Marriott’s Arne Sorenson: 2019 CEO of the Year

Many of those are digital-first companies, which make them a bit threatening for a company like us learning the digital space, hopefully quickly. We’ve done a lot already, but we’re not a digital-first company. We’re an operating company first. So, we’ve got to figure out how to marry that with our historic culture, and learn and gain from that without giving up this service culture.

We’ve had one advantage, but it’s not ironclad, and that is, unlike a lot of retail, you can’t ship a trip to somebody in a box. We own the stay, we would say, and that’s a positive thing. I say it’s not ironclad because if you’re Expedia and you can get yourself in the middle of our relationship with our customer and extract a tax in order to deliver that customer to us, we might still own the stay, but we’ve just changed the economics of our model. Now, of course, Expedia has a home rental platform. Booking.com has a home rental platform. There are some smaller players, but Airbnb is the first one to take technology and deliver a different product and, to some extent, invent the so-called shared economy in the hospitality space.

If you replayed every step that Airbnb took and said, “Imagine instead Marriott took that step,” we would have been crucified, right? The taxing authorities in these jurisdictions would have said, “The hell you’re not paying taxes. Of course, you’re paying taxes.” We would have had to comply with laws that Airbnb never had to comply with early on because they were a new shared-economy platform. And politicians love that, and nobody really knows where it’s going.

I met with the Airbnb founders very early in this process and was thinking about it in these ways in the first conversation probably six years ago. We couldn’t do this. Nobody would let us get away with what they’re doing. So, we’re watching, trying to figure it out. Maybe we can be blamed for moving too slowly, but, ultimately, what we decide is there is a place in the home rental market for quality. I want something where a brand is going to stand behind it. If it doesn’t go well, I want to be able to call somebody. It’s not going to be selling the cheapest room—which is never where our business has been—but it’s probably going to be in the middle of the market and a whole-home product. We think we can deliver the technology solution, the loyalty linkage and a branded experience in a way that will allow us to offer a product that is different.

How do you help the culture absorb a change like this?

It’s not hard. People want to be involved in change. People can be threatened by change, of course, particularly if it’s about contraction. The bulk of our change has not been about contraction. It’s been about the opposite. In that context, you see people just drawn to it. The bigger challenge is ensuring that you get the right people drawn to it and not too many people drawn to it. Because we’ve still got a core business, and you can’t all run off and get after the new shiny penny.
People like innovative change. They like to win. Everybody likes to win.

How do you make sure they know that they’re winning—all the way down to folks who are cleaning rooms?

Probably the more you tell them directly you think you’re winning, the more damage you do. We are deliberately fairly humble in the way we talk about what we’ve accomplished. For example, when we closed the Starwood deal, there was a lot of self-congratulation. We had general managers’ meetings in every market, and we said, “We have not done anything to be congratulated for. We paid more for Starwood than anybody else would pay for it. That is not victory. Victory is what we do with this deal, and that work is just starting.”

One of the things that the Marriotts have talked about for decades is success is never final. The more you convince yourself that you’ve really gotten good enough, if you really think that, you’re probably [in trouble].

How do you keep from doing that? How do you keep from feeling too successful?

It’s not a temptation for me, maybe sometimes to the frustration of some. I’m convinced we can always do better. I’m not really wired to do a commercial. I was just having a conversation with the folks about our next board meeting, and I’ve been saying for years, “We don’t go into the board with an advertisement of how well we’ve done on something. We go into the board with the things that we’re worried about.” There are always things we’re worried about. Because that’s where the risk is, that’s where our emotional energy is focused, that’s where their counsel is going to be most relevant. It’s who I am, but I think it’s who the company is, too.

What are those conversations like? How how do you engage the board?

We’re sort of old fashioned in some respects. We meet only four times a year. They are fairly efficient. It’s a 24-hour, maybe a little longer, thing. We’ve got a board of 14. When I became CEO, I said to Mr. Marriott, who is still the chairman, “I’d like my entire team at every board meeting because I think the board needs to know who they are, which you only get from repeated interaction with folks, give them the ability to always have a line towards succession, which is the board’s fundamental responsibility. And give them their own read about the way the team is working and a chance at the dinners or lunches or wherever to hear more.”

Bill Marriott said to me 25 years ago, “The board’s job is to hire and fire the CEO, period. There’s nothing else that they can do for you.” He doesn’t think that anymore. I think today he would say, “The board, they are smart people. They have got good breadth. We should be getting their counsel.” That doesn’t mean you go to them and say, “What should we do about this problem?” We should say, “Here’s what we’re worried about and working on, but here’s also what our strategy is,” or, “Here’s when our strategy will be ready.” So that you’ve got the ability to get some input and reaction without pretending that the board will have a better set of solutions.