CEO Speaker Series: Regaining U.S. Economic Growth and Global Leadership: A Conversation with J.W. Marriott Jr.

Tuesday, November 30, 2010

J.W. Marriott Jr. shares his views on how the U.S. economy and global leadership can rebound; the prospects for growth in China, India, and Brazil; the need for immigration reform to maintain U.S. global competitiveness; and his own experiences and lessons learned from building a global hotel and property management company.

This session was part of the Corporate Program's CEO Speaker Series.

GERALD SEIB: Good morning, everyone. I'm Gerry Seib. I'm the Washington bureau chief for The Wall Street Journal. Thank you all for being here.

This is the latest installment in the Council on Foreign Relations CEO Speaker Series meeting. My job is easy. I conduct the conversation. The only hard part of the job is to do the housekeeping first, which makes me sound like a grade-school teacher, but I will do it anyway. First, you have to completely turn off cell phones and beepers -- not just mute them, but turn them off -- for the convenience of everybody else in the audience. Secondly, this is simply to remind you that this conversation is on the record.

And we're going to talk about the world today and the international economy. And we are lucky to have somebody whose name is literally synonymous with the international economy: J.W. Marriott, Jr., chairman and CEO of Marriott International. He -- I think it's fair to say everybody in this room has probably benefitted from your hospitality at one point or another. I know when I lived in -- I was based in Cairo for a few years and, though I didn't live in a Marriott, I made my way to the Marriott a lot because it was a great oasis of sanity in Cairo -- (laughter) -- which, at that time at least, needed some. And I think that's true in countries all around the world. So, Bill, thank you for being with us. It's a pleasure to have you.

We're going to talk for about a half an hour about the state of the world, the state of the hospitality industry, the state of the American economy in the world, and then open up the session to your questions. There'll be microphones in the audience when we get to that point. And I know you'll probably have more interesting questions than mine.

Bill, let's just start with the state of the world economy. You, from where you sit, have an incredibly interesting perspective on the world economy: you have, at last count, something like 3,500 hotels in 70 countries. Talk a little bit about the global economic perspective as you see it from where you sit. Which regions are strong, which regions are weak, and what's the U.S. presence in that economy right now?

J.W. MARRIOTT JR.: Well, right now, we're seeing a little bit of an uptick in business here in the United States, and in most parts of the world we're coming off a real low. Our sales-per-occupied-room dropped about 20 percent during 2008 and 2009, and we're coming back. We'll be up about 4-1/2 percent this year, and looking for a bigger increase next year.

Business -- transient business has been pretty strong, and actually business is more traveling than ever. And we're finding leisure business is continuing to be pretty good. It stayed pretty good through the recession, surprisingly.

The one area of business that is kind of tough for us is the group business, the convention meeting business here in the United States: very short-term bookings. A lot of the big companies and the big trade associations are waiting till the last minute to book. I think that's the uncertainty in the economy that's causing that. And so we're wrestling with that, but we're forecasting to have a pretty good year in 2011.

As you look at the world, you start here in this country, New York and Washington continue to do very well, and that's real -- they're really the leading cities as far as occupancy and business are concerned. And the rest of the country is following along behind in various spits and spurts, so to speak.

Mexico is a problem because of H1N1 carryover, and also because of the situation with the drug cartels down there. And of course, none of the drug action is in Cancun and Puerto Vallarta and places where Americans want to travel, but we're not very good at geography -- (laughter) -- so we think everybody's being shot in Cancun, but it isn't happening.

And we're doing very well in China and India, of course. They're really the hot spots for hotel growth around the world. Latin America's been good, Caribbean's been good. Paris and London continue to be really very strong. We've been surprised how strong Germany's been. Germany's been a really strong economy, and very strong in the travel business this past year. And Germany's traditionally not a real strong travel partner, but they have been this year.

And so things are spotty around the world, but generally on the upbeat. And Middle East is kind of soft. Cairo's pretty good, but the Emirates are not very strong. The Dubai situation has really kind of hurt that whole Middle Eastern scene.

SEIB: So I think you're describing what we all kind of sense, which is a slow global recovery under way, but one that's quite uneven as you -- as you move around the globe.

MARRIOTT: Very uneven, but China and India are where the action's at today, and Brazil of course.

SEIB: Well, you -- China -- let me turn to China now, because every conversation one has with an American CEO these days inevitably turns to China, so let's just go there right away. You were at the 2010 World Expo. We were talking earlier, recently, you spent time in China. It's obviously an important market for you.

What's your experience been doing business in China? Because business experiences tend to vary, and the government's attitude and the regional partners are very important in that environment. What's your experience in China been? What is it today?

MARRIOTT: Well, traditionally, we're a hotel manager. And we don't own hotels, we don't buy hotels, except in very, very few instances. Someone asked me the other day, out of your 3,500 hotels, how many do you own? I said seven. And they said well, that's what we thought you did.

But we've -- so we're relying on Chinese partners. Chinese investors are building the hotels, designing the hotels. We work closely with them to make sure they're efficient and that they're attractive, but they're putting in the money, they're getting the permits, they're getting the financing. And so we're just relying on partners. And that's true everywhere in the world. It's true in India and true in China as well.

We have 60 hotels in China by the end of this year, and we're planning to double the number of hotels in China in the next five years. China is a very interesting situation for us because so far, as you know, there are three major economic areas in China: Shanghai, Beijing, Hong Kong and Guangzhou and -- together. And so 99 percent of all tourist arrivals going into China come into these three big markets. And that's very different from India, which has 10 big markets, which only account for about 25 percent of the GDP of India and 6 percent of the population, whereas these three big markets in China really take about 60 percent of the GDP.

