UNIVERSITY OF WALES INSTITUTE, CAEDIFF

B.A.in International Hospitality Management

Strategic Management Year3

Marriott International Inc

Lecturer: Mr. David Goh Student Name: Yang Bin Rong Student ID:0602/1066 Words:3700
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Table of Contents
1.0 Executive Summary 2.0 Introduction 3 2

2.1 Background of the Marriott International Inc 3.0 Vision, Mission and Goals 3.1 Vision statement 3.2 Mission statement 3.3 Goals 4.0 External Environment Analysis 4.1 The PESTEL Analysis 4.2 Porter's Five Forces Model 5.0 Internal Environment 5.1 The SWOT analysis and TOWS Matrix 5.3 The Boston Consulting Growth 5.4 Product Lift Cycle (PLC) 5.5 Financial Analysis 6.0 Comparison of industry competitors 6.1 The Competitive Profile Matrix 7.0 Formulating Strategies and Development Methods 7.0 Grand Strategy Matrix 8.0 Conclusion 9.0 Recommendations 10.0 Evaluation of learning References 17 17 17 16 14 15 15 16 13 12 9 9 5 7 4 5 4 4 4

1.0 Executive Summary .Marriott International, Inc. is a worldwide operator and franchisor of a broad portfolio of hotels and related lodging facilities. Founded by J. Willard Marriott, the company is now led by son J.W. (Bill) Marriott, Jr. Today, Marriott International has about 3,150 lodging properties located in the 69 countries and territories. Singapore has long renowned as a popular destination for various reasons, ranging for business, pleasure, medication, and study purpose. With the opening of two Integrated Resorts in early of 2010, tourists visitation to Singapore reached to the top visit recently. Changi airport also listed as the best airport with highest tourist visit at the mid of March 2010. This phenomenon resulting a growth in the tourism and hospitality sector in Singapore, which includes hotels, restaurant, tour and travel, airline, entertainment, and so forth. Facing this situation as an opportunity, lodging providers such as hotel and inns have to be able to capitalize it and compete with each other by maintaining their competitive advantages. Thompson et al. (2008) stated that a winning strategy must fit the enterprises external and internal situation, build sustainable competitive advantage, and improve company performance. The objective of this assignment gives us an in-depth analysis of Marriott and to better understand Marriott in the context of the hospitality industry in which they operate. Followed by analyzing the external environment issues faced using PESTEL analysis and the porters five forces model. And also looking into the internal environment analysis of Marriott through S.W.O.T analysis, TOWS matrix, Grand Strategy Matrix and lastly the product life cycle curve.

2.0 Introduction 2.1 Background of the Singapore Marriott Hotel

Marriott is a global hospitality company operating more than 2,600 lodging facilities, primarily in the U.S., but also in 69 other countries and territories. The corporation has developed several brands in the mid to luxury sectors of the hotel industry, including The Ritz-Carlton in the luxury sector; Marriott Hotels and Resorts, and Renaissance Hotels and Resorts in the upscale sector; Courtyard by Marriott in the upper mid sector; and Fairfield Inn by Marriott in the mid-scale market. Extended stay properties, time-shares and golf finish the list of property types owned or operated by Marriott. The company had $12.9 billion in revenue during 2007, earning a net profit of nearly $700 million through the efforts of approximately 151,000 employees. That revenue held steady during the difficult economic conditions of 2008, at $12.8 billion, with net profit declining to almost $400 million. The Marriott Hotel Singapore is located in the heart of Orchard Road, next to Scotts Square and Lucky Plaza shopping complexes, and across the road from popular Wisma Atria and Ngee Ann City shopping complexes. The Marriott Caf is popular for its international buffet meals while Crossroads Caf is a favorite spot for watching people over drinks and a quick bite. There is also elegant Cantonese cuisine at Wan Hao Chinese Restaurant, and trendy al fresco dining by the pool at Pool Grill. The hotel is two miles from the business district and the Singapore International Convention & Exhibition Centre. Closer to the hotel are Fort Canning one mile away, and Little India historical enclave one and a half miles away.

