Name: How Marriott's CEO Was Appointed During Significant Challenges
Uploaded: 2025-07-31T16:02:00Z
Duration: 20 min 50 s
Description: Marriott International's Anthony Capuano spoke about when he was named chief executive officer of the hotel chain after the death of Marriott's then-CEO and amid the Covid-19 pandemic. "It was, you know, on a personal level, extraordinarily emotional," Capuano said. This interview was recorded on June 2, 2025.

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Marriott International's Anthony Capuano spoke about when he was named chief executive officer of the hotel chain after the death of Marriott's then-CEO and amid the Covid-19 pandemic. "It was, you know, on a personal level, extraordinarily emotional," Capuano said. This interview was recorded on June 2, 2025.

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How Marriott's CEO Was Appointed During Significant Challenges

Hello, everyone, and welcome to "At Barron's." I'm Andy Serwer, and welcome to our guest Tony Capuano, who is the CEO of Marriott. Great to see you, Tony.

Thanks for having me. It's great to be here.

So I wanna start off by asking you about travel trends, consumers, domestically and internationally. Let's start off with the United States. Are we seeing any changes, given what's going on in the economy?

Yeah, so it's interesting. We just did Q1 earnings, and we talked a bit about trends globally and by region. On a global basis, revenue per available room, which is really the most important metric for our industry, we were up a little over 4% but only-

For the quarter?

For the quarter.

Yeah.

Correct. But barely 3% in the US and about 6% internationally. So we are seeing relative more modest demand growth here in the US. But really, the quarter was impacted by March. So January and February, both domestically and internationally, we came out like gangbusters. I think you saw consumers pull back a little bit because of some of the pace of uncertainty that we saw around tariffs and international relations. But April actually showed some encouraging signs. And so there seems to be a view from the consumer that maybe we're in for a little more volatility, but that doesn't fundamentally change our appetite for travel.

In the US, what's the breakdown between domestic travelers and international travelers coming into the country?

Yeah, so the vast majority, more than 90% of our demand in the US is domestic. On a global basis, about 20 or 21% of our demand is cross-border travel. As you might expect, in the quarter, we saw Canadian inbound drop about 5% because of some of the complexities in the US-Canada relationship. But our overall international was actually up. Because we saw more than what we lost from Canada coming in from other international destinations.

And what about Americans going overseas in 2025?

Yeah, you know, again, our transient booking window is less than three weeks, so I don't have as much visibility I as I would like into what the summer will look like. But when you talk to our customers, when you look at our booking patterns, destinations in Western and Southern Europe, so think Barcelona, London, Rome, Paris, Amsterdam, those types of destinations are top of mind for US outbound travelers.

And it seems to be holding up at this point.

So far, yes.

Right, and what about tariffs per se? Do they impact your company?

Maybe I'll give you a micro and a macro answer. From a micro perspective, to the extent tariffs are impactful on construction materials, the furniture or fixtures and equipment that we use to either build or renovate hotels, that could create additional pressure on the economic equation for our owners and franchisees. From a macro perspective, the thing I worry a little bit about is consumer confidence. Not that long ago, we heard that the US had hit a 52-year low in terms of consumer confidence. Generally, industries like travel and tourism thrive in times of stability and high consumer confidence. So that's a worry as well. Although, this fundamental shift we've seen in consumer discretionary spending, moving away from hard goods towards travel and experiences, at least so far, seems to have offset any dilution of that demand from weakening consumer confidence.

Oh yeah, you hear all about that experiential.

Absolutely.

And what about China? I know you have a number of hotels there, and relations between the US and China have been difficult, quite frankly, for a number of years now. What's been going on there?

So we have about 600 operating hotels in China today, more than 400 in the pipeline behind that. Those hotels tend to be owned by domestic owners, staffed by domestic associates. And so in many ways, in the best of ways, I think, we're sort of woven into the fabric and the economy of China. So I'm not sure that relations between the countries are as impactful as they might be for other sectors and other industries. With that said, inbound international travel into mainland China has not recovered to pre-pandemic levels. And that's something that obviously represents upside in the future for the performance of our business.

