apartments by marriott bonvoy
A New Innovation to Meet the Changing Needs of the Traveling Public
By Carole VanSickle Ellis
Almost 100 years ago, Marriott International began not as an international chain of hotel brands and bespoke service providers but, instead, as a small A&W root beer stand owned and operated in Washington, D.C., by founder J. Willard Marriott, Sr., and his wife, Alice.
Over time, that company grew to include the East Coast’s first drive-in restaurant, the world’s first in-flight catering service, and, in 1957, a monumental shift into the hotel business in Arlington, Virginia. Today, the company is poised for another strategic expansion — this time into the serviced-apartment concept in the United States and Canada. Serviced apartments are fully furnished apartments available for short- or long-term stays, depending on the preference of the service provider.
For Marriott, this shift is not really as monumental as it might first appear. The company has 26 years of experience with Marriott Executive Apartments operating in Asia, Europe, the Middle East, Africa, and Latin America. Apartments by Marriott Bonvoy is simply the next link in the chain.
“We are always peeking around the corner, looking for opportunities for our company to grow and serve the traveling public in new ways,” said Noah Silverman, Marriott International’s global development officer for the U.S. and Canada. Silverman explained that the company has been tracking the travel preferences of today’s “digital nomads,” remote employees and freelancers who are location-independent and use technology to perform their jobs from anywhere, as well as consumers who are increasingly combining business and leisure travel.
Since the advent of COVID-19 in early 2020, the concept of being able to work from anywhere has expanded into the mainstream, with entire families engaging in longer-term stays in intriguing locations.
“Customer preferences have evolved as the digital nomad has grown up, and workplace requirements have evolved to allow people to work from locations other than their office,” Silverman continued. “We have also seen a significant increase in leisure travel and extended families all traveling together. This new product will meet the needs of that growing population, one that is looking for more space and the ability to park themselves for longer periods in a larger, residential-style apartment versus a traditional hotel room.”
Paul Loehr, the company’s regional vice president of full service brands in the U.S. West Region, called Apartments by Marriott Bonvoy a “unique opportunity” not just for travelers, but also for real estate investors and developers to partner with Marriott in a new way.
“We are already fielding many phone calls from developers and potential partners who have specific projects in mind that they feel are an ideal fit for the concept,” Loehr said. He added, “There has been incredible interest in the offering from parties ranging from existing hotel partners who increasingly see value in the serviced apartment space to traditional apartment developers.”
Lisa Sexton, regional vice president of full service brands for the U.S. East Region, called the response to the initial announcement “incredible.” She explained, “It is not limited to one type of market or catering to one type of traveler over another.”
All three agreed that the prevailing drivers of interest in this new offering are rooted in the Marriott brand itself and the potential for Apartments by Marriott Bonvoy operators to customize the projects to fit the needs of the development and the local market.
“As a brand partner, we are able to deliver higher-rate premiums at lower cost than when developers do things on their own,” Silverman explained. “The product is appealing because of the reputational endorsement that comes with being part of the Marriott Bonvoy portfolio of brands, the significant advantage of our large-scale distribution platform, and our 170-million-plus members loyalty program.”
Loehr emphasized that Marriott prioritizes developer and investor returns in a variety of ways early in the development process as well as once the doors of a new facility open.
“We review each application carefully to make sure that the location and type of product will work together to optimize the partners’ chances of financial success,” he said. This means being willing to ask tough questions early on. “We ask about rates, revenues, and costs to build,” Loehr explained, noting that specific urban and secondary markets are well-suited for Apartments by Marriott Bonvoy.
Expanding the Pool of Owners and Franchisees
When Marriott first began considering the idea of premium-tier serviced apartments in the United States and Canada, the company was primarily considering how to meet a new and growing customer preference while expanding its pool of owners and franchisees. Silverman explained that they expected to attract primarily hotel owners seeking to diversify their existing holdings, and that expectation has proved valid. However, he continued, there has been substantial interest from the multifamily development community as well, even though that group of owners/investors previously focused almost exclusively on traditional, long-term rentals.