3.0 Vision, Mission and Goals

3.1 Vision statement To become the leading provider and facilitator of value-based luxury, leisure and business experiences across the globe. Marriott committed to dynamic growth and service excellence built upon our heritage of traditional hospitality. Marriott consistently meet and surpass guests, employees and other stakeholders expectations. They feel pride in making effort to position Singapore in the forefront of the international arena. 3.2 Mission statement To create an environment conducive and helpful to both our employees and customers, thereby encouraging our employees to work at their maximum capacity in being of service to our customers.

3.3 Goals Marriott International has recently announced its strategy for developing within the next 5 years in China. As everybody knows, China is the largest market outside the United States, and Marriott International is betting everything on that fact. J.W. Marriott Jr., chairman and chief executive officer of Marriott International commented:China is arguably the worlds most compelling tourism market today. Its buoyant tourism industry will host 2.1 billion domestic and international tourists this year, an increase of 12 percent over 2009.He also said: Within the next 10 years, China is expected to be the worlds single largest source of international tourism and its number-one travel destination.

4.0 External Environment Analysis 4.1 The PESTEL Analysis

1Political Factors:Marriott Hotels cannot discriminate when employing people based on sex, ethnicity, religion, orientation. The government supports tourism because it is a lucrative industry for the country. Marriott has to pay attention to physical and psychological working environment conditions since the Singapore government thoroughly regulates it. 2Economic Factors:In the short-term, they are affected by the economical crisis, so they should focus on giving an image of affordability. In the long term, they have a very solid reputation so when the economy bounces back, they will be able to return to their original status which is a chain of luxury hotels. Cost of employment is high in Singapore so the Marriott would need a substantial profit to compensate. The above goes for high taxation in Singapore as well

3Social Factors:Green issues are very important in Singapore so the Marriott would have to focus on recycling, not being wasteful and in general be as eco-friendly as possible. Foreign population in Singapore is wealthy spend on leisure, travelling and hotels

4Technological Factors:Marriott is defined by luxury therefore it should be up-to date with the latest technologies: Free, fast, accesible WiFi. Functional and easy to use website. Paying bill on cellphone

5Environmental Factors:They have a buzzword-ECHO (Environmentally Conscious Hospitality Operators) is the name theyve given to their green initiatives. Headquarters Initiatives: theyve replaced plastic utensils with spudware, given premium parking spaces to hybrid drivers, and made reusable mugs available. This feels pretty week. The company has led a whole smorgasbord of energy- and resource-saving initiatives, including: replacing 4,500 outdoor signs with LED displays, replacing 450,000 light-bulbs with CFLs in 2006, saving 11-17 percent on their water usage through linen reuse programs, and installing 400,000 low-flow shower heads (which each save 10% on hot water use per year) 96% of Marriott hotels recycle in some form. Of course, theres no quantification here, but its an area they say theyre working on. Well see. Most impressively, Marriott is a member of the EPAs Climate Leaders program, and theyve committed to reducing their energy use 6% per guest room in the period from 2005 to 2010. This is a modest but quantifiable step toward reducing energy use.

6Legal Factor Legal issues apply to hospitality enterprises in a variety of operational areas from bookings to purchasing to human resources and a wide spectrum of other activities. The broad areas of legal exposure applying to the hospitality industry are contract law, liability exposure, obligations imposed on hospitality companies by specific legislation.

4.2 Porter's Five Forces Model

weak

medium

weak

weak

strong
1. Threat of new Entrants : ( WEAK )

The competition in an industry will be the higher; the easier it is for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry.

Bargaining power of buyer : ( WEAK) This force reflects the strength of the bargaining position, particularly regarding price, which customers have over suppliers. For example, tour operators, who book thousands of customers in to hotels, have a strong bargaining position and can demand lower prices from hotels. Customers have a weaker bargaining position if demand is high and capacity low, but when demand is variable and capacity high the customers have a stronger bargaining position. However, individual customers who book and consume hospitality products have limited or no bargaining power.
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Threat of Substitute products or services : ( STRONG) A threat from substitutes exists if there are alternative products or service with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. The major substitutes for the hotel industry are camping and recreational vehicles for tourists, corporate guesthouses for business travelers and other informal means of accommodation with friends and family. The rapid development of videoconferencing is a substitute product for the hotel meetings market. Compared to the hotel industry, these are much cheaper alternatives, making their price values very high and the switching costs very low. This makes the industry attractiveness in terms of substitutes.

