Marriott’s merger with Starwood a game changing success: Neeraj Govil

TourismFirst caught up with Neeraj Govil, Area Vice President-South Asia, Marriott International, for an update on the country’s biggest hotel chain, especially on how the merger and takeover of Starwood Hotels has evolved, and current trends in their going forward in India. 

Where have you arrived with the consolidation of the two major brands of Starwood and Marriott specifically in the Indian context?

It’s been over a year. The merger has gone rather well. Internally we see ourselves as one organization which is a significant achievement. There has been learning along the way which was expected. After all, it is an integration of the people. In hindsight, the delay in the merger allowed us to prepare and gave us time to put a strategy in place. It has been an overall great success.

Most mergers of this magnitude, they have not really gelled even after many years. And you seem to have achieved this. Could you share how you went about it?

One of the things we did which has been very effective was cross pollination. We started by saying let’s take Marriott Legacy General Managers and put them in Starwood Hotels and let’s put Starwood General Managers and put them in Marriott Hotels. That was a tremendous support. They inherited a team and certain culture and people understood that this is now one organization and we will not shy from taking leadership from one hotel to another. There have been 100s of such moves. It has been about educating people and making them see the positive benefits of the merger. People have very willingly taken on new assignments. It was great exposure and reassuring for the people.

We had transparent and open modes of communication through the entire process. We communicated through townhalls, through written means, regular email updates on the integration.  We set up a platform where people could log in and see the changes. You can almost say perhaps there was an over communication of the things we were doing but we wanted it this way.

Did it become a mountain of an assignment for somebody like yourself?

No, it did not as I think it was delegated very well. We just went on telling people that lets put it together and communicate it.

But suddenly in one stroke, managing your inventory, your staff, number of hotels – it all doubled.

We put in the recourse to do it as well, at an above property level. Initially we had one corporate office in Mumbai, today we have two; one in Mumbai and one in Delhi. We put in support in Bangalore and Calcutta. So, we added resources. We beefed up the structure.

So the two things we did very well was the cross pollination across organizations and open communication. My biggest learning from the merger is that people need information and if you don’t give them information it is perceived as not being transparent and that leads to a lot of other issues.

Sometimes it is not always good news but you must communicate. People understand that it is timely, relevant and sincere. And of course, you have to treat people with respect. You have to listen to people. I spent a lot of time listening and also on Facetime.

The biggest win, of course, was that we did not drop the ball on performance despite all the challenges of 2017.

So how is this calendar year going to be?

Fantastic. We are set to deliver great RevPar index. We are growing our market share in the country and our profits are up. 2017 was a tough year starting with demonetisation which had a pronounced impact and then you had the liquor ban that came and hit us without warning and then finally the GST. When it was rolled out, the mechanisms that were put in place were not made very clear. Implementation tended to be somewhat opaque. Despite all this we are going to put out some pretty robust numbers at the end of this year. But we do believe that going forward, the introduction of GST will be most fortunate and rewarding for hospitality and will greatly enhance ease of doing business in our sector. We remain most optimistic about GST in the medium and long run.

Any indications on the numbers you are going to put up?

Our growth in India will be high single digit almost getting to double digit depends on how the last months go.

The big thing to my mind was also the putting together the brands from the two stables and a lot of them appeared to me to perhaps overlap. You have 15 brands in India and overall 30. Any simplification of the brands? And also, which will be the 16th that you will bring to India and when?

We have signed a Delta in Goa. Now will that be the 16th depends on when and which hotel will open next. There are talks to bring in many other brands to India as well. Such as Moxy, again depends on when it opens.

Do you all these brands will enhance the branding?

Absolutely. There is a market for them. Now going back to the first question, there is no doubt that Marriott and Starwood were fierce competitors so naturally the brands would be set up to compete with each other. But I think what we have done very well now is that we have recognized that these are all in our stable today and we very quickly put in a lot of effort on a global level to figure out what we call swim lanes. We are defining these clearly. We have now set up very distinct standards for each of our brands. There is no plan to consolidate any of these brands. There has been a great amount of investment into building these brands. We will retain all these brands.

