IAP607 Global Chain of Hotels and Lodging Facilities

The Marriott International is a global chain of hotels and lodging facilities which was first established in the year 1927. The first hotel was established in Washington DC, and since then it has expanded its horizons to the rest of the world. In Australia and other parts of the world, the Marriott International is reputed to be one of the most well known and preferred hotels four tourists. The flagship brand has its hotels and resorts in more than five hundred locations around the world, while simultaneously holding a majority of the market share in United States.

The brand is commonly associated with luxury and opulence. However, the chain has now begun to introduce its range of affordable and mid range facilities which appeal to middle class travelers. Despite the global economic crises and the unsuitable market conditions at present, the Marriott chain continues to dominate the international hospitality market. This is mainly because the brand caters to the unique needs and demands of the average tourist. The company led by Bill Marriott has been a forerunner in the industry for well over fifty years and has a motto of “spirit to serve”. This highlights the customer oriented strategy of the hotel.

As a part of the hospitality industry, it ensures that every expectation of the customer is met. This has now come to be known as the Marriott way (Marriott.com, 2018). This refers to the hotel’s sense of responsibility towards its stakeholders, associates, the customers and the community as a whole. The following critical analysis studies the internal environment of the hotel, focusing mainly on guest experience, operations and competitive advantage. Porter’s five forces and a S.W.O.T analysis would be applied to study the various internal and external issues plaguing the hotel.

Research aims

The purpose of this research is to carry out an independent critical analysis of the Marriott International. The report would mainly focus on the internal environment of the hotel, with respect to guest experience, hotel operations and competitive positioning.

Research objectives

• To study the internal environment of the hotel
• To study the competitive positioning of the hotel
• To study the hotel operations and its impact on guest experience
• Review of literature

While speaking of the internal environment of the hotel, there are largely three aspects that must be taken into account. They are – hotel operations or the quality of customer service delivered to the guests, the perception of the guests based on their experience and the competitive positioning of the hotel.

Guest experience or the perception of the guests staying at the hotel

According to Xiang, Schwartz, Gerdes and Ulysal (2015), the core tenets of the hospitality industry would be a positive experience for the guests. In fact, that is considered to be the sole purpose of the industry itself. However, Jauhari and Bharwani (2015) believe that the main reason why hotels ensure maximum customer satisfaction is to gain customer loyalty and at the same time ensure competitive advantage. Every firm across the world, including the hospitality industry, has recognized the importance of positive guest or customer experience. Customers today are powered by technology and expect tailor made or customized customer service which would meet their unique demands and needs (Levy et al., 2014).

Hotels like Marriott and other global hotel chains are focused on delivering exemplary customer service both online and offline. As a matter of fact, a new term, customer experience management or guest experience management has emerged, which deals exclusively with the quality of service delivered to the customer.

According to Manhas and Tukamushaba (2015), customers or guests are the main reasons why hotels even exist in the first place. Thus to ensure a positive brand image, the hotel should strive to focus their business strategies and mission on the customer (Torres & Kline, 2013). Ariffin (2013) argues this perspective and says that customer experience, though extremely important, is not the sole determinant of a firm’s competitive positioning. Instead, a positive guest experience would improve the market performance of the hotel (Verleye, 2015). The experience of a guest is all encompassing, and begins from the moment a person books a room at the hotel.

It includes preconsumption, consumption and post consumption of hotel services (Kandampully & Solnet, 2015). In other words, guest experience would take into account every single interaction that the guest has at the hotel. It would be wrong to assume that guest experience of a customer relies solely on accommodation facilities, entertainment, food and beverages and other such amenities. Instead, little things like technology, website, in room entertainment, facility designs and interactions with the hotel employees play a crucial role in determining guest experience (Li, Ye & Law, 2013).

Suffice to say, customer or guest experience at a hotel is elusive and quite indistinct in nature and cannot be defined easily. This is mainly because it includes a number of minor and insignificant aspects, which together would contribute to a positive experience for the customer (Jani & Han, 2014). It must be realized that each guest is unique and it would be unfair to generalize them. Very often, they come from different cultural backgrounds, beliefs, attitudes and traditions which affect their perception of the hotel experience. While visiting a hotel, they would have a unique set of demands and expectations which must be fulfilled.