And so China now with all the infrastructure that they're spending money on, all the bullet trains and all the highways and the new airports and everything is moving west. We're building their Ritz-Carlton Shangdu, way western China. And that would have been unheard three or four years ago. So China's moving west, and we're moving west with them. We're planning on developing a lot of Courtyard hotels in China, because we see a need for moderate-priced lodging there for the Chinese travelers. The Chinese travelers are becoming a huge, huge impact not only within China, but around the world. But Hainan Island is the -- is the Hawaii of China. It's south of Hong Kong, as you know, on the ocean. And we have a JW Marriott and a Ritz-Carlton there, the fabulous hotels, and they're full. And they're filled with Chinese.

And then we look at some of the great hotels. We've got some of the best hotels in the world in China. Everyone does, really, because they've all been built in the last 10 or 15 years. They're all brand new. They're all over the top. We've got a beautiful, brand new Ritz Carlton opening up in Hong Kong this year, 102nd floor of a Hong Kong office building. So it will be the tallest hotel in the world on the Kowloon side overlooking Hong Kong.

And we're opening a beautiful new hotel in Shanghai in the Pudong area, a new Ritz Carlton this past year. So we've got some wonderful hotels in China. And China occupancy and room rate this year have been up around 25 percent. So China's benefitted from the Expo and the continuing growth of that economy.

SEIB: Yeah, I want talk to you in a -- in a couple of minutes about that flow of Chinese visitors coming here. But before we get there, let me ask about the other two hot developing markets you mentioned a minute ago, India and Brazil. What's the profile there? What's the outlook? What's the growth rate?

MARRIOTT: Well, in India right now we have 12 hotels. And we're going to be -- we've announced last week in India -- had a team of people over there -- that we're going to have 100 hotels in India in the next five years. We're going to be building a lot of Fairfield Inns in India. That's our economy brand here in the United States, but a real demand in India for travel within India. And with the wide diversion and dispersity of the geography and the economic skyline of India, there's an awful lot of opportunities around the country to develop these hotels. Business in India's very good, and the economy, of course, is strong.

Brazil is a -- really a hot economy, again, for Fairfield Inns. We're going to be developing Fairfield Inns in Brazil. We only have four hotels in Brazil right now. And -- but we're going to be building at least 50 Fairfield Inns in Brazil in the next several years. So we're excited about the opportunity in Brazil.

You know, I scratched my head when Rio got the Olympics, because there's only maybe 2(,000) or 3,000 first-class hotel rooms in Rio. And they tell me now they're going to be operating with cruise ships anchored off the coast of Ipanema and Copacabana to house all the people who want to come to the Olympics.

SEIB: Opportunity, right?

MARRIOTT: (Laughs.)

SEIB: You know, what the -- what those countries all have in common is a -- is an emerging middle class. And I guess that makes the economic difference. It also creates business opportunities, not just for the -- for the lodging industry but all American businesses, right? If the country's got an emerging middle class, the opportunity for American business becomes instant and becomes huge. As -- and those countries, can they sustain middle-class economies? And does that make them safe investment havens for the U.S. -- Brazil, China and India?

MARRIOTT: Oh, I think they can sustain their middle-class economies. In fact, those middle-class economies are growing very, very fast. We're seeing huge numbers of middle class in India and in China, and they're starting to travel.

And the sad thing about it is we're not getting the piece of the action that we should out of this new, emerging travel market, both in China and India, and also in Brazil. You know, more people visited -- more Chinese visited Paris last year than came to the United States. And that's --

SEIB: And why is that? Why is the U.S. getting a smaller piece of this international travel pie? Is it all security? Is it 9/11? Is it a combination of factors? If the U.S. share of that pie, which is so big and so growing, is shrinking, what's the problem?

MARRIOTT: We are shrinking. Our market share is down 31 percent in the last 10 years in the international-travel-arrival business. And, you know, we call it the "lost decade," 2000 to 2010. We lost a tremendous market share in world travel. One of the things --

SEIB: And by "we," you mean the U.S. generally, not Marriott specifically.

MARRIOTT: Yeah, the U.S. -- the United States. No, the United States lost a tremendous amount.

And one of the main reasons was we have not been marketing this country. When you look around the world, all the big countries have a really dynamic marketing and sales effort, advertising effort to get people to visit their countries. The United States has never had a national global advertising program. The government would never spend the money for it. The government really doesn't recognize the great value that comes as a result of tourists coming to these shores.

Help's on the way. We've -- the Congress has passed the Travel Promotion Act. The president signed it this past winter. And that will allow us to collect $14 -- the United States can collect $14 from all the countries who are visa waiver countries. Countries that -- whose people want to visit the United States who do not have to have a visa will have to pay $14 when they sign up to come to the United States. And of that $14, 10 of it is going to travel promotion. Four dollars goes back to homeland security.

And so we're going to be developing a large amount of money that we can spend overseas. It's going to be matched by the American business community. So we'll have a lot of money out there that we can begin to promote our country. And so that's a big -- a big opportunity for us.

The other thing that's holding us back and losing our market share is the visa situation. It's very hard for many countries to get people to come here because of the visa situation. And also, we're not recognized as being a warm and friendly place to visit when you get to immigration and customs. And the people in immigration and customs are perceived around the world as being not friendly to foreign visitors.

