At the hotel chain his parents founded, 73-year-old chief executive J.W. "Bill" Marriott Jr. is known for inspecting hotels down to the toilet seats and base boards.
But when his son John, a rising Marriott executive, knelt to peer under beds while touring luxurious Ritz-Carltons in Osaka and Hong Kong five years ago, managers complained. "It's an insulting thing," says an executive who fielded gripes from managers offended at the notion that their hotels could be dirty. "His father used to do it, but that was a different day."
Marriott International Inc. has always had a Marriott at the helm. For four decades, that has been Bill Marriott, the son of company founder J. Willard Marriott. The Marriotts have woven their strongly held faith in The Church of Jesus Christ of Latter-day Saints into the hotel giant's fabric, placing thousands of copies of the Book of Mormon in hotel rooms.
Bill Marriott has no plans to retire. But as he enters his 50th year at the company, Marriott's board is frequently discussing a decision it must one day make: whether to elevate another family heir, almost certainly 43-year-old John Marriott, or go with an outsider — most likely the company's much-admired chief financial officer, Arne Sorenson.
Many other family companies that are now publicly traded, such as Rupert Murdoch's News Corp. and Toyota Motor Corp., have faced similar choices over the years. Murdoch has made clear his preference that one of his children succeed him. At Marriott, where family members own 20 percent of the shares, the succession race increasingly looks like a jump ball.
Marriott's next CEO will face a challenge in keeping up with hipper brands such as Westin and W from Starwood Hotels & Resorts Worldwide Inc., as well as road-warrior favorites such as Hilton Hotels Corp.'s Hilton Garden Inns. Bill Marriott is known for his conservative tastes — it took years for executives to persuade him to allow hard-to-maintain fixtures such as wicker chairs and Venetian blinds. Both Sorenson and John Marriott say they want to update Marriott's hotels while keeping the company's reputation for consistency. Marriott's brands include Marriott, Ritz-Carlton, Residence Inn and Courtyard.
Marriott must also deal with the fallout from a strategy it pioneered — divesting ownership of hotels to concentrate on managing the hotels and franchising its brands. While the strategy helps hotel chains reduce real-estate risk and get a higher return on their assets, it also creates frictions with owners who pay Marriott management or franchise fees.
'The best person'
John Marriott — his full name is John Willard Marriott III — won appointment to the board in 2002 and a year later became an executive vice president in charge of sales, marketing and other operations. But he has been haunted by an awkward public persona and a limited track record. Of the under-the-bed inspections in Asia, he says, "I certainly didn't want to offend anybody — it's just what we do."
Sorenson, 46, is a financial expert who has played a central role in virtually all the key deals shaping Marriott over the past 13 years. As a young lawyer with the law firm Latham & Watkins, Sorenson helped negotiate the 1992 deal in which Marriott split off its real-estate holdings and became primarily a franchiser and manager of hotels. He then joined Marriott, working on legal and financial strategy.
In the post-9/11 travel slump, many owners began complaining that management contract terms were overly favorable to Marriott. Some even accused the company in lawsuits of fraud, which it denied. Marriott has had to give some ground, disclosing more information to owners and renegotiating hundreds of contracts, but it has avoided a major hit to the bottom line.
Last year, Marriott earned $596 million on revenue of $10.1 billion. The hotel industry is booming as corporate profits improve and travelers shake off their terrorism worries. Room rates and occupancy levels are soaring, and Marriott's stock price has more than doubled since early 2003.
Bill Marriott and the board are hedging their bets on succession. "Someday it would be nice to have a Marriott as CEO, but whoever it is has to be the best person," says Bill Marriott. "I've told all my kids there's no pathway to gold here."
"The board sees great value in having the family involved in the business," says Larry Kellner, a Marriott board member and chief executive of Continental Airlines Inc. He declined to discuss individual candidates but said, "I will tell you that the decision will be based on performance."
A father's advice
Marriott started in 1927 as a Hot Shoppe root-beer stand on 14th Street in Washington, D.C. Under founder J.W. Marriott, Bill Marriott's father, it was mainly a restaurant company. J.W. fought turning over control until his wife, Alice, insisted. In 1964, the year Bill Marriott became president, J.W. wrote his 32-year-old son a heartfelt letter with management advice. It included: "Guard your habits — bad ones will destroy you" and "Pray about every difficult problem."
Longtime Marriott executives recall that Bill Marriott was driven hard by his father, who insisted on aggressive expansion without taking on debt. "He was never happy," Bill says of J.W. "I got B's and he wanted A's. He challenged everything I did."
Bill pushed into hotels and originated the concept of multiple hotel chains aimed at different customers, which led to Marriott's explosive growth. These days there are more than 2,500 Marriott-managed or franchised hotels around the world, many of them with paintings of Bill and his father in the lobby.
Bill and his wife, Donna, raised all their kids in the family business, putting each to work at the age of 15 in kitchens or behind the front desk. "We don't have any big shots in our family, and that's for a family that's been pretty well-off," says Marriott. "It comes from our good Mormon background."
Bill and Donna have three children besides John: Debbie, now 48; Stephen, 46; and David, 32. Like their father, the boys were sent to the elite St. Albans School in Washington. Stephen was the most studious, earning A's and looking like a candidate for stardom at the company. John Marriott earned B's and was seen as the most creative. David, the youngest, became what passes for a wild child in this conservative clan, listing "Zeppelin," "Hooters" and "Austin & me taking the car out at age 15" as his "obsessions" in a 1992 yearbook. "Excuse me officer, just how fast was I actually going?" reads a caption on his yearbook page.
