Marriott International sees bigger groups of Chinese guests in the future, says its chief
Arne Sorenson, president and CEO of Marriott International, is confident about the growth prospects in China despite concerns about the economic slowdown in the country.
On average, the hotel group has been opening a new hotel once in every two weeks in China. Its existing 75 hotels make China Marriott's second－largest market outside the United States.
"In the long run, we are very bullish on China," said Sorenson, a member of the US President's Export Council.
Sorenson admits that the growth conditions vary from city to city. "Shanghai is the strongest market for us, while Beijing is among the weakest. But we are growing well and we believe the future will be strong," he said.
On China's slowdown, Sorenson said: "I see it as two distinct areas. The first is that it has zero or no impact on Marriott. The second view is that the slowdown will have some short- and medium-term impact. However, there is one thing that I am clear about. The slowdown in exports will not have any impact on us. Even the slowdown in infrastructure construction does not directly drive demand for hotel rooms."
Sorenson said his main concern is about the slowdown in capital investment, such as real estate development. "This means that there will be fewer new hotel constructions in the next few quarters."
Sorenson, the first Marriott International CEO whose last name is not Marriott, succeeded Bill Marriott Jr in 2012 after an illustrious career with the global lodging company for about 16 years.
"About 7.3 million Chinese people are projected to travel to the US by 2021. That is expected to contribute nearly $85 billion a year to the economy and support 440,000 jobs. What that means is that we need to make sure we've got the requisite Chinese language skills and the facilities to welcome these guests when they show up," he told China Daily during an interview in New York.
Following are edited excerpts from the interview:
What kind of adjustments has Marriott been making to cope with the changing economic situation in China?
We have been adjusting our strategies continuously. That, however, had nothing to do with the slowdown. During the last five years, business has been slowly gravitating towards China. If you go back 15 years, most of our hotels in Shanghai were welcoming people coming to China from abroad. Today, even in Shanghai, the majority of our guests are Chinese people. That has impacted the way we run our hotels.
I suppose the second change would be our expansion into the secondary cities. And that's something that we have just started to do in the last two years.
How does China fit in the big picture for Marriott?
China is already our second－biggest market. It overtook the United Kingdom about two years ago. It will continue to grow faster than other markets and will remain our second-biggest market for a long time.
Which Marriott brand do you think will see maximum growth in China?
Most of the growth we have seen in China has been in the high-end segment. Our brands like Ritz Carlton, JW Marriott, Marriott and Renaissance have been received well in China. Going forward, I think that much of the activity would be centered on the medium tier, rather than the high-end segment.
That said, we will continue to bring in new brands to China, like Edition and Bulgari. We may also think of adding some lifestyle brands.
Who do you perceive as your competitors in China?
I think Shangri-La is one of our main competitors in China. They have been there much longer than us and are obviously strong players. Among global chains, Hilton and Starwood would be the biggest competitors.
What kind of special leadership and management skills are needed for championing growth in China?
If you look at our core team, you will find that most of the top leadership is Chinese. A decade ago, maybe even five years ago, many of our general managers were gweilo (a Cantonese term referring to foreigners, mainly Westerners). That has changed and we are getting in more local talent.
We believe that since our customers are more localized, we need to have more Chinese employees, especially those who can gain experience by rising through the ranks.
What do you do as CEO to motivate your international team?
Training and career growth are needed to motivate global teams. This is not only for China but the United States, France, or anywhere else. I believe that the more people have pride in their work, and have a sense of accomplishment, and can sense that they are growing, both in responsibility and expertise, the better they will be at work.
How would you rate the relationship that Marriott International has with its local partners in China?
I think it is very good. Every single hotel we have in China is owned by our Chinese partner. We do nothing in China without our Chinese partners, and many of them thankfully have done a number of hotels with us. Marriott International does not own anything anywhere, not even in the United States.
How do you handle hardship and setbacks?
I think the most important thing is to have a long-term perspective. Obviously, there are things that happen every day. It can be a crisis in the market or about the economic cycle. I think when you look long-term, the short-term issues are less significant.
That's why I say we are very optimistic about future in China. When you look at a population of a billion and a quarter, when you look at the way the economy is growing, when you look at the growth of the middle class, we think it bodes well for our business in the long term.
What kind of expectation does a business leader like you have for China-US relations?
I'll give you a piece of data that I think is really interesting. We have surveyed travelers around the world, asking them what trips they are most interested in taking. The highest percentage of people surveyed in the United States selected China as the place they would like to visit. And vice versa.
I think that's a sign that even though our politics can be complicated at times and our government systems are different, there is a fascination that we have for each other. This is something that bodes well for travel between the two countries.
What's the most impressive place you have visited in China and what's the next place you want to visit?
My first trip to China was in 1984, when I visited Guangzhou and Guilin. Because it was my first visit, it is still one of the most memorable trips that I have made. In 1984, we had an official guide with us all the time, making sure we were well cared for and we were in the right places. Today, I absolutely love being in Shanghai. I think it's one of the world's greatest destinations, with rich cultural and entertainment heritage, apart from great food and beverages.
I do wish that I had more time to enjoy the scenic beauty of the countryside in China. I did visit some regions of the Yangtze River, west of Chengdu. That's a very beautiful part of the country as well.
What books are you reading now?
I have just finished Hank Paulson's book Dealing with China. That's an American government official and American businessperson's views about China. There are a number of books that I read, sometime it's old history, sometime it's more modern, sort of business-focused things, but a lot about growth of the Chinese market.
What's your typical weekend as CEO?
I am probably traveling during most of the weekends. If I travel, I often engage in one way or another in the hotel business. While I am not traveling, I use the weekend to get exercise. I also use the time on hand for some personal socializing.
There is an American Dream and a Chinese Dream. What's your dream for Marriott in China?
I would like Marriott to be as strong in China as it is in the United States. I would also like our brand to be viewed as a Chinese brand.
Find more interviews at: http://www.chinadaily.com.cn/business/qaceo/
CV
Age: 56
Birthplace: Tokyo, Japan
Career:
2015: Board of Trustees for the Brookings Institution, CEO of Marriott International
2012: CEO of Marriott International
2009: President and COO, Marriott International
2008: Launched Marriott's rainforest preservation partnership with the Amazonas Sustainable Foundation in Brazil
2003-09: Executive vice-president, chief financial officer, president of continental European Lodging, Marriott International
1998-09: Executive vice-president, chief financial officer, Marriott International
1996-98: Senior vice-president for business development, Marriott International
1992-96: Partner, Latham & Watkins, Washington DC, specializing in M&A litigation
Education:
1983: JD, University of Minnesota Law School
1980: BS, Luther College in Decorah, Iowa
