Expansion of Marriott in Australia

This article discusses the expansion possibility of Marriott in Australia through external environmental analysis. It provides insights into the background of Marriott, PESTEL analysis, opportunities and threats, and industry analysis. The article also highlights the strategic planning for Marriott's expansion.

Running head: EXPANSION OF MARRIOTT IN AUSTRALIA
EXPANSION OF MARRIOTT IN AUSTRALIA
Name of the Student
Name of the University
Author Note

1EXPANSION OF MARRIOTT IN AUSTRALIA
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Background of the Organization- Marriott:...........................................................................2
PESTEL Analysis:.................................................................................................................7
Opportunities and Threats for Marriott:...............................................................................12
Industry Analysis- Porter’s Five Forces:..............................................................................13
Conclusion:..............................................................................................................................15

2EXPANSION OF MARRIOTT IN AUSTRALIA
Introduction
The strategic tool, which is used for the identification of internal as well as the
external factors that can influence performance of organizations, is known as Environmental
analysis (Moutinho and Phillips 2018). The factors reflects the assessment of the threats as
well as the opportunity of the organizations (Ansoff et al. 2019). The procedure of
environmental analysis consists of Environmental Scanning, which identifies the elements or
factors that affects the business operations of organizations (Grant 2016). The objective is to
find early warning signal and/or emerging trends (Keith 2017). The external environmental
analysis studies the analysis of the industry, competitor analysis and macro-environmental
forces. Macro environment forces concentrates on the future possibility of events (Glowik
2017). The purpose of the paper is to discuss the expansion possibility of Marriott in
Australia by conducting external environmental analysis. Marriott is planning to expand its
business to Australia, which will require the analysis of opportunities and threats in
Australian hospitality industry. The paper will also present the background information of
Marriott. For the identification of threats and opportunity of the organizations, external
analysis will be conducted by using the framework of PESTEL as well as the Porter’s
Industry Analysis. The paper will be concluded by stating the expansion possibility of
Marriott in Australia.
Discussion
Background of the Organization- Marriott:
The American multinational company Marriott, specializing in hospitality services
manages as well as it involves in franchising a wide range of hotels, lodge facilities and other
hospitality businesses. J. Willard Marriott founded the company in the year 1927. The

3EXPANSION OF MARRIOTT IN AUSTRALIA
headquarter of Marriott is situated in the metropolitan area of Washington, D.C. Marriott
offers includes around 6,900 properties in 130 countries (marriott.com 2019).
Marriott International was started in the year 1993 after the split of two different
companies, Host Marriott Corporation and Marriott International. The first ever hotel
organization, which offered the online service of booking hotel reservation is Marriott. The
organization incorporated the online infrastructure of Marriott's Automatic Reservation
System for Hotel Accommodations (MARSHA) (marriott.com 2019). The organization
acquired the hotel chain of Canada, Delta Hotels in the year 2015. Marriott also acquired
Starwood Hotels and Resorts Worldwide in the year 2015. The acquisition of Starwood
presented a wide presence in non-US regions (marriott.com 2019).
The core values of Marriott consists of various elements such as taking care of
employees/staff before taking care of consumers. The hotel brand focuses on improving the
service offerings for reaching as well as in maintaining the level of excellence. The brand
believes in incorporating innovation by accepting changes from external environment
(marriott.com 2019). The brand concentrates on challenging status quo of the operational
functions and identifies the changing needs for consumers in regards with new locations,
different guest experiences as well as new brands (Tso and Wood 2018). Integrity is one of
the main values of Marriott as well as the organization involves itself in legal and ethical
practices for day-to-day business activities, policies of supply chain, employee policies and
regulations, commitment towards social responsibilities as well as human rights as well as
setting standards for environmental practices. The organization also involves activities for
contributing towards sustainability (marriott.com 2019).
The mission of the organization is to improve lives of the customers by the creation of
supreme quality of vacation and leisure experience. The vision of Marriott is to become the

4EXPANSION OF MARRIOTT IN AUSTRALIA
leader of providing and facilitating leisure as well as for vacation experiences (marriott.com
2019).
Brand portfolio:
Services offered by the brand includes events like social events, meetings as well as
various booking packages like senior travelling packages. The stakeholders of Marriott
includes vendors, communities as well as customers, franchises, the organization manages a
wide range of hotels but owns very few of them as well as independent owners (marriott.com
2019).

