Arne Sorenson, president and chief executive of Marriott International Inc., at the Delta Hotel in Toronto Thursday. In 2015, Marriott acquired the Delta Hotels and Resorts properties.Fred Lum/The Globe and Mail
It will take some time to tell whether travel restrictions and tightened border security will put a chill on tourism to the United States. But there are some early hints.
"I've heard of groups who were previously planning to meet in the U.S., and said, 'Let's go to Canada instead.' They feel more confident in their ability to get a global group in, and maybe a bit more welcome," said Arne Sorenson, chief executive officer of Marriott International Inc., the world's largest hotel chain.
Marriott was able to claim that title when it closed its $13-billion (U.S.) acquisition of Starwood Hotels & Resorts Worldwide Inc. last fall. Six months later, Mr. Sorenson finds himself atop an industry navigating a charged political backdrop.
In Toronto to meet with Marriott general managers, Mr. Sorenson sat down with The Globe and Mail to discuss the hotel business, its opportunities and its threats.
How is the integration of Starwood going?
It's going well. When you bring two companies together, there are job impacts, but they've tended to be more the senior ranks. For guests, there was intense interest in the loyalty programs. They wanted to know about their points, how they earn points in the future. We sent some messages to the [Starwood] loyalists that they shouldn't be terribly worried. And I think they were pleased with the linking of accounts, and the connectivity of the two programs.
About one of every 15 hotel rooms worldwide now falls under the Marriott banner. How would you characterize that level of consolidation?
That's nothing. Seven per cent globally is not terribly high. We do have more rooms than anybody else, but it's still a small fraction.
What are your goals for expansion?
Today, we have about 1.2 million rooms open. We think we'll open 285,000 to 300,000 rooms in the next three years. That is a hotel every 14 hours. Those are big numbers, but they reflect what's happening in travel trends around the world. There's a growing global middle class, particularly in the developing world. Millions more people have the resources to travel and see things they've only read about. And we're seeing people elevating travel in their hierarchy of wants. Go back a generation, people would have viewed leisure travel as a luxury. In individual markets, it's driven by economic growth. Canada has a very promising story right now.
How so?
I was in Toronto in late 2014, right before we closed on the acquisition of Delta. At that point, in the U.S. we felt good about the economy. In Canada, I heard a lot of pessimism. Today, I think it's the reverse. The U.S. markets are optimistic, but growth continues to be pretty modest. In Canada, I hear tremendous optimism. In our business, it's driven by inter-Canada travel, inbound travel from abroad, and to some extent, the complexities south of the border are creating opportunities for Canada.
Are you seeing any real impact on U.S. travel as a result of President Donald Trump's executive orders and immigration agenda?
It's important to be grounded in the data. The executive orders by themselves are certainly not positive from the perspective of travel, but we'll see how negative they ultimately are through the data. We're watching that carefully. But all inbound travel to the United States from abroad was up in February. There's likely a lag. If I'm travelling for commerce, I'm probably going to do it anyway. But vacations are highly discretionary. And that's a longer lead time. If you're planning a family vacation, you're going to be thinking about that months before. So we won't really know the impact until we get into the summer.
Do you worry the U.S. could get a reputation as unwelcoming to foreigners?
It's possible, and sometimes the chatter suggests that's the case. Closing borders is not good for the U.S. economy. The U.S. last year had 75 million visitors from around the world. We estimate that supports 2.5 million jobs.
As a registered Democrat, do you raise your concerns with any of these policies?
I do have a personal philosophy, but I don't think it's often relevant. There are many issues I've never said anything about publicly. It's not relevant to our business. But when you get to issues around diversity and inclusion, it is directly relevant to our business. Immigration is directly relevant. So it's important to be willing to speak out.
Moving on to another threat, how do you size up Airbnb at the moment?
It's been less of a threat than you'd think, and maybe even less than we would have predicted. I think they're bringing new travellers into the market who might not have travelled otherwise. Because of their model, they have been able to offer meaningfully lower price points. We've never tried to be the cheapest room in the market.
Is there anything about the peer-to-peer platform you'd consider incorporating?
With Element Hotels we've started to experiment with some shared spaces. One of the ways we've had a hard time competing, is with, say, a bridesmaids' weekend, when six or eight guests want to be together. A hotel room is not a great place for that to happen. We're trying, with Element, to create a common area between a number of rooms with lock-off space, so people can have that kind of experience.
This interview has been edited and condensed.
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Tim Shufelt