How Arne Sorenson Is Melding Marriott and Starwood

Arne Sorenson, president and CEO of Marriott International, now oversees the largest hotel company in the world, which owns eight iconic luxury brands.

To Arne Sorenson, president and CEO of Marriott International, luxury is very much about the hardware of hotels, and about their emotional promise as well. With the recent Starwood merger, Sorenson is the overseer of the largest hotel company in the world, with 30 brands and more than 5,700 hotels in 110 countries. Eight of those 30 brands sit firmly in the luxury space: St. Regis, The Luxury Collection, The Ritz-Carlton, Ritz-Carlton Reserve, W Hotels, JW Marriott, Bulgari Hotels & Resorts and Edition. The eight brands comprise 365 luxury hotels, with another 100 in the pipeline.

Although just a fraction of the entire portfolio, its luxury products are of vital importance to Marriott and its shareholders.

“The economics of each luxury hotel are significantly more important to us than the economics of an average hotel for obvious reasons — there’s that much revenue running through these hotels,” Sorenson notes. “So the size of it is one thing. But probably the most important thing is that it’s during the most emotionally important times in travel that we build the closest ties with our customers.” Take for example, he says, that dream trip, which could be a honeymoon, an anniversary celebration or a family vacation. “It might even be a trip alone, but to a place that a traveler has dreamed about for the longest time. It’s that special memory that a luxury hotel is often — not exclusively, but often — the most suited to create.”

Luxury also fuels the value of Marriott International’s loyalty programs, which provide vital data on its individual customers. Combined, there are 100 million unique members among Marriott Rewards, Ritz-Carlton Rewards and the SPG loyalty programs. The loyalty of the most loyal members is likely inspired by the thought that their constant business travel will reward them with enough points to vacation in their dream destination.

Sorenson is serious about the emotion of travel being the major component of a trip. To him, it’s the vibe, the feel of a place that defines luxury. “It’s really about the intensity of the experience,” he tells Luxury Travel Advisor. “[To me, luxury] is something that is extraordinarily authentic, genuine and local. And I want to experience the chaos that’s around me because I think it’s going to deliver something that’s that much more intense and therefore that much more memorable.”

Unifying the Brands

Prior to the Starwood merger, which was completed last September, Marriott already had a strong foothold in serving the affluent traveler with its Ritz-Carlton, Ritz-Carlton Reserve, JW Marriott, Bulgari and Edition brands. But Starwood brought its own luxury rock stars to the party with St. Regis, The Luxury Collection and W Hotels.

Bringing all the brands, some former arch competitors, together under one umbrella remains a work in progress.

“We have talked internally about ‘brand riddles,’ and those are: how do we draw distinctions between these brands and how do we position these brands, relative to one another, that used to be competing head to head?” says Sorenson.

The two classic “brand riddles,” according to him, are The Ritz-Carlton and St. Regis. Each has its own identity, but work is still being done to define them apart from each other.

“We do think there are some things we can tease out over time,” says Sorenson. “The culture of The Ritz-Carlton is about ‘Ladies and Gentlemen serving Ladies and Gentlemen.’ St. Regis has traditions around the Bloody Mary and the sabering of champagne, and butler service; that’s a bit more typical and prominent with that brand. But there will still be an effort over time from us, I think, to dial up some service distinctions between those brands, and to dial up some product cues as well.”

Two other brands that appear to play in the same circles, Edition and W, have a stronger unique distinction. “Edition is a great luxury, lifestyle hotel, but it’s also a bit more nuanced in design sensibility than W would be,” Sorenson points out. “So even though they bear some relationship in the way they are positioned in the marketplace, they have a very different feel to them. I feel it would actually be quite easy to make sure those brands remained distinct as we move forward.”

New Leadership

Creating a new structure that combines the top talents from Marriott and Starwood has been in the works for months and months. Marriott International works as a matrix organization, with business distributed geographically around the world. As such, there are separate presidents for the Americas, the Caribbean and Latin America, Europe, Asia Pacific, and the Middle East and Africa. Those business units are responsible for running all of the hotels in their markets. The business units also provide great support to the luxury hotels under their umbrella.

