marriott international capstone research paper

Running head: MARRIOTT INTERNATIONAL

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Assignment 5: Capstone. Marriott International.

Natalia Poplawska

Strayer University

BUS 499: Business Administration Capstone

Professor Tim Kinsey

December 11, 2016

MARRIOTT INTERNATIONAL 2

Assignment 5: Capstone. Marriott International.

Mission, Vision, and Stakeholders

According to the company website, Marriott International does not have a mission

statement, rather, it has a vision statement which is: “to be the number one hospitality company

in the world.” (www.marriott.com). It has a significant impact on the company’s overall success

as it outlines its ultimate achievements for the long-run. It contains standards and aspirations for

its employees and its promise to all stakeholders. It vouches to be the best provider of

unforgettable guest experience around the globe. That implies constant improvements in striving

for being number one. It also implies diversification as it calls itself a hospitality company as

opposed to a hotel chain. Moreover, it implies growth and international expansion as it wants to

dominate in the world. Marriott’s vision statement challenges its employees and motivates them

to strive for excellence in delivering exceptional service. Furthermore, it ties together the internal

organization’s core values with the external environment correlations of global markets and

creating a competitive advantage over other players in the hospitality industry. Thus, the vision

statement impacts Marriott’s success by motivating its employees to achieve the goals it outlines.

Other crucial aspects that impact Marriott’s success are its stakeholders. The first group

are the capital market stakeholders consisting of investors. They affect the company’s success by

making important decisions about the future. One of them included the recent acquisition of

Starwood hotels and contributed to Marriott’s success by bringing in new customers and adding

more brands and locations to the portfolio. The investors also provide financial support that

allows Marriott to expand and improve which eventually defines the company’s success. The

second group are the product market stakeholders. They highly affect Marriott’s success as the

customers provide reasons for existence and the suppliers make the operations possible. The last


group are the organizational stakeholders, or the employees. They are responsible of Marriott’s

success as their efforts determine sales volumes and relationships development. They are the

driving forces of the operations and executors of the vison statement.

Five Forces of Competition

The five forces of competition defined by Michael Porter have a significant impact on the

feasibility and potential profitability of Marriott International, as they influence prices, costs and

investments. (Cheng, 2013, p. 52). To start with, the threat of new entrants in the hotel industry

is low because it operates within the economy of scale characterized by high capital costs and

high proportion of fixed costs to total costs. Marriott International has an advantage over the

potential new comers as the hotel chain already has facilities, amenities, furniture as well as the

established brand image, respect and customer loyalty. According to the company profile: “at the

end of FY2015, it operated, franchised or licensed 4,424 properties (with 759,330 rooms),

inclusive of 41 home and condominium products (4,203 units), in 87 countries and territories.

(MarketLine, 2016, p. 4). These facts illustrate Marriott’s dominance in the market over the

potential new entrants, hence this force of competition has a low impact on the company. The

capital investment that Marriott made in the past contributes to its current profitability and, at the

same time, makes it difficult for new comers to compete against the hotel chain.

Next, the threat of substitute products is also low. According to a research study, the only

things that can replace a hotel service during an economic recession would be hostels, motels or

staying with relatives and would only affect low-income, cost-conscious strategic groups of

tourists. (Cheng, 2013, p. 53). Marriott International has various customer bases such as business

travelers and high income leisure travelers who remain loyal to the brand due to its rewards

program. Thus, even in the case of an economic recession, business travelers would still need a


hotel service and the members of Marriott’s reward programs would use their points earned

during their travel history to stay at the hotel chain that they know and trust instead of turning

towards cheaper lodging options. The Marriott rewards program offers its members benefits such

as lower rates and upgrades.

