Managing Innovation in Business

This report examines the innovation strategy of Marriott International, a leading hospitality company. It explores the company's innovation history, performance, and capabilities, using examples like Mobile Key and AI chatbots. The report also examines the hospitality industry using Porter's Five Forces model, highlighting key trends and challenges.

MANAGING INNOVATION
IN BUSINESS

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
.........................................................................................................................................................1
INTRODUCTION...........................................................................................................................2
INNOVATION HISTORY..............................................................................................................3
INNOVATION PERFORMANCE AND CAPABILITIES............................................................4
HOSPITALITY INDUSTRY..........................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

EXECUTIVE SUMMARY
The report below is based on managing innovation in business, for which purpose,
Marriott International has been chosen as an appropriate organisation. The organisation has
multiple chain of hotels and restaurants all over the world and is working on bringing innovation
within the company. Innovation refers to adding value to existing offerings of an organisation to
further enhance its applicability and increase its usefulness.
The agenda of this report was to effectively determine the innovation history of Marriott
Hotel and to achieve this, its major innovations such as Mobile key, AI chatbot etc has been
described and discussed and how it assist them to gain competitive advantage over others.
Another purpose of this report was to effectively determine the innovation performance.
Its various achievements and effective accomplishments have been described to determine the
performance of Marriott. Apart from this, innovation process is used and implement to identify
ways through which Marriott international can attain sustainable business performance.
Lastly, the report aims at an overlook on the Hospitality Industry in 2018. To
appropriately address this agenda, PORTER's five force analysis have been used which provides
a framework to determine industrial attractiveness and competitiveness of an industry.
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INTRODUCTION
Innovation refers to transforming of ideas and thoughts into real time scenario which will
create customer value for the individual who is using it (Möller and Halinen, 2017). Main motto
of innovation is to shorten the hard work performed by person to accomplished the pre assigned
task. For this report, Marriott international is taken for discussion which deals in the hospitality
industry as a largest hotel chain all over worldwide. This report will assist the reader to clear the
concept of innovation with the help of digging the history about the hotel chain and how it
changes their strategy to cope up with the external factors. How much efficiency does the hotel
has while performing in various circumstances will be discussed with the help of porters five
forces model. Along with this, market share of the hotel will be explained from various credible
sources.
Innovation generally means to modify the existing or new process or products so that
more effectivity would be gained by the company. For business, it could be business catalyst
factor for attaining competitive advantage over other competitors as it assist them to differentiate
their product from other or make some new with the aim of satisfying needs (business
innovation, 2019)
Marriott International INC was founded by John Willard Marriott with his wife Alice in
the year 1927 and started as a root beer stand. Now hotel has more than 6000 properties in more
than 120 countries around the world and has crossed 226,500 employees all over globe. Whole
group which includes brands like JW Marriott, The Ritz Carlton, W hotels Sheraton, Westin etc
is now managed by Arne M. Sorenson who is managing the Chief Executive position since 2012
(MARRIOTT INTERNATIONAL, INC, 2017)
Marriott international does not have any mission statement for their company and its
employees but they do have a vision statement which is “To become world's favourite travel
company in the world”. Group does not have any specific product as it mainly provides services
to their customers which includes accommodations, F&B, leisure, service lodging etc.
Marriott has launched its first car services in the world in 1936. (Meet Our Founders,
2019) In 1986, Marriott has started its co locating time share resort at Orlando World Centre
which saves their high investment in the starting due to which cost to the customers reduces to a
certain level. (Brand Milestones, 2018)
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Marriott international belongs to the hospitality industry which worth for more than 500
billion dollar in 2018 in which 22.3 billion market is covered by the group. Along with this, hotel
has also divided their portfolios into three parts according to their services i.e., classic hotels
which includes The Ritz Carlton, St. Regis, Distinctive includes the luxury collections, W hotels
etc, Luxury hotels includes Sheraton, Delta etc and premium consist of Courtyard, four points etc
(New structure of Marriott brands explained, 2019)
INNOVATION HISTORY
Owner of Marriott has launched its first services in which customer can take a rest in
sophisticated and clean rooms in exchange of money known as Hot Shoppe at 14th & Kenyon,
1927. In the year 1957, Marriott has launched its first motor hotel in the world which is based on
1957-1985
Marriott made a historic shift into the hotel business in 1957. The world’s first motor
hotel opened in Arlington, Virginia, under the leadership of J. Willard Marriott’s son, Bill.
Motor hotel refers to those hotel which has large parking spaces for motorist as they are their
target customers due to increase in tourist frequency. Main aim of modifying their process is to
attract more market share while enhancing their effectivity by saving money. After that,
company requires to shift their leadership as senior was defensive in nature that's why J.W.
Marriott, Jr. was selected as the Chief executive officer of Marriott group in 1972 (Our Story of
Innovation, 2019)
In 1995 and 1997, Marriott group has acquired Ritz Carlton hotel and Renaissance hotel
group respectively thus preparing for becoming one of the largest hotel chain in the world. After
that, JW Marriott has launched its one of the first LEED green hotel prototype in 2010 which
will save 100,000 dollars in six months and also reduces the excess consumption of energy and
water. Hotel has also promised to provide 300 models till 2015 with advancement in technology
(Marriott Leads the Industry with the First LEED Green Hotel Prototype, 2019)
In 2016, the hotel launched its first M Beta service hotel in Charlotte Marriott City in
which high tech technology is been used to enhanced customer experience (M Beta at Charlotte
Marriott City Center, 2019). JW Marriott have acquired Star-wood hotels and resorts in 2016 for
13 billion dollar. In 2018, Marriott acquisition company Star-woods hotel and resorts have
started its first automatic lights in which room light will automatically gets switched off if the
room is unoccupied (Starwood Hotels hits environmental milestone, 2019)
3

