September 18, 2019 Owner & Franchise Communications

2020 Budget Overview & Notable Items

As hotels are focused on their annual budgets, we’d like to provide you highlights of key changes and initiatives impacting the 2020 Operating budget guidelines. Top-of-mind items for the upcoming year, not unlike 2019, continue to be Loyalty and Mobile Key. These two initiatives remain critical components of Marriott’s strategy to maintain a strong owner/franchisee value proposition and remain top-of-mind with guests in our continued efforts to be the world’s favorite travel company.

To learn more about these changes:

owners of Managed by Marriott Select Brand hotels should contact their hotel General Manager(s).
owners of Managed by Marriott full service hotels will receive additional information later this month.
franchise management companies of all brands are encouraged to view the 2020 Budget Guidelines on MGS (EID & password required).

Loyalty and Marriott Bonvoy
On September 14, 2019, Marriott Bonvoy Off-Peak, Standard and Peak rates became available on Marriott.com for stays after October 4. Hotels should closely monitor how redemption demand responds to the new award chart; however, an appropriate amount of time is required to allow for a new equilibrium in member behavior and program economics to take shape. Therefore, we do not recommend changes to RevPAR targets based upon this program change.

As a reminder, Reimbursement Base Rates and Reimbursement Schedules for Marriott Bonvoy™ compensation are reviewed and updated for each property annually. This information will be available via the MBV5 report in MRDW under the 2020 Tab. Hotels should use this information to assist with 2020 budgeting; the rate and schedule listed for your hotel will go into effect on Jan. 1, 2020.

Mobile Key

As a reminder, all hotels that have not installed Mobile Key-certified RFID BLE locks must budget for lock upgrades or replacements in 2020. To support hotels in activating in 2020 and avoid entering the red zone in 2021, hotels have the option of obtaining third-party deployment support for a one-time $2,500 charge between now and July 31, 2020 via an approved vendor. This support provides project management and coordination of lock vendor, iT, and hotel activities required in the correct order to successfully activate Mobile Key, as well as troubleshooting and support on day of activation. For hotels that have not engaged in the process to activate Mobile Key by August 1, 2020, third party deployment support will be required at an increased one-time charge of $5,000 to complete preparations and go-live. The cost increase is required due to the constrained timeline and urgency to activate prior to the January 1, 2021 brand standard date. Multiple vendor options will be available to provide the deployment support outlined above.

Customer Engagement Center (CEC) Property Support Services

As an optional service, CEC Property Support Services will continue to be billed as a direct charge. Properties will have the option to forward calls to Customer Engagement Centers (CECs) if they have a shared service agreement in place. Billing rates for 2020 are increasing in most markets globally for both Managed by Marriott and franchised hotels due to hourly wage rate adjustments. Refer to the 2020 Hotel Operating Budget Guidelines for the respective rates.

Hotels may also want to consider their recent volume trend when budgeting 2020 costs. As customers continue to shift to digital reservations, there has generally been a downward trend in call volume/reservations through this channel. These trends vary by hotel so properties should consider their own volume trend when budgeting.

Other Customer Engagement Center Service Charges
During 2019, the Customer Engagement Center (CEC) issue resolution policies were revised to have hotels take greater responsibility for resolving guest issues in a timely manner. As of April 1, 2019, in order to ensure that costs are borne by the hotels requiring case turnovers by CEC associates, cases sent to hotels and not resolved within 72 hours were taken over by the CEC, and hotels were charged a $150 USD takeover charge. However, as recently communicated, these charges were suspended for the remainder of 2019 and any 2019 billings were credited to the hotels to provide more opportunity to adjust to the new process.

We will be reviewing the case resolution trends for the remainder of the year to further evaluate the billing rate for 2020; however, based on recent improvements we expect the rate will be in the range of $45-$55. We will provide an update as soon as the approach is finalized for 2020. Until then, a $50 USD per takeover charge is included as a placeholder. Please note that in order to reduce property caseloads, CEC associates are directed to resolve property issues within their empowerment levels at initial contact, and any compensation provided for resolution (e.g. award points) will continue to be billed and appear on invoices.