Buhalis and Amaranggana (2015) even claimed that in order to understand guest experience, one would have to gain insight into the internal feelings of the customer which would impact their perception of the hotel. The service delivery process in a hotel could either be direct or indirect; it would be the onus of the hotel to make sure that all processes pertaining to delivery of service is optimized (Rao & Sahu, 2013). Moreover, the construct of service delivery and customer experience should involve the guests’ emotional, social, physical, social, cognitive and behavioral responses to pave the way for a wholesome guest experience.

Hotel operations or hotel performance management

 According to Schuckert, Liu and Law (2015), the business environment in the hospitality industry is highly competitive today. These authors have claimed that the increasing pressure of stakeholders and the ever changing circumstances have put more pressure on hotels to incorporate hotel performance management as part of their business strategy. Hotel performance management has now become one of the most important tools in hotel operations which would be necessary while determining the business strategy of a hotel and its competitive positioning.

Berezan, Raab, Yoo and Love (2013) have argued that management of hotel performance would be instrumental in determining the market position of the hotel and at the same time maximizing customer satisfaction. However, Pnevmatikoudi and Stavrinoudis (2016) are of the opinion that measurement of the performance of a hotel would be more important. A system which effectively measures the performance of a hotel would highlight its key strengths and weaknesses and even point out room for improvement (Alrawashdeh & Alrawashdeh, 2014). This would further enhance the competitive brand positioning of the hotel.

Sipe (2016) argues that the operations of a hotel should be designed in such a way that it contributes to customer satisfaction. For instance, front desk employees are the first point of contact for the customers. A guest staying at the hotel would first interact with the employees stationed at the reception. Thus, it is imperative to have skilled and dedicated individuals at the front desk to create a lasting first impression. It is important for hotels to consider customers as emotional and intuitive beings who observe and imbibe every bit of service offered to them. Hence, it is obvious to assume that the quality of service would depend on the operations within the hotel.

Any hotel is comprised of several departments, like housekeeping, food and beverages and the top management. It is important to facilitate a flow of services and communication between all these various levels so as to optimize the quality of service delivered to the customer. Every employee in the hospitality organization would directly or indirectly affect the quality of experience of the guest (Ahmad, Bosua & Scheepers, 2014). For instance, the efficiency of the housekeeping department would determine how the customer feels about the rooms, the cleanliness and the promptness of service. Summing up, it can be said that main aim of improving hospitality operations in the hotel would have a direct positive impact on the customer service offered.

Competitive advantage within the hospitality industry

According to Urbancova (2013), the main goal of every business, hospitality or otherwise, is to ensure that it maintains a favorable competitive positioning in the market. Leonidou, Leonidou, Fotiadis and Zeriti (2013), on the other hand, argue that adding value for the employees, customers and also the shareholders would play a crucial role in determining the competitive strategic management in the hospitality organizations. Competitive advantage would refer to the way organizations adapt themselves in a highly uncertain industry steeped in volatility.

It also refers to the way an organization strategically gains insight into the needs of the customers and takes adequate measures to meet their expectations (Sigalas & Peka Economou, 2013). As such, it can be said that competitive advantage is the primary goal of every organization. Failure to secure an advantageous positioning in the market would affect the profitability of the company as well.

According to Meihami and Meihami (2014), knowledge is one of the crucial factors that determine competitiveness of an organization. For instance, in the hospitality industry, it is expected that a company would have fair knowledge of their target audience, of the needs of the target market, the position and status of the competitors and measures required to improve competency in the market. However, Marchi, Maria and Micelli (2013) elaborate on the concept of competitive advantage and discuss about the few basic approaches to achievement of competitive advantage in business.

