CASE STUDY

Analyzing the hotel and tourism industry on the example

of Hotel Group “ Marriott International”

Student: Emanuela Zadrima

April, 17th 2023.

Podgorica

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1. Main trends

Tourism has developed into a global phenomenon, which represents one of the most
important economic sectors and social activities of this modern time, as an economic driver -
growth, investment, general social progress and environmental sustainability, while in many
countries and the main in the economy sector.

A significant contribution to the intensive development of tourism - to a large extent

contributed to the strong development hotel and catering industry with numerous different
contents, as well as increasing the market in new tourist destination which are becoming more
and more available, as well as expanding providing these services in means of transportation,
such as an air hotel, ship hotel (cruisers) and other "non-traditional" forms of accommodation on
different locations (facilities of health institutions intended for the provision of various types
medical treatments, etc.). The future will tourism bring to enormous opportunities in the sense
of occupying a central place on the political and economic agenda of a large number countries.

Striving to meet the needs of tourists it also conditioned by various forms of mutual
cooperation and connection of catering entities - tourism industry, tour operators, travel agencies,
airlines and other companies, first of all on the national and then on the international level, which
led to globalization business and in this activity. A typical product of modern integration
processes characteristic of this activity is the phenomenon hotel chains, which are increasingly
becoming the main ones carriers of the global business orientation of the modern hotel industry.

Business of hotel companies and theirs position on the tourist market directly are depending
on international trends tourism, that is, conditioned by changes in volume and structure of tourist
demand on the one hand, and technological development, on the other hand. Under such
circumstances, further development will take place hotel offers, and those challenges will
inevitably also cause changes in business orientation hotel companies.

The COVID-19 pandemic has undoubtedly already left long-term negative effects on the
global tourism industry. Nevertheless, many see the pandemic as a turning point, as a pause to
consider the pressure that tourism exerts on the environment, as well as the general socio-

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economic consequences of the development of tourism, but also an opportunity to indicate a
more desirable direction of its development.

However, for tourism to revive as an industry that has less negative impacts and that works
for the benefit of society and the planet, it is also necessary that there is more awareness among
consumers. In this sense, mindfulnesstrend, that is, the trend of full awareness among consumers,
is seen as a significant driver of lifestyle changes in Western societies. This trend results in an
increase in the number of more aware consumers, but also in the appearance of products and
services based on this trend. Considering the severity of the impact that the COVID-19 pandemic
has caused on the collective state of consciousness, there are more and more calls for a certain
awakening in the tourism industry and the need to rely more strongly on individuals who are
already part of the global mindfulness movement. It is believed that individuals who cultivate
full awareness have a greater ability to better understand current problems and to influence the
creation of more compassionate tourism for the future.

The tourism industry, as one of the pillars of the globalized society, was among the first to
be affected by the COVID-19 pandemic, thus showing its well-known fragility to sudden
changes in tourist flows. However, this is by far the biggest slowdown the tourism industry
has ever experienced in its post-war history. Almost immediately, tourism researchers and the
industry, known for their curiosity, proactivity and agility, started working on possible
solutions. Destination management organizations immediately started promoting social
responsibility, urging people to stay at home and fantasize about when things will return to
normal, when they will become (mass) tourists again. Special editions of scientific journals and
webinars have flooded the online space stating the damage that was already obvious to everyone.

The tourism industry in the post-pandemic period could benefit from consumers who have
become more aware of their previously unconscious behaviors and actions (for example, impulse
purchases) and consumers who can resist the promise of false happiness. In this sense, traditional
approaches to tourism marketing can seem somewhat trivial, but also overbearing, promising
something that the conscious tourist knows cannot be fulfilled. Therefore, the tourism industry
could consider the current promotion based on the travel stereotype and turn to more honest
approaches, such as promoting vacations as a means to enjoy the diversity of life, promoting

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active participation in the life of local communities or promoting socially and environmentally
responsible travel.

