Strategic Analysis of Marriott International: Hospitality Simulations

This report provides a detailed analysis of Marriott International's current market position using Porter's Five Forces and PESTLE analysis. It explores the competitive landscape, including threats from new entrants, supplier and buyer power, substitute products, and rivalry among existing players. ...Read More

Running Head: HOSPITALITY MANAGEMENT SIMULATIONS
HOSPITALITY MANAGEMENT SIMULATIONS

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Table of Contents
Introduction................................................................................................................................2
Findings......................................................................................................................................2
1. Porters Five Forces analysis...............................................................................................2
2. PESTLE analysis................................................................................................................4
Conclusion and Recommendations............................................................................................6
References..................................................................................................................................8

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Introduction
Marriot International is a famous international hotel chain headquartered at Bethesda,
Maryland, US. Marriot International is a diversified hospitality company which franchises
and manages a huge portfolio of hotels along with lodging facilities around the globe. In
recent years it is been noted that Marriot continuously rely on the acquisitions for expanding
their market share (Johan, Baga & Asmara, 2018). Outside US the company is looking for
increasing market share to gain a position in top place and boost overall performance. The
main aim of this report is to explore current situation this hotel chain with the use of
theoretical model analysis. Also, the purpose of the report is to produce a tactical and
strategic management decisions that they need to take to increase their market share. The
recommendations from analysis would help in informing managerial decisions for expanding
its market share. The following report will analyse the current position of Marriot
International hotel chain using two different theoretical models and recommend strategies to
improve their current situation. Porters Five Forces analysis and PESTLE analysis are
presented in the following section.
Findings
The current position of Marriot International hotel chain is analysed through two
aforementioned theoretical models.
1. Porters Five Forces analysis
Threat of New Entrants
New entries within the hotel industry are bringing innovation along with new ways of
operating business which is putting pressure on Marriot International. They are specifically
threatened by the lower pricing strategy, reduced costs and adding new value propositions to
the customers (Borisova & Razumeiko, 2018). As a result, the company have to manage all
the present challenges and build effective barriers to creating its competitive edge. Marriot
International can build new products and innovate their services ensuring customer loyalty
and also attract a new segment of customers. By defining their standards regularly new
entrant can hardly penetrate into this dynamic industry as resources are spent over research
and development.

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Bargaining Power of Suppliers
Majority of the international hotel chain acquire their raw materials from a different
and large number of suppliers. Suppliers have the capability of decreasing the profit margins
of Marriott International if they are dominating within the hotel industry. Zhang, Shu, Ji &
Wang (2015) mentioned many powerful suppliers utilizes their negotiating power for
extracting higher prices from the Marriot International. This impacts the overall profitability
of the company. However Marriot International can tackle this challenge by building an
efficient supplier chain consisting of multiple suppliers. Also by experimenting with the new
design of products by using different materials can help the company to switch to an
alternative when prices go up for certain raw materials.
Bargaining Power of Buyers
Buyers or customers are found to be a lot demanding and they often try to avail the best
products and services by paying minimum price. On the long run, this puts pressure of
profitability of the hotel chain. As the customer base becomes smaller and powerful, the
bargaining power of the buyer's increases and also seek increasing offers and discounts from
Marriot International (Nyangwe & Buhalis, 2018). This situation can be rectified by building
a large customer base which would further provide the opportunity to streamline its own
production and sales process.
Threat from Substitute Products
According to Schuckert, Liang, Law & Sun (2019), the hotel chain profitability is
bound to suffer when the service or products is going to meet customer needs in a different
approach. This threat of a substitute service or product is high if the value proposition offered
to its customer are unique and different from the industry offerings. Here Marriott
International can become more service oriented instead of being just product oriented and
also understanding the customer needs instead of monitoring what sales the most.
Rivalry among the existing players
Rivalry among the existing players within the industry is intense and it has the
potential to decrease overall profitability. However, its real competition is from the larger
chains due to which the pursuit for global expansion can be strongly created through
franchising and acquisitions (Poorani & Sullivan, 2019). Recently it has acquired Starwood

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hotel group to become the largest hotel chain in the world. Further, Marriot International is
required to build a sustainable differentiation and build in scale to compete better.
2. PESTLE analysis:
Political The main political factors that are most
likely to affect the Marriot International
hotel chain are international relations, the
danger of tourism and political environment
in travel destinations. Roe, Drake & Slade
(2015) stated the military conflict and
terrorist activities are the major threat to the
hotel business since that could disrupt the
international travel momentum and also
frighten to travel into affected destinations.
The level of political stability and the place
of hotel industry within the country’s
economy plays a major role. Along with
legal framework and bureaucracy and
interference in the hotel industry by
government, the antitrust laws favoured tax
rates and incentives play a major role in
deciding the company profitability (Zhang
et al. 2018).
Economic The economic factors which mainly affects
Marriott’s business across various
international boundaries are slow economic
growth and economic turmoil. For instance,
in China, the economic progress have
slowed down in the last few years and
Europe hotel business are not stable (Madar,
2017). Some events like debt crisis and
stock market crash greatly contribute

