Making Room to Grow
December 1 1995 by Lorri Grube
The revolving door slides silently, disgorging a slightly built man who leisurely surveys the lobby of the Marriott Financial Center Hotel in downtown
Once inside, though, he is all business, smoothly transitioning from folksy politician to the shrewdly laconic CEO who has guided $8.4 billion Marriott International to the top of the roughly $40 billion
“We have to focus on growing,” the CEO of Marriott International answers simply, “and on strengthening and maintaining our brand as we grow.”
Such growth will be possible because Host Marriott-which only buys and sells real estate-took over about two-thirds of the chain’s $2.9 billion in debt, leaving its sister operating company with a lighter balance sheet, strong earnings, and the ability to move forward in the global arena. Though angry bondholders sued the company and top executives, alleging securities fraud, Marriott has since proven the wisdom of the plan he hatched with then-CFO Stephen Bollenbach. Since the split in October 1993, shareholder value for the two companies combined has increased from $16 a share to more than $50. Marriott International’s net income in the third quarter ended
“Interestingly, splitting up companies as we did seems to be the rage now,” Marriott muses. “Today, companies such as ITT, AT&T, and General Motors are trying to focus on a specific industry business as opposed to the ’70s and ’80s, when everybody was asking me, ‘What are you going to buy this week? You have to have 15 or 20 different businesses under one roof or you can’t be successful.’ That’s just not so. We sold our airline catering business because we knew we had peaked in growth. We had an airline catering kitchen at almost every airport in the
Bill Marriott, 63, did his own growing up in the hotel industry. His father, J. Willard Marriott Sr., started his global hospitality company in 1927 with a nine-seat root beer stand called the Hot Shoppe. After working in the Hot Shoppe throughout high school and college, J. Willard Marriott Jr. joined the company full-time in 1956. A year later, Marriott opened its first hotel: the 370-room Twin Bridges Marriott Motor Hotel in
Today, Washington, DC-based Marriott International has 170,000 employees and manages 1,000 hotels, the most recent opening in
There are 3.2 million hotel rooms in the
Each line has its own competitors:
Business travel accounts for 75 percent of Marriott’s business, though pleasure travel comes into play on the weekends. International tourism arrivals are up somewhat, particularly in
What about Marriott’s focus outside
Surprisingly, Marriott does not have a hotel in
Domestically, the hotel industry has ground to something of a halt, with few new units being built. That means demand for hotel rooms finally has caught up with and exceeded supply, allowing hotels to increase their rates somewhat. However, the hotel business is highly cyclical, and the economy probably will start to move through a down cycle between now and 1998, according to Michael J. Schroeder, chief investment officer at Naples, FL-based First International Asset Management, a fixed-income money-management firm. However, even though Marriott International carries a fair amount of debt, Schroeder says, it should be able to ride out the downshift, particularly with its varied product lines.
Despite brand erosion in many industries, such as food, apparel, and office supplies, Marriott claims travelers stick to names they know when it comes to bedding down. “People look for the consistency a brand name provides,” he says. “That’s why 70 percent of the hotels in the
During the next six months, Marriott will install a new front-office system for all its full-service hotels. This will allow faster check-in, simpler group bookings, and more detailed guest histories. “Right now, we’re in the process of trying to decide what information we need to have on our customers,” explains Marriott, whose sons, John and Steve, are Marriott managers. “Certainly, we want to know if a customer prefers a non-smoking room, king-sized bed, room with a view; and if he or she is a frequent traveler, credit-card user, etc.” In terms of guests’ personal preferences, the company isn’t quite willing to go the route of
The approach seems to be working, according to the company’s recent customer surveys. A firm believer in customer feedback, Marriott visits roughly 150 of his hotels each year, talking informally to customers as they enter the dining room or lounge in the lobby. And he visits with employees in the kitchen, laundry room, hallways, loading dock, anywhere and everywhere. “The problem is that as the organization grows, it becomes harder and harder to talk to guests personally every day,” laments Marriott, an active member of The Church of Jesus Christ of Latter-day Saints, who brings a single-minded, Mormon work ethic to his business. “You can’t do it all yourself. You have to rely on your organization.”
“Bill Marriott has done an excellent job of managing such a large company,” says Joseph J. Doyle, managing director at
Concurs First International’s Schroeder, “Bill Marriott is an effective leader with the ability to motivate his people, and he has a good handle on his business.”
Marriott’s latest venture has been providing outsourced services in areas such as food-service management to hospitals and schools. However, the CEO claims he has no plans to enter any other new businesses. “We have enough to do,” Marriott says with conviction. “Our cup runneth over.”
J. WILLARD MARRIOTT JR.
Chairman and Chief Executive
Family: Wife, Donna; four children and 11 grandchildren.
Boards: GM, Outboard Marine, the Mayo Foundation, the National Geographic Society,
First job: Working in the kitchen in the Hot Shoppe restaurant in
Outside interests: Family and church.
Best decision: Marrying his wife.
Biggest mistake: “I’ve made so many it would take all day to answer.”
Mentors: Father, mother, wife.
Favorite hotel: Marriott’s Camel-back Inn Resort,
Car: 1995 Buick station wagon.
Latest book read: “Monty” by Alistair Horne.
Motto: “Success is never final”