees, even our relationship with our own associates, [is that] we all came together to the same side of the table to battle a common foe, which was the impact of the pandemic on the global tourism and travel sector.
As it relates to our customers… we kept our special corporate rates flat for two years, reflective of the challenging economic environment that all of our customers were facing. As we saw travel recover, as we saw demand patterns recover, we then engaged with those customers and said, “We’re glad we were able to help during that two-year period, but now the demand has returned, we’d like to get back to some sense of normalcy.” It was those discussions that resulted in rates ending up in those high single-digit levels over a base that had remained constant for two full years.
BTN: Market rates in the depth of the pandemic were quite below those 2020 negotiated rates. Did you have a lot of corporates renegotiate during the pandemic?
Capuano: We had some, but rate negotiations at their core tend to be a little bit about supply and demand dynamics. So many of the large corporates had ratcheted back their volume of travel in the face of the pandemic that, in some cases, it really didn’t make a lot of sense to have those discussions. There were certain industry segments that were traveling very early in the recovery, and I think to the extent there were renegotiations it was probably centered in those limited sectors.
BTN: Have the thresholds changed at all in terms of the business that Marriott, or the hotel industry as a whole, is willing to engage in conversation corporates? What is that starting to look like?
Capuano: I would maybe pivot a little to a discussion of blended trip purpose [because] in a pre-pandemic world it was relatively easy to tell you, with a high level of precision, exactly why folks were in our hotels—which of those visitors were business travelers, which were leisure travelers, which were group meeting and conference attendees—and those lines, to the benefit I think of our customers and to the benefit of the industry, have been blurred. We see more and more folks blending leisure and business travel, adding leisure days pre- and post-conference attendance, so I think it’s a little hard to do an apples-to-apples comparison pre- and post-pandemic. Not that that’s not good news for the industry, it just makes some of the slicing and dicing of data a little more imprecise.
[During] our earnings call, we talked a bit about day-of-the-week recovery patterns, and it was so interesting to us. When we did that analysis to look at the strength of recovery we saw on Sundays and Thursdays, which obviously in a pre-pandemic environment we viewed as shoulder days, and the speed with which demand has recovered on those days provides some empirical support to the idea that you’re seeing folks extend their business or group meeting travel by adding an element of leisure.