Start Me Up: What the Hospitality Industry Can Learn from Marriott's Recovery Strategies

DOWNLOAD TRANSCRIPT

Spencer Levy
I'm Spencer Levy and this is The Weekly Take. The summer travel season is winding down and there are signs that business travel is picking back up. On this episode, the leader of one of the world's largest hotel companies is joining us, along with one of CBRE’s top hotel researchers to talk about hotels,  

Stephanie Linnartz
Particularly in 2020, people for the most part, during the worst of this thing, we're not traveling at all. So how do you stay engaged with your best customers when they're not traveling? And that was a challenge, as you can imagine,

Spencer Levy
That’s Stephanie Linnartz, president of Marriott International, the hotel group with 30 brands worldwide. Joining us from Maryland, Stephanie's leading the company's comeback after a historic year of challenges during the pandemic.

Robert Mandelbaum
It's been a good summer. If anything, summer’s beaten expectations in terms of occupancy levels, but the pattern of how it's come out, it's been pretty much as we felt it would occur.

Spencer Levy
And that's Robert Mandelbaum, the director of research information services for CBRE Hotels Research. Based in Atlanta, Robert has worked in the industry for nearly four decades and now leads CBRE’s extensive industry forecasting. We'll take a deep dive into Marriotts experience of the downturn and recovery, including the value of brand and how loyalty has helped the company through this challenging time. We'll also discuss the sector at large, checking into trends across the industry over the past year and on the road ahead. Coming up, Marriott International and an informative and insightful stopover in the hotel sector. That's right now on The Weekly Take. Welcome to The Weekly Take. So, Stephanie, let's start with you. And let me first of all, thank you, as I am a loyal Marriott fan, I'm a big Bonvoy guy. In fact, I'm a Titanium just on the cusp of Ambassador. And I know that I'm not alone in saying that as a loyal customer last year was not easy, was not easy for Marriott either. So tell me, how did you deal with customers, customer retention and attraction during such a challenging period?

Stephanie Linnartz
Well, first, Spencer, let me thank you for your business and your loyalty and for being a Marriott bon voyage member. You know, we can't do it without you and our customers. The Bonvoy members are our most loyal customers. And keeping that connection with them throughout the pandemic was at the top of our list of priorities. Particularly in 2020, people for the most part during the worst of this thing were not traveling at all. And that was a challenge, as you can imagine. So we did a lot of things related to rolling over status and making sure people kept their place in the program even though they weren't traveling. So that was kind of job number one in terms of making sure our members knew we recognized what we were all going through together. But then secondly, we decided there's got to be ways to engage with members. So we did a bunch of different things through partnerships to help keep people engaged. And I'm sure we'll talk about this. But we also have some new product lines like our homes and villas by Marriott International. Home rentals actually did fairly well during the pandemic. So that was an opportunity actually, where you did see, particularly in the worst of it last summer, quite a bit of travel. So lots of different things that it was all about customer engagement and connectivity. You're absolutely right.

Spencer Levy
We're definitely going to come back to several of the topics you covered, including home rentals and its challenges as it relates to traditional hotels versus Airbnb and things like that. But, Robert, let's turn to you now for just a moment. I look at the numbers just like you do, Robert, and they're getting a lot better, particularly drive to hotels, particularly in capital markets. What are you seeing? Robert?

Robert Mandelbaum
Thank you, Spencer. Yeah, well, I'd like to address what Stephanie just talked about, the loyalty points. When I joined the business world in the 1980s, airline points were all the rage. That's what people wanted to accumulate. But slowly but surely, we're starting to see the importance of hotel points as well. As far as hotel performance, Spencer, you are correct. It's been a good summer. If anything summer’s beat expectations in terms of occupancy levels, but the pattern of how it's come out, it's been pretty much as we felt it would occur. We've seen stronger performance in those more isolated areas. If you look at the occupancy levels during June -- haven't quite tabulated the July numbers yet -- but we saw the occupancy levels in rural areas, remote areas, destinations, interstate hotels slightly below are equal to that achieved in June of 2019 pre-Covid. And even of more importance in those same areas where there were high demand levels. It's the more dense urban properties, properties that are more corporate or group oriented. Those occupancy levels, maybe 50, 60 percent of what they were pre-Covid and average daily rates lagging slightly as well.