Having said that, you have 400 in the pipeline.

That's right, and maybe I'll just make one other point-

Please.

which is interesting. 2024 and first quarter of 2025 were record years of deal volume for our greater China business, which would suggest that the development community across greater China fundamentally believes in the long-term potential of the travel and tourism sector. So they're not necessarily pushing and pulling levers based on the fluid nature of the relationship over a quarter or two. These are assets that have decades of useful life. And so they're making long-term bets in the future of travel across China.

And they being both players in the public and private sector.

That's correct.

Right, and it's not sort of contingent upon the US-China relationship is what you're suggesting.

No, no, that's right.

And what you were describing in China, how you operate sort of speaks to the greater business model, Tony, and I wonder if you could explain that to us a little bit.

Of course. So in some ways, our model is quite simple. We are an asset-light model. Today, we have approximately 9,600 hotels around the world. We own 20 of those hotels. And in some ways, we're reluctant owners of those 20. We'd like to-

Only 20 out of 9,000?

Only 20. It's about-

Why even any?

There's a variety of individual reasons. I can give you one example here in New York, the Union Square W Hotel. Periodically, we'll look at the performance of one of the brands in the portfolio and say we'd like to jumpstart either the performance or shift consumer and developer perception of that brand. And rather than just talk about it, we'll leverage our balance sheet, we'll buy an asset, and in effect, reinvent that asset. So we've done that with the core Marriott brand in Charlotte, North Carolina. We've done that with the Sheraton brand in downtown Phoenix. And we're doing that today with the W brand here in New York. So we do that periodically, but those won't be long-term holds. We'll reinvent the hotel. We'll relaunch it to consumers. We'll bring many of our development partners through to understand the future direction we'd like to see the brand go. And eventually, we'll recycle that balance sheet capacity by selling the asset and retaining the long-term management agreement.

Right, but then the other 8,880 hotels, talk about that.

So they are a mixture of managed and franchised hotels. Managed meaning it's owned by a third party, but Marriott International, our company, is the operator of that hotel. Those are our associates in running the hotel under one of our brand flags. The alternative is a franchise model, where the hotel is still independently owned, and either it's an owner-operator that's operating that hotel, or they've engaged a third-party management company. But in either of those circumstances, they're operating under a long-term license agreement with us that requires them to maintain our brand standards and gives them the opportunity to plug into our powerful revenue engines and our industry-leading loyalty platform.

And how do you determine between those, the latter two models then?

Yeah, it's really the determination of the owner. So we've got a terrific group of owner-operator franchisees whose core business is the development and operation of their own assets. You have other more institutional investors who want to own the asset. Perhaps they want flexibility because their investment horizon is relatively shorter. And so they like a third-party operator that will consider a shorter-term management agreement.

Let me ask you about all these different brands that you operate. I was looking at a "Skift" article. I think you were actually interviewed in it. And they were talking about breaking down more than the 30 brands that you guys have. On the high end alone, you've got Ritz Carlton, Bvlgari, St. Regis, Le Meridien. Why so many? Is that too many? How do you determine that?

Yeah, well, you asked that question more politely than some. Usually, I get why do you have so many brands? But I always give the same answer because I really fundamentally believe this. The breadth choice that our brand portfolio offers both our guests and our owner community is a powerful advantage for the company. For our guests, our objective is to get as close to 100% of their travel wallet as possible. So how do you achieve that objective? You make sure that we have the right product for every trip purpose, everywhere they wanna go. And the breadth of the brand portfolio is a powerful advantage in trying to achieve that objective. Similarly, for our development partners, we wanna capture as close to 100% of their development wallet as possible. And the reality is, sometimes they may come to us and say, "I have an amazing site in X, Y, Z city, and I really wanna build a Marriott," and we say, "Well, the Marriott brand's already taken in that market. But we could do a Sheraton, or we could do a Westin, or we could do a Le Meridien," and it allows us to keep them in the Marriott ecosystem. Now, if you pursue a strategy like that, then you have a pretty profound responsibility. And that responsibility is to make sure that each of the 30-plus brands enjoys a well-articulated, distinct positioning within the portfolio. And one of Mr. Marriott's favorite expressions is success is never final. I would say this is a good example. I think we've made tremendous progress, particularly after the Starwood acquisition, but we need to continue to make sure the positioning of each of those brands is very clear and very well articulated.