Bargaining Power of Suppliers : (MEDIUM) The term supplier comprises all sources for inputs that are needed in order to provide goods or services. The two key suppliers to the Hotel industry are labour and real estate. Over all the suppliers in this market are defined as property owners, developers and real estate companies, interior design and furnishings companies, architects, management and training service providers, marketing companies, industry consultants and ICT manufactures,

Rivalry among existing firms : ( WEAK) This force describes the intensity of competition between existing companies in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. There are a few large hotel chains that dominate the industry in Singapore. They have very strong brand names and identities and high stake in this industry which requires very high fixed costs. But Hotels also face excess capacity since one 69% of their rooms are occupied on an average. With moderate industry growth the overall attractiveness of industry in terms of competitors is low.

5.0 Internal Environment

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5.1 The SWOT analysis and TOWS Matrix

Strengths Marriott Singapores location is just on top of the Orchard MRT this would definitely give them an edge over the other hotels that are located in Orchard since the transportation of Singapore is mostly done by MRT. Compared to the other hotels the delay between order and delivery is very less, which would eventually increase the quality of service. Marriott is very strong and established brand name all over the world. It has a base of loyal customers at local level as well as at international level. It has one of the biggest international booking structures. Whatever the situation and scenario may be, corporate and government agencies always prefer Marriott hotel for their functions, seminars, and lodging their guest and customers. Marriott Guest Rewards program is the worlds largest and most preferred frequent guest program and is strength for customer retention.

Weaknesses Limited room space may become a weakness for Marriott as it has only 393 rooms. Marriott needs to build more rooms. However, they are unable to do that because of their location constraints. This may become their weak area in future. Marriott does not directly approach new customers and only focus on the existing customers.

Opportunities
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There is a strong potential customer, those clients will be captured by good advertising strategy and effective distribution channel. In Singapore, tourism sector has been registering record highs of visitor arrivals and tourism receipts year after year. Accordingly, there are numerous potential customers for Marriott . Futher more, as an important economic and trading hub with a base of over 5,000 multinational companies(MNCs),Singapore is a natural venue for corporate meetings, Hence, there always have chances to attract corporate customers who are less sensitive about accommodation price.

Threats Competitors are one of the major threats that is faced by Marriott hotel Singapore. As we know Orchard road and its nearby premises are hosting the most number of 5-star hotels in Singapore, currently 22. It is very hard for Marriott to fight back from this amount of competitors. Some of these competitors are capable of decreasing the production costs massively and thereby decreasing the cost of the services. This could also pose a threat against Marriott hotel Singapore. Around three hotels are under construction around the same area. These hotels would be having innovative products and services. Marriott should also have an approach in this area of innovation and creativity to attract more customers.

5.2 Tows Matrix Analysis

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Internal factors

Strength
1 Large expanse of brands 2 Global leader in hotels market 3 Excellent strategies to

Weakness
1 Over dependence on luxury brands 2 Focus on US instead of international establishments 3 Marriott being targeted by fundamentalists or extremists 4 Lack of low-cost brands

External Environment

attract employees

and

retain

4 Geographic presence

Opportunities
1 Trend fro low-cost goods 2 Distinction amongst

S-O Strategy
1 Acquire or establish hotel in Asia 2 Initiate budget and economic brands and 3 Differentiation of a particular brand in certain locations

W-O Strategy
1 Expand in Asia 2 Build high-end inns 3 Joint ventures in other high risk countries and use the locals name

hotel service offered 3 Environmentally

family oriented

Threat
1 Boom of economy hotel brands 2 Increase of real estate in Asia 3 Terrorism

S-T Strategy Company 1

restructuring cost and efficiency to

W-T Strategy
wide reduct increase 1 Work towards due to expansions economic with overseas meltdown 2 Use relationship employees to temporarily reduce salary to be more competitive 3 where Joint ventures with other companies especially in new low cost businesses

2.Hire local employees by collaborating with local government units 3 Hire, train and support the localities Marriott operates in to win the hearts and minds

