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Hotel Labor Shortage ‘Most Significant Challenge,’ Says Marriott CEO
A shortage of workers is the most significant challenge being faced by the hotel industry, according to Anthony Capuano, CEO of Marriott International, speaking at the annual Stephen W. Brener Distinguished Lecturer Series in Hospitality Management, hosted by NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality. Tisch himself, CEO of Loews Hotels, interviewed Capuano at the event.
While there have never been more applications for hourly positions, said Capuano, there is also a phenomenon of “quick quits,” employees who leave shortly after taking a job because they are surprised at the hard work involved in hospitality. He said that guests understand about charges of high rates but expect commensurate service, which can be difficult with the shortages.
Asked how he is handling the labor issue, Capuano said he recently met with Secretary of Labor Martin Walsh, who told him that all 60 CEOs he had met with to that point had talked about workers wanting a “bus stop schedule” – a flexible schedule where they could put their children on the bus, go to work, pick up their children and maybe even go back to work after that. Capuano said Marriott now has part-time managers for the first time and is experimenting with job sharing and generally trying to be creative about work schedules.
DEI (diversity, equity and inclusion), said Capuano, is also a high priority for Marriott, noting that a company should never be satisfied with its progress in that area. The company, he said, has about 800 people in senior leadership. Of those, 46% are women and 21% are people of color. The goal is to have gender parity and 25% people of color by next year. “You should always pick the best person,” said Capuano, “but you have to start with a diverse slate.” He said employees “ want to see people who look like them in leadership roles.”
The dearth of minority-owned hotels was also discussed. Capuano said Marriott’s Bridging the Gap program has set up a large fund to help minorities acquire properties. He said the company is working with banks and other institutions to make borrowing easier for these groups.
At the beginning of the pandemic, said Capuano, there was a question of the company staying liquid and it proceeded to raise billions from various sources. Just two-and-a-half years later, Marriott enjoyed the highest earnings in its history. If you look at the two most recent shocks to the industry – 9/11 and the Great Recession, said Capuano, it took 4-5 years to recover. This time it has only taken two years. The turnaround, said Capuano, can be attributed to “the resilience of travel.”
Capuano also paid tribute to J.W. (Bill) Marriott, Jr. who oversaw the company’s growth over several decades and is now chairman emeritus. While that expansion was impressive, he said, Bill Marriott is most proud of all the opportunities the company has created for people worldwide, following its core philosophy of taking care of your people because they will take care of guests.
Capuano was appointed in February 2015 at a time of extreme crisis, he said – during the pandemic and after the untimely death of Arne Sorenson, the charismatic longtime CEO. While Bill Marriott wanted to wait a longer grieving period, he decided to act and appoint Capuano because of the company’s responsibility to thousands of employees and owners.
As the second non-Marriott to head the company after Sorenson, Capuano said he still works with the family as David Marriott – Bill’s son – is chairman of the board. And, he added, even with 8,100 hotels, associates feel like they work for a family business. He said that when he was appointed, he got 30,000 e-mails from employees asking how they could help.
Marriott’s business model has changed since the end of the last century, said Capuano, noting that in the past, the company would build a hotel, then sell it and keep the management contract. At some point, it was stuck with too much real estate and there was a danger of going under. At the time, executives spun off Marriott International as a management company while Host Hotels & Resorts took on ownership of hotels. Both companies have thrived, said Capuano. Today, Marriott International owns just 20 hotels and Capuano told the audience, “I’m happy to sell you any one of them.”
Capuano said early in his career (he joined Marriott in 1995), he was involved in acquiring the Ritz-Carlton and Renaissance brands, which gave Marriott three brands. It then began buying more small companies like AC Hotels and Delta Hotels in Canada. The opportunity to buy Starwood came up and Marriott passed at first before deciding to go ahead with the $14 billion deal, which was accomplished in three weeks. He said there were questions about merging the two companies’ cultures, “but it turned out we shared many commonalities.” Today, Marriott has 30 brands, with 1.5 million rooms in its 8,100 hotels across 139 countries and territories.
Capuano does not see a deal the size of Starwood coming up again because it is so difficult and expensive. He said the company has half a million rooms in its pipeline with 60% of those outside the US, a number that will rise. He said that makes sense because Marriott has 18% market share in the US and just 3% outside the country. Surprisingly, he said, the company has seen the lowest number of deals falling through than any other period in history.
Looking ahead, Capuano said there are strong headwinds as far as inflation, interest rates, a potential recession and political instability. He said those have not yet been felt in bookings. He said leisure is very strong, group stronger than expected and business travel – “the tortoise” – is growing steadily.
Tisch asked why NYU hospitality students should be optimistic. Capuano said that if you look back at history, the Roman philosopher Seneca said, “travel and change of place impart new vigor to the mind.” He said travel “is embedded in our DNA and is as powerful as ever.” He said those involved in travel get to share the joyous occasions of their customers – like weddings, bar mitzvahs and anniversaries.
Capuano said he recently asked Bernard Arnault, head of LVMH, which owns many luxury brands like Louis Vuitton and Tiffany & Co. why he bought Belmond hotels (outbidding Marriott). Arnault told him, he said, “I own 77 companies that sell expensive s—. We needed to diversify to sell experiences.”
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