Marriott Case Analysis

Marriott’s Goal, Industry and products (GIP)

Goal: To enhance the lives of their customers by creating and enabling unsurpassed vacation and
leisure experiences.
Industry: Lodging industry, hotels and Resorts Services.
Product: Luxury Suites, premium suites, select suites and longer stays suites.

Generic Strategy Model

Marriott identifies themselves through their goal, industry, and product. As we look dive into who
Marriott truly is, we find that their goal is based around their vision and mission statement to provide
‘unsurpassed customer experiences through leisure and vacation rooms’. Their industry is lodging, and
the product is hotel and resort rooms. (Marriott, 2021)

X-Axis: Differentiation
Ø Customer dependency growth. This was one of the best well invested criterial used by the Marriott
company. Since its existence in 1927 the idea of having many customers was built into them and
this resulted to them opening more and more branches over the years. The company started with a
single store in 1927 and had 19 brands in 2015. (Marriott International, 2021)
Ø Desire to be at the top. Marriott was so much encouraged to be at the top of all their competitor
and ensure that they ranked at the top of the bar. Checking and learning from their competitors
helped them to be ranked the best and used as a benchmark for the rest.
Ø Incorporation of new ideas in the organization. The idea of creating a virtual reality room brought
more customers into the company, increased the customer experience, and the need to be in the
hotel. The investment into the R&D was essentially a good idea. (Marriott International, 2021)
Ø Great cost selection. Essentially in the 21st century the company had more than enough customers
and therefore the company considered having a great pricing technique to ensure customers are
well served at the price. And, by having commissions their customers could still have them enjoy
the company services.
Ø Enhancing customer loyalty. Marriott understood that customers are what makes them who they
are and therefore they want to keep the customers in their service as long as they can and with all
the best way possible. This is by giving the customer confidence of their performance having a
Place Pass featured over 150,000 experience in more 180 countries. (Montevago, J.)
Ø Marriott loyalty program. As of 2017, Marriott had three customer loyalty programs: Marriott
rewards, which included the Ritz-Carlton rewards, and Starwood Preferred Guest (SPG). Which
came with the recent acquisition of Starwood. The total number of loyalty program members had
surpassed 100 million after the merger up from 54 million in 2015. (Tully,S., 2017)
Y-Axis: Niche Market
Ø According to a survey posted by Harvard Business School on hotels and hospitality services,
luxury and loyalty are the two important factors of business travel which Marriott focus
enormously. Fortunately, businesspeople and business travelers are the main revenue generators of
the Marriott as they cannot avoid travelling around the world. (UKEssays, 2018)
 Ø Businesspeople dependence on the luxury and ease of availability anywhere in the world has given
Marriott competitive advantage over others. That made them to earn 20.97 billion USD according
to Statista. (Lock ,P., 2020)
Ø Marriott hotels officials says that the segmentation of Marriott hotels works in whole different
levels that would help the business groups to plan in the format which they like. (Steinberg,
E.,2020)
Ø Few instances are Marriott has Courtyard suites, SpringHill suites for the businesspeople for
regular travel and stay. If the stay period is long like 6 months or more, they have town place suites
and a Marriott resort club for vacation and recreation purpose. (Steinberg, E.,2020)
Ø To compete with the millennial brands like Airbnb and Expedia Marriott is heavily investing on
the user experience, innovation, and human resources extensively. They are even trying to build a
local authenticity so that travelers can explore the authenticity of the place of stay. (Steinberg,
E.,2020)
Ø In addition to all these they divide the services based on the demography, psychography,
behavioral aspects. This provides a clear picture of what to expect from a customer. (Steinberg,
E.,2020)
Ø Finally, even though the Marriott has a ‘niche market’, services provided by the Marriott has
provided sustainment through their loyal clients for years.

Five Forces Model

Barriers of New Entry – [low] risk
• Economies of Scale: [Good] Marriot full year 2019 total revenue approximately 20.97 billion.
Huge investment in Innovations, with the launch of the Marriott Bonvoy app to improve the
customer loyalty programs. (Marriot International news center 2019).
o Hilton: Generated approximately 9.45 billion U.S. dollars in revenue in 2019. (Hilton
Annual Report 2019)
o Wyndham: Wyndham Hotels & Resorts annual revenue for 2019 was $2.053B.
(PRNewswire 2020).
o Marriot market capitalization $42.03B, with huge gains from Resorts Vacation.
(Bloomberg, Marriot bet on Resort as industry eyes vacation demand,2020)
o Hilton: Hilton market capitalization $31.0B. (Hilton news report 2020)

• Capital Requirements: [Good]

o Marriot expected spending on capital expenditures and other investments will total
approximately $700 million to $800 million for 2020, including contract acquisition costs,
equity and other investments, loan advances, and various capital expenditures (including
approximately $200 million for maintenance capital spending).
o Hilton: Hilton expected spending on capital expenditure would be $87 million. (WSJ
Financial earnings and estimates. 2020) (Marriot International Annual 2019)

• Access to Distribution: [Good]

o Marriot assets encompasses a portfolio of more than 6,900 properties in 30 leading hotel
brands spanning 130 countries and territories. (Marriot International news center 2019).