5.3 The Boston Consulting Growth (BCG)

Boston Consultancy Group matrix is designed specifically to enhance a multi divisional firm`s effort to formulate strategies to find out market share position and industry growth rate. BCG matrix was developed by Boston Consultancy Firm.
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DOG: Marriott Fitness Gym. Fully-equipped fitness center features state-of-the-art cardiovascular equipment. Fitness Gym at Marriott hotel have low market shares and decreasing cash flows. Star: Marriott hotel have total 393 guest rooms are equipped with a well-lit work desk, easy-to-reach cable points and in-room broadband high-speed Internet access, the perfect retreat for all business travelers. Marriott Deluxe room is experience rapid growth and best long-run opportunities for profitability Question Mark: As times become more hectic, more people than every before are willing to pay top dollar to get away from it all. The so-called wellness revolution has given rise to a whole new kind of hospitality clientele, and has fueled staggering growth in the spa industry. Marriott hotel Retreat SPA menu offers varies of spa program that includes Body scrub, Facial treatments, foot bath, Manicures, Massages, steam room, and waxing. Marriott hotel Retreat SPA is in the introduction stage having negative cash flows but good growth potential. Cash Cows: Marriott caf renowned for its sumptuous all-day international buffets, this popular cafe adopts a cheery open-kitchen concept. Appetisers and main courses are complemented by an equally tempting dessert selection. An impressive a la carte menu is also available. Marriott caf survive the maturity stage and have a high relative market share position but compete in a lowgrowth industry.

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5.4 Product Lift Cycle (PLC)

The product life cycle presents a challenge to hotels to continuously assess their product effectiveness and performance in the market scene. Products or services used in the hotel facilities, leisure packages, business and family packages should all be assessed since their inception into the market by monitoring their growth, customer acceptance through the different stages in the cycle. Offering specific room rates and offers can drive return revenues in a hotel. Marriotts needs to evaluate the different challenges its brands are facing in the product life cycle at the different stages of product development, introduction, growth, and decline.

5.5 Financial Analysis

1. Profitability Ratio: Ratio Net profit margin Gross profit margin 2010 0.03 0.07 2009 0.05 0.1 2008 0.05 0.08

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Return on assets

0.04

0.08

0.07

Return on equity 0.26 0.49 0.23 Marriott is the leader in total revenue in the lodging industry but has low net profit margin and profitability ratios due to high costs (labor) and acquisitions

2. Liquidity Ratio Ratio Current ratio Quick ratio 2010 1.33 0.55 2009 1.24 0.7 2008 1.31 0.84

Their current ratio goes beyond the industry standard but their quick ratio is less than industry standard 3. Leverage Ratio Ratio Debt to total 2010 asset 0.84 5.45 to 2.16 5.37 2009 0.84 5.25 1.95 7.17 2008 0.7 2.28 0.69 12.15

ratio Debt to Equity ratio Long Term Debt

Equity Ratio Times Interest Earned

Shows Marriots Acquisition culture, where they use the shareholders investments when venturing to other avenues.

6.0 Competitive Profile Matrix

Marriot Hotel Critical factors Advertising success Weight Rating Weighted Score

Holiday Inn Hotel

Rating Weighted Score

Sheraton hotel
Rating Weighted Score

0.14

4.0

0.56

4.0

0.56

3.0

0.42

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Service Quality Price Competitiveness Management Financial Postion Customer Loyalty Brand name Market share

0.13 0.12

3.0 3.0

0.39 0.36

4.0 3.0

0.52 0.36

3.0 2.0

0.39 0.24

0.11 0.15 0.10 0.20 0.15 1.00

4.0 3.0 4.0 2.0 3.0

0.44 0.45 0.40 0.20 0.45 3.25

4.0 4.0 3.0 4.0 4.0

0.44 0.60 0.30 0.40 0.60 3.78

3.0 2.0 2.0 2.0 3.0

0.33 0.30 0.20 0.30 0.45 2.63

Total

The rating scales are as follow: 4=Strong, 3=Average, 2=Weak, 1=Very weak Based on the research and analysis the result of the comparative profile matrix shows that Holiday Inn hotel is the most competitive but having a total weighted score of 3.25 for Marriott hotel shows that they also have a good position in Hotel Industry. Marriott needs to be more focus on their weaknesses to improve its competitive position.

7.0 Formulating Strategies and Development Methods 7.0 Grand Strategy Matrix

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Grand strategy Matrix

As figure identify that Marriott Hotel comes in the 1st quadrant. The company management must focus on current market and achieve growth by adopting product development, market development and market penetration strategies. The company has abundant resources and competitive advantage through which it can achieve growth by adopting the backward and forward integration strategies. Marriott can also adopt the related diversification strategy to

reduce its risk with broad portfolio or product line. Marriott hotel can afford to take benefit of external opportunities in many areas. It can also take risks being aggressive when necessary.