Furthermore, the bargaining power of suppliers for Marriott International has a moderate

impact. The quality and image of suppliers determine the final products and services that the

company offers to its customers. For the hotel industry, the most powerful suppliers who have an

impact on the hotel chain are its experienced and well-trained employees. Marriott International

overcomes this force of competition as its employees feel respected and satisfied with the

company, hence they remain loyal and perform well. A research study shows that: “the average

tenure for a hotel general manager at Marriott is 25 years; industrywide it’s much lower. Some

10,600 people have been there more than 20 years. The company has been on the Best

Companies to Work For list all 18 years of the list’s existence, something only 11 other

companies can say.” (Gallagher, 2015, p. 114). J.W. Marriott’s founding philosophy was: “take

care of the associates, the associates will take care of the guests, and the guests will come back

again and again.” (www.marriott.com).

Moreover, the bargaining power of buyers for Marriott International has a moderate

impact. Marriott values loyal customers by offering an attractive rewards program described

earlier. It also differentiates itself through branding spread from hotels for business travelers, to

middle-class families, to luxury-seeking individuals. The company also has a respected and long

established brand image and global recognition, hence it attracts former and new customers.

Lastly, the intensity of rivalry among competitors is high. There are several major hotel

chains that offer similar services that Marriott International does. They also diversify themselves

http://www.marriott.com/


into brands similar to the ones of Marriott. In addition, the company also competes against

independent hotels and resorts such as local facilities or bed & breakfast places. Marriott

International still has the competitive advantage over its major competitors because of its reward

program and its global brand recognition that guarantees high quality. It has also recently

acquired Starwood hotels which added brands and locations to its portfolio. The acquisition also

brought in new, loyal customers as Marriott matched Starwood’s rewards program with its own

to benefit the guests.

SWOT Analysis

Marriott International has its strengths that lead to opportunities and weaknesses that can

create threats. First of all, its strengths include a diversified brand portfolio and attractive loyalty

program. It offers 30 different hotel brands across over 5700 locations in more than 110

countries. (www.marriott.com). The company has a portfolio that divides customers into various

segments. It includes the luxury brands such as Ritz-Carlton. It also has the upper-upscale brands

such as the Renaissance Hotels. In addition, it has the upscale such as Courtyard by Marriott.

Lastly, it has upper-midscale brands such as Fairfield Inn. Market analysis points out that:

“diversified brand portfolio of the company and their increasing awareness among its clientele

make Marriott a popular choice among its customer base. This gives Marriott an edge over its

competitors when clients opt for lodging facilities. Furthermore, broad portfolio of brands also

enables the company to enhance its market share.” (MarketLine, 2016, p. 4). These facts

demonstrate Marriott’s competitive advantage in being able to reach and satisfy all types of

customers. Another strength of the company is its rewards program. It creates brand loyalty and

develops long-lasting relationships with customers. Market research highlights that: “as of

FY2015, the company had more than 54 million members and 16 participating brands in these



programs. The rewards programs help Marriott in yielding repeat guest business by rewarding

frequent stays with points toward free hotel stays and other rewards, or airline miles with any of

41 participating airline programs.” (MarketLine, 2016, p. 5). This data illustrates attractiveness

of the loyalty program to the customers as well as its effectiveness in developing brand loyalty.

Marriott International also has some weaknesses. Its most significant one is the business

model that focuses on managing and franchising hotels, rather than owning them. A business

analysis identifies this as an issue. “Though the emphasis on management contracts and

franchising tends to provide more stable earnings in periods of economic softness, it does not

provide much scope for revenue growth.” (MarketLine, 2016, p. 6). This weakness can interfere

with Marriott’s profitability and development in the future. Moreover, the risk of poor

management at franchises can lower quality and harm the brand’s name and reputation.

There are a lot of opportunities for Marriott International. One of them is the growing

popularity of tourism and the interest in the hospitality industry in the USA. There are more

tourists coming in from the emerging economies such as China. A research shows that:

“international visitors spent nearly $18 billion on travel to, and tourism related activities within,

the US in January 2016. Also, the travel and tourism industry annually generates about $1.6

trillion of economic output, which supports approximately 8.1 million US jobs.” (MrketLine,

2016, p.7). These facts confirm the opportunities for Marriott to expand and gain new customers.