Spencer Levy
Stephanie, you have a global view on what's recovering, what's not. We'd love your perspective.

Stephanie Linnartz
Sure. Well, I think it's always good, I think, to ground ourselves on where we're coming from right in the depths of this thing. So last spring, our business some months down 90 percent, single digit occupancy, 25 percent of our hotels closed. I mean, we had never seen anything like that. As further context, after 9/11 our worst quarter for rev par or same store sales was down negative 15 percent. In the 2008-2009 financial crisis. Our worst quarter for rev par, again, more broadly known as same store sales, was down negative twenty five percent. To be down 90 percent, single digit occupancy, 25 percent of your hotels closed, the great majority of your associates either furloughed or on reduced workweeks -- we've never seen anything like this in our industry, period. So that's where we're coming from. So now to zoom back out to where we are now and to build on some of the comments that Robert made, things are getting much, much better. Again, particularly when you consider where we're coming from. We've seen an increase in consumer demand for leisure travel, in particular in nearly all parts of the world, and particularly where the vaccination rates are increasing. Our worldwide occupancy was at fifty one percent in the second quarter. In June of ‘21, specifically, our occupancy was at 55 percent. Obviously, this differs by country, by market, by brand, but these are global numbers. And so I think things have gotten better.

Spencer Levy
So, Robert, which segments are doing better and why?

Robert Mandelbaum
It's been fairly consistent since the beginning of covid in general, the more modest price segments are those that have seen the least impact and have enjoyed the best summer vacations. If you look at the industry segments itself by chain scale and in the upper midscale midscale economy, the lowest three price chain scales in the month of June, occupancy levels were pretty much equal to what they were in 2019. The other side, the high end, is sort of a tale of two stories. Luxury resort hotels have fared fairly well. Low occupancy levels. But those guests that are staying at those else are paying the premium. We're actually seeing price increases at the luxury high end resorts to more urban luxury properties. And then the big bucks upscale hotels, again, those oriented towards business travelers, group demand. Those are the ones that are lagging. Those are the ones that are still, you know, 30, 40 percent behind their comfort levels in terms of occupancy and average daily rate.

Spencer Levy
Let's talk about New York for just a moment, if I can, Stephanie. I'm a New York guy. I was in New York yesterday and a lot of people are talking about will hotels recover in New York. Does Marriott think they're going to reopen any of these hotels? What's your point of view? Because we've seen certainly a fair number of closures.

Stephanie Linnartz
I'm a big, big believer that cities like New York, a perfect example, will come back. I don't live in New York, but I do spend a decent amount of time there and have been there many times, including over the past several weeks. And New York seems pretty hopping to me. Restaurants are full. People are back. Broadway is going to open up this fall. And I think New York is going to come back across all business segments ultimately. I should note, in terms of hotels closing, though, let me zoom out quickly and then dive into New York. But I mentioned 25 percent of our hotels were closed during the worst of this thing. Most of our hotels are open now, right? Less than I think. Less than two percent of them are closed, a lot of them in Europe, some here in the U.S., but not a lot. So most of our hotels are open, including in New York. So I think New York will come back. I think that this idea that downtowns are dying in New York and otherwise this is not true. We're not seeing a disproportionate number of closings coming from our downtown locations as compared to prior years. That is not showing up in our data, including New York. So that's a little bit on the kind of closing perspective from my lens.

Spencer Levy
So Robert would love your perspective on that. And let's go into just good old fashioned supply-demand. Is there some silver lining in the hotel business in that new supply will be limited over the next couple of years, which might bolster existing stock?