“One of the great advantages of having the kind of luxury distribution that we have is they can have on their teams dedicated senior luxury experts,” says Sorenson. These experts can draw on the food-and-beverage talent, and the sales talent from throughout their continent, and be backed up with global support from the Marriott organization, he says.

In the new scheme of things, Herve Humler, who has long been the president and COO of The Ritz-Carlton Hotel Company and Bulgari, is now also providing that global support for St. Regis, including “cultural leadership for the brands, development leadership and a strong focus on the [brands’] prominent luxury customers,” says Sorenson. “He is often an external spokesman for the brand, but he doesn’t run an isolated organization that somehow exists independent from those continents, because those continents have to make sure they are delivering the day-to-day results.”

Lisa Holladay is a brand leader who works alongside Humler. As for the others, Ian Schrager continues to be deeply involved in the Edition brand, which he co-founded with Marriott. Anthony Ingham, who hails from Starwood, now oversees W, and Mitzi Gaskins, a Marriott veteran, is in charge of JW Marriott and the Luxury Collection.

These individuals will work on marketing, the positioning of the hotels, their brand voices, and their service and product cues, all the while ensuring they are animating the brand across the globe, says Sorenson.

What was it like having so much talent to draw from between Marriott and Starwood?

While not trying to oversimplify it, Sorenson says that Marriott has always been an operations-oriented company. “We’ve always been focused on execution, hopefully as near to flawless as we can, providing a consistent warm welcome at our hotels all around the world and a strong discipline around the core operating bits of the business,” he adds.

Starwood also has a strong operating heritage, he says, pointing out the legacy of Sheraton and Westin, which have long been in the marketplace. But Starwood’s DNA in recent years has been based more around marketing and branding, stresses Sorenson, noting the success of the launch of W and Aloft as well as the Westin Heavenly Bed and Heavenly Shower. “And while Starwood’s SPG loyalty program is smaller than Marriott Rewards, it’s been marketed extraordinarily well, and defined well, and used as a strong connection with their luxury brands to bring that emotional dream component to the regular traveler,” says Sorenson.

For these reasons, his team looked to the Starwood team to fill roles in the marketing and brand space in the new Marriott organization. That means David Flueck from Starwood is now running all the loyalty programs and Tina Edmundson is overseeing all of the brands. She is most recently from Marriott but spent 15 years with Starwood and was deeply involved with the W brand.

In crafting a new sales organization, which includes a global luxury team, a multitude of talent, which formally competed head-to-head, has now been combined.

“We’ve got the great ability to coordinate this team into one and be able to call on many more customers, and probably also do it more efficiently,” says Sorenson.

The Evolving Consumer

Having such a major stake in the luxury sector isn’t daunting in the slightest to Sorenson, who joined Marriott in 1996 and became CEO in 2012. Along the way, he held the title of president and COO, executive vice president, CFO and president of Continental European Lodging.

In fact, he indicates the luxury space could very well be the place to be right now and for the long term.

“The dynamics around luxury travel are quite healthy and are likely to remain so for decades to come,” he tells Luxury Travel Advisor. “I think you’ll see a couple of different things happening. One is this growth of the global middle class, and the global upper-middle class.”

With this expanding consumer market comes an evolution of what luxury means; these folks are looking for something more than the ordinary, Sorenson says.

“There are millions of people who not only have the resources to travel, but many of them have the resources to collect really special experiences,” he notes. “We are increasingly a society wanting more experiences and fewer things, which is obviously good for us, as we are in the experiences business.”

Sorenson points to his adult children and their friends who prioritize taking a vacation higher than they would, say, buying a car or a house because “they deserve it.” They’ll immerse themselves in the research of the trip and they’ll want to ensure it’s memorable and localized, and something they can share on Instagram or Snapchat, and brag about.

