1. (Mt) – Strategic Management Case Analysis
Part 1: Action Plan and Calendar of Events (Topic 2) Select a case from “Part 6: Strategic
Management Case Analysis.” First, identify the key issue(s) in the case and then identify a
particular aspect of the strategic management process that your analysis will focus on
which can include the following: • Identify and evaluate the organization’s existing vision,
mission, objectives, and strategies. • To propose and defend specific recommendations for
the company. • To develop an industry analysis by describing the competitors, products,
selling techniques, and market conditions in a given industry (from textbook). Next, create
an action plan that details how you will conduct the case analysis including assigning roles
and tasks to specific project members. The action plan should include a calendar of events
with specific team members assigned to tasks. An Executive Summary is a required
deliverable in your calendar of events. Please note the Executive Summary is not due until
Topic 7; however, your action plan will help inform the Executive Summary. While APA
format is not required for the body of this assignment, solid academic writing is expected,
and documentation of sources should be presented using APA formatting guidelines, which
can be found in the APA Style Guide, located in the Student Success Center. We are doing
this work on Marriott International Inc. Assignment – Question Action Plan: Key Issues
Action Plan: Case Analysis Focus Action Plan: Narrative (description of the type of plan,
including the vision) Action Plan: Narrative (mission, and values of the organization)
Calendar of Events Review and Approve Final Paper Submit for the Team Assigned to Carrie
Mohammed Perri Due 09/23/19 09/23/19 09/23/19 Kristen Zankhana All Carrie
09/23/19 09/23/19 09/24/19 09/24/19 This is how we divided the work for this week
among our team, I got to do case analysis focus. I am attaching the study case for your
reference. If you have any doubts or concerns pls let me know. Marriott International Inc.,
www.marriott.com, MAR Marriott International is the largest hotel company in the world
with more than 4,100 properties in over 80 countries and territories around the world, over
700,000 rooms, and an additional 200,000 rooms in the development pipeline. In June
2014, Marriott opened its 4,000th hotel, the Marriott Marquis in Washington, DC, and
opened its 4,200th property in the summer of 2015. The majority of rooms and properties
are franchised out, with 2,673 franchised proper ties containing a total of 360,451 rooms.
About 1,057 Marriott properties with 283,029 rooms are company-owned with long-term
management agreements. In total, about 97 percent of all Marriott rooms are either
managed or franchised, as the company is opposed to owning the rooms outright. The firm’s
flagship brand is Marriott Hotels, designed to serve business and leisure travelers as well as
2. meeting groups. Courtyard is another popular Marriott-owned property designed around
transient business travelers. Courtyard hotels are smaller, often with 90 to 150 rooms, and
upper moderately priced. Fairfield Inn & Suites are also designed for business travelers but
are priced below Courtyard. Marriott’s Residents Inn is designed for extended stay
customers. Marriott’s Ritz Carlton hotels offer luxury accommodations. Beginning in 2016
at many Marriott hotels you can unlock your room door with your phone, log into your
Netflix account from your room television, and charge your wireless mobile device.
