CFO & Executive VP of Development, Marriott International Inc
Chief Future Officer: Leeny Oberg, Marriott International
This episode of Chief Future Officer focuses on Marriott International CFO Leeny Oberg. Shery Ahn explores how she's helping the world's largest hotel chain through a challenging period for the hospitality industry, facing labor shortages, changing customer expectations, and a sharp falloff in business travel due to the Covid-19 pandemic.
About Kathleen Oberg
Kathleen Oberg, CFO and EVP of Development at Marriott International, has discussed the company's growth strategy and operational model in media appearances. In a 2024 interview with the Wall Street Journal, Oberg stated that Marriott was the first hotel chain to separate real estate ownership from management, a model she said allowed the company to focus on building brands and growing more quickly. She noted that the company holds only about 7% of global market share and sees "lots of opportunity for future growth." Oberg cited the StudioRes brand as an example of Marriott entering the mid-scale extended-stay segment based on customer research and feedback from owners and franchisees. She also said that returns on investment for hotel owners are driven by efficient costs and revenue from customers, and that amenities such as multi-use bar and lounge spaces have shown "tremendous returns." In a 2021 interview with Bloomberg, Oberg addressed the impact of the COVID-19 pandemic on Marriott, describing it as "a shock" and "a kick in the butt." She said the furloughs and layoffs the company implemented were "necessary to survive." Oberg noted that Marriott had hired 40,000 people since the beginning of the pandemic and emphasized the importance of technology, such as mobile key entry, in improving productivity for both customers and owners. She described the CFO role as having broadened beyond financial oversight to include communicating strategy and value to all constituencies. Oberg also stated that over 60% of her global finance team are women and over a third are people of color, which she said makes the company better in terms of ideas and performance.
Transcript (53 segments)
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Narrator0:10
It was devastating, like nothing you could have imagined. It was a shock, a kick in the butt. There's very little that didn't change during the pandemic for the global chains. It's comparable to maybe five consecutive 9/11s, what it did to demand. Marriott, the world's largest hotel chain, saw revenues plummet by 50% in 2020. Another blow came in early 2021 when CEO Arne Sorenson lost his battle with pancreatic cancer. Long-time Marriott executive Tony Capuano succeeded Sorenson, and despite these setbacks, he's optimistic about the future.
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Tony Capuano0:53
Part of my confidence in the ability to... the way in which she handles business challenges. I think she goes well beyond maybe the quote traditional CFO role. She's involved in every aspect of the business. The openings in Q4, we're still right on target. We've even had a couple in net. Not only is she obviously a wonderful steward of the company's balance sheet, but I rely on her heavily as any leader would as we try to look around the corner. Part of our job is to make sure what the customers want, what are they thinking that they want next year and the next year, and that takes investment and that takes thinking ahead of time of where you want to get.
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Narrator1:52
You could call Leeny Oberg Marriott's chief future officer.
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Kathleen Oberg2:10
I always love finance. I did figure out that once I'd worked at a financial services firm that it was a great experience for a few years, but that I ultimately wanted to join a team for a more long-term way to try to build a business.
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Narrator2:27
Oberg joined Marriott as part of its investor relations group in 1999. As is often the case for many people, things evolve, the company grows, opportunities show up, and I really was able to build a set of skills and experiences that helped prepare me for the CFO role. Not only in corporate level roles, but also operational and international.
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Kathleen Oberg3:11
In the wake of an unprecedented disruption, that was the wake-up call for rethinking some of the operations and to try to figure out smarter ways to operate.
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Narrator3:24
The large hotel chains are very much still in the mode of figuring out what the consumer is going to look like, what guest demands are, what preferences have changed. How does Marriott need to reinvent itself in these very uncertain times?
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Kathleen Oberg3:40
I think a lot of the initiatives that were in place, a lot of the strategy that was in place even before the pandemic began to unfold, will continue to serve us well. Continued global growth, more than 60 percent of our pipeline is outside the U.S. No doubt I would expect that we will see greater growth rates of our rooms outside the U.S. than inside the U.S.
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Interviewer4:17
Does that mean that you'll be putting more investments overseas as well?
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Kathleen Oberg4:21
Well, investments is an interesting word, but the capital structure of deals varies a lot by market. So for example, in some markets in Asia Pacific, there's far less use of debt, while in the U.S. there is much more use of debt to construct a hotel. So the investment needs are often different for an owner outside the U.S. than inside the U.S.
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Narrator4:48
Notice that she refers to owners. That's because Marriott owns a very small percentage of properties that carry its name.
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Kathleen Oberg5:11
Because we don't own all of our hotels, we have far less debt. We would never have been able to grow as fast as we've grown and become more attractive to our customers without having the capital from all these hundreds of owners providing capital. The challenges of the model are you're managing a lot of different constituencies. You have to really consider the owner's needs and what's going on in the financing markets. I'd say the biggest challenge is around prioritization, about really picking your spots, going after them quickly with your investment dollars, and then adapting as times change.