SEIB: And is that a situation that is -- has gotten worse over your -- the course of your lost decade? And is it a direct result of 9/11?

MARRIOTT: I think it's a lot tighter as a result of 9/11. I think we can do a lot more. We need more training of visa and border agents. They need to put a smile on their face. I went out with homeland security at Dulles three or four years ago, and we visited booths out there. And the Japan Airlines flight had just landed, and they were coming through immigration. It was about 10:00 in the morning.

A young lady -- a very attractive young Japanese lady came to the -- to the immigration officer. And we were all standing there with Homeland Security people. And he said, well, you've got to fill this form out. You didn't fill it out right. Go back and fill it out. Well, there was no place for a desk for her to sit down and fill it out. There was not a shelf for her to put (it ?) down to fill it out. I didn't know how she was going to fill it out unless she sat on the floor and wrote on the floor.

And I could tell that she was confused and didn't know quite what she was going to do with it. And he offered no assistance. Nobody was there to give her a clue as to what she needed to do. It's these little kinds of things in our business we focus on, that they're just not -- that -- (inaudible).

SEIB: But you really -- let me try to separate the two issues. One issue is the simple difficulty in getting a visa back in your home country.


SEIB: The second issue, if I'm hearing you correctly, is the feeling that you have that you're welcome in the U.S. once you actually get that visa and show up here.


SEIB: Both are factors. Which is the bigger problem, in your point of view?

MARRIOTT: Oh, I think the biggest problem right now is the visa situation.

SEIB: The -- and is that a -- is that an unwillingness to grant visas, or a system that's too clogged up to process the visa applications that should be processed?

MARRIOTT: Well, let's take a look at Brazil. Today, if I'm a Brazilian citizen and I want to visit the United States, it takes me 90 days to get a visa. I have to apply. It takes me 90 days before I'm interviewed.

I have to be interviewed in person. The new law that was passed after 9/11 said that all visa applicants must be interviewed in person. So if I -- and there are only four consulate offices in Brazil. So if I'm living in Manaus, up in the northwest part of Brazil, and I have to travel to Brasilia, which is 2,000 miles to get a visa, and if I've got a family of four and we drive all the way down to Brasilia and one of my kids looks funny at the interviewer, I don't get a visa.

SEIB: Yeah.

MARRIOTT: And then it's another three weeks before you get the visa, after you've done this.

Now, the Commerce Department is saying we're going to do a 1,200,000 visitors from Brazil this year, and they're forecasting over 2.5 million in five years. There's no way we're going to get to 2.5 million visitors from Brazil if we don't get this fixed.

SEIB: (Inaudible.)

MARRIOTT: There are not enough offices; there are not enough people in the offices; it's too cumbersome; and they can go to Europe, which requires no visa at all.

(Cross talk.)

SEIB: I think you just hinted at the fix. What's the fix? What should/could the government be doing about the --

MARRIOTT: Well, I think one of the most important things they can do is get videoconferencing. Interview with videoconferencing. They did a pilot -- a quick pilot in London three or four years ago. It worked very, very well. But the law says they have to be interviewed in person.

Now, some of the people in (State/state ?) are saying, well, "in person" maybe could mean a videoconference. Actually, a videoconference is a better security situation because you can run the tape back. You can look again and see maybe you missed something. And it makes it a lot simpler. They can go to Manaus; they can go to the local bank or something and be interviewed with videoconferencing. We really need to get the technology sorted out on this -- (inaudible).

SEIB: And you raised this issue, I assume, with U.S. government officials. What's the response you're getting?

MARRIOTT: We get a response that the law says you have to be interviewed in person. (Laughs.)

SEIB: (Chuckles.) So how much hope --

MARRIOTT: What else is new?

SEIB: How much hope do you hold out, then, for an actual fix to this problem?

MARRIOTT: Well, we're all working on it. And, you know, when the -- when the president went to India and talked about exports, the interesting thing to us was, nobody ever mentioned tourism as an export.

Now, it's probably not understood, but when we sell a hotel room in San Francisco to a visitor from Singapore, that's an export. And last year, there were $120 billion of export revenue generated by the travel and tourism business; 8 percent of our exports were in the travel and tourism area.

And the great part about the travel and tourism area is it doesn't require schools; it doesn't require health care, Social Security, any of those things. You come, you visit and they spend. Chinese visitors (in ?) the United States spend $7,000 per visit; average visitor to the United States spends $4,000. When an American travels around the country, it's 1,200 (dollars), $1,500. So the dollars per visitor are huge.

And the market is out there. People want to come to this country. This is really low-hanging fruit. When you talk about wanting to increase exports, the easiest thing you can do is say, here, America, it's welcome. Come, we want you here.

SEIB: And you're saying there's not a shortage of people who want to come, that there's not an declining interest in coming to the U.S.?

MARRIOTT: No, there's a huge interest.

SEIB: So it's a question of matching demand and supply.

MARRIOTT: Right. And when they come, they feel so much better about America. You know, we know that 70 or 75 percent of all the people that come here return home talking about what a great country we have. And it's the person-to-person diplomacy that is so important. And particularly in today's conflict environment we have around the world, the more people that can visit America, see what we have to offer, what a great country we have, how wonderful the people are, they go home waving the American flag.

SEIB: You know, you also mentioned security on this side of the -- of the flight to the U.S. Everybody here obviously heard a lot, talked about, I'm sure joked about TSA security over the Thanksgiving holidays: pat-downs, intrusive searches. What's the effect of that process on international travel? Is it a nuisance? Is it an impediment? Is it something that you think needs to be addressed more systematically?

