Marriott International Inc. Business Analysis Essay
Marriott International, Inc. is a leading global lodging company headquartered in Bethesda, Maryland, USA. Marriott International, Inc. has over 4,200 properties spread across 79 countries (“About Marriott International”). Besides, the company owns 19 brands that are grouped in five business segments, which include the North American Full-Service Lodging, North American Limited-Service Lodging, International Lodging, and Luxury Lodging and Timeshare (Marriott Jr. 15). Besides franchising and operating the hotels, Marriott International offers services to home and condominium owner associations for projects related to one of its brands (Marriott Jr. 28). Marriott International uses unique strategies aimed at achieving effective market share and good profitability.
MARRIOT INTERNAL ENVIRONMENT
The company is guided by Marriott family for almost 90 years (“About Marriott International”). The initial idea of the founders of Marriott International, Inc. was to open a root beer stand in Washington (Marriott Jr. 12). The company’s first hotel, founded in 1927, was a major achievement for Marriott family. Marriott International has become a world leading business due to its main focus is on customer relationship, growth efficiency, service offering as well as its capability to provide effective customer promotions for the hotels. The paper aims at analyzing the Marriott International Inc. and its environment.
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Marriott International understands the importance of employees for the success of the business. Thus, the company provides a supportive environment to help its employees grow in the current job positions and build a sustainable career (Gallagher par. 1). The company follows the principle of putting people first. The company is known to be offering competitive compensation and benefits to its employees. In Marriott International, there are over 200,000 hotel employees. Together with those in the franchised properties, there are 361,000 (Gallagher par. 6). The company’s employees are not concentrated on a cool campus, but rather scattered all over the world.
The founder of Marriott International was J. Willard Marriott. Today, the company is led by his son, Bill Marriott, the Executive Chairman, in conjunction with Arne Sorenson, the Chief Executive Officer (Marriott Jr. 12). The Marriott family owns 30 percent of the company. The company hosts an Ownership Educational Summit twice per year to encourage hotel ownership and educate potential owners on the hospitality and tourism industry as well as the ways of attaining Marriot’s ownership and the significance of contracting strong brands for the company.
Board of Directors. The board of directors of Marriott International consists of qualified personnel as discussed below (Aspen Publishers 56-77).
Marriott International’s Executive Chairman and Chairman of the Board is W. Marriott Jr., the son of the founder, Willard Marriott.
Marriott International has a broad target market (Marriott Jr. 44). However, the company’s most important target group are the business travelers or people in the business world. The company understands that people in the business industry have to travel around the world for business reasons. Thus, Marriott International offers such brands as Fairfield Inn & Suites, Residence Inn, Courtyard, TownePlace Suites, and SpringHill Suites for its business clientele (Marriott Jr. 47).
Marriott International faces strong competition both as a franchisor and as a lodging operator. There are approximately 872 lodging management companies in the US, with 9 of them operating over 100 properties (Marriott Jr. 56). The operators are mainly private management companies, but also include some large national chains that operate own hotels and franchise own brands.
Marriott International ranks second in the market share (5.6 %) after Hilton Hotels Corporation (7.2%) (Marriott Jr. 57). Other major rivals of Marriott International in the industry include Starwood Hotels, Resorts Worldwide, Inc., and Wyndham Worldwide Corporation, which have the same market share (3.4%) (Marriott Jr. 57). Other competitors include Accor at 1.7% and the Intercontinental Hotels Group PLC, whose market share is 0.8% (Marriott Jr. 57-58).
Though all the hotel properties offer similar facilities, the Hilton Hotels Corporation, the largest competitor in the industry, incorporates more leisure facilities. Secondly, Hilton Company operates its own loyalty program. Besides, unlike Marriott, Hilton has taken environmentally friendly efforts to maintain its market position (Marriott Jr. 60).
