NEW YORK — Marriott International has announced a $50 million program called Bridging the Gap to further diversify its hotel development and ownership partners.
Marriott’s top executives met with members of the media and students of Howard University on the first day of the NYU International Hospitality Investment Conference to explain its new development program.
The Bridge the Gap program will offer a series of incentives to qualified owners, said Noah Silverman, Marriott's global development officer for the U.S. and Canada. These incentives will include reduced applications fees, key money for specific projects, reduced royalty fees and training programs. On an individual basis, Marriott may contribute between $500,000 and $1 million per qualifying project through these incentives.
Collectively, this initial seed funding amounts to $50 million from the company in support of these projects, he said.
“If we are as successful as we hope we will be on this front, we see ourselves creating as much as $1 billion in asset value in underrepresented owners,” he said.
Bridge the Gap is aimed at owners in the U.S. and Canada for now, Silverman said. While Marriott’s diversity objectives are global, diversity takes on different meanings in different countries, he said.
The $500,000 to $1 million per project is a combination of the different incentives the program will offer, he said. Typically, key money is paid upon the opening of the hotel, and while it’s not something Marriott has done often for its select-service hotels, it’s something the company is committing to in this program.
Overall, some of these incentives come directly from Marriott’s balance sheet while others are about reducing the cost the owner would otherwise have to pay, he said.
Access to Capital
Diversity, equity and inclusion has been a core part of Marriott’s people-first culture for many years, and the company has been focused on that through the ownership lens, Silverman said. It set a revised goal years ago to have 3,000 diverse hotel owners by 2025.
To achieve that, it has partnered with several leading organizations, such as the Asian American Hotel Owners Association, the National Association of Black Hotel Owners, Operators and Developers and the Latino Hotel Association as well as Tracy Prigmore and her ”She Has a Deal” program. Marriott has also run diversity ownership summits at its headquarters to provide educational opportunities for interest investors and also as recruitment efforts.
“While we can claim some good credit for success, in certain areas, there continue to be particular groups that are meaningfully underrepresented among our ownership and franchise ranks,” he said, referring specifically to black owners, female owners, Latino and Hispanic owners and Native American and First Nation owners.
The most common impediment Marriott heard about was financing, Silverman said.
“Unquestionably, access to capital was identified as the No. 1 barrier to entry for these groups,” he said. “It was just a repeated theme from all the conversations we had.”
Marriott doesn’t invest in hotel projects cavalierly, CEO Tony Capuano said. It invests in projects executives think are of strategic importance to fill important gaps in its footprint. The company’s investment also has the power to attract lenders to the project, which is why the company didn’t limit the program to just making introductions and training.
The ability to penetrate the debt market will be key in assisting some of these prospective owners, he said.
“Our willingness to invest in them and their projects, combined with leveraging some of the longstanding lender relationships that we enjoy, will be critical to seeing this program succeed,” he said.
Importance of Diversity
The 95-year-old company has been focused on welcoming all, Capuano said, including guests, associates, business partners, owners and franchisees. Marriott has several programs that focus on diversity, equity and inclusion, and it recently celebrated the 20th anniversary of its board-level Inclusion and Social Impact Committee.
The Bridge the Gap program is a continuation of those efforts, he said, noting that while the company is build for rapid growth, that can only be achieved on the shoulders and balance sheets of its owner and franchisee community.
Marriott executives will keep an eye on both the aggregate statistics and the data about the individual groups that represent its ownership community, he said.
“So, today's announcement is really about making a commitment, both in terms of our collective effort, but also our balance sheet, to try and drive diverse ownership in those communities that are not as well-represented,” he said.
One of the first questions Marriott gets asked by customers is how the company’s core values align with theirs, said Julius Robinson, chief sales and marketing officer, U.S. and Canada. That includes questions about Marriott’s DEI efforts.
“Companies want to do business with people that share the same values,” he said. “As you know, especially across the United States, there’s a tremendous amount of interest in how we get more diverse as a country in terms of the corporate and economic environment.”
There are investment dollars out there in these communities, but they don’t necessarily know the power of plugging them into a network like the one Marriott has, he said. This program will create an opportunity for further engagement and spreading the word.
“I think the initial investment makes a real statement, that we’re serious about this,” he said. “It begins a conversation that has an infinite amount of opportunity.”
Marriott has spent a lot of time and effort on supplier diversity, making sure its purchasing goods and services from women- and minority-owned businesses, President Stephanie Linnartz said. It’s spent about $6 billion at such businesses over the last decade, so it has made progress there.
On the marketing side, Marriott’s Love Travels campaign started in 2014 that focused on the LGBTQ community, but it’s become broader to market across all diverse customers segments, she said.
“Now it’s broadened even further, this idea of Love Travels, we welcome all, to mean owners, supplies, not just customers and associates,” she said.
One area the Marriott needs further progress is on the hotel ownership side, she said.
Hotels are the economic engines in many communities, and that requires thinking about diversity and inclusion among all the players involved, Linnartz said.
“This is all about economic empowerment, too,” she said. “If we want to see diverse groups, women, people of color, grow and have a bigger impact in society, it's about economic empowerment.”