Robert Mandelbaum
Certainly. Well, my New York litmus test is always my friends that live in the city when they complain about doors on the sidewalks. And I started to hear those complaints a little bit in June and July. So that's good news. Listening to our consultants and advisory personnel in the New York office, those hotels that are in trouble are really ones that had problems pre-Covid. I think Covid just exacerbated maybe some problems with how they were financed or how they're operated or labor issues that they had as far as supply and demand. As you noted, Spencer, we are seeing some downward pressure in terms of supply growth, availability of product to build new hotels, just the low performance levels currently. That typically doesn't excite developers or lenders to contribute to new construction. There is still hotels under construction, but below long term averages. Then it's just a matter of when will demand pick up. Obviously, we've had a strong summer. We're all looking eagerly at the fall. Want to see if there will be a return to business that we're all hoping for and when we'll conventions follow that and come back. But I think if anything, we've always said is this is going to be more of a V shaped recovery. Hotels are cyclical like all other industries. I don't think supply will be anything inhibiting recovery. It's just a matter of demand coming back. And it sounds like a broken record, but it's all about the business traveler in the group traveller. Leisure travel has proven itself both last year and this year. So when those business travelers come back and the group travelers come back, we'll have the demand and without any excessive supply growth.

Stephanie Linnartz
Spencer, let me, if I may, jump in on something that you touched on, because it's both about from the silver linings in terms of a crisis. And it actually relates to New York, not New York City, New York State, more broadly In the worst of this thing, last year, last spring on the state of New York was having a terrible time processing unemployment claims that could not keep up. They literally could not keep up. At the same time, we for years have been talking about: We have 23 call centers around the world, customer engagement centers, including our largest one in Omaha, Nebraska -- so what if we could use those engagement centers for other purposes? You know, but we never got around to it. We were so busy, 2019 was our best year ever. But we're in the worst of this thing. And we said, what if we could help the state of New York process unemployment claims? What if we could train our agents in Omaha, Nebraska, on the software that the state of New York uses? They cannot keep up with the volume in their own call centers. Sounded like a crazy idea, but with the help of Deloitte Consulting, we got the software loaded and our agents in Omaha, close to 900 agents had their jobs saved. We were going to have to lay them off. No one was calling us for hotel reservations. And we also saved trainers and managers. And so well north of a thousand people had their jobs saved in Omaha, Nebraska, because they were trained to do unemployment claims for the state of New York. We processed millions of claims for New Yorkers who desperately needed their checks and who wouldn't have been able to get them as quickly without us. I was very proud at the end of this whole story. Not only were all of these people employed the entire pandemic all the way to the end of last year when our business started coming back. So we had to get them back on the phones for hotel reservations. Not only were all these jobs saved, but I was very proud. We had some of the highest customer satisfaction in terms of the call centers in New York State had ever seen. You know, as terrible as it was, I think there's many stories of hope and resiliency that came out of these things. But you brought up New York, so I thought that was a good story to share.

Spencer Levy
But it also brings up another issue. It brings up an issue of labor. So, Robert, what are you seeing from a labor perspective and how is that impacting the hotel business?

Robert Mandelbaum
Clearly, the number one topic that comes up when we talk to our clients. You know, if you look at hotel managers over the past 80 years of performance, labor costs have traditionally ranged anywhere from 30 to 35 percent of revenue. What that means is that historically hotel operators have been nimble and adjusted their staffing levels to meet adjustments and fluctuating volumes of business. But what we're seeing now is just the inability to bring labor back into hotels. Historically, it's been an industry that has suffered a stigma of relatively low wages and tough work. But it's also an industry where if you're the type of personality that loves service, if you enjoy being out there, providing good service to others and joy to others, it meets your personality profile. These are the people that we need to attract to get back into the industry. I’m sure when Stefanie's sits there at a boardroom meeting and looks around the table, I bet you 90 percent of the executives had some start at a low level job -- a waiter. bellman, front desk clerk cook. So it's an industry where you can rise. Yeah, it's tough. There are some very tough jobs in hotels, but it's a very rewarding job and industry to be in. Clearly labor is a tough issue. And with the impact of labor, not only is on cost, but it's also impacting the degree to which we can reinstate the services and amenities that were during 2020. So that's the other impact of labor.

