China’s hoteliers achieved a dramatic milestone earlier this year –one that signals a profound change in the dynamics of our industry globally.
For the first time, not one, but two China-based hotel groups leaped into the ranks of the world’s top 10 hotel companies. Shanghai Jin Jiang International Hotels with 1,243 hotels and 193,334 rooms now ranks ninth in the world as Shanghai-based Home Inns & Hotels Management with its 1,426 hotels and 176,824 rooms came in at 10th place—joining long-time industry stalwarts IHG, Marriott, Hilton, Wyndham, Accor, Choice, Starwood and Best Western as the industry’s dominant players.
With its population base of over 1.3 billion people, China’s huge domestic tourism market and expanding middle class have generated a 10 percent tourism growth rate every year over the past decade. This phenomenal expansion has enabled Chinese hoteliers to lay a solid foundation for entering the hotel business on a global scale. Domestic Chinese tourism now contributes about five percent to the country’s GDP, greatly enhancing local employment, consumption and economic development. Today, over 80 million Chinese tourists a year travel to far-off places like the US, Australia, the UK, Canada, Germany, Italy, Spain, Brazil and Mexico. This number is expected to increase exponentially as the Chinese government recently announced plans to boost its tourism sector another 10 percent. By 2020, Chinese mainlanders are expected to make 200 million cross-border trips annually.
The Chinese path to international expansion is not unlike that which hoteliers in North America and Europe followed in the second half of the last century when western hotel chains built their domestic portfolios then turned their attention to tapping international markets.
Today, while western chains continue to expand their reach into China through franchising, management contracts and new brand introductions, Chinese hoteliers are employing a variety of strategies to gain a firm foothold in markets beyond their borders. Along the way, they are fine-tuning their experience with various business models.
For example, over the past couple of years, New World Hospitality bought Dallas-based Rosewood Hotels & Resorts, China’s HNA Group took a 20 percent stake in Spain’s NH Hoteles, and Shenzhen New World Group bought the Sheraton Universal Hotel and the Los Angeles Marriott Downtown Hotel in Los Angeles. China’s HanTing Inns and Hotels is similarly reported to be interested in expanding its operations by looking at hotels in the West.
Perhaps, the most aggressive among China’s expansion-minded hoteliers has been Shanghai Jin Jiang Group which joined with Thayer Lodging to buy Interstate Hotels & Resorts in the US. Jin Jiang recently struck a deal with France’s Louvre Hotels Group in which Jin Jiang Inn customers will be able to make reservations for Campanile hotels in five French cities and Campanile customers can book rooms in 15 Jing Jiang Inn hotels in China. In addition, Jin Jiang also entered into an alliance with Spain’s Sol Melia as a first step in forging a larger partnership.
It’s clear western markets offer attractive opportunities for these hoteliers.
In the past decade, China’s hotel industry has developed in quality and quantity. China Hotel Association reports there are about 300,000 hotels in the country, with approximately 11,000 of these hotels holding a four-star rating. The booming Chinese economy has enabled the big domestic hotel groups to build their networks and to grow in popularity. As mainland Chinese tourists and businesses become the world’s dominant travel group, they will become a solid customer base for these chains as they move into western markets, including Africa.
Meanwhile, the difficult economy in many western countries has created an attractive environment for mergers and acquisitions as well as for other forms of consolidation and integration as ways to instantly penetrate new and emerging markets. And, franchising is proving to be a potent engine for global brand distribution.
In the years ahead, Chinese hoteliers will continue to build their global reputation and to increase their brand value internationally. It won’t be long before a Chinese-flagged hotel opens its doors on Main Street, USA or the Champs Elysees.
Transitions are about Change—from the known to the unknown. Moving from one reality to another can be a daunting journey; it can be uncomfortable; it can be exhilarating; or it can be all of this and then some. It helps, I think, if you can build on what was while creating the future.
Several days ago, I closed the door on a rewarding, 40-year career with Marriott International that culminated in my serving the company as President & Managing Director of International Lodging. This role gave me the opportunity to lead its growth outside the continental United States from 16 hotels to more than 550 today in more than 70 countries while generating $7+ billion in annual sales. It also enabled me to help create 76,000 new jobs and to implement multiple environmental, youth and educational initiatives which are now benefiting thousands of people worldwide.