Suppliers. Marriott International maintains strong relations with businesses owned by minority groups in the areas of its operation across the world, and these relations continue to grow and strengthen («Marriott Enlists more Diverse Suppliers” par. 1). In the past decade, the company spent 4 billion dollars with diverse suppliers («Marriott Enlists more Diverse Suppliers” par.
The company’s suppliers from different industries include:
- Berman Purchasing Inc., Jupiter, Fla. (furniture, fixtures, and equipment seller);
- Carter Brothers, Atlanta, Ga. (security and fire alarms distributor);
- Eagles Koinonia Corporation, Brandon, Fla. (janitorial/cleaning services);
- Fairmont Designs Hospitality Group, Buena Park, Calif. (furniture designs);
- Gary’s Seafood, Orlando, Fla. (seafood distribution);
- Hospitality Staffing Solutions, Marietta, Ga. (temporary staffing);
- Land-Ron Inc., Orlando, Fla. (constructions for the company);
- Tronex, Parsippany, NJ. ( disposable gloves and products);
- Ty, Ty, & Ty Inc., Miami, Fla. (takes care of the rooms/linen);
- T&G Constructors Inc., Orlando, Fla. (constructions for the company) («Marriott Enlists more Diverse Suppliers” par. 3).
Marriott International has one of the strongest distribution systems in the industry. The system is integrated with the revenue management, customer loyalty, ecommerce, global distribution systems, and property management systems of the company (Marriott Jr. 66). The company’s foodservice distributors include the Red Lobster restaurants, Darden Restaurants’ Olive Garden, and Gary’s Seafood, Orlando, Florida (Marriott Jr. 66).
Marriott International has entered a number of strategic alliances with strong world consumer brands to increase customer awareness as well as revenue and share value (Marriott Jr. 67). The company’s strategic allies include Visa USA, which entered an agreement with the company to develop novel products for leisure and business travels, joint sponsorships, and consumer and trade promotions. Next is the Rugby Football Union. The alliance with Marriott International was meant to enhance the existing relationship between the two firms (Marriott Jr. 77).
Unions and Employee Associations. Of the total number of employees working for Marriott International, 11,000 of them are protected by unions (Gallagher par. 6). These organizations ensure that workers receive the right treatment at their workplaces and are equally compensated. Some examples of the unions is the International Labor Organization and Hotels, Restaurants & Cafés in Europe (Marriott Jr. 70).
As a recognized company that operates managed and franchised lodgings, Marriott International has various stakeholder groups that include hotel owners, shareholders, customers, suppliers, associates, industry associations, community organizations as well as governmental and non-governemntal agencies (Marriot 92). The company’s stakeholders are diverse and operate globally. Marriott has an understanding that the stakeholders are important and that their opinions, desires and needs drive the company’s stategy. Therefore, the company’s stakeholders are highly valued and are accorded utmost respect because they shape the sustainability strategy (Marriot 92).
Marriott International is financed by the local commercial banks in the US (Marriott Jr. 102). However, in case of a financial crisis in the home country, the company can borrow money from a bank in the country it wishes to operate.
The regulations encountered by Marriott International are with regards to the environment, tax, and employees (Marriott Jr. 108). In every country where Marriott International is executing its operations, there are particular rules that guide its interactions with governmental agencies and officials. The rules mainly focus on lobbying, political contributions, trade restrictions etc.
Special Interest Groups
Special interest groups are formed to enable members to share information related to hospitality and tourism. Marriot International is a member of special interest groups (Marriott Jr. 103). What is more, one of the chairmen of the special interest groups, Allan Tuttle, is the member of the company. Marriott International is a member of the Hospitality and Sales (SIG) group (Marriott Jr. 103).
Marriot International uses mass media to reach out to its clientele (Marriot 36). The company uses the social media such as Twitter and Facebook to create awareness of any changes in the company. Besides, it uses flyers to communicate its programmes to its customers. Lastly, the company uses utility bills such as eGifts to enhance its customers’ experiences (Marriot 36).