Despite constant efforts to change the face of the current tourism industry, attracting mass
tourists is still the main characteristic of modern tourism The COVID-19 pandemic forced
mass tourism to suddenly hit a wall and stop expanding rapidly, and it happened almost
instantly. Media reports on cases of infection on cruise ships exposed the problems of mass
tourism in an almost cartoonish manner. That trend continues with the current arrangement of
"trips to nowhere" in Australia and Asia, where airlines and cruise lines take passengers to and
from the same place. Inevitably, in the next phase of recovery, the tourism industry will try to
attract as many parts of the once massive demand as possible by offering various incentives, as
was the case in Sicily, whose officials expressed their willingness to subsidize flights and
accommodation costs for tourists coming to the island

Tourism and hotel industry participates in the sharing economy, sharing economies enable
people and organisations make more money from underused resources. Although there exist
certain differences between the sharing economy and the alternative terms forwarded above, the
underlying principle that shapes this business model remains the same

The tourism sharing economy refers broadly to the application of collaborative consumption
in the tourism and hospitality industry. Sharing business model is more applicable to the tourism
industry and the sharing economy has wider impacts and utilization in the tourism industry,
ranging from home-sharing to ride sharing between hosts and tourists. The tourism and
hospitality industry are dominated by two corporate ‘unicorns’ that is Uber and Airbnb and it is
these platforms which have set the pace concerning the application and adoption of the tourism
sharing economy. The fundamental value of the tourism sector aims to create a connection
between people and location. The birth of the collaborative economy has made online
reservations even cheaper. Travelers today benefit from the diversity of accommodation
reservations around the world with more customization options.

As technology is a part of almost every aspect of our lives, technological solutions perform
the regular, routine tasks of hotel, apartment, hostel and camp staff. Tourism is focused on the
guest, and the use of technology strategically accelerates business and allows guests to "refresh"

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their experience. Technological solutions are more intuitive than ever and are constantly
improving.

Hoteliers today have a handful of digital solutions available to increase efficiency, maximize
revenue, and improve the guest experience. Technological solutions will continue to improve
traditional services, but - does digitization distance the basic principles of hospitality and tourism
from the modern guest? Although for a moment it may seem that the end of omniscient
receptionists who, based on their own experience and sharpened communication skills, can
predict the expectations of the guest in front of them, this approach will still remain crucial
regardless of technology. In situations where efficiency and speed are crucial for quality service,
technological solutions appropriately change human work - without alienating guests from the
traditional approach to service.

Digital transformation in tourism and hospitality sector allows travel agencies to maintain
undisclosed information that customers cannot get anywhere else unless they visit the agency's
office. Long ago, people would spend an hour reserving a ticket in a very long queue with paper
confirmation. Also, with these manual processes, passengers lose approximately 90 minutes at
airline check-in. The digital transformation in the tourism sector causes a total disruption in
the way people adopt information and services. Therefore, the rise of travel software
development and the Internet has eliminated the geographic challenge, allowing companies to
approach their customers through a screen.

Undoubetdly, the rapid technology changes induce incalculable trends, which vary continuosly
to to each category:

1. The empire of mobile applications – 35% of users book accommodation through a mobile
device;
2. Cognitive computing – based on machine learning technology;
3. Personalization in the customer experience - The main duties of successful tourism and
hospitality companies account for the design and delivery of their services with a high
level of customization based on each unique preference.

Online travel platforms like Expedia, Hotels.com and Booking.com are among some of the most
popular websites in the world. The main advantages of using these online travel platforms are.:

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 1. Huge range of experiences and prices;
2. They let people search for travel within a set budget, and weigh their options in one
place—comparing different options side by side.
3. Convenience and ease of use.

Disadvantages of digital platforms:

1. Having to pay a commision;

2. Customer service issue and cancellation rules;
3. Risk of overbooking;
4. Loss of complete control.

Here is an online travel agency list:

- Agoda (leading booking site for Asian market)

- Tripadvisor
- Expedia (part of the Expedia group)
- Viator (one of the largest online travel platforms for tours and activities in the world)
- Booking etc.