Do you have one loyalty program across all-

We do.

So in other words, I could go to a Courtyard by Marriott one day and a Ritz-Carlton-

That's right.

the next day and get points, the same points?

If you were interviewing a gentleman named David Flueck, who runs our Bonvoy program, he would tell you that's the most important brand in the portfolio, Bonvoy. And the reason he would say that is, in so many ways, it's the connective tissue for the company. To your point, if you are a traveler, and you say, "Tuesday and Wednesday, I'm going to arrive at 11:00 PM. I'm gonna be out before the sun comes up. What do I need? I need a clean room, comfortable bed, hot shower, great Wi-Fi," you probably are gonna stay at one of our select brands, select brand hotels, and have a great experience. Two weeks later, you may say, "I'm taking my extended family for this amazing multi-generational vacation," and you may wanna choose Ritz-Carlton Resort or a St. Regis resort. And so, again, this goes to the idea of never having you leak from the ecosystem, and Bonvoy ties that all together. The other thing Bonvoy does is for a new traveler, who's maybe just starting their career, gives them the opportunity to explore the full breadth of the portfolio.

Let me ask you about the competitive set. And you've got two big publicly traded companies that are somewhat similar, quite frankly, Hilton and Hyatt. And I wanna know how you're differentiated, number one. And number two, I noticed the stock market performance is kind of interesting. Quite frankly, Hilton is number one, you're number two, and Hyatt's number three, over time, over all different time periods. So I want you to address that, too. But first of all, what distinguishes them?

So a few things, if you look at scale, we are the largest. We're about 35, 40% larger than Hilton from a room-count perspective, Hyatt is meaningfully smaller than both of us. The next would be mix. So Hilton is much, much higher percentage franchised. We have a much larger managed portfolio than Hilton. Hyatt is actually even higher percentage managed than we are but on a much smaller footprint. Both Hilton and Marriott, Hilton just celebrated their 100th anniversary. We're celebrating our 100th anniversary in 2027. So long-tenured companies, really strong cultures of service. I am certainly not an objective respondent to those questions. I would tell you that what really distinguishes us from our peers is the strength of our culture. The company was founded 98 years ago by J.W., Sr., and his wife, Alice, Marriott. And they founded the company on five core values that have guided the company really effectively over the long tenure. And then on your stock market question, you know, the market determines valuation. The market determines multiples. We have only so much control over that. You know, my guess is a high-franchise model or high-percentage franchise is more predictable. And the Street likes predictability of earning streams. If you have a higher percentage managed, you earn fees in two categories. You earn base management fees on gross revenue, and then you earn incentive management fees on profitability. Those incentive management fees are viewed by the investment community as more variable because they are tied to profitability. They're also tremendously lucrative when you're in an up market. But I think the Street looks and rewards more predictability in the earning stream.

And I should point out that your stock is outperforming the market over all those various time periods as well. You took over the company in a very difficult time period. First of all, Arne Sorenson passed away from cancer in 2021, and then you had the pandemic. What was that like, Tony?