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towards the individual buying power and
scope for travelling.
Further, mostly related problem for Marriott
is a high exchange rate for the US dollar
overseas and discourage business travel.
The inflation rate, interest rate along with
economic cycle determine the aggregated
investment and demand within an economy
(Lee & How, 2018). Therefore stability of
host currency, exchange rates and
infrastructure quality of hotel industry have
a potential effect on the Marriot
international expansion.
Social According to Sheppard & Udell (2016),
international travelling rate have increased
by at least 15% over the last five years
which have increased the average spend of
the people away from people. Australian are
observed to have spent the most on travel
and leisure in 2018 and interestingly more
people around the globe are willing to pay
more for the enriched travel experience.
Given the fact population in Europe and the
United States are growing older, the
demands for certain kind of travel
experiences are also increasing such as
luxury resorts and packaged tours. Cultural
changes can possibly impact the Marriot
including an increased number of Asian and
Chinese travellers.
Technological Advancement in technology is creating a
huge impact on the overall profitability of
the hotel business as the form of online
rental service are increasing at much a lower

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price. A tough competition has raised due to
Airbnb which lets private individuals
renting homes to the travellers and around 8
million guests stayed in Airbnb properties in
2016 (Sheppard & Udell, 2016). Impact of
product offering and value chain structure
have given a little time to cope and be
profitable.
Legal The legal factor impacting the Marriot
International business is directly linked to
the services like Airbnb. Many cities around
the world including New York, Barcelona,
and New Orleans have fined the Airbnb and
its host for violating hotel regulations,
safety regulations and zoning laws. Here the
hotel chain is benefitted as they are getting
less competition from the convenience
features. Also, increase in the minimum
wage by legislation have pushed Marriot
hotel to reduce service and higher labour
costs (Schuckert et al. 2019).
Environmental The major environmental factor affecting
the Marriot's business is different
environmental standards or norms in
different countries. The profitability of an
organization is affected by different liability
laws and environmental laws (Chen &
Tabari, 2017). For instance, laws regulating
pollution, air and water pollution regulation,
waste management standards and attitude
towards support renewable energy impacts
the revenue of the international hotel chain.

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Conclusion and Recommendations
The report has produced a detailed analysis of the current position of Marriot
International with the help of Porter’s five forces analysis and Pestle analysis theoretical
model tool. From the study it can be concluded that Marriot international is presently leading
among other international hotel industry however there are many scopes to expand its market
share. Despite gaining the largest hotel company in the world after acquiring Starwood
groups of the hotel in 2016 it is position get even bigger. Simply by combining two
companies, Marriot is now leading the market by 45 per cent largest share than its nearest
competitors. From the report, it can be suggested that the company growth hasn't slowed
down due to the economic situation and are continuing to build hotel and resorts in 90
countries worldwide. Technological advancement has posed both as a threat and opportunity
to excel in the market and its competition are from the company producing unique value
propositions such as Airbnb. The biggest growth opportunity for Marriot lies in international
select service segment. Marriot International can introduce lower level hotels for a different
segment of the customer in under developing countries. The hotel chain should also make it a
rule for updating the interior style if it's older than 8 years. This will allow them to stay ahead
of the competition in the market of the hotel industry. Overall they must be sticking to the
traditions that have originated from its foundation to keep its authenticity and remain the
most successful international hotel chain around the globe.

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References
Borisova, K., & Razumeiko, A. (2018). Hotel Rebranding: Marketing Plan for Piter Inn
Petrozavodsk.
Chen, D. W., & Tabari, S. (2017). A study of negative customer online reviews and
managerial responses on social media—case study of the Marriott Hotel Group in
Beijing. J. Consum. Mark, 41, 53-64.
Johan, A. W., Baga, L. M., & Asmara, A. (2018). Competitiveness improvement strategy
formulation on individual hotel: case of xyz hotel at city of bogor. European Journal
of Hospitality and Tourism Research, 6(2), 1-15.
Kane, G. C. (2017). In the Hotel Industry, Digital Has Made Itself Right at Home. MIT Sloan
Management Review, 58(4).
Lee, C. G., & How, S. M. (2018). Long-run causality between customer satisfaction and
financial performance: the case of Marriott. Current Issues in Tourism, 1-6.
Madar, A. (2017). Quality-a competitive advantage on the hotel services market. Case study:
Marriott Hotels & Resort versus Radisson Blu. Bulletin of the Transilvania University
of Brasov. Series V: Economic Sciences, 10(2).
Nyangwe, S., & Buhalis, D. (2018). Branding transformation through social media and co-
creation: lessons from Marriott international. In Information and Communication
Technologies in Tourism 2018 (pp. 257-269). Springer, Cham.
Poorani, A. A., & Sullivan, W. A. (2019). HR Analytics: Human Capital Return on
Investment, Productivity, and Profit Sensitivity: A Case of Courtyard Marriott
Newark at the University of Delaware. In Aligning Business Strategies and
Analytics (pp. 133-154). Springer, Cham.
Roe, D., Drake, R. E., & Slade, M. (2015). Routine outcome monitoring: An international
endeavour.
Schuckert, M., Liang, S., Law, R., & Sun, W. (2019). How do domestic and international
high-end hotel brands receive and manage customer feedback?. International Journal
of Hospitality Management, 77, 528-537.

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Sheppard, S., & Udell, A. (2016). Do Airbnb properties affect house prices. Williams College
Department of Economics Working Papers, 3.
Zhang, Y., Shu, S., Ji, Z., & Wang, Y. (2015, March). A study of the commercial application
of big data of the international hotel group in China: based on the case study of
marriott international. In 2015 IEEE First International Conference on Big Data
Computing Service and Applications (pp. 412-417). IEEE.