3 Lessons Disney Learned From Marriott

After 40 years of being CEO, Bill Marriott has announced that on March 31, 2012 he will step down from one of the world’s greatest hotel companies and become Executive Chairman. Having taken the reins originally from his father, who started the company as a root beer stand in 1927, Bill Marriott grew the company to operating about 660,000 hotel rooms in 3,800 hotels in 75 countries.

Bill Marriott was much like Walt Disney–he walked in the shoes of his customer, visiting as many hotels as he could. He was adamant about being in the trench. Even at age 79, he just visited his 250th hotel for 2011. What many people don’t know is that Disney owes many of its own lessons from its experience with Marriott. Many of Disney’s best leaders came from Marriott, including Lee Cockerell, former Executive Vice President of Operations at the Walt Disney World Resort, who wrote the forward to our book Lead With Your Customer. Here are three important insights:

1. Look at Your Potential. In the early 1980s, Disney was in a very vulnerable position having huge cost over runs in the creation of Epcot Center, and doing poorly in the box office. Disney did not look attractive on Wall Street. Meanwhile, Marriott Hotels had a lot of cash on hand. Bill Marriott was trying to figure out what to do with that money.  Al Checchi was treasurer of the Marriott Corporation at one time, and was instrumental in helping Marriott finance hotel developments at home and abroad. Al went out to California to look at potential hotel property. That visit led him to stay with Fess Parker, known to America as Disney’s Davy Crockett. Fess was now a millionaire in real estate, and Al spent the weekend with the Parkers discussing potential properties.

But the conversation went a different direction. In The Prince of the Magic Kingdom, author Joe Flower talks about how one night the two stayed up late talking about Fess’s experience with Walt Disney, and how the company had grown lethargic in the years after his passing. “You know, Al,” Parker finally said, “I think that Disney is ripe for some positive influence. It’s just drifting.”

Not long after Al and his team at Marriott did a study of the whole company, part of which suggested that not only were Disney’s three hotels (Contemporary, Polynesian, and Golf Resort) operating at a near 100 percent occupancy, but that some 250 hotels had sprung up around Orlando since 1971, handling some 10 million guests a year. More importantly, people preferred to be inside Walt Disney World than outside it, and that they could build several thousand more rooms and charge more than hotels outside of Walt Disney World.

James Steward, in the book DisneyWar, noted a conversation between Bill Marriott and Card Walker.  Walker had brushed aside their suggestion that Disney might want to build and operate more hotels. “Disney is not in the hotel business, ” Walker maintained, “it’s in the park business.”

“Why is that?” Marriott asked.

Walker seemed surprised by the question. “That’s the way we do things,” he said.

That sort of mental clarity was at the heart of Disney’s problem during those years. Clearly there was opportunity in building out resort rooms, but it wouldn’t be by Marriott. In the end, Bill Marriott decided not to purchase Disney, and ended up using its money to buy back an extensive amount of its own stock. After completing EPCOT Center, Disney would start design on the Grand Floridian Resort. But in the 70s, it missed the boat to being more actively in the resort business–the profits of which might have better enabled them to finance EPCOT Center, and would have kept them away from later financial duress.

2. Be In Charge of The Magic You Make. Afterwards, Al Checchi went to work with the Bass brothers in Texas, and advised them to purchase a 25% stake in Disney. The Bass brothers were instrumental in their role in bringing change to Disney, especially in the form of Michael Eisner and Frank Wells. Al advised Michael and Frank to go into a partnership with Marriott to have them build and operate all of the new hotels and convention space needed. The advantages of that were that Marriott had a worldwide reservations system in place, knew the convention business in and out–something Disney still wasn’t doing much of–and was very solid in its abilities to run a hotel operation.

But did Marriott create magic?

That started a series of events and meetings with Marriott, which included long meetings with Bill Marriott about how their operation ran. While Eisner could see that Marriott ran a tight operation, he was underwhelmed with the product itself. At the same time, Imagineers were already well underway in building Disney’s Grand Floridian Resort. Wing Chao and his team had completed a couple of finished model rooms that had all of the details added, from bath towels to door handles (a practice I discuss in another article here). According to Eisner’s autobiography, Work in Progress, when Frank Wells and Michael saw the rooms they were wowed by what they saw and felt it was far superior than anything he had ever seen in a Marriott or Hilton. They decided that very moment that they would not go outside to another partner to build and run their hotels.

3. Put Your Money Behind Your Dreams: While courting Marriott, Eisner and Wells were introduced to Gary Wilson, who was then Marriott’s executive vice president for finance and development. So impressed were Michael and Frank with Gary, that he came on as Chief Financial Officer for the Walt Disney Company.  When he came aboard Disney, he made a number of financial moves that put Disney in a position of building new ideas and dreams. For instance, Gary took the steady cash profits that Disney received from the royalties of Tokyo Disneyland and sold it to Japanese investors for about $750 million. In a plan he refined at Marriott called 20/20, Gary made Disney look more attractive to investors on Wall Street by aiming for a 20 percent growth in earnings and a 20 percent gain in the stock price each year. It’s that kind of financial wizardry and discipline, difficult as it was to achieve, that made it possible for Disney to have the money necessary to grow its resort business.

Let’s face it–you can dream the greatest ideas in the world–but without financing, you’ll never get past putting the ground breaking shovel in the ground.

Disney has learned much from Marriott. And we can learn something as well:

  1. Look at Your Potential
  2. Be in Charge of the Magic You Make
  3. Put Your Money Behind Your Dreams

Here’s to making the magic in your organization. And congratulations to Bill Marriott for a not only a fantastic career, but a wonderful company.

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