This is the second part of our interview with Tony Capuano. If you missed part one – covering M&A, resorts and staffing challenges – you can find it here.
The Covid-19 pandemic has put a strain on all types of business relationships and the hotel industry hasn’t been immune from such pressure. There have been plenty of stories across the world of owners clashing with tenants and operators. Nobody really wins when properties are unable or severely restricted from taking customers.
For Tony Capuano, CEO of Marriott International, this means continuing to work hard on building those relationships, especially with the owner and franchising community.
“My sense, in terms of how Marriott has navigated those challenges, in some ways we've come to the same side of the table. And really in lockstep, tried to figure out solutions to help us collectively navigate this.”
Bullish on Business Travel
Owners may have lost millions or even billions of dollars in enterprise value and it’ll likely be a long road. Something that will help is the return of corporate travel. As we discussed in part one, leisure travel, especially domestically, is coming back pretty strongly, but there are question marks over how fast meetings, events and business trips will recover to pre-pandemic levels. Indeed, some think they never will.
You’d expect the CEO of a major hotel brand to be bullish on the sector, and Capuano doesn’t disappoint.
“I think so. It won't surprise you that I, and we the company, are quite optimistic about the return of business travel. You've heard lots of opinions over the last year, ranging from Bill Gates saying 50% will never come back, to others saying it'll come back, and then some,” Capuano said.
“I'm optimistic, but there were also some trends I think, that will endure even beyond the pandemic. That if it turns out I'm too optimistic and 10 or 15% of business travel does not come back, I think there are a few trends that are quite encouraging to us in terms of mitigation of any loss demand.”
Capuano pointed to a couple of trends that could become advantageous for the company. The first is the blending of business and leisure travel. So someone might take a holiday with their family but might spend a few days working as well. The second is fewer but longer trips.
Regardless of the trends, Capuano is seeing signs from some of Marriott’s biggest markets that things are returning to normal.
“I look at a market like China, which is our second biggest market in the world. And as we indicated during our earnings call in March, business transient volume was actually about 6% higher than it was in March of 2019. And so, I look at a market like that, and I say, that gives us some optimism and maybe a roadmap for the way the rest of the world may recover,” he said.
“Another interesting statistic, the U.S which is our biggest market. When we look at business transient here, we're back up over about 50% of where we were in 2019. But what's interesting is, if you look at just secondary and tertiary markets, we're actually closer to 80% recovery. And so, what we're waiting for and hoping for as we get to the fall, is to see the primary, big urban city centre markets start to recover in terms of business transient as well.”
Arne’s Legacy
Capuano’s ascent to the CEO role at Marriott came in tragic circumstances following the death of Arne Sorenson from pancreatic cancer in February. Sorenson was only 62 and had been in the role since 2012.
“It's obviously a tremendous honor to lead this amazing company, albeit under devastatingly sad circumstances. Arne was such a close friend and mentor, and his loss is felt not only by his family obviously, but by his extended Marriott family. And I think by the industry more broadly. He was such a vocal and powerful advocate for travel and tourism around the world,” Capuano said.
He added that he was fortunate to be “guided by Bill Marriott's steady hand and counsel” as well as an experienced board of directors and a “battle-tested leadership team”.
“I don't take the responsibility lightly. It is a huge job and a complex job, but when I look at all of the support and all of the resources that are at my fingertips to try and navigate the complexities of recovery from the pandemic, I find myself humbled by the opportunity. And energized by the team that I have at my side,” he said.