“That [trend] is influencing all of us, so we will see luxury travel continue to grow at a faster pace than travel generally,” Sorenson adds.

Who Is the New Consumer?

Millennials are accelerating this trend toward authenticity, but Sorenson argues that they’re not the only ones who have specific tastes when it comes to luxury.

“It’s about the era as much as it is about the individual’s age,” says Sorenson. “I’m 58 and I love a lot of the things that we say Millennials probably love. I love great meals. I love traveling. I love traveling in my jeans. I don’t really like to be smothered in service, but I want to have great service when I need it. I want a local experience and I’m perfectly content adventuring out a little bit to a space that is not a pampered space.”

What does that “not-pampered space” look like? “It could be defined by a hike through rough terrain, or it could mean a jeep ride in the heat where you’re soaked with sweat and sand by the time you’re done. Or it could be going out on a camel ride in the Egyptian desert and not necessarily having 20 people around you with fluted champagne glasses or cold Dom Perignon standing by.”

Sorenson fully understands, however, that others might have a very different definition of luxury. It’s therefore imperative that hotels in the luxury sector understand that when servicing their guests. “There are others who have exactly the opposite view — I want to see those sights, but don’t make me experience the difficult parts of those sights. They might want a tour of the Coliseum, just like everyone else has had, because it is such a compelling place to go or they might want a one-off experience at a restaurant in Rome with the chef who is going to teach them how to make homemade pasta,” he says.

Ultra Loyal Users

Consumers today are heavily vested in their favorite luxury brands; Sorenson got to experience that firsthand a few years ago on a flight from Beijing to the United States. He had some Ritz-Carlton paperwork out on his tray table, which caught the eye of a fellow passenger in his late 20s. The young man proceeded to regale Sorenson on how much he loved The Ritz-Carlton brand and even took out his laptop to show him photos of the 15 Ritz-Carltons he had visited over the last 10 months.

“So there you have somebody who is a Millennial, prototypically looking for the most reputable luxury experience,” says Sorenson. “[His belief was], ‘I know all about The Ritz-Carlton, I know their hotels are going to be beautiful. I know they’re in great locations, and I want to experience as many of those as I can, and I’m incredibly proud of my association with them.’”

With eight luxury brands that have a combined 100 hotels in the pipeline, luxury aficionados have a lot to look forward to in terms of new product in the market. Where might we see future hotels serving the affluent client from Marriott International?

“I think we will continue to be focused on the destinations that are already the most compelling, so think about the global cities, particularly those that are so powerful, and the resort destinations, which are all very well known,” Sorenson observes. “We will see some brand new destinations come up, but they aren’t likely to become as significant as a number of these well-known destinations, many of which we haven’t even touched. Think about Paris and London; there isn’t a Ritz-Carlton or a St. Regis in either one of those markets.

“Obviously the risks associated with the development and opening of a hotel [in an iconic city] are much less. The cost is going to be high, but you’re opening in a place where there is strong demand, and you know that going in. And the cities provide the stage.”

That stage is hugely important to Sorenson, who believes it’s important to his travelers’ definition of luxury. He says one of his family’s favorite memories is of a stay in Zanzibar where they dined two days in a row at a beach restaurant, sitting on plastic chairs and enjoying incredibly fresh seafood and cold beers that were brought to the table by the owner’s son who rode off on a bicycle to get them.

“There was nothing typically luxurious about that lunch,” says Sorenson. “But it ranked as highly in my family’s relatively spoiled travel history as the Michelin-star meals we have had in France or elsewhere. Why? Because the food was spectacular. The setting was spectacular, and you’ve got all these other bits and pieces of the little boy riding off on his bike and so all of that is part of the luxury experience.”

With so much opportunity to grow in a global environment with eight iconic brands, the stage is set for Marriott International to create experiences for this new traveler in search of much more than a hotel room. For Sorenson, luxury is personal and it’s likely we can look forward to a unique delivery of authentic experiences, whether it’s The Ritz-Carlton, St. Regis, Edition, W or Bulgari. It’s also likely he’ll take the lead from the new luxury customer, who has high expectations of customized services.

