Business Smarts - Courtyard by Marriott Turns 30
The brand that introduced the upper moderate tier aims even higher.
Tuesday, October 15, 2013
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Now in year two of its multi-year deal as the official hotel sponsor of the NFL, Courtyard by Marriott can look forward to significant attention when Super Bowl 48 hits New York City and New Jersey next February. Today, however, Marriott International’s second most profitable flag is raising its own victory banner, as it celebrates 30 years as the pioneer of the upper moderate tier segment of the hotel industry.
Launched in 1983, the break-through brand introduced a unique lodging product for the business traveler, based on the concept of consistently high-quality accommodations and services in a comfortable atmosphere at moderate prices. Courtyard has since gone global with nearly 1,000 properties in 38 countries, making it Marriott International’s largest brand by number of hotels and the 12th largest hotel brand in the world. After opening its first international property in London in 1989, other milestones include reaching 10,000 rooms outside of the U.S. with the 2005 opening of a 218-room hotel in Moscow, its first in Russia, and in 2009, opening its 800th property, in Shanghai.
Now flying its flag in far-flung locales such as Bali, Bangkok, Mumbai, Riyadh and more, Courtyard is celebrating its anniversary with five major guest and customer events in Hong Kong, Doha, Berlin, Mexico City and Atlanta, home of the first Courtyard.
“Launching the Courtyard brand was our biggest risk and also our biggest reward,” said Bill Marriott, Marriott International’s Executive Chairman and Chairman of the Board in a release honoring the occasion. “I’m so proud of what Courtyard has become but even more proud of where it is taking our industry.”
Risky it may have been, but with no small measure of calculation, for few hotel brands does its homework like Marriott, which devoted more than two years to in-depth market research and customer insight before launching Courtyard. What does the future hold for the next stage of Courtyard’s evolution? As the brand blows out 30 candles today, the strategy remains the same: flexible, adaptable repositioning, intelligently attuned to changing customer preferences and global market conditions.
“Courtyard pioneered the select-service segment 30 years ago when it met the demand for good upper moderate hotels in suburban markets, where none existed at the time,” says Janis Milham, SVP, Marriott Modern Essentials and Extended Stay Brands, who has been with Marriott since 1988 in a series of escalating roles. “With only higher end hotels in urban markets and roadside motels and nothing in between, business travelers told us they wanted a hotel that was a good value that catered to their specific needs. For example, we learned that they did not need everything a full-service hotel provided, such as room service, bellmen, valet parking and spas.”
In addition to providing business travelers with a new option in the market, Courtyard’s introduction of the upper moderate tier provided great growth for the hotel industry overall.
“One can only build so many full service hotels due to demand and cost,” Milham says. “Courtyard created a tier that provides owners with an investment option that offered great returns, as profit margins in the upper moderate tier, estimated between 35 and 45 percent on average, are much better than in full service.” The tier also benefits the international traveling public, adds Milham. “In countries like China for example, a brand like Courtyard provides the country’s emerging middle class with an option they can afford and that is more approachable.”
Confidence is the operative word in Courtyard’s continuing global growth strategy as the entrepreneurial brand, targeting 1,000 hotels internationally in early 2015, expect to debut properties in Brazil next year and then in Africa the year after, along with secondary cities in China.
“Representing Marriott’s largest pipeline, we are looking to double the Courtyard portfolio in 15 years,” says Milham. “The pipeline is larger unit-wise in the U.S. than abroad, but as a percentage of growth, the pipeline is growing faster internationally, at almost 15 percent, than domestically, at five percent.”
In terms of evolving the brand, Courtyard has kept its finger square on the pulse of today’s business traveler. “Thirty years ago, travelers checked in, went to their rooms and worked,” says Milham. “Today, with technological advances, people get work done along the way and are now looking for lobbies to be a place to socialize and relax while they work. Our Refreshing Business lobby concept is one example of meeting a changed need.” Another repositioning example was in response to changing food and beverage trends. “When the brand started, we had a three meal-a-day restaurant,” continues Milham. “Today, our Bistro offers breakfast and dinner, but highlights more casual and healthy options.”
These are but two of the lessons learned on growing Courtyard into the industry leader for this tier. As the brand says of its pioneering offering, it has created “exactly the room you need.”
There is much more ahead as Courtyard embarks on its next 30 years, such as mobile check-in, mobile devices that interact with hotel staff, new room choices, smart design and residential style décor. “You have to continually evolve in order to stay current and relevant to guest needs,” Milham says. “The customer has to be at the center of everything you do, which means listening to them and growing the business based on their needs and desires--not yours. You also have to remember that your people and associates are your most important asset, for as a franchise operation, you must have good partners to help you grow the business.”