5EXPANSION OF MARRIOTT IN AUSTRALIA
Organizational structure of Marriott
(Source: Wang 2018)
Financial structure of Marriott for the third quarter of the year 2018:
The organization reported a net income of 483 million dollars as compared to 485
million dollars in 2017. The Earnings per Share of the company was reported to be 1.38
dollars. The adjusted net income of third quarter of 2018 was around 598 million dollars,
which was a 51 percent increase from 2017 (Tso and Wood 2018). The franchise fees as well
as base management income summed up to 781 million dollars, which was a 14 percent
increase from the previous year. The incentive management fees increased up to 9 percent,
from 138 million dollars to 151 million dollars (Robinson et al. 2016).
Financial Performance charts:

6EXPANSION OF MARRIOTT IN AUSTRALIA
Graph representing the net income of Marriott International from the year 2007-2018
(Source: marriott.com 2019)
Graph representing the revenue and net income in each segment
(Source: marriott.com 2019)

7EXPANSION OF MARRIOTT IN AUSTRALIA
Graph representing Earnings per share from September 2017 to June 2019
(Source: marriott.com 2019)
The company involves the approach of sustainability in its levels of value chain. They
contributes towards reducing the impacts of operational activities on the environmental
aspects. The environmental footprint of the company is mitigated by managing the water as
well as energy use, enhancing the utilization of recyclable resources as well as the renewable
energy as well as by reducing the carbon and waste extraction (Wang 2018). The
organization adopts innovative ways and technological implementation for facilitating their
sustainable strategic implications. They have incorporated the approach of sustainability from
designing hotels to improving guest experience. They also attempts at synchronising the core
values of the company with the supplier as well as the business partners for reducing the risk
as well as impact of business operation on the environment (Mendieta-Peñalver et al. 2017).

8EXPANSION OF MARRIOTT IN AUSTRALIA
PESTEL Analysis:
The tool or framework, which is used by businesses or marketers in order to assess as
well as it monitor macro-environmental factors for understanding the impact of external
environment on the organization (Moutinho and Phillips 2018). The findings of PESTEL
analysis are used for identifying the opportunities and threats of an organization.
PESTEL Positive or Negative for Marriott
Political Factors:
One of the important markets for the
operation of Multinational companies in
Asia Pacific is Australia. It reflects the state
of growing economy. It has a stable
business as well as stable political
environment. It also have a population of
skilled workforce with a diverse cultural
background. The country Australia reflects a
competitive cost base structure. The
economic resilience of Australia is the
impact of its stability in political structure as
well as the transparency in regulatory
systems. Australia has a sound framework
of governance. It is ranked among the top
five regarding Index of Economic Freedom
(Moutinho and Phillips 2018). The country
Australia offers the business environment,
which holds the 15th rank in regards with the
Positive for the expansion opportunity of
Marriott.

9EXPANSION OF MARRIOTT IN AUSTRALIA
ease of doing business (Wheelen et al.
2017). The regulatory system of Australia is
considered to be robust for the stable
institutional framework as well as strong
banking as well as the financial regulations.
The quality of life is rated as seventh
highest in world.
Economic Factors:
Australia has the 13th largest economy in the
world. The economy grew up to two percent
in the year 2017 as well as around three
percent in 2018. The opportunity of buying
off-land properties in an optimal rate arose
from the increasing number of people
opting for the option of ‘pure investment’
(Moutinho and Phillips 2018). The currency
exchange rates favours companies from
America as well as the foreign countries to
invest in business opportunities with ease
and convenience. The tax rate in Australia
currently thirty percent.
Positive for the expansion strategy of
Marriott.
Social Factors:
The population of Australia is smaller as
compared to other countries. It is around 23
million as recorder in the year 2018. The
Positive for the expansion plan as the
acceptability factor will be more with the
presence of diverse culture.

10EXPANSION OF MARRIOTT IN AUSTRALIA
average life expectancy of men is
approximately 80 years as well as women is
84 years. The country have a multicultural
background which increase the acceptability
of new products and services. The social
class of Australia is divided in three classes,
upper, middle and lower class (Moutinho
and Phillips 2018). Australia directs its
focus on the importance of higher
education. The standard of living in
Australia is ranked as the seventh highest in
the world. It is considered to be one of the
best counties in terms of education, quality
of life and education. Australians are
considered for investing time for
entertainment as well as leisure activities
which can be great opportunity for Marriott
by entering in the hospitality industry
(Grünig and Kühn 2015).
Technological Factors:
Australia is considered to be technologically
advanced in the world. It is known for
investing in technological implications.
Technology purchase of Australia have
grown at a rate of 4 percent in the year of
It will be beneficial for the organization for
the process of innovation.

11EXPANSION OF MARRIOTT IN AUSTRALIA
2018 amounting up to 65 million Australian
dollars (Molina-Azorín et al. 2015).
Companies like Marriott will acquire a great
advantage from the technological scenario
of the country (Gupta 2013). The
government is known to fund around 50
percent of the research & development of
the country (Moutinho and Phillips 2018).
The government has introduced a law,
which allows the security agencies to have
access of encrypted messages, which
contributes towards the overall security of
the country (Moutinho and Phillips 2018).
Environmental Factors:
The country face environmental issues like
it is considered to be the driest inhabited
continent on earth. Another challenge is the
increasing rate of climate change, which
causes infectious diseases, water insecurity
as well as the conflicts over water, food and
land (Moutinho and Phillips 2018).
This can be an opportunity for Marriott to
attract partners and customer by reflecting
the sustainable practices.
Legal Factors:
Australia has competition laws, consumer
laws as well as fair trade practices laws. The
Fair Work Act 2009 governs the
Positive for Marriott

