Smart Growth? Focus and Diversification

Every successful business large or small, new or old, product-driven or cloud-based, consistently faces a choice between a continued focus on its original mission and diversification into new areas.

My company is an interesting mixture of focus and diversification. Since our founding in Washington, D.C., 88 years ago, we have been focused on service. But the business we compete in today – hotels – was not our first business. We started as a restaurant company. The founders’ son, Bill Marriott, pressed his parents to expand into the hotel business roughly 60 years ago. We have intensified our focus on that business ever since, ultimately exiting not only the restaurant business, but other businesses that we had entered, like amusement parks and senior living communities.

And, yet, even as we have intensified our focus on the hotel business in recent years, we are diversifying in that business as fast as we possibly can. We are diversifying geographically and by adding new brands. At the same time, we strive to reinforce our company’s core values with every new hotel and every new hire.

The first tool that allows us to be successful even as we expand our portfolio is a maniacal focus on our original mission

In the last few years, we have started from scratch or acquired many new brands: Moxy, our new affordable lifestyle brand; EDITION, our Ian Schrager-designed luxury lifestyle brand; AC Hotels, a brand with a European design flavor; and, just this week, the top full-service hotel brand across Canada, Delta (The brand's soaring Toronto property pictured to the left.) These brands have joined a brand portfolio that includes iconic brands like Marriott itself, The Ritz-Carlton, which we have owned since the 1990’s, and Autograph, a collection of full-service hotels with strong individual personalities.

I am often asked why we have followed this path. Doesn’t it get confusing for guests? Doesn’t it dilute what “Marriott” means? Can’t you have too many brands?

The answer for us has been simple: No.

The first tool that allows us to be successful even as we expand our portfolio is a maniacal focus on our original mission of providing great service and a genuine welcome. That is our cultural DNA. By respecting that common core, we can diversify with much less risk.

But, why diversify in the first place? Tom Otley of bbt magazine was the latest reporter to pose the question: “Why keep growing?” Here’s what I told him

When you look at the guest it starts with the brands. …

For the individual traveler, they say ‘I can look quickly and see whether Marriott in its portfolio of its brands has something there that I’m interested in.’ Or, ‘I can see if there’s a Ritz-Carlton because I know that, or a Courtyard because I know that, and I have a sense of the pricing’

I would add: The key for any successful business is to understand its customers. I use the plural form of that word deliberately. Customers are not monolithic.

For us, some guests may be on business travel, some might be on a rare getaway, others a family vacation. A company has to know that their customers are not only different people, but also have different needs at different times.

Otley asked me if it was possible that we may get to a point where we have too many brands. “In theory it’s possible and we debate it internally,” I told him. “But there’s no sign with our customers that we have too many brands. … If anything, our customers are telling us to get bigger, have more brands, so they have more opportunities.” We’re not sitting still.

Related Links:
Marriott International Becomes Largest Full-Service Hotelier in Canada
‘But it Doesn’t Look Like a Marriott’ (nytimes.com)