Unexpected turn
The family's future took an unexpected turn when Stephen began experiencing serious health problems in high school. "We noticed he wouldn't hear things at the dinner table sometimes," recalls Bill Marriott.
Doctors eventually diagnosed an extremely rare disease affecting the mitochondria, cell parts involved in energy production. By the time he returned from his Mormon mission to Canada at age 21, Stephen was already losing his sight, and today he is entirely blind and nearly deaf.
Despite his deteriorating health, Stephen, like all of the Marriott sons, was dispatched to college in Utah — "to find a Mormon wife," says Bill Marriott. Stephen studied English at Brigham Young University, marrying and having a baby before he graduated. He then earned an MBA at Arizona State. John studied accounting and David studied finance at the University of Utah, the alma mater of their father and grandfather.
After college, all three Marriott sons wound up back at the company, joining older sister Debbie's husband and many other Marriott relatives and in-laws working there. Debbie doesn't work at the company, focusing on her family and charity work.
Stephen now works full-time as a vice president in charge of labor. Known for his personal warmth, he often travels to address employees, telling them about his grandparents' root-beer stand and work ethic. He memorizes and choreographs PowerPoint presentations.
David, meanwhile, was recently promoted to his first corporate job, two rungs below John, overseeing the team that sells Marriott to corporate travelers and event planners. David "plays Grateful Dead music, and they love it," his father says. "I think that helps them relate to him."
But circumstances dictate that, for now, neither Stephen nor David can take over the company. David is too young, and Stephen "understands that because of his disabilities, there's not much more he can do," says Bill Marriott. Stephen and David declined to be interviewed.
That leaves John. He has rotated through many positions meant to acquaint him with all corners of the company. He has washed dishes, managed restaurants, served as his father's executive assistant and overseen the mid-Atlantic region.
John shares many of his father's qualities. Both love fast cars, maintaining collections of Ferraris, Camaros and Firebirds. Also like Bill Marriott, John is introverted. He has worked with speech coaches to improve his public speaking. "I get a little bit nervous," he says.
Being a Marriott is a lonely enterprise, John Marriott says. "Because of my name and my role, people make a lot of assumptions," he says. "Sometimes, humility is misunderstood as being shy or aloof."
Rising star
Meanwhile, the outgoing Arne Sorenson has risen rapidly. The son and grandson of Lutheran ministers, Sorenson hit it off with Bill Marriott when they worked on the 1992 deal splitting off Marriott's real-estate holdings. "I bet he called me two to three times a week," Sorenson recalls.
In the past few years, Sorenson has resolved several clashes with hotel owners who thought they were getting a bad deal in their management contracts with Marriott. Host Marriott — the independent real-estate company created in the 1992 split-up — threatened to sue Marriott, accusing it of overcharging on fees and improperly pocketing some payments from suppliers of hotel goods. Sorenson's friendly relationship with Host Marriott's chief executive, Chris Nassetta, helped Marriott sew up a settlement that spread the financial impact over many decades, blurring its impact on earnings.
Last month, Marriott effectively ended a nearly three-year legal war with a hotel owner, CTF Holdings Ltd., by agreeing to pay $1.45 billion to acquire 32 CTF hotels and then reselling most of them.
Through the clashes, Sorenson has impressed investors with his smooth handling of quarterly conference calls.
While Sorenson lacks a seat on the board, he is an active participant at every board meeting, according to people involved, and he has been pressing well beyond the traditional bounds of a chief financial officer. In early discussions about opening a new chain of Bulgari luxury hotels, Sorenson delved into operational details and questioned whether the new chain would cannibalize the Ritz-Carlton unit, say people involved in those discussions. Sorenson also led the purchase of the Renaissance hotel chain, which gave Marriott a foothold in Asia.
Asked about John Marriott, Sorenson says: "I think it's tempting to say John is held to a lower standard because of who he is. I'd say it's the opposite: It's higher, much higher." At the same time, though, Sorenson is one of the few people bold enough to say that the role of the family might change. "I think there's a reasonably good chance that John will be the representative of the Marriott family," he says. "But what the role of the Marriott family is has yet to be determined."
In the limelight
John Marriott and Sorenson have tried to broaden their relationship beyond the office. They have dined out together with their wives. But John indicates some anxiety about Sorenson. "I'm glad to hear Arne's saying nice things about me," he says in an interview.
John is beginning to put his imprint on the company. He says he's proud of his push last year for a "best rate guarantee," offering customers a 25 percent discount if they find a better rate on the Internet than they were given by Marriott directly.
Yet there's nothing on John's resume to match Sorenson's record of deal-making, nor does he show in public the familiarity with financial arcana that are the hallmark of Sorenson's conference calls.
At John's May 2001 introduction to Wall Street analysts, he presented the company's sales and marketing strategy. "I started out when I was 15 washing dishes," he began, telling the type of tale that works wonders for his father. But he stumbled through the speech and left audience members talking afterward about his awkward silences.
Several investors say they're loath to air their concerns. "It's hard to talk about it with Bill Marriott because it's his son," says the portfolio manager of a major fund that holds Marriott stock.
Bill Shaw, Marriott's president and chief operating officer, notes that John sometimes compares unfavorably with Sorenson because he "isn't as articulate as Arne." But Shaw says John "is not one who's looking for a lot of limelight."
Bill Marriott sympathizes with John's struggles.
"I've had to learn to speak," he says, recalling addressing his first securities analysts meeting in the 1960s — a more forgiving era, when only six analysts showed up. "I stumbled through. I was nervous," he says about that day. "They had very low expectations, and I proved them right."