BETHESDA, Maryland — Marriott Worldwide’s chief monetary officer will not be within the enterprise of predicting recessions. Her job, nonetheless, does embody ensuring Marriott is ready for any financial state of affairs, good or dangerous.

Throughout a go to to Marriott’s new headquarters in Bethesda, Maryland, Resort Information Now sat down with Leeny Oberg, Marriott’s CFO and government vp of enterprise operations, to debate her outlook on the trade throughout difficult financial occasions, the corporate’s relationship with franchisees, and visitor loyalty and experiences.

In hospitality, the love individuals have for journey has been strengthened throughout the pandemic, Oberg mentioned, as has the cyclical nature of the trade.

Within the occasion that the economic system does enter a recession, demand for journey, significantly on the leisure aspect but in addition for teams and enterprise vacationers, will assist the hospitality trade climate its results, she mentioned.

Oberg mentioned leaders within the resort trade are at all times ready for the ups and downs of financial cycles. She mentioned she likes to remind folks that whereas Marriott appears large, it’s 8,100 small companies.

What common managers and their groups can do on the property stage in their very own communities has by no means been extra obvious than throughout the pandemic, she mentioned. Although they weren’t in a position to get by means of all of it pain-free, they confirmed unbelievable ability maneuvering by means of the challenges.

If a recession does occur, it’s necessary to recollect every financial recession is totally different with totally different fundamentals at play, Oberg mentioned.

Whereas unemployment did barely enhance from 3.5% to three.7% within the U.S., that’s nonetheless a low proportion, she mentioned.

“We’ve obtained a sturdy labor market with loads of good jobs for individuals available in the market for work, and that can have some impression on how issues go ahead mixed with the [Federal Reserve’s] strikes on each the U.S. stability sheet in addition to with rates of interest,” she mentioned.

Throughout the first and second quarters of 2022, Marriott had document signings for brand new administration and franchise agreements, Oberg mentioned.

“There’s nothing higher than individuals voting with their contractual commitments to say who they need to be with and their perception within the enterprise and their perception within the hospitality enterprise,” she mentioned.

Great conversion exercise additionally has added to the corporate’s development outlook, she mentioned.

All through the pandemic, resort homeowners and operators needed to work diligently to maintain their properties afloat because the lack of journey demand considerably reduce into their income whereas they nonetheless needed to cowl bills.

As a franchisor, Marriott has constraints on the way it can straight have an effect on franchisees’ operations, Oberg mentioned. To assist carry down bills, Marriott can regulate its franchise charges for applications and providers. These charges are based mostly on the income produced on the property stage, which is closely reliant on charges and occupancy.

“If the revenues come down in a recession, which means an enormous chunk of the fees come down as nicely,” she mentioned. “Meaning I must be prepared for each eventualities, each revenues going up and revenues happening.”

Marriott has realized and handed alongside hundreds of greatest practices to groups within the subject, she mentioned. The corporate can be gaining effectivity in the way it manages labor at lodges and controls prices by means of economies of scale.

“That’s all a part of the way you assist them work by means of downturns,” she mentioned. “Throughout COVID, we clearly did greater than we usually would do by way of having to actually reinvent how you use a resort on dramatically decrease occupancy and nonetheless break even.”

The power of Marriott Bonvoy, its loyalty program, and what it delivers to the highest line in addition to the underside line for lodges has been clear over the previous few years, Oberg mentioned. The scale of this system and the in depth participation by members in its full choices, together with bank cards and journey insurance coverage together with the extra conventional makes use of with lodges, builds the ability of this system and drives different price efficiencies.

For instance, the prices related to utilizing on-line journey companies have been decreased as Bonvoy grows and drives extra direct bookings, she mentioned.

When individuals couldn’t journey as a lot throughout the pandemic, their use of Marriott-branded bank cards allowed them to earn factors they may use for future stays, she mentioned. Using these playing cards and the variety of individuals signing up for the playing cards proceed to develop.

“All of that’s engagement with our clients throughout a time when the lodging element was significantly weak, however within the meantime, we continued to construct and develop this terrific group of shoppers that we hope to have for the remainder of their lives,” she mentioned.

As traveler behaviors and priorities have modified throughout the pandemic, Marriott has carefully watched the evolving demand segments, significantly the mixing of leisure and enterprise journey demand, often known as bleisure.

“Accommodations have achieved a terrific job of adapting, and admittedly, the development in bleisure development has been occurring earlier than COVID,” she mentioned. “It was sort of inexorably seeming to get larger and greater annually, so it’s clearly been an enormous focus of ours to be sure that we’re working lodges in a approach that meets their needs.”

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