The 4,154th Marriott hotel just opened in the Caribbean. On the surface it seems like a standard-issue Marriott—a modern concrete structure with a giant “M” on top, 175 rooms, ample meeting space, a nice pool outside with palm trees and orange umbrellas, all nestled in the hills with the island’s mountains rising in the distance.
But this is not just any Marriott: It’s the Marriott (MAR) Port-au-Prince Hotel, in the hard-hit country of Haiti. And its very existence is a testimony to Marriott’s unusually strong commitment to its people.
Marriott employs many Haitian Americans at its South Florida locations. Bill Marriott, the company’s executive chairman and its CEO for 40 years until 2012, spends every January at the Fort Lauderdale Marriott Harbor Beach and has come to know these employees personally.
So when the earthquake that devastated the country hit in 2010, he wanted to do something to help. The company and Marriott personally provided disaster relief, but Kathleen Matthews, the company’s EVP and chief global communications and public affairs officer, pitched a bigger idea: Why not build a hotel in Haiti instead, which would continue to give back in the form of jobs, economic activity, and opportunity for local suppliers? “It’s not a conventional hotel market, but it’s a testament to our Marriott culture of opportunity that [Marriott] said, ‘Why not?’ ” says Matthews.
The result was a unique partnership with Digicel Group and the Clinton Foundation. So while at first glance the hotel is pure Marriott, inside are local touches like papier-mâché skulls hanging on the wall behind the check-in desk, and traditional Haitian tin art. Coffee is sourced from a local grower; produce comes from a farmer’s co-op in the nearby mountains; the fair-trade soaps in the rooms are supplied by a small business that employs Haitian women. On hand last month for the hotel’s soft opening were Bill Clinton, Sean Penn, Haiti president Michel Martelly, Digicel Group chairman Denis O’Brien, and other dignitaries—as well as many of the hotel’s 130 full-time staffers, who were beaming.
Marriott isn’t Google. Jobs in the hospitality industry, in Haiti or anywhere, are about as far from Silicon Valley chic as you can get. The company’s employees—more than 200,000 of them, and 361,000 if you include the franchised properties—are scattered around the globe, not concentrated on a cool campus. Rather than writing code, most of them spend their time catering to, and cleaning up after, guests. About 85% earn hourly wages; the largest category is housekeeper.
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But talk to Marriott employees—or associates, as they’re called—and you’ll hear the word “family” with unusual frequency. They rave about their workplace and their colleagues. And they stick around. The average tenure for a hotel general manager at Marriott is 25 years; industrywide it’s much lower. Some 10,600 people have been there more than 20 years. The company has been on our Best Companies to Work For list all 18 years of the list’s existence, something only 11 other companies can say.
Indeed, the next time you find yourself in a Marriott hotel, stop a housekeeper and ask what the guiding principle of the company is, and chances are she’ll say some version of “Take care of the associates, the associates will take care of the guests, and the guests will come back again and again.” That’s J.W. Marriott’s founding philosophy, and while not necessarily a wholly original concept today, it runs through the DNA of the company.
Arne Sorenson, the CEO of Marriott International, wasn’t in Haiti for the celebration that day. He was waiting in an airport lounge in Manassas, Va., stuck after a mechanical problem required his plane to return to the airport after takeoff (this writer was with him). Most CEOs might have been visibly angry or upset; our schedule had no room for error, and Clinton et al. were expecting him. But Sorenson calmly kept one eye on the ticking clock and, finally, when the crew delivered the news that an alternate plane wouldn’t be available in time to make the ceremony, he made an executive decision: We wouldn’t go.
The first CEO to helm the company outside the Marriott family, Sorenson, 56, assumed the role three years ago. He joined Marriott in 1996 from the law firm Latham & Watkins, where he was a partner. Marriott was his client, but it wasn’t until he joined that he realized the company had a unique culture—all the more so considering how diverse and decentralized it was. “Google is probably a great employer, but so much of why people love working there is they’re ‘winning,’ ” says Sorenson. “They do well, they make a lot of money, but they’re also winning and conquering all these problems,” he says. “I hope we’re ‘winning’ too, but that doesn’t necessarily animate what happens with a housekeeper at a hotel.”
Marriotts’s history is one of the legendary success stories of American business. In 1927, having passed through Washington, D.C., on his Mormon mission years before and been struck by the city’s muggy summers, a 27-year-old John Willard Marriott—with his wife, Alice—opened the first A&W franchise there, a nine-stool root beer stand on 14th Street. They soon added another location, Alice running the books and collecting the “sticky nickels”; after she grew worried that customers wouldn’t want cold root beer in the winter, they got permission from A&W to serve hot food and renamed their concept Hot Shoppes. In 1957, J.W. expanded into lodging, opening the Twin Bridges Marriott Motor Hotel.
