As a full-time participant in the CIIE, Marriott International Group has been present at this international event for seven consecutive years. During the CIIE, Mao Yibing, a member of Marriott International's Global Executive Committee and President of Greater China, discussed in depth Marriott's comprehensive plans for the Chinese market after its upgrade in an interview with 21st Century Business Herald reporters.
Despite Marriott's latest Q3 2024 performance report showing a net profit of approximately $584 million, a year-on-year decrease of 22.34%, a 7.9% year-on-year decline in RevPAR in Greater China, and a slight decrease in occupancy rate, Mao Yibing remains confident in the Chinese market and candidly acknowledges the challenges Marriott faces in the current market environment.
Mao Yibing stated that Marriott has been operating in the Chinese market for 50 years, starting with the opening of its first Sheraton hotel in Hong Kong in 1974 and now owning over 570 hotels. Marriott has been deeply involved in the Chinese market. However, facing the current market environment, Marriott also faces many challenges. On the one hand, there is downward pressure on the Chinese economy in the short term, which has impacted the hotel industry, resulting in a decrease in average consumption per order and increasingly fierce market competition. On the other hand, the rise of local brands and their rapid development through market opportunities have put considerable pressure on international brands such as Marriott.
But Marriott has not been discouraged by this. Mao Yibing said that Marriott will continue to adhere to its localization strategy, deepen cooperation with Chinese brand partners, promote sustainable development construction, and continuously improve member experience. At the same time, Marriott will also focus on the lower tier market and expand into more hotels in third - and fourth tier cities through franchising and other means to meet the needs of different consumers.
In Mao Yibing's view, the Chinese market is still full of opportunities. With the acceleration of China's urbanization process and the continuous growth of consumers' enthusiasm for tourism, the development space of the hotel industry is still vast.
Chinese market "rising coffee"
21st century: Marriott has participated in the CIIE for the seventh consecutive year. As a full-time student, does it feel tired to participate every year? What is the biggest difference this year?
Mao Yibing: Actually, I don't feel tired. On the contrary, every time I attend the CIIE, I feel a sense of familiarity. We attach great importance to the CIIE, and every participation is a review of our development history in China, as well as a good opportunity to communicate with our partners and government leaders. This year is my third time participating in the CIIE, and I feel that each time brings different gains. This year's CIIE is particularly focused on fields such as life sciences, green and low-carbon, manufacturing technology, and digital technology. Although I haven't personally visited the exhibition hall yet, it is understood that this year's exhibition hall has a larger area and richer content. I am very much looking forward to visiting and also want to know how my peers are making efforts in these fields.
In addition, this year marks a milestone for Marriott's 50th anniversary of operation in China. We have over 570 hotels in China, so in the exhibition hall, we showcase Marriott's 50 year history in China through a combination of images and text, including the first Sheraton hotel opened in Hong Kong in 1974. At the same time, we also showcased the annual "Road to Give" charity project aimed at giving back to society and bringing positive impact to the communities we operate in. In addition, we also respond to low-carbon policies by utilizing big data through partnerships to track and reduce food waste.
In the 21st century, in order to better serve the Chinese market, what aspects of localization innovation and adjustment has Marriott carried out in response to its localization strategy? How do you evaluate the current effect?
Mao Yibing: Since last year, we have established Shanghai as the headquarters for the Greater China region and achieved localization in terms of organizational structure. Now, all strategic and operational core decisions have been placed in China.
In terms of specific measures, we mainly carry out localization from several aspects. Firstly, we collaborate with Chinese brand partners. This year, we signed a cooperation agreement with Dehu Group. Previously, we also collaborated with local big data company Alibaba to launch a series of innovative products such as convertible housing vouchers. At the same time, we also cooperate with brands such as Air China, China Eastern Airlines, China Southern Airlines, and CITIC.
We have also made many innovations in reaching our guests. For example, we have launched WeChat mini program points redemption and other functions, making it more convenient for guests to book and order meals online. In addition, we also collaborate with Shanghai Rolex Masters, Mercedes AMG Petronas F1 team, and others to expand our loyal member community.