Marriott’s Q1 2015 earnings were $207 million, up from $197 million the prior quarter,
while company revenues dropped slightly to $3.513 billion from $3.559 billion the pre-
vinous quarter. History Marriott traces its roots to an A&W root beer stand founded by
Willard Marriott and his wife Alice in 1927 in Washington, DC. The following year, the
Marriott’s added hot food items to their menu and the new business name became Hot
Shoppes. By 1957, the business had grown large enough to become a public offering selling
out of stock within 2 hours at the opening price of $10.25 per share. Using capital from the
sale of stock, Marriott opened its first hotel the same year in Arlington, Virginia, with 325
rooms. The firm experienced growth in the domestic market and international market over
the next two decades, even opening an additional fast-food restaurant and forming a
partnership with Sun Line cruise ships. In 1983, Marriott introduced its Courtyard
properties designed for business travelers. In 1987, Marriott introduced Fairfield Inn and
acquired Residence Inn and Renaissance Hotel properties. Marriott is noted for including
copies of the Book of Mormon in addition to the Holy Bible in its rooms. U.S. Republican
Presidential candidate Mitt Romney, a Mormon, recently reported $260,390 in director’s
fees from Marriott. Guinness World Records recently recognized the 5-Star JW Marriott
Marquis Hotel Dubai as the world’s tallest hotel. In 2013, Marriott International introduced
Vacations by Marriott, the company’s official travel deal website. In 2014, Marriott began a
new initiative titled “The Envelope Please” whereby its hotels leave an envelope in every
room for customers to tip the housekeeper who cleans their room. Since cleaning is
oftentimes performed by women working for minimum wages, tipping these individuals is a
way to show your appreciation for their services. Marriott now places envelopes in 160,000
hotel rooms in the United States and Canada, urging its customers to tip the housekeepers.
Roughly 750 to 1,000 hotels take part in the envelope campaign from Marriott brands such
as Courtyard, Residence Inn, J. W. Marriott, Ritz-Carlton, and Renaissance hotels. Mission,
Vision, Values Marriott does not report a vision or mission statement. However, the firm
does state its core values and the founder’s philosophy. Marriott’s philosophy is to “Take
care of associates and they will take care of the customers.” Marriott’s values are as
follows:1. We put people first.2. We pursue excellence.3. We embrace change.4. We act with
integrity.5. We serve our world. Internal Issues Exhibit 1 Organizational Structure As
illustrated in Exhibit 1, Marriott operates from a divisional-by-region organizational chart.
Notice the firm has numerous female executives, consistent with its exemplary record on
workplace equality. New Policy On January 1, 2015, Marriott, and rival Hilton Worldwide,
implemented a new policy that re-quires customers to notify them the day before their
scheduled arrival to avoid having to pay for the room. This policy reverses a long tradition
of allowing customers to cancel their reservation “up to 6 pm the day of arrival without
3. penalty.” Bob Gilbert, CEO of the Hospitality Sales and Marketing Association International,
a hotel industry group, said of the Marriott move: “It’s not surprising. The hotel business is
one of the last places where you can hold inventory with no commitment.” Hotel demand in
2014–2015 has exceeded supply in many cities, giving hoteliers the upper hand. Another
motivation for the new policy is hoteliers’ desire to stifle the use of apps such as Yalta or
Hotel Tonight that track hotel prices and, whenever a rate dips, apparently a growing
number of travelers rebook at a lower rate and cancel the costlier reservation, literally right
up until check-in time. Penny-pinching travelers are increasingly using such tools, and
Marriott seeks to deter this practice. Big most rival hotels are staying the course with
traveler-friendly cancellation policies. Segment Information Marriot provides detailed
financial breakdowns based on hotel type and location, with three reporting business
segments: North American Full-Service, North American Limited-Service, and International.
1. North American Full-Service includes Ritz-Carlton, EDITION, Marriott Hotels, J. W.
Marriott, Renaissance Hotels, Gaylord Hotels, and Autograph Collection Hotels. 2. North
American Limited-Service includes AC Hotels by Marriott, Courtyard, Fairfield Inn & Suites,
SpringHill Suites, Residence Inn, and TownePlace Suites. 3. International includes Ritz-
Carlton, Bulgari Hotels & Resorts, EDITION, Marriott Hotels, J. W. Marriott, Renaissance
Hotels, Autograph Collection, Courtyard, AC Hotels by Marriott, Fairfield Inn & Suites,
Residence Inn, and Marriott Executive Apartments located outside the United States and
Canada. Revenue and net income information for Marriott’s various brands and businesses
is pro-vided in Exhibits 2 and 3. Note, the North American Full-Service segment has twice
the revenue of the Limited-Service segment, yet the LimitedService segment net income was
slightly more in both 2012 and 2014. Exhibit 4 reveals Marriott’s hotel ownership type by
percent of total properties. Note the majority of Marriott’s properties are franchised.
