‘Our No.1 goal is to fix the Sheraton brand’

Chitra Narayanan New Delhi | Updated on January 09, 2018

CRAIG SMITH, President and MD (Asia Pacific), Marriott International

Marriott International’s Craig Smith speaks on the integration with Starwood Hotels

“Most companies tend to lose step when they are merging as they are so busy integrating they stop watching their customers and bottomline,” says Craig Smith, President and MD (Asia Pacific), Marriott International, the largest hotel operator in the world, post its merger with Starwood Hotels and Resorts last year. Yet, Marriott managed to grow during this period, as everyone went about their jobs even as they worked at knitting the two organisations together. “We really taxed our teams,” he admits. In an exclusive interview with BusinessLine, Smith discussed how the integration is panning out, and the priorities. Smith oversees operations and development in 15 countries across Asia Pacific, with more than 180 hotels and 49,000 employees. Excerpts:

What were the toughest bits in the integration with Starwood? Were there any mistakes?

Planning and costs were a big challenge. But the hardest piece was to match personality and culture. I walked into this integration reminded of the experience of my marriage. My wife and I were previously married. I brought two kids from a previous marriage, she brought two and then we had two of our own. There were questions like ‘Do I see them as all my children or do I treat them as your kids and my kids and our kids’. We had this same thing in our organisation. If I picked on somebody, I would be told oh, you are picking on them, because they are coming from Starwood. No I would say, I am picking on them because they are not doing their job.

The mistake we made in the beginning was that we took too long to make decisions as we were trying so hard to be fair and nice. We could have also communicated some of the benefits faster to the owners. At times we worry that we don’t want to Marriottise the Starwood brands.

With 30 brands in your portfolio now , will there be some rationalisation? Especially in the Collections (Starwood’s Luxury & Tribute collections and Marriott’s Autograph).

As of now we are not putting any brands together. We are working on swim lanes. Swim lanes means we are trying to figure out what is each one’s lane and then letting each stay in their particular lane. Even before the merger, these questions were asked about some of our own Marriott brands. The hardest parts are undoubtedly the Collections because there are no set standards to these.

Our number one goal is to fix Sheraton. We think Sheraton has aged. It needs to become more relevant. There are a few Sheratons that may be affecting the brand image. The idea being that you are only as good as your worst hotel.

One way to improve the image is to start with our bottom hotels and fix those. Funnily enough Sheraton was the largest part of the Starwood portfolio — I think close to 40 to 50 per cent when we acquired them. Everybody is titillated by W and Westin but Sheraton is the core brand of Starwood and it’s a grand brand. We are working on new specifications for Le Meridien as well. But the biggest focus is on the Sheratons.

How is the scale helping you in India?

We are the largest hotel operator in India and in Asia. We will be at 100 before the end of the year. Even by number of rooms we are much larger than the Taj and others. Our marketshare has grown over the last year. Part of that is due to our brands, and part of that is our distribution.

And yet, the Indian hotels still command the highest rates in gateway cities like Delhi and Metro?

I would say location is the factor. Some of the historic Indian hotels have got the best locations. But we now have the St. Regis in Mumbai . Also, we don’t judge ourselves on rates but look at RevPar (Revenue per available room that you get multiplying average rate into occupancy rate) and marketshare. What’s the point commanding the highest rate if you have only 30 per cent occupancy?

Where’s India in the worldwide Marriott standings?

The percentage of fastest growth for Marriott is Asia Pacific. Within Asia Pac, China is growing fastest for us and India is second. But we feel India should be growing faster and needs to catch up.

India has dealt a tough card to hoteliers with demonetisation, liquor ban and GST – how have you coped with those?

Demonetisation and GST I see as positive in the long term. The comparison is that when an athlete gets an operation, he is slowed down for a few weeks. But over the long run it is good. That’s why we continue to be bullish about India. However, 28 per cent GST on hotels is no good. Tourism is a job creator and yet it is being treated as luxury and punished. Most of our hotel owners are screaming. We are already being told by some of our owners that new projects may slow down or die. So we are worried about that. We are hoping, the government will listen to us.

Has your ability to negotiate with OTAs gone up post merger?

The percentage of profit being given away to OTAs has already come down. The commission rates had come down even before the merger. These rates will go on for a couple of years before we re-negotiate again. The highest percentage of our direct bookings come through loyalty members. We have a 100 million loyalty customers. In India we have a million. Just in Asia Pac we will grow our loyalty base this year by 7 million. If we have 14 million members in Asia Pacific today by 2017-end we would have acquired another 7 million. China is still the biggest.

Some of your rivals like Hyatt have been moving into adjacencies like wellness. How about you?

We are launching cruise ships — Ritz Carlton cruise ships. We are continuing to look at other opportunities. But ( with a laugh), we are never getting into airlines. Too risky.

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Published on October 31, 2017
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