“There are challenges today. There is no construction in the debt market, especially in greenfield sites,” he said. Capuano said the common prediction was that the pandemic years inevitably would have created a storm cloud, “and that is coming now,” referring to excessive costs, a lack of deals, the loss of labor and traditional bank lending. On top of all that, the latest war in the Middle East is on everyone's minds. “There are huge opportunities in certain markets, but Israel-Gaza is unsettling, extraordinarily challenging. We thought terrorism had subsided a little, but seemingly, no,” Capuano said.

The Travel Trends That Should Last

Hotel demand has shifted, perhaps permanently, as traditional shoulder nights Thursday and Sunday are filling up just like the weekends. Capuano said hoteliers will have to determine if the rate pricing model needs changed for good. “Blended travel is going to endure. The most interesting data point we’ve seen is around recovery per day per week, and it is Sunday and Thursday. It is not easy to pivot on this, but we’ve had to think differently about what offerings we provide and on what days,” he said.

Capuano said the term “bleisure" — when hotel guests extended business trips by a day or two for leisure purposes — might be out of date since demand has shifted so significantly. He added that Marriott's loyalty program, Bonvoy, was a critical tool when consumers felt safe traveling again. “There has been a deep engagement with our guests, and I cannot underestimate the importance [our loyalty program] played when no one was traveling. … Our guests see their relationship with Bonvoy as being one that is transactional,” he said. As for what excites him on the horizon, Capuano said he's intrigued by how the hotel industry could benefit from artificial intelligence tools. “I had 30 MIT graduates at [our headquarters in Bethesda, Maryland], and this one bright student said, 'With all these great advances, do you welcome your first hotel with no employees?' And I said, 'Oh, my goodness, I hope not.' But if we free staff from tasks such as check in, it will give them a few more minutes to look a guest in the eye and find out what their trip is about and why they are there,” Capuano said. “And if someone calls and says we need a hotel in Brazil with a suite and connecting rooms, a spa with a lap pool and an Italian and Japanese restaurant, AI will find that instantly,” he added.

Company Strategy

Marriott has been mostly out of the hotel ownership game for a while, and Capuano said that's the strategy the company will continue. “Of our almost 9,000 hotels, we own 20, and I’d be happy to sell you any one of those 20. ... Historically, we’ve been disciplined in our use of the balance sheet, and you will not see Marriott move away from our asset-light model. There will not be another Host Marriott,” he said, referring to the real estate investment trust Host Hotels & Resorts, which was spun off from Marriott as a hotel ownership company in 1993.

Across the hotel segments, Capuano said he wants Marriott to continue its dominance in the luxury segment. “About 10% of our 1.5 million rooms are in luxury, but they account for 25% of our revenue. For us, luxury equals focus and fluency, and we will do all we can to extend the lead we have created in [that segment],” Capuano said. He added Marriott will extend resources to expand more into the midscale hotel segment. “It is interesting to see the future, which is less of a bell curve. I feel upper-upscale still is trying to find its way,” he said.

CEO Outlook

Overall, Capuano said he is optimistic about the overall picture for travel demand. “Younger generations have changed from wanting material goods. … Many independent assets [have seen] the benefits of brand and loyalty engines, and another thing quite encouraging is that even though a large percentage of human capital left the industry, we are seeing our traditional labor levels return, and with good people,” he said. He reiterated guidance the company gave during its third-quarter 2023 earnings report on Nov. 2, stating it “predicted global revenue per available room for full-year 2024 to be up in year-on-year terms by 14% and internationally by 31% or 32%.” “We normally do not give guidance, but the strength we continue to see is encouraging. There has been extraordinary growth in [guest] wealth,” he added.

Capuano said it meant a lot that during COVID-19 the hotelier community came together and “put its petty differences to one side.” “We can be a little numb as an industry as to what the pandemic really meant to our staff, who chose careers helping people and then saw occupancies fall to low single digits,” he said.