MARRIOTT: Well, right now we haven't seen any evidence that there's been any impact internationally. It's too early to tell. Obviously we got through Thanksgiving a lot better than everybody thought we would. I think people are going to get used to it. It would be nice if Homeland Security would spend a little more time trying to figure out how to make it easier on the customer because air travel today is becoming even more difficult than it already has been, and that just adds to it.

We don't want to have anything happen that will deter people from coming here. At the same time, we are very security-conscious. We lost a hotel in New York on 9/11. You know, we had a hotel between the two Trade Center buildings that was destroyed. Lost -- a couple of our employees were killed. And so we're very security-conscious. And around the world in high-risk areas, we will stop the cars before they drive in the driveway. We inspect them with the dogs, and when people get to the hotel, they go through a metal detector. And so there's all kinds of security that we have in place around the world in these -- in high-security areas.

And so we're very, very security-prone. We don't want to do anything to deter that, but we think there's got to be some better ways to do it.

SEIB: And is there a dialogue under way between your industry and the government on that front?

MARRIOTT: Well, we do the best we can. We keep talking, and they look at us and say we're protecting the country. So --

SEIB: Well, I guess that's the problem.

One of the things, to go back to a point -- you just made it a minute ago -- that would affect the attitude, I assume, of everybody is if they actually saw this as an export question and not a hotel industry question. You know, President Obama's talked about doubling U.S. exports. It seems to be one of the few areas of bipartisan agreement in this town. In your industry's point of view, what more needs to be done to make -- to make the travel industry part of that goal of doubling exports?

MARRIOTT: Well, to recognize, first of all, that this is a huge, huge part of our export programs: 8 percent of our exports, $120 billion of exports last year. If we increase that by 10 percent from $120 billion, we take another $12 billion of exports, and we'd provide another 100,000 jobs. When we lost this market share that we talked about -- between 2000 and 2010, we lost 440,000 jobs in this country and $500 billion worth of exports because of the fact we weren't marketing, visas were tough to get, and the perception was, when you came to America, you really weren't welcome.

So there's a huge opportunity. This is really low-hanging fruit. If the president says he wants to double exports, then please help the travel industry. You know, maybe get together and try and convince, you know, people in State to figure out a way to get these visas done. State has no long-range plan that we're aware of or that we've been made aware of to increase the size of the number of visa offices and consulate offices in these big countries where the new generation's going to come. We only have four visa offices in China. And the amount of Chinese coming to this country in 2030 could be 10, 13, 15 billion -- million people.

SEIB: And is this a budget problem or is this a lack-of-awareness problem, from your point of view?

MARRIOTT: It's a budget problem. It's a lack-of-awareness problem. It's the State Department and Homeland Security together are saying we've got to protect the country, and we -- I don't think they recognize the importance of travel as an export.

SEIB: And is there a political and public relations problem embedded in that? Which is to say that in the post-9/11 environment, are Americans -- leaving aside the government, are Americans sending a signal that we don't want foreign visitors, that we're afraid of foreigners in our country? Is there a kind of close-the-borders mentality that's affecting the attitude of the U.S. government?

MARRIOTT: I don't think so. I think the American people are anxious to meet people from foreign lands. I look around the room today. Not all of us were born in this country. We're a country of immigrants. We're a country of people, of providing opportunity from people all over the world. We're the greatest mixing bowl in the world, and we want to see people from other countries.

SEIB: Let me -- let me just ask one final question, and then we'll open it up to your questions from the audience. Let's look forward a little bit. We have been -- the travel industry obviously perhaps more than most -- have been through a pretty tough stretch here. There are signs of an economic recovery out there. They're a little uneven.

What is -- when you project forward for the next decade, what do you see in your industry? What do you see for the U.S. economy? What do you see for the global economy? What does your crystal ball look like at this point?

MARRIOTT: Well, I'm an optimist. The glass is certainly half full and better. I think that we have tremendous opportunities for travel and tourism growth. The World Travel and Tourism Council says that travel and tourism around the world is going to grow 6 percent a year. But the travel and tourism coming out of the emerging markets of India and China and Brazil is going to be way more than that. So there's going to be a tremendous increase in world travel through the -- through the next 10 years.

And the challenge we have here in America is, how do we get them to come to America and spend their money here, rather than sending more Chinese to Paris and no Chinese to the United States? We have a tremendous opportunity here with the export situation to really, really double the exports in tour and travel, which would just add hundreds of thousands of jobs, and really help the economy.

SEIB: To ask a cynical follow-up question, does it matter to you? If you have a -- if you have a hotel in Mumbai and a hotel in San Francisco, you're going to profit from travel regardless of what destination that person -- why does it matter to you if they come to the United States?

MARRIOTT: I'm a flag-waving American, number one.

And, number two, 60 (percent), 70 percent, 80 percent right now of all of our rooms are right here.

SEIB: (Laughs.) (Inaudible) -- patriotic --

MARRIOTT: I'm a really flag-waving American. (Laughs.)

SEIB: Fair enough.

Let me -- let me ask you all to raise your hands if you want to -- if you want to ask a question. The microphones will come around to you. We'll start right here. My request would be that you wait for the microphone and that you stand when you ask the question, and if it's a question rather than a statement, that'd be better. And state your name and affiliation.

QUESTIONER: Hi, I'm Steve Charnovitz from George Washington University Law School. Thank you, Mr. Marriott, for coming today.

