Marriott International Company’s Strategic Direction

Abstract

Marriott is a multinational hospitality industry dealing with franchising and management of lodging facilities. The company has a chain of unified branches in the global market that sell under one brand. With the adoption of the customer-centric business strategy, Marriot enjoys market dominance through acquisitions and alliances with other service-related firms. The company has adopted a regional-based global market expansion, which facilitates proper management of the growth process with the intention to double its market dominance.

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Marriot has adopted a friendly-tailored environment, which has a positive influence on the company’s image, for it depicts it as a responsible social partner in all market segments and enhances its competitive advantage over rivals. For Marriot has a rich diversity of consumer preferences, future research should examine the role of the current reward scheme on client loyalty and the competitiveness of brands in the global markets. Moreover, since the hospitality industry inadequately defines the contribution of loyalty programs in shaping the overall market positioning and consumer preference, future research should determine the relationship between reward programs and growth in market share.

Company Overview-Milestones Timeline

Marriott International, Inc. (Marriott) is hospitality and vocational enterprise founded in 1993 with the split of the A&W beer business established in the year 1927 by Alice Marriott and Willard Bill as a drink and refreshment based organization (Marriott International, Inc., 2018). Through alliances with other executives, including Frank Wright, the small business expanded its product line and coined the company’s brand that denoted exciting experience aimed at providing quality at a low cost.

This brand strategy influenced the development of an all-inclusive culture and guided the organization’s steps towards a customer-centric business model. By 1992, under Bill Marriot as the CEO, the company had collaborated with travel firms such as SunLine Company to provide in-transit services and lodging facilities across the international market.

While enjoying global growth, the organization subdivided to form two large service business lines dealing with the food industry and accommodation services. In 2012, due to high competition from rival locally and internationally established firms in the service industry such as Starwood, Marriot developed a new mission aimed at pushing excellence in the travel industry through the adoption of technology-based services that include online and mobile-based outlets to ease and enhance client convenience in bookings ((Marriott International, Inc., 2018).

With global industrialization that fostered socio-economic growth in Africa, Marriot identified an opportunity for growth in this untapped market in 2014 and acquired Protea Hotel’s brand, which significantly influenced the growth of its market share and overall profitability.

The success of Marriott is the significant positive contribution of the established organizational culture and core values inculcated on the employees across its branches globally. The aim of the research paper is to analyze Marriott by examining market brands that cut across the entire economic-level consumer segments and the factors that shape the strategic direction through enhancement of its competitive advantage and market share.

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Marriott Brands

The leading market brand for Marriott is the full-service facilities, which strive to offer quality and affordable low-priced products to its diverse set of customers.

Luxury Product

Marriott takes its market and customers as special business partners. The company has developed its products in line with this concept, which has significantly shaped the hospitality industry and influenced consumer quality needs in service delivery. Centered on transforming consumer experiences, the Marriot luxury brand competes in the high-end market segment providing an exceptional social environment and quality recreational facilities. The company provides prestigious and quality social amenities with tailored services for its diverse clients through J.W. Marriott, Ritz-Carlton, and The Luxury Collection brands.

These Marriott branches have consistently scored high in consumer surveys over the last five years conducted by J.D Power. Through this consumer survey, Marriott has consistently improved quality and expanded the product line based on consumer responses. One of the significant contributions of this survey service entails the adoption of techno-linked bookings utilized by the company. This strategy gives clients sufficient space and time to check and make a direct reservation with an attached reward for customer loyalty.

Premium Products

The company utilizes this service to provide an exceptional recreational experience for its clients, including access to mentorship programs and expert counseling. This product communicates the company’s value of a caring partner. The company has collaborated with American Express, a financial firm, to offer its clients a convenient payment platform. The service allows customers to enjoy priority passes in their network with a financial reward affront on drinks and food. Under this umbrella product, Marriott guarantees client satisfaction by creating a friendly, caring, and personalized service.

Select Services

Marriott’s select-service is cost-effective tailored products developed to give diverse consumers an opportunity to choose and enjoy hospitality services in line with their financial capacity. Using this brand, the company intends to capture the middle-level leisure and business travelers’ needs in its branches that include Protea Hotels in the African market, Courtyard, Aloft, and SpringHill Suites. With the increased competition in the travel and hospitality industry, Marriott utilizes this select service to give clients the freedom to choose specific facilities and services they want during their stay.