Marriot International is affected by economic factors such as recession and ecomomic turmoil in Europe (Marriott Jr. 75). Events such as debt crisis have reduced the buying power of customers and their ability to travel. This affects Marriott International heavily, as its operations depend on travelling trends. Another economic problem facing Marriott International is that the US dollar faces high exchange rate overseas (Marriott Jr. 75). This discourages foreign visitors from travelling to the US. The high exchange rates discourage business travels as well.
Sociological Forces. The demand for the products in the tourism and hospitality industry is influenced by sociological factors. In the modern world, people enjoy travelling and exploring new places. Due to technological advancements and improvements in the transportation system, travelling has been made easy. The desire to attain a distinctive atmosphere has become an important concern for managers in the hospitality industry. Employees in the industry offer personal services to customers so as to retain them (Sung Chon and Yu 77). Marriott International is characterized by its strategy of ensuring customer satisfaction to guarantee a return visit (Renner 7). It is also is expanding its travel network across the world (Marriott Jr. 72).
The demographic forces entail characteristics such as age, gender, religion, education, income, among others. The hotel industry targets people of all ages (Marriott Jr. 55-56). The company targets the highly paid in the society; however, it also takes into consideration the lowly paid who have a passion for travelling (Marriott Jr. 54). Marriott International has to ensure that it has a tier to every income group so as to remain competitive in the industry. The company has ranks of hotels in specific areas that rely on the wants and needs of the customers of all groups. For example, the company’s brands such as Fairfield Inn & Suites have free Wi-Fi and business centers with PC and printing services to help its customers to remain entertained and productive. Besides, the rooms are fitted with accessible high-speed Internet, guest rooms with a conducive work area, and separate living and sleeping areas. The brand SpringHill Suites is spacious, has style, and is affordably priced to attract both the high and low income earners (Marriott Jr. 57).
Political/ Legal Forces
Marriott International operates in a country that remains politically stable. Further, the growing prosperity of its populace continues to provide a concrete foundation for sustained growth that will prompt the confidence of investors in the hotel industry that results in investments for the company (Marriott Jr. 87). Research indicates that developments in the hotel industry result in stable taxes for the government. In turn, it becomes easy for foreign investors to get licensed to operate in the country. The unpredictable and volatile situations in the political environment of a host market increases risk and uncertainty, thus pushing potential investors away.
There are laws and regulations that control business operations in every country. Marriott International understands the role of such rules, and it has acted accordingly both in the past and currently. The company understands that every political system is different and it needs to be addressed. Marriott International is reported to have always followed the set of rules specific for certain countries such as policies concerning low-fat food, smoking policies etc. (Marriott Jr. 87).
Today, the world of business is more interconnected and interdependent than ever before. Evidently, all decisions facing international managers regarding whom to hire, which technologies to adopt, how to market their products locally and internationally among others are influenced by the business environment of the country in which a company operates. Marriott International has had to confront the legal, cultural and political issues specific for the countries of operation in developing strategies to enter the local market (Marriott Jr. 115). The issues include encouraging government’s fiscal policy, a conducive environment for business that offers investment incentives, effective and sustainable marketing and promotions, as well as policies that are in agreement with the local communities and cultures.
Marriott International has been able to succeed in business because it not only complies with the rules of its home country, but also with the laws and regulations of the host countries in which it operates. The international laws have influenced the markets that the company can serve, the prices it should charge for the products, as well as the costs of inputs such as labor, technologies, and raw materials (Marriott Jr. 115). Besides, the political environment and the legal system in the international market have affected the location of hotel suites for Marriott International.
SWOT analysis is defined as a structured planning technique used for evaluating the strengths, weaknesses, opportunities and threats involved in a business venture. For Marriott International, SWOT Analysis presents the actual picture of its business operations.
- Marriott International is a universally recognized leader in the hospitality industry. The company has strong brand equity with an Internet presence and sufficient IT solutions. The company has been attentive to specialized market segments and brand differentiation.
