Strategy and planning

Marriott Hotel Strategy and Planning

 
Marriott Hotel Strategy and Planning
Introduction
Marriott Hotel is an international brand founded in the late 1920s. The company’s headquarters are in Washington, D.C. Its brand portfolios also spread across various market segment prices that range from luxury to mid-market. Marriott’s brand also takes the form of classic and distinctive hotel styles, which are also layered out to and subdivided into three quality tiers, namely Select, Luxury, and Premium. The hotel and lodging systems developed by the organization encompass thousands of properties in terms of resorts and over one million rooms worldwide. With approximately 170,000 employees in over 30 countries and territories globally, Marriott Hotel’s success has always been on the rise.
Marriott Hotel defines its mission as aiming at enhancing customer wellbeing through the creation of competitive leisure and vacation experiences. Looking into the future, Marriott’s vision is to become the world’s leader in the role of providing and facilitating high levels of experience in the hotel and leisure businesses. The mission and vision statements of the organization show that the critical values of Marriott’s business include having a focus on the pursuit got excellence, change acceptance, and integrity. The company’s unique selling proposition has been a significant strength that ensured the consistent performance of the company. In the hotel and hospitality industry, Marriott Hotel’s brand ranks among the top three. However, despite financial and productivity performances, Marriott Hotel still has particular weaknesses and faces industrial threats such as stiff competition. As such, carrying out an analysis of the company’s internal and external environments would help in providing better recommendations for future success.
External Environment
Industry Overview
Industry trend
Globally, the hotel industry is one of the largest owing to the increased sand in services. Expansion in related sectors such as air transport and tourism is one of the most acclaimed reasons for success in the hotel industry. Players in this industry record billions of dollars in annual revenues. Additionally, more and more people globally enjoy service of the industry in terms of attaining desires vacation experiences as well as enhancing the success of business trips. With vast amounts of revenues recorded annually, several investors want to have a share by concentrating their efforts and business strategies on the hotel industry. Nonetheless, new entrants seeking to invest in the market may find it challenging to earn millions of revenues from the invested capital.
Furthermore, the industry has several significant corporations operating globally, with thousands of hotels operated locally. One specific trend that major brands face in this dynamic industry is the possibility of foreign investors taking over the ownership of the hotels. This trend may provide opportunities for accessing the necessary capital for expansion. Additionally, although rival companies in the industry may appear to be similar in operations, product differentiation is emerging a new trend. For this reason, differentiation into commercial hotels, resort hotels, all-suite hotels, and airport hotels enables organizations to take advantage of unexplored market segments. Finally, technology is an emerging trend that continues to influence the ability of organizations in the hotel industry to remain competitive. For example, the use of computer technologies to track guests, verify credit card information, and the management of crucial data is becoming common practice for every player in the hotel industry.
Competitor discussion
The hotel industry is highly competitive. The stiff competition in the industry is essential for influencing organizations to come up with elaborate strategies for maintaining existing customers while also attracting new ones. Marriott Hotels enjoys a lot of competitive advantage in the industry when compared to its key rivals. This competitive edge is not only the local industry but also the global market. With known brands that operate from a budget-range segment of the market to a luxurious segment, the organization a lot of brand recognition more than Hilton Worldwide Holdings, Airbnb Inc., and Wyndham Worldwide Corporation. With the recent takeover of Starwood Hotels & Resorts Worldwide, Marriott Hotels effectively increased its local and global market, bypassing its rivals by more significant margins.
Additionally, product segmentation, training for easy adoption of new technologies, and effective marketing strategies have been among the key factors that enable the organization to counter stiff competition from other industry players such as Airbnb Inc., Red Lion Hotels, Choice Hotels International, and Hyatt Hotels and Resorts. Finally, stable financial performance and positive make trends in terms of increased demand for services have enabled Marriott Hotels to have adequate resources for expansion and investment in research and development. With all these advantages, Marriott Hotels can remain in a better position to counter forces of competition within its industry.
The Five Forces
The threat of new entrants
Starting up a new business in the hotel industry demands a lot of capital. Since many startups may not raise the required capital, this threat becomes advantageous to Marriott Hotels. Additionally, brand establishment in an industry with well-known brands may be a challenging task for new entrants. For instance, consumers tend to go for brands that they have had previous experience with or those whose ratings are high in the market. Moreover, new entrants must have a good network of suppliers to improve their chances of surviving in a volatile and competitive market environment. Therefore, the threat of new entrants starting businesses in the industry is very low.