This allows the company to develop the products in line with customer-anticipated needs. Additionally, the service allows customers to enroll and participate in a point reward system for loyalty. The company adopted this service category in line with its objective to provide affordable quality services to all.

Longer Stays

As people rush to beat time in meeting daily duties, demands for productivity at any point are inevitable. To appeal to the needs of corporate travelers, the company developed the Longer Stay brand to provide a comfortable working environment and conference facilities for customers who relocate on temporary business assignments. Longer Stays designs include the provision of facilities with ample space and laundry services to allow customers to enjoy a comfortable atmosphere that supports their products, such as adopted in Town Place Suites, Residence Inn, and Marriott Executive Apartments. Additionally, the company provides expert support services to the clients and reward programs to promote clients’ value of stay and enhance their loyalty.

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Timeshare

Marriott timeshare brand involves reward schemes, which promote customer loyalty, enhance competitive advantage, market share, and cushion the company from financial inflation. The Starwood hotel reward system and Marriott vacation Club allow clients to choose, earn points, and convert these benefits to future costs. This strategy has positively influenced Marriott’s market brand across the international market.

Strategic Direction

Expansion

Acquisitions

Marriott Inc. has enjoyed a global expansion through the acquisition strategy. The company adopted this growth approach to consolidate its business in the hospitality industry in the global market. Mulherin, Netter, and Poulsen (2017) hold that the acquisition is a market control mechanism that positively influences the effects of the external environment on an organization and facilitates the exploitation of growth opportunities.

The main purpose of Marriott’s acquisition is to establish a competitive framework and enhance the brand position in the target market. Marriott adopted the horizontal acquisition approach to enhance penetration, overcome barriers, reshape competition, and increase its market power. The 2016 acquisition of Starwood Corporation is the most significant achievement in augmenting global dominance and establishing a competitive product brand.

Given that Starwood Corporation is a multinational hospitality firm with an established customer base, market brand, branches, and distribution channels, it formed part of significant rival firms in the hospitality industry. Therefore, its acquisition reduced the negative financial effect of intense rivalry between the two firms with the merger of their diverse branches, leading to the consolidation of their local markets under one brand. This approach positively influences Marriott’s global growth and competitive position.

As technology continues to shape the global society, the hospitality industry faces competitive pressures from new and established organizations in these markets. The emergence of online firms such as Airbnb has imposed a great deal of market competition on hotel firms. Marriott’s acquisition has facilitated the consolidation of resources such as expertise from the two firms, which increase efficiency, market size and promote control of business operations.

Global Growth

Regional growth

Marriott enjoys a large market share with most of its revenue from the local region of South America. The company has facilitated the growth of its market segment in the international market through regional penetration and expansion, which involves the establishment of business schemes in North America, Africa, the Middle East, and Europe.

The Company’s major expansion in Northern, Latin, and Caribbean America involved the acquisition of Starwood hotel, one of its major competitors in the American and international markets. Localized market growth helps a company to establish a commanding market share in the local market, which boosts and stabilizes regional growth (Xie & Redding, 2017). The improvement of Marriott’s financial strength is essential in supporting market expansion approaches in socio-economically challenged markets such as Africa and the Middle East.

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In the European market, the company has availed its upscale plan with the objective to establish a robust competitive edge and enlarge its market share. Since Europe harbors a stable economic environment, the market offers high demand for lodging facilities. Moxy hotels act as the company’s European brand in luxury and full-time service segments. However, the acquisition of Starwood resort, an already established international company, significantly influenced the company’s brand in the European market with an increase in target share of 2.2% to 3.4% of the region’s branded hotels (Marriott International, Inc., 2018).

Marriott’s acquisition of Protea Hotels and alliance with Alibaba (an online business firm) has significantly increased access to the African and Middle Eastern markets. Improved economic conditions due to industrial development in these regions inspire consumer spending and profitability of lifestyle-related businesses. The company’s expansion into these new markets includes the introduction of AC Hotels by Marriott, Element, and EDITION brands to tap into burgeoning opportunities in the tourism industry.

