The Growth of Marriott International From a single root beer stand in Washington, DC, player in these two high-end segments. In addition in 1927, Marriott International Corporation (here- to acquiring Starwood properties, Marriott also em- after "Marriott"-referring to the corporation, not barked on numerous building projects. Here is one to "Marriott Hotels" or "JW Marriott Hotels") has "astounding" statistic according to Fortune: 36% of grown to become the largest hotel company in the all hotel rooms under construction in North America world. In 2019, Marriott-headquartered in Bethes- and 23% worldwide would be managed or franchised da, Maryland (a Washington, DC, suburb)-operated by Marriott. Marriott executives remained optimistic and franchised more than 6,900 properties with 30 about the industry's growth prospects, pointing out hotel brands spanning 130 countries. Its strategy of that the 1.2 billion international trips made in 2016 product diversification and international diversifica could reach 1.8 billion by 2030. However, would the tion has been a hallmark of its growth. entire industry suffer from massive overcapacity if a Marriott's recent $13.6 billion acquisition of Star- much-anticipated slowdown (or recession) took place wood in 2016, the largest deal in the hotel industry, in Marriott's home country? was a case in point. This acquisition added several The Starwood acquisition enabled Marriott to kill iconic brands such as Sheraton, St. Regis, W, and two birds with one stone. It not only enabled Marriott Westin. Before the acquisition, Marriott and Hilton to grow bigger and diversify to become more high were similar in size. After adding 380,000 hotel end, but also could compensate for a possible US rooms, Marriott reached 1.2 million hotel rooms, slowdown. This was because Starwood was far more making it 50% larger than Hilton (790,000 hotel globally positioned, with 75% of its revenues from rooms) and 62% larger than the third-place InterCon- non-US markets. In short, the acquisition made tinental Hotels (730,000 hotel rooms). Marriott International literally more international. In addition to becoming larger, the Starwood ac- This was especially true in the world's fastest quisition also enabled Marriott to diversify further growing major hotel market: China. Before the into the luxury segment (such as St. Regis and W) merger, Marriott was relatively weak in China (and and the premium segment (such as Sheraton and across Asia). By contrast, Starwood was the leading Westin) (see Table 9.1). Before the acquisition, Marri- global chain in the region, propelled by Sheraton's ott's brands were mostly midmarket "select service" pioneering position as a full-service brand. In China, properties such as Courtyard, Fairfield, and Springhill the most thriving segment would be select service Suites that targeted price-sensitive road warriors and hotels catering to domestic business travel. Chinese vacationing families. More than 53% of Marriott's road warriors used to stay in domestically owned, rooms were in these select service (read "limited superbudget properties. But now increasing affluente service") brands. In contrast, close to 80% of Star- made some favor an upgrade in quality found in wood's rooms were either in luxury or premium seg- select service hotels with a Western brand-a game ments. The merger made Marriott a much more solid that would play to Marriott's strength. However, TABLE 9.1 Merging Marriott International with Starwood Hotels Hotel Brands From Marriott International Before the Merger From Starwood Luxury Edition, JW Marriott, Ritz-Carlton Luxury Collection, St. Regis, W Hotels Premium Autograph, Delta, Gaylord, Marriott, Renaissance Le Meridian, Sheraton, Tribute, Westin Select service AC, Courtyard, Fairfield, Moxy, Protea, Springhill Aloft, Four Points Longer stays Marriott Executive Apartments, Residence, Timeshare Element 225OPENING CASE (Continued) the combined group at the time of merger only had 54 members-by far the world's largest hotel loyalty such hotels in China. Therefore, a majority of Marriott's program. Integration was especially challenging 100 new hotels planned to open in China every year in the beginning. Thanks to system glitches, cus- during 2016-2020 were select service properties. From tomers who could redeem their points with an old a synergy standpoint, pushing into China would also brand could not enjoy the perks in the new com- help boost Marriott's business globally. The Chinese bined loyalty program, causing some backlash. Ex- were already the world's largest group of business and ternally, Marriott needs to fight off challengers such tourist travelers. More than 100 million Chinese did as Airbnb, Expedia, and Priceline that are nipping business or vacationed abroad every year. Familiarity at its heels. Given COVID-19, how long Marriott with Marriott brands such as Courtyard, JW Marriott, can stay on top of the industry remains to be seen. and Ritz-Carlton at home might attract them to seek out the same brands abroad. Beyond China, Marriott was actively diversifying internationally. In 2018 alone, Sources: (1) Fortune, 2017, Marriott goes all in, June 15: its brands made their debut in Finland, Lithuania, Mali, 200-208; (2) Los Angeles Times, 2019, An unhappy Marriott New Zealand, and Ukraine. rewards points customer is leading a revolt, April 4: www.latimes. 62.ed com; (3) Marriott International, 2019, Marriott International an- In terms of integration, merging thousands of ho- nounces three-year growth plan, March 18: news.marriott.com; tels with 176,000 employees and annual revenues of (4) Marriott International, 2019, Marriott International sets new $17 billion was not an easy job. Combining the loyalty record for growth in 2018 fueling global expansion and adding programs across the 30 brands resulted in 125 million choices for travelers, January 22: news. marriott.com