There are also some threats to Marriott International. The most serious one is the

vulnerability to terrorist attacks that brings up safety of guests around the world. Research points

out that: “Marriott, a symbol of American luxury and power, has been a prime target of terrorist

attacks.” (MrketLine, 2016, p. 8-9). Those include attacks in Pakistan in 2002 and 2008. These


incidents raise concerns of safety and security arrangements at Marriott hotels around the world.

This threat could harm overall reputation of Marriott International and result in lower check-ins.

SWOT Analysis Strategy

In order to capitalize on its strengths and opportunities, Marriott International should

work on the constant service improvements, innovations and invest in market research activities.

To start with, the company’s greatest strengths described earlier include its diversified portfolio

and its loyalty program. Major competitors started to imitate these strategies and developed their

own brads targeting specific customer groups as well as their own rewards programs. Hence, in

order to retain the competitive advantage, Marriott needs to introduce new features to each of its

brands and more incentives into its loyalty program. The company should conduct filed studies

and surveys in order to identify guests’ expectations and desires. Next, it should work on

incorporating their feedback into improvements in service, facilities design, amenities options

and ways of earning and using points for choosing Marriott. For example, the hotel chain should

ask its guests to complete a quick survey and tell the managers what they liked and disliked

about their reason stay. In exchange they would be awarded with points towards discounts and

upgrades. These responses could be used to introduce changes and increase customers

satisfaction.

Furthermore, Marriott International could capitalize on its opportunity of growing

popularity of tourism in the emerging economies. The company should develop a transnational

strategy and use it in its international expansion. It should study statistics of international

tourists’ frequency and their cultures to design its locations accordingly. For example, if there are

a lot of tourists from China staying at a specific Marriott hotel, then the management of that hotel

could offer Chinese cuisine on its menu, Buddhist Temples on its ground or nearby, reduced


telephone rates and mailing services to China as well as gift stores with common products from

China. This would enhance the customer satisfaction, as they would feel more like home while

being far away from home, and that’s the main goal of any hospitality firm. By trying to achieve

this, Marriott International would fulfill its vision statement of being number one hospitality

company in the world.

In order to minimize its weakness in a form of the business model that it follows,

Marriott should own more of its properties instead of franchising them. This would yield more

revenue growth and reduce the risks of lowering high quality and good standards of its services.

To achieve this, the company should buy out some of its franchisors and increase the ownership.

Marriott could use its current revenues, ask investors to provide more financial support or get a

loan at a bank. Marriott would be able to use any of the suggested forms of payments, as it is

already a profitable and reliable company, thus it would meet all necessary criteria.

Lastly, to be able to minimize its greatest threat that is the customers’ fear of the terrorist

attacks, Marriott should invest in more security, especially in areas of high terrorist attacks risks.

The company should hire more security guards and train all employees on proper behavior in

case of a terrorist attack. It should also have armed individuals on all of their properties.

Moreover, hotels should be equipped in bunkers and escape channels for easier evacuation.

Lastly, there should be surveillance cameras around the properties in order to spot dangerous

behaviors and stop a potential disaster. The efforts of increasing safety and security should be

communicated to all customers so they feel safe and know that they will have greater chances of

surviving in case of an attack.


Business Level and Corporate Level Strategies

Marriott International uses various levels of strategies in order to maximize its

competitiveness and profitability. First of all, its business-level strategy is differentiation. The

company is aware that one type of hotel cannot cater to all kinds of guests. Hence, it offers 30

different brands and each of them caters to a specific customer group or a target market. For

example, the Ritz-Carlton is designed for upscale consumer, seeking high-end and luxurious

accommodations. On the contrary, Courtyard is designed for a business traveler who needs office

spaces. Finally, Fairfield Inn is designed for travelers on a tight budget. These various brands

allow Marriott to reach broader market segments and attract all types of guests. The

differentiation strategy allows for high responsiveness to the customer demand and thus

promotes improvements in a sense that it recognizes various needs of different customer groups

and then creates a brand that meets those demands. Another aspect of its differentiation strategy

it’s the rewards program. Guests can earn points for frequent stays at Marriott’s locations and

later use them to receive discounts and upgrades. It is very attractive to all customers because

they can use the points not only for hotel stays but also for airline tickets. This gives guests more

options instead of limiting them to narrowed-down activities. This builds customer relationships

and creates brand loyalty in the long run as customers are more likely to choose a hotel room that

will contribute to the future rewards. This increases Marriott’s competitiveness and profitability.

