Through its new-build projects, conversion opportunities and brand acquisitions, Marriott International has significantly grown its global pipeline and footprint over the past several years.

In a webcast of the company's 2023 Security Analyst Meeting in Miami, Marriott executives outlined the company's growth strategy and how they expect its newest brand additions to play into it.

Since the end of 2019, Marriott’s development team has signed long-term contracts for more than 2,000 properties with 359,000 rooms, said Leeny Oberg, chief financial officer and executive vice president of development. Fees per room in 2022 were nearly $100 greater than its closest global competitor, and about $350 higher than its second-closest, she said.

The company’s pipeline is at a record high of nearly 547,000 rooms, 44% of which are under construction, Oberg said.

“Globally, we're winning on both quantity and the quality of our footprint and have a leading 7.2% market share of open rooms,” she said.

Marriott continues to grow its share of the hospitality industry in the U.S. and Canada, and it has a lead over its competitors in system size as well as signed, new-build hotels in its development pipeline, said Noah Silverman, global development officer in the U.S. and Canada.

Last year, the company signed more than 54,000 managed and franchised rooms in the region. Normally, the bulk of new signings occur in the second half of the year; Marriott signed more than 51,000 rooms in the first half of 2023, a 173% year-over-year increase. A big part of those signings were 16 hotels with nearly 37,000 rooms added to Marriott's loyalty and distribution platforms in a MGM Resorts International deal. Those figures exclude The Cosmopolitan of Las Vegas, which was already a part of Marriott's Autograph Collection.

Marriott has been focused on expanding its select-service brands, particularly its Fairfield Inn, TownePlace Suites and SpringHill Suites brands, in secondary and tertiary markets across the U.S. and Canada, Silverman said. The company has signed and approved 220 projects representing nearly 19,000 rooms with those three brands since 2021.

The soft brands have maintained their momentum, especially the Tribute Portfolio and Autograph Collection, he said.

Much of the company’s pipeline success year to date comes from conversions. Including the MGM Resorts partnership, conversions account for 76% of hotel rooms in the pipeline.

The financial environment is a challenge for new construction, but Marriott’s brands and its owners, franchisees and developers continue to fund their projects, Silverman said. Nineteen percent of the new-build rooms in the company's pipeline are under construction.

“Our strong-performing brands and relationships have historically helped owners secure financing, and we've stepped up our efforts to assist our owners and franchisees in today's challenging environment,” he said.

Even with high interest rates and reluctant lenders, there’s less fallout than the historical average from the pipeline, he said.

Since 2019, Marriott has entered 12 new countries and territories, expanding its footprint to 139 countries total, said Carlton Ervin, global development officer, international. The company’s international pipeline stands at about 286,000 rooms, which is approximately 52% of its global pipeline.

Of the 552,000 rooms in international markets, 364,000 are in the upper-upscale and luxury segments. That number is 2.5 times higher than its closest competitor, Ervin said. Within its international pipeline, 113,000 rooms are in the upper-upscale and luxury segments, more than two times its closest competitor.

In the Caribbean and Latin America region, Marriott is No. 1 in terms of room count, he said. Deals signed with Blue Diamond in 2021 and City Express in 2022 added more than 20,000 all-inclusive resort and midscale hotel rooms to Marriott's portfolio in the Caribbean and Latin America.

In the luxury segment, Marriott has 175,000 rooms open or in construction, which is 53% higher than its closest competitor, Ervin said.

Marriott signed 42 luxury projects around the world in 2022, representing about 8,000 rooms that have entered or will enter the company’s system.

The company has more than 600 resorts open globally and has signed 15,000 rooms in the all-inclusive space since its last security analyst meeting in 2019, Ervin said.

“Which shows you how important that is to us, and that’s a really intriguing segment for us for growth just overnight essentially with the Blue Diamond deal,” he said, adding that deal took Marriott to the No. 2 spot globally for upper-upscale and luxury all-inclusive rooms.

Marriott has signed an all-inclusive project in the Europe, Middle East and Africa region, and executives hope to sign another three this year mostly in the same region, Ervin said.

Marriott's entry into the midscale segment, which operates at a lower average daily rate than the rest of its portfolio, will allow it to gain loyalty from potential Marriott Bonvoy members early in their hospitality life cycle, Ervin said.

From a development perspective, midscale provides above-average growth rates for the company, he said.

Regardless of location, its midscale offerings will be high-quality for their segment, at a lower cost and faster to build, and will have efficient operating models that give guests exactly what they need, he said.

The segment will also create a simpler relationship with owners in terms of fees and reimbursement costs bundling together, Ervin said.

“When you put all those similarities together and you mix them up, what we expect from entering midscale will be a high return on investment for our owners that will entice them to start working with us and then entice them to do more and more units as they see how successful those units have been,” he said.

City Express will be Marriott’s midscale offering in the Caribbean and Latin America, given the brand recognition and penetration that already exists in Mexico, Ervin said. Its midscale vehicle in Europe, the Middle East and Africa will be its newly announced Four Points Express by Sheraton. Marriott’s new extended-stay StudioRes brand will lead the segment in the U.S.

Marriott doesn’t have a midscale offering yet for Greater China and the rest of the Asia-Pacific region, but given the growth potential in those markets, Marriott will soon increase development there, he said.

Extended stay has always been a strong segment, and it’s been a particularly successful growth vehicle for Marriott with its Residence Inn, Element, TownePlace Suites and Executive Apartments brands, Silverman said. The segment’s strength became more evident during the pandemic and the subsequent recovery.

“Changing stay patterns have accelerated consumer demand for extended-stay lodging options across multiple product tiers,” he said.

The blended trip purpose trend in travel is driving incremental room-night demand, especially on the traditional shoulder nights of Sunday and Thursday, he said. It’s also clear a greater portion of the workforce is looking for extended-stay lodging options as they have greater flexibility in where they work.

“Extended-stay hotels have long offered positive owner economics and advantages over transient hotels that fuels additional owner demand for a broader array of extended-stay products across different product quality tiers,” he said.

Marriott now has offerings in this segment from the luxury premium tier through midscale, and it can adapt for owner, customer and market needs, he said.

Marriott has the largest hospitality-branded residential business globally, making up 30% of the market share when combining open and pipeline units, said Tim Grisius, global mergers and acquisitions and real estate officer.

Marriott entered this space more than 20 years ago when a developer approached the company about branding and managing condos adjacent to a Ritz-Carlton hotel, he said.

The powerful sales premiums generated from these branded residences help to boost hotel development while generating significant fees for Marriott, he said. In 2022, there were $1.2 billion in sales for Marriott-branded residences, generating license fees of $71 million for the company.

International markets are a growing part of Marriott's footprint, comprising 70% of the branded residence pipeline, Grisius said. In the past five years, the company's branded residence offering has expanded to 12 new countries and territories, bringing the total to 30.

Seventy-nine percent of the open and pipeline residential portfolio is co-located with a hotel, and Marriott has 19 stand-alone residential locations with another 28 in the pipeline, he said. The branded residence segment includes 15 brands, of which eight are upper-upscale and seven are luxury.

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