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When Marriott International finally bought Starwood Hotels & Resorts for $13.3 billion in September, it gained all 11 of Starwood’s brands, three of which have now been added to Marriott’s new Luxury Brands Group.
Similar to how AccorHotels debuted a standalone Luxury Brand Group when it completed its acquisition of the Raffles, Swissotel, and Fairmont brands earlier this year, Marriott is doing the same with eight of its luxury brands: The Ritz-Carlton, St. Regis, W, The Luxury Collection, EDITION, Ritz-Carlton Reserve, JW Marriott, and Bulgari.
“As part of Marriott International, dedicated teams will be put in place to focus on luxury, including operations, sales and finance, to better differentiate and market our incredible luxury brands and hotels,” Tina Edmundson, global brand officer for Marriott International, told Skift. Edmundson will be responsible for leading this new division.
“By grouping these brands together under the Marriott International umbrella, we are better positioned to deliver distinct choices to the discerning luxury guest,” she added. “We are fortunate to be able to leverage the experience, tenure and capabilities coming from established luxury brands like The Ritz-Carlton and St. Regis, while also offering more boutique luxury experiences offered by The Luxury Collection and EDITION.”
Last week, Marriott began distinguishing all 30 of its brands by identifying them as either “classic” or “distinctive,” and grouping them into four distinct categories: luxury, premium, select, and longer stays.
Marriott does not have plans at this time to form standalone groups for its premium, select, or longer stays brands, according to Edmundson.
Marriott Is a Major Luxury Player
Edmundson says the focus on luxury has to do with the fact that a little over a quarter of the company’s portfolio occupies the luxury space, and that sector, in particular, is one of the strongest in hospitality.
“With luxury travel up nearly 50 percent over the past five years, we see a long runway for growth at the high-end and have a world-class, dedicated luxury structure in place to nurture and strengthen this coveted portfolio of eight diverse luxury brands,” she added. “We want to ensure that our award-winning brands continue to flourish while safe-guarding the uniqueness and prestige of our luxury brands as we carefully grow them around the globe.”
Luxury is also one of the biggest strengths of the combined Starwood and Marriott. As of Dec. 31, 2015, Marriott’s eight luxury brands represented 356 properties and 102,152 rooms worldwide. That’s nearly 7 percent of the company’s global portfolio by number of properties, and about 9.3 percent of Marriott’s global room count.
When Skift spoke earlier last month with Four Seasons Hotels and Resorts President and CEO J. Allen Smith, he shared his thoughts on Marriott as a major luxury hotel player when we asked him if Four Seasons would ever add a brand that wasn’t luxury.
Smith said, “We don’t have any plans to do so now. We view our opportunity to be focused on what we do, which is serve the luxury segment both in luxury hotels, resorts, and residences. Especially, if you think about someone like Marriott who now has 30 brands, they’re the largest operator of what would be considered luxury hotels with eight different brands. They’re obviously a formidable competitor. In some respects, they’re approaching the business in a way that’s very different than we are. Their strategy is about distribution across many different segments and they’re a terrific company, and they do that really well.”
Luxury and Loyalty Go Hand in Hand
Another advantage of having so many luxury brands under the same portfolio? Marriott can use them to entice its more than 85 million loyalty members.
“Our stronghold in luxury is a huge loyalty lure — between Marriott Rewards, Ritz-Carlton Rewards, and SPG, our members now have more access to more luxury in more destinations,” Edmundson said.
Loyalty, in particular, is the primary strategy by which Marriott is building its game plan for the future. This is why Marriott linked all three of its loyalty programs as soon as the Starwood purchased was finalized, and why Marriott has been so eager to reward its loyalty members with discounted room rates.
In pursuing scale, not only in its number of brands, Marriott is also seeking scale in the number of its most loyal guests: to not only gain their business but also collect information from them to craft a better guest experience, too.
“Our incomparable data insights and a robust technology ‘back of house’ system means we can deliver personalized service in all corners of the world, at any time,” Edmundson added. “But most of all, we are now able to offer an unrivaled global perspective on luxury in more than 60 countries through eight distinct hotel brands for today’s global luxury travelers, whose needs are momentary, dependent on where they are and how they feel.”
The creation of the Luxury Brand Group, however, doesn’t necessarily have any impact on how consumers perceive them or interact with them.
“These brands will still be marketed individually in a B2C environment,” Edmundson added. “So, as an example, we won’t have advertisements in mainstream media for our combined luxury portfolio. The Marriott International Luxury Brands group has been created mainly for B2B, as it is a great way for us to communicate the breadth of our luxury portfolio at influential industry conferences such as ILTM Cannes [which began today].”
Where there are changes will be in how these eight brands are sold to the trade, as reported last week. According to Edmundson, it sounds like there will be a single dedicated sales team for the eight luxury brands now, whereas previously different teams sold different brands.
“Careful consideration on how we structure and support our Global Sales teams is underway as we support our new expanded portfolio of brands,” Edmundson said. “In some cases, there may be a difference between how we market our brands to consumers and how we organize our sales teams for our global customers – but we are still making those determinations, given that the merger only closed two months ago.”
The Year Ahead
Next year, Marriott is planning to open an nearly 30 additional luxury properties and it currently has 180 luxury hotels in the development pipeline. This includes hotels opening in 20 new countries for the company, including Iceland, Nepal, and Cuba.
Beyond adding to its luxury portfolio, and working on building this new Luxury Brand Group, Marriott has a very busy year in 2017, especially when it comes to differentiating all 30 of its brands, including these eight luxury brands.
When it comes to the luxury brands, we’re already beginning to see glimpses into how Marriott plans to distinguish them, even if they “occupy the same swim lane” as Edmundson has previously noted.
In announcing the debut of the Luxury Brand Group, Marriott said The Ritz-Carlton and St. Regis would “further define the luxury landscape in 2017” and the company labeled W Hotels as a “luxury rebel.” EDITION, it said, showcases “luxury-lifestyle experience” and The Luxury Collection “provides global explorers true, indigenous experiences.” JW Marriott stands for “approachable, modern luxury.” Ritz-Carlton Reserve represents “rare estates, set apart from the world.” Bulgari embodies “timeless glamour, unique design, [and] flawless service.”
Just how differentiated these brands will become going forward has yet to be seen, but it does appear that Marriott is determined to do all it can to keep all 30 brands, and ensure they have the right brand positioning for each and every one.
As Edmundson told us in September, about what it means to have an ideal brand: “If you can have a brand positioning and an expression and articulation of the brand that is clear to customers, I think you win. I don’t care what segment you’re in. If you’re in the budget segment and your proposition is really clear, I think that’s ideal. As a brand purist, that’s what you want at every level.”