Along the way I had the privilege of working with scores of thoughtful and dedicated men and women. Some are still household names in any culture; but most would consider themselves average, everyday folks who wanted nothing more than to do the right thing and the best job possible. However, working together, we achieved some incredible things; and even had some fun along the way.
Throughout my life I have made it a point to maintain ties with institutions, industry groups and people who in one way or another had an influence in my life or on whom I’ve had an impact. Little did I think back in 1972, when I joined Marriott as a trainee fresh out of the U.S. Army, that my assigned mentor, Buck Laird, would today be joining with me as I transition into the next chapter of my life.
In those days, Buck was a sales manager at the company’s iconic Twin Bridges Marriott, just across the Potomac from Washington, D.C.
His role was to guide me through Marriott’s self-directed Individual Development training program. I guess I was a quick learner because soon we were working together on major Marriott sales and marketing projects, such as hosting the entire U.S. Olympic Team prior to their departure for the Munich Games. And securing what was then reported as the “world’s largest hotel booking” by promising the client that she would be the first guest at the Lunar Marriott Hotel when it opened “in about 2001.”
Over the years, Buck and I traveled separate paths as he went on to build a hugely successful career in advertising in Hawaii. But we always stayed in touch. Now, 40 years later, I’ll be joining him next month as President of an Irvine, California-based global consulting group called Laguna Strategic Advisors. We’ll be leading a consortium of independent global business consultants whose primary focus is to deliver grounded solutions to a variety of business challenges. We’ll be making the LSA announcement very soon.
In addition, I plan to serve as an adjunct professor at the Paul Merage Graduate School at the University of California Irvine and as a visiting professor at Boston University. I will also continue to be involved with numerous business, educational and charity boards in the U.S. and abroad and to share my experiences and insights at selected industry gatherings.
It’s been a terrific ride so far—full of wonderful experiences and memorable people. And now, it’s time to move on. Let the next chapter begin!
Not too long ago, I announced plans to retire from Marriott International at the end of March, 2012 after a corporate career spanning 40 years that began as a management trainee.
It was 1972 and I had just left the U.S. Army, following tours of duty in Germany and Vietnam. My goal was to land an airline job but the country was entering a recession and the airlines were furloughing people. So I went to work for Marriott, never imagining that my job would lead to a career in which I spent more time in the air than most airline pilots.
I interviewed with the Marriott division that provided in-flight food to airlines. From the get-go, I knew it wasn’t a good fit. So when the chance to get into military sales for the company’s fledgling hotel division appeared, I jumped at it and was accepted into the management training program at the Twin Bridges Marriott in Arlington, Virginia. While waiting to start the training program, I worked in the security department, followed by extensive basic training in the kitchen, at the bell stand, the front desk, in the accounting department and more—all of which proved to be valuable experiences as my career developed. Eventually I did get into sales and the rest, as they say, is history.
Over the years, I’ve often been asked to share some philosophical guideposts that helped me through my career. Here are three:
- Shortly before his passing in 1985, the founder of Marriott, Bill Marriott Sr. summed up the philosophy that had shaped his life—“A man should keep on being constructive, and do constructive things. He should take part in the things that go on in this wonderful world. He should be someone to be reckoned with. He should live life and make every day count, to the very end.”
- I started out as a micromanager, unwilling to trust anyone to get a job done the way I wanted it done. My eyes were opened by Al LeFaivre, head of our marketing and sales in the 1970s. I noticed that Al gave his people a lot of latitude. “Why?” I wanted to know. “You’ve got to understand what you can’t do and let other people do it for you,” he told me. “And then you’ve got to be there to back them up.” Suddenly, I got it. Even if I were the best at everything, which I certainly wasn’t, there wouldn’t be time enough in the day for me to do it all. And, if I tried, I would simply be standing in the way instead of helping people grow. Ever since, I have tried hard every day to follow Al’s example.
- I am a great admirer of Ronald Reagan. His leadership style is, to my mind, worth emulating. Reagan surrounded himself with people he trusted and freed them to do what they best. It’s widely known that on his desk in the Oval Office was a plaque with the words “You can accomplish much if you don’t care who gets the credit.” Truer words were never written.