Program initiatives

Marriott’s global market penetration largely depended on the collaboration with firms in the travel industry. One of the most significant innovative international market brand penetration and advertisement strategy involved an alliance with Hoover Airport in 1937, which gave Marriott an opportunity to sell its brand to clients on board the plane and the suppliers of materials to the facility. Since suppliers in the travel industry depend on agents for convenient bookings, Marriott’s complimentary service developed along their main hospitality products match the needs of the consumers and stimulate the company’s competitiveness.

Vertical diversification has significantly influenced the company’s global growth and profitability. According to Russo (2017), a company’s objective in strategic alliances is to facilitate the pooling of resources that create a stronger market brand. Since travel agencies have similar interests and synergistic capabilities that cut the international platform, this business approach presents a win-win situation for both organizations by enhancing consumer satisfaction and promoting loyalty.

Community Investments/Outreach

Shelter and food, environment, job readiness, the vitality of children, empowering diversity

Marriott is committed to supporting social development within the branches in different market segments. According to Font and McCabe (2017), organization participation in sustainable development by supporting social responsibility initiatives is a promotion strategy that breaks market barriers such as consumer resistance and increases market share. Engaging in corporate social responsibilities is fundamental in shaping the brand’s reputation and creating consumer preference. The company supports shelter and food security in the global society by running charity programs in its branches to collect and distribute donations to the orphanage, children’s homes, and the elderly such in Warsaw and Budapest branches.

The element of diversity in the global market is one of the significant factors shaping an organization’s brand. Marriott’s consistency in embracing diversity within its market is evident in the creation of equal employment opportunities for all. The company has built an all-inclusive reputation that employs the disabled, champions for increased job opportunities for women, and creates empowerment programs targeting vulnerable groups.

In addition to the charity programs and embracing diversity, Marriot has earned its reputation in the commitment to enhance social development through the vitality of children initiative. The company collaborates with children support firms in the global market to source a financial contribution from its employees, business associates, and clients. Moreover, employees contribute their time and participate in recreational activities with children in orphanages and children’s homes.

Educational and work-study

The company contributes immensely to the advancement of education and work experience through the creation of youth career programs in its branches to enable this population to gain practical work experience. Additionally, the company creates employment for some of these trained youth in its new branches in Poland and Romania. This business strategy strengthens the company’s market brand and promotes the sustainable development goal of improving human lives.

Going Green Initiatives

Environmental goals

Marriott has continuously embraced sustainable business processes in line with the sustainable development goals, which entail environmental protection initiatives. Conservation measures involve prudent management of natural resources, the adoption of proper waste disposal measures, and educating clients and employees on sustainable measures. Additionally, apart from adopting processes to achieve these environmental objectives, the company continues to champion and support global initiatives such as reduced deforestation and management of renewable resources.

LEED buildings

In demonstrating its commitment to going green initiative, Marriott develops its facilities in line with the US regulatory certification. This business approach boosts the company’s social image as a responsible partner, which significantly lifts its market brand.

Electric vehicle charging stations

Environmental conservation measures have inevitably affected the transport industry. The ongoing global call for effective reduction in carbon emissions has forced automobile industries to manufacture green vehicles. Marriott has portrayed its support for the program by strategically adopting electric charging stations for clients who own electric vehicles. This leadership in embracing global policies significantly promotes the company’s competitive advantage and boosts its global market share.

The United Nations (UN) sustainable development goals

Marriott’s strategic approach to sustainable development goals involves fighting inequality in employment, reduction of global poverty, improvement of the global economy, and support of responsible consumption. The company has devised its community initiatives in line with these development goals resulting in enhanced global growth. Providing job opportunities, engaging in charity work, championing equal employment for all, and embracing reduced and proper waste disposal have clearly set the company on a trajectory path of promoting sustainable development goals globally. Given the company’s global presence, enhancing sustainable development projects is fundamental in promoting consumer trust and increasing market share.

Marriott Loyalty Programs

Marriott Rewards, Starwood Preferred Guests (SPG), The Ritz-Carlton Reward

This is a strategic loyalty scheme developed to enhance consumer allegiance to a company’s products in the competitive market. These programs enable the customers to run brand loyalty accounts that show progress status and redemption offers. Despite consumer diversification of benefits and risk, loyalty programs are essential in enhancing customer satisfaction while the expectation of reward for product use deters defection to competitors (Kim & Ahn, 2017). This brand promotion strategy aids in building a strong market presence with both the consumer and the organization benefiting from the relation.