The company would expand over the years to include Roy Rogers, Bob’s Big Boy, cruise lines, theme parks, and more. In 1972, J.W.’s son, J.W. Marriott Jr., known as Bill, took over as CEO, selling off some of the ancillary businesses and overseeing the company’s modern-day hotel expansion. Bill also made the key decision in 1992 to split the company in two, separating the hotel management operations from the ownership and real estate operations. Today Marriott owns only a few hotels; instead, almost all hotels are owned by real estate partners, and Marriott manages or franchises them (about 70% are franchised worldwide.
From the start, J.W. and Alice made an enormous, almost obsessive effort to take care of their employees (prompted in part by a lesson learned early on, when one of their three employees didn’t show up and they had to pull root beer and wash mugs all day). J.W. put a doctor on the payroll in the ’30s, then added a surgeon. He took kids in off the street and taught them to cook. He promoted from within, turning hourly workers into managers.
Multiply the attention those first three employees got from J.W. by about 100,000 and you get the modern-day Marriott workplace. What’s so great about it? The benefits and perks befit a stalwart of our list. At headquarters there’s a gym, dry cleaner, gift store, day care, preferred parking for hybrids, and an array of wellness initiatives. There’s flexible scheduling, an employee assistance line, and another one just for lower-wage workers, available in English and Spanish. Hourly workers get health care benefits if they work 30 hours a week. Then there are the travel deals: Every employee gets steep discounts on room rates for themselves and for family and friends (rates vary but can go as low as $17 a night). Employees with 25 years or more are eligible for the Quarter Century Club and can get free weekend hotel stays for life.
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At the hotels, every shift starts with a 15-minute “stand-up” meeting, a chance to check in, share updates, and get pumped for the work ahead. The meetings vary from hotel to hotel but are known to include stretching, music, and dancing (at the Newport Beach Marriott Hotel & Spa, salsa and disco are de rigueur).
One of the biggest events of the year is the companywide Awards of Excellence, an Oscar-style ceremony that recognizes employees from across the globe in four categories. Winners are chosen from a list of nominees by Bill Marriott and flown in for the event, attended by some 800 employees and the entire executive team. (Sorenson says it wasn’t until he attended his first ceremony “that I really understood that there was a depth to this culture that actually starts at the hotels.”)
Many associates will say the best perk is the opportunity to grow a career. Stories of top executives who started out pushing a housekeeping cart or on the bellstand are commonplace. Bob McCarthy, the company’s recently retired chief operating officer, started as a waiter. Ed Fuller, who ran international operations, started as a security guard. Bridget Bilinski, area vice president in the Western region, was a front desk manager trainee. Erika Alexander, vice president of the country’s Eastern region, started in entry-level sales.
“The biggest perk is the opportunity,” says Daniel Nadeau, general manager of the 1,175-room Marriott Marquis Washington, D.C., who started busing tables at the Newton, Mass., Marriott in high school, then worked his way up through sales, marketing, and operations before becoming a general manager. A culture of mentorship, he says, is what pulled him along. “People have helped me,” he says. “You have to have the environment that fosters that.”
Stephanie Linnartz, chief marketing and commercial officer and one of the highest-ranking women at the company, started in finance 17 years ago and says she’s benefited from both mentorship and this sense of opportunity. “I’ve been given a ton of opportunity to do different things,” she says.“There’s the idea that anyone can make it to the top here if you work really hard.”
Two tools help enable the Marriott culture. One follows the mandate to “hire friendly, train technical.” Wherever possible, the company assesses applicants for friendliness first. For hourly positions, the company developed an elaborate image-based screening for interpersonal skills, dependability, and disposition. “It tests personality,” says David Rodriguez, EVP and chief human resource officer. The tests “are not foolproof,” he says, and a manager still makes final hiring decisions—but scores correlate strongly with performance. “We tell general managers, ‘If you hire more of the top-scoring people, you will see less turnover.’ ”
The second is an on-the-ground network of business councils—76 local and regional teams of general managers worldwide who meet regularly to compare notes and serve as a conduit to Bethesda, where they report to Debbie Marriott Harrison, global officer for culture and business councils (and Bill Marriott’s daughter). The councils “are one of the best tools I have,” she says.
Harrison previously ran government relations and stepped into this role a year ago—it was previously held by her late brother Stephen, who died in 2013—but she knows the culture like the back of her hand: The company’s first hotel opened three months before she was born; growing up, Sundays were spent visiting the Hot Shoppes kitchens. She’d occasionally accompany her father to headquarters just before Christmas, where they’d stand at the front of the building and shake the hands of all employees. “That really left an impression on me,” she says.
The presence of the family, and in particular Bill Marriott, still governs the company. Multiple people describe Mr. Marriott—no one calls him Bill—as a “rock star” and talk about wanting to do him proud. Robert Levering, co-founder of Great Place to Work, recalls visiting an all-employee event years ago. “It was just palpable how much that guy was loved,” he says. “It’s really very unusual.”