Stephanie Linnartz
First, let me thank Robert for, you know, his insights, which I think are dead on about the service industry. And, you know, I grew up in the business. My family owns a small boutique hotel and has had a lot of restaurants over the years. So like many executives in my industry, I've waited tables. I've checked people in. I've cleaned rooms. I've done it all and, you know, started off at the bottom. And the great majority of our general managers, as a matter of fact, started as hourly workers. So I do think our industry -- which is, by the way, travel and tourism, more broadly speaking, one in 10 jobs globally, 10 percent of global GDP. So an important part of the economy and a really great way for people to get into a business and then work their way up. But you're right, labor is a challenge. It was pre-pandemic. It was a challenge for us. It's a challenge now, I think because of our industry. I want to speak just now about my company, but our industry was at the tip of the spear in terms of the impact on the pandemic. No one would doubt that many hospitality workers opted to go into other jobs right away instead of waiting for the jobs to come back in our industry. There's no doubt about that. And I think the challenges are complicated. I think part of it is the government help, you know, the unemployment and the three hundred dollars a week top off. I think that's part of it. But there's also concerns about health. There's child care issues. So I think it's complicated. I don't think there's a one size fits all answer as to why we're having these challenges. But we're having them like everybody else. We're doing lots of things. We're doing referral payments, signing bonuses, temporary incentives, faster employment, a lot more marketing. So we're really, really doubling down on the things like that to get creative and scrappy, to get more people in our hotels. And because the recovery is so choppy, where we're staffing is choppy. Right. In terms of, we went from zero to 60 overnight in places like Florida, Texas, California, Arizona, that's where the business is coming back like crazy and that's where the staffing needs are most significant. I think we're having to get creative in terms of different ways to deal with labor challenges. And technology, by the way, is a big part of it, too. We're doing some high end vending machines, for example. We're testing in different brands to see how that can help with labor. We're doing a lot more with mobile check in and check out. I just don't think there's one simple answer to solve these challenges. I think the problem is complex and therefore the solutions are going to be multifaceted and complex too.

Robert Mandelbaum
And hotels, not only is labor the single biggest expense at a hotel, but it's also an important part of the product -- a personalized guest service. And so it's always been a challenge for the industry to attract people. I give the industry historical credit because it's one that has reached out to historically populations of hard to employ: seniors, people with disabilities, English as a second language. I think hotels have had an extremely diverse workforces in the past. Histories for the hotel industry has been very creative in terms of recruiting and retaining employees. It's just a very challenging environment out there, like a lot of things the past two years, something we hadn't seen before.

Stephanie Linnartz
But Robert, what you touch on is such a good point. Our industry, not just the hotel industry, the travel and tourism, it's actually skews very female, skews very minority and actually skews very youth, two times the youth in any other sector. So when you think about who's been most hurt by this pandemic, there are certain groups that have been disproportionately hurt. Women are one example. The, you know, McKinsey report last year came out -- they do this annual thing: Women in the workplace, broadly speaking. They called it the first female recession as just one example. So I think when we think about the hotel business as kind of a component of the broader travel and tourism sector, we can never forget who works in this industry and therefore who has been most devastated by the pandemic. I think that's really important. And you're also right, this is a people business. I always say all the technology in the world is never going to replace people. You can do high tech, but you always have to do high touch. It is a people business. In the case of my company, you know, pre-pandemic we had in the neighborhood of seven hundred and fifty thousand people globally wore the Marriott name badge. Over 95 percent of them worked at a hotel. Guess what you can't do: work at a hotel from home. Right. So this is a high touch people business. And we can never, never forget that even while we're talking about all the cool tech in the world, which I love. cool tech. Don't get me wrong.

