As it finds itself in brighter spotlights, Marriott International must defend its leadership position in the industry with a mixture of education, patience and communication.
Since announcing its intention to become the world’s largest hotel company on 16 November 2015, Marriott has been in an ever-expanding spotlight. Unfortunately for the Bethesda, Maryland-based, publicly traded company led by President & CEO Arne Sorenson, a number of recent events also have put it under an intense microscope.
Marriott, as pretty much everyone knows, let it be known in November that the brands it acquired from Starwood Hotels & Resorts for $13.6 billion in 2016 were exposed to a hacking scheme that began FOUR YEARS ago, before its deal to buy Starwood.
That’s an incredibly long time for such skullduggery to float under the radar, but it does show how complex and deep data breaches can be when performed by the experts.
It’s certainly not the first data breach in the industry—I think you’ll be surprised at the length of this list of breaches that Hotel News Now has been compiling for the past few years—but it is the largest one.
Last week, Marriott revised the number of guests affected by the breach, which is now believed to be fewer than 383 million, significantly less than the 500 million figure originally stated but still massive.
Unsubstantiated reports have been pointing some fingers at the Chinese government for the breach, and only time will tell if that’s true (if we ever find out). Regardless of who the thief is, the fact that hundreds of millions of customers were affected means Marriott is going to have its hands full dealing with this for some time.
Questions abound, including: How could it go undetected for so long? Do the officers of Starwood share any of the liability? Where did Marriott’s due diligence legwork fall short? How much is this eventually going to cost Marriott in terms of money and reputation? How does this affect owners of properties?
The last question could be the most far-reaching one. A few owners that I’ve reached out to told me that customers think the breach includes all of Marriott’s brands (not just the legacy Starwood brands). They’re telling their employees to be open, honest and inform customers on what they know about the fallout—which in general is pretty little.
Marriott is directing all inquiries to a website and not publicly commenting on the breach. That’s a smart move, at least until they completely understand what happened and how it can be avoided. But at some point, the executives must publicly address it. This is not something to brush under the rug. It involves so many consumers and does potentially affect the values of the hotels.
Here’s hoping that Marriott quickly solves how it happened and shares it with all of its competitors. The hotel industry is a dog-eat-dog world on just about every street corner, but the industry overall can’t afford hotel companies to be provincial when it comes to issues such as this.
Sharing as much information about the breach as possible could prevent another one. Competition aside, it’s the right thing to do.
Marriott also has had to deal with a number of strike-related issues at its properties. Many of them have been resolved, as this timeline from HNN shows, but labor issues aren’t likely to go away any time soon. Organized labor continues to gain a stronger foothold in the hotel industry, and hotel executives are going to spend more time dealing with strikes. It’s ironic that during a time when labor in general is so hard to find, the organized labor issue is at center stage. The bottom line is the bottom line, and more owners are going to see theirs shrinking as labor costs continue to skyrocket.
Dealing with misperception
But, wait, that’s not all for Marriott.
The company also is feeling some heat for its use of plastic in its Fresh Bites roomservice program. Musicians Stevie Van Zandt and Jackson Browne have teamed with the Plastic Pollution Coalition to boycott all Marriott International-owned hotels because of their use of plastic containers for room service. Maybe they’re also boycotting Marriott’s franchised, licensed or managed properties—but those weren’t mentioned in the statement.
Rolling Stone ran an extensive interview with Van Zandt, who you might recall played Silvio Dante in “The Sopranos” and is one of the greatest guitarists in rock history. He’s obviously passionate about the subject. The magazine did include in the article this snippet:
In an interview, a senior Marriott executive clarified that the roomservice Van Zandt ordered in Morgantown was part of the company’s Fresh Bites pilot program, a more informal, affordable form of roomservice the company is testing out in 200 of their more than 6,000 hotels as a way to compete with services like Seamless. The company also noted that the plastic in Van Zandt’s order was recyclable and made of pre-consumer recycled materials. “We all care about this issue,” says Erika Alexander, Marriott’s Chief Lodging Services Officer for the Americas. “It’s important for all of us to reduce our reliance upon plastics, and there are a lot of different reasons for that that are all totally valid.”
The boycott does appear to be selective. No mention was made in the Rolling Stone article whether the rockers would be boycotting any of the concert venues that I suspect use far more plastic at each event than Marriott uses in its pilot room service program.
Gaining the upper hand
The final mention of Marriott in this writing involves its ongoing negotiations with Expedia over commission. Rumors have been floating that a deal has been reached but nothing has been announced. The entire industry is awaiting the results of this discussion.
A major reason for Marriott’s acquisition of Starwood was to build a portfolio that could essentially serve as its own major distribution platform—one that could force OTAs such as Expedia to reduce commissions if they wanted to include Marriott’s inventory on their platforms. The results of the current negotiations will go a long way in scoring whether Marriott’s approach is working in the short term.
The distribution landscape in the hotel industry is evolving before our eyes. What’s happening now is as important as the major changes that were implemented at the dawn of the OTAs in the late 1990s and early 2000s. Marriott’s leadership position will have a lot of influence on what happens next.
Because the publicly traded company is in a brighter spotlight than ever based on its largest-in-the-industry stature, it will constantly face more pressures ranging from frivolous to serious. Maintaining an open dialogue with all of its stakeholders—including consumers, shareholders and franchisees—is essential if it wants to continue to build the leadership capital it has worked hard to create.
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