When Marriott International unveiled plans to franchise its AC by Marriott brand in the United States in June 2013, the company was trying to fill what it viewed as an unmet need in the marketplace. “We saw an opportunity we didn’t think anybody already owned—to create a lifestyle brand with a select-service operating model,” says Eric Jacobs, chief development officer for Marriott’s North America select-service and extended-stay hotels. In October—16 months later—the first AC by Marriott in the United States is on track to open in an adaptive reuse of the historic Cotton Exchange Building in downtown New Orleans. Jacobs elaborated on how Marriott views this new brand in an already-crowded select-service industry tier.
Where do you see AC by Marriott fitting in relation to Courtyard, for example? It’s a space between a productivity brand like Courtyard and a full-service brand like Renaissance. It’s really a lifestyle positioning in that its approach to design, contemporary art, and food and beverage is different from what you see in a traditional select-service hotel. Remember, it wasn’t as though we were creating a brand from scratch. When we first entered into a joint venture partnership with AC Hotels in 2011, the brand already had 70-plus successful hotels in Europe. It had its own style and design aesthetic.
Are you targeting AC by Marriott to urban markets or markets generally? Our development strategy is to target markets that we call “metropolitan urban.” Urban city centers make sense but so do greater metropolitan areas. It doesn’t always have to mean city center. I’d say we’re looking for opportunities that are part of a lifestyle vibe, whether that’s a mixed-use development or an office-living-shopping environment. Whichever, we want to be part of the business clientele in the immediate area.
Are the franchisees signing up mostly from among Marriott’s pool of existing franchisees or are new franchisees stepping forward? We’re seeing a mix. We believe many of our core developers understand the value of the Marriott distribution system. So our existing ownership and current partners actually joined with us early on as we started to see how AC by Marriott might function, what it might look like, and what the financial model might be in the United States. Existing owners have reacted favorably and have done a number of deals. But the brand has also opened us up to other developers who want to play in the boutique/lifestyle world. It’s been roughly 80 percent our core Marriott partners and 20 percent new partners looking at us for the first time.
Are you seeing equal interest in new builds versus conversions? We wrote the business plan thinking we’d have more conversion opportunities than new builds, but we ended up with the opposite, even though the first project to open will be the adaptive reuse in New Orleans. Of the 31 deals we have approved through the end of the second quarter, 26 are new builds. Following New Orleans, we have a new build in Miami scheduled to open in the first quarter of 2015. Then, we have the conversion of an independent hotel in Kansas City. So at least initially, we seem to have a bit of everything.
Can you say more about the brand’s approach to F&B? It’s an adult kind of concept. We refer to F&B, for example, as B&F. As we look at these next-generation travelers, they’re focused on beverages. We knew our beverage program had to lead with the right kind of beer, creating some local feel to it. We also knew we needed some high-end specialty cocktails. Liquor is important to members of this generation, and they’re willing to pay for it.
And what about the food component? We provide a full, hot breakfast that the guest pays for. We want it to be European in style, look, and feel. That might mean an egg tart instead of scrambled eggs or muesli instead of traditional oatmeal. We’ll have fresh sliced meats and fresh fruit, all fairly upscale. Everyone is interested in healthier living today, so we needed to upscale the kind of offering we’re providing for breakfast.