The Porter’s Five Forces theory introduced by Michael Porter in the late 1900s highlights that any organization is affected by five forces, namely the threat of substitutes, the threat of new market entrants, buyers’ power, suppliers’ power and the rivalry that exists within the industry (Liu, 2013). For example, in the hospitality industry, there exists intense rivalry between various global hotel chains in the international market, with each hotel attempting to gain dominance over the other. This model adopts an approach that studies the external environment of the organization in compliance with the performance of the entire organization. On the contrary, Leonidou, Leonidou, Fotiadis and Zeriti (2013) argue that the resources and capabilities of an organization determine its competitive positioning.

According to this theory, the common resources that are shared by the members of an industry and the way they are distributed would play an integral role in determining competitive advantage. This view has been countered by Kumar and Pansari (2016) who believe that a relational approach to competitive advantage should be adopted. In other words, the only way a company can gain competitive vantage over other companies in the same industry is by forming alliances or by partnering up with other firms. In this aspect, it is also important to study the importance of quality service relationships between the organization and the customers. A favorable relationship between the two parties would ensure brand loyalty and affect the customer’s intention to return and promote word of mouth advertising.

Research methodology

Research methodology refers to the series of techniques and methods that can be used to conduct a critical analysis on any subject. Methodology would mean the specific procedures and techniques which seek to identify, process, select and also analyze the information pertaining to a specific subject. In this report, the research methodology methods would be used to critically analyze the performance of Marriott International. The review of literature in the above section highlights three major areas of measuring performance of a hotel, namely guest and customer experience, hotel operations and competitive advantage.

Accordingly, three tools of marketing and strategic management would be used in this report. They are S.W.O.T analysis, Porter’s Five Forces theory and McKinsey’s 7S. While the S.W.O.T analysis studies the internal strengths and weaknesses of the organization and at the same time points out opportunities and threats, the Porter’s Five Forces studies the various industrial aspects which affect the competitive positioning of the hotel. The McKinsey 7S is another tool used for studying the internal environment of a hotel.

S.W.O.T analysis of Marriott International

Strengths

• The company has a very positive organizational culture. This means that the working conditions of the employees are favorable, thus promoting positive social relationships within the hotel. Moreover, since the company has a strong organization culture, it positively affects the quality of service delivered to the customer.
• Being one of the most prominent chains of hotels in the world, Marriott International refuses to compromise on the quality of service offered to them (Mollina-Azorin, Tari, Pereira-Moliner, Lopez-Gamero & Pertusa-Ortega, 2015). They use state of the art technology in all their services.
• Having established themselves as one of the forerunners in the industry, Marriott has a number of loyal customers spread out across the world. These customers have proved their loyalty over the years. This means that Marriott has successfully won the goodwill of the customers in the industry.
• Marriott International has a global chain of hotels and resorts and operates in over a hundred countries. Accordingly, they have a strong infrastructure which would support the myriad operations within the hotel.

Weaknesses

• The architecture of the hotel is not very impressive. The Marriott International is one of the most popular hotels in the world. It should exhibit architectural brilliance which is both unique and characteristic of the hotel.
• The company had registered tremendous success as far as market position is concerned. However, off late, the company has been falling behind in terms of competitive advantage.
• The company has been wrapped up in a number of controversies in recent times which have undermined the quality of services provided by the organization.
• The organization members and management are not flexible. They have a tendency to resist to changes which are implemented from time to time. They fail to realize that the hospitality industry is a dynamic one which requires effective change management.

Opportunities

• The tourism market is growing at a rapid rate despite the raging economic crises that prevails in the world today. As a result, the hospitality industry is booming. The Marriott International has already established itself as a premier choice in hotels and resorts. It could easily build on its competitive positioning by tapping into new markets and retaining existing ones (Blogs.marriott.com., 2018).

Threats

• One of the major threats that the company faces is that of rivalry with emerging brands in the hospitality industry. Globally, there are a number of hotel chains which are slowly gaining popularity and achieving the same levels of success as that of Marriott.
• Also, there are a number of alternatives in accommodation today. For instance, as part of the sharing economy, Airbnb has grown as a popular choice for tourists looking for affordable lodging facilities today (Guttenbag, 2015).