It’s been an exhilarating four decades in which I’ve been privileged to meet and work with many of the best, most talented, people in my industry as well as many of the national political and business leaders of the more than 70 countries which today are home to more than 500 Marriott International-branded hotels. More importantly, I’ve experienced the satisfaction of helping grow a business that created economic opportunity for more than 70,000 people around the world.
Rest assured: my pending retirement is not an ending—it will be a transition into the next phase of my life’s journey where, as Mr. Marriott counseled, every day counts and leaves its mark. In coming months, I’ll share with you milestones along the way.
Not too long ago, I had the occasion to participate in a high-profile ceremony that will lead to the opening of two new deluxe Marriott International hotels in
Erbil, Iraq by 2014. They will be the company’s first hotels in the country and hold the promise of being the first of many more to come.
The event was part of a larger celebration marking the opening of the first-ever U.S. Consulate in Iraq’s semi-autonomous Kurdistan region and was meant to be symbolic of the normalization of U.S.-Iraqi relations and recognition of the dynamic growth of the Kurdish economy and the enormous building boom now underway in Erbil.
Surrounded by a lot of U.S. military and diplomatic brass, the President of Kurdistan and other officials, I couldn’t help but remember back three years earlier when, at the invitation of General David Petraeus, then commander of the multi-national force in Iraq, I led a group of colleagues on a hasty trip to Baghdad to inspect a potential site for a new hotel. The hotel, the General said, would provide work for Iraqis and demonstrate the United States’ goodwill. At the same time, it would show the world that Iraq was back in business and ready to host foreign enterprise. Last but not least, he predicted, it would be a profitable venture for Marriott International.
I accompanied the team because I believe leaders make a tacit contract with the people they lead. A leader has to be on the front line when necessary, always taking responsibility for any flak the troops get for doing the job you’ve set for them. That way, when you hand out an assignment, your people can be confident that you have clear and personal knowledge of what you’re asking them to do. Ultimately, however, after examining the situation firsthand that spring in Baghdad, we agreed that we could not, in good conscience, recommend building a hotel there at that particular period in time. Had I not toured Baghdad with my team, I might have made a decision I would have lived to regret.
As it turned out, over the subsequent three years, we evaluated other projects in Iraq with the end result being the two hotels we recently announced in Erbil. This time, the timing was right.
We hear a lot these days about the direction the “Arab Spring” is taking in the Middle East. Nearly everyone you meet seems to have something to say about the political unrest that has embroiled Tunisia, Morocco, Egypt, Jordan, Libya, Bahrain, Yemen and Syria. Some celebrate the determined hope and optimism that’s sweeping the region; others push back in dismay as the old order crumbles. Many voice opinions as to what’s needed to bring peace and prosperity to the region; others wait to test the prevailing winds before they commit to one side or the other.
Recently, I had the privilege to join a delegation to Tunis and Cairo of several high profile corporate leaders from the United States led by two prominent U.S. Senators (and political rivals)—John McCain and John Kerry. Along with me were representatives of Bechtel, Mobil, Coca-Cola, Dow Chemical and General Electric. Our purpose: to get a first-hand sense of the situation as it is right now in each country; demonstrate our support, respect and encouragement for the evolving leadership and the arduous task ahead of them as they each work to forge a new political and economic future for their fellow citizens; and to learn enough so that when the time is right we can do the right thing—for them, but also for our respective customers and associates.
The trip was a dizzying kaleidoscope of briefings with high ranking government officials including a Finance Minister and a Prime Minister, embassy officials, enormous security including armored vehicles and incredible caravans of police chase cars, hoards of news-hungry media and serious talks with local business leaders. Even with all this security and preparation, we managed to get hit by a truck in a run-of-the-mill traffic accident in Tunis!
It’s too soon to tell if anything tangible will come out of the trip but I learned long ago not to be in a rush to get down to “real” business too quickly. The all-work approach, particularly when the meeting involves people from multiple cultures and the external environment is fluid, is usually non-productive. This was a time to listen actively, for exchanging insights and for hearing what wasn’t being said. There will be time enough for the real negotiations somewhere down the road. Hopefully, we all will have listened well.