Threat of substitutes
Although the organization’s merger with Starwood Hotels and Resorts Worldwide increased Marriott’s market share, the presence of substitute products continues to threaten this position. In the organization’s markets in developing nations, there are a lot of alternatives sold for low prices. Among these substitutes include informal family visits, camping, and homestays. The changing economic conditions so continue to force consumers into choosing low-cost vacation plans as opposed to spending on luxurious hotels. Competitors with casinos also try to take advantage of this segment to encounter Marriott’s success. Since Marriott does not offer these services, it can lose gambling consumers. Therefore, the industry has a high threat of substitute services.
Consumers’ bargaining power
Companies in the hotel industry not only compete over prices but also the development of strategies that ensure the provision of excellent and quality services. For several decades, Marriott has established its brand as a reputable organization with excellent services for both the middle class and luxurious consumers. This reputation enables the organization to attract new consumers and maintain the existing ones. This point means that the organization can moderately determine the level of consumer bargaining power.
Suppliers’ bargaining power
In this industry, suppliers have an average level of bargaining power. The rationale for this point is that supply diversity is high. For example, training institutions, real estate investors, and property owners are suppliers with different levels of bargaining power. This diversity is also advantageous to the company since the management can bargain for the quality of employees’ training and I.T. systems, among others.
Intensity of competition
The company’s merger with Starwood propelled its position to the top in the global market through the attainment of a strong competitive position. The company’s brands also provide a competitive edge since they venture into different market segments (Marriott International News Center, 2015). Compared to other companies such as Airbnb Inc., Marriott is respected for its excellence in service delivery, thereby leading in the competition.
Internal Environment
Core Competency
Segmentation and positioning is the core strategy used by Marriott. In this strategy, customers should always have adequate information about the brand (Johnson et al., 2014). Marriott uses several positioning strategies such as product positioning, price positioning, and cultural positioning to enhance its success over rivals.
SWOT Analysis
Strengths
The company’s first strength is its position as the world leader in the global hotel industry. Coming second after Hilton in market share, Marriott enjoys a massive presence in terms of geographical coverage than any of its competitors (Bojanic, 2007). This strength can help the organization to increase its profitability, influence pricing, and control competition.
The unlimited ownership of Marriott Hotels is the company’s second strength. According to Grant (2010), Marriott owns approximately 1% of the business. The advantage that comes with this strength is that the company is shielded from fluctuations in real estate prices. Furthermore, the company’s quest for portfolio expansion can benefit from its focus on franchising.
Weaknesses
The first weakness of the company is the strategy of focusing on the local market. Despite several processes and strategies for global expansion, Marriott considerably depends on its domestic market in the U.S. This puts the company at risk of issues such as inflation at the home-country market.
Secondly, the company’s luxury brand is a strategic weakness. For example, concentrating on the middle class and luxurious market segments can expose Marriott to the challenges of the international financial crisis. In this case, during unfavorable economic conditions, consumers tend to avoid spending on luxurious products and services (Peter & Olson, 2010). As such, the organization should consider product diversification to meet the needs of all consumers.
Opportunities
The first opportunity for Marriott is the emerging markets. In this case, Marriott should take advantage of the opportunities presented by developing economies in regions such as Africa, Asia, and South America. This move would improve profitability and diversification.
Secondly, the organization has the opportunity of utilizing technological advancements. In this sense, the organization would streamline its operations through effective coordination. For example, using technology for communication between branches and the parent company as well as tracking every customer would be of great importance in enhancing business success.
Threats
An unstable financial market is a significant threat to the success of the company’s business. With unpredictable exchange rates, the tourism industry is likely to slow down, thereby reducing the number of customers. Additionally, since the company has a strong sense of serving customers who prefer credit agreements, cases of the credit crunch may be a threat. Secondly, Marriott is likely to face competition from cheap organizations. With fierce price wars in the industry, the organization may be forced to reduce its prices to meet the competition. This move has a negative effect on the company’s profitability since it is essential to maintain service quality regardless of the pricing dynamics in the industry.