“This era is leading us to say, ‘You know what, you can have what you want. And if you want it, we need to make it happen for you,’” Sorenson says, adding that the girth of the new Marriott organization makes it possible for that to happen.

“With the size that we have, we have the ability to deliver against the breadth of what drives customer demand in the luxury space,” Sorenson tells Luxury Travel Advisor

Leading The Ritz-Carlton and St. Regis: Herve Humler

One of the original founders of The Ritz-Carlton Hotel Company when it was created in 1983, Herve Humler has served as the COO and president of the brand for Marriott International since 2010. With the merger with Starwood Hotels & Resorts, he now also oversees St. Regis, a brand that has competed head-to-head with The Ritz-Carlton for years.

The Ritz-Carlton currently has 93 hotels, 49 residences and five clubs open in 33 countries, with eight hotels set to open this year. St. Regis has 40 hotels in 19 countries, with six scheduled for a 2017 debut.

We caught up with Humler, who also oversees the Ritz-Carlton Reserve and Bulgari brands, to see what it’s like working with this new mix of iconic luxury hotel companies.

“When I look at true luxury, The Ritz-Carlton and St. Regis play very much in the same space, but The Ritz-Carlton facilitates the destination in extraordinary ways and St. Regis truly is the destination. That is what we are finding out,” says Humler. “Certainly, The Ritz-Carlton has been well organized in the high-end landscape and sets the standards in the luxury space, especially related to service. St. Regis is an iconic brand with a lot of history, and it’s very exciting for me to have two iconic brands, and Bulgari, too. I’m back in my element. St. Regis has done a tremendous job of highlighting its legacy through all its touchpoints; they have the Bloody Mary, the jazz element, the Midnight Suppers, all of which are part of the New York history of this legendary brand.”

When we spoke with Humler, he had literally just returned from a whirlwind roadtrip with other Marriott International executives to visit with hoteliers in the company across the globe. Stopovers included Mexico, Dubai, London and Macau.

Herve Humler is the luxury steward for the iconic Ritz-Carlton and St. Regis brands.

One theme was clear throughout, he said. “Luxury today is much less formal, but much more personal, than it ever was. It doesn’t matter the geography or demographic, we have to make sure that customers feel well coming to our hotels. We must have an approachable luxury.”

The role of the GM has evolved as well. “A GM has to be well versed in sales and marketing. The GM to me is an extension of sales and he has to surround himself with some great talent. What we have been working on is how you put the perfect team together,” Humler says.

How else will The Ritz-Carlton and St. Regis complement each other?

The feedback from customers is that some are seeking luxury on a “smaller” basis, which plays well into St. Regis, says Humler. “They are smaller hotels, and that’s something we have done quite well with Ritz-Carlton Reserve. These are smaller hotels, and the locations are less traveled. They are also highly personable.” He’s seeing that wealthy guests are traveling the world with their families and spending a lot of time with them. “We call this high-end customer the ‘luxury global tribe.’ They spend 35 nights a year in a luxury hotel traveling on vacation, and with the kids too. For four or five days, they don’t leave the hotel. That’s perfect for St. Regis and for Ritz-Carlton Reserve,” he adds.

The Ritz-Carlton data shows that the luxury customer is more global than ever, and younger. “When I look at last year, 45 percent of our customers on the leisure side were millionaires, and about 35 years old. That starts to tell you how everything has changed. They are much more diverse and connected than ever before. They socialize in a digital space and they are much more connected with their place when they travel,” observes Humler.

He suggests that as new hotels are brought on, it’s vital that hoteliers put themselves in the shoes of the customer and of luxury travel advisors as they look at new concepts and new ways of doing things. “We need to involve them with creativity and innovation,” says Humler. “We cannot do anything by ourselves; we involve them in the process because it’s going to affect them too.”