In terms of talent development, we have also taken many localization measures. At present, Marriott has over 90000 employees in the China region, of which 98% of employees and leadership personnel are local, and 81% of general managers are also local. We also cooperate with domestic universities such as Nankai University and Chengdu Vocational and Technical College to jointly cultivate talents in the hotel industry and improve the professional competence of practitioners.
21st century: In the past 7 years, the number of Marriott hotels in China has doubled. After you take over as the President of Marriott Greater China, what are Marriott's next development plans? What are Marriott's development priorities and strategic initiatives?
Mao Yibing: Our development layout in China has always adhered to two basic points: closely monitoring market evolution and changes in consumer demand. Our strategy is to bring suitable brands wherever consumers go.
Overall, our development direction is mainly divided into two aspects. Firstly, for the development of luxury and high-end brands, we will continue to lay out in key cities, including Beijing, Shanghai, Guangzhou, Shenzhen, and some popular tourist cities. As of the third quarter of this year, our signing volume for luxury brands has increased by 50% compared to last year. From the perspective of the high-end market, although we have already established a good layout in first and second tier cities, we believe that this market still has potential, so we will deeply cultivate these popular markets and continuously expand in some emerging destinations.
Secondly, from the perspective of localization, Marriott signed a cooperation agreement with Doyle Group, announcing that they will jointly promote the development of Marriott International's Best Choice hotel brand in Chinese Mainland. This is the main development direction of our group in the aspect of selection services, because this is the demand of the market, and the development speed in this aspect is the fastest. As of the third quarter, we have signed more than 90 projects, doubling our growth compared to the same period last year.
21st century: Marriott Group has upgraded the Greater China region and made adjustments to its organizational structure, indicating Marriott Group's emphasis on the Chinese market. Why?
Mao Yibing: Marriott Group is very optimistic about the long-term prospects of the Chinese market, and I think there are several reasons for this.
Firstly, based on the data, the International Tourism Organization predicts that by 2033, the Chinese tourism industry will contribute 4 trillion yuan to China's GDP, accounting for approximately 14% of China's GDP. According to data from the National Bureau of Statistics, the service industry in China accounted for about 50% of GDP in the third quarter, and there is still a lot of room for development compared to mature economies.
Secondly, China's urbanization is still ongoing, and with the incubation of cities, there is always a demand for hotels. Especially from the perspective of guests, their enthusiasm for tourism is only increasing and not decreasing. October 1st Golden Week is a good example. We have several cities, including Chongqing, Xi'an, etc., that are almost fully booked during peak hours. Although the economic downturn has had some impact on the hotel industry in the short term, I believe it will not continue. At present, the country has introduced a series of policies, although it may take some time to see their promoting effect on economic development, overall we are very optimistic about them.
21st century: Currently, the overall performance of hotel groups in China has declined. Has the era of foreign investment making quick money passed?
Mao Yibing: I think this is mainly due to the supply-demand relationship. At present, the Chinese market is a stock market, with too many new hotels opened in the past, especially high-end hotels. The number of newly opened hotels has decreased in the past two years, and as the economy continues to develop, hotel occupancy prices will always increase. In addition, local brands have also developed rapidly during the pandemic. We are very pleased to see this kind of competition, because only competition is more beneficial to consumers. We often learn from the strengths of our competitors, which also has a promoting effect on us.
Pay attention to mid to low end brands and lower tier markets
21st century: We have observed that many brands with the fastest growth in China are economy hotels and mid-range hotels, but Marriott's layout in China is mostly high-end. Does it completely ignore the layout of the mid to low end market?
Mao Yibing: We currently do not have this plan, which is based on our judgment of the market, considering the current market maturity and overall economic development level, whether we can support the landing of international brands in the local area.
In addition, we will also look at activities that loyal members participate in, such as the Shanghai Rolex Masters, because loyal members are actually the center of the entire consumption strategy, and we will consider the trajectory of member travel to make the layout. From now on, the mid to low end is not our main development strategy. Of course, it may be adjusted in the future according to the member's activity trajectory.
