Full speed ahead: CEO Arne Sorenson on all things Marriott
Marriott International CEO Arne Sorenson talks to Hotelier about losing the Al Habtoor City Hotels, opening 11 new hotels in the UAE and expansion plans for the mid-market sector
US-headquartered Marriott International is “on track” to open 11 new hotels in the UAE this year alone, according to CEO Arne Sorenson.
Year-to-date, the company has added six new properties and is scheduled to add five more in the country, bringing its portfolio in the UAE to 59 properties and over 17,000 rooms across six emirates by the end of the year.
Two of the company’s openings this year feature regional brand debuts — the eco-conscious Element Hotels brand, which opened earlier this year in Dubai, and the Edition brand, which opened its doors on October 24, this year.
There's no denying that 2018 has been a milestone year for Marriott International in the UAE, with the company anticipating having added a total of 11 properties and over 2,600 rooms by year-end.
The design-led Aloft Hotels made its debut in Dubai with four new openings: Aloft Palm Jumeirah, Aloft Me’aisam and Aloft City Centre Deira, all within the first half the year, and Aloft Dubai South in October.
The company launched its eco-conscious Element Hotels brand in the region with the opening of Element Me’aisam. The Ritz-Carlton brand opened its fifth property in the UAE — The Ritz-Carlton Ras Al Khaimah, Al Hamra Beach.
The company also took over the operations of the Yas Island Hotel from Viceroy, which is scheduled to be flagged as a W Hotel early next year, marking the debut of the brand in Abu Dhabi.
Building off the momentum of the first nine months, the company is gearing up to open three more properties by the end of the year. These include the Courtyard by Marriott Al Barsha, Four Points by Sheraton Sharjah – which would be the company’s second property in Sharjah, and W Dubai — The Palm.
Even as the de-flagging of Al Habtoor City hotels dominated the news cycle last quarter, Marriott International CEO Arne Sorenson says he believes that the loss – the single biggest faced by the company worldwide – has not been bad for its brand image.
"We all know Hilton has signed a franchise contract for the AHC cluster hotels. The owner had a different vision for the management of that complex than our vision," Sorenson revealed at an interview with Hotelier Middle East at Bulgari Hotel in Dubai.
"We are not in the business of departing hotels, that's not our primary aim but the economics associated with separation seemed logical and we're quite confident that we will have incremental growth in each of the three brands [St. Regis, W and Westin] in the relatively near future in Dubai,” he adds.
Marriott's president and managing partner Alex Kyriakidis also reveals that sometimes you come to a point where the vision on the partners side is different from the vision we had going into the relationship, as Arne said commercial achieved what we both want to achieve and it made sense in this situation that we both amicably parted.
"The Habtoor group was and continues to be a very substantial partner and owner and we still operate their hotels in Europe and the Middle East," Kyriadikis adds.
According to Sorenson, the collective response from owners is important and they are impressed by the power of Marriott's portfolio and the loyalty programme.
“We very much want to talk about growth and not the hotels we don't operate,” Sorenson says.
Kyriakidis adds that 70% of current Marriott owners have developed more than one hotel with the company, “so the the desire of those owners to grow with us and continue to grow with us is very high.”
However both Sorenson and Kyriakidis emphasise the importance of Marriott’s growing select-services hotel portfolio.
The UAE is currently home to 16 of Marriott International’s brands – with over 50% of its existing portfolio across its upper-upscale brands, including Marriott Hotels, Sheraton and Le Meridien. The company is also a leader in the luxury space with 15 properties across five luxury brands in the country.
While the company’s development pipeline highlights solid growth for its upper-upscale and luxury portfolio, its select-service brands represent over 70% of the development pipeline for the UAE. The growth of its select-service portfolio, which features brands such as Courtyard by Marriott, Aloft Hotels, Element Hotels and Residence Inn by Marriott, is in line with the UAE government’s efforts to expand the mid-scale segment in the country.
“10 years ago the supply in this market was about 80% luxury and the rates up until four-five years ago, Dubai was heading the global rankings in terms of rates. But if you step back and look at the vision of Dubai which is 20 million tourists by 2020 you can conclude that it’s not sustainable to focus completely on luxury hotels,” he adds.
“Dubai has actually said that we need more mid-market hotels in order to diversify our offerings for tourists and today the ratio of luxury hotels to mid-market hotels is about 60:40.”
“Our ability to offer a lower price point is very good for Dubai’s tourism landscape as a whole,” the American CEO says.
“This is not just a phenomenon we are seeing in the Middle East. This is a global shift that we are seeing in almost all the countries we operate in. The first wave of global hotel brand development is in the high-end, luxury market. As markets get more and more developed, you start to see more and more tourists show up and you see a broader set of traveller.”
He believes that it’s those factors that are driving the growth of the mid-market hotel industry in the Middle East.
Earlier this year, Marriott announced one set of unified benefits across Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest (SPG) for its members, and the hospitality giant launched the combined programme on August 18, 2018.
“We’ve got two bits of chatter out there, one is about the transition process and the status and the new rules and that’s where the bulk of the chatter has been about that.There are obviously more long-term questions on how did we deal with the decision process of upgrades and tiers. Overwhelmingly I think people are supportive of the new programme,” Sorenson adds.
When asked why there was the delay on announcing a name for the programme yet, Sorenson laughingly says, “I’ve been asking them the same thing. I think it’s because we want to focus on our marketing efforts. We’re currently in phase one and we wanted to merge the tech systems getting the call centres to work, which are much less exciting. We wanted to focus of working out all the problems.”
“There is a name and I know what it is, but I can’t tell you yet,” he says with a laugh as he exits the room.