
How Raj Menon shaped the Marriott story

Summary
With its asset-light model, the firm has been more successful than any other hotel operator in IndiaNEW DELHI : Kamal Galani, founder of the Landmark Group, whose businesses range from hospitality to real estate, first came across Moxy Hotels in Tokyo. These hotels have a youthful energy about them. The brand has “small but smart rooms, stylish communal spaces and bars you’ll love," Moxy’s website tells us.
Galani thought that central Mumbai could do with such a hotel brand, one that fills a gap in the millennial and Gen-Z travel segments. The Landmark Group is now working on a hotel project that would be branded Moxy. It is expected to launch in January.
Moxy is owned by American hospitality firm Marriott International. The firm is the largest hotel operator in the world, and in India. It has become the largest even without owning any asset— Marriott doesn’t ‘own’ a hotel; it simply manages them.
For instance, the firm manages another hotel Galani built, in Indore.
“We were happy with the performance of our 218-room Indore hotel, and we were happy with the idea of extending the partnership," he said.
Galani’s company initially wanted Fairfield, another midscale hotel brand owned by Marriott. “We changed our minds when we saw Moxy. If this brand does well, we may consider opening more of them," he said.
Businessmen like Galani have made a beeline for Marriott, wanting the firm to manage their hotels. So much so, Marriott now has a problem of plenty in India. At least four hotel consultancies that help hotel owners find operators said that they are inundated with requests from owners who would like their hotels branded into a Marriott.
Mid-market and luxury hotel owners prefer Marriott for two reasons—a Marriott brand often commands a premium, higher average room night rates. For instance, some of its W Hotels, a lifestyle hotel brand targeted at the young, charge a hefty rate, upwards of ₹30,000 a night in prime locations like Goa during the peak season.
Second, its loyalty programme, Bonvoy, is a hit with many travellers. Marriott charges a higher fee to hotel owners to manage their properties compared to other operators, but the promise of better long-term returns shapes their choice.
Many of these owners have to wait; some requests have been turned down over the last year.
Marriott, today, manages 21,237 rooms in 144 hotels in India. Besides, it markets about 4,500 rooms from the luxury properties of ITC Hotels, one of India’s largest hotel chains, on its platform. Together, it beats Indian Hotels Company Limited (IHCL) by quite a distance in the pecking order of hotel operators in India. The Tata group owned IHCL operates brands such as Taj, Seleqtions, Ginger, Vivanta, Ama Stays and Gateway. The group’s existing supply of rooms totals 17,336, according to industry estimates.
The key difference here is that IHCL owns more assets, about 100 of them and manages another 72 hotels.
Marriott is likely to retain its lead in the years ahead. Its pipeline includes another 11,008 rooms compared to IHCL’s 8,838.
The company’s India success story is even more spectacular when you consider that not many international hotel chains have succeeded. While some like Radisson Hotels Group and French major Accor have done reasonably (110 and 58 managed or franchised hotels, respectively), others like Hyatt are still playing catch up with just 45 hotels. American hospitality firm Hilton, in India for over 17 years, has just 25 hotels till date.
Marriott International entered India around 1999 and it owes its success, quite substantially, to the efforts of one man—Rajeev Menon. The company’s president for Asia Pacific excluding China, he has either directly or indirectly headed the hotel operator’s business in India for over two decades.
What did he do, and more importantly, what did he get right that others in the business didn’t?
The rise
Menon, now 54, grew up in suburban Delhi with two brothers. His father worked in the railways, and he attended the Navy Children School in Chanakyapuri.
Menon always wanted to become a pilot with the Indian Air Force but couldn’t meet the physical criteria. Instead, he applied to hotel management schools, which, in the 1990s, were considered glamorous and promised a razzle-dazzle, on-the-go life.
He studied at the Institute of Hotel Management Catering and Nutrition, Pusa, before migrating to Australia. He joined Marriott International there, and since then, has been to India on several stints.
“India taught me true hospitality, but Australia taught me resource management because I went there in the middle of a recession," Menon said, during an interview at JW Marriott in Juhu.
In 2007, Menon was appointed as the area vice president for India and a clutch of other countries. He has climbed the corporate ladder fast ever since. In his current role, Menon is based out of Singapore. He travels to India and other markets he heads, every fortnight, at times every week.
Over the years, Menon developed traits every successful hotelier must have.
“He has an innate business sense. His customer, peer, and media connect is outstanding. Dealing with over a hundred hotel owners can be very challenging. I would always wonder how he does it," Rattan Keswani, a veteran hotelier, said.
“Apart from good leadership in a country, an international brand must also have a strong understanding of the local requirements. That is what makes them successful. Rajeev has great India experience and therefore can take difficult decisions for the country. It is a system and process driven company," said Manav Thadani, cofounder of Hotelivate, a hospitality consultancy.
Hotelivate is working or has already closed about half a dozen hotel deals in Asia and Europe, the Middle East and Africa (EMEA) region with Marriott.
