2020-02-01 Forbes Asia

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FEBRUARY 20 20 FORBES ASIA

son, Stephen, died in 2013 from a health con-

dition that had left him blind and mostly deaf.

Daughter Deborah Marriott Harrison left Marri-

ott to raise a family in the 1990s and rejoined in

2006 in its government affairs office; she is now

a board member.

Another son, John Marriott III, followed his

father’s footsteps into the business, rising from

hotel cook to operations exec. But he also battled

a drug and alcohol problem. By 2005 his father

had decided he wouldn’t succeed him. David, 12

years younger than John and in his 30s when So-

renson took charge, is now the chief operations

officer for the eastern region of the Americas.

Bill Marriott trained Sorenson in the family’s

ways, including a willingness to take risks and

adherence to the family motto, “Success is never

final.” Even now, the 87-year-old board chairman

likes to call Sorenson from New Hampshire and

talk about the business, particularly after hear-

ing an earnings report. “I think we’re similarly

driven toward winning, similarly driven toward

making sound decisions,” Sorenson says.

The Starwood deal proved to be a game chang-

er, decisively vaulting the company past Hilton.

Just over half of Marriott’s 7,100 hotels are fran-

chised, meaning owners pay 4% to 6% of each

hotel’s room revenue (plus an extra 2% to 3%

of food and beverage sales) to use the Marriott

name, loyalty program and customer service.

The remainder of its hotels pay extra for the priv-

ilege of having Marriott manage their property.

If the managed properties outperform, Marriott

takes another cut. For hotels in Asia and Latin

America, that amounts to around 7% to 9% of

profit. For U.S. properties it manages, Marriott

pays a guaranteed sum to the hotel owner first

and then takes as much as 25% of its remaining

cash flow. (Marriott avoids the pitfalls of taking

on too much real estate: It owns only 20 proper-

ties worldwide and leases another 49.)

“The deep dark secret is he is a deal junkie.

He loves deals, and he loves winning competi-

tive deals,” says Tony Capuano, Marriott’s group

president for global development, design and

operations services. “Two thousand eighteen was

the seventh straight year of record deal produc-

tion for the company, and I don’t think it’s any

coincidence that that sort of lines up with the

time that Arne has been CEO.”

Sorenson’s best idea to tie it all together so far

is Marriott Bonvoy, a loyalty program, meant to

draw in frequent travelers and reward them for

staying at Marriott’s 30 brands. The program is

popular: Bonvoy members booked around 50%

of Marriott’s hotel nights last year. “The rewards

program, based on dollars spent, already delivers

about a 6%-to-7% return when the points are re-

deemed, better than a lot of credit card returns,”

Sorenson says.

The more customers stay at Marriott chains

like Aloft Hotels—or use their reward points on

other stuff like rental cars or a soon-to-launch

Ritz-Carlton cruise line—the more property de-

velopers want to put the Marriott name on their

hotels. Today around 20% of new hotel rooms

being built around the globe are Marriott. “It just

keeps feeding on itself. The bigger you are, the

better your opportunity is going to be,” says Wes

Golladay, an analyst with RBC.

One ongoing concern: Travelers who book

stays through Expedia or Kayak generate less

revenue for Marriott and don’t feed its Bonvoy

flywheel. So far, these booking-site challeng-

es have been manageable, but Sorenson is wary

about what will happen if Google or Amazon

gets into the game.

“When Amazon surfaced, what I convinced my-

self was that we’re in a different place from retail,

generally, because you can’t ship a night’s stay to

somebody in a box,” Sorenson says. But now “it’s

clear that it’s not enough of a defense.” His strat-

egy is to bulk up: “I want to be as big as possible.”

As Sorenson deals with his cancer treatments,

his team has taken some meetings off his calen-

dar. But that’s only freed up time for the master

dealmaker to make his next move. On a sticky

summer morning in Washington, D.C., Soren-

son surveys the nation’s capital from the rooftop

lounge of the W Hotel on 15th Street. He points

out the Washington Monument and the White

House. Asked how many Marriotts he can count

in the city skyline as he looks out, Sorenson sim-

ply grins and says: “Not enough.”

Bill Marriott, seen with sons Stephen, David and John in 2004, built his family

empire on acute attention to detail, like the right way to change a bed.

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