Marriott select-service execs talk PIPs, extended stay
 
Marriott select-service execs talk PIPs, extended stay
05 APRIL 2017 8:40 AM

The leaders of Marriott's select-service brands see growth opportunities in the extended-stay segment and anticipate a few changes to property improvement plans for some former Starwood brands.

NEW ORLEANS—Marriott International has found a place in the extended-stay segment for brands on both sides of its select-service spectrum—classic select and distinctive select—and company executives say some owners can expect changes in property improvement plan standards.

In exclusive interviews arranged by Marriott, Hotel News Now spoke with select-service brand leaders after a conference for GMs in New Orleans to discuss what the future holds for brands in the classic-select and distinctive-select segments.

Classic-select PIPs, renovation compliance program
Owners on the classic-select side, particularly of Four Points properties, could see a few changes when it comes to PIPs, said Janis Milham, SVP and global brand leader of Marriott’s classic-select brands.

“We typically do a property improvement plan when there’s a sale or relicensing of an asset, and that’s our opportunity—typically it’s an older asset—to get the asset more up to the standards of our new builds today,” she said. “And so I think we’ll see that we will apply the same sort of rigor around the Starwood properties. So let’s take Four Points, for instance, which is a brand that’s in my group. So Four Points has had a little different approach to (PIPs); they’ve allowed owners to do a PIP over, let’s say, three years’ time and (have) done a phased-in approach.

“That’s not something Marriott has done or will do, so that will be something that we’ll … change as we go forward …. We’ll take the best of what we’ve been able to establish over the years that have sort of allowed us to have more consistency and quality and apply that to the Four Points as a Starwood brand, for example.”

Milham said Marriott has also implemented a renovation compliance program.

“We expect hotels to renovate every seven years, and we have a renovation strategy and documentation for each of our brands,” she said. “And basically we hold people accountable to that renovation compliance, and if they don’t comply—the hotel goes 10, 12 years without renovating—then there are contractual issues that can start to pop up for those hotels.”

Opportunities for owners
Marriott might have made some of its competitors part of the family, but there are others in the industry to worry about, said Toni Stoeckl, VP and global brand leader of Marriott’s distinctive-select brands.

Stoeckl said owners and GMs under the Marriott umbrella should work together to take on the competition and worry less about having multiple Marriott properties in the same city.

“If we have cities where we have multiple properties … it is often about working together and seeing there are plenty of other players in the market that we compete with,” he said. “So if you think about the competitive landscape, it is changing a little bit, but the ability to offer a broader variety of product, we feel, is a plus for our consumers, is a plus for our owners as well as our GMs.”

Milham said Marriott’s numerous brands present opportunities for owners to plant new flags, not switch over to new ones.

“So it’s not taking existing assets and shifting flags,” she said. “It’s really more planting new, and now (owners) see Moxy and AC and Element, and some of our smaller brands, even some in my camp like SpringHill … and see a lot of runway for those brands. I think you might see with Delta and Four Points that there’s some opportunity to shift a non-Marriott asset, potentially reflagged as one of those brands, because they’re going to be more of our sort of flexible brands that would be perfect to take another independent hotel or another flag and flag it in the Marriott system.”

Extended stay select-service brands
Marriott is focusing on growing all of its select-service brands, Milham and Stoeckl said. But there’s opportunity in the extended-stay segment particularly for an older brand, Residence Inn*, as well as a newer brand, Element.

Stoeckl said Element’s health and wellness focus could be a new perspective for extended stay.

“Element is a brand, for instance, that talks about centeredness and balance and well-being in general,” he said. “So Element’s actually a real pioneering brand, because it brings this idea of this lifestyle experience into extended stay. It’s a great opportunity for us as a company to sort of grow that brand because we see (guests) that are healthy, active; they want to act and behave and stay on the road as they do at home. They don’t want to skip their workout routine, they (don’t) want to skip eating healthy food, and so Element brings that to the table.”

Residence Inn is a recognized extended-stay brand in the United States, but Milham said Marriott is working to introduce the concept overseas.

“Extended stay is a business segment that is just starting to be understood outside of the United States,” she said. “Residence Inn really was the first almost, invented in the extended-stay segment 40 years ago. And as we’ve seen the international opportunities, people have not understood the extended stay potential in other countries outside of the U.S. They are now figuring that out, and so we think there is a lot of runway for Residence Inn.”

She added that two Residence Inns currently are being developed in London and are scheduled to open in 2018, marking the brand’s entry into the United Kingdom.

Global brand growth
Courtyard is the fastest growing select-service brand with more than 1,000 hotels in 48 countries, Milham said. She said Courtyard is expected to be in 60 countries within the next three years, and that Fairfield Inn & Suites is also on a fast global growth track.

“A lot of the select brands are seeing global growth, too, so it’s not just in North America where we’re so heavily distributed,” she said. “If you look at Fairfield Inn, for instance, we’ve got over 850 hotels, and we are growing globally fast. We’ve got a pipeline of over 400 (hotels) and 200 of those are in China, for instance, so that’s a brand that’s really on the move.”

On the distinctive-select side, Aloft is the largest brand with more than 120 hotels, and is emerging into new markets such as Asia.

“We have over 100 Aloft hotels in the pipeline that are being worked on right now,” Stoeckl said.

Stoeckl said Marriott is trying to grow its newer distinctive-select brands, Moxy, AC Hotels and Element, and predicts they’ll be major growth vehicles for the company.

“This year alone, (we’re) opening 34 AC hotels around the globe, most of which are in the U.S.,” he said. “And the pipeline is well over 100 hotels for AC, and just this past month we opened our 100th hotel in Raleigh.”

AC started out as a European brand and reflects European style, Stoeckl said.

“For AC, it was about being in markets where there is a great lifestyle, ultimately,” he said. “And so when you think about lifestyle brands, distinctive brands, it’s about being in areas where you’d want to be.”

Moxy is the newest distinctive select-service brand, with 65 hotels in the pipeline, he said.

“Over half of those are in Europe, and the other half in the U.S. and other parts of the world,” he said. “We’re just introducing the brands into Asia, but if you think about Moxy, it’s going to be a major growth vehicle in Europe, for example.”

Editor's note: Marriott International paid for all travel expenses and two roomnights. Complete editorial control was at the discretion of the Hotel News Now editorial team; Marriott had no influence on the coverage provided.

*Correction: A previous version of this story gave the wrong name for the brand. 

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