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Tourism and Hospitality Strategy : Report

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Added on  2020-01-15

Tourism and Hospitality Strategy : Report

   Added on 2020-01-15

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TOURISM AND HOSPITALITY STRATEGY IN THEGLOBAL MARKETPLACE
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Table of ContentsINTRODUCTION......................................................................................................................11. Environmental and competitive analysis of your company and explain whether its successis strategically sustainable..........................................................................................................1External environment.............................................................................................................1Competitor analysis................................................................................................................3Core capabilities of organization............................................................................................4Organizational culture of Marriott International....................................................................5Drivers of change...................................................................................................................6Competency Gap....................................................................................................................62. Identify and discuss the possible strategy or strategies it could develop to redress its currentsituation......................................................................................................................................7Cost leadership.......................................................................................................................8Differentiation strategy...........................................................................................................9Cost focus.............................................................................................................................10Online promotions................................................................................................................10Expanding.............................................................................................................................11Focusing on costs cutting.....................................................................................................12Mid-level expansion.............................................................................................................12Run promotional schemes to enhance occupancy rate.........................................................133. Implementation challenges associated with your recommended strategy...........................14CONCLUSION........................................................................................................................16REFERENCES.........................................................................................................................18
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INTRODUCTIONMarriott International is a global lodging industry leader. The hotel with 3000 and moreproperties in 68 nations along with attainment of countless awards, not only considered aswell-liked brand but also a well-known brand. The worldwide financial crisis has greatly hitthe lodging and hotel industry due to sharp drop in travel and leisure business. In this regards,Marriott has increasingly focus on improving revenue by cutting costs and plans to open twonew brands. Such strategic moves is being discussed in the following document. Also,Marriott opportunities has been addressed to further capitalize on its strengths throughextending the plans of expansion into the segment of mid-level hotel for taking industry’sfastest increasing population advantage. Furthermore, to beat challenges of economicdownturn, the hotel should use low cost, high influence promotions for allowing rates ofroom to remain competitive by regularly evaluating the prevailing conditions in the market.In this regards, the paper here is discussing external environment and competitive analysis ofcompany by analysing its drivers of change as well as competency gap. Moreover, byreviewing capabilities of organization through SWOT analysis model, the possible strategiesto improve business undertakings and performance is being explained below. At the end, thereport is summarizing challenges of implementing the strategy in a company and creativity orinnovation model to improve strategy. 1. Company’s competitive and environment analysis and explanation ofwhether its success is sustainable strategicallyExternal environment The business environment of hotel can be determined through PESTLE model, whichincludes:Political factors – The main political aspects that impact on Marriott are internationalrelations, terrorism and political situation in popular destinations of tourist. Here, the highestthreat is attack of terrorist or military conflict that frighten individuals away from travellingand disrupt global air travel. Some examples of these events include Malaysian AirlinesFlight MH17 downing in 2014 by a missile and 11 September 2001 attacks. Increasedtensions at international level and increase in new aggressive terrorist companies like ISISmake possibilities of occurring these events in future also. Obviously, any fall in travelling byair would lessen the hotel room’s demand (ALBEE, 2015). One more danger faces byMarriott is that attack of terrorists at hotels or tourist sites. Some evidence of terrorists1
