What Eisenhower Taught Bill Marriott About Leadership
Watching a room full of 400 hotel developers, financiers and CEOs sit in awed silence for 30 minutes is something to witness, and we did just that yesterday when Marriott International chairman J.W. Marriott Jr. was interviewed by his daughter, Debbie Marriott Harrison, at Bisnow’s annual Lodging Investment and Innovation Series at the Renaissance in downtown (a Marriott property, naturally).
The 83-year-old hotel icon discussed a broad range of topics, like leadership and Millennials, but he started out with the story of his company, which his father founded as a root beer shop in DC back in 1927. As the company grew in size and prestige, Bill got a major lesson in leadership from President Dwight Eisenhower when Ike visited the Marriott family farm in Virginia. Gathered around a fire on a cold December evening, the family asked the president what he wanted to do. The president turned around and asked a young Bill Marriott what he would like to do. “I thought long and hard about that” moment, Bill told the enraptured crowd. Asking questions of others is “what made him such a successful leader, that’s how he dealt with egomaniacs like Patton and Roosevelt and Churchill and Stalin.” Someone from the crowd asked what he told the president. Without missing a beat, Bill responded: “Stay inside. It’s too damn cold.”
Bill’s sense of humor and warm demeanor were on full display throughout his talk, especially coming through when he took questions from the crowd. One audience member asked what is on everyone’s mind in the DC office market: What’s the status of the search for Marriott’s next corporate HQ? (The company plans to move from its suburban campus in Bethesda by 2022.) “Damned if I know,” Bill answered. “Next question.”
Bill says the keys to leadership are listening to those around you and humility. A leader still needs the confidence to make a decision, “but you have to be humble when you make them.” He said it’s always been paramount in his company—back to when his father owned it as a chain of Hot Shoppes—to treat people well and give them opportunities for advancement. “That encouraged him to grow his business as much as anything else,” Bill said. Debbie chimed in with a point about culture—one of the hot topics of the summit—pointing out that GMs stay with Marriott an average of 24 years, while the industry average is four to six. “People think culture is the fluffy stuff,” she says. “We know intuitively that it is what gives us a competitive advantage.”
Bill said his biggest regret is, after opening up Marriott’s first major hotel in downtown Atlanta in 1964, passing on an opportunity to buy an adjacent property. Instead, Hyatt bought it for $16M and it became a signature hotel for the chain that would become one of Marriott’s chief competitors. “I really do believe that if we had taken that hotel and developed it then there wouldn’t be a Hyatt chain,” he said, “and that’s too bad.”
Bill also touched on Millennials, which he called “an enigma.” Marriott is developing three brands—Moxy, AC Hotels and Edition—to cater to the younger demographic that is set to dominate the lodging business. Millennials don’t need closets or desks in their rooms, he said. “They check into their room, drop their stuff off and go back down to the lobby,” he says. “That’s a real challenging opportunity for us.” When someone asked him what Marriott is doing to prepare for the generation after Millennials, he chuckled and said “we’re trying to get through the current Millennials, and that’s not easy, OK? Next question.”
While Bill and Debbie were the highlight of the day, the 400 or so attendees were treated to a Sheila Johnson keynote and state of the hotel industry, covered yesterday. In the afternoon, the crowd was given an update on EB-5 financing from a panel of Polsinelli’s Dawn Lurie, Wright Johnson’s Aaron Goforth (he’s the one with the man-bun), Sonnenblick Development CEO Bob Sonnenblick, EB5 Capital founder Angel Brunner, who moderated in the style of Anderson Cooper, Homeier & Law's Clem Turner, and NES Financial’s Reid Thomas. EB-5 is a vehicle for immigrants to invest in real estate. It’s a convoluted and complicated process, but it can be worth it. “The bottom line is always money,” Bob says. “The EB-5 mezzanine deal we just finished was at 6%. If you’re able to borrow mezz money at 6 instead of 12% to 13%, it’s going to save you millions of dollars over your transaction.”
Before that, Berkadia’s Andrew Coleman, Walker & Dunlop’s Chris Hew, Urgo Hotel’s Kevin Urgo, Arent Fox's Kim Wachen, who moderated, JLL’s Art Adler and Noble Investment Group’s Adi Bhoopathy broke down the debt and equity markets for hospitality. Art said that 2016 will be the seventh straight year of RevPAR growth for the hospitality industry, and this cycle could be one of the longest in decades. “It’s been slower and steadier growth in revenues,” he says, “which is why we continue to see a tremendous amount of capital flow into lodging.” Because there’s so much money available and so much time left in the cycle, Art says it’s a good time to buy and sell, hard as that is to believe. “Just because all of the money is there doesn’t mean you should take it,” Andy warned. “It’s a good time to choose your partner well.” We’ll have even more coverage from BLIS—including the interview with Choice Hotels CEO Steve Joyce—later in the week.