- Marriott International has a strong market position because of its expanded and diversified business across the globe.
- Marriott International has a large market share in the industry as it provides a wide range of high-quality products and services to its customers.
- Marriott International boasts a strong customer relationship. Its ability to offer satisfying products and services to its clientele has helped the company earn customer loyalty.
- The Marriot International Company is over-dependent upon luxury brands in the United States’ market. The company lacks low-cost lifestyle brands that are now gaining popularity in the developing nations.
- As a result of its huge expansions in business, Marriott International is becoming weak in its management system.
- Marriott International is facing backwardness in infrastructure, especially in management of information technology.
- Due to its huge debts, the market share of Marriott International is declining.
- Marriott International operates in a highly concentrated industry. As such, there is a high rate of competition, and customers have a variety of substitute products.
- Marriot International can try to merge its firms and businesses across the world, particularly those in the European countries. Joining the businesses together will help the company regain its power in the market.
- Studies reveal a considerable growth in the tourism industry and Asian travel. The low-cost market segment is trending, and Marriot International can benefit from capturing the segment through investment. Environmentally friendly operations and eco-tourism can have significant success in helping Marriott International gain its position in the marketplace.
- Marriott International has the opportunity to enhance its business and grow its services in the market to achieve more customers’ loyalty.
- Marriott International should take the necessary steps to grow in the market. For example, the company can improve its direct marketing plans such as in the advertisement to ensure its content for the ads is relevant to capture more customers.
- In the contemporary world, the element of timeshare is losing its charm. Economic problems in Europe are affecting consumer spending. This is because the crisis have affected the travelling ability and purchasing power of the customers.
- The risk posed by political instabilities in some countries and government involvement are creating tensions for the company because of its hotels operating in the countries.
- The economic recessions in some countries may pose a threat to the company, since this will influence the prices that the company should charge for its products as well as the cost of labor, technologies, and raw materials.
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“To enhance the lives of our customers by creating and enabling unsurpassed vacation and leisure experiences.” (Marriott Jr. 6).
“To become the premiere provider and facilitator of leisure and vacation experiences in the world.” (Marriott Jr. 6-7).
In its primary line of operation, Marriott International employs strong competitive strategies that have enabled it to maintain its competitive advantage over its rivals in the mature hotel industry (Renner 5). Since it has been established, Marriott International has believed in a continued long-term success achieved by over 80 years of experience, customer preference, strong brands, as well as an effective business model. As mentioned earlier, the portfolio of the company consists of over 4,200 properties in more than 80 countries across the world (”About Marriott International”). By 2009, about 137,000 employees had been part of the company’s workforce that helped generate sales of 11 billion dollars, a figure that was projected to continue increasing in subsequent years (Renner 9).
Irrespective of the many challenges faced by Marriott International such as the global recession, inflation and international forces that have cut back on travel, the company has been able to remain on top through the use of extraordinary customer service. Marriott International focuses on the use innovative technical programs and technology to enhance the customers’ experience (Marriott Jr. 98). By so doing, Marriott International has been able to differentiate itself from its rivals and attain a strong competitive position. Besides, the company owns a center piece programme, Marriott’s Automated Reservation Systems for Hotel Accommodations (MARSH), which ensures customers receive personalized attention (Marriott Jr. 98). In a nutshell, Marriott International’s competitive strategy is a hard mode of operation that rivals in the industry strive to match.
Marriott international is a globally recognized brand that manages and franchises lodgings and hotels. The paper has performed an analysis of the company and its environments. From the analysis, Marriott International operates in a highly concentrated industry where completion is quite high. The main competitor for the company is Hilton Hotels Corporation. Despite the competition in the industry, Marriott has been able to maintain its position and become a world leading business through the use of its unique competitive strategies. The company’s main focus has been excellent customer service and growth efficiency.