Spencer Levy
Well, let's go with cool tech for just a minute. We're just tech itself. We go back, we're going to have a whole episode on how tech is disrupting the hotel business. But let's touch on two parts of that for a moment. One is the part that people outside the business don't talk about that much, which is the reservation system. And the second point I want to talk about is the rise of Airbnb and things like that. So, Robert, let's start with you and just the nuts and bolts reservation system. That was always the attraction of the major brands. Is it still a major attractor of the major brands, given that you have other sources of reservations?

Robert Mandelbaum
Yeah, as you mentioned, Spencer, one of the competitive advantages you have when branding is a reservation system and access to all the loyal customers we've talked about beforehand. And there's been a big drive towards brand dotcom and pushing people towards booking with the brand. A lot of that is to reduce some of the costs. I know that the hotel companies have been focusing a lot on that and are seeing increases in the guest loyalty fee assessment's charge to hotels. But that's indicative of the increased business that's being driven through the loyalty programs and the reservation systems. But you're right. The reservation system is a driver and a primary benefit of affiliating with a major brand.

Stephanie Linnartz
Yeah, I think I want to zoom out a little bit, Spencer. I think, you know, the reservation system. That's a system, right. But to me, I think the value first and foremost is the power of the brands. First and foremost, a brand is a promise and it comes with a set of expectations to consumers, like what happens when you're at the hotel? Are we delivering? You know, if it's a Ritz Carlton, there's a certain set of consumer expectations, a design esthetic, programming in the hotel, a certain level of service, food and beverage. You know, there's so much that goes into delivering to our owners. As you know, and many people don't know, we own very few of our hotels. I mean, out of eight, close to 8000 hotels, I think we own 14 now. So to me, it starts with the brand. What we're delivering on the brand side. Then, yes, the reservation system is really a function of, in large part, our website and our app. Right. We're not shy about saying we want people to come to our website directly, our app. And as a matter of fact, we do things to encourage that. We want to have that direct relationship with our consumers and we want that to be super sticky and super compelling. Right. So I think the value that we bring is well beyond a reservation system, but recognizing that's an important piece of the puzzle.

Spencer Levy
So let's stay with brand for just a moment. I’m going to give you a generalization. but it's a generalization I've heard, which is that younger generations are less brand loyal. They like sometimes these niche-y boutique hotels and not as interested in the point system that Robert and I grew up on and love. Stephanie would love your point of view.

Stephanie Linnartz
Yeah, I think it's important that we don't only talk about demographics, but talk about psychographics, and that may be an obvious statement, but I don't think everybody who's of a certain demographic has the same. Right. There’s things that differ around the world in different countries to add that layer on to it. And I also think that our space is complicated and that the same human being, depending on their trip purpose, can need different brands for different stay occasions. So you think about somebody that is, well, you know, wants to have a Ritz Carlton or St. Regis for a romantic getaway with his or her spouse or significant other, whatever, and then they want to stay at a Courtyard for their kids soccer tournament. And then they're going to stay at this hotel because it's near their business meeting. I'm just using that as an example. Right. So I think different brands serve different purposes for people depending on why they're traveling. And they may want a home rental for a whole different purpose. They want to do a family reunion and they need someplace that will sleep 12, as one example. So I think it's more complicated than just one dimension of demographics. There is a reason we have 30 brands because we want to have something for everybody at their different price points. I always find this statistic quite remarkable: for the people that are most loyal to Ritz Carlton, that love Ritz Carlton, were big members and the Ritz Carlton loyalty program before we merged everything into Bonvoy and had the, you know, their second most frequent and brand for us is Courtyard, believe it or not -- kind of illustrating the point that it depends on your trip purpose. So I think, again, like all things, it's multifaceted and complex.

Spencer Levy
Robert, let's go right to that home rental, VRBO, Airbnb. We talked earlier on the show about supply and supply is the building of new hotels, but it's not anymore. And it's clearly impacted by these other channels to stay in a home.