The topic is regaining U.S. economic growth and global leadership. You've talked about some of the things that we could do to regain economic growth. Could you comment on the global leadership dimension, in particular what the United States could be doing in terms of its trade policies, including trade and services at the World Trade Organization, or some of the regional trade agreements, the U.S. role in the World Tourism Organization, and the fact that the United States is not a member of the Bureau of International Expositions, which has 157 other countries?

MARRIOTT: It's a global, global world we're in right now. A flat world, as has been written about and talked about many times. We need to pass the Colombia free trade agreement. It's funny-paper simple. We sell more to Colombia when we've signed that bill. Why isn't it signed? Where is the leadership that says we've got to do this? That, to me, is an example of the fact that we are really not embracing global trade as we should as a nation. And we simply have to do it.

You know, 8 percent of the -- of the exports are in my industry. But there's a lot more out there. The United States economy has got to be stronger. We're the biggest economy in the world. We buy more. We sell more than any other country in the world. And we've got to strengthen our own nation and our own economy.

And we can do that with tax policy. We've got to either extend or make permanent these -- the Bush tax cuts that's on the top of everybody's agenda in the city right today.

You know, there's a proposal out there. There's hundreds of billions of dollars trapped offshore in corporate accounts, U.S. corporate accounts. Somebody has said, well, let's cut the tax rate when they repatriate those funds, and ask these companies to bring back to reinvest in the American economy. That's a no-brainer, too. Why don't we do it? Why don't we just get some of these things done? Why don't we let R&D tax credit -- you can expense your R&D expense. Take a tax credit for it. Get it off the books. Great. Everybody will spend more on R&D.

Business has got to start spending in America to make the global economy better. We've got to get the American economy back stronger. We're coming out of this recession in the hotel business at a 4 (percent) or 5 percent growth rate. We've got a 9 (percent) to 10 percent growth rate the last two or three times we've had recessions. We are not coming back strong as a nation. And we need to if we're going to get a real strong global economy going that depends on the economy of this country.

SEIB: And I'm curious. You mentioned the Colombia free trade agreement rather than the South Korean free trade agreement. Any particular reason you picked that one rather than the other?

MARRIOTT: Well, that one is on the table. It's negotiated. It's agreed to by everybody. All it has to be is signed.

And I -- we don't know what happened in North (sic) Korea. I don't know. You and I talked about this before. Apparently Obama wasn't able to get it done, and we don't know why he wasn't able to get it done. Apparently the South Korean president didn't want to play ball or whatever. But we should have a free trade agreement with every country in the world.

SEIB: And your point on Colombia is, it's there for the taking, right now --


SEIB: -- right now.


SEIB: Fair enough. Okay.

Other questions? Right here.

QUESTIONER: Hi. I'm Earl Fry from BYU. The United States' share of global GDP, of manufacturing, of direct investment, of educational outcomes is all going down. Are we sort of coasting on our laurels, thinking that we're always going to be number one and not taking into account what is happening around us in the world and also maybe perhaps some dysfunctional decision making, as you've pointed out, in terms of tourism here in Washington? How do we get back on our feet again and really begin to move forward in terms of a combination of both private-sector policies and public-sector policies?

MARRIOTT: Well, that goes back to the answer, somewhat, that I just gave. Tax policy is extremely important to getting our economy going again. We've got to get our own economy going again before we can preach to the world that they've got to get their economies straightened out.

And so we have all the tools here in Washington to do it. I think tax policy is a huge part of it. I think immigration policy is a huge piece of this. You know, the smart young people from China and India and the other Asian countries and many other countries come here and go to universities, get good degrees; they get -- they're doctors or scientists, they're engineers; and then they leave and go home because we don't have enough H1N -- H1 visas here to take care of them.

And the same thing in our business -- we need hourly workers. There's 12 million undocumented aliens in this country. As you all know, we need to figure out a pathway to -- for them to have citizenship in this country. We've got to protect the borders, but we also got to provide a stable workforce in this country.

So we can do a lot here in Washington to encourage business. Unfortunately, the administration, as we all know, doesn't have anybody in it that's had any business experience. And so we're not running this country like a business, like we have a lot of times in the past, and we really need to start thinking about all the things we need to do to run this country as a businessman would run a business, solve problems, move on, get things done and get away from this gridlock things when all the things that can be passed can really have an impact on the global trade, the world economy and the United States economy.

SEIB: Are you aware of meaningful conversations about actual immigration reform legislation right now --


SEIB: -- or has that gone dead?

MARRIOTT: I haven't seen anything lately.

SEIB: I mean, the sense you have is, the circuits have gone dead on that --

MARRIOTT: Yeah, they have.

SEIB: -- and may stay dead until after 2012.

MARRIOTT: I don't know. I know that with -- some of the reasons why it's dead, but I just -- it's just a crime to me that we see all these wonderful young men and women coming here to go to college and university and then going back home.

SEIB: Yeah. Okay.

Other questions? Right here, and then there next.

QUESTIONER: Thanks. I'm Holly Wise, Georgetown University.

Besides running your business, what else do you think that you need to be doing? What are you doing internationally in terms of corporate social responsibility, in terms of community engagement? You've been targeted as a symbol of the West or the U.S. in various markets and have continued to stay there and invest and do work in the community. Can you tell us a little more about how you feel about that?

MARRIOTT: Yes, we feel very strongly that we need to do more for sustainability. We invested a couple of years ago in the Juma Reserve down in Brazil, the rain forest. We put in over a couple million dollars to preserve about 2 million acres of rain forest in Brazil. And we're -- and as we develop Fairfield Inns in Brazil, we will be contributing from each Fairfield Inn a certain amount of money to continue to preserve the rain forest in Brazil.