Strategy Performance
According to Ferrell and Hartline (2011), the segmentation strategy is of great importance in enhancing business expansion in the global context. Currently, Marriot Hotels is employing a segmentation strategy that focuses on the achievement of the company’s objectives. In geographical segmentation, the primary focus of the organization is to cluster its consumers into regional groups. In the case of Marriott, hotel placements are in metropolitan areas to maximize the ability to reach target consumers. For the company to at this goal, researching aspects such as cultural values and desires is significantly crucial (Hooley et al., 2017). This research would also provide insights into demographic variations of a target market, thereby enabling the organization to engage in product development based on demographic preferences. According to Grant (2013), needs and preferences vary according to age and gender. As such, carrying out an analysis of demographic characteristics can be of great value in serving organizations with the needed knowledge for product design and marketing. To a large extent, this segmentation strategy has served Marriott in terms of enhanced positioning and market entry techniques.
Financial Performance
The main objective for comparing firm’s financial performance and that of its rivals to evaluate market strength. Marriott Hotels is a business that worth over 15 billion dollars compared to the 2 billion dollars of Airbnb Inc. With this information, it is evident that Marriott is a large-cap organization, while its rival is a mid-cap business. However, comparing financial ratios provides a better glimpse into how these organizations are utilizing their money and investing in stockholders. Although Marriott’s revenue is far much higher than that of Airbnb Inc., the gross profit margins of the companies are 11.8% and 22.6%, respectively. Despite this disparity in profit margins, Marriott still poses significant performance in terms of working capital per share, return on equity, and cash flow per share. Overall, Marriott Hotels leads in the industry in terms of return on assets. These statistics indicate that Marriott Hotels is in a better position to take care of its liabilities and even invest more in its strategic quest towards global expansion. Additionally, the company has enough resources to invest in marketing strategies such as product promotion and market research, thereby reinforcing its ability to maintain a sustainable competitive advantage.
Discussion
This paper discussed the business strategies used by Marriott Hotels in ensuring that it maintains its leadership position in the hotel industry. Additionally, the study analyzed that the hotel industry is dynamic and volatile owing to constant changes. Trends such as technological innovations and increased competition continue to force organizations into the development and implementation of strategies that enhance performance and the realization of a sustainable competitive advantage. Marriott’s strengths, such as being the industry leader and financial stability, enable it to maintain a successful business. Additionally, opportunities such as the utilization of technology and emerging markets can help in securing the company’s success in the future. Segmentation and positioning strategies used by the organization are also useful in facilitating the achievement of profitability.
Recommendations
For Marriott Hotels to secure its future success, the management must come up with policies for service diversification. Instead of concentrating on luxury and middle-class customers, the organization should design its services to meet all markets. Secondly, the company should pursue global expansion instead of relying heavily on the local market. In doing so, the organization would be seeking to avoid uncertainties that come with constant changes in the global financial market. Finally, Marriott Hotels should consider developing pricing strategies that are effective in countering cheap services offered by other organizations in foreign countries. This approach would help the organization maintain its market share. 
References
Bojanic, D. (2007). Hospitality marketing mix and service marketing principles. Handbook of Hospitality Marketing Management, 59-84.
Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning.
Grant, R. M. (2013). Contemporary strategy analysis: Text only. London: Wiley.
Hooley, G. J., Piercy, N., Nicoulaud, B., & Rudd, J. M. (2017). Marketing strategy & competitive positioning. Harlow, England: Pearson.
Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2014). Exploring strategy. UK: Pearson Education Limited
Marriott International news center (2015). Marriott international to acquire Starwood hotels & resorts worldwide, creating the world’s largest hotel company. Retrieved from: http://news.marriott.com/2015/11/marriott-international-to-acquire-starwood-hotels-resorts-worldwide-creating-the-worlds-largest-hotel-company/.
O’neill, J. W., & Mattila, A. S. (2006). Strategic hotel development and positioning the effects of revenue drivers on profitability. Cornell Hotel and Restaurant Administration Quarterly, 47(2), 146-154.
Peter, J. P., & Olson, J. C. (2010). Consumer behavior & marketing strategy. New York: McGraw-Hill Irwin.
 
Appendix
2×2 SWOT Matrix
Company SWOT matrix

Internal Strengths
1. Industry leader
2. Unlimited ownership Weaknesses
1. Focus on local market
2. Emphasis on luxury market

External Opportunities
1. Technological advancement
2. Emerging markets Threats
1. Unstable financial market
2. Competition from cheap organizations