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targeting tourist sites and hotels is June 2015 case when 39 people along with tourists werekilled in Tunisia hotel beach. These attacks can hurt the hotel by scaring away potentialvisitors plus creating the security measures needs that are very costly.Economic factors – The main economic aspects that would influence the overall business ofMarriott are slow economic growth of China and Europe’s ongoing economic disorder.Moreover, events like collapse of Chinese stock market and debt crisis of Europe havereduced the buying power greatly together with their travelling abilities. The largest influenceof this is business travel tapering off on which Marriott is greatly depend upon. One moreissue for Marriott is US dollar high exchange rates that discourage Americans to travel andalso foreigners to visit destinations of US, like Las Vegas. Business travel is also get affectedby high exchange rates. A long term threat of economy is growing inequality of income andstagnation wages of middle class in United States that lessens ability of people to travel andstay at lodges (Alderton, 2014). Social factors – These aspects are expected to be positive for Marriott, as number ofindividuals that plan for international travel has been increasing. More significantly, theplanned amount of travellers to spend away from home is also improved. It means there arelarge number of travellers making more money expenditure. Besides this, changes in theculture that influence Marriott comprise enhanced number of Asian and Chinese travellers.Moreover, Europe and Unites States population are increasing older can enhance certaintypes of travel experiences demand, such as luxury resorts and packaged tours (Brealey andet.al., 2012). Technological factors – Technology can have great influence on the business of hotel in thetype of rental service online like Airbnb that lets private entities rent homes or rooms directlyto travellers. In the year 2013, around six millions of guests were stayed in the properties ofAirbnb. One main likely threat poses by Airbnb to traditional hotels is that expenses can beavoided by its hosts, such as fire regulations and hotel taxes, which also means they have lesscosts of operating. It enables hosts of Airbnb to undercut room rates of hotel in variousmarkets (Brier, 2012). Legal factors – The main legal aspect that would influence the future business of Marriott isits service status like Airbnb. Also, cities authorities is as diverse as New Orleans, New Yorkand Barcelona have fined Airbnb plus its hosts for violation of zoning laws, safety, health andhotel regulations. One consideration is that Airbnb hosts do not pay lodging taxes that are2
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municipality’s source of revenue. In US, Marriott face potentials of an increased minimumwage as more as $15 an hour in some proposals. This can result in high labour costs andservices reduction (Buhalis and Crotts, 2013). Environmental factors – At present, the main environmental aspect that can disrupt businessof Marriott is fuel rates. Falling prices of oil can lead to reduced costs of travel and morehotel room’s demand. Obviously, a possible threat to business of Marriott would be anyunexpected increment in the costs of fuel, specifically for airlines. A possible long terminfluence of environment on Marriott can comprise increased costs of electricity by efforts tolimit greenhouse gases by restricting coal burning in power plants. Moreover, Marriottbusiness can be affected by change in climate by increasing flooding resorts and ocean levelsor storms creation that discourage tourists to visit beach. Also, ski resorts can be closed dueto increased temperature and global warming that can also make beach resorts hot. It canforce hotels closure or relocations (Cameron and Quinn, 2005). Competitor analysis The competitive position of company can be done with the application of Porter’s five forcesmodel:Supplier bargaining power – It is low for the Marriott International, as power of supplier inthe sector of hospitality is fragmented. Developers, property owners, marketing firms,architects, law firms, real estate companies, equipment suppliers and information technologyservices are few example of industry supplier. These are in different sizes and shapes. Also,the supplier of food and beverage, labour and utility are main player, as they are mainstakeholder in lessening operations cost (Chalofsky and Griffin, 2005). Buyers bargaining power – The customers power is moderate in the sector of hospitality. It isbecause Marriott International has strong recognition of brand and can easily attract newcustomers with less efforts of promotions and marketing. Also, the organization can keep itsrepeat business, as there is uncertain risk or switching cost for guest. Marriott International isoffering consistently quality service and providing best experience to its customer at eachlevel.New entrant’s threat – It is considerably more due to hospitality sector substantial growth inpast several years. The unfavourable condition of economy in some European nations havelowered the real estate and land value as well as is potential to attract new entrepreneur in the3
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sector of hospitality. The Asia Pacific and South Asia economic growth is also increasingnew entrant’s threat (Easy, 2010). Rivalry degree – The rivalry threat is moderate in hospitality industry and also for MarriottInternational. In the particular sector, main players are big branded chains. The hotel is facingpowerful competition from other similar sized chain brands, however it is attaining itscompetitive edge by the business diversification in specialized segments. The hotel is also has18 brand and expanded in 74 nations that is main reason that it is ahead from rivals.Additionally, the strong brand equity of Marriott, quality services and strong guestsatisfaction commitment is supporting the organization to stay ahead from competitors. Threat of substitution – There is low substitution threat for Marriott in the developedcountries and premium place of market. In emerging nations, there is high substitution forMarriott because of travel and tourism sector innovative concepts like camping, homestaycampaign, informal visit to family and friends. Although, there is substitution threat but wecannot compare the level of service offered in informal sector with the service level ofMarriott (Enz, 2010). Core capabilities of organization Moreover, to develop adequate strategy for hotel, it is very essential to determine its corecapabilities as well as opportunities and threats associated with the organization. In thisregards, the following SWOT model can be used effectively:Strengths The company has strong market position with its diversified and expanded businessthroughout the globe.It is leading hotel in international market through its strong financial presence becauseof high debt.The hotel is offering huge range of satisfied services and products to its clients.The organization has created strong position by attaining customer’s loyalty (FTG,2013). WeaknessesBecause of extended business activities, the company is getting weak its managementbecause they are supposed to be tragic in performances. High debt is faced by company due to its stability in the matters of finance.4
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