Benefits

Consumer benefits include point redemption to air travels, room bookings, and bill payments. On the other hand, the company benefits from additional revenue from product subscriptions, enhanced brand loyalty, and the creation of a reliable customer base.

Marriott Rewards Credit Card

Credit card services enable customers to enroll and earn reward points. The company utilizes premier and business credit cards to earn the loyalty of both retail and corporate clients. The Marriot cards promote convenient customer bookings while providing the benefit of earning and points redeeming for loyal customers. The benefits include annual one-night free hotel booking and bill payments.

Technology/Accessibility

Mobile platforms

Technological shift and innovation continue to reshape social behaviors and processes of engagements while weakening the loyalty link between suppliers and their consumers due to ease of access to complementary services. However, the contribution of technology to business diversification and expansion has not been without notice. Han and Park (2017) maintain that increased consumer sensitivity to technology-based services is an essential element in the improvement of an organization’s market performance and profitability. Given the shifting consumer behaviors and the changing social platforms, which affect direct and indirect retail sales, companies must adopt digital technologies to augment their competitive position and global market growth.

Marriott has consistently pursued innovation in market research to identify opportunities in global trends and product development, which enhance tailored service delivery to the expanding market segment. The company utilizes a mobile application, an easy-to-use online platform, to facilitate its customized service and relationship management to both retail and corporate clients. The mobile application enhances global penetration due to its flexible feature that includes localization of language and real-time product updates to fit regional consumer segments. This service is essential in enhancing the millennial generation market segment that embraces technology-based services and has low loyalty behaviors.

Web platforms

While expanding its online availability, Marriott has developed its own website platform and sourced online services from TripAdvisor, an online web firm, to enable customized booking of services in its chain of hotel branches in different locations. The company promotes web-based services by offering a reward scheme for consumers who practice loyalty of channel service bookings and reduced service prices as an incentive for customers who access services directly from their website. Overall, the technology-based market penetration and establishment significantly enrich Marriott’s global growth.

Conclusion

Marriott has gained its global market dominance through horizontal acquisition and vertical diversification strategies, which have significantly boosted the company’s competitive advantage. The company has developed its market brands in line with its customer-centric business model by providing products to meet the diverse needs of global consumers. Marriot products include luxury, premium, select, and longer stay services, which cater to all client’s economic capacities. Overall, as the hospitality industry is a relationship-based and customer-care-oriented industry, the development of user-friendly services and reward programs is essential.

Given the diversity in consumer preferences, future research should investigate the impact of the current reward scheme on client loyalty and the position of the program on the market compared to those of rival firms. Additionally, current studies in the hospitality industry inadequately discuss the significant contribution of these loyalty programs in shaping the overall market positioning and consumer preference. Thus, future research should determine the relationship between reward programs and growth in market share.

References

Font, X., & McCabe, S. (2017). Sustainability and marketing in tourism: its contexts, paradoxes, approaches, challenges, and potential. Journal of Sustainable Tourism, 25(7), 869-883. Web.

Han, J., & Park, C. (2017). Case study on adoption of new technology for innovation. Asia Pacific Journal of Innovation and Entrepreneurship, 11(2), 144-158. Web.

Kim, K., & Ahn, S. (2017). Rewards that undermine customer loyalty? A motivational approach to loyalty programs. Psychology & Marketing, 34(9), 842-852. Web.

Mariott International, Inc. (2018). Grow with the world’s favorite travel company. Web.

Mulherin, J., Netter, J., & Poulsen, A. (2017). The evidence on mergers and acquisitions: A historical and modern report. In: B. Hermalin & M. Weisbach (Eds.), The Handbook of The Economics of Corporate Governance (pp. 235-290). New York, NY: Elsevier Science.

Russo, M. (2017). Alliance management as a source of a successful strategy. European Scientific Journal, 13(7), 110-123. Web.

Xie, E., & Redding, K. (2017). Guest editorial. Management Research: Journal of the Iberoamerican Academy of Management, 15(1), 2-11. Web.

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