Notable brands by property type are provided in Exhibit 5. Note Courtyard is the most
common hotel by number of properties followed by Fairfield. Marriott’s properties and
rooms by geographic region are reported in Exhibit 6. Finance RevPAR is “Revenue Per
Available Room = Average price of room × occupancy rate × number of rooms available.” In
2014, Marriott reported worldwide a RevPAR increase of 6.6 percent with a worldwide
average daily price of $150.23. For 2014, Marriott reported net income of $753 million, up
from $198 million in 2011. Luxury demand worldwide continues to be the strongest
segment, and leisure destinations in the United States also experienced strong demand.
Marriott reported that Eastern Europe, Russia, and the United Kingdom had strong demand
for Marriott properties, but Western Europe only experienced moderate RevPAR growth.
The com-pany reported stronger RevPAR growth in the United Arab Emirates, Thailand,
and Indonesia in 2014. Marriott’s properties in China, Egypt, and other regions in Asia
Pacific reported numbers average to below average on RevPAR.Marriott’s recent income
statements and balance sheets are provided in Exhibits 7 and 8, respectively. Strategy
Marriott plans to add over 5,000 hotels worldwide to its portfolio by the year 2017 with a
focus on overseas markets, in particular Asia, where Marriott plans to double its exposure
by 2017. The Middle East and Africa are also key areas of growth. With the recent
acquisition of Protea in South Africa, Marriott expects to have a compounded growth rate of
25 percent from 2013 to 2017 in this region and also a 25 percent compounded growth rate
4. in the Middle East over the same time frame. At year-end 2014, Marriott had 46 properties
in the Middle East and in northern Africa, and 104 properties in Sub-Sahara Africa, but
announced in January 2014 that the firm was adding 116 hotels in seven different Sub-
Sahara African nations. The total deal was worth $187 million. Africa is a strategic focus for
Marriott moving forward, citing the continent’s growing middle class and higher growth
rates than the United States. Africa tourism grew 6 percent in 2013 and is expected to
continue at this rate over the long term. The acquisition of Protea Hospitality Group makes
Marriott the largest hotel company in Africa. However, the Ebola virus outbreak in western
Africa is a primary concern for Marriott. Marriott is the largest hotel operator in Beijing and
Shanghai, but not in China as a whole. The company plans to open a new hotel in China
every few weeks for the next several years. Marriott is more focused on the luxury market
in China but has plans to get into the more middle-class market as this demographic in
China grows. External Issues Technology Hotels are rapidly developing smartphone apps to
help speed up check-in for travelers, including letting customers go straight to their rooms
by using their smartphone to unlock doors. In November 2014, Starwood Hotels and
Resorts (HOT) became the first hotel to let guests unlock doors with their phones. The
feature is available at 140 Aloft, Element, and W hotels at mid-2015. “Guests want this
because it makes their lives simpler,” says Mark Vondrasek, who oversees the loyalty
program and digital initiatives for Starwood. “The ability to go right to your room gives
them back time.” In 2013, Marriott International (MAR) launched its check-in app at 330
North American hotels last year. By the end of 2014, that Marriott app was live at all 4,000
of its hotels world-wide. When a room becomes available, a message is sent to the guest’s
phone. Traditional room keys are preprogrammed and waiting at the front desk. A special
express line allows guests to bypass crowds, flash their IDs, and get keys. Marriott guests
made $1.25 billion in bookings in 2013 through its mobile app, according to George Corbin,
senior vice president of digital for the company. However, Marriott is holding off on using
smartphones as keys until security issues can be resolved. With brands Hilton, Waldorf
Astoria, Conrad, and Canopy, Hilton Worldwide (H) is the second hotel chain, behind
Starwood, to announce plans for mobile room keys, which it plans to roll out at the end of
2015 at some U.S. properties. Guests can use also use maps on the Hilton app to select a
specific room. Guests who like personal check-in attention, such as to ask about pool hours,
restaurant hours, and so on, can still opt for the traditional check-in. Hotel companies say
new technologies are not about cutting jobs. Many hotel chains desire travelers to
eventually be comfortable using their mobile apps to interact, such as using an iPad, phone,
or smartwatch to request a wakeup call or purchase suite upgrades, spa treatments, and
room service. InterContinental Hotels Group (IGH) is testing express check-in at 60 hotels.