We just made a half a million dollar contribution to the headwaters of the Yangtze River in China to get better water and to preserve the landscape up there, so there's not so much mud flowing into the water and into the rivers.

We're constantly working around the world to do a better job. We have a goal of cutting our greenhouse gas emissions and also our water supply and power supply by 25 percent in our hotels in the next five years. And we are building over 300 LEED-certified hotels.

I was just in the first LEED-certified hotel in Atlanta yesterday, at the Marriott at the Atlanta airport, and he has two LEED-certified -- the owner has two LEED-certified hotels, a SpringHill Suites and a Marriott, right there at the airport. So we're very conscious of the environment and working very hard for sustainability around the world.

SEIB: Here, here, and there.

Q My name is Marsha Echols. I'm a professor at Howard University School of Law. You've spoken about the role of government and what government should be doing to strengthen our economy and for global leadership. What should business do? The impression for many Americans is that business is sitting on huge profits, not spending anything, or not spending a lot on either research or further investment -- certainly, for the banks, not spending the money and making loans available to small businesses. So for promoting our own economy and for global leadership, what should be the role of business?

MARRIOTT: Business has a major role. Business hates uncertainty. When I was going to business school and was trying to learn how the stock market worked, the only thing I could remember them saying was, "The stock market hates uncertainty." (Laughs.)

SEIB: Still true.

MARRIOTT: And I think it's still true. (Laughs.) That's basically why I don't invest in the stock market. But -- (laughs) -- you know, there's so much uncertainty on the part of any businessman in this country. What's going to happy to health care? What's it going to cost me in 2014 when all these regulations kick in? What are the regulations going to say and do?

We know that our health-care costs are going up in 2011 when we have to cover people up to -- dependents up to the age of 26. We know it's going up 1 to 2 percent. That's a lot of money, okay? That's a small piece of all this.

What's going to happen to taxes? I mentioned that. Are the corporate taxes -- why aren't the corporate taxes coming down? Why are we the second-highest -- pay the second-highest amount of money for corporate taxes of any country in the world? Why do we as a corporation pay more than almost any other country in the world but one?

These are disincentives to investment. You invest when you get a return on your investment. You know, we're all sitting here scratching our head. Interest rates are basically zero. Why aren't companies investing? And I think it's this overall uncertainty that we have about what's the government going to do to us next and what is the role of government going forward.

And we've had a lot of uproar and concern about the deficit. That's overhanging. Everybody's concerned: How long? Are we going to have a double dip? I don't think so now; I think there's less chance than there was six months ago. But still, there's so much uncertainty in the minds of businessmen. We can't get financing for a hundred-room Courtyard hotel in Alexandria, Virginia. We can get a 50-percent loan. The banks won't lend. They're scared. They don't want to lend; they don't want to take any risk. So we've become a risk-averse country. We've got to get out of that, and we've got to start lending, borrowing; we've got to start the engines going again to grow this economy in a -- in a rapid and strong way.

SEIB: But if I can paraphrase your question, what I think your question was, I -- do businesses have a responsibility of their own to just cut through the uncertainty and move ahead anyway?

MARRIOTT: Businesses will do what they need to do for their stockholders, basically, their employees, their customers. And they're waiting for government to say, here's the green light: Here's the green light on taxes, here's the green light on health care, Here's the green light, deficit's going to be -- so that we can make the kinds of decisions that we have to make every day when we invest money.

SEIB: There and then there.

QUESTIONER: (Clears throat.) Excuse me. Elizabeth Becker (sp), journalist. Do you -- politics are so important in any Washington administration, and when the Republicans gained the House under the Contract with America with Newt Gingrich, getting government out of travel and tourism was one of the top items on the list. Do you see any more of this change as the Republicans now take the House? Do you have any political allies in any party as you are trying to get government back into your industry?

MARRIOTT: It's a very hard question to answer, because part of the problem with visas, part of the problem with border security is the concept of keeping dangerous people out of this country. The Republicans are totally onboard with that. The Democrats are, too. So, you know, this is warring against what we're trying to do, in terms of bringing people here and getting people into this country. So it's a hard slog for us.

We were very thrilled and excited when we -- when they passed the Travel Promotion Act, recognizing that we really need to be a global player in travel and tourism. We need to be able to market our wares around the world, and we've got to have a system set up so as a nation we can speak to the world about what a wonderful thing it is to visit America. But right now, I don't see either party as jumping onboard and waving the flag for tourism. You're getting it from the states. You know, Las Vegas spends a ton of money; even Illinois is one of the biggest spenders in the country for travel and tourism promotion; Florida, these big tourist destinations. But the global economy, global -- America is not spending that money.

SEIB: And this is an area where you're actually asking for some government activism?

MARRIOTT: Oh, yes. Oh, sure. We're pushing hard. And we had a hard time getting Travel Promotion passed. It doesn't cost the government a dime, and we had a hard time getting anybody to buy into it; took us three years to get it done.

SEIB: Here, and then there and there.

QUESTIONER: This has been a very interesting session. I'm Mitzi Wertheim, with the Naval Postgraduate School, and I guess I want to piggyback on some of these questions.

The problem I've had with this administration is I don't understand their stories. And I -- since they're not very good at telling their stories, I'm wondering what the business community could do to start getting the stories out in a way that the public gets it.