As its corporate-level strategy, Marriott uses a diversification strategy. First of all, it

partners with popular airlines, such as British Airways, on its rewards program. Customers can

use their Marriott membership number to reduce their plane tickets. They can also incorporate

miles they used through air travel into their rewards points and use them for upgrades and

discounts during their future travels. Moreover, Marriott linked its own reward program with the


Ritz-Carlton rewards program and the recently acquired Starwood’s rewards program. This is

beneficial for both, the company and the customers: Marriott gained new, loyal clients, and the

guests have more opportunities to earn and use their traveling point. Overall, the diversification

strategy creates value for its customers. Because Marriott linked the rewards programs and

partnered with airlines, its guests have more ways of earing points. It also builds economy of

scope through sharing value chain activities, resources, knowledge, and by transferring core

competencies. Hotels and airlines are both hospitality industries and they share similar customer

base. Hence, Marriott partnering with major airline brands gives both companies greater market

power which gives them grater competitiveness and profitability.

Communication Plan

In order to make the above strategies known to all stakeholders, Marriott International

should implement a communication plan. First of all, it should bring the strategies to its

stakeholders’ attention during the annual meeting. This would allow them to become familiar

with and discuss all aspects of strategies. It would also provide opportunities to raise questions

and suggest changes into the presented strategies. Second of all, a final document that contains

the details of strategies should be sent to all stakeholders for review and archives as well as be

posted on the company website, in the investors section for public records and for the future and

potential investors. Furthermore, the same document should be presented to all employees. This

could be done during initial or follow-up trainings. The employees could also receive a copy by

mail. Lastly, all customers should be notified about Marriott’s strategies through media

campaigns that would prepare and spread out a simplified version.


Corporate Governance Mechanisms

According to the investors section on the company website, the shareholders of Marriott

International elect the board of directors to oversee management. “The board, together with its

independent committees, evaluates and challenges Marriott's strategic plans, approves

appointment of corporate officers, approves senior executive compensation, appoints and

supervises the company's independent auditor, reviews the company's financial condition,

declares dividends and approves significant investments and divestitures and other significant

matters.” (www.marriott.com). This quote summarizes the privileges and responsibilities of the

company’s decision-makers.

Moreover, Marriott’s corporate governance also appoints independent directors and audit

committee. Those institutions can be contacted if there is a concern about the company’s

conduct, accounting, internal accounting controls or auditing matters. Anyone can communicate

those concerns directly to the Chairman of the Nominating and Corporate Governance

Committee, to the independent directors, or to the Audit Committee. The concerns are forwarded

to the appropriate directors for their review, and are reviewed and addressed by Marriott in the

same way that other concerns are addressed by the company. (www.marriott.com).

A unique aspect in Marriott’s corporate governance is the presence of J.W. Marriott Jr.

on the executive board. He is the former CEO and the current Executive Chairman and Chairman

of the Board. He is also the son of Marriott’s founder. Having such a person on a board increases

the morale of other members and assures that all decisions will have the company’s best interest

ahead of their personal goals.




Leadership

In my opinion, leadership at Marriott International is very effective. Employee

satisfaction is high and their turnover is low. Some refer the work environment to their family.

This is a result of dynamic and passionate top management and a strong organizational culture.

The president and CEO, Arne Sorenson emphasizes the importance of a diversified leadership in

a hospitality industry: “we are passionate in our efforts to remove barriers and create an inclusive

environment that leads to opportunities for others to contribute and grow.” (Sorenson, 2012, p.1).