Robert Mandelbaum
Certainly the home short-term rental had a very good year in 2020. I think a lot of it is just the nature of the product. Those units that did best in that category were those in the remote areas, those with multiple bedrooms. That just fit the profile of how people felt comfortable traveling. They were doing extended family vacations. They wanted to be in a resort area because everyone was working from home. They could stay there for two or three weeks at a time. And you enjoyed that residential feeling. So having the kitchen available,. I think it was really in 2020 the short term rental, the Airbnbs and VRBOs and Stephanie will talk about the Marriott Homes and Villas, have the type of product that was demanded and preferred in 2020.

Stephanie Linnartz
I agree a thousand percent, Robert. I think you're spot on with why that product was so popular. Right? It's just intuitive, right? People want it to be in remote locations with more space. And perhaps some people just didn't want to be in a hotel with other people. Right. I mean, I think that was an exceptional set of circumstances that drove the volume there. That being said, Airbnb, VRBO. Booking.com actually is, I think, almost as big as Airbnb in terms of number of listings. They were growing and very popular well before the pandemic. Right. They were supercharged last summer in particular, that's for sure. And by the way, I think we have to remember home rentals have been around for a long, long time. And what we have found over time is that our members, our Marriott Bonvoy members were not just talking about renting these homes. They were doing it. As a matter of fact, over 40 percent of our Marriott Bonvoy members when we surveyed them recently did a home rental. Again, not talking about it, doing it. And so we said we need to have an offering that is distinct and different from Airbnb, really geared towards our members that is complementary to our core hotel business, because I think this is the rub, right? Consumers want it. Our members want it. And if we don't give it to them, they're going to go somewhere else and get it, because that's what they're doing. Straight out, that's what they're doing. So we said we saw a gap in the space and we said it's so confusing. There's no branding. It's just chaos. When you go on some of these sites, we wanted to do some things that were different. No. 1, play very specifically in a certain segment of the market. We only play in premium and luxury and we have a branded product, Homes and Villas by Marriott International. We have brand, you know, quote unquote, brand standards. You know, you must have a certain design esthetic. You must have a washer dryer. You must have high speed Internet access. You must have 24- hour service. You must have X, Y, Z in the kitchen. Like we have a list of standards you must have or you cannot be on our site. Furthermore, you must be professionally managed. And I should point out that over forty percent of our homes are in markets where we don't have hotels anyways, and 90 plus percent of the people staying in our homes are Marriott Bonvoy members. We are really trying to provide something that's complimentary and builds our core hotel business. The stickier. Bonvoy is the more people give us their hotel business. So we see homes and villas as additive to our core hotel business, not something that's competing. You know, I'm not saying that there's zero overlap. Don't get me wrong. But the way we've structured it is to be complementary.

Robert Mandelbaum
I have a question for Stephanie. So in the early stages of timeshare, I remember that there is a big bonus affiliating with one of the major hotel brands, a greater level of assurance to the guests. How have you seen that with having the short term rental affiliated with a name like Marriott, both from the homeowners side and from a guest side for maybe non Marriott loyal customers?

Stephanie Linnartz
Robert, I think that is such a good analogy. People often said being associated with the brand brought a certain level of credibility to timeshare back in the day. It gets back to a brand as a promise of a level of service and quality. And I do think with homes and villas by Marriott International, what we are delivering is a certain promise of quality, right, to consumers. That's what distinguishes us not only to the person renting the home, but to the person who's renting his or her home. I think that's a really and I think your analogy is a really good one to, you know, back in the day timeshare.

Spencer Levy
Stephanie, I think one category that we should comment further on are the owners, because as you mentioned in the show, Marriott is almost 100 percent manager, not owner. And believe me -- or don't believe me, I believe you -- the owners are really struggling during the pandemic. We had one of the big owners on the show. We had Jim Risoleo from Host, was one of our early guests on the show talking about many of the challenges that you brought up. But tell us some of the special programs or other things that Marriott might have done to help smooth over what was a very challenging period for the owners.

