Positional Analysis of Sheraton Hotels

This report evaluates the positional analysis of Sheraton Hotels, including factors influencing its business operations and recommendations for future success.

Subject Code: HOS802
Hospitality Management Simulations
Positional Analysis of Sheraton Hotels
18 MARCH 2019
Student Name: ____________

REPORT 1
Executive Summary
The increased globalisation has made the business activities to be more complex
which is characterised by tough competition, technological innovations, the wide range of
stakeholders and increased need of the legal compliance and transparency in the business
operations. Thus, the managers are constantly faced by the challenges of formulating
effective business strategies for the overall success and the achievement of the objectives. In
order to formulate future policies, the first step is to conduct a positional analysis of the
entity. The report attempts to evaluate the same for the entity Sheraton Hotels. The report
gives an insight into the fact that while the entity started as a luxury brand and succeeded
strikingly in the initial years, the same phased out in recent years especially in regions of
North America. Further, the report highlighted various factors that influence the business
operations of the entity. The report concludes that the organisation should stick to its unique
feature of luxury hotel brand in order to succeed in future.

REPORT 2
Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................2
Background of the organisation.................................................................................................2
Positional Analysis.....................................................................................................................2
PESTLE Analysis...................................................................................................................2
Sheraton Porter’s Five Forces Analysis.................................................................................3
Conclusion and Recommendation..............................................................................................4
References..................................................................................................................................5

REPORT 3
Introduction
With the increased globalisation, it is significant for the entities to evaluate the
business environment to formulate the future course of direction of the policies and activities
for the growth and long term success (Ansoff et. al, 2019). The following report is aimed at
evaluating the current position of the entity “Sheraton Hotels and Resorts” in terms of its
global standing and various business aspects. The work will make use of the various
theoretical models to analyse the current position and to further recommend the means for the
potential improvements.
Background of the organisation
The history of the popular hotel chain Sheraton Hotels and Resorts can be traced back
in the year 1937, when the founders Robert Moore and Ernest Henderson had acquired their
first hotel in Springfield, Massachusetts (Sheraton, 2019). The chain is owned by Marriott
International and today the organisation is one of the most popular international hotel chains
that operate globally at a number of locations in the regions of the United States, Canada,
Middle East, Asia Pacific and others.
Positional Analysis
The competitive positional analysis gives an insight into the various aspects of the
business environment of an organisation, thereby facilitating the knowledge of the
competitive strength and position of a business organisation.
PESTLE Analysis
Political Factors: The political factors that mostly affect the organisation are the
international relations, dangers of terrorist activities, Trade regulations & tariffs related to
Services, Anti-trust laws related to Lodging, Industrial safety regulations in the Services
sector and the overall political climate in the notable tourist destinations. For instance, Brexit
has exposed the major hotel chains including the Sheraton to the negative perception of the
U.K. among European travellers (Fox, 2019).
Economic Factors: The economic factors that primarily affect the business functions
of the Sheraton are the taxation charges, exchange rates, level of inflation in the country of
operation, the efficiency of financial markets, interest rate, unemployment rate, and the
overall economic growth of the region. For instance, as per the recent reports it has been

REPORT 4
stated that there would be distinct slow-down in the current hotel development cycle of
Australia (The Hotel Conversation, 2019). This is because of the downturn in the residential
sector.
Social Factors: The changes in the social and cultural factors of the consumers such
as the demographic structure, cultural factors, class structure, hierarchy and power structure,
lifestyle changes, and the overall nature of the society may alter the demand of the services
and demands of the international luxury hotel chains. The hotel chain distributing the treats to
the mothers on the occasion of the mother's day is an innovative step of the entity to reinforce
its place in the luxury hotel industry (The Oracle, 2019).
Technological Factors: The technological impacts in the value chain, transportation,
hotel operations, guest services, revenue management, communication and other incidental
areas lead to the major impacts on the cost structure of the services offered in the hotel
industry (Starkov, 2019).
Legal Factors: Some of the major legal factors that impact the business activities of
the entity Sheraton are the discrimination law, health and safety law, data protection law,
Consumer protection and e-commerce, Anti-trust law in lodging industry in the country of its
operations and the other such applicable laws.
Environmental Factors: The environmental factors like environment pollution laws,
waste management in services sector, renewable energy and recycling activities, air and water
pollution rules in the hospitality industry deeply influence the business of the Sheraton
Hotels.
Sheraton Porter’s Five Forces Analysis
The threat of New Entrants: It is significant to note that the economies of scale are
hard to achieve in the hotel industry. Therefore the fact that by the end of the year 2017, there
were 441 Sheraton properties around the globe at some of the best locations in the world and
the chain is one of the major brands of the Marriott renders the economy of scale to the hotel
chain (Skift, 2018). In addition, capital requirements are high in the sector. Therefore, though
the new entrants can access the distribution network easily, the entity Sheraton hotels can
take advantage of economies of scale within the industry and gain the cost advantage.
Bargaining Power of Suppliers: There are a major number of suppliers in the
hospitality and hotel industry, in contrast to a few numbers of buyers. Thus, the bargaining