These are all very complicated issues, but if they come out with -- without the public understanding what needs to be done and what they would -- they ought to be supporting and pushing on Congress to do, I think we're all sort of stuck. So how do -- how would we get leadership from the business community to come together and start telling stories that the rest of us understand?

MARRIOTT: Well, for the media in the room, if you'll listen to the business story and talk about it, that would help a lot. And I think we're telling our story as best we can. The U.S. Chamber is certainly actively telling the story. And I'm on the Business Council, and we meet and we do the very best we can. I'm not on the Business Roundtable. I know they're very active in telling the story about the needs of business in this country.

And as a businessman, you know, I'm here today to tell a story about our industry and about our company. And you're listening, and I'm grateful for it that you're here. But we just have to keep working it. We just have to keep pushing the ball up the hill as best we can. It's a very Sisyphean program we've got going here. (Laughs, laughter.)

SEIB: (Thrusting analysis ?).

Well, but, I mean, you have confronted for almost a decade now, though, an inevitable conflict here, which is the conflict between extremely heightened security concerns and the desire for world travel. I mean, at the end of the day, those two things are going to be in conflict at some level no matter what you do. You're talking about resolving -- not resolving the conflict, but making it manageable.


SEIB: And that's a tough thing to do.

MARRIOTT: Yeah. And we have to do it, we really do.

SEIB: But you're saying it's do-able.

MARRIOTT: It's do-able. Sure it's do-able. We can do anything in this country we put our mind to do. You know, we got a man on the Moon. That wasn't easy. And we've done so many wonderful things. This is such a great country. But, you know, we've got to get the American political bodies thinking that we really need to support business and industry, and we really need to help business get back on track again. And some of the things I talked about -- tax policy, immigration policy -- are the kinds of things we need to do to get business back on track. And that's -- somebody's got to step up on Capitol Hill and get some stuff passed and get some legislation passed that will help business get the courage and the confidence to reinvest in this country.

SEIB: Right there. Yes, and then you next.

QUESTIONER: Allan Wendt. Mr. Marriott, a couple of months ago, there was a column in the Financial Times. It was entitled "Guess Where I Am." And the column proceeded to recite a succession of horror stories about getting through Dulles Airport immigration and customs, right here --

MARRIOTT: And that's (a mild ?) report, by the way. (Laughter.)

QUESTIONER: Yeah. And as you read through the column and the horror stories -- and I felt very -- because after the first couple of sentences, I guess where he was. It -- the problem was not security; it was sheer incompetence and inadequate staffing. Surely we can do better than that, and why aren't we?

MARRIOTT: That's a very good question. As I related my little story out there, here I was with four or five top officials from Homeland Security inspecting an inspector as he did his job. And when this young lady came and asked to be admitted to the United States, she had everything she needed, except one form wasn't filled out right. And he just said go back and fill the form out right. She didn't have any place to go. She didn't have any place to put it. She didn't have any way to fill the form out right. And how does she go back and relate to her friends in Japan her experience entering our country?

We are pushing very hard with State Department to try and get them to let us know what they need in terms of staffing for these consulate offices so we can get visas. They won't tell us what they need. They're not transparent at all and we have no transparency coming out of them.

We had a good conversation, the U.S. Travel Association, with Secretary Napolitano a couple of weeks ago about this very issue. And we got a lot of circular discussion. We didn't -- they just didn't nail the problem. They just didn't say we're going to add people because they have -- you have to get an appropriation to do that, and I don't think they have a plan.

I don't think they are planning to be customer-friendly. I don't think they are using the resources they need to use, and I don't think they have a long-term plan to increase the size of the immigration halls. And, you know, Miami -- our people go in and out of Miami all the time to Latin America for business. And it's an hour wait coming from Latin America every time they go through Miami. And for the immigrant people without U.S. passports, it's a lot longer than that.

And they need to expand the space. They need to have more officers on duty. They need to work them a regular shift. A lot of them don't, I don't think, in these visa offices particularly. So it's a management problem more than anything else, and it's a -- it's an awareness problem on the part of State and Homeland Security to adequately staff and program and invest in facilities to make this happen. And we're working hard to bring it to their attention, but they've got a lot of other things on their plate.

SEIB: But don't you also assume every visa officer and every security officer in the United States government's emploi is saying to himself or herself, I'm not going to be the one who lets the next shoe bomber in.

MARRIOTT: That's right. They're --

SEIB: And is there any way around that problem?

MARRIOTT: I don't think there is. I really don't. But at the same time, they can have a desk for somebody to fill out the form. They can say welcome to the United States, and they can look you in the eye and say, "We're glad you're here." They can expand the size of the immigration hall. They can put more people on so that everybody doesn't have to wait two hours to get through. They can do all these things, and, at the same time, not damage the security of the country.

SEIB: Right there, and then there next.

QUESTIONER: Good morning, Mr. Marriott. My name is George Chopivsky with Simpson Properties. I noticed that you mentioned only three of the four BRIC countries this morning. I was curious as to what your expansion plans are for the former Soviet Union, specifically Russia and Ukraine, in light of the questionable leadership style of President Medvedev, Prime Minister Putin and the fact that the recently elected president in Ukraine, President Yanukovych, who many argue is a puppet of Moscow.

My question to you is, just what are -- what are your expansion plans? How aggressive are you going to be in those countries? And is there a specific product type that you're going to be focusing on? Full-service, extended stay, so on? Thank you.

