Managing the largest hotel firm on the planet, Arne Sorenson said he is optimistic, based not on false hope but transparency, value, talent, travel demand and hard work.
RIYADH, Saudi Arabia—The president and CEO of the world’s largest hotel company, Arne Sorenson of Marriott International, said he felt definite optimism for the industry’s future, but much work remained to be done, especially in fostering young talent and proving the continued value of brands to owners.
Speaking with moderator Stephen Sackur, journalist and presenter of the BBC program “HardTalk,” during the online Future Hospitality conference, Sorenson said the last nine months have been an emotional rollercoaster.
“Sustaining optimism throughout this, and including the days that are the most concerning, is that there is no doubt that the virus will get behind us. It may take a vaccine, it may take further evolutions of therapeutic regimens that are improving all the time … and when it gets behind us the forces that have propelled growth in travel and hospitality for decades will still be there,” he said.
Underlining that optimism are the requirements of transparency, analyzing strategy and working collaboratively with all stakeholders.
He said it is imperative communications happen regularly, even more regularly than they might have happened in the past, especially in an organization that he said pre-pandemic had approximately 750,000 colleagues.
“(Communications) have got to be very transparent,” he said. “To go out and paint a rosy picture of the future without talking what we are confronting in the present leaves that communication without very much credibility.”
Sorenson said messages must include what we are seeing, what we know, what we do not know and the steps we are taking.
“And here are the decisions we have already taken, and why we have made them, and recognize that there is pain in many of the things we have done immediately and early,” he said.
Those conversations need to be grounded in a balance of optimism and realism, he said.
“But then talk about what it is that gives us hope collectively. … If you just deal with the hope side of it, I think it would fall flat. I don’t think people would blame you for it, but I think people would say I am not really sure I understand how that gets me through the crisis I am confronting today,” he added.
Sorenson said everyone is aware that working from home and regional and national lockdowns are up and staff numbers are down, but he noted the forces and strategies are in place to see the first rays of sunshine.
He said formulating an outlook is based on figuring out what are the long-term changes for the industry.
“In consequence we asked to what extent will this permanently displace reasons that caused us to travel before?” he said.
He added Marriott has shed 20% to 25% of staff, at hotels and in corporate, “which is deeper cuts than we have ever made.”
Sorenson said in looking at the last two industry crises—the tech-bubble burst following 9/11 and the Great Recession—the message in both circumstances was business travel would never come back to levels it has been before, and on both occasions that proved untrue.
“Now some of that was about economic pressure, not health pressure … but now as we look towards the future, the debate is evolving a little bit,” he said. “We heard from many companies early in the crisis that working remotely was just as good, if not even better, than going to the office, but I think increasingly we hear from folks that with each passing month of this crisis that gets less and less easy to say.”
He said the conversations on the next steps continue to evolve.
“The farther you get out the more strategic it is, the more collaborative it is, the more we’re searching out what are the questions we need to answer as opposed to the answers to the questions we know are already in front of our face, the more that depends on being together, so I think those things will drive us again,” he said.
Sorenson said he did expect more white-collar time being spent working remotely but that bleisure travel would increase.
“I think we will find that, as we have in the last 25 years, a higher percentage of our total business is going to be leisure business in the future than it was in the past,” he said. “That has always been the trend, and it will continue.”
Sorenson said the rise in technology use during the crisis would also continue.
He added some loyal guests no longer wanted to walk up to a check-in desk to see if they were eligible for an upgrade, but he did not expect the industry is “going to a place very soon where we have zero people at the front desk.”
Sorenson is concerned about how young talent has been hit hard by COVID-19 and the entire hotel industry needed to rebuild its attractiveness to them.
“I think that is something we have to collectively watch out for. … I think there are some disciplines like finance, legal, HR where they could make their calling in lots of different industries, and so the connectivity with those folks is a little less tight, so we have to make sure we are doing what we can to realistically paint the future,” he said. “The positive thing here is that when you take a hit in the way we’ve taken the progression here should be quite positive, and that has an impact on opportunities.”
Sorenson said the industry has lost people it no longer has room for and others who have decided to move to industries they have deemed are safer than hospitality.
He saw less worry as to the attractiveness of brands to owners post-crisis.
“The core issue for hotel owners is do the brands deliver value, and that value is really about top-line premium and the cost of grabbing that business,” he said. “If they can both grab premium at a lower cost, then the analysis will be very simple, that is, is the cost of that brand worth it?”
“We will deliver among a smaller group of customers that much more premium than we would in a time when every single hotel was full whether it had a brand on top of it or not,” he added.