Interview: Marriott CEO Arne Sorenson

Interview: Marriott CEO Arne Sorenson

The Chevy Chase resident talks about moving the Marriott headquarters, his background and his life here

| Published:

NAME
Arne Sorenson

AGE
56

WHAT HE DOES
President and CEO of Marriott International

GREW UP IN
Tokyo, Japan, and the American Midwest

LIVES IN
Somerset, Chevy Chase

Every morning, Monday through Friday, roughly 2,500 people come to work at the corporate headquarters of Marriott International on Fernwood Road in Bethesda. They stream across the sprawling, bucolic campus and into the 900,000-square-foot building. It’s a scene that has been repeated about 10,000 times since the building first opened in 1979.

It also happens to be a scene with an expiration date. Arne Sorenson, the president and CEO of the corporate giant since late 2011, told The Washington Post in February that the company has begun searching for a new location.

With that, Sorenson, 56, the first non-family member to ever lead Marriott, triggered a fierce competition among legislators from Maryland, Virginia and the District, all of whom would love to have the Fortune 500 company based in their jurisdiction. Marriott’s current lease expires in 2022.

Sorenson is only the third CEO in Marriott’s history. Founded in the District in 1927 by J. Willard and Alice Marriott as a nine-stool root beer stand, the business grew into the Hot Shoppes restaurant chain, and eventually evolved into Marriott International, a hotel company with about 4,300 properties in 80 countries and territories. There are approximately 350,000 employees worldwide, about 4,330 of whom work in Maryland.

Born in Tokyo to Christian missionaries, Sorenson and his family returned to the U.S. when he was 7. He spent most of his youth in the Midwest, majoring in religion at Luther College in Iowa and attending the University of Minnesota Law School, before coming to Washington, D.C., to work in corporate litigation for Latham & Watkins in 1984. He met Bill Marriott, the son of J. Willard and Alice, in 1993, while defending the hotel chain in a lawsuit, and began working for the business three years later as head of Marriott’s mergers and acquisitions team. He has lived in the Somerset neighborhood of Chevy Chase for 27 years with his wife, Ruth, who teaches music at Chevy Chase-Bethesda Community Children’s Center in D.C. The couple has four grown children.

You were born in Tokyo. What was your family doing there?

My father went there with the Army as a 17-year-old in 1945, just after World War II ended. He spent a year in Tokyo, came back, went to college, then to a Lutheran seminary. He became a preacher. After that, he went to Japan in ’52 or ’53, and my parents lived there for 13 years. It was where I was born, and where my three siblings were born. In many respects, it’s really our family heritage. Comfort food in my family is Japanese food. If anyone gets sick, they go straight for sushi.

What brought you to D.C.?

A job. Ruth and I were engaged, and we had to decide where to live. We found in Washington a place that seemed to be wonderfully livable, but with a legal practice that I thought could be as exciting as any, anywhere.

How did you change industries, from law to the hotel business?

In late ’95, maybe early ’96, I started talking to the folks here, including Mr. Marriott. There wasn’t a deep plan. Mr. Marriott said, ‘I’d love to have you come out,’ and I basically said, ‘I’d like to, but not to be a lawyer. If you want me to represent you as a lawyer, you know where I am. I can do that where I am. But if you’re interested in having me do something else, I’m always interested in having more than one career.’

There was no more definition or plan in my head, or, as far as I know, in his. I started doing mergers and acquisitions in the summer of ’96. I did that for a couple of years before I became chief financial officer in ’98. I got to know the industry really well that way, as well as the company.

You’re the first non-Marriott to run the company. What has that been like?

Well, I still have my job. It’s been three years, that’s a good sign. Mr. Marriott’s been great. It is intimidating in some respects to step into a job, not just as the first non-family member, but when you look at the longevity of both Bill Marriott and his father—his father was CEO for 45 years, Bill was CEO for 40 years, so between the two of them they covered 85 years. Without doubt, I will not serve the same length of time as either one of them did.

I’m under no illusions. My name is not over the door. I do not have a stake in the company the way they have a stake in the company. But I love the company, and I love the business, and I’m totally committed to the culture. I think he knows that. He was a great mentor long before I became CEO, and continues to be a great adviser and partner.