The top 15 hotel companies have more than 42,000 properties worldwide with a combined
5.2 million rooms, according to travel research firms STR and STR Global. Thus, some hotels
have made smart app technology updates over the past few years, but they remain the
minority. One reason for reluctance is security. Starwood, for example, requires the phone
to actually touch a pad on the outside of the door to open it. This is to assure the guests that
if there is knock on the door late at night and guests go to the peephole to see who is there,
their phones in their pockets will not accidently unlock the door. Industry Fragmentation
5. The overall hotel industry is quite fragmented with only around 51 percent of the total hotel
market being derived from the major brand’s properties. The top five hotel brand
companies in the world account for only 41 percent of all branded hotels, leaving many
other brands (and “mom-and-pop” hotels) divided among the remaining 59 percent of the
branded hotel market. However, the future outlook appears much more positive for
branded hotel companies in general, as 72 percent of hotels currently being developed
belong to major hotel companies. Hotel industry fragmentation is even much more
pronounced in markets outside the United States. For example, in the United States about
70 percent of all hotel rooms available are branded, leaving only 30 percent to independent
operators. However, in regions such as China and India, branded penetration can be as low
as 20 percent of the total rooms available. Analysts expect a great increase in branded
penetration in developing markets such as China and India moving forward, as customers
become more affluent, have increased disposable income, and are able to travel more. Many
consumers prefer particular brands being assured generally of better security and
consistency from one hotel to another of the same brand. The overall hotel industry is also
expected to see modest gains moving toward 2018, enhanced by limited (but positive)
supply growth, an improving economy, higher room rates, and a willingness for both
businesses and individuals to travel. A key area of revenue growth for hotels is add-on fees,
much like airlines charge. Hotel fees have doubled in the last 10 years with luxury hotels
often charging the lion’s share of the industry’s total fees. Internet and mini-bars have
historically been prone to fees, but in addition now, business centers, inroom safes, and
even mandatory valet parking are being added at some hotels to help improve the bottom
line. Different Business Models Different firms in the hotel industry operate under some
combination of four general business models that are (1) owned, (2) leased, (3) managed
model, or (4) franchised. Hilton even structures its operations under the four models,
whereas Marriott structures are based more on geographic region. Most all hotel firms
provide segment data for both ownership type and geographic region breakdowns. Owned
hotels are majority or even 100 percent owned by the parent company. Under the leased
model, common in large cities, the major hotel brand leases space but otherwise has total
control over hotel operations. The managed model consists of a third-party manager
operating the hotel on the parent company’s behalf. In return, the branded hotel pays the
manager fees, usually based on some combination of revenues and profits. Finally, a
franchised hotel is owned and operated by an individual or group of individuals who benefit
from the brand name of the company yet have the luxury of owning and operating their own
business. The individuals who run the hotel are required to pay franchise fees and usually a
per-centage of sales to the major brand company. Hotel brands enjoy franchising to third
parties, as this drastically reduces initial capital. However, reduced risks in initial capital
can be offset by loss of quality control in franchised properties. Industry Growth Globally
The hotel industry as a whole enjoyed 4.4 percent overall RevPAR growth in 2013, but
growth rates varied greatly between different regions and price points. The top-grossing
region was the Americas, with RevPAR growing 6.6 percent attributed mostly to hotels
being able to charge higher prices. Higher-end segments also enjoyed much better RevPAR
numbers than middle- or lower-tier hotel properties. Growth in the Eurozone lagged many
6. other global regions with industrywide RevPAR of only 3.2 percent in 2013 with hotel
