Marriott’s Eastern Europe growth may include Fairfield
BUDAPEST—Marriott International is looking to open properties across Central and Eastern Europe, with perhaps its brand Fairfield Inn & Suites making its debut outside of the Americas there.
Speaking at the keynote session at the Hotel Investment Conference Central and Eastern Europe and Caucasus, known as HOTCO, Liam Brown, president and managing director of Europe, Middle East and Africa at Marriott International, said there are tremendous opportunities for growth, development and partnerships in the region.
“We see the hotel market in Europe as underserved relative to other parts of the globe. … It is a wonderful part of the world, and it is undiscovered from a global perspective. When you think of the rich history and diversity that is in this region and the remarkable influx of tourism over the last several years, it is just going from strength to strength,” said Brown, who started in his current role at Marriott in November 2018.
“Our pipeline is remarkable over the last couple of years, and we have the ability to double our size and presence here over the next two, three or four years, depending on how projects come to fruition,” he said.
Brown was born in Dublin, spent approximately 30 years living and working for Marriott in the U.S. and now, since his promotion, resides in London. He said his first job in hospitality was working in Irish rail-system dining cars at the age of 14.
Three Marriott brands—Moxy Hotels, developed for the European market; and Autograph Collection Hotels and Tribute Portfolio, two soft or conversion brands—have definite possibilities in the newly developed Eastern European markets, Brown said, but there are other brands that might come, too.
“If you think of our Fairfield Inn brand in the U.S., where we have close to 1,600 open and in the pipeline, that is an opportunity for us from an European perspective, but stay tuned on that in terms of how we think through it and how that might work. That is an opportunity for us given where a lot of people play in that particular segment here,” Brown said.
Marriott, the largest hotel company in the world both in market capitalization and hotel count, added two brands in 2019—Homes & Villas by Marriott International and all-inclusive Elegant Hotels Group.
“I would make the argument that we would love to see all our (30) brands in every location and all thriving, but … our most successful brand at the moment would be Moxy, where we have done a remarkable job at delivering that brand,” Brown said.
Approximately 20 Moxy projects have been signed in the Central and Eastern Europe region, he said, adding there are conversion opportunities for Autograph and Tribute.
“The team likes to say we are the most globally distributed of all the global brands in that we have a presence in every country in Eastern Europe except for three … and we would love to think we had the opportunity to continue to develop with all of our brands,” he added.
Critical to this development, Brown told the audience of 400, is ensuring the team on the ground understands local opportunities, local developers and the people who can make growth happen.
“Marriott owns very, very little real estate. We probably have at any given time about a $1 billion worth of assets on our books, but they are always for sale. Our business model is very much management contracts and franchise agreements. What we deliver … has to work from a cash-flow, margin, return-on-investment capital perspective, and (all of those) are driven by guests” he said.
Today’s travelers are more sophisticated than they were 30 years ago, Brown added. Travel wants now are enabled by social media, whereas 30 years ago all hotel brands had to focus on were cleanliness and consistency, he said.
“Think about when you would be able to say ‘Color TV’ and ‘HBO,’ and all that sort of stuff. That just does not cut it anymore, and it presents challenges. We have to be on our game all the time,” he said.
Much development and tourism interest is centred on the region’s capital and historical cities—Budapest, Bratislava, Bucharest, Krakow and Warsaw—but Brown said he also sees opportunities to push into other less-served markets.
“The biggest opportunity and challenge for us is to try to drive greater distribution in those secondary markets,” he said.
Brown said for most travelers, Eastern Europe remains a mystery that they increasingly wish to discover, for its history, culture, food and wine.
“It has been a big change over the last 10 years or so. 2018 was the first year we approved more deals internationally,” Brown said.
The key for Marriott, he added, is to serve business travelers as well as leisure travelers who are prepared to pay a premium.
That requires “working with local partners and trying to understand from a guest perspective, what are the brands that resonate most powerfully and compellingly in this part of the world,” he said.
“The guest is the one who decides if your brands are going to be successful or not. I would not put a limit on where the opportunities are and what brands. Every brand should be fit for purpose and have a compelling brand story,” Brown added.
Much of Brown’s career at Marriott has been in what Marriott terms the “classic select” segment.
In his role as president of select brands and owner and franchise services in North America, Brown oversaw the opening of more than 400 select-service franchises for brands such as Fairfield, Residence Inn and TownePlace Suites. He has also been a GM, including at a Courtyard by Marriott in Syracuse, New York.
Brown also has been a board member of the International Franchise Association since 2009.
“Business is about relationships. We are into long-term relationships. We have 1,000 franchisees in the U.S. and over 5,000 hotels that are franchised. About 30% of that group have 70% of the hotels, and they have grown into being wonderful entrepreneurs and developers,” Brown said.
“I knew Gary Tharaldson (franchisee Tharaldson Hospitality) when he had maybe half a dozen hotels. He began in a little place called Fargo, North Dakota, with a Fairfield, and has built over the course of his career with Marriott 480 hotels. … I met Bruce White (franchisee White Lodging) when he was opening also a Fairfield … and he has grown his company from that one hotel in Merrillville, Indiana, to close to 300 hotels, including a beautiful JW Marriott with some 1,000 rooms in Indianapolis and another 700- or 800-room JW in Austin, Texas,” he said.
Brown added the franchising model should also work in Europe.
“From what you might regard as somewhat humble beginnings, from one having one hotel, to having 200, 300, 400 hotels is a remarkable story of entrepreneurship and partnership. Why would that be any different in Europe and in particular this part of the world where there is an entrepreneurial spirit and a desire to grow a business?” he said.
Brown said Eastern European owners new to hotels are ready to learn and be successful.
“There is no one more motivated than an owner as to understand what it will take to be successful, to understand the nuances of a business,” he said.
The importance of loyalty
He added that Marriott needs to be able to demonstrate to owners that from a market-share perspective it performs better than its competitors, adding that Marriott’s loyalty platform Bonvoy is its main piece of equipment.
“Marriott Bonvoy is probably the most important brand that we have, and the level of investment and commitment we have is to demonstrate that is the case,” he said. “It is the anchor we need to continue to drive. There is a huge operational part we always need to get right. … It is the moat around our castle at the end of the day, the thing that allows us to differentiate ourselves and to have strength and horsepower.”
Brown points to the 22 million to 24 million Marriott Bonvoy members in China, many of whom are traveling to Eastern Europe.
“Outbound travel from China has gone from almost nothing to 200 million outbound trips, and in Europe it went from zero to 3% of our business in basically a blink of an eye,” he said.
Brown ended the keynote conversation with more reminiscences from his days on the Irish rail lines.
“I had the most illustrious title of ‘Pantry boy,’” he said. “I worked for a guy by the name of Ned Hegarty … he was a rather abusive supervisor. I told him once ‘Ned, I only have one pair of hands,’ and he said ‘if you had two, you wouldn’t be here at all. You’d be in a circus.’
“But Ned was the guy who told me, ‘make sure you get an education, go to college,’ and then he said, ‘you might do well in the hospitality business.’”