Marriott takes the experience route to win hearts and loyalty

Suman Tarafdar

So you attended the Singapore F1 race and chatted up with champion Lewis Hamilton and even visited the garage? And met Maroon 5 during their tour in Asia? Or attended a Gwen Stefani concert? All for free? Well, effectively, for these are just some of the experiences Marriott Bonvoy members enjoyed recently. You may well wonder why a hotel company – the world’s and India’s largest one – is talking about such experiences instead of touting up their rooms and spas and banqueting facilities, as is the usual practise for hotel companies. Well, as Craig Smith, Group President, Asia Pacific and Neeraj Govil, Senior Vice President, South Asia, Marriott International, point out in a meeting on the sidelines of the India Economic Summit, guests are prioritising unique experiences when they choose a hotel!

“Experiences are replacing the purchase of goods,” stresses Smith. “It used to be more transactional – I stay with you, you give me points, I redeem my points. Today we are trying to win their hearts, more than just their wallets. For the Maroon 5 concerts, Marriott Bonvoy members were able to bid on points. Quite a few Indian owners and Bonvoy members attended the F1 race in Singapore recently. Things like these– no matter how wealthy you are, or who you know– are hard to do.”

Marriott International, after its acquisition of Starwood in 2015, took time to merge the loyalty programmes – Ritz Carlton Rewards, Marriott Rewards and SPG – and put them together – now a whopping 133 million members. “A third of those are in Asia Pacific,” reveals Smith. “And 50 percent of the growth of that is Asia Pacific. I would say about 50 to 60 percent of our hotels are filled through loyalty members. That’s an incredible base and we are growing that.” Govil points out that the penetration of rewards in India is touching 60 per-cent.

Upward curve: Marriott International has been growing strongly, opening its 7,000th hotel earlier this year. Asia Pacific is a very dynamic part of the world, Smith asserts. “I don’t think there is any economist who does not believe that Asia Pacific will be the fastest-growing part of the world in the next 20 years. We will continue to grow in China, we are growing very well in ASEAN, as well as India.”

Govil is just as confident about the growth in India, saying there is a real sense that the government and industry are partnering really well together at the moment. “We have 120 operating hotels in India and will finish the year at about 125. We have had three to four really good years. This year we had a phenomenal first couple of quarters – January onwards. We will end up in a pretty good place this year. There is talk of a slowdown, but the government has taken a lot of good steps, including the latest GST announcements. There was a lot of business going overseas, especially in the MICE segment, which will now remain in the country. The broadening of the e-visa helps. The government is doing a lot in improving infrastructure – more airports, roads, convention centres, destinations.”

They see no dark clouds on the horizon. Smith says, “Most of the economies that we work in are growing their GDPs. A lot more people are getting into the middle class and with their disposable incomes, one of the things they want to do is travel. That is the new badge of honour.”

Smith points to another advantage Marriott International has, “Because we are large, that is great opportunity in Asia Pacific for growth. Say in India, the more hotels we have in India, the more Indians know us. That’s been one of our advantages over the last couple of years.”

Indian trends: While inbound business traveller numbers have been growing, the corresponding figures for leisure have been stubbornly flat, industry numbers and anecdotal evidence reveal. Smith agrees, saying both are needed. “A year ago, we had pointed out that Singapore gets more foreign tourists than India. China is the largest outbound business in the world, and India has an incredibly small percentage of that. If India gets a bigger percentage of that, what’s the knock-on effect? Most governments don’t stop to think that every time a tourist comes to your country, it’s an export. They are bringing foreign capital for goods or services. There seems to be a great desire now to see how do we get more tourists in. India has so much to offer – it isn’t about getting the message out. It’s about getting the infrastructure in, simplifying the process of getting here, when they get here, take care of them. I am feeling bullish about the future of tourism in India. Our advice is that pick two to three destinations and focus on that.

India is our second-largest growth engine, says Smith. “We will finish the year close to 400 hotels in China. India is doing very well on revenue growth year on year and market share.”

We have significant distribution in most of the Tier 1 markets, and we are seeing a lot of these cities break up into microcities, says Govil. “For example, Bangalore has four zones where business is now conducted. So, we are seeing growth in those segments within the cities as well. Bangalore today has 18 of our hotels, and we are going to open another three in that city. Same with Mumbai and Pune. Growth is not slowing down in Tier 1 markets and given that we now have different brands that we can bring to market, catering to different segments according to what customers want, there is a propensity to grow there. Tier 2 markets are a big focus, many of the openings in the last two years have been in those markets, e.g. Indore, Lucknow, Madurai, Kochi, Amritsar.”

The pipeline for India will see six more hotels open in India this year, says Govil, with another 50 hotels under construction or signed. We are very excited about the Ritz Carlton in Pune, our second hotel for the brand in India. A Le Meridien is opening in Hyderabad, we have a Sheraton coming in Indore, the group’s third opening in a year. A Marriott branded Hotel has opened in Surat, as well as a Courtyard will open in Amritsar.

The middle bulge is growing: India’s overall economic growth has meant all segments of the hospitality space growing, even what is sometimes seen as the saturated luxury market. Marriott already has a plethora of luxury brands, many of whom operate in India, including the Ritz Carlton, St Regis, Luxury Collection, W, JW Marriott and others. “When I was a kid, the luxury travellers were the uber, uber-rich – the .01 percent, points out Smith. “Today luxury travel has gone deeper. Today people want less material things and more experiences. I foresee luxury offerings coming up in many other markets. Goa, for example, has a lot more opportunities. It comes down to the right partner and the right location. We are still growing the luxury hotels.”

The resort market is starting to grow in India, says Smith. “It used to be only Goa, now you have resorts everywhere.”

The middle rules, however. “The fastest growth, just by number, will be the mid-scale hotels – the Fairfield, the Moxy, the Courtyard, the Aloft – just because you can penetrate so many other markets,” points out Smith. “In Shanghai, we have 48 hotels. Mumbai can easily have 14-15 Fairfield. To decide the right brand for each location, we have a feasibility group, who do a market study. They don’t just look at existing hotels, they also look at what hotels are under construction.” Select service brands in India have the potential to penetrate many markets that more expensive to build and operate brands may not be able to reach.

Marriott had 15 operating sub-brands in India at the beginning of the year and has opened its first Tribute hotel in Kochi recently. “There is tremendous potential for the brand,” says Govil. “After the success of the opening in Kochi, we are starting to see an interest in the brand as probably being a brand where we can create a separate circuit within India. There are people saying to us, ‘Why don’t you have a few of these hotels across Kerala?’”

The other brand that has tremendous potential here is Moxy, adds Govil. “We have about 60 of these hotels worldwide now, three in Asia. Moxy plays in the same space as Aloft – young, stylish, at a great price point. It’s one of those brands that we dial up all the time. It’s easy to execute. We have a few Moxy branded hotels signed. One is in Goa, the opening of which is about two years away.”

A trend that has made many leading hospitality players in the premium and luxury segments pivot increasingly to the domestic market is the slowing down of the inbound leisure market. The inbound business travel market for India is growing fast though. However, Smith points out that leisure travel is growing four times faster than business travel for Marriott International. His suggestion to make Indian destinations more attractive, which he shared with the minister of tourism, is to “build up two or three destinations to world-class levels.” Giving the example of Bali, he says now Indonesia is trying to build Bali’s success in tourism in a couple of more destinations.

With India’s potential and still hugely underserved hospitality market, there is little doubt of growth. And Marriott looks well poised to lead and shape that path. An inducement from Marriott Bonvoy is just the cherry atop the substantial cake!