21st century: In the past few years, we have found that the competition in the mid to low end market that Chinese brands focus on is very fierce. If Marriott really wants to enter the mid to low end market, how will it intervene? Should we choose to acquire Chinese brands or enter the market with Marriott's own brand?
Mao Yibing: Although we have not yet entered the mid to low end market in China, the North American market is the most mature market for our mid to low end market. In fact, we are both in the North American market. Firstly, we acquired a Mexican brand called "City Express by Marriott" to quickly expand our presence in North America. At the same time, we are also launching some of our own mid-range brands. Therefore, we need to consider the brand's recognition in this market, including whether it is suitable for market growth, and we will have to look at it later.
21st century: Just now you mentioned the sinking market. We noticed that 30% to 40% of newly opened hotels this year are concentrated in third - and fourth tier cities, and 80% of new hotels are located along high-speed rail lines. What are Marriott's specific plans for these markets? What are the new strategic deployments for the future?
Mao Yibing: We actually have several considerations. Firstly, along the high-speed rail line, with these high-speed rail infrastructure, guests can reach these destinations. Secondly, what is the level of economic development of the destination itself, and which brand can it support?
If we judge it as a mature destination, our strategy is to find some brands that are highly recognized by our customers, enter the market first, establish consumer trust, improve brand awareness, and then bring other brands to the destination.
The sinking market is crucial for us, and we will continue to accelerate market penetration through differentiation and diversification. Next, new projects will enter Fengze, Rizhao, Shaoxing and other places in Quanzhou.
More than half of the executives are female
21st century: How many members does Marriott Traveler have in China now, and what is the user profile of this part?
Mao Yibing: From a global perspective, we have reached 219 million members so far this year. In terms of user profiles, the majority are business travelers aged around 30 to 40, a large part of whom are young families and a small number are even younger members, including some campus students.
Membership is the top priority of our consumption strategy, mainly because it has high loyalty, consumes the most, stays the longest, and is the lowest cost of acquiring customers for us. Therefore, it is crucial for us.
21st century: What are the differences between Marriott and other global markets when building a membership system for the Chinese market?
Mao Yibing: From the current perspective, traveling for events, performances, music festivals, or art exhibitions is the biggest trend, which is also in line with the trend of international consumption.
In general, we are observing the entire consumption trajectory of our members, hoping to understand their interests and passions through various aspects of their travel, and then enhance their rights from different aspects, so that members feel that our points can be exchanged for what they love.
Of course, we mainly focus on four aspects to create member benefits: music, food, sports, and lifestyle. For example, in terms of food, we recently collaborated with director Chen Xiaoqing to produce a documentary called "Encounters of North and South, Ten Thousand Flavors". About 300 hotels participated in it, and the response from our members was also good.
In terms of sports, we have partnerships with Rolex Masters and F1 teams to create exclusive member experiences. In terms of music, in China, we have partnered with the Mercedes Benz Culture Center in Shanghai to invite members to immerse themselves in various music events in private rooms.
What is the change in the proportion of female employees at Marriott in the Chinese market in the 21st century? Are there any relevant development measures? How do you view career development opportunities for women in the hotel industry from a female perspective?
Mao Yibing: Putting people first is the core, creating equality, respect, opportunity, trust, and inclusiveness in the workplace. These are the talent systems that Marriott Group has always promoted. In fact, female leadership is not a new concept at Marriott, according to the founder of the group, J When Willard Marriott founded this company, his wife was involved in hotel management and became a very active board member. She actually set a good example for everyone early on and had a very positive impact on women's development. In the Greater China region, more than half of the executives are now women, and the proportion of women in global executives is also 47%. Half of our global management committees are also women.
The Marriott Women's Leadership Development Program has been continuously implemented for 25 years, empowering female employees. I have been with Marriott for 26 years and have been a witness and beneficiary of this project myself. In Greater China, the proportion of female general managers is 26%, far exceeding other regions.