Stephanie Linnartz
Absolutely. You know, as I mentioned, a very important stakeholder for us at Marriott is our owners and our franchisees. You know, we don't exist without them. So, you know, they were at the forefront of the stakeholders that we worked with and partnered with in 2020 and into ‘21 to help us all navigate through this. So we did a lot of things on. It depends on where we are in the world, who owns our hotels. But let's talk about the United States. You mentioned Host to one of our most important partners and Jim Risoleo. Terrific, terrific guy. You think about the owners in the United States and particularly the smaller owners, not the host of the world. I mean, everybody was devastated. Right? But one of the things we did is we recognized for big owners, small owners, we had to say, OK, how can we partner together to bring some cost out of the business? Right. We did things like we suspended things like certain brand standards that were requirements. And we said we got to loosen up on this a little bit, not forever, because customers are going to want some of the stuff back. We need to look at things like Essany reserves and renovation cycles and all these strict timelines and rules we had. We have to say, wait a second, we need to step back and look at this in a way that recognizes our owners are in incredible pain. I think we also said, you know, take advantage. A big company like Marriott wasn't getting PPP money, but we actually helped our owners navigate what was kind of a complex way, help them apply for PPP loans and understand things like the employee retention tax credit and the different tools that were available to them. Right. So we did a lot to help on that front. We did a lot just I mean, again, overall in terms of reducing cost, but also where there was demand, making sure we were scooping up every bit of it and trying to get it into their hotels. So I think we were doing everything humanly possible to partner with our owners in a way that was constructive. And we're in this together. Right. So I really think and I was very happy to see that for the most part, owners navigated through this. It's always a balancing act. And, but yes, owners are at the very top of our stakeholder list and incredibly important to us.

Spencer Levy
Let me ask another question, if I may, Stephanie, on ownership. The question has to do with ESG and ESG. I know we touched upon -- you did a nice answer earlier regarding some of the diversity in our industry. But also I want to ask you a two part question. So first, I'd like you to touch a little bit deeper on the diversity question touching on minorities in the business. And second, I want you to touch on the “E” element of the business, how that's evolving from Marriott standards and from the owners.

Stephanie Linnartz
Yeah, I am very passionate on both those topics. And as is our entire senior leadership team at Marriott International, Tony Capuano, our board, etc. We do have a diverse workforce and not just at the property level, but also we're very focused on diversity and inclusion at the corporate level. You know, these are things that are important to our employees, to our customers and to our ownership community. So on the environmental front, there is a big focus on this. I don't think we can all just look at what's happening in the world around us to know that this is the issue of what's happening to the world and the environment is growing. We were focused on it before the pandemic. We’re even more focused on it now. I'll use a couple examples. We're right back at our efforts. To get rid of tiny single use bottles, amenity bottles in our hotels and to replace them with larger residential size offerings, because when this is done, we estimate will eliminate over 500 many tiny plastic bottles and landfills, which will be a big step forward. And we're looking at other things besides just amenities. Food waste is a major contributor to greenhouse gases. There's a ton of food waste in our industry and our sector. So we're very focused on that. We're very focused on building hotels that are LEED certified and that are thinking about renewable energy sources. Again, we've got to think about the ROI on a lot of this stuff, too, you know. And it's not just about -- of course, we should focus on cost savings elements of some of this stuff -- but also top line. I think increasingly consumers care about this and you'll get more consumers on the top line if you focus on it. So our ESG efforts are I mentioned just a couple things in the interests of time. They're much broader than that. But we know it's important to our employees, to our customers and to our owners.

Spencer Levy
And I'm going to now go to my crystal ball part of the show. I ask every guest this at the end of the show. I'll start with you, Robert. How much is the hotel business the same five years from now than it was in 2019? How much is it different? What’s sticky? What's going to grow? What might fall away?

