Marriott International, which began as a Washington, D.C., root beer stand in 1927, now operates or franchises about 2,700 hotels worldwide. Measured by revenue, it's the largest hotelier in the world.
CEO J.W. "Bill" Marriott Jr. spoke last week about the changing industry at an editorial board meeting with USA TODAY journalists, including business travel reporters Barbara De Lollis and Roger Yu. An edited transcript:
Q: How's business?
A: Very good. We are seeing pricing power stronger than it's been since probably 2000. Most of the new supply (of hotel rooms) is coming in (limited) service brands.
We'll open about 23,000 rooms this year and, hopefully, between 25,000 and 30,000 rooms next year. We're redesigning our guest rooms in all of our hotels to be more contemporary.
A little cleaner in design — more functional. We're making major efforts to redesign our lobbies. The X Generation people can meet in little groups and take their BlackBerrys and computers down to the lobby if they want and sit there and work on them — have a cup of coffee, have a drink, meet with a couple of friends on a very much less formal basis than the old-style hotels.
Q: You've made it a priority to increase diversity among workers, suppliers and franchisees. Why?
A: If you look at the customers that we are serving, we need to better understand them, and so we are looking to get the best workforce and the best group of managers. In each of these areas, we have put in programs for development plans (and) mentoring for our managers and associates.
For our franchisees, we have been doing some things with financing plans looking at how they develop hotels.
Q: The business conditions you describe today are the polar opposite of the situation after Sept. 11, when people weren't traveling. What does that say about people's attitudes about travel since then?
A: I think around the world, people seem to be accepting of the fact that there is more risk today in travel. They're saying we are not going to let the terrorists get us.
We're going to take our vacations, plan our trips and not go underground like after Sept. 11. There was an immediate, knee-jerk reaction that your hotel was going to be blown up, and all of the airliners were going to be shot down. But they seem to have overcome it. The London (subway) bombings had a little effect on tourism, but minor compared to what it would have been four years ago.
Q: After Sept. 11, business travelers were expected to embrace telecommunications technology as an alternative to travel. Has that proved true?
A: We are seeing some of that; it's very hard to put a handle on it. But the eyeball-to-eyeball customer-contact approach to life is still a very important part of it.
Q: Immigration is a big issue. Does Marriott rely on immigrant labor to fill many hotel jobs?
A: We have huge numbers of Hispanics, Haitians and Mongolians. We have more than 30 different languages spoken in our hotels. We have many Eastern Europeans. Most of them are in housekeeping and working in the kitchens and laundries. If we didn't have people working in our hotels from other countries, we'd be out of business.
Q: Westin, your competitor, just announced a no-smoking policy.Will there come a day when you can't light up a cigarette in a bar in a Marriott?
A: We haven't made that decision. Whatever the rules are in the cities and towns, we will follow those. We've had hotels which try to go all no-smoking for guest rooms. But big groups say, "Hey, 20% of our people smoke. We need to book our group."
Q: Your middle son, your possible successor at Marriott, announced he will leave the company in January. Can you comment on your succession plan?
A: Not really. We have some really strong bench strength. As I've said earlier, the senior management of the company is in place and well trained and well thought of, and continues to grow and develop their abilities and talents. And I'm not going anywhere. My wife won't have me home for lunch.
Q: Foreign tourism in the USA is still below 2000 levels. What do you think needs to be done to bring back foreign tourism?
A: They've got to fix the visa problem. It 's too hard and too laborious in many, many countries to get visas. Everybody (who) has to get a visa to come to the United States has to be interviewed personally. When you take a country like Brazil, they've got three or four visa interviewers in three or four cities. People aren't going to travel 400 miles to get an interview. It's just a very difficult situation, and homeland security and state (departments) have got to get together and figure out a better way for the granting visas. The visa problem is a very serious issue.
Q: Rising health costs touch nearly everyone's lives. How is Marriott managing costs?
A: Five years ago, it was up around 15% to 20% annually. In the last couple of years, we've gotten it down below 10%, about 6% or 7%. Much of that is continuing to look for ways that you can offer associates different alternatives and finding out what is it that they really value the most, and trying to adjust the plans that way.