Name: Marriott's CEO Explains the Starwood Acquisition and Facing Company Culture Challenges
Uploaded: 2017-05-25
Duration: 5 min 23 s
Description: Arne Sorenson discusses why the $13 billion Starwood deal made sense and how it impacted company culture.

Mr. Marriott mentioned earlier this great challenge of the Starwood acquisition. And almost instantly you're multiplying the number of hotels under your umbrella by something like 50 % and taking on many, many more employees. As well. I'd love to talk a little more about the culture challenges involved with that. First of all, if you don't mind briefly talking a little bit about the business rationale driving the decision. Why was it important for Marriott to make this move at this time? Yeah. Too much of it played out in the newspapers, of course, but in Early 2015, [ UNKNOWN ] which has long been one of our principle competitors, put itself out for itself. And so it obviously starts a process, which is more than just an abstraction. Often, you might say, should we buy x, y, or z? But x, y, or z may not be for sale. And they may Refuse to be for sale even if you think you want to buy them. Well here was a company that was for sale. We looked at it first, and we decided we weren't interested. We thought it was a lot of work and a little bit the flavor of Mister Marriott's comments We were performing extraordinarily well and this looked like a really big job and the economics didn't feel quite compelling enough and so we initially passed we then over the course of the summer of 2015 are engaged in conversations with a number of our tech partners the online travel agents, the [ INAUDIBLE ] price line I met with Google, I had time with Facebook, all of whom are deeply engaged in the travel space in one way or another, sometimes as middlemen who are selling our rooms and are trying to sell more of our rooms so they can collect the commission and the way those unfolded we thought You know what? If we build an even bigger loyalty program, Marriott Rewards and SPG, now about 100 million members, that is the way for us to have a stronger relationship directly with our customers. By offering them more choice we have the ability to say, well, why would you stay anywhere else? And Really drive sort of that connection. And so the strategic importance of the deal became stronger over the course of those months of thinking and analysis. The economics also got better because of the relative shift of the stock prices. And nobody else had really stepped up to Do the deal at terms that we're compelling. So there was a window for us in late 2015 which was really more lucky than smart in some respects but we decided we would jump at it. The other thing that Ms. Miranda has said at that time is companies like this come for sale only Every ten years or longer. If you don't jump at them, forever you'll look back and say should we have done it. So we jumped in. Now how do you maintain a culture in the midst of all that?.. Sure. We just completed 8 global general managers meetings. The first that we've done since closing the Starwood deal. And it was sort of a grueling. From Toronto to Mexico City, Dubai, London, Macau, a number of United States destinations ranging in size from about 200 to about 4000, which was the group in New Orleans. And by bringing people together, talking together about the strategy and the important issues for the company Building relationships. Letting people sort of touch it and feel the culture of the company and celebrating to some extent. There's nothing that builds culture like success and so when the team thinks you know what? We're accomplishing something. That, too, is something that gives them power and pride in their work. Did you feel that Starwood had a distinctive culture of its own prior to the acquisition that differed from Marriott in significant ways? I think the more you're at the hotel level, the more the culture is similar. Because hotel people understand that in order to succeed, they have really got to have a team. A general manager who doesn't know his or her people and treat them the way they deserve to be treated. Will not be successful for long. And so, no matter what the corporate culture is above that there's much more commonality there than dissimilarity. At corporate level I think the cultures were a bit different in some respects. Marriet has long been an operating culture. Which you see from somebody like Mr. Marriott and his parents. Who were deep into the details of what's happening in this hotel or this restaurant. So it's a real operating DNA. Starwood was much more a marketing than branding DNA. And so that actually can be quite complementary though. Because we're obviously needing to do both things. Sure. So trying to bring in the right talent and trying to make sure we embrace that piece as well. So do you feel that they're adding things to your cultural DNA that maybe Marriott. didn't have as much of before. They're absolutely adding expertise, and I'm hopeful we were already doing some things around innovation and branding, starting new brands and doing a number of things before we close the Starwood acquisition. But it brings us that much more in that space.

Marriott's CEO Explains the Starwood Acquisition and Facing Company Culture Challenges

Arne Sorenson discusses why the $13 billion Starwood deal made sense and how it impacted company culture.