Opera PMS Upgrade

In 2020, Marriott will begin implementing an upgrade of the Opera Property Management System from version 5.4 to 5.6. This upgrade is necessary for all 1,850 hotels running the Opera PMS, and ensures the properties receive continued support from Oracle, meet credit card payment industry standards (PCI), and receive continued support from Microsoft for the operating systems licenses on which Opera runs. This upgrade will also enable access to critical other initiatives, including Mobile Key, Choose Your Room, and All-Inclusive.

Hotels will be charged for the one-time deployment which includes training and change management. The Opera Upgrade development costs are included in the Program Services Fund (PSF) and does not impact the existing rates.

American Hotel & Lodging Association (AH&LA) Assessment Increase – U.S. Hotels Only

To reflect increasing support provided by the AH&LA, the rate for hotel membership will increase in 2020 and then again in 2021. In 2020, the rate will increase from $3.00 per room to $4.00 per room for Luxury hotels and $3.75 per room for all other brands. While optional, all hotels are encouraged to participate in this assessment in support of the AH&LA’s advocacy efforts. Note: there are no changes planned for the Hotel Association of Canada assessment in 2020.

New Workforce/HR Technology Suite

In 2020, we will be replacing the technology suite that powers systems such as myHR/myPDR, including Explore Program materials, and myLearning. For Managed by Marriott hotels, the suite also powers performance appraisals, global recruiting and Marrpay (U.S. only).

Our current platform is rapidly becoming obsolete because of its age, evolving global business needs, and the required investment just to sustain it with no added benefits. Marriott International has researched best-in-class technologies and has decided to partner with Oracle to upgrade our suite of workforce management tools. The new technology platform will launch in the summer of 2020.

The new suite is expected to drive value through:

Virtual assistance that provides personalized support in real-time for customized, faster guidance
An enhanced Explore discount experience, including digital forms
Mobile-enabled, cloud-based platform ensures regular and seamless tech updates
On-demand learning and reporting to measure and track employee progress
Availability in more languages to create more accessibility
Integrated HR data (e.g., hiring, onboarding, performance, development + payroll) and business data (e.g., Revenue, Loyalty signups) in one place provides powerful analytical insights to inform business decisions (for Managed by Marriott Hotels only)
Supports self-service with convenient, on-demand access to job and personal information (for Managed by Marriott Hotels only)

Specific cost information for both Managed by Marriott and franchised hotels is included in the 2020 budget instructions.

ATLAS Enhanced – U.S. Managed by Marriott Hotels Only

All Managed by Marriott hotels in the U.S. currently on the ATLAS labor management platform will implement ATLAS Enhanced. The planned roll-out begins in Q4 2019 and runs through Q2 2020. ATLAS Enhanced offers improved labor management tools and processes supported by an above-property Center of Excellence. Each property has an approved business case, which includes estimated savings in productivity, overtime and other labor costs; the business case also includes estimates for costs like the COE, licensing, etc. AVPs and Finance Business Partners will work with each property to ensure the correct savings and costs are budgeted. On-going costs begin once the hotel goes-live on ATLAS Enhanced; properties will not see one-time costs until 2021.

PC Support (Computer) Rate Increase – Managed by Marriott Hotels Only

PC Support rates are increasing globally for Managed by Marriott hotels due to the implementation of new tools that detect, analyze data, and enable response to security threats, and including Microsoft’s Software Assurance (SA) expenses that were previously incurred directly by properties from Microsoft.

Global Safety & Security – Former SPG Managed by Marriott Hotels Only

Former SPG Managed by Marriott hotels will experience Global Safety & Security rate increases in 2020. SPG hotels have been transitioning to the Marriott program, which is more comprehensive than SPG’s program, over the past 2 years. The allocation is revenue-based so that the cost impact will vary with actual revenue, but may average approximately $3,000 per hotel. Services provided to former Marriott Rewards hotels and former SPG hotels are the same.

Thank you again for your ongoing partnership and commitment to Marriott’s brands. Should you have any questions or need additional information, contact MSB.MxM.Americas.Finance@marriott.com for Managed by Marriott hotel guidance or AmericasFranchiseFinance@marriott.com for franchised hotel guidance.