GOLF MANAGEMENT COMPANY RETREAT JUNE 21, 2017 OPERATING ACCOUNTABILITY JOE CARRILLO SENIOR VICE PRESIDENT, FRANCHISE OPERATIONS MARRIOTT SELECT BRANDS

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1 GOLF JOE CARRILLO SENIOR VICE PRESIDENT, FRANCHISE OPERATIONS MARRIOTT SELECT BRANDS MANAGEMENT COMPANY RETREAT JUNE 21, 2017 OPERATING ACCOUNTABILITY

2 SUCCESS IS NEVER FINAL 2

3 BRAND OWNER MANAGEMENT COMPANY GUEST 3

4 Branding DRIVE PROFIT PREFERENCE GROWTH FOR MARRIOTT AND KEY STAKEHOLDERS 4

5 Owner and Franchise Services Strategy Drive excellent returns for owners and franchisees and deliver value and exceptional on-strategy growth for Marriott International Objectives Deliver margin and cash flow growth with exceptional Owner return on invested capital Objectives Represent Owners and Franchisees within Marriott Act in a manner that is transparent in terms of business decisions, being direct and honest Display a sense of urgency for resolution Drive alignment with Owners and Franchisees to support business objectives and brand integrity 5

6 Core Preference Drivers Performance Develop best brands and strongest channels that deliver the highest returns and work with Owners & Franchisees to realize their portfolio s full potential. Support Transparency Partnership Provide tools and resources to enable Owners & Franchisees to run great Marriott hotels that are accretive to Marriott brand equity, deliver outstanding guest service, and industry leading NOIs. Provide opportunities for Owners & Franchisees to share their perspective during Marriott decision making process to achieve stakeholder buy-in on strategy and initiatives. Communicate with Owners & Franchisees on regular/on-demand basis critical information to support their business operations. Strongest relationships with our Owners & Franchisees by conducting business with integrity, recognizing their investment with Marriott, celebrating their success, and acting in the long-term interest of our Owners & Franchisees. 6

7 Marriott Franchise Model Marriott Role Deliver tools, resources, systems, brands and standards that work. Management Company Role Leverage internal and external resources to run great hotels. 7

8 Engagement MINA/CONNECT Conferences Individual Brand Boards Joint Advisory Boards Market Meetings Innovation Forums Webinars Conference Calls Account Reviews 8

9 Account Management Marriott Account Executive (AE) Franchise Management Company Hotel Performance & Accountability Work with principals and above-property leaders where financing and strategic decisions get made to Influence hotel performance and Hold franchisees accountable. 9

10 What We Do Serve as the Primary Point of Contact Escalations & Issues Quick Response / Resolution Transparency Proactive Communication Follow Through / Close loop Listen, Acknowledge & Resolve 10

11 What We Don t Do Engage in the management or operation of any aspect of a franchisee s hotel or business operations. Manage or direct the work of hotels or above-property teams Train hotels (and to some extent, the franchise management company) Inspect hotels 11

12 The Formal Account Meeting Understand account s desire for frequency and format of meetings in-person, conference call, monthly, quarterly, ad-hoc, etc. Identify participants from account and determine appropriate Marriott attendance, based on relationship and desired goals for the account Call account 2 to 3 weeks in advance of meeting for their perspective and proposed agenda items and issues to be addressed Send account review deck in advance of the meeting Identify desired results from account (i.e., growth in certain markets, renovations of hotels) and thus from the meeting 12

13 Owner and Franchise Admin Services Relicensings & Renewals Comfort Letters Other Amendments Growth Administration BUSINESS SUPPORT ENGAGEMENT COMMUNICATIONS Owner Account Strategic Information System (OASIS) Franchise EID Process Owner Card Management PRODUCT INTEGRITY O+F ADMINISTRATION 13

14 Owner & Franchise Communications OFS Communications owns all messages presented to owners and franchisees Communication Vehicles depend on complexity of initiative/message mi360 Marriott s Hub for Owners & Franchisees Marriott Global Source Owner Update (managed owners) Weekly Update (franchisees) Quarterly Game Plans (franchisees) Ad hoc owner/franchise memo (delivered by OFS Communications) Account review presentations Market meeting presentations Conferences Roadshows / Webinars Office Hours 14

15 Owner & Franchise Product Integrity Business Objectives: Brand Detractors Renovation Compliance Capital Asset Planning & Execution (CAPE) 15

16 Owner & Franchise Administration Administration Owner & Franchise Survey Owner Account Strategic Information System (OASIS) 16

17 Pre Opening And Ongoing Services Operations Sales & Marketing Revenue Management Human Resources Tools & Technology Training Systems Installation 17

18 Global Design Global Design Services Architecture & Interior Design Project Management (Select Service & Extended Stay) Engineering Estimating and Feasibility Procurement Proto-typical designs and concepts 18

19 Global Quality Assurance Global Quality: How does it work? Brand Standard Audits, guest satisfaction results, and major capitol improvements are used to measure performance and determine a property s accountability status Guest Satisfaction (GSS) ACCOUNTABILITY Brand Standards & Audit (BSA) Major Capital Improvements / CAPEX 19

20 Benefits to our Hotels & Guests Strong accountability to guest feedback, hotel audits of operations and brand standards, and performance improvement tools ensure the health of our brands, and ultimately to drive guest satisfaction to guest loyalty Understand hotel performance Drive Brand Preference & Guest Loyalty Provide Brand Equity Protecting Investments 20

21 Accountability Metrics We evaluate in 6 month tracking periods or waves. For each six-month tracking period, hotels are assigned a Performance Classification (green, clear, yellow, or red) for each of the following measurements using thresholds which categorize hotels based upon their level of compliance with standards. 1. GSS Performance Classification based on the hotel s Intent to Recommend Score from guestvoice 2. Brand Performance Classification based on hotel s performance in the Branded section of the BSA 3. Operations Performance Classification based on hotel s performance on the Operations section of the BSA 4. Capex/Major Initiative Performance Classification based on the hotel s performance against the brand standard for major brand or company initiatives 21

22 Accountability Matrix GSS ITR Score GSS Performance Classification color BSA Brand Score BSA Operations Score Compliance BSA Brand Performance Classification color BSA Operations Performance Classification color CapEx/Major Initiative Performance Classification color Overall QA Zone determined by lowest applicable classification Determined each 6-month tracking period (Jan-Jun & Jul-Dec) QA Zone Green Clear Yellow Red Accountability Each time hotel is in the Red QA Zone it will escalate in the Accountably Program; the hotel must go 4 tracking periods with a QA Zone that is Yellow/Clear/Green to earn a Clean Slate. Another Red Zone occurrence during any of those 4 tracking periods will result in an additional escalation and cause the clean slate clock to reset, requiring the hotel to be out of the Red Zone for the next 4 tracking periods. 22

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24 Questions? 24