He’s quite bullish on the affluent market. “When we look at luxury as a whole, there is tremendous growth. We are very optimistic about the world of travel, and global travel, and certainly about luxury. More people are traveling now than ever before,” he says.

Bottom line for his portfolio going forward? Humler is intent that The Ritz-Carlton and St. Regis have brand differentials. “There has been a lot of great learning the last three months and we can learn from each other in order to offer a great luxury product, with some diversity, to our global customer worldwide,” he notes.

It’s likely, however, the two brands will have at least one thing in common as Humler stewards them forward.

“For us it’s always delivering on memories, listening to the customer, and delivering on that. And when you do that, they always come back,” he says.

Brand Architect: Tina Edmundson

Tina Edmundson, global brand officer for Marriott International, is the marketing architect for all 30 brands brought together under the Marriott / Starwood merger and represents quite well the marriage of the two mega-hotel companies. That’s because she’s not only spent the past eight years at Marriott as a key brand executive, but prior to that, was with Starwood for 15 years, most notably managing global brand operations for W Hotels, St. Regis and the Luxury Collection.

Tina Edmundson is the architect for all 30 brands after the merger.

She, along with other Marriott Inter-national executives, recently embarked on a road trip to visit with Marriott and Starwood hotel teams across the globe, which, for the first time, exist under a single umbrella. We asked Edmundson what she relayed on the trip and how she sees brand messaging going forward for the eight luxury brands that are now part of Marriott International.

JW Marriott: “We talk about this brand as being the lens of approachable modern luxury, inspired by our legendary namesake. This brand is built around the philosophy that true luxury is created by people who are really passionate about the work that they do. Think about residential design and anticipatory services. The brand’s ethos is around the idea of enrichment, ensuring that guests leave more fulfilled than when they arrived.”

Edition: “This is a very sophisticated experience combined with a contemporary lifestyle. This is the brand we’ve done in partnership with Ian Schrager. We have four Editions open today and it’s set to double in the next 12 months. We’re going to open Bangkok, Shanghai, Barcelona and Abu Dhabi. This is the brand that offers the best in food and beverage, and entertainment, and this is a brand that wants to be the social center of the locale that it’s in.”

W Hotels: “This brand from a personality perspective is bold, playful and extravagant. This is the lifestyle that was really born in New York City. W has 50 hotels and continues to have great energy and great acceptance as we open new hotels in all parts of the world. With W, what we’re trying to do is really push the boundaries of what traditionally people think about hospitality. Every hotel really has to be able to do that.”

The Ritz-Carlton: “This is the legendary brand that we can accept as the standard for luxury in the industry. For this brand, it’s all about our ladies and gentlemen creating these indelible moments for our guests and that’s really at the heart of what the brand promises.”

Ritz-Carlton Reserve: “This is a very intimate experience at the world’s most exotic estates. These are very extraordinary intimate resorts. They’re generally in remote locations. The experience is a very, very personal experience for our guests.”

Bulgari: “These are exquisitely styled, very contemporary hotels and resorts. This brand is founded on the principles of the renowned jeweler. We have openings scheduled over the next 12 months in cities like Beijing and Shanghai and Dubai.”

The Luxury Collection: “This is a glittering ensemble of locally authentic hotels. We talk about this brand’s hotels as defining the destination. It has palaces in Vienna and Venice and haciendas in the Yucatan Peninsula. These hotels are really connected to the locale.”

St. Regis: “St. Regis is a global destination where every detail, every interaction, and the environment that it lives in is precisely designed. St. Regis started on 55th Street and 5th Avenue in Manhattan with the St. Regis New York. We are bringing this legacy to life in a modern and timeless way. We now have 40 locations around the world and the stand-apart thing for this brand is the signature rituals, everything from the Bloody Mary to Midnight Suppers to the Jazz Legends where we continue to reinterpret the legacy of John Jacob Astor.”