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Narrator5:51
And in a time of rapid change, Marriott has made it a priority to invest in technology.
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Kathleen Oberg6:12
To stop by the front desk and that you can communicate about how you want your pillows, etc., all on your smartphone. That's both great for the customer, that's also great for the hotel. Allows them to plan better, allows them to run it more efficiently. There have been wonderful innovations. We're not done, we got plenty more to go. I think the key is to really enhance technology but to realize that technology doesn't replace the face-to-face interaction. I have to make sure we do things right. After all, it's my name over the door. We are a people first business, but how do we utilize technology to enhance the services we can deliver and make those... our craft.
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Narrator7:11
Coming up, Leeny Oberg shows me how classic hospitality meets cutting-edge technology at one of Marriott's iconic hotels.
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Kathleen Oberg7:22
On the digital platform, you can do so much in terms of communicating with your customers, and guess what, it's also economically really efficient to be doing it that way. It's all about engagement.
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Narrator7:35
This is Bloomberg.
Founded in 1927 as a root beer stand in Washington D.C., Marriott has grown from a tiny family business into the world's largest hotel chain. But in 2020, the public health crisis that ravaged global travel also threatened the consumer engagement these programs had built.
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Kathleen Oberg8:19
Some of our most loyal customers didn't stay in a hotel for a year. But through our branded credit card programs, through the partnership with Uber that we rolled out, we found other mechanisms to keep connected with our customers even in a period where they were grounded, not traveling at all.
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Narrator8:37
The partnership with Uber allowed Marriott Bonvoy members to earn points through rides and food orders. The credit card partnerships not only kept Marriott connected with customers, they connected the company with funds at a critical moment.
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Analyst8:51
What Marriott, as well as Hilton, did, they were in a position to generate cash by pre-selling points to their credit card partners. When demand had dropped by 80-85%, it means you really value the relationship and you trust the partner. You truly trust the partner, they'll make millions and millions of dollars from the branding of the credit cards. And then additionally with that, the consumers get the points.
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Kathleen Oberg9:29
What we're seeing quite a bit this year is a lot of redemption of those points now that the world is opening up again. We've enabled our customers to have more choices in how to redeem those points. They can redeem them within our hotels, they can redeem them outside of our hotels with the partnerships that we have through experiences, etc. But I think it really helps our customers stay within the ecosystem of Marriott.
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Narrator9:54
I got a view of that ecosystem from the lounge, a premier amenity for Bonvoy members.
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Kathleen Oberg10:15
Making our loyalty members now 157 million strong, making them feel welcome, special, and appreciated for their frequent travel with us really matters.
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Interviewer10:27
It feels like you're trying to own the full experience of travel, whether it's through your co-branded cards or your travel insurance. Why is it important to bring your guests into this ecosystem?
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Kathleen Oberg10:40
It's all about engagement. One of the most important things is looking around the corner. What are the trends that you're seeing in customers, particularly in the digital commerce space? Before, obviously so many of our reservations were made by the telephone. On the digital platform, you can do so much in terms of communicating with your customers, and it's also economically really efficient to be doing it that way.
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Narrator11:12
The digital future is already in place for Marriott guests, transforming everything from the check-in process to the traditional room key. But even as technology creates efficiencies, there are areas of rising cost on the horizon. After making deep staff cuts in 2020, Marriott needs to rebuild its workforce.
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Kathleen Oberg11:34
For sure, the most painful part of this entire pandemic was about the furloughs and the layoffs that we had to do. It was necessary to survive, to make sure we got through to the other side.
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Narrator11:46
Now the company not only faces competition for workers in an economy reshaped by the pandemic, it's trying to do this while wages in the industry are rising.
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Analyst12:10
There's tension as they work through what those guest expectations are, what their strategic placement in the market is, and what their labor cost needs actually are. So I do think they need to leverage technology to reduce the number of unskilled jobs in hotel operation, but they really need to provide jobs that require higher level of skills so that they can reallocate part of their payroll to fewer workers and pay them better.
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Kathleen Oberg12:45
We have been able to hire 40,000 people since the beginning of the year in 2021. And where you see it is in certain really hot markets, it's where you can... demand.
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Narrator13:12
This labor management system allows a hotel to much more assign labor just in time. So you're able to say, I see what's coming over the next couple days, I can work the shifts in a way that frankly gives the associates more flexibility but also makes the staffing levels more appropriate. It used to be prior that it would be more of, okay, I'm going to plan for all of next month, done your work shift, you know what it is. Now there's more flexibility and more adaptability to what's happening in the business of the hotel.
Flexibility and agility will be critical assets for Marriott in the foreseeable future, with leisure travel driving the demand recovery and the forecast for business travel uncertain.