rooms available increasing only 0.9 percent. RevPAR in the InterContinental home market
of the U.K. increased 3.9 percent. Germany was a laggard in Europe, only reporting an
increase in RevPAR of 1.7 percent. Asia, Middle East, and Africa (AMEA) enjoyed an overall
RevPAR of 6.1 percent. This region does not have the number of developed hotels as other
regions; therefore, the numbers are a bit misleading because it is easier to achieve a higher
percent gain when working off an initial revenue base much less than that of Europe and the
United States. The 6.1 percent increase in RevPAR was buoyed by a 5 percent growth in the
average daily rate charged and an increase in total hotel rooms of 2.6 percent. The Middle
East and South East Asia enjoyed the largest percent gains of RevPAR at 11.4 and 7.9
percent, respectively. The Middle East numbers are especially impressive considering the
ongoing civil unrest the region has experienced recently. Hotel rooms available increased by
4.6 percent in India in 2013, but demand did not rise as fast, resulting in a decrease of
RevPAR of 3.3 percent. The hotel industry in China experienced a similar pattern as India in
2013, with an increase in available hotel rooms of 4.6 percent resulting in prices dropping
3.1 percent and total RevPAR falling 4.2 percent. Analysts blame not only the increase in
available rooms but also the slowest growth in China this millennium at only 7.7 percent
GDP in 2013. With a large population, a growing middle-class population, and China’s
growing tourism, the long-term outlook remains positive for China’s hotel industry.
Competitors Many thousands of hotel/motels compete for travelers’ dollars. Some major
rival firms to Marriott are InterContinental, Wyndham Worldwide, Hilton Hotels, Accor S.A.,
Best Western, Choice Hotels, and Starwood Hotels & Resorts. Exhibit 9 provides a
comparison of Marriott and two other competitors, and Exhibit 10 provides additional data
regarding some competitors. Note in Exhibit 9 that Marriott leads both Hilton and Starwood
on both total revenues and net income. Starwood has a significantly higher earnings-per-
share (EPS) ratio but trails both rivals on market capitalization. Hotel occupancy rates vary
by location. Hotels located in urban areas and airports tend to have higher occupancy rates
than other areas, such as resorts and suburban and highway properties. These properties
benefit from both tourism and business travel. Exhibit 11 provides the 2013 occupancy
rates for hotels in the United States based on quality of hotel property. Note that higher-end
hotels, at least in the United States, enjoyed higher occupancy rates in 2013, with the most
luxurious hotels (average rate over $200) enjoying the highest occupancy rates of all. The
overall trend toward higher-end hotels and occupancy rates was similar in international
markets as well. Generally, top tier, middle tier, and bottom tier are considered to be hotels
with prices over $120, $85, and below $60, respectively. Hilton Worldwide Holdings (HLT)
Headquartered in McLean, Virginia, Hilton is a large worldwide hotel chain with 10 brand
names and properties in 91 countries. Hilton operates and/or franchises 4,000 hotels and
timeshares with over 678,000 rooms and around 40 million customers in its rewards
program; it employs over 150,000. Hilton’s vision is “to fill the earth with the light and
warmth of hospitality” and its mission is “To be the preeminent global hospitality
company—the first choice of guests, team members, and owners alike.” Notable properties
Hilton operates include Waldorf Astoria and Conrad in the luxury segment, Hilton, Double
Tree, and Embassy Suites in the Full-Service line, and Hilton Garden Inn, Hampton,
7. Homewood Suites, and Home 2 in the Focused-Service segment. Hilton’s three primary
business segments for Hilton are (1) ownership, (2) management and franchise, and (3)
timeshare. Year-end financial results were $4,075 million with EBIT of $926 million, $1,271
million with EBIT of $1,271 million, and $1,109 million with EBIT of 297 million for each of
the three segments, respectively. Hilton reported overall net income of $415 million in
2013, up from $253 million just two years earlier. However, Hilton reported net income of
$673 million in 2014, up 62 percent from 2013, while revenues increased 8 percent to
$10,502 million. InterContinental Hotels Group plc (IHG) Headquartered in Denham, United
Kingdom, InterContinental is world famous for its InterContinental flagship branded hotel.
