Marriott International Strategic Management Analysis

Introduction: Marriott International Overview

This paper demonstrates the proposition that success for any business is dependent upon the ability to find a valuable strategic position. This argument is applied to a hospitality organization — Marriott International, Inc. — and uses this theoretical premise to critically examine the company's performance, drawing on a case study approach to apply relevant principles and processes.

Marriott International, Inc. celebrated its 75th anniversary in 2002. The leading hospitality company on a worldwide basis traces its heritage to a root beer stand operated by J. Willard and Alice S. Marriott. Today, Marriott International operates more than 2,700 properties with over 490,560 rooms across the United States and in 69 other countries and territories. The company owns more than 12 distinct hotel brands spanning the full range of lodging accommodations from luxury to economy.

The Marriott family established core values 75 years ago that have, according to company sources, "served our company well and will continue to guide our growth into the future." The ultimate core value is the long-held belief that "associates are our greatest assets." The company has coined a philosophy known as "The Marriott Way" to describe its distinctive approach to customer and community service. A former Marriott employee, interviewed for this study, confirmed that Marriott offers "a superior and individual rendering of customer and community service unlike the run-of-the-mill generic company in the hospitality industry."

Marriott International, Inc. (NYSE: MAR) is headquartered at 10400 Fernwood Road, Bethesda, Maryland. The company is widely regarded as the number one lodging company in the world, with approximately 2,600 owned or franchised properties in roughly 65 countries. Its hotel formats include full-service brands such as Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts. Select-service offerings include Courtyard, Fairfield Inn, and SpringHill Suites. Extended-stay lodgings include Residence Inn, TownePlace Suites, and Marriott ExecuStay. The company also operates time-share properties under the Marriott Vacation Club International and Marriott Grand Residence Club brands. Approximately 65% of company revenue is derived from its full-service hotel business.

A news report dated December 28, 2004 stated that the JW Marriott Phuket Resort and Spa as well as the Anantara Royal Coco Palm Resort and Spa were affected by the earthquake and subsequent tsunami of that date. Minor damage was suffered by the JW Marriott Phuket Resort while damage assessment was still underway at the Anantara Coco Palm Resort and Spa.

Marriott International demonstrated its characteristic resourcefulness in responding to this disaster. Despite the recent rise in stock prices prior to the event, the company had not become complacent, acknowledging internally that "they cannot let their culture of resourcefulness wither when the economy is healthy" (International Data Group). One example of strategic preparedness is the company's pricing agreement with Travelocity, through which both companies agreed that the total price of a Marriott stay — including taxes — would be disclosed to the customer at the time of booking. This was the first such partnership Marriott had entered into with an online travel agency.

Recent Company News and Strategic Initiatives

The Travelocity partnership produced significant benefits for both companies. As reported by Executive B&C Inc.:

"Travelocity has also proven its advantage over competitors by offering the best values at the lowest prices possible. While trying to meet their customers' needs at the lowest costs, Travelocity and Marriott International Inc. signed a Hotel Total Pricing agreement in which the total price of a Marriott Hotel stay, including taxes, would be known to the customer at the time of booking. Through this alliance, Travelocity's customers will be better informed, and a better informed customer is a satisfied customer. 'Our partnership with Marriott is designed to make the travel experience faster and easier for all involved,' said John Stow, president of Sabre Travel Network. 'With the proliferation of various taxes and surcharges, determining the true price of a hotel stay can become a confusing process for many travelers. Hotel Total Pricing is a great productivity tool for travel agents, and alleviates a point of frustration for both the hotel and the traveling public.'" (Goldstein, 2003)

The company's culture is further described in its online corporate profile, which emphasizes two commitments: "We do whatever it takes to provide our associates with the utmost opportunities, and our customers with superior service," and that "The Marriott Way is built on fundamental ideals of service to associates, customers, and community."

Marriott has received extensive recognition for its workplace culture. The company was named one of the "100 Best Companies to Work For" and one of the "Top 50 Companies for Minorities." It was ranked No. 1 by the NAACP in its annual industry report, named one of "The Best 50 Companies" for Latinos by Latino Style Magazine, and recognized as one of the "Best Companies for Working Mothers" by Working Mother Magazine.

The company articulates its philosophy through three overlapping commitments. The Spirit to Serve Associates rests on: an unshakeable conviction that people are the company's most important asset; an environment supporting associate growth and personal development; a home-like, friendly workplace; a performance reward system recognizing both hourly and management staff; pride in the Marriott name and record; and a focus on growth through managed and franchised properties. The Spirit to Serve Customers emphasizes: a hands-on management style ("management by walking around"); attention to detail; openness to innovation and creativity; and pride in delivering quality, consistency, and personalized service across all Marriott brands worldwide. The Spirit to Serve the Community is demonstrated daily by associates and corporate support of local, national, and international initiatives.

A strategic analysis is needed to gauge the reality of these claims, validate the numbers, and explain the reasons behind Marriott's sustained success in the hospitality industry.

Resiliency is a word that aptly describes Marriott International, Inc. and other industry survivors following September 11, 2001. Dr. Stephen E. Campbell writes that after the attacks, "consumers were afraid to vacation, therefore restaurants and related businesses were forced to lay off workers. Suppliers were not paid and the domino effect devastated this proud industry. Hardest hit was travel and tourism in the United States and abroad." (Campbell, 2003)

Strategic and Competitive Analysis

There are identifiable reasons why some companies in the industry outperform others in terms of properties owned, growth rates, and booking occupancy. Researchers Hesham Z. Al-Sabbahy, Yuksel Ekinci, and Michael Riley at the School of Management Studies for the Service Sector identify two dimensions of perceived value in the hospitality industry:

Acquisition Value refers to the perceived net gains associated with the product or services acquired in consumption. The positive influence is expressed through the benefit of the product, while the negative influence is expressed through the costs of obtaining it.

Transaction Value refers to the difference between the customer's internal reference price and the price actually offered, particularly in the context of a special deal or promotional pricing. (Al-Sabbahy et al., 2004)

These two dimensions provide a useful framework for understanding how lodging companies compete for customer loyalty — not merely on price, but on the total perceived benefit of the experience relative to its cost.