Marriott International is undergoing a reorganization that will bring more of the operations of its luxury Ritz-Carlton brand under the corporate umbrella. Hotels editor Jeri Clausing talked with Simon Cooper, president of Ritz-Carlton’s global operations, about how the brand has fared during the downturn in luxury and meetings travel and what the new Marriott structure means for Ritz-Carlton’s future.
Q: How are things going this year?
A: It’s been a tumultuous year. It’s still going on. Obviously we were hit disproportionately on the group side of things. One of the things that has been incredible, though, is that up until the end of October, our transient occupied rooms, which is 70% leisure and 30% corporate, has been the same as last year.
Obviously, the rates took a hit. The big thing, though, is that we had a significant drop in group rooms following the whole AIG fallout. That has softened, but basically from Oct. 1, 2008, through the first four months of this year, groups were just canceling and not booking. That was very challenging. We were successful in creating very good value-added promotions very early in the game, so we were able to replace a lot of that [lost group] business. … I think it’s pretty good that we were able to hold that transient occupancy.
Q: Are things getting any better?
A: Yes. We are seeing groups booking again. I think that we will begin 2010 with more group rooms on the books than we began ’09 with. And that’s good, because while we had cancellations, they peaked in January, February, March and April of ’09 [so those groups were on the books at the beginning of the year even if they later canceled].
Most of our regions are in season now, so I am a little bit encouraged by what I am seeing. We have a long way to go yet. Obviously we are all facing rate compression for a while. And we are doing well on the growth side. We have nine hotels opening in a 25-month period.
Q: I understand Marriott is going through a major reorganization.
A: Marriott is going through what I think is an absolutely appropriate reorganization. They are decentralizing operations, actually. They are creating four continental presidents around the world, and they will have the complete organization in the continent reporting to them.
Previously, a lot of the functions in a region, let’s say Asia, all reported back to Bethesda [Md., Marriott International headquarters]. So what they are doing is two key things: focusing on decentralizing, and centralizing what I would call centers of excellence: taking key functions in the company and saying, "How do we make these functions global?"
Q: How does that impact Ritz-Carlton and its employees?
A: It does create some movement and some level of concern. But Ritz-Carlton will continue to be a separate brand, it will continue to have a president, it will continue to have offices in Chevy Chase [Md.].
[Marriott President and COO] Arne Sorenson has been clear about retaining Ritz-Carlton’s first-class culture and making sure that that be maintained at all costs.
Really, from a customer-facing point of view, there won’t be any changes. From back office and support functions there may be some changes, but they really are mostly related to the creation of centers of excellence. Some of our employees will be embedded in the centers of excellence.
Q: Will you remain president?
A: Yes. … And Ritz-Carlton will still retain a robust Ritz-Carlton function. Its leadership in all brand aspects will continue.