We asked him some questions at the International Hospitality Investment Conference (IHIF) in Berlin at the end of August 2021. This is an edit of the interview.
When will business travel return?
One of the things we’ve learned through the pandemic is that it is increasingly difficult to talk in generalities, you almost have to talk by city, by country, by continent and by quality tier, but I do think broadly if you look from 100,000 feet the recovery has been driven by leisure.
Our second biggest market, China, has been fascinating to watch. We hope that the shape of the recovery curve in China provides a bit of a blueprint of how the rest of the world may recover. We saw revpar [revenue per available room] back to above pre-pandemic levels across the Greater China market, but we saw it by segment back to pre-pandemic levels. So not only was leisure significantly above where we were above pre-pandemic, but business travel and even group had effectively returned to pre-pandemic levels. So that was encouraging.
In the US, our largest market, the recovery has been led disproportionately by leisure, as you might expect, but we are seeing some encouraging early signs around the return of business travel. The Fall will be very telling for us, and I think for the industry more broadly. You’ve seen this in Europe and seen it in the States, many of the big multinationals have pushed back by a month or a quarter the return to the office, which we’ve always thought would be a pretty significant catalyst for the return of business travel.
The conventional wisdom was that leisure would lead the recovery, business travel would follow and then group business would limp back. Yet we’ve seen in selected markets that groups have come back, are increasingly confident in the hospitality industry’s ability to host meetings, because of the measures around safety and cleanliness, and so we are seeing bookings there as well.
So we are confident with the transient business and group business, but with one caveat. We believe it will be increasingly difficult to distinguish precisely the trip purpose of someone walking through the lobby of one of our hotels, and that’s ultimately good for our business in the long term with the blending of trip purpose and longer trips.
There are lots of opinions out there about whether business travel is dead or whether it’s going to be reduced by 50 per cent or 20 per cent. Time will tell, but in a very positive way for the hotel business, it will be more difficult to have a precise measurement, because it won’t be crystal clear exactly why our guests are in the hotel, whether it’s for business or leisure or a combination.
Some big corporates have said they will reduce the number of trips they will take in the future.
Like any statistic we have to peel the onion a bit. Fewer flights [booked by large corporates] does not in and of itself directly translate to fewer occupied room nights. We’ll have to see how it evolves. Perhaps fewer trips, but longer trips may materialise which would be difficult for our colleagues in the airline industry but potentially less impactful for the hotel industry.
You can’t encourage people to travel, if they don’t want to, can you?
No, but the principal thing we can do is continue the great work we have done around inspiring confidence in the safety of travel. Making sure that anywhere in the 138 countries where we operate today our guests arrive, they have a hospital grade cleanliness in their guest room, they see associates masked consistently, they see signage for social distancing, they see hand sanitising stations at every turn, that’s probably the thing we can do best.
We can also do a great job at communicating what to expect when you arrive and if you go to marriott.com there’s a bar you can click on that gives you very specific data at what’s going at that particular hotel – are the restaurants open, are they operating on reduced hours, is the gym open, do you require a reservation… You also receive a pre-arrival email and we have also provided some scripting for our front office agents to reinforce that.
Business travellers are all standing around the edge of the pool, trying to figure out who’s going to jump in. I had a dinner meeting with six partners from one of the big global consulting firms. I said to them that “Your young consultants were legendary for jumping on a plane, flying around the world to Singapore to make a one-hour pitch and then flying back home.” I said, “How do you think that is going to evolve.” They said, “We’re in the customer service business, we need to engage with our customers and so we will continue with business travel.
Those legendary extreme trips may very well fall beside the wayside, maybe because of cost containment, or fall by the wayside because we are keenly focussed on reducing our carbon footprint, or a combination of those factors.”
And I said, “That is perfectly logical and understandable. But, ”Let me ask you one question. What happens when your biggest competitor chooses to actually make that extreme trip for one hour and wins the business?” And all the partners laughed and said, “Well, we will all go right back there as well.”
The carbon footprint piece is real and something the industry needs to be focussed on. But I am, as you might expect, much more optimistic about a little different looking return of business travel.
It seems like governments haven’t listened to the industry
The week I am back in Washington DC, I have a meeting with the US Secretary of Commerce, and that conversation will be I think largely dominated by a discussion around getting the Biden administration focused on border policy. Arne Sorenson sat on President Obama’s Export Council, and I think did an extraordinary job not just of reminding the US Government not just about the impact on the US employment picture from successful and thriving tourism and travel industry, but the fact that inbound international spend represents an export and it’s quite valuable.
Obviously Biden was the VP – and the Secretary of Commerce is keen to have that conversation. In addition, we have the American Hotel and Lodging Association (AHLA), and there are similar entities around the world, and it is incumbent on us not just as leaders in terms of scale but also our peers. I am talking to Chris Nassetta at Hilton, Mark Hoplamazian at Hyatt and Keith Barr at IHG to build consensus across the big global brand players that we’ve got to use the power of this broad employment base to encourage governments to think and act more deliberately around helping us drive a return in travel and tourism.
What we saw in the US, candidly, was our friends in the airline industry were better coordinated. When you look at some of the aid packages that the US Federal Government offered, it was because the airlines had been through this before, they had a quick and coordinated response, a well-articulated request for support and were quite successful. One of the learnings for me is that the hotel segment of travel and tourism should aspire to have that same level of coordination in the face of a future crisis.
by Tom Otley