Delta rollout shows Marriott’s plan for acquired brands
 
Delta rollout shows Marriott’s plan for acquired brands
22 APRIL 2016 8:36 AM

At the first Delta Hotels and Resorts U.S. opening, Marriott’s Paul Cahill talked about brand growth, as well as bigger-picture positioning strategies the company will face as it integrates Starwood brands. 

ORLANDO, Florida—By introducing the Delta Hotels and Resorts brand to the United States, Marriott International showed its commitment to growing the brands it acquires, according to Paul Cahill, global brand leader and area VP of operations in Canada for Marriott.

“We put the Marriott stamp on Delta, which means we are fully committed to growing this brand in the short term and long run,” he said during an interview Thursday at the grand opening of the first Delta hotel in the U.S., the Delta Orlando Lake Buena Vista. Marriott completed its acquisition of the Canada-based Delta brand in April 2015.

Cahill also said Marriott’s process for expanding Delta mirrors the plan for the new brands it will acquire if the pending acquisition of Starwood Hotels & Resorts Worldwide closes. Shareholders from both Marriott and Starwood approved the merger on 8 April.

“The Starwood acquisition adds nine more brands to the portfolio, in which there will be conversations about where each of those brands sit and who the consumer target is,” Cahill said. “That’s all part of the due diligence.”

One specific brand on many minds is Starwood’s full-service Sheraton brand, which competes with such brands as Marriott Hotels & Resorts and now Marriott’s full-service Delta Hotels.

“As the brand leader for the Marriott brand for the last five or six years, I certainly was building the brand repositioning in a space that competed with Sheraton and Hyatt and Hilton, so I know a lot about Sheraton,” Cahill said, adding that Sheraton is a dominant global brand with almost 600 full-service hotels in its portfolio. He said it’s a legacy brand, and people have an affinity for it.

“Sheraton is a powerful brand, and I imagine we are going to lean into that brand and learn as much as we can about the direction Sheraton is taking,” he said, citing the 10-point Sheraton 2020 plan Starwood introduced last year to lift the brand.

“We’re still competitors today,” he said, adding that Marriott executives are excited to learn more when the Starwood deal closes, which is expected to happen in July.

“We have a history of doing this, taking on brands and growing brands,” Cahill said.

He said that with Marriott’s 19 brands there is always going to be some crossover. But that doesn’t give Marriott executives cause for concern, although Cahill did admit that there can be brand fatigue.

“But we don’t have too many brands,” he said. “I consider our brands like baby tigers. A brand like Delta, for us it’s our baby tiger. We need to nurture it and set it up for success and feed it and care for it, and someday it will grow into a tiger that can go on its own. And we’ll cultivate new baby tigers.”

Paul Cahill, global brand leader and area VP of operations in Canada for Marriott, speaks during a news conference at the grand opening of the Delta Orlando Lake Buena Vista. (Photo: Alicia Hoisington)

Delta details
The 62-year-old Delta brand matured in Canada, and today it has a footprint in 35 locations with nearly 40 hotels. The brand’s new Orlando hotel is just the first step for global growth, according to Cahill. There are 80-plus properties in the pipeline in such locations as New York, Shanghai and London, Cahill said during a news conference at the grand opening event.

He said Orlando was a natural fit for Delta’s introduction to the U.S., as Canada is one of the city’s largest source markets for travelers.

During a separate interview with HNN at the event, Cahill said he sees the brand in metropolitan markets due to demand opportunity.

“The other thing is that these large metropolitan areas have been saturated with brands, and so any time there’s a new brand, there’s going to be more opportunity,” he said.

New York City’s supply surge also doesn’t scare Cahill. The market has 15,145 rooms under construction as of March, according to data from HNN’s parent company STR

“Manhattan is where we want to be with the brand,” Cahill said. “There’s lots of supply coming in, but there’s also a lot of consumers. … New York City is a perfect example. Even during the U.S. recession, there was a huge influx of European travelers to the city.”

Cahill said he expects Delta to grow mainly through conversions. The Delta Orlando Lake Buena Vista was a conversion project, although Cahill said the property was totally gutted and rebuilt as if it were a new build.

“We think there’s an opportunity in these large cities to take older hotels … with owners looking for a better return on the next investment,” Cahill said.

Marriott and JHM executives participate in a ribbon-cutting ceremony during the grand opening of the Delta Orlando Lake Buena Vista. (Photo: Alicia Hoisington)

The Orlando property is owned by Greenville, South Carolina-based JHM Hotels, and President D.J. Rama said the developer-owner was happy to be the guinea pig for the brand in the U.S.

“Every week I get three phone calls from other owners who say, ‘Why Delta? What did you do?’” he said during the event. “When we acquired the hotel, there was another brand on the building that the previous owners were planning to put. Our objective was to identify a brand that can make it easy for the customers that come.”

Bringing the brand to the U.S. was carefully considered with research to back up the decision, according to Cahill.

“We do a lot of research on all of our brands, and all of our brands are centered around a customer. So not just demographics … but psychographics,” he said.

When Marriott conducted its research, executives found that there was a new customer segment. Even though the company had 18 brands, it didn’t have one that was hitting against what Cahill described as a “reliability segment.”

“It’s this idea that, ‘I want premium services, but there’s lots of services in full service that I don’t want, and when you give me those services it is actually impeding my flow,’” he said. “We saw (Delta) as an opportunity in the U.S. … it’s tens of millions of travelers who want a brand to deliver seamless operations and dial up things that are really important.”

For instance, target guests for Delta want a full-service bar and a good fitness center, as well as simple things, such as a hair dryer that works. In the case of the Orlando property, Cahill said there’s a leisure focus. That’s why executives thought of travelers—and many are children. The 241-room hotel has a pirate ship pool and a room for kids to play in after visiting the area theme parks, and a full-service bar that appeals to adults.

“What Delta brings owners is a flexible model that allows us to dial up things that are important to customers, which will then differentiate the hotel from others,” Cahill said.

Editor’s note: Marriott International paid for all travel expenses and comped one roomnight for the grand opening of the Delta Orlando Lake Buena Vista, where the interviews for this article were conducted. Complete editorial control was at the discretion of the Hotel News Now editorial team; Marriott had no influence on the coverage provided.

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