- The Washington Times - Monday, March 19, 2001

Marriott International Inc. is showing no signs of slowing down, continuing its vigorous growth strategy to remain one of the largest hotel conglomerates in the world.

The mega-hotelier will add 35,000 hotel rooms or approximately 200 hotels to its portfolio this year and is expected to add another $2 billion in system-wide sales by the end of this year, says J.W. Marriott Jr., chief executive of the nearly $20 billion company.

"We're sort of on a bullet train in terms of growth and adding rooms," says Mr. Marriott, 68, in an interview with The Washington Times at the company's Bethesda headquarters. "You know you're not going to drive your stock price and you're not going to drive value to your shareholders without growth."

About 20 percent to 25 percent of the additional hotel rooms will be outside the United States with some in places where the company doesn't have any other properties, such as Copenhagen, Bucharest, Rio de Janeiro and Phuket, Thailand.

"We really work very hard to make sure that the Marriott name is out there," Mr. Marriott says. "Hopefully someday when [people] think hotels they'll think Marriott. The more hotels you have, the more recognizable your name is and the more people will call you first."

Marriott already has 2,200 hotels and resorts worldwide with at least a dozen different brands including Marriott Hotels, Resorts and Suites, Renaissance Hotels, Ritz-Carlton, Residence Inn and Courtyard by Marriott. That's nearly 400,000 Marriott rooms blanketing the world.

After nearly a decade and a half of acquisitions such as the Ritz-Carlton and the Renaissance Hotels, Mr. Marriott says the shopping spree is over for now.

"I don't see us buying a major brand because we don't need it," he says. "We're in every market segment we want to be in."

Mr. Marriott, keeping his eye on the future, says he's not guaranteeing anything though.

"I wouldn't say we would never buy another brand but right now our brands have a lot of growth potential not only inside the United States but outside the United States," he says.

Marriott's many brands give the company the "opportunity to segment the customer base and serve more people," says Tom Graves, equity analyst at Standard's & Poor's in New York.

In one of the most recent decisions by the company, Marriott is partnering with Italian jeweler Bulgari SpA to introduce a new luxury hotel chain catering to an elite market.

Marriott will continue to grow its other brands aggressively in markets where its name is already recognizable, such as the United States, Germany, France, China, Mexico, Canada and Japan.

"When we had 1,000 hotels we weren't getting nearly the percentage of calls that we're getting today as a result of progress," Mr. Marriott says. "When we have 3,000 or 4,000 hotels, that'll make an even greater difference. People will know that wherever they are going they can get a room at a Marriott."

Mr. Marriott says the hotel company is in line with a $2 billion or so annual increase in sales for the properties it operates and franchises. He expects to hit the $30 billion mark in the next four or five years.

Technology continues to be an important asset to the company. Its on-line reservation system (www.marriott.com) had more than $430 million in reservations last year and at least $700 million is expected by the end of this year.

Good times

Marriott, like other hotel companies, is coming off a solid year of growth. Occupancy rates increased in 2000 for the nation's 4 million hotel rooms.

Last year there was demand for 2.5 million rooms compared with 2 million rooms 10 years ago, according to Smith Travel Research, a research firm in Tennessee.

In 1999, lodging occupancy rates hovered around 63.3 percent for the industry while Marriott's company-operated U.S. properties had a 77.5 percent occupancy that year.

Last year, the company was right on track with above-average rates. Residence Inn, for example, had an occupancy of 83 percent and Courtyard by Marriott had an occupancy rate close to 80 percent, Mr. Marriott says.

"Historically Marriott has been able to produce occupancy rates higher than the industry average," Mr. Graves says.

Mr. Marriott says the company's revenue per available room a key measure of profitability in the industry, is right in line with the rest of the industry. In 2000, revenue per available room industry-wide increased 5.7 percent from 1999 and is expected to increase 4.5 percent this year, according to Smith Travel.

This year is not expected to be as good as 2000 thanks to the downturn in the economy that could lead to a slowdown of business and leisure travel, says Mr. Graves.

"The hotel industry is not immune to economic conditions," he says.

Financing for new hotels has become more difficult to come by but it may be a little easier for someone looking to create a Marriott hotel to secure financing, Mr. Graves says.

"Marriott's track record and brand-name recognition help put a lender's mind at ease," he says, adding that it also helps Marriott pick up more market share.

For now, like many businesses, Marriott's stock price is reflecting the overall economy.

Marriott's highest stock price this year came on Jan. 23 closing on the New York Stock Exchange at $47.69 and has dropped steadily over the past seven weeks, closing Friday at $40.98

Overall Marriott's stock price has increased by 11 percent since the company spun off its hotel, senior living and distribution businesses into a new company under the same name on March 27, 1998.

"We are very interested in making sure we are maximizing shareholder return," Mr. Marriott says. "That is the number one goal of management."

Mr. Marriott should know. He has been a part of the company's management for more than half his life.

Following in his father's footsteps, Mr. Marriott began working full-time in 1956 at the family's Hot Shoppes restaurant chain, which was the foundation for the Marriott corporation that exists today. At the time he had to lobby for more than a year to get his own office, which turned out to be slightly larger than a walk-in closet.

Now he sits in a corner window office fit for a king, surrounded by portraits and photos of his family including his three sons who work at the company.

Mr. Marriott became president in 1964 and eventually succeeded his father as chief executive in 1972. He was then elected chairman of the board in October 1985 following his father's death. He and his younger brother, Richard, own about 20 percent of the corporation.

Looking ahead

Less than a week away from turning 69, Mr. Marriott is showing no signs of slowing down and has no plans of retiring ever. This year he's already visited Saint Thomas, Virgin Islands; New York; Philadelphia; Orlando and Phoenix and has plans to go to South America in April and Europe in May.

Mr. Marriott also has got his eye on the competition visiting rival hotels to check out their layouts, color schemes, decor, food and service.

"I want to see what they're doing that's different from what we're doing," he says. "You can learn a lot from your competitors."

Mr. Marriott continues to put a big emphasis on the company's 153,000 employees and the customer service guests have come to expect at a Marriott property. That's why Marriott spends $100 million annually to train and retain employees.

"Because we have worked hard to become a preferred place to work we've been able to attract and retain [employees]," Mr. Marriott says. "The more we train the better the service. It's just a key element in managing a business."

Self-portrait

J.W. Marriott Jr., chairman and chief executive officer

Age: 68 (turning 69 on March 25)

Native of: Washington, D.C.

Education: Bachelor of science in banking and finance from the University of Utah

Resume: After his 1954 college graduation, spent two years as a supply officer on the aircraft carrier USS Randolph. Started working at his father's Hot Shoppes restaurant chain in high school and college and joined the company full time in 1956. Eight months later took over the management of the company's first hotel in Arlington. He was elected executive vice president of Marriott Corp. and member of the board of directors in January 1964 and became president of the company in November 1964. In November 1972, he succeed his father as chief executive and was elected chairman of the board in October 1985, following his father's death

Religion: Member of the Church of Jesus Christ of Latter-day Saints

Spare time: Reads, drives speedboats, sometimes a golfer, active member of his church

Just finished reading: "The Dark Valley: A Panorama of the 1930s," by Piers Brendon

Favorite vacation spot: Camelback Inn in Scottsdale, Ariz.

Family: Wife, Donna, three sons, one daughter and 11 grandchildren


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