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 o Marriott International accounted for over 1.38 million hotel rooms worldwide in 2019,
making it the leading hotel company in terms of number of guestrooms that include 118
luxury hotels and exclusive resorts. (Marriot International news center 2019).
Supplier Power – [moderate] risk
• Presence of Substitute Inputs: [bad]
• Marriot also operates in such a way that the suppliers are not in opposition to provide a
threat in forward integration into their industry. In addition to that the previously
established stores can easily attract their customers into online trading markets like, best
buy, Walmart which is already seeing their profits in supply chain. Which amazon is
already working excellent on online trading with profits of 75% and 10,000 vendors with
repeated customers and retailers (cleverism.com/by martin luenendonk, September 2018)

• Supplier Concentration: [good]

o Suppliers in the lodging business consist of: property owners, developers, real estate
companies, interior design and furnishing companies, management and training service
providers, marketing, consultants, wholesalers, retailers, cash and carry, daily market,
specialist suppliers, and company nominated suppliers.
o A more concentrated supplier base has both benefits and costs. On the one hand, it yields
benefits such as cost savings due to economies of scale, reduction of administrative and
transaction costs, and potentially closer buyer-supplier relationship.
o Marriott prides themselves on a diverse supplier program. (Marriot International, Inc.)
o Marriott reports that over $5 billion have been spent in the last decade with woman owned,
LGBT, Minority, Veterans, and Disabled companies both locally and globally. (Marriot
International, Inc.)
o Their products include beverage, disposables, food, furniture and fixtures, hotel amenities,
kitchen equipment, linens, small wares, and uniforms.
o They also have the need for cleaning services that encompass carpet cleaning, room
cleaning, night cleaning, general contractors for maintenance, landscaping, laundry,
printing, and roofing. (Marriot International, Inc.)
o Marriott hired on Avendra, a procurement supplier, who leads in the ability to provide
quality products and negotiating favorable terms with vendors for cost savings. This
partnership with Avendra has reported in the ‘Gains and other income, net’ a positive gain
of $425 million. (Avendra, 2017)
o The industry in which Marriott international is growing every year and is expected to
continue to do this for a few years ahead. A positive industry growth means that
competitors are less likely to engage in complete actions because they do not need to
capture market share from each other. this makes the competition among existing firms a
weaker force within the industry.

• Importance of Volume to Supplier: [good]

o Marriot assets encompasses a portfolio of more than 6,900 properties in 30 leading hotel
brands spanning 130 countries and territories.
o Through their procurement systems focused on technology, supply chain continuity,
procurement support, contracts, and cost saving measures to include clustering of projects

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 and mergers/restructures clustering hotels they were able to perfect their supply – chain
management. (Marriot Supply Chain)
Buyer Power - [moderate] risk
• Bargaining Leverage
o Buyer Switching Costs: [good]
o Marriott combined their three loyalty programs into one name, Marriott Bonvoy. The
programs provide the ability for their ‘loyal members’ to earn free points with hotel stays,
and even miles with airlines. It was reported in 2019 that over 50% of Marriott’s rooms
were booked with their Loyalty Program Members. There is an annual fee of $95 at
Marriot that would be charged for loyalists. Depending on the type of the hotel, the prices
(80-150$) and elite points (12-30,000) vary. Marriot uses these concepts to grab the
customers and build a strong band (Marriot and upgrade points). Moreover, in this area, the
bargaining power of the buyers is very weak. So, they use this opportunity and convert the
returning amount or cash as credit points. None of the competitors are using these concepts.
(Marriot International Annual 2019)
o Buyer Concentration: [good]
o To gain the attention of the customer base who are very much into the lavish or luxury
lifestyle. Marriot has introduced the Marriott Bonvoy credit card that is a fancy method of
utilizing the services provided by Marriot and it is attracting a major portion of millennials.
Such Innovation is simple, and people can use it with ease. (Marriott Loyalty)
o Marriott holds 12% market share of hotel rooms and is over 3% of the worldwide market
average of $300 billion. (Marriott International, Inc) (Marriott, 2001)

