I know the daily headlines about the economy are causing some jitters. I'm as concerned as you are about the declining stock market, distress at mortgage giants Fannie Mae and Freddie Mac and all the turbulence in the airline industry.
The high price of oil, airline capacity cuts and the current economic malaise present real challenges for Marriott and for the hotel industry. However, I've been through seven or eight of these downturns in my career -- most recently in 1990 to 1992 and 2001 to 2003 -- and I have terrific confidence in our business strategy, the strength of our management team and spirited associates to weather this storm and come out ahead.
We just posted our second quarter earnings, which were down 24 percent from this time last year. Housing and corporate budgets are tight and people have cut back on their travel in the United States. But I don't agree with one news report that the hotel boom is kaput. True, results were softer in the United States, but business outside of North America is terrific - and that's where over 60 percent of our new full-service hotels will be built.
While our industry goes through short-term cycles, the general trend is towards robust growth. For instance, in 1980, Marriott had 100 hotels. And last year, as you know, we opened our 3,000th hotel in Beijing, China. I can hardly wait to see what will happen in the next 25 years around the world! And I hope I'll be around to celebrate.
The important thing is for us to keep the business healthy so we can remain a big employer that produces jobs and opportunities for our associates. To keep our business humming, we also need to balance the needs of all our stakeholders. That means the people who own our company - from big investors on Wall Street to individual shareholders. It also means our hotel owners and franchisees, who are key business partners. And it means our customers and guests who are also faced with this tough economy.
Short-term, we need to buckle down and get through this rough patch so that our business emerges stronger than ever before. Of course, we're working on a lot of ways to get more heads on the beds and build other revenue. And we're looking hard at ways to streamline operations at our hotels and headquarters. Long-term, we need to keep growing our brands in vibrant markets like China, India, the Middle East and Latin America, and here at home as well. And we'll continue moving ahead with the exciting work of launching new brands and revitalizing our existing ones.
This month we'll be celebrating the grand reopening of the iconic Atlanta Marriott Marquis. It showcases the new Mi great room and hip new bar called Pulse. It's a dazzling reinvention. When I visited Atlanta this spring I was blown away as you can see in the video we posted on YouTube. Our Courtyard reinvention is also moving ahead with hotels lining up to debut the new lobby. And in Mexico City this week, we're announcing the near doubling of our Latin American pipeline.
My dad once said, "If you are prepared, you should never fear." We have a great balance sheet and a superb team of experienced executives and managers and committed associates. We have terrific brands and loyal and dedicated owners and customers. I'm very confident we'll come through this downturn with flying colors.
I'm Bill Marriott, and thank you for helping me keep Marriott on the move.
Bill,
Sounds like a good time to buy or lease properties at a discount and pass some of the savings onto Marriott guests! As for the economy I think Boone Pickens on CNBC made a good point today...we could save over $700 billion a year in energy costs by investing in wind technology. What is Marriott doing reduce energy needs and carbon foot print? Any Green ideas?
Posted by: Doug | 07/22/2008 at 05:23 AM
causing some jitters indeed! As Americans living in Italy we watch the news with horror these days! Just as we've made the decision to sell and move back to the states in order to get more 'bang for our buck', suddenly the U.S. economy has gone into a tailspin!
I'm relieved to read that even corporate giants like you are concerned and working to conserve resources just like the rest of us!
Posted by: Barbara Skinner | 07/21/2008 at 08:30 PM
Hello Mr. Marrriott,
As a an Elite Member of Marriott I wanted to thank you, and all your staff for the outstanding service that they provide us. I have spent over 3 years at the Residence Inn in Bakersfield, California and the staff has been very professional and kind. Recently I've booked a reservation for the Courtyard in Mahattan New York, and Tiffany your employee from San Antonio Texas, was very gracious and patient taking the extra mile to help me out. What a great company to work for! As for the comment you made on your blog about the economy, I agree.
Respectfully,
Ray L. Valdez
Posted by: Ray Valdez | 07/19/2008 at 12:24 PM
Hi Mr. Marriott.
I just wanted to thank you for giving me an opportunity as a college graduate years ago. I spent 12 years with Marriott Hotels starting out as an ID Trainee and moving up through the ranks eventually becoming General Manager at the Courtyard in Highland Park before leaving Marriott to return to Omaha. You and Marie Osmond helped us open that hotel, the 100th Courtyard!!! Even though I have been gone from Marriott several years, I still remember a conversation you and I had while we toured the Oak Brook Terrace Courtyard together before my transfer to Highland Park. Gil, I will tell you three things to keep in mind as you continue your career. Take care of your staff, your staff will take care of our guests and our guests will take care of our profit. I heard an interview with you on NPR some time ago and it reminded me of that conversation. Thanks for preparing me for all that I have been able to accomplish in my career both professionally and personally. I hope you and your family are well.
Most sincerely,
Gil Cohen
Executive Vice President
Sales and Marketing
Omaha Magazine
Omaha, NE
Posted by: Gil; Cohen | 07/18/2008 at 06:11 AM
Hi Mr.Bill!, I feel proud of people like you and your positive thinking, I can see why you have what you have, It is amazing how your family perseverance since your Grand pa being a farmer all of you can built such a great legacy. An example to follow! I have a burning desire of having more than one hotel, so I'm working on it, thanks for teaching me that anything is possible.
Rainier Zerpa from Venezuela ( I Live just across the street of Marriot Caracas). Have a wonderfull day!
Posted by: Rainier Zerpa | 07/17/2008 at 09:53 AM
Keep up the good work Mr. Marriott. Marriott properties are the best.
Posted by: Frank | 07/17/2008 at 04:41 AM
I felt great relief after reading your blog. Thank you for the reminder that you've already been through seven or eight of these downturns.
-- A guest who enjoys your blog.
Posted by: Shar McBee | 07/16/2008 at 06:22 AM
As both a Marriott shareholder and long time Marriott fan I applaud and appreciate the long-term perspective taken by the company. while no one likes to see earnings decline, they cannot keep going up forever. Marriott is profitable and I have every confidence the company will continue to prosper. Thanks, Mr. Marriott for setting a positive tone not only for the Marriott, but the business community as a whole!
Posted by: Hank Mancini | 07/16/2008 at 04:00 AM
Thank you Mr. Marriott!
Posted by: Joe | 07/16/2008 at 03:27 AM
Thank you Bill for helping keep us on the move.
Posted by: Ron | 07/16/2008 at 03:12 AM