The company’s brands include Hotel Indigo, Crowne Plaza, Holiday Inn, Holiday Inn
Express, EVEN, and several others. The firm’s rewards pro-gram is considerably larger than
that of rival Hilton, with over 77 million members worldwide. The company owns, leases, or
franchises over 4,700 hotels with over 687,000 rooms in 100 different nations around the
world. In 2013, InterContinental opened an additional 237 properties and signed contracts
to put 444 more in the pipeline. Key markets moving forward for InterContinental are the
United States, the Middle East, Germany, the U.K., Canada, Greater China, India, Russia,
Mexico, and Indonesia. Intercontinental reports earnings based on geo-graphic region and
broken down further by company-owned versus franchised-owned by each geographic
segment. Starwood Hotels and Resorts Worldwide (HOT) Starwood operates luxury hotels,
full-service hotels, resorts, select-service hotels, and extended-stay hotels under a variety of
brand names, but the company primarily focuses on upper-end hotel offerings. Branded
hotels by Starwood include the W, Westin, Le Meridien, Sheraton, Four Points, Aloft, and
Element. Starwood is expanding its footprint with both management and franchise
contracts; it doubled its international footprint between 2008 and 2013. As of March 2014,
the hotel owned and operated 1,200 properties and 350,000 total rooms in 100 different
countries. Headquartered in Stamford, Connecticut, Starwood reported net income of $635
million in 2013. Starwood is building the first-ever Aloft brand hotel to enter Australia by
2016 and will expand its Latin American presence by 20 percent by 2016 with the opening
of 17 new hotels in that region. Starwood’s 2013 same-store RevPAR increased 5 percent
and the company opened 74 new hotels totaling 16,200 rooms and signed 152 new deals
for hotels—the most since 2007. Starwood at year-end 2013 had 590, 158, 133, and 130
properties in North America, Europe, Asia, and China, respectively. The firm reported
revenues and net income of $5,983 and $633 million in 2014, respectively. Future Marriott
and the entire travel industry have experienced a growth in sales as the economy in the
United States has improved and oil prices have fallen. The firm in 2015 announced plans to
buy back 25 million shares or around 9 percent of total shares outstanding. Marriott also
announced in January 2015 that it plans to buy Canadian-based Delta Hotels and Resorts for
$125 million. The acquisition of Delta Hotels is in line with Marriott’s plans to expand
internationally; how-ever, the firm is mostly focused on emerging markets. In 2015, CEO
Sorenson reiterated these plans in particular to India, where the firm currently operates 24
hotels with plans to operate 50 by 2020. Currently, Marriott has 40 hotels in the long-term
pipeline for India; however, infra-structure issues continue to hamper expansion into India
as rapidly as Marriott and other rivals would like. In addition to India, Marriott has 150
8. properties in Asia (not including China or India), with more than 200 in the pipeline.
Chinese properties currently total 70, with more than 80 additional hotels scheduled to be
operating by 2020. Marriott is opening a hotel every two weeks in China and plans to
increase the number of its properties in the Middle East and Africa by 75 percent and Latin
America by 50 percent through 2020. Currently many emerging markets are struggling, and
the strong dollar hurts overseas sales that are converted back to dollars. There are also
many regions of the world in which Marriott and rivals would like to position their
properties. Help CEO Sorenson develop a three-year strategic plan moving forward that
most effectively uses Marriott’s resources.