INNOVATION PERFORMANCE AND CAPABILITIES
In 2018, Marriott group has been awarded most innovative companies in the world as
they are continuously bringing AI and IT in to their working operations. For instance, Marriott
has there personal app which are equipped with elements like Mobile check in from anywhere,
mobile key so that customers does not have to carry key all the time.
In 2017, Marriott group has awarded by Gold and silver data Cannes Lions for using big
data to control real time marketing command on online platform. They used real time data to
surprise their customers by providing their needs and demands without knowing them. Apart
from this, they have also launched their Artificial intelligence boats which directly contact with
the customer from all around the world through Facebook and other social media platform so
that customers queries would be solved in less time (Awards and Recognition, 2019)
In 2016, Marriott group has named as most innovative companies in the world as
company has started their first version of Moxy hotels, then started their first Apple Pay so that
customers does not have to worry about the cash (Brand Milestones, 2018)
In 2015, again company was awarded as innovative hotel as they have launched its first
VR services in which customers can see the hotel and other facilities with the help of technology.
V Room service was launched with the collaboration with Samsung electronics (Awards and
Recognition, 2019)
Marriott international has been able to identify its capabilities which is ample of funds as
hotel 2018 revenue has crossed 20 billion USD worldwide which could help them to invest in
different parts of the business with the aim of getting high result (Revenue of Marriott
International worldwide from 1999 to 2018, 2019) After this stage, next step is to find out area in
which company is going to expand their business so that they can increase their revenue in the
next financial year. After it, next step is to implement the strategy in the real market that's why
they have recently acquired Starwoods hotel so that they can enhance their customer and market
base to a certain level. Last stage is capture or how company is going to get benefits from it.
Marriott has also attained this by launching new schemes in which past customer would achieve
benefits by getting discount on fairs of hotel, gets extra services for free etc so that customers
would be transform to a loyal one which is a positive sign for hotel's growth (ONE UNIFIED
PROGRAM, 2019).
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HOSPITALITY INDUSTRY
Wyndham worldwide hotel group is the biggest chain in the world and has 8092 hotels in
66 countries in the world. They are the market leader in terms of hotel number and revenue as
Marriott has 5974 hotels worldwide. To analyse the hospitality industry, Porters five forces
model is explained below,
All the factors which affects company profitability and sales is directly connected to the
external environment in which hotel is operating. For instance, due to advancement of
technology in the hospitality sector, hotels are now using VR technology to increase their
customer experience engagement to a certain level.
 Threat of substitute: It refers to other options which individual would do to do the same
things. Due to change in trends and customers preference, now tourist prefers to stay at
the resort, rented home, villa etc instead of hotels. It just a trend in the hospitality
industry as people normally does not visit other than hotels due to less security and
privacy concern. So threat of substitute is moderate in nature (Snihur and Tarzijan,
2018).
 Threat of new entrants: This factor would be low in intensity as hospitality industry is
already equipped with big players like Hilton, intercontinental hotels group, Wyndham
worldwide corporation, choice hotels etc. Along this there are high number of medium
and small size enterprise who are providing accommodation services. Apart from this, it
requires high scale of economies to start a hotel chain. So Marriott does not have any
threats from this factors.
 Bargaining power of supplier: Hospitality industry requires different types of vendors
or suppliers like clothing, accessories, furniture, electronic appliances supplier etc. There
are high numbers of supplier as big as well as small companies supplies the products
which are necessary for any hotel to run. For instance, Hotel chain Hilton has 10 %
supplier who is permanent in nature and the remaining changes according to the price and
quality of product, some of the permanent suppliers of them are LG and Coca Cola
(Food, Beverage & Hospitality, 2016). So Bargaining power is supplier is low in nature.
 Bargaining power of customers: This power is directly proportionate to the number of
customers in the industry. For instance, if there is high number of customers then the
power will remain at the customers side and vice versa. Hotels like Hilton decreases their
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prices at the time of peak time so that more customer would be attracted. This is a type of
strategies every hotels uses in high time. On the other time, in normal week days, hotel
maintain their standards prices. So it can be concluded that bargaining power is moderate
in nature and changes according to the external environment.
 Intensity of rivalry: It refers to number of competitors in the competitive market.
Hospitality industry is one of the fruitful industry as it will worth more than 100 billion
dollars solely in UK and all over world it accounts for more than 500 billion (Hotel
Industry Analysis and Market Statistics for 2018, 2019). That's why every hotel has
continuously slashing their prices and increasing their quality of services so that more
customers would be attracted in future. For instance, Zante hotels in UK are slashing their
price up to 30% so that they can attract BRITS and millennials tourist. So it can be said
that rivalry of competition is high in nature
6