Robert Mandelbaum
Well, we talked about that hospitality ethos. And again, I think that's going to stick. I think, you know, the joy of spending time in a hotel, being served, meeting guest expectation, I think that's going to be there. I'm intrigued to see what consumer trends stick. We don't really track the consumer side. Our customers are more the owner and operators. But, you know, have there been any permanent changes to what the consumer wants? And we mentioned before, you know, the breakfast, the decreased housekeeping frequency, mobile check. on those three areas. I think mobile checking definitely will be there in the future. I think the housekeeping I think, hey, we don't clean our rooms at home every day and change sheets. Sorry, mom. But, you know, I think breakfast however, I think you're going to get your maybe your muffin mountain and a few eggs and waffles back. I think that has a lot of high value to the consumer. And I think the breakfast is going to come back. I know it's a big expense for owners, but I think what you're going to miss out by not having that with the guests is going to be a negative impact. So breakfast: Yes. Mobile check in: Yes. Housekeeping: maybe not.

Spencer Levy
So, Stephanie, same question to you. What do you think will be accelerated from the pandemic? What do you think is going to be more like it was in 2019?

Stephanie Linnartz
Yeah, Marriott’s been around for ninety four years, so we've had to change and pivot and reinvent ourselves many times over the years. But I agree with Robert. I'm very bullish on the future of travel across all segments, you know, pre- pandemic. Everybody was talking about the experience economy and people want experiences more than they want physical things. I believe that then and I still believe it now. Maybe after the pandemic, people want experiences even more now because they want to see their loved ones and have rich, meaningful experiences in their life. And that's really what travel is about. Right. So I am a big believer that travel will come back. I think business meetings, it will change. We've all gotten used to Zoom and Teams and all these tools, and I'm not naive enough to think it won't impact us at all. But there's nothing like being with someone in person if you've got to do a strategy conversation, if you're trying to sell something. Nothing replaces that human connection. So I'm bullish on the future. I think there's some things, though, to Robert's point that are going to stick and grow. Adoption of technology is certainly one of them that will grow again. I still believe high tech, high touch. But more people will adopt mobile check in, mobile check out. Who knows where we'll go with things like hybrid meetings? I think they started gaining some steam in this where, you know, half the people are there in person and half are Zooming or Teamsing in -- I'm not sure if this is even proper English, but Teamsing in. But you know what I mean, people using technology. So I think the adoption of technology will only accelerate. I think this concept of Bleisure will accelerate, I think as more and more people can work from anywhere. I've done it myself and I'll say I think we'll see that grow. It may mean longer trips. People will be doing business and leisure at the same time. They'll be mixing the two. I think that will -- that was supercharged during the pandemic. I suspect it will stick and grow. I think you'll see an increased focus on safety and cleanliness. That was, I mean, we always had clean hotels before. I think that will be dialed up for years to come, focus on safety and cleanliness as it relates to housekeeping. But again, my headline would be very bullish on travel. Things are going to get better. I'm very excited to see what the next five years hold.

Spencer Levy
Well, thank you, Stephanie. And I just learned a new word, Bleisure.

Stephanie Linnartz
Bleisure. There we go.

Spencer Levy
The vernacular

Stephanie Linnartz
I didn’t make it up, but I certainly like it.

Spencer Levy
All right, it’s a good word. On behalf of The Weekly Take. We were so excited to have two friends of ours on the show, starting with Stephanie Linnartz, the president of Marriott. Stephanie, thank you so much for joining us.

Stephanie Linnartz
Thank you, Spencer. Great to be with you. And Robert, lovely to spend some time with you as well.

Spencer Levy
And Robert, my friend and colleague, we are delighted to have had you on the show. Well done, Robert.

Robert Mandelbaum
Thank you, Spencer. Thank you, Stephanie.

Spencer Levy
For more about hotels and our guests, check out our website, cbre.com/theweeklytake. We're taking a break for Labor Day next week, but we'll be curating and reposting some of our favorite recent episodes that you might have missed. So check those out. And as always, please share the show, subscribe rate and review us wherever you listen. See you in September, when we return with a truly powerful program -- that is, an episode on solar power featuring their clean energy company, Altus Power. For now, I'm Spencer Levy. Be smart. Be safe. Be well.