“More, more, more” is how Leeny Oberg, chief financial officer and executive vice president development, Marriott International, summarised the outlook for the world’s largest lodgings company at the Annual Hospitality Conference (AHC) in Manchester on Monday.
After picking up the mantra held dear by former executive chairman, Bill Marriott, Oberg told delegates that “excellent demographics in the travel space” signalled success for brands across the board. “Per country, travel & tourism (T&T) is growing at a faster rate than GDP,” she noted. “While a country like the UK might not be growing as rapidly as India – which is seeing a 7 percent growth rate – T&T is still expanding faster here than GDP.” Key factors behind this growth include “the continued preference for experiences over goods and more people entering the middle classes”, she added.
Marriott’s midscale adventure
Oberg, who joined Marriott in 1999 and recently signalled plans to retire, described some of the changes she had witnessed in her 26-year journey with the company. “As part of our desire to meet customers’ travel needs, Marriott moved into the midscale space to expand the pitch we want to play on,” she said. Four Points Flex by Sheraton, for example, which only launched in Europe, Middle East and Africa (EMEA) in September 2023, now has 30 assets across the region.
From offering “classic hotels in certain markets”, she added, “we’re trying to be in all places, with all kinds of experiences, at all price points”, noting that “opportunities are endless”. Oberg said that Marriott currently enjoys a 4 percent share in the lodgings business internationally, and 16 percent in the US, illustrating further space in which to expand.
Growth levers
Some of the levers helping that growth have included a strong conversions story in a tougher construction environment, while luxury – “around 10 percent of our portfolio, and representing 10 percent of the pipeline” – is another area offering opportunities for progress. In the latter segment, Oberg signalled key projects in the UK, such the W in Manchester due to open in 2027, and the St Regis coming to London next year.
In the middle ground, she described the ongoing success of “collection brands” which have been particularly effective in the conversion space, such as Autograph Collection Hotels, The Luxury Collection, and the Tribute Portfolio. While the firm’s conversion strategy for soft brands was once US-focused, this is now a big part of Marriott’s European success. “Once they plug into [loyalty scheme] Marriott Bonvoy, there is an incredible draw,” she added.
Business environment
Speaking of Marriott’s recent deal to acquire the Citizen M brand, Oberg said that deciding between organic growth and expansion by acquisitions was a matter of balancing “the best returns… with an opportunistic approach”. Comparing the successful, organic growth of its budget brand Moxy, she said that Marriott was now excited to grow the “particular brand strength and aesthetic” of Citizen M. She added: “Around seven to eight percent of all the rooms we have added have emanated from a brand we have purchased.”
While navigating strong growth, Oberg conceded that certain aspects of the global business environment have been challenging in recent times. “We all are dealing with a world that has greater geopolitical tensions – all of business is dealing with that,” she said. “We pay attention to that and what it means for the guests at our hotels, for our associates, and global travellers.” However, she noted that the evolving environment also translated into “growth opportunities for our hotels to deliver experiences”.
The UK is a case in point. “In the UK, we have been growing our signings at 10 percent a year over the last decade,” she said. From around 161 hotels with 27,000 rooms, she said, “another 3,000 keys are on the way”. She described a climate where “opportunity tends to multiply” with “certain conversions and new builds bringing more”. She concluded: “The UK is an incredible economic and travel centre for the world, with an exciting mix of leisure and business guests.”