Tripadvisor, Expedia, Airbnb and Booking.com enjoyed a large enough increase in visitor traffic
on both a yearly and monthly basis to bode well for 2023, according to the analysis by digital
intelligence platform Similarweb.The boost was particularly robust for Booking.com, which saw
a 28% increase in year-over-year traffic in December, though it remained the smallest of the peer
groups with 56.5 million visitors. Tripadvisor remained the most popular site with 89 million
visitors in December, 15% higher than the previous year. Expedia saw nearly 17% growth with
its 67 million visitors, matching the total for Airbnb, which lagged the others with 6% year-over-
year growth.

Airbnb also lost the most relative traffic share, slipping two percentage points versus its peers,
while Booking.com gained the most in the group with nearly two percentage points. Despite the
relative shifts, Tripadvisor remained the leader with 32% of the total share of traffic, followed by
Airbnb and Expedia at 24% and Booking.com at 20%.

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 Also, here is the list of latest tourism and hospitality industry trends:
- Hospitality venues are turning themselves into remote working hotspots for locals and
traveller's alike. This is a great opportunity for hotels and F&B venues to capitilize on the
trend and adapt their offering to meet the needs and wants of this emerging segment;
ample plug sockets, free high-speed WIFI, meeting rooms and great coffee are good
starting points.
- Preventative medicine and self-care are undisputedly trending right now.
- Digitalization of guest experience.
- Contactless payments.
- Virtual reality tours.
- Mobile check in service.
- Local experience etc.

2. „Marriott international“

Marriott International, Inc. is one of the top leading hospitality company in the world. J.
Willard and Alice Marriott were the founders of the company. From past 80 years, it has always
been looked under the guidance of Marriott family. The headquarter of the company is situated
in Bethesda, Maryland, USA.This company has more than 3,900 properties and 18 brands. It
currently employees around 300.000 people. This company is focusing on continuous growth
worldwide. The Chinese market is at the moment one of the biggest expending markets , they are
focusing in general on growth outside the US. Marriott is a wonderful company whereby the
employees are the basis of their success. Marriott International One of world’s biggest hotel
chains in the world with more than 80 years of experience in the hospitality industry wherefrom
50 years in the hotel industry.

Marriot International is a company that has used generic business-level strategies

successfully. Marriot is a worldwide franchisor and operator of hotels and lodging facilities.
They are a top player in the Hotel industry and will continue to be for many years. Based on

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multiple competitive advantages, which include uniqueness, cost, and extent of their
competitiveness. Marriott International, Inc. pursues multiple business level strategies.

Current situation in this hotel’s group

Two years after experiencing the sharpest downturn in our company’s history, they
reported record financial results in 2022. They achieved full global revenue per available room
recovery to pre-pandemic levels in June. Fourth quarter global 5 percent compared to 2019, with
occupancy down just 5 percentage points, and average daily rate up 13 percent. One of the
highlights was their group business, which experienced significant improvement last year.

Leisure demand has also remained incredibly robust. Business travel is still lagging 2019
levels, but also improved meaningfully during 2022. Rising crossborder travel and the blending
of business and leisure trips have also continued to help spur overall demand. For the full year
2022, gross fee revenues totaled $4.1 billion, a significant increase of more than 50 percent
compared to 2021 which reflects higher, rooms additions, and significant growth in our non
related franchise fees, primarily driven by their co-branded credit card fees..

At the hotel level, they have continued to work closely with our owners and franchisees to
provide superior customer service while containing operating costs. Importantly, their guest
surveys indicate that customer satisfaction continues to rise.

They were excellent in 2022 year. The company is continuing to focus on expanding the
breadth of travel offerings available to its customers. In October, they were pleased to announce
their planned entry into the popular affordable midscale segment with an agreement to acquire
the highly regarded City Express brand portfolio, comprised of around 17,000 rooms in Mexico
and three additional countries in Latin America. They are expanding their all-inclusive platform
to meet rising guest demand, and they have received a great deal of initial interest from owners
and developers in Apartments by Marriott Bonvoy, a new serviced apartment brand in the upper-
upscale and luxury segments. In 2022, they also celebrated the inaugural sailing of Evrima, the

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first yacht in The Ritz-Carlton Yacht Collection, offering intimate yachting experiences around
the world and contributing to the company’s growth in areas beyond traditional lodging.