Porter’s Five Forces theory

The framework introduced by Michael Porter is a holistic approach to the existing forces within the industry. According to Porter, there are numerous forces which affect the competitive positioning of an organization. In the hospitality industry, there are numerous factors which could be used to understand how Marriott is positioned in the market, especially with respect to its competitors. They are analyzed as follows:

• Threat of new entrants - Michael Porter theorized that the entry of new companies into the industry would render the market volatile and unstable and might even turn the tables on the existing brands. In the hotel industry, the threat of new entrants is relatively low. This is because to start a hotel, an entrepreneur would need to invest huge sums of money as capital, which is not practical. Moreover, it would be impossible to get hands on required human resources and finances that are essential for the successful running of an organization. For a hotel like Marriott which already has an international reputation, new entrants to the market would pose a negligible threat.
• Threat of substitute products - A company’s position in the market could easily be disrupted by substitute products which provided the same services but offered lesser costs, better quality or service or more value. However, now there are a number of alternative accommodation facilities like backpacking lodges, hostels, shared accommodation facilities and so on which are more affordable and often offer better quality of services. For instance, Airbnb, an online booking forum which provides cheap yet quality accommodation to tourists slowly gaining popularity in the hospitality industry (Ert, Fleischer & Magen, 2016). According to Zervas, Presperio and Byers (2017), the rise of the sharing economy in the hospitality industry is proving to be a serious threat to traditional hotels like Marriott.
• Bargaining power of suppliers - The bargaining power of suppliers in the hotel industry is high. This is because apart from Marriott, there are a number of other hotels who require the same raw materials and resources. Thus, a large number of competitors are competing for the same supply of resources.
• Bargaining power of buyers – The buyers have relatively moderate power in the hotel industry. This is because the tourism industry is growing at a rapid rate in the world today. Hence, the flow of customers is at an all time high in the hotel industry.
• Rivalry – The hotel industry is highly competitive in nature. Across the globe, there are a large number of hotel chains and resorts which are competing in the international market. Thus, Marriott would have to take necessary measures in order to enhance its market position.

McKinsey 7S framework

The McKinsey 7S framework can be divided into hard and soft elements.

Hard elements

• Structure – The Marriott International hotel has an innovative and adaptive organization structure with a positive organization culture that empowers the employees.
• Strategy – The business strategies of Marriott are customer oriented and take into consideration the various needs and expectations of the customer.
• System – Both informal and formal procedures have been established at Marriott which is maintained through procedures, policies, mission and vision.

Soft elements

• Shared values – This refers to the values that are added to the service provided by the organization.
• Style - .A transformational leadership style is followed at the hotel which ensures participation from all members of the organization who are involved in the decision making process.
• Staff – The staff morale at the organization is high owing to proper and efficient employee engagement practices.
• Skills – Sufficient training programs are implemented at the organization so that the employees can acquire new skills and hone the existing ones (Arneson, Rothwell & Naughton, 2013).

Results and discussion

The results and analysis of the same can be summarized into two main points:

• The Marriott is not as favorably positioned in the market as compared to its competitors. Competitive advantage is one of the most important aspects in the hospitality industry (Jones, Hillier & Comfort, 2016). Most of their competitors are turning to various new and innovative marketing, advertising and business strategies which would lure in more customers. On the contrary, the Marriott has restricted itself to its outdated business strategies which fail to live up to customer expectations in the present day. The company has invested mostly in developing its human resources because according to the management, the organization’s employees are its main resources.
• There are a number of threats in the industry, from both rivals and potential substitutes. As such, the company has failed to update or change its strategies and policies which would eliminate such threats. On the other hand, various innovative strategies are being implemented by its competitors (Nieves, Quintana & Osario, 2014). One of the major threats would be alternative modes of accommodation which are gradually gaining prominence over traditional hotel and lodging systems. Failure to recognize the potency of such threats would not only affect customer retention but would also adversely affect the revenue generation of the company.
• According to Sakas, Vlachos & Nasiopoulos (2014), strategic management of an organization should revolve entirely around competitive advantage. However, in the case of Marriott, the management has failed to successfully implement the same into its business objectives. The main concern for the organization is the customer and enhancing the customer service process to ensure maximum satisfaction. Yet, the company fails to realize that customer satisfaction is partly reliant on competitive advantage. Competitive positioning of a company depends on the way the brand is perceived in the market by the customers. In the case of Marriott, the target market would be upper class tourists who prefer luxury accommodation. However, the company has failed to incorporate a unique selling proposition or USP into its branding strategy. Such USP would have enhanced its competitive positioning.