THREATS
Change is the only constant in the hotel industry and due to which terrorism is one of the
factors which is affecting hotel business in a negative way. As according to a survey, 10 % of
Americans have cancelled their vacation plan due to terrorism resulting in approximately 6
billion loss for the industry (Marriott CEO: Terrorism, politics major threats to travel industry,
2019). Marriott can not directly affect this factors but still they can reduce this obstacle by
increasing securities in their hotels and resorts so that tourist will feel safe.
MAIN PRODUCT TRENDS
It is important for every company to regularly analyse and monitor the market trends as
they have to change their products and services accordingly. Different trends in the market is
explained below,
 Online booking: Number of millennial travellers is increasing significantly as their
interest over exploring the world is enhancing. That's why every hotel is coming live on
online platform so that they can book the hotels anytime and anywhere and without any
hustle.
 Automation: After Internet of things, hospitality industry is changing as most of the
work could be done with the help of smartphone. For instance, The Wynn Las Vegas has
Amazon Echo in their all rooms with the aim of enhancing customer experience
engagement to a certain level.
 Sustainability: Most of the tourist all around the world is getting concerned about the
environment due to which every hotels has started using solar panels, automatic
electricity off after customer leaves the room etc so that customers wont be able to
criticise the hotel actions.
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CONCLUSION
From the above mentioned report it can be concluded that innovation assist hotel to gain
competitive advantage over others. Company has to regularly try to make something new and
innovative by creating products or services according to the customers needs and demands.
Company have to analyse their own strengths and weakness as then only they can increase their
capabilities to improve their performance over time. At last, they have to regularly assess the
external environment as strategy and future planning is directly connected to that.
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REFERENCES
Books and Journals
Möller, K. and Halinen, A., 2017. Managing business and innovation networks—From strategic
nets to business fields and ecosystems. Industrial Marketing Management,.67. pp.5-22.
Snihur, Y. and Tarzijan, J., 2018. Managing complexity in a multi-business-model organization.
Long Range Planning.51(1). pp.50-63.
Online
Awards and Recognition. 2019. [Online]. Available Through:
<https://news.marriott.com/p/awards-and-recognition/>
Brand Milestones. 2018. [Online]. Available Through:
<https://www.marriottvacationclub.com/common/cms/mvc/pdfs/news/MVC-Brand-
Milestones.pdf>
business innovation. 2019. [Online]. Available Through:
<https://searchcio.techtarget.com/definition/business-innovation>
M Beta at Charlotte Marriott City Center. 2019. [Online]. Available Through:
<http://news.marriott.com/2016/10/marriott-hotels-introduces-worlds-first-hotel-
innovation-incubator-m-beta-charlotte-marriott-city-center/>
Marriott CEO: Terrorism, politics major threats to travel industry. 2019. [Online]. Available
Through: <https://www.marketwatch.com/story/marriott-ceo-terrorism-politics-major-
threats-to-travel-industry-2016-05-20>
Marriott International Completes Acquisition of Starwood Hotels & Resorts Worldwide, 2018.
[Online]. Available Through: <http://news.marriott.com/2016/09/marriotts-acquisition-
of-starwood-complete/>
MARRIOTT INTERNATIONAL, INC. 2017. [Online]. Available Through: <https://marriott.gcs-
web.com/static-files/ea577917-fe7f-4696-9eb7-dcf0fd356737>
Marriott Leads the Industry with the First LEED Green Hotel Prototype. 2019. [Online].
Available Through: <https://www.prnewswire.com/news-releases/marriott-leads-the-
industry-with-the-first-leed-green-hotel-prototype-99094294.html>
Meet Our Founders. 2019. [Online]. Available Through: <https://www.marriott.com/culture-
and-values/marriott-family-history.mi>
New structure of Marriott brands explained. 2019. [Online]. Available Through:
<https://insights.ehotelier.com/global-news/2016/12/09/new-structure-marriott-brands-
explained/>
Our Story of Innovation. 2019. [Online]. Available Through:
<https://www.marriott.com/about/culture-and-values/history.mi>
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Starwood Hotels hits environmental milestone. 2019. [Online]. Available Through:
<https://www.stamfordadvocate.com/business/article/Starwood-hits-environmental-
milestone-6065115.php>
Revenue of Marriott International worldwide from 1999 to 2018. 2019. [Online]. Available
Through: <https://www.statista.com/statistics/266279/revenue-of-the-marriott-
international-inc-hotel-chain/>
ONE UNIFIED PROGRAM. 2019. [Online]. Available Through:
<http://members.marriott.com/>
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