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Marriott’s ruthless brilliance pays off

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While other hotel companies have floundered since the Sept. 11, 2001, terrorist attacks on the United States, Marriott has prospered. The reason? Marriott coddles its customers and squeezes its partners.

Example: Marriott property owners complain not only about new Marriotts opening down the street, but also about corporate failing to pass along rebates from suppliers and overbilling for marketing and research. Some owners have even sued the partner company.

On the other hand, Marriott provides an unparalleled reservations system, delivering more customers, for an average of 13 percent more revenue, than comparable hotel brands. One big hotel in New Orleans reports that just weeks after it converted into a JW Marriott, its occupancy nearly doubled.

The principles that make Marriott’s approach so successful:
  • Place your customers ahead of employees and partners. Marriott’s rewards program—featuring rate discounts and room upgrades—was the first in the industry and remains the best. Marriott books the program as a liability that costs 2.5 percent to service, while charging its hotel owners 10 percent on loans.
  • Drive a hard bargain, and stick to it. Hotel owners who want to renegotiate a deal can forget it, says new development head James Sullivan, adding that he wouldn’t call himself a “tough” negotiator but a “good” one.
  • Seek out new business. Simon Cooper, head of Marriott’s Ritz-Carlton division, has increased its hotel count by 50 percent since taking over in 2001. Kristine Gagliardi specializes in grabbing pharmaceutical-company shows launching new drugs. Even the old man’s son, Bill Marriott, persisted in calling Jet Blue’s chief until he nailed a deal.
  • Stay cool as a cucumber. Cooper remains unflappable about the overpopulation of Ritz-Carlton hotels in Florida: “I make no apologies that we happened to add inventory to the No.1 leisure market in the U.S.”
—Adapted from “Soft Pillows and Sharp Elbows,” Stephanie Fitch, Forbes.

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