How often do you see him?

I see him every day we’re in the office at the same time. I travel a lot—I’m on the road 200 days a year. He’s on the road some, too, so I see him on average at least once a week. If I’m in the office and he’s not here, we’ll talk just about every day.

Tell me about the possibility of Marriott leaving Bethesda? How much of this is about attracting millennials, who might not want to come out to a suburban office building and prefer to use public transportation to get around?

There are a few things going on here. First, this building is leased, not owned. The lease expires in 2022. The second factor is that to renovate this building, which was opened in the ’70s, would cost almost as much as to build a building from scratch. And a brand-new building is almost always going to be better than a renovated building, no matter how much money you want to put into it. It’s not going to be state of the art.

The third driver, we talk about millennials and millennial mindset, but I actually have many of the same views. I’d like to be someplace that is accessible by public transportation. I’d like to be someplace where I can walk to restaurants or be part of a community that seems more vibrant, that doesn’t require me to have a car. Obviously, that is a more pronounced bias from our younger workers.

The overwhelming likelihood is we will not be in this building after the lease expires. And so that means we need someplace else. And we have 900,000 square feet in this building.

Even if we are more efficient about our use of space in the future, we’re not talking about a small office space. It takes a number of years to go through the process, to find locations. I think there are places in Montgomery County that can be accessed by public transportation, have an urban feel, and where we could build a new building that would meet our needs. But there are obviously places in Virginia or D.C. that could be considered, as well.

We’ve made no decision to move from Maryland. And I’ve assured the governor of Maryland, for example, we’re not starting any negotiating process. You’re not going to wake up one morning and read in the paper that we’ve decided to move. We’re going to spend the next year or so figuring out: How much space do we need? Are we going to put everyone in the same building, or are we going to put some disciplines in different buildings? Only when we’ve really completed that process will we start to focus on possible locations.

I have talked to Gov. Hogan, Gov. McAuliffe and Mayor Bowser. I’ve had calls from other states. The likelihood of our moving out of the Washington area, where we’ve been for our entire 88 years, is very slim. The overwhelming likelihood is that we will be in the Washington area for many, many decades to come. I suspect sometime in 2016, or more likely in 2017, we’ll start to zero in on a location or two.

Let’s talk a little about the hotel business. What about the industry appeals to you?

I think it’s a great business. It’s of interest to virtually everybody. When my kids were playing soccer or swimming in a meet and I’d be talking to other parents on the sidelines, people would want to tell you about the hotel they stayed in. It’s of interest to people, it’s accessible to people, it’s not a complicated technological thing that people don’t understand.

It’s also intensely a ‘people’ business. We have something like 350,000 people who wear our name badge every day in our hotels around the world. They’re making their careers with us. How do you create jobs for them that are attractive, how do you give them the opportunity to feel like they’ve got pride in their work, and, obviously, how do you do that in a way that causes them to deliver great service, something that customers recognize?

And then, in addition, you’ve got a business, which has lots of dollars, lots of real estate transactions, and lots of financing, lots of strategic questions. We have about 4,300 hotels today—it’s probably about $150 billion worth of real estate. Last year we signed 650 new hotel deals. That’s about 100,000 rooms. So you look at those 650 hotel deals in one year, that’s spread across something like 15 brands, those deals are probably, I’ll guess, in 40 different countries. Every one of those hotel deals is a separate real estate transaction.

So you’ve got a really fun deal aspect, which is married to this human aspect that gives a breadth to the business that makes it accessible—but also deeply interesting, filled with all sorts of great problem-solving, riddles and strategy.

How many hotel rooms are in Marriott’s portfolio?

Sometime this year we will hit a million rooms open or that are headed to open. It will probably be a few years before we’ve actually opened our 1 millionth room. That’s a lot of pillows.

What’s the most interesting place you’ve been?

I get asked all the time, ‘What’s your favorite Marriott hotel?’ My typical response is, ‘I love all my children.’

I find fascinating things almost everywhere. I’ve been in India twice this year. In India, we have about 30 hotels open and about 50 under construction. There’s tremendous growth there. It’s a place that is teeming with people, beauty, color, noise, spectacular food. I could go there every month and never fail to find something new and interesting.

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