8.0 Conclusion
Marriott is a powerful name in the hotel industry all around the globe. Marriott Singapore was established thirteen years ago but the technology they has is breathtaking. Marriott is aware of the fact that hospitality industry exists in rapidly changing environment , where new products and innovations are
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introduced quite frequently, Whenever a new competitor enters the market Marriott has got their own strategies and methods to counter it. The operational procedures are crystal clear and all those personnel involved in it know what their part of the big pictures is, For the last decade Marriott has created a revolution in hospitality and services. After analysis several matrix, external and internal analysis, Still there are a lot of things on which Marriott can improve on, as I have mentioned in the SWOT analysis. The best part is that their possibilities and opportunities are endless.

9.0 Recommendations
Joint ventures offer hospitality businesses a unique opportunity to maximize their profits and revenue streams, as well as building a community with fellow businesses in their region. The central benefit of a joint venture is resources. By pooling together resources from both companies, a joint venture can end up doing more than a single business could. For example, if Marriott do business requires goods, services, or capital it does not have, they can communicate with a fellow business to set up a mutual plan for success.

10.0 Evaluation of learning

Through this case study for the subject of strategic Management, I was given an opportunity to evaluate lodging industry based on its present performance and strategies. For which I used various management, marketing and growth strategies such as BCG matrix, External environment study, Grand Strategy Matrix and TOWS matrix. With the financial analysis I can understanding the Marriott past performance. I would like to thank my teacher, Mr. David Goh, Thanks for being strict with us and imparting knowledge to us, these insightful knowledge which could help me in my future.

Reference list:
Books: Arthur A,Thompson,Jr.A.J.Stricklaud.1998.Strategic Management concepts and cases.10th edition. McGraw Hill .USA
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Carpenter, A,M and Gerard Sanders, Wm.2007.Stategic management-a dynamic perspective concepts and cases. 2nd edition. Unite state of America, Pearson education, Inc. David, F,R.2007.Strategic management-Concepts and cases. 11th edition. Unit State of America: Pearson Prentice Hall. Thompson, A, A and Strickland, A, J,2005. Strategic Management-Concepts and Cases. 12th edition. Singapore: McGraw-Hill. Philip Sadler, James C. Craig 2003 Strategic Management. 2nd edition. Unit State of America John L. Thompson, Frank Martin 2005 Strategic Management: awareness and change. 5th edition Ronald A,Nykie.2005, Hospitality Management Strategies. Pearson prentice Hall LTD Jeffery S. Harrison.2005. Hospitality Strategic Management concepts and cases. John wiley&sous, Inc, Canada. Dallas Hanson, peter J. Dowling etc. 2002, Strategic Management Competitiveness & Globalisation, 4th edition. The Auptralian copyright Act. Australia. Laurie J Mulling.1995.Hospitality Management A Human Resources Approach. 2th edition. Addison Wesley Longman Limited Edinburgh Robert D. Reid &David C. Bojanic. 2006 Hospitality Marketing Management 5th edition. John wiley & sons.Inc, Hoboken, New Jersey. Website Marriott n its Forthcoming Strategies on Emerging Competition 1 ,2006 http://wenku.baidu.com/view/4b5db16c58fafab069dc0240.html (Accessed on 15 April 2011) Hotel Industry Analysis Report,2007 http://www.scribd.com/doc/23134349/Hotel-Industry-Analysis-Report (Accessed on 15 April 2011) Singapore Marriott Hotel, Orchard,200 http://www-singapore.com/singaporemarriott/
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(Accessed on 16 April 2011) Porters 5 Forces,2001 http://www.themanager.org/models/p5f.htm (Accessed on 16 April 2011) BCG Matrix,2005 http://www.docin.com/p-47982400.html (Accessed on 10 April 2011) SWOT Analysis 2005 http://www.12manage.com/methods_swot_analysis_zh.html (Accessed on 10 April 2011) Grand Strategy Matrix 2005 http://wiki.ebusinessreview.cn/Grand_Strategy_Matrix (Accessed on 12 April 2011)

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