Mid-market play
Marriott’s strategy, from the beginning, was very different to what the Indian hotel chains like IHCL or ITC Hotels were pursuing. While these chains largely managed their own marquee assets, Marriott focussed on the asset-light business model of managing properties others built and owned. This was a scalable model and the Indian chains only realized this around 2010, when they too joined the asset-light party.
In the asset-light model, hotel owners pay companies like Marriott a management fee, ranging between 6% and 9.5% of the revenue. If a hotel generates revenue of ₹300 crore in a year, it will therefore pay ₹25-30 crore to the hotel operator. Most hotels sign 12–15-year contracts.
Meanwhile, Menon’s team also decided to go after the mid-market business traveler segment versus just the luxury segment. India had many opulent luxury hotels in major cities, but it solely lacked any business hotel in the early 2000s. Marriott’s Courtyard brand fit in well here. Early entrants were the Courtyard in Chennai, which started in 2006. The ones in Gurugram and Hyderabad came up in 2009 and that in Mumbai, near the city’s international airport, started in 2010.
“When a hotel company is growing, it’s part of their strategy to make their smaller and mid-market brands shine more—like 5-star hotels—because that’s what owners want," said a hotel consultancy’s India head who didn’t want to be identified.
Some of the Courtyard brands became huge hits. For instance, Courtyard by Marriott, located along the outer ring road in Bengaluru, is among the best performing in its category across markets, industry watchers said.
Following the success of Marriott’s mid-market strategy with Courtyard, other hotel chains started targeting this market, too.
To be sure, Marriott does operate hotels across segments. Its high-end brands in India include St. Regis, JW Marriott, Ritz-Carlton and W Hotels.
Picking owners
As Marriott picked up assets to manage, it also treaded cautiously. One reason behind its success story is the owners it chose to work with—the hotel business in India is notorious for attracting owners with questionable backgrounds.
“We diligently looked for partners who were well established and had a great reputation," Menon said, recalling the company’s early days. “The Rahejas, Kanakias, Ruias, Vikas Oberoi (chairman and managing director of Oberoi Realty)… to name a few. Partnering with them has always worked out well for us," he added.
Marriott, for instance, manages The Westin Mumbai Garden City, owned by Oberoi Realty in Goregaon.
Menon balanced pace with caution rather well, analysts agree. “They were very nimble and fast on their feet and established great investor relationships," said Jaideep Dang, managing director of hotels and hospitality group at JLL India, a real estate services company. “They evaluate their potential owners and properties thoroughly. They filtered the Indian market very well," he added.
Many of Marriott’s owners became its best ambassadors—this word of mouth worked well for the company, Dang believes.
“Marriott is one of the few international brands that have understood and moulded themselves into how Indian owners work," said Romesh Koul, chief executive of Delhi-based Naaz Hotel Consultants, a boutique consultancy. “They have been performing well across the categories of hotels it operates in. The Bonvoy programme, too, has become a game changer for them," he added.
Menon’s contemporaries and seniors said that apart from his keen sense of business, his owner connect is considered one of the best in the industry. Over 40% of Marriott’s new signings in 2022 were with existing partners.
“The heart of doing any business is to create trust. Especially from the Asia point of view, if you’re able to create trust with partners, business becomes easier. You must be a straight shooter and be transparent with them," Menon said, talking about his people approach.
What’s next
While the going has been good, past success is no guarantee for the future. Marriott does face stiff competition now across segments.
For hotel owners with access to huge capital, the choice is always between a Marriott and IHCL, said Nikhil Shah, director of hospitality, capital markets and investment services at Colliers India, a real estate advisory firm. IHCL now has an advantage, he added. Why is that? The company has many brand variants to offer to hotel owners—everything from villa stays and business hotels to upscale products. The company also has a larger development team in India. Therefore, it can potentially grow faster.
The problem of plenty could also manifest in a different way. In some popular destinations, there is a crowding of many Marriott brands. For instance, within a four km stretch in Goa, the company has three of its hotels—a Westin, a W and a JW Marriott, industry experts pointed out. This could leave hotel owners anguished if they lose business to one another.
We are not sure how Menon plans to handle such confusion. What we do know is his plan to further expand, both in terms of business models and the sort of property it takes on.
To retain its edge, Marriott is exploring the franchising model. Here, the company would just lend its brand to a hotel owner and not manage the property. More hotel owners may be interested in this model—the fee charged by Marriott here is lower, about 4-5% of the topline. Marriott, however, is likely to be very selective. Franchising would leave it with little control over either the hotel operations or its owner.
At the top-end of hotel pyramid, Menon appears to be bullish on resorts.
When he migrated to Australia, in the late 90s, India’s GDP was less than $500 billion. India’s GDP crossed $3.5 trillion in 2022. And soon, the country is hoping to cross $5 trillion. Menon is betting on this growth wave.
“As India’s wealth grows, more and more Indians would want to take vacations in urban resorts," he said. “In fact, last year, 50% of our signings were luxury properties," he added.
Subsequent to the publication of this story, IHCL has clarified that its gross revenue from all its India businesses is ₹8,589 crore. This includes ₹641 crore from its air catering business housed under Taj SATS. IHCL owns about 100 hotels and manages another 72 of them.