TORONTO — When Arne Sorenson tragically passed away earlier this year, he left a great void at Marriott International, where he was the first CEO in the history of the company who didn’t carry the Marriott moniker. Five months later, as the industry moves through a slow recovery process, Tony Capuano is leading the world’s largest hotel company to success and working hard to fill the big shoes left by Sorenson.
“It’s obviously a devastating loss for Arne’s family, for his extended family at Marriott and for the industry more broadly as he was an advocate for an industry that he loved deeply,” said the CEO during an interview with Lyle Hall, owner of consultancy Hall Hospitality Advisors at this year’s Canadian Hotel Investment Conference (CHIC). “Everyone at Marriott has been forced to compartmentalize our emotions about his loss,” said the Marriott veteran of 26 years. But Capuano was quick to add, he’s taking direction from the couple of decades he worked so closely with Sorenson, including in the area of mergers and acquisitions. Still, he says it’s a “tremendous honour to serve as the company’s fourth CEO during Marriott’s 94-years of existence.”
As someone who’s worked at Marriott since 1995, Capuano has amassed a broad range of experience in Canada, Latin America, North America and Europe. He had been leading the global-development area before his appointment as CEO. “I had responsibility for global design function. I also picked up our global operations services team and full P&L responsibility for the Edition brand. That broad exposure in so many disciplines in the company to both the growth side and operating side, which really represents the two key economic principal drivers in the company, I hope prepared me quite well for this extraordinary responsibility I was given in February this year.”
While it’s a daunting task to follow on the heels of Sorenson, especially with the pandemic adding another level of complexity, Capuano says, “It might be a bit terrifying if I was tasked with that by myself, but when I look at the engagement and strength of our Board of Directors; when I look at the gift that is Bill Marriott, who I speak to every day; when I look at our senior leadership team, which I’ve characterized as battle-tested, it’s a long tenured team that has worked together through conventional recessions, through 9/11, through the Great Recession, through Arne’s diagnosis, and now through the unfolding of the pandemic and I think of the hundreds of thousands of associates that put the Marriott badge on every day, I’m enthusiastic and energized to continue all the extra work Arne had started. It’s a team I’m very confident going shoulder to shoulder with as we climb our way of this crisis — rather than being terrified I would characterize it as being enthusiastic and energized.”
The pandemic has clearly been impactful, but for Capuano, the secret is to look at everything through the lens of the constituents: “our partners, our associates, our franchise owners and our guests.”
Through it all, demand recovery is top of mind, says Capuano. “It’s the medicine that heals our ills,” noting that he never imagined he’d celebrate occupancy of 50 per cent. “We are encouraged by the steady pulse of recovery we’re seeing in many markets.” He’s also buoyed by the positive trends — “the vaccinations, the return to office and anything that inspires consumer confidence.”
As far as the possibility of a vaccine passport, Capuano admits in the beginning he was optimistic there would be a global approach to it. “We had a view it had to be global, it had to be comprehensive, reliable and tech-enabled, but unfortunately in many ways, that window has closed a bit. Borders are opening, but every country and every city has their own approach to how they will evaluate health credentials and that’s either terribly complex or it requires extraordinary trust,” says Capuano, stressing it makes navigating the entire subject increasingly challenging.
With hotels in 133 countries, Capuano has the luxury of seeing varying degrees of recovery around the world. “In some ways, China has had the benefit of first, in first out,” says Capuano. “In the first quarter, China was back to pre-pandemic demand levels and in March business transient was six-per-cent ahead of where it was in March 2019. It provides an optimistic roadmap for what our trajectory current might look like,” explains Capuano, who remains cautiously optimistic about the summer. “We and our peers in the industry are anticipating a very strong summer, led by transient demand, but we’re looking for lots and lots of indicators of what business transient demand might look like in the fall. You hear people routinely use the term green shoots — we’re seeing a lot of green shoots both in business transient and leisure but I think the fall will be quite telling. I’m an eternal optimist about travel — it’s an integral part of the human condition.”
Capuano says “We’ll get back to 2019 [levels] and blow past it. I’m optimistic about the medium to long term. What’s interesting and maybe maddening about the pandemic, through conventional recessions, we had a great deal of optimism to predict and shape the recovery but there’s not much of a playbook, and we see it every day. You build some optimism week over week, then there’s a spike in the infection rate, and then government reacts quickly to get containment and then demand falls.”
It’s a scenario that has played out even in markets such as China where a recent flare up in Shanghai saw occupancy plummet from 70 to 20 to 30 per cent literally overnight. “What gives me confidence is widespread vaccine distribution…but I’m hesitant to tell you when [things will return to normal] “Every time we think we know, we’re surprised.”
As for what the industry can expect in terms of changes when business does return, Capuano says “business travel will come back but I do acknowledge it might look different,” citing the trend to more blending of trip purposes. “We’re seeing it every day and it’s a blending of business and leisure. It’s going to be with us for the next foreseeable future.” The other trend, he predicts will be a reduction in the number of one-day trips to destinations for meetings or lunch. “This may fall by the wayside — business transient will come roaring back but it will be different.”
The pandemic has also accelerated the use of technology. Capuano says there are some by-products sparked by the pandemic. Guests who would never have used technology are now checking in through their mobile phones and opting to send texts to hotel associates when they need something. “Suddenly when we were appropriately uncomfortable with close human interaction, our guests started to test all of that functionality and they’ve developed a familiarity and a comfort with that technology that will endure long beyond the pandemic.”
On the franchise front, the pandemic has also strengthened “the power and depth and value of partnership in the last 16 months.
With regard to human-resource issues, labour challenges have intensified during the pandemic. “Labour in many markets will continue to be challenged,” and in terms of employee perspective, the industry lost its lustre to many who might have chosen hospitality as a career choice. “For decades and centuries, everyone looked at tourism as a safe industry. None of us contemplated demand would drop by 90 per cent overnight.”
Still, Capuano believes the industry needs to do a better job of selling itself as an employer of choice. “If you look at our industry, we have 7,600 hotels and growing; more than half of the GMs started as hourly associates. That’s a powerful story to tell a newly minted employee…we need to do a better, more effective job at selling ourselves and we need to be more proactive at educating prospective employees about our industry.’
As for the company’s growth strategy, Capuano says it’s all about driving premium performance, growing the RevPAR index, increasing same-store sales, and cultivating business adjacencies. “It’s about “doing everything we can to grow our footprint ─ not for the sake of growth but thoughtful, profitable growth.” As an example, in Canada the company boasts 257 hotels with another 80 in the pipeline with 22 of 30 brands currently represented. “It’s a powerful market for us. There’s lots and lots of runway for growth,” says Capuano.