Tell me, in your brands, you have …..When you have a Westin, the word Marriott does not appear in it. Now is there any plan to pre-fix?

What you are referring to is what we call a brand endorser, such as Fairfield by Marriott. But then we also have a Ritz Carlton that does not carry an endorser. The Westin is going to play in the ‘live well’ space such as eat right, sleep right etc. At this point there are no plans to add endorsers to it. Starwood’s biggest strength was how well their brands were known. Why would you take a Westin and put the name Marriott underneath it. The Westin is well known by itself.

Some of the big hotel companies have come up with new brands in India and it has taken a long while for them to establish them in a manner that would produce good financial results. So, when you say that you will bring a Moxy or a Delta and you don’t put a Marriott endorser to it, the connect may get lost?

So yes, maybe when we bring Delta or another brand to India, it may at that point need an endorser. However not for the Starwood brands as they by themselves have phenomenal recall.

How has the GST roll out been for you at your hotels?

The implementation was not good. There was confusion. I must say that in the subsequent months there has been a lot more clarity. I think 28% GST on 7,500 is excessive. I think there is a notion that hotel stays are all luxury stays, but I don’t agree. It puts pressure on hotelier to bring the rates down. Leisure destinations get impacted because there is no credit return. Banqueting at 18% is fine, but the credit does not apply for social functions.

How do you see MICE?

MICE is going to get hurt by GST for sure because it makes you un-competitive as a destination. You have to look at MICE and understand the roll-on impact. They might extend for a leisure trip or bring in family. Here we will be un-competitive. Though I do think GST is a good thing from a long-term play.

How do you see India having done so far in the MICE sector? People say it is the under-promoted part of India’s tourism potential. What is your take on this?

There in international MICE and domestic MICE. There is also the fact that if you ignore GST etc, MICE numbers have grown, connectivity has grown, more roads and airports and this helps MICE. At the same time, outbound MICE is also on the rise. India is now competing aggressively for domestic MICE. Sometimes you realize it is cheaper to fly to Thailand for MICE than within India.

You need to have world class convention centres if you truly want MICE to grow. We need to have investments in infrastructure. There is a lot of interest but it’s a matter of time.

There needs to be a heightened sense of security in the country. In today’s world, perception is reality. And in today’s world, India’s perception on this front is not at the level where we think it should be.

Also, we need to invest heavily in our heritage tourism sites. They need to be better maintained and more easily accessible and all this will help MICE.

Do you think somewhere we are lacking in a response mechanism when it comes to security and perception sent out?

Yes definitely. From a safety perspective, India has work to do.

Marriott at 100, where is the 100th?

We are already close to 20,000 rooms. Tomorrow we are at 94 hotels. Our goal is to hit 100 by the end of this year. Next year is going to be great too. We expect maybe other 18-20 hotels next year. ‘

What about Rajasthan and the tourism circuit?

We really didn’t have much inventory there. We are opening a JW Marriott in Jaipur before the end of this year, we have a Marriott in Jaisalmer and a Marriott in Jaipur. We now have a Marriott in Jaisalmer and then in Pushkar. We have a Fairfield in Jodhpur.

Your W in Goa has been a resounding success. Where else is the W portfolio going to open?

Nothing for next year. We have W signed in Mumbai. Goa will be the only one in India at least till the end of next year.  We have opened a Le Meridien in Goa and we have a Sheraton in Goa. Goa is a big market for us, with 7 other hotels signed.

Which is the most happening city in the country in terms of adding more rooms, demand wise.

That would be Mumbai, then Goa. Our hotels in Bangalore are doing very well. Bangalore is currently at 11 Marriott hotels, we will open 5 in the next year. That will be 16 hotels.

How is Aerocity doing?

Excellent. We are very pleased with the hotel. We are adding a new F&B to the hotel. It will be something that they city will truly enjoy. Aloft opens first quarter next year.

So the Marriott saga continues to unfold, and India is emerging as a happy hunting ground for this US based hospitality major. With a 100 strong hotel presence, the largest room inventory in the country, and a strong supply line ahead, Marriott is indeed poised to retain its hold on the Indian market. 

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