Marriott CEO on the ‘Resilience of Travel’ and New Paths for Growth

Anthony Capuano took the helm of Marriott International in early 2021 in what was in some ways a battlefield promotion, following the tragic death of the company’s president and CEO Arne Sorensen. After navigating the tumultuous post-pandemic era, Capuano finally has time to pause and fine-tune strategy at the world’s largest hotelier.

“The speed with which we went from the depths of the pandemic and its impact on our business to achieving record-setting EBITDA in 2022 and the strongest quarterly EBITDA that we’ve ever had in the first quarter of 2023, to me, I say that illustrates the resilience of travel and that illustrates the wisdom of our business model,” said Capuano. “So you shouldn’t expect any deviation from our core strategy.”

Yet fine-tuning may be in order. Capuano wants to see the company, which has more than 1.5 million rooms, expand faster internationally in hotel count and loyalty membership. He spoke with Skift on Monday during the New York University International Hospitality Industry Investment Conference.

To strengthen the group’s core lodging business, Capuano’s team will look to drive down costs. Steps include “continuing to drive down affiliation costs in the franchise portion of the business” and boosting margins in the managed portion.

Marriott’s announcement on Monday of a planned new extended-stay brand partly illustrated this. It’s in the mid-scale segment, meaning a typical nightly rate of $80 in the U.S. and Canada. That’s the first time Marriott has played at that low price level and with development costs of under $14 million per property. The move came just after Marriott closed on its acquisition of Mexico-based City Hotels, which also is mostly in the mid-scale segment and has relatively reduced costs to develop and operate.

Capuano said his team is still evaluating if the City Hotels by Marriott brand should come to North America to appeal to transient leisure travelers and complement the new extended-stay brand.

Going for Global Growth

Marriott, which is in 138 countries and territories today, has 20 more countries in the pipeline. The company has 1.5 million rooms, and about 60% of its development pipeline is outside the United States. It is aiming for at least 4 percent net rooms growth this year.

Capuano credits the company’s overseas momentum with a decision to decentralize some decision-making away from its headquarters.

“When I took over development in 2009, more than half of our transactors globally were ex-pats, which was pretty standard for the industry,” Capuano said. “You had a lot of Brits and Germans sprinkled around the world.”

“Today, more than 90% of our international development teams are living and working in their home countries or regions,” Capuano said. “That’s why we’re getting a disproportionate share of the deals in those markets. At its core, I believe real estate is a local business.”

Looking for Adjacent Businesses

Capuano wants to expand into adjacent categories, including recent entries into Ritz Carlton-branded yacht-style cruise ships, home rentals through Marriott Homes and Villas, and a rapidly expanding branded residential business.

“We’ll continue to build off this extraordinarily strong core lodging foundation that we’ve built and explore adjacencies that we think will enhance your experience as a traveler and enhance the overall economic proposition of our shareholders,” Capuano said.

Leaning Into Loyalty

Capuano also wants to continue strengthening the Marriott Bonvoy loyalty platform by growing it internationally.

“In some ways, it’s the most important of our brands because it pulls together the entirety of the portfolio,” Capuano said.

“We want to ensure that if you’re a member of Marriott Bonvoy, for any travel purpose anywhere in the world, you never need to look outside that ecosystem,” Capuano said. “So we need a broad portfolio across multiple price points and multiple geographic locations.”