Travel Advisor Strategy

We asked Marriott International what its luxury sales structure looks like today, following the merger with Starwood. Brian King, global officer digital, distribution, revenue solutions and global sales, provided the following intel:

“We will have a dedicated luxury sales team as part of the new global sales organization, which launched in North America, the Caribbean, Latin America and Asia Pacific on April 3, 2017, as one fully integrated team; the Europe, Middle East and Africa launches will follow at a later date. 

“To ensure the highest level of support and oversight in the company, the luxury team reports into my executive leadership team and is led by Tammy Routh, senior vice president of global sales, who has been with Marriott for 33 years. Her luxury team includes leaders from The Ritz-Carlton, Marriott and Starwood. John Harper, having spent 18 years at The Ritz-Carlton, has stepped into the role of vice president for Luxury Strategy and Activation for all luxury brands as part of Tammy’s leadership team.”

King says Marriott will continue to have a presence at key luxury trade shows and events. “Our luxury team is full of many familiar faces based on their past roles with The Ritz-Carlton and Starwood Global Sales Organizations.”

Marriott International will continue to be very committed to the travel professional, he notes. “We have a dedicated retail travel Industry team focused on luxury that partners with our Retail Travel Industry Team for all other Marriott brands. We know luxury customers have very complex travel itineraries and unique needs that require the assistance of knowledgeable travel professionals. Our goal is to support professional travel agents to create and deliver magnificent experiences for our customers at each one of our hotels.”

 

Luxury Brand Plans

St. Regis

St. Regis is on track to reach 50 hotels by 2020; at present it has 40 hotels in 19 countries. Openings in 2017 include Astana, Amman, Dubai, Cairo, Changsha and Shanghai.

St. Regis, Maldives

The Luxury Collection

The Luxury Collection is projected to reach 125 hotels by 2020; it currently has 100 hotels in 35 countries. Openings in 2017 include Las Alcobas (Napa, CA); Solaz (Los Cabos, Mexico), Hotel Talisa (Vail, CO); The Santa Maria (Costa del Este, Panama); Cristallo (Cortina d’Ampezzo, Italy); Al Manara (Jordan); The Alexander (Armenia); The Duxton Club (Singapore); ITC Royal Bengal (Kolkata, India); and Plaza Athénée (Bangkok).

Las Alcobas, Napa, CA

The Ritz-Carlton

The Ritz-Carlton is on track to reach 119 hotels by 2020; it currently has 93 hotels, 49 residences and five clubs in 33 countries. Openings in 2017 include Geneva, Jeddah, Astana, Ras Al-Khaimah, Haikou, Langkawi and Jiuzhaigou.

The Ritz-Carlton, Geneva

Ritz-Carlton Reserve

Ritz-Carlton Reserve has three hotels at present: they are Phulay Bay, a Ritz-Carlton Reserve in Krabi, Thailand; Dorado Beach, a Ritz-Carlton Reserve in Dorado Beach, Puerto Rico; and Mandapa, a Ritz-Carlton Reserve in Ubud, Bali.

Mandapa, a Ritz-Carlton Reserve

W Hotels

W Hotels is on schedule to reach 75 hotels by 2020; its portfolio consists of 50 hotels in 23 countries. Openings in 2017 include Bellevue, WA; Panama; Tel Aviv; Amman; and Dubai, and in China, Suzhou and Shanghai.

W Goa

JW Marriott

JW Marriott is set to open an additional 45 hotels by 2021, bringing the brand’s portfolio to more than 125. Openings this year include Marco Island, Vancouver, Morocco, Vietnam and Jaipur (India).

JW Marriott Venice

Bulgari Hotels & Resorts

Bulgari Hotels & Resorts has three hotels in three countries. Openings this year include Dubai, Shanghai and Beijing.

Bulgari London

Edition

Edition has four hotels open in three countries with additional properties set to debut this year in Barcelona, Abu Dhabi, Bangkok and Shanghai.

New York Edition

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