Source: CoStar Group
By Sean McCracken
February 17, 2021
Analysts who cover Marriott International said companies don’t get stronger by losing emblematic leaders like Arne Sorenson, but the remaining executive leadership team is expected to continue to grow the company.
- Patrick Scholes, managing director of lodging and experiential leisure equity research for Truist Securities, said he doesn’t expect there to be much disruption — among investors or consumers — due to the leadership change following Sorenson’s death from pancreatic cancerMonday.
“Marriott is well-known for talent development and the longevity of its employees,” he said, noting the company’s executive leadership team “will have big shoes to fill, but they’re fortunate to have strong depth of talent.”
In a statement, Marriott said it expects to announce a new CEO within weeks, and an interim leadership plan is already in place.
Earlier in February, Marriott announced plans for Sorenson to take a step back from day-to-day operations and leave those responsibilities in the hands of two long-term company executives: Stephanie Linnartz, group president of consumer operations, technology and emerging businesses; and Tony Capuano, group president of global development, design and operations services.
Linnartz joined the company in 1997 as a financial analyst after a tenure working with Hilton. During her time with Marriott, she oversaw various functions for the company, including its revenue management, sales, marketing and technology divisions. She was also the executive in charge of integrating the company’s loyalty program following the acquisition of Starwood Hotels & Resorts Worldwide in 2016. In Sorenson’s absence, she was charged with overseeing the company’s international division.
Capuano joined Marriott in 1995 as a member of the company’s market planning and feasibility team after working with Leisure Time Advisory Group and Kenneth Leventhal & Co. He advanced in the company largely through roles in development — overseeing development efforts in the Western U.S. and Canada, then all of the Americas and eventually heading global development for the company. He is currently tasked with overseeing Marriott’s U.S. and Canadian divisions along with the corporate finance operation.
Marriott’s executive leadership also includes Chief Financial Officer Leeny Oberg, who joined the company’s investor relations team in 1999 before climbing to the top financial role. She had previously worked with various financial institutions, including Sallie Mae, Goldman Sachs and Chase Manhattan Bank.
Sorenson served in the CFO role until 2012, then became the first chief executive for the company who was not a member of the Marriott family.
Mit Shah, CEO of Noble Investment Group, whose company has various Marriott-branded hotels and who considered Sorenson a personal friend, said he remains confident in the ability of the remaining team to lead the company, although there is no replacing someone like Sorenson.
“I have strong relationships with the existing leadership team and their board, and as the chair of a public company myself, I know how involved a board will be in a situation like this,” he said. “I have faith in them.”
Scholes offered a similar assessment.
“Certainly losing Arne is a blow, and he is irreplaceable, but Marriott is a company with a deep bench of highly qualified employees,” he said. “I’ve met before with the people mentioned in the media [as possible replacements], and I’ve always been very impressed with the poise, knowledge and professionalism of their top executive leadership team. Whoever ends up with that seat has gigantic shoes to fill, though.”
Michael Bellisario, senior hotel research analyst and director at Baird, agreed that all the pieces are in place for Marriott, already the largest hotel brand company in terms of market cap, to continue as a well-oiled machine.
“People at Marriott and in the industry loved Arne, and obviously he was the face of Marriott and will be missed, but consumers weren’t staying at Marriott-branded hotels and developers weren’t signing franchise agreements because Arne was the CEO,” he said. “He helped create this bigger, broader platform that we know as Marriott today.”
Bellisario said investors and the markets should not be worried about the transition, and indeed Marriott’s stock prices held steady in the wake of the news. Shares hit $130.40 by close Tuesday, which is the highest mark for the stock since the start of the year.
With Marriott scheduled to hold its fourth quarter and full-year 2020 earnings call on Thursday, Scholes and Bellisario said analysts will be listening for some insights into who might ultimately take the chief executive seat. Bellisario ranked Linnartz, Capuano and David Marriott — son of Chairman Bill Marriott and the one who is slated to eventually take over the chairman seat himself — as the top candidates for the position.
But overall, indicators of the company’s short- and long-term health have not changed, Scholes and Bellisario said.
“The macro-forces that are there — vaccinations and people getting out and traveling again — are not things that Arne, Stephanie, Tony or the board could control, and that’s the focus for almost anyone,” Bellisario said.
“From an analyst perspective, the focus is on the recovery, and this doesn’t change that,” Scholes said, noting Sorenson’s death does “cast a shadow of sadness” over the call.
Shah said Sorenson’s shadow also looms over the broader hotel industry, which will need leaders to step up to fill that void.
“You cannot lose a person of Arne’s impact, passion, courage and voice in the room and not have an impact,” he said. “All others in our industry at this time of great sadness and profound importance need to continue to find ways we can make the collective impact Arne was so very much focused on.”