Nowadays both employees and guests are much diversified as they come from different

backgrounds and cultures. That is why Marriott is proud to call itself an equal opportunity

employer and it hires a much diversified workforce. The successful leadership identifies such

diversity as an asset when it comes to dealing with tourists from different backgrounds.

Furthermore, Marriott engages in a family leadership. The company was founded by J.W.

and Alice Marriott and guided by Marriott family leadership for nearly 90 years. The managers

today still refer to the guideposts outlined by J.W. Marriott in 1964. Some of them include

advice to his son when he was taking over: “See the good in people and try to develop those

qualities. Don’t try to do an employee’s job for him – counsel and suggest. Encourage all

management to think about better ways and give suggestions on anything that will improve

business.” (Marriott, 1964). These statements describe an ideal leader of Marriott International,

who follows good work ethics, treats people with respect and sets expectations for performance

and improvements high. According to the founder, a hospitality leader should be able to identify

talents and allocate them appropriately to increase its corporation’s performance. This approach

also contributes to high satisfaction and a low employee turnover.


My recommendation for improvement would be a greater empowerment of employees by

its managers. First of all, it would increases morale of the employees. They would feel more

important and more responsible. They would also develop a stronger relationship and thus they

would care more about the best interest of the company that they are a big part of. Second of all,

this would reduce the work load on the top managers as the tasks and responsibilities would be

outsourced to the newly empowered employees.

Corporate Responsibility and Ethics

Marriott International is an ethical and socially responsible corporation that supports

local communities and protects the environment. First of all, the company promotes ethical

behavior and integrity among its core values known by all employees and available to public and

shareholders on the website. The company scored 100% on the respect for the human rights for

the past three years. It achieved this through being an equal opportunity employer, hiring

women, as well as having an inclusive and diversified workforce. The company also provides

attractive benefits all of its employees. For example, the workers get health insurance, retirement

plans, and discounts of hotel rates and meals. (www.marriott.com).

Marriott International is also an industry leader on environmental sustainability.

According to the reports, the company reduced its energy intensity by 13.2% and its water

intensity by 10.4%. This is not only contribution to the nature preservation but also cost saving

mechanism that will pay off in the long run. Moreover, “going green” attracts more environment-

aware customers and generates more revenues from them. Furthermore, Marriott has LEED-

certified hotels and building all over the world as well as over 263 electric vehicle charging

stations. (www.marriott.com).




Finally, Marriott International engages into responsible sourcing. The hotel chain partners

with its suppliers to help develop “innovative products and programs throughout the supply

chain that deliver superior performance while meeting sustainability goals. Ongoing efforts such

as these are helping to conserve energy, reduce water use, increase waste diversion and

incorporate more sustainable materials.” The company reports that 93% of Marriott’s contracted

North American suppliers have a sustainability policy. (www.marriott.com). These responsible

efforts and actions have a significant impact on Marriott International. They create a positive

brand image and build up a good reputation on the market. They also attract more customers who

are concerned about corporate social responsibilities of modern firms. This gives Marriott a

competitive advantage. Lastly, caring for environment and society gives the management a piece

of mind and leaves a legacy of ethical and responsible leaders.



References

Cheng, D. S.Y. (2013). The Hotel Industry in Porter Five Competitive Forces. The Journal of

Global Business Management. Vol. 9.3. 52-57.

Gallagher, L. (2015). Why Employees love Marriott? Fortune Magazine. Time, Inc. 113-118.

Marriott International. (2016). Company Website. www.marriott.com

Marriott, J.W. (1964). Guideposts to management. Marriott Corporation Employee

Communications and Creative Services Department Marriott International Headquarters.

MarketLine. (2016). Company Profile. Marriott International, Inc. 1-44.

MarketLine. (2016). SWOT Analysis. Marriott International, Inc. 1-9.

Sorenson, A. (2012). Diversity Leadership: Arne Sorenson, Marriott International, Inc.

Diversity, Inc.


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