“An increasing number of the investors expressing interest are hotel developers who are thinking about adding a few floors to a planned building or developing an entire building for short-term rentals,” Silverman said. “If you are one of these developers or a multifamily developer looking to move into this space, Apartments by Marriott Bonvoy should be considered. Our system can reliably deliver customers in a cost-effective way, and we think savvy investors are seeing that and responding to it.”
Silverman continued, “Previously, in the United States and Canada, our extended stay brand offerings topped out in the upscale quality tier with Residence Inn by Marriott and Element by Westin. Those are unbelievably powerful and successful hotel brands, but we believe there is a higher-end consumer willing to pay more for a truly differentiated, premium and luxury product, and that is what Apartments by Marriott Bonvoy will be.”
Loehr noted that many parties expressing interest in the offering have specific developments already underway that could incorporate the Apartments by Marriott Bonvoy concept.
“The developer will create a unique brand for the project and deliver an attractive design that incorporates their brand”, Loehr said. “They are sending us plans to review and our comments are focused on product quality, ensuring that the project will achieve a premium or luxury tier.”
“There are many aspects of Apartments by Marriott Bonvoy that are attractive, but one constant is flexibility to drive short-term revenue and hedge risk,” Sexton continued. “Our lean operating model enables franchise partners to minimize costs and maximize revenue through rates while delivering a quality guest experience to foster repeat business.”
Built Strong Over Decades to Find & Deliver Customers
Marriott’s loyalty program, Marriott Bonvoy, is one of the largest hotel rewards programs in the world. The program spans nearly all of the company’s more than 30 brands ranging in price points from moderate to luxury. Real estate investors and developers often cite the loyalty program as a key component in their decision to partner with Marriott, and Silverman believes it will play a crucial role in developers’ decisions to convert part or all of new projects to the Apartments by Marriott Bonvoy model.
“The loyalty program plays a key role in attracting new and repeat real estate investors for the company because it delivers a ready-made, loyal, high-value customer base within the company’s vast sales engine,” Silverman explained.
Marriott Bonvoy offers members an increasing array of benefits the more nights they stay with Marriott, enabling them to achieve elite status levels and enhanced program benefits. He continued, “Combining those incentives with excellent stay experiences at a wide range of products has established a customer base that seeks out Marriott brands first any time travel is in the offing.”
Apartments by Marriott Bonvoy meets a “previously unfilled need” in the U.S. and Canada for these already-loyal customers who prefer to stay in Marriott venues whenever possible, creating a built-in demand for the new product, Silverman said. The expansion into a new product type and new locations also helps attract new customers to the Marriott Bonvoy platform.
“Many customers want to experience the locality in which they are staying in an authentic way, differentiated from our existing hotel products and brands,” Silverman said. “By taking a soft-brand approach to Apartments by Marriott Bonvoy, we enable our owners and franchisees to deliver high-quality units and create their own brand within our company standards of quality, while fully benefiting from Marriott’s demonstrated ability to deliver customers.”
As an evolution of the existing Marriott Executive Apartments brand, Apartments by Marriott Bonvoy are intended to reflect local neighborhoods and brand partners’ unique aesthetics in the premium and luxury product tier.
“These will be distinctly designed apartments catering to independent-minded travelers who are seeking more space and residential amenities,” Silverman said.
Apartments by Marriott Bonvoy units will feature a separate living room, bedrooms, a full kitchen, and in-unit washer and dryer. Unlike the company’s other hotel brands, they will not provide food and beverage services, meeting spaces, or retail. Silverman compared Apartments by Marriott Bonvoy to the company’s other soft brands — notably, Autograph Collection and Tribute Portfolio — which provide developers with flexibility to create independent, “unique hotel experiences” that are still backed by the powerful Marriott reservations engine and loyalty program.