Yeah, I was talking to somebody about this a little earlier today. It was, you know, on a personal level, extraordinarily emotional. Arne was a dear friend to many of us. He was a generational leader in the industry, a mentor to many, many Marriott leaders. We knew he had a very difficult diagnosis, but I think we all had some combination of hope and confidence that if was gonna beat it, it would be him. And so it was devastating emotionally. The fact that that happened against the backdrop of what Bill Marriott has characterized as the most significant challenge the company's ever faced, in the pandemic. And remember, Mr. Marriott was chairman and CEO for 40 years. So he steered the company through recessions, regional and global conflicts, the impact of 9/11 on travel, the Great Recession. And I don't think there was hyperbole in his comment that the pandemic was the most significant challenge that we ever faced, and so, you know, I suppose as I wrapped my head around the challenge ahead, I took great comfort in the fact that I was inheriting a long-tenured, battle-tested leadership team that had been involved in steering the company through many of these crises. And as is often the case, I leaned heavily on the wisdom of Bill Marriott, who, when he called me that Sunday evening to tell me that I had been appointed, he said, "I know how heavy everyone's heart is." He said, "I wish I could press a button, get the world to stop spinning for a little while so we could properly grieve our friend." He said, "And you're gonna have to figure out a way to grieve but to compartmentalize your grief, because tomorrow morning, hundreds of thousands of Marriott associates are gonna wake up, pin on their name badges proudly, and expect you to lead them out of the biggest crisis the company has ever faced." And so, as he often does, he takes extraordinarily complex situations and synthesizes them down to their core. And it was such a gift for me because it allowed me to narrow my focus and not be terrified of the task ahead.

And so what is your strategy going forward then?

Yeah, you know, in some ways, it's a relatively simple, straightforward strategy. We wanna have the best brands and experiences of anybody in our space. We wanna make sure we are everywhere that our guests wanna grow, travel, and we wanna have the strongest and most immersive loyalty platform. These loyalty platforms in lodging were created ostensibly in a very transactional way. You stay with us, you earn points for that stay, and eventually you redeem those points for a future stay. Certainly, for Marriott, our aspiration is to see that relationship with our nearly quarter of a billion members to go from that functional and transactional relationship to a much stronger emotional relationship. And that involves adding other experiences like Marriott Homes & Villas, The Ritz-Carlton Yacht Collection, our new Outdoor Collection, but also things like Marriott Moments, which are opportunities to leverage your membership for once-in-a-lifetime experiences.

Quick follow up to that, has the Airbnb trend peaked or seen its day or what do you think about that?

Yeah, that's probably a better question for my friend Brian Chesky. But listen, I think there is a profile of guests that love what Airbnb offers. What we found and some of the research that ultimately led to us launching Marriott Homes & Villas was not about trying to go head-to-head with Airbnb. It was about that overarching objective I described of keeping all of our guests within the Marriott ecosystem. And what we heard from our guests, for very specific types of trip purposes, so think about a big group of friends going on a golf trip, or think about a family reunion, that a multi-bedroom home with a kitchen and laundry facilities and common rooms, maybe a backyard with a pool, that that best fit their needs for those very specific trip purposes. And to the extent they couldn't find that within the Bonvoy ecosystem, Brian would be waiting there with, you know, open arms to welcome them to Airbnb. What we hear from our guests, they like the consistency they find in our portfolio. They like the service that's offered within our portfolio. They love the loyalty platform. And we think those are the attributes of a stay with Marriott that give us an advantage.

And final question, Tony, I saw that you went to Cornell School-

I did.

of Hospitality, Hotel Management, so have you ever thought about what it is inside you that made you pick that pretty early on in your life and made you best suited to be a hotel guy?

Yeah, it's a good question. My family is Italian. I've had the good fortune to spend lots of time in Italy from a young age. And sometimes I wonder, every time I come back from Italy, I probably torture the team a little bit because I say we've got to do a better job, particularly here in the US, of celebrating and recognizing the dignity in those that serve or choose careers in the service of others. And so if you have the good fortune to go to places like Italy, you'll go to a restaurant, and the waiter there has been there 40 years. It's not a temporary job while he or she look for a, quote, real job. You know, they have made a conscious decision. I get tremendous satisfaction from serving others. And there is a tremendous dignity and nobility in those sorts of careers. And I think maybe I was exposed to it for so long that I gravitated towards something in the service sector.

And you stuck with it.

I stuck with it.

Tony Capuano, CEO of Marriott, thank you so much for joining us.

My absolute pleasure, thanks for having me.

This is "At Barron's." I'm Andy Serwer. We'll catch you next time.

How Marriott's CEO Was Appointed During Significant Challenges

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