During the post-9/11 recession, when many employees saw their hours cut and risked losing their health insurance, Bill Marriott waived the 30-hour-per-week requirement. “When you’re in a tough situation like that, if you put your people first, they’ll never forget it,” he says.
Fostering that kind of workplace isn’t entirely altruistic; in Marriott’s case it’s essential to the business’s success. “Think about the advantage of a place where talent wants to stay 25 years,” says Rodriguez. Bill Marriott says a happy workforce is a cost-saving strategy: “Your turnover’s lower,” he says. “You don’t have as many people you have to train every year, break in every year, you don’t have as many mistakes. A seasoned workforce does a better job—and they cost you less money.”
For his part, Sorenson sees the culture as important in its own right but critical to the company’s overall strategy. “It’s not an end in itself,” he says. “It drives loyalty of our folks, which drives better service, which drives customer preference, which drives higher retention, which reduces costs. There are all
sorts of benefits to that.”
Internal Marriott data show that properties that score higher in engagement tend to have better financial results. In hotels where employee engagement is higher, surveys show that customers who experienced a problem with their stay were much more satisfied with the resolution.
Led by Sorenson, Marriott is in the midst of its biggest transformation since the spinoff of its real estate business. Last year’s deals for 100,000 new rooms at 650 hotels was a record for Marriott and the industry. Much of the growth is global: Marriott operates in 79 countries and is likely to surpass 100 in the next few years.
And it’s reinventing itself from the inside out to become more relevant to the next generation of travelers. “They’re it,” says Sorenson.
The company has added three new brands: Moxy Hotels, for young budget-conscious travelers; AC Hotels by Marriott, a sophisticated city-based chain launched with Spain’s AC Hotels; and one of the biggest bets in recent years, the creation of the Edition brand in partnership with Ian Schrager. The first Edition opened in London in September 2013, followed by one in Miami last fall; a third is expected to open in New York this spring.
The company has also retooled its product to meet the very different demands of this generation, starting with the room itself: Millennials don’t use drawers very often; they like their closets without doors; and they hardly ever use the desk and chair—they prefer to work on their laptop from the bed while watching TV. So new rooms at these properties have fewer drawers, big comfortable beds, and bigger TVs. They’re also smaller—at Moxy, 180 square feet—but the public spaces are bigger and more social, with lots of places to lounge and drink specialty cocktails. Room service is seen as stodgy and formal, so the company is rolling out a program called Dining Your Way, where guests can order online or at the hotel bar, and takeout is delivered to their room.
Many of these insights came from an internal focus group called nextM, a collection of some 200 or so millennial-minded associates who serve as an in-house laboratory. They consulted on room redesign, named the happy hour at the Residence Inn “The Mix,” and recommended that the company tweak its rewards program to deliver more immediate gratification. (“We don’t want to stay 20 times before we get something,” says Nicole Taylor, a senior manager of digital marketing for the lifestyle brands and one of the group’s leaders.)
Sorenson’s transformation seems to be working. Last month the company reported record 2014 revenue of $13.8 billion; net income was up 20% to $753 million, also a record. Analysts expect double-digit growth for both this year. At presstime the stock price had just hit a record high of $85.
Sorenson says part of this is the economic recovery. “I think it would be unfair to claim that every bit of that credit should be attributed to our work,” he says. And he deflects it from himself: “It’s not like I’m doing any of this alone,” he says. “The team is great, and Mr. Marriott’s been a great partner.”
Of Sorenson, Marriott says he knew he was the right choice. “I felt very comfortable with him,” he says. “He’s a hard worker. He’s extremely bright. But the thing that I almost like the best about him is that he leaves his ego at the door.”
That appears to be an understatement. Marriott was, and still is, Mr. Marriott; Arne goes by Arne to all. He’s a father of four who drives a Ford Escape. (Leaving the airport after our aborted trip to Haiti, he hauled my bags into the back of his SUV like a dad on a family vacation.) During a visit to Fortune’s offices, Sorenson turned up solo, without handlers. He has no interest in attaining the level of fame that Bill Marriott has. “I don’t have his celebrity, and I don’t want it,” he says.
Any at Marriott will tell you that the global growth poses the biggest threat to the culture in its history. Sorenson disagrees. “I think [preserving the culture] is something that’s important for us to do, but I think we are doing it, and I think we will continue to do it.” (Besides, he points out, it’s been a very long time since Marriott has been anything resembling “small.”)
What else keeps him up at night? “We are in a very competitive industry,” he says. “We need to win over our real estate partners, who are also our customers—and that is about driving better results than our competitors do.”
Working in his favor is a robust outlook for the travel industry. Sorenson likes to cite World Tourism Organization statistics: In 2014, there were 1.1 billion international arrivals worldwide, a figure some say could hit 2 billion in the next decade. “That’s a lot of bodies moving around,” he says. Bodies that need beds—and friendly, happy Marriott International employees to welcome them.
This story is from the March 15, 2015 issue of Fortune.