BERLIN — The current geopolitical strife, economic disruptions and other general uncertainty has caused some to worry about travel demand, both domestically and internationally.
During an on-stage interview at the International Hospitality Investment Forum EMEA on April 1, Marriott International President and CEO Tony Capuano spoke about his confidence in the ongoing demand for travel and experiences.
"Without question, I'm bullish," Capuano said at the time.
The day after Capuano's remarks saw global stock markets dip to record lows in reaction to President Donald Trump's tariff plans announcement. In the following days, stock markets experienced more ups and downs as Trump paused some tariff enactment for 90 days.
“Ours is an industry and a sector that thrives in times of stability and consumer confidence, and there are some headwinds out there and some flashing red lights that are shaking that confidence a little bit,” Capuano said on the IHIF stage. “I think if we come out of [the first quarter] with really strong corporate earnings, that will start to restore some of that confidence and stability, but it's going to be an interesting few weeks, to be sure.”
Part of what drives his overarching optimism is the insight Marriott has into consumer spending through the company’s relationships with credit card issuers, he said. It receives real-time deep data on how consumers are spending.
“Pre-pandemic, you saw a younger demographic really start to shift their spending away from hard goods toward travel and experiences,” he said. “Now when we look at the data, it is clear that the pandemic acted as an accelerant to that trend across demographics.”
Some thought the revenge travel phenomenon would be short lived, but it’s still going, he said. There seems to have been a fundamental psychographic change that should support the hotel industry for decades to come.
Midscale and luxury
Marriott only entered the midscale hotel space within the past few years, doing so with its acquisition of the City Express brand that operated in Latin America, Capuano said. As Marriott has grown in the midscale space, it has expanded City Express’ reach to the U.S. and Canada while also launching StudioRes, its midscale extended-stay brand.
Marriott saw further opportunities to grow in the midscale space in the Europe, Middle East and Africa region as well as Asia-Pacific, Capuano said.
In many markets where Marriott operates, there’s the continued bifurcation of consumers, he said. High-income households continue to have “a ravenous appetite” for travel and experiences, which is why the company is doubling down to extend its lead in the luxury space. Households with more modest incomes have a real interest in travel and experiences as well, but they’re doing so at a more affordable price point.
“Prior to Marriott's entry into midscale, I'm not sure we really were satisfying that need within our portfolio,” he said, adding it widens the funnel to bring people into the Marriott Bonvoy loyalty platform.
In Europe, there are a lot of compelling individual hotel and portfolio conversion opportunities, he said. For Marriott’s teams in EMEA and Asia-Pacific, the company’s platform enables conversion prospects. Two months ago, he was in Japan opening Marriott's first Four Points Flex by Sheraton, which was part of a 14-hotel portfolio with global investment firm KKR.
Capuano said he was recently in Naples, Florida, with about 350 of Marriott’s luxury hotel general managers. The company has about 650 luxury hotels globally with nearly 300 in its pipeline. What Marriott is hearing from its luxury customers is they have an insatiable appetite to explore the world and have real luxury experiences.
The breadth of Marriott’s luxury offerings gives these guests different experience types that would meet their needs, he said. While the goal is to have each luxury hotel brand have its own distinct and well-articulated identity, what they share is the hiring, training, retention and motivation of staff.
“I think that [luxury] consumer has always looked for local,” he said. “They've always looked for authentic, and maybe most importantly, they want friction eliminated from their travel experience.”
Marriott has more than 100 operating branded residential projects around the world with a similar number in the pipeline, Capuano said. In the early days of branded residences for Marriott, they were a means to an end, used to bolster the economics of a hotel deal that might not have worked on its own. Today, they’re a critical part of many mixed-use luxury projects, but they also work well on a stand-alone basis in some markets.
In markets with many luxury residences all along the main thoroughfares, it may be difficult for buyers to navigate them all, he said. When they see one with Marriott's St. Regis or Ritz-Carlton brand attached, they’ll know what to expect in terms of quality and service delivery.
“When you look at the price per foot or price per square meter that those projects are commanding, it would suggest that buyer is willing to pay a premium for that certainty,” he said.
The Marriott ecosystem
It’s arguable that Bonvoy is Marriott’s most important brand, Capuano said. It’s the connective tissue that ties together its portfolio of brands across multiple quality tiers. In the early days, the aspiration is that guest would stay in hotels to earn loyalty points and then later redeem those points for other hotel stays.
“Of course, that functionality still exists, but the opportunity to grow and expand and reshape the relationship we have with our members and have them start to view their participation in these platforms as giving them access to really extraordinary experiences and travel planning and the like, to me, is the exciting future of loyalty,” he said.
Prior to being president and CEO of Marriott, Capuano said he ran global development for the company, and a common question was about growth strategy. The consistent answer was Marriott’s objective was to capture as much of the share of guests’ and Bonvoy members’ travel wallets as possible.
“From that perspective, the clearest path to achieve that objective is to have the right product everywhere our guests want to go for every trip purpose,” he said. “It’s that focus that has driven a lot of the innovation in the portfolio.”
When the company launched its Marriott Homes & Villas platform, everyone asked if it was going head-to-head with Airbnb, he said. That wasn’t necessarily the case, but Marriott’s guests wanted to take trips for which higher-end, multi-bedroom homes would better suit their needs.
“To the extent our guests couldn’t find that within the Marriott ecosystem, we were sending them into the warm, welcoming arms of my friend Brian Chesky,” he said, referring to Airbnb’s CEO. “And we really didn’t want to do that.”
Marriott had similar motivations with the launch of its Ritz-Carlton Yacht Collection and its midscale offerings, he said.
“All of those are driven by that overarching objective: to ensure that our guests and members really need not look outside our ecosystem,” he said.