12EXPANSION OF MARRIOTT IN AUSTRALIA
employment in Australia (Moutinho and
Phillips 2018).
Opportunities and Threats for Marriott:
Opportunities Threats
 The high standard of living in
Australia reflects the opportunity for
the expansion of Marriott.
 High acceptability due to the
presence of diverse culture.
 Increasing openness towards luxury
hotels.
 Increasing need for sustainability
approach in hospitality industry
because of the concerns of climate
change.
 Continual innovation procedures of
Marriott can address the changing
needs of Australian diverse culture
 Increasing popularity of Australian
tourism.
 Increasing competition from Hilton
Worldwide Holdings, Hyatt Hotels
Cooperation.
 Increasing trends of Airbnb (Gurran,
Searle and Phibbs 2018).
 The increasing vulnerability due to
terror attacks.
The president and MD of Asia Pacific, Craig S. Smith stated, “This is an extremely
exciting time for Marriott as we significantly grow our footprint in the Australia as well as it

13EXPANSION OF MARRIOTT IN AUSTRALIA
continue to build on our leadership position in gateway markets” (marriott.com (2019). The
organization is prepared to expand in regions of Australia over the few years. Marriott
already have its presence in cities like Melbourne, Sydney and Perth (marriott.com 2019).
Industry Analysis- Porter’s Five Forces:
The tool which facilitates the understanding of company’s position in a specific
market relative to the other companies which produces similar services, products or idea. By
constructing the understanding of various forces in the environment or in the overall industry,
industry attractiveness in a specific regions can be identified. It is an important component
for implementing strategic planning effectively and efficiently. Industry analysis also
contributes towards the identification of opportunities and threats in a business environment
as well as helps in focussing the resources towards the development of unique capabilities
which could result in differential factors as well as competitive advantage.
Factors Impacts Level of Impacts
Bargaining Power
of Buyers
In the technologically advanced world
as well as the increasing exposure of
information on online platforms is
contributing to the power of buyers.
The simplicity in booking a hotel
influences the power of buyers.
Increasing options of lodging solutions
is also contributing to the increasing
level of buyer power (Manning et al.
2018). Moreover, increasing level of
High

14EXPANSION OF MARRIOTT IN AUSTRALIA
similar pricing structure in competitions
increases the power of the buyer as it
decreases the switching cost (Anton
2015).
Competitive
Rivalry
Competition is increasing with the
emergence of new conceits like Airbnb.
There are wide range of option in for
the lodging solutions like big brands in
hotel industry, home-stays as well as
the affordable hotel options (Kaur and
France 2018). However, brands with
Unique Selling Point as well as
technologically advanced approach can
contribute in the favour of a specific
brand (Kaur and France 2018).
Moderately High
Barriers to Entry The initial investment for entering into
a hotel or hospitality industry is very
high, which act as a barrier for the new
entrants. Another barrier can be the
factor of differentiation as the new
entrants will have to experience the
burden of offering something different
for establishing an Unique Selling Point
among the establish hotel brands (Kaur
and France 2018). However, marketing
High

15EXPANSION OF MARRIOTT IN AUSTRALIA
or promotion cost of the new businesses
can be addressed by the increasing
advancement in digital world.
Bargaining power
of suppliers
Hotel industry is dependent on
workforce as well as hotel necessity
supplies, which is present in a large
number (Lehr 2015). With the
increasing focus on education and
training in Australia, hotel industry can
have a greater extent of appointing
skilled labour, which makes the power
of supplier low (Kaur and France
2018).
Low
Threat of
substitutes
With the growth as well as the
promotion of tourism industry, the hotel
business is improving. The threat of
substitute in hotel industry is very low
(Madar 2017).
Low
Conclusion:
Therefore, it can be concluded from the paper that Marriott reflects great potential of
expanding the hotel chain in Australian market. Marriott is a well-known established brand
with the process of continual innovative practices as well as the adoption of sustainable

16EXPANSION OF MARRIOTT IN AUSTRALIA
approaches in its operational activities portrays the positive possibility of expansion plan.
After the evaluation of macro environmental factors in Australia it can be seen that the
current political, economic, socio-cultural, technological, environmental and legal factors are
positive for the implementation of expansion strategy of Marriott. The opportunities of
Marriott in Australia can be depicted by one of the best living standards of people in
Australia as well as the high acceptability as well as the openness of consumers due to
cultural diversity. Strong legal structure will also contribute towards the possibility of
expansion plan as it will eliminate the vulnerability caused by terror attacks in hotel industry.
The increasing environmental concerns of Australia can be addressed by the encouraging
sustainable practices of Marriott in regions of Australia. After conducting the industry
analysis, it can be deduced that other than competition, the hotel brand Marriott does not
reflect any factor of concern as it already have a strong presence in various countries as well
as is known for it fair trade practice as well as technologically advanced methods. Marriott
considers valuing their employees first, which will attract the workforce of Australia.
Moreover, Marriott also reflects various differentiating factor, which will contribute towards
the expansion strategy of the organization.

17EXPANSION OF MARRIOTT IN AUSTRALIA
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