MARRIOTT: That's a good question. I omitted Russia from the BRIC because, as Churchill said, an enigma wrapped in an enigma. (Scattered laughter.) And it still -- it remains of a bit of an enigma. However, we did just put on a full-time developer for Russia, and we have about a dozen or so hotels in Russia, and several hotels in the "stans," and we are working very hard to get into Kiev. We've been trying to get into Kiev for a long, long time.

So we're continuing to grow in Russia. Russia's been good. We've got a Ritz Carlton right on Red Square that is just very, very successful. So we're doing business in Russia with Russians; they're the owners of our hotels over there and the developers of our hotels. People like to visit Moscow. I'm not sure about the rest of the country -- certainly Leningrad -- but I don't know about, you know, the -- some of the other cities, but we are probably going to be doing a lot of Courtyard hotels in Russia. We've got eight or 10 now. And we're going to be doing a lot more. Thanks for the question.

SEIB: There and then there.

QUESTIONER: Hi, my name is Jerry Johnson with RLJ Equity Partners. You mentioned earlier that 80 percent of your hotels are in the U.S. If you forecasted out 20 years, how would you see that asset allocation between sort of, I would say, the U.S., Asia, South America and Europe/rest of the world? And I guess the follow-up question to that is, what's your biggest impediment to international growth?

MARRIOTT: Well, right now we're, I'd say, about 80 percent U.S. We'll probably be closer to 50-50 in 10 years. We're growing very rapidly, as I mentioned, in China and India and Brazil, and in Latin America, as well, as well as the Middle East. We're growing all over the world.

The biggest problem in international growth will be training and developing the staff necessary to manage all these hotels and work in these hotels. You know, when we have a hundred hotels in China, that's a lot more difficult than if we have 10 hotels in China. So from an -- we're operators, we're not owners. From an operating standpoint, it's training and developing the management talent and the people to work in the hotels.

But it's been a a terrific growing experience for us to understand how well these people respond to the training we give them. Whether it's in India or China or Thailand or wherever it is, they're responding to the Marriott culture, which says take care of the customer, take care of the employee, take care of your co-worker.

And our culture is growing rapidly around the world and we're becoming recognized for being able to translate the kind of service we want to give here around the world. There was a recent cruise ship company that was recruiting in India, and they were recruiting in Mumbai, and they had two desks in the hiring hall. One desk said anybody who worked at the Marriott in Mumbai can come to this desk, and the other desk were the people who had not worked for the Marriott in Mumbai. And of course, we were thankful that they were interested enough in people who'd worked for us to make that their prime desk.

So we're translating that, but that will be a huge challenge going forward, with the tremendous numbers of hotels we're going to be adding.

SEIB: And if I could just follow up, your 50-50 mix in 10 years, is that a function of lack of growth opportunities in the U.S. or simply huge growth opportunities abroad?

MARRIOTT: It's basically huge growth opportunities abroad, yeah. We're growing, as we --

SEIB: That's more a statement about the world market --


SEIB: -- up than the U.S. market being down.


SEIB: There, and then there.

QUESTIONER: Hi, Mr. Marriott. Frank Finelli with the Carlyle Group. You've mentioned some of the various brands across Marriott -- Fairfield Inns all the way up to Ritz-Carltons. How do you manage that on a global basis? And do you see any collapsing of your brands, much like General Motors has just has accomplished, or do you see the brands continuing to proliferate?

MARRIOTT: We're actually adding brands. We've added two new brands in the last 12 months. We added the Edition brand, which is a boutique hotel we've developed with Ian Schrager. We opened the first one in Waikiki, in Honolulu, in October; and we'll be opening one in Istanbul in the first quarter of next year; and we've got one under construction in London, one under construction in South Beach, in Miami. And then the other one is the Autograph collection, which applies our name to iconic hotels around the world who are looking for the systems that Marriott can provide. And we've got about 45 hotels signed up for the Autograph collection within the next year or two.

So we're not going to be collapsing our brands, are going to be expanding our brands. It's worked well for us and we have about 18 different brands now, and we're working them and they're growing -- all of them are growing and adding more units all around the world.

SEIB: I think we have time for one last question. Before I take it, I just want to remind everybody that this conversation has been on the record.

And I think you get the last question.

QUESTIONER: Thank you. Good morning, Mr. Marriott. My name is Vivian Lowery Derryck with the Bridges Institute. And I'm going to take your story back to Africa, because as we talked about the BRICs, used to be the BRICs, including South Africa, that was not mentioned. So I'm wondering if you're active on the continent, and what are some of the challenges, if you are, of working with -- in countries that really do not have the capacity that we see in the emerging markets, for instance.

Thank you.

MARRIOTT: We're working in sub-Sahara Africa very actively. We'll be opening a hotel in Accra, Ghana; and we're working in Darfur. We're also working very hard in South Africa to acquire a couple of locations. We've been working that for a long time. We're doing a lot in North Africa. We're opening in Tunis; we're opening in -- in Morocco we've got one under construction and several hotels in the pipeline. And we're continuing to expand in Cairo and throughout Egypt. And so we're bullish on Africa.

Africa, as you know -- the bureaucracy, the financing, the capabilities of developing good, strong real estate projects in many of the African countries is really daunting and challenging. But we've got a full team developed to Africa, and we look on that as one of the great opportunities in the future.

SEIB: That's all we have time for. I want to thank you very much. A fascinating discussion, a really unique perspective of the world, and thank you very much for sharing it with us. And in both economic and policy terms, I think we've learned a lot. I appreciate it very much.

MARRIOTT: Thank you very much.

SEIB: Thank you all for being here.

MARRIOTT: Thank you, everybody, for being here. (Applause.)







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