“From the start of the brand to now, Marriott excels in customer service…and, to go even further, their customer experience strategy focuses on customer delight,” wrote SharpenCX analyst Laura Krajewski in 2016.
SharpenCX specializes in customer service success metrics, and cited Marriott as a prime example of how to leverage customer experience strategy to build up a brand. Around the same time, Forbes ranked the company 18th on its list of “The World’s Most Innovative Companies,” and in 2022, the company also ranked in the top 100 for “Best Employers,” “Top Regarded Companies,” and “Top Female Friendly Companies.”
“Marriott is a trusted brand,” Sexton concluded, “whether it is among developers
or consumers.
Sidebar 1
Early Entries in Quality Projects
The Right Markets, the Right Locations
When any party reaches out to Marriott with questions about a franchise partnership with the company, Paul Loehr and Lisa Sexton, regional vice presidents of full service brands for the West and East Regions of the United States, respectively, have one overriding goal in mind. “We want them to be successful,” Loehr said firmly. “That is the most important thing.”
To that end, Marriott dedicates vast resources to evaluating potential markets and potential consumer populations for viability long before a product is launched. In the case of Apartments by Marriott Bonvoy, the company looked carefully at places where they expect their target market will want to stay and at places that these consumers are traveling to currently but where this type of offering is not yet available from Marriott. Loehr said partnering with parties in these markets, which are both urban and secondary, is the key to success with Apartments by Marriott Bonvoy and that the company is seeing interest from potential franchise partners in these areas.
“We are seeing interest in Chicago, Seattle, San Diego, Dallas, and Houston, to name a few places where developers are already sending us plans to review,” he said.
Sexton noted that much of the interest in the eastern U.S. is coming not only from 24-hour cities like New York and Washington, D.C., but from secondary markets like Chattanooga and coastal and leisure markets like Savannah, Georgia. “We are also hearing from developers in leisure-focused destinations,” she said.
Both Loehr and Sexton emphasized the importance of location within a market as well as the market itself, noting that their roles include traveling to potential Apartments by Marriott Bonvoy sites or sending a team member to assess a development. “We are not just looking at a project on a laptop or iPhone,” Loehr said. “When there is an active project, it prompts us to get on a plane, see the investor and their vision, see the community, have coffee in the local coffee shop, etc.”
Because Apartments by Marriott Bonvoy units are designed to help travelers feel as if they have a home base in the local area and help them feel like part of the local community, “location, location, location” becomes more important than ever, Loehr continued. “Our guests want to go to a place that is ‘happening’ and that meets a certain level of quality expectation. When a development partner speaks to us about their commitment to quality, that tells us there is alignment there.”
Ultimately, Sexton and Loehr both concluded, the excitement about Apartments by Marriott Bonvoy stems from the fact that the product is new and innovative even among a plethora of long-term stay providers.
“This is a product type that did not previously exist in the U.S. and Canada,” Loehr explained proudly. “The idea of being able to have a family getaway or for a group of friends going to see a city together and stay in a beautifully appointed apartment with the assurance that it will be an extremely high-quality product is new and exciting for future consumers and existing Marriott Bonvoy members.”
Sidebar 2
Marriott by the Numbers
139 — number of countries and territories in which Marriott International brands are located (as of the third quarter 2022)
173 Million — number of members of Marriott Bonvoy, the company’s loyalty program (as of the third quarter 2022)
30+ — number of brands in the Marriott International family
8,100 — Marriott boasts more than 8,000 properties around the world (as of the third quarter 2022)
1.099 Billion — annual net income for Marriott International according to the U.S. Securities and Exchange Commission (2021)
$13.857 Billion — Marriott annual revenue according to the U.S. Securities and Exchange Commission (2021)
379,500 — number of Marriott employees worldwide (excluding those employed by franchisees)
96 — number of years in business