• Price Sensitivity
o Price Total Purchases: [good] Capital expenditures increased by $97 million compared to
2018 which reflects acquisitions; however, 25 other hotel and tourism companies have
achieved high capital expenditure growth which shows the price total purchase is competitive
for this market. (Marriott International, Inc)
o Depending on the type of the suites or rooms in Marriott the price for their product varies for
the consumer from $74-$149. (Marriott International, Inc.)
o The other type of charge levied on an in general customer is in terms of credit points which
varies from 100 points to 30000 points. (Marriott News)
Degree of Rivalry – [low] risk
• Industry Growth: [good]
o Marriot has diversity of strategies of the different firms within the industry making them
unique. (Marriott Porter Five Forces Analysis, 2018)
o During the year 2019 Marriott has expanded its business to a whole new level by signing 815
deals. (Marriott International, 2020)
o The record number of deals signed were mostly by expanding the market in various countries
which is around 53% of all the deals signed. (Marriott International, 2020)
o Marriott has recorded a significant growth with the market cap of $49072 million by the end of
December 2019. (gurufocus,2019)
o Marriott is diversified in their industry which makes them unique. (Marriott International,
2020)

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 o Marriott has recorded a significant growth with the market cap of $49072 million by the end of
December 2019. (Marriott International, 2020)

• Concentration and Balance: [good]

o With the hotel chain market booming Marriott has still been the best and most preferred as it
does not have the rivalry from small competitors with an estimated sales revenue of 21 billion
US dollars. (Statista, 2020)
o Marriott’s market share is around 29.32% compared to Starwood hotels and Host hotels being
around 10% in market share in the hotel industry. (MAR’s Competition)
o The overall market share of Marriott with respect to both hotels and vacation ownerships is
12.75% compared to Hilton worldwide Holdings Inc and Las Vegas Sands Corp whose market
share is around 10.31%. (MAR’s Competition)

• Intermittent Overcapacity: [good]

o According to Lodging Statistics, occupancy was positive amongst all properties in 2019 vs.
2018 except for North American Limited Services (1.0%pts) with 15-million-dollar growth
from RevPAR. (Marriot International Annual 2019)
o Marriott has planned to build around 30 hotels to meet the demand for special places where the
demand is high in the holiday seasons and avoiding over capacity. (Marriott International
News Center)
o The occupancy rate between 2010 to 2019 of Marriott has changed a lot. As in 2010 it
averaged 70.31% occupancy across the world. Whereas the occupancy rate in 2019 is 71.7%
showing a significant improvement. (S.Lock, 2021)
o The occupancy in United states differed around 7.7% over the years by expanding themselves
strongly in United States. (S.Lock, 2021)
Threat of Substitute – [high] risk
• Substitute Products Available: [many, bad]
o Marriott does a great job in diversifying themselves through constant growth and acquisitions.
(Marriot International Annual 2019)
o Marriott provides lodging options from Elegant, Luxury, Premium, and Select lodging,
additionally, they have hotels/resorts, timeshares and seasonality options essentially capturing
the target market for consumers looking for lodging. (Marriot International Annual 2019)
o The presence of substitutes is becoming more frugal to Marriott’s business model and include
alternatives such as: Air B&B, staying with friends and family, other hotels or lodging nearby
and eve camping. (Marriot International Annual 2019)
o When we review products, there is also not a lot of opportunity for substitutes either. (Marriot
International Annual 2019)
o Hilton hotels worldwide control over 584 hotels with over 900,000 rooms and luxury
properties. Hilton carries a good name recognition and quality services with a growing
financial growth to provide a viable substitute to Marriott international (WSJ report, 2019)
o Since Marriott is primarily a niche market to businesspeople, in times of recession we can cost
reducing options like conferencing and meetings held via internet and technological
advancements such as zoom, WebEx, etc. (Porter, 2001)

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 o Domestic travel can replace overseas travel and companies may find more premium/select
lodging in not so popular areas for cost-saving factors. (Porter, 2001)

• Buyer Propensity to Substitute: [bad]

o Buyer propensity to other substitute look more likely include alternatives such as: Air B&B,
staying with friends and family, other hotels or lodging nearby and eve camping. (Marriot
International Annual 2019)
o Cost of land increments and the capacity to telecommute turns into a more practical choice
with telecommunicating getting simpler.
o 74% of Americans need greater adaptability to their plan for getting work done and
telecommute gives this choice work has $47.2B rent commitments.
o Marriott operates having a higher number of suppliers as compared to its consumers which as a
result makes the supplier to have minimal control over the prices and this makes the power of
bargaining weak.
o Marriot also makes sure that their suppliers provide products that are standardized and less
differentiated making them have a low switching cost. With this strategy Marriott can switch
suppliers if they like which as well makes the suppliers experience minimal power. (green
energy suppliers, UK 2021)

Bibliography
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