Recommendations and action plan for Marriott International

Although Marriott International is one of the leading hotel chains around the globe, certain gaps or shortcomings have been observed in the case of strategic management and competitive advantage. The recommendations for betterment of the same are as follows:

• The company is mainly reputed as a luxury hotel all around the world and targets a niche market in all the countries it operates it. Marriott could expand its mid level operations, thus also providing affordable accommodation to tourists. The main reason why most tourists are turning to alternatives like Airbnb is because of the price factor. Altering its pricing strategy would allow the company to tap into newer segments of the market and thus broaden its market position. Moreover, such a strategy would improve the market position of the company with respect to its competitors.
• A rewards program may be introduced which would be offered to its customers. This kind of referral program would reward the guests if they promoted the company through word of mouth advertising. The benefits of such a strategy would be twofold. On one hand, it would increase occupancy at the hotel and increase overall revenue outcome. Additionally, through word of mouth advertising, more and more customers would be converted and committed to this brand, thus enhancing the branding position of the hotel. In other words, these customers would prefer Marriott as compared to other hotels.
• The marketing strategies of Marriott would have to be improved. The company has been following the same marketing and advertising principles since it established itself. It must be realized that these strategies are now outdated and no longer effective. A robust marketing team should be brought in which would renovate the brand image of the company and promote it as the ultimate choice in luxury and mid level accommodation facilities.

ACTION	RESPONSIBLE PARTIES	DEADLINE	NECESSARY RESOURCES	CHALLENGES	EXPECTED OUTCOME
A robust new marketing strategy that would improve the brand image of the Marriott chain of hotels.	Marketing team of the organization	3 months	Resources required would be for promotional campaigns, social media campaigns et cetera. Publicity stunts and gimmicks may also be organized to grab attention.	The company faces severe competition from other brands who have already implemented brilliant marketing practices. Marriott would have to come up with a USP, which sets it apart from its competitors.	·         To lure in more customers ·         To improve brand positioning
A referral and rewards program	Organization. The stakeholders involved would be the customers.	One year	Financial resources to provide referring customers with special amenities and discounts.	Failure to provide the rewards in a timely fashion would lead to loss of faith on the customer’s part.	·         To enhance customer retention.
Mid level and affordable accommodation	Hotel management members	Two years	Financial resources, budget controls, human resources	The company has a reputation for being a luxurious brand. It might be difficult to override that reputation and portray the brand as affordable and appropriate for mid level customers.	·         To compete with new entrants and substitute accommodation facilities like Airbnb.

Conclusion

To conclude, it can be said that competitive advantage forms the most important aspect for any hotel or organization in the hospitality industry. For a brand like Marriott with a global presence, it is of the utmost importance to have a positive position in the market. The brand which has been around for decades has a definite business strategy which takes into account marketing, human resources, finances and other aspects as well. However, this business strategy is outdated and at present fails to provide the company with a competitive positioning.

The report above carries out a detailed analysis of literature pertaining to the various internal aspects of Marriott International and highlights issues which affect the competitive advantage of the hotel. The SWOT analysis and the application of Porter’s Five Forces theory reveals that the company needs to improve its market position. That can be done through innovative new marketing and business strategies that would help the company explore new markets, lure in more customers and also retain existing ones. The detailed action plan and recommendations present some suggestions which the hotel can incorporate into its existing strategies.

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