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Kathleen Oberg14:10
The weekend, but maybe stay an extra night, and we have the business center and we have the guaranteed Wi-Fi and reception that can ensure that you can get business done from perhaps the pool or the beach on come Monday morning. Where I'm a business traveler, I likely will choose mobile check-in, mobile key, come up the elevator straight to my room. Then I may go on a family vacation, I want to talk to the front desk clerk and find out about a restaurant that no tourists are aware of. So now when you look around this hotel, before it would be really easy to tell exactly who was on a business trip and who was here seeing the city for leisure. Now much more of a blend, people staying longer over a weekend. That means we need to... in the past.
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Interviewer15:11
Well, I think first of all, we ultimately will... that business is coming back. I think one of the interesting things we're seeing in the group business is that people are not canceling farther out, they're canceling really close in where there's still some discomfort in traveling, but where there are bookings that they feel comfortable doing in the next few months, those bookings are ramping up. So we've seen group get better and better and better with each quarter of this year, and we're actually really excited about what we see in 2022.
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Narrator15:46
Leeny Oberg's job always keeps her on her toes, and when she's not on the job, her favorite pursuits are active as well.
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Kathleen Oberg15:54
I love to run. We've been part of a... head. You know, a lot of people say they run with music. I generally don't run with anything. I really like the time to think, reflect. You've always heard the saying that people get their best ideas when they're out for a run. There's no doubt there's something to that.
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Narrator16:28
Up next, Leeny Oberg believes a chief future officer must be a good listener. To be a good leader, I actually find that the listening is where some of the best decisions get made. And she says some of the best ideas come from a business culture of diversity. Over 60 percent of my global finance team are women. Over a third are people of color. It makes us a better company.
February 2021, the Marriott Foundation announced a $20 million endowment to launch the Marriott Sorenson Center for Hospitality Leadership at Howard University. The partnership with a historically Black institution aims not just to bring more diversity to the industry, but to give students the tools to rise to the top.
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Kathleen Oberg17:34
When we first spoke about this, it was about building a true partnership, really trying to solve for an issue, and that is the lack of underrepresented minorities, especially at the upper echelon of these industries. And that was, that is problematic. And what this is is to provide a solution. I think the positioning of that center is really unique in being one of the first to say publicly... diversity promotes new thought, new ideas. It makes organizations stronger, it makes organizations better. It requires deliberate focus to drive the sort of diverse workforce that we want. If you look at our C-suite, more than 50 percent of my direct reports are diverse. If you look at our board, more than 50 percent of our board composition is diverse. On the diversity inclusion side, I'm particularly proud in finance we have over 60 percent of my global finance team are women, over a third are people of color. It makes us a better company, not only from ideas but from performance.
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Narrator19:11
Oberg brings that same commitment towards diversity going as a mentor in all areas of business.
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Kathleen Oberg19:16
One of my overall beliefs is it's really important for leaders to be approachable. And so the more that I can talk to anyone in my shop, or frankly even out of my discipline, about what they're doing and how they're thinking about it, hopefully it's helpful for both them and for the company.
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Narrator19:36
Unflappable, responsible, and approachable, Leeny Oberg has the expertise and the people skills to steer Marriott into the future. I asked her what she sees when she looks ahead.
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Interviewer19:49
What's the opportunity for Marriott in the next 10 years that most excites you?
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Kathleen Oberg19:53
We are all about being the world's... opportunities. We got to get at them, we got to make sure that we go and take advantage of them. And so a lot of this is about the translation of business strategy and financial resources and putting them together in a way that provides value to all of our constituencies.
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Interviewer20:28
What's the challenge for Marriott in the next 10 years that keeps you up at night?
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Kathleen Oberg20:33
Pace of change. Pace of change. All of us have seen that technology has meant that the pace of change has only accelerated. When I think about when we would start a brand initiative 20 years ago versus when you start it now and how quickly it takes to get it done and rolled out, and what customers expect, they expect things really quickly. All of us, you know, you're... in the next 10 years.
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Interviewer21:10
Of course, you've got the standard parts of the CFO role in reporting accurately and with great transparency of our results and our state of health, critically important. But just as important is really helping the company find ways to accelerate growth. For me, it is very much about how to enable the growth that we want to achieve.
What's the skill set or area of expertise that the CFO will need to develop in the next 10 years?
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Kathleen Oberg21:40
Deep understanding of technology and where technology is going, I think is number one. I think communication skills, the need for good communication skills is only going to continue to increase. You know, the old days you had the... the strategy and the value that you're trying to deliver.
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Interviewer22:15
What's the best advice that you'd give to somebody who got promoted to the CFO level today?
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Kathleen Oberg22:23
Love what you do. It's really important that you love what you do. And then the other one is about listening. You know, as a leader, there's this expectation that perhaps you're going to come out with what everybody should go do and the edict of this is the way we go. I actually find that the listening is where some of the best decisions get made, by listening to team members so that you can say, I want to take part of that point of view and that point of view to get to the best decision and strategy for the company. And that takes really listening.
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Narrator23:11
A willingness to learn makes Leeny Oberg a chief future officer. I'm Sherian. This is Bloomberg.