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Tuesday, June 18, 2024

Why Marriott is taking a flexible approach to brand standards – at least for now

When the Covid-19 pandemic hit at the start of 2020, Marriott, like many other hospitality companies moved to cut its owners some slack when it came to dealing with brand standards.

These requirements that can cover anything from the placement of a desk in a room to the type of breakfast on offer are designed to create a certain degree of uniformity but vary across the industry from brand to brand.

Marriott, understandably, was keen to allow a certain degree of flexibility, cutting back what needed to be done to manage a hotel at such low levels of occupancy. But as leisure travel in particular starts to ramp up across the world, this approach will start to change. The difficulty, as Marriot’s chief financial officer, Kathleen Oberg explained on a recent call with analysts, is going to be striking the right balance with services such as housekeeping.

“Our view is that we will continue to be looking at this really with an eye towards occupancy in a variety of markets where we’re going to need to be flexible. But I do think by the end of the year … that we will have been able to make some decisions as we look forward about how we’ll manage this as occupancy really gets back closer to being normal,” Oberg said.

“And in that regard, we do believe that there are some things that we can do to improve the productivity of the hotels. It obviously varies a lot by the tier. What is expected at a select service hotel is very different from a beach luxury hotel. But I do expect as we get into ’22 that we will have re-established where we are on the brand standards.”

Marriott’s Q1 update

Despite many countries across the world limiting travel at the start of the year, Marriott managed to keep its headline net loss in the three months to the end of March down to $11 million, compared with a profit of $31 million a year ago.

Crucially, Marriott is seeing a bounceback in markets where travel is less restrictive such as China, where occupancy on the mainland reached 66% in March, nearly the same as 2019’s figure.

“In our largest region, the U.S. & Canada, demand increased rapidly as vaccine rollouts accelerated.  Occupancy started the year at 33 percent in January and reached 49 percent by March.  Leisure demand gained momentum, particularly in ski and beach resort destinations,” CEO Tony Capuano said.

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