REPORT 5
power of the suppliers is weak. As the switching costs are low, the entity Sheraton can easily
switch the supplier in order to maintain the cost of services.
Bargaining Power of Buyers: The buyers in the said industry have weaker control,
however the same have diversity in terms of choices. The product differentiation and service
differentiation are said to be the chief means to tackle this. However, it is essential to note
that in spite of being one of the oldest brands, Sheraton diversified in all the areas, making it
a little bit of everything for a diverse range of customers, due to which the unique feature of
the organisation phased out (Skift, 2018).
The threat of Substitute Products or Services: The products offered in the industry
have very few substitutes, however, constant innovation is necessary to get past the
competitors in terms of greater quality at a lower price. While innovating for the substitutes,
the margins are likely to be reduced because of the high capital industry. Therefore, only
major players tend to innovate in terms of new products and services.
Rivalry among Existing Firms: The entity faces tough competition from the
international giants like that of Hyatt Hotels, Hilton Hotels, InterContinental Hotels Group
and many others. However, the fact that the entity operates under the brand Marriott gives it
an edge. Recently as per the reports, about 25 per cent of the owners in the parent has decided
to invest about $500 million on account of renovations of Sheraton hotels across the USA, in
order to address the phasing out of the brand and resist competition (Trejos, 2018).
Conclusion and Recommendation
As per the discussions conducted in the previous parts, it can be stated that a number
of factors deeply influence the business of the entity Sheraton over the years. The report gave
an insight that in order to constantly innovate and maintain the goodwill; the brand did a lot
of product differentiation in recent years, thereby leading to missing out on its main service
of luxury hotel experience and elite brand characteristics. The entity is recommended that
being a valuable brand it is for, over the years, the entity must concentrate on its unique
product to meet the overall standards of the brand Marriott to continue succeeding in the long
term.

REPORT 6
References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R. (2019). Implanting
strategic management. UK: Springer.
Fox, J. T. (2019). Study shows Brexit has hurt travelers' perception of UK. Retrieved from:
https://www.hotelmanagement.net/legal/no-deal-brexit-could-hurt-uk-perception-
among-travelers
Sheraton. (2019). About Us. Retrieved from: https://sheraton.marriott.com/about-us/ ta
Skift, D. T. (2018). How Sheraton Lost Its Way and Marriott’s Plans to Bring It Back.
Retrieved from: https://skift.com/2018/06/18/how-sheraton-lost-its-way-and-
marriotts-plans-to-bring-it-back/
Starkov, M. (2019). Hospitality Digital Technology: Challenges, Priorities and Buzzwords.
Retrieved from: https://www.hotelnewsresource.com/article104385.html
The Hotel Conversation. (2019). Hotel development set to slow in 2019. Retrieved from:
https://www.thehotelconversation.com.au/blog/troy-craig-jll-asia-pacific/hotel-
development-set-slow-2019/jll-strategic-advisory-troy-craig
The Oracle. (2019). Sheraton Lagos Hotel offers March treats. Retrieved from:
https://oraclenews.ng/sheraton-lagos-hotel-offers-march-treats/
Trejos, N. (2018). Marriott to revamp Sheraton Hotels brand with major makeover.
Retrieved from: https://www.usatoday.com/story/travel/hotels/2018/06/05/marriott-
overhaul-sheraton-brand/674612002/