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BW Businessworld

‘Bullish On The India Story’

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It has been just a little over a year since Arne Sorenson took over the reins from Bill Marriott, the second-generation family member of the $14-billion Marriott International that runs more than 3,800 properties across the world. The firm’s first CEO outside of the Marriott family, Sorenson is focusing on making the brand contemporary. The former mergers and acquisitions specialist is bullish on India — and China. His plans for Brand Marriott are to fit the company into larger themes of mobility and value. Edited excerpts from an interview:

How important is technology in hotels? And how does one win over the young traveller?
I think the Cloud is going to make IT cheaper. It is changing the way the world operates. We at Marriott are testing some applications on the Cloud. Our property management is going to the Cloud soon. We already have a great website with global loyalty programmes that track our members. Mobile apps can make a difference. They make service much more personal, which is what every guest wants.

In 10 years’ time, we will need to contend with ‘Generation Z’, whose whole lives will revolve around devices, and being in the service industry, you need to have a top-notch strategy through such technology. I am, however, not a believer in working from home. It makes you competitive, but it kills innovation and team spirit. The mobile world fits in with the younger generation, which is travelling more and is value conscious. It is important to have properties that can cater to their service requirements. They might want to access a good restaurant and also a gym, it is important to create brands around the theme of generational shifts. We are experimenting with such hotels in Europe — the brand is called Moxy.

Do hotels for young business travellers stand a chance in India?
You have to understand that we tweak our budget brands according to each market. For example, a Fairfield in the US would be very different from what we are thinking about in India. The Fairfield Inn will offer all services at a  cost but unlike the US, where it is a low-cost hotel. In India, we see so much travel happening in the future — the country is underserviced. The Fairfield property fits in perfectly with the Indian market and we can open 100 properties over time.

You are still a premium brand. What are your plans for the country and where do you see India in your growth strategy?
In the US, we can open a property in two years. In India, it takes four years for the entire project to take off. But remember that we have been in India for 15 years now and have studied this market well. It can take several of our brands and we can bring in eight of them at least. Currently, we have 18 hotels in India and six more will come up in 2013. We have already signed 38 deals that will go live soon. Then, we have 30-40 deals that are in the pipeline.  The key to winning or striking it big in India is in scouting for the right real estate franchise partner. It makes our task difficult because there is no one pan-India real estate company. Nevertheless, there are great local real estate companies.

We need to find partners who want to invest in the long run and not those who might be in the game of selling the business for a good valuation. In India, the key is to invest in training our associates and, in fact, we took care of our employees during the global crisis and, yet, grew as a company.  India has a lot of people and people need to be trained. But look at the market — it has only 400,000 rooms compared to the 5 million rooms in the US. We already have 2 per cent of the marketshare in India, and in the US, we own 10 per cent of all the hotel rooms.

How resilient is the US economy because most of your revenues come from there?
I was speaking with Warren Buffett during the crisis and asked him whether we could ever be positive about the US economy; he told me that the US was one of the most resilient of all countries. There are several reasons to this, but three things immediately come to mind: one is the education system, the second is culture and, finally, the availability of capital. The US believes in a hustling culture and there are institutions that support entrepreneurs that innovate. This culture of innovation and the ability to survive hard times will make the US stronger than before.


(This story was published in BW | Businessworld Issue Dated 15-07-2013)

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