Business strategies of “Marriott International”

Marriott’s vast portfolio of brands allows them to have a strong presence in the market. This is
part of their differentiation strategy.

The company faces a strong competition. No player in the hotel business commands more
than 20% of the market share. The intense competition results in a price war which makes
Marriott’s luxurious brands uncompetitive, resulting in low market opportunities for the
company.

The corporate strategy of Marriott International focuses on aligning the strengths to

enhance their market competitiveness. This will allow added value to the shareholders'
investment and provide valuable resources to the two parties, so Marriott's managers will want to
create not only great competitors in the marketplace, but also to be the first-rate among their
peers with many advantages. More profit and competitive variables to guarantee profit. This can
be seen at the corporate strategy level and determines the course and focus of the new market.

The mission and vision are the guide lines for an organization to use in everyday decisions to
achieve the company’s goals. Marriott has provided specific core values which reaffirm and
reinforce the culture of the company, but has not provided a mission statement in the traditional
sense, or a vision statement. Mission Marriott is committed to being the best lodging and food
service company in the world. About 50% of all Marriott brands around the globe are linked to
the name Marriott, to stimulate the brand recognition.

Because of their strong culture they know that they will have stronger guest satisfaction
and guests will return. New vision statement Marriott wants to become the leading provider
and facilitator of value-based luxury, leisure and business experiences across the globe. We will

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embed global diversity and inclusion into our organization so that it is integral to how we do
business. To achieve our growth goals outside of the U. S. , it is essential that our leaders truly
embrace and understand different cultures. Reduce our environmental footprint and combat
climate change.

This company also uses few more strategies:

- Differentiation strategy - by providing multiple lodging options, from moderately priced

to premium priced, the Marriott has earned a reputation for innovation and quality.

- Cost leadership strategy - The company excels in efficient cost production that enables to
charge a low price compared to its competitors while still making a reasonable profit.

- Franchising strategy - adopted the strategy of franchising and managing hotels instead of
becoming a full owner. This reduced a great financial risk for the company, while still
allowing global growth.

One of their core values, Serve Our World, guides their efforts to support communities and
manage our environmental impact. During tragic humanitarian crises, including the war in
Ukraine and the aftermath of the devastating earthquakes in Türkiye and Syria, they provided
support to impacted associates and their families and assisted with relief efforts in the
community — efforts that continue today.

Marketing strategy of Marriott International

In recent years, Marriott International’s marketing strategy has revolved from offline to
online. It has shifted its focus to market itself more digitally than using the traditional marketing
approach. As rightly put by Arne Sorensen, President of Marriott International, on his blog,
“What social media is allowing us to do is not draw attention to ourselves, but to see our guests
in their own spotlight”.

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 The marketing campaign of Marriott revolves around showcasing the comfort, care and
richness of Marriott’s luxurious hotel chain. The advertisements focus on the hotel chain’s
luxurious room and hospitality services, as well as a relaxed atmosphere.

Marriott International has launched a campaign named “Golden Rule”, a category branding
campaign that features four of its brands — Courtyard by Marriott, Fairfield Inn & Suites, Four
Points by Sheraton, and SpringHill Suites — together for the primary time.

The idea behind the Golden Rule campaign is to showcase Marriott’s collective strength
that stems from its “classic select” brands, which together comprise a third of its 30-brand
portfolio. It showcases a connection between the four brands and how the service is rooted like
human connections.

Bonvoy – It is Marriott International’s worldwide campaign that promotes its travel program
with the tagline “Rewards Reimagined”. Bonvoy is a new loyalty program that gives its
customers a variety of benefits, such as one-time bonuses and discounts. It also allows customers
to earn points that can be further redeemed. It also provides members access to a lot of sporting
and entertainment events as well.

However, for the past three years, Marriott International has also been at the forefront of
online travel marketing. From its extensive global network to the proprietary technology
platform, Marriott International has worked well on integrating digital marketing into a well-
curated strategy to turn its brand into a preferred choice for individuals looking for luxury travel.

Marketing mix of “Marriott International”

- Product strategy - For Marriott, the core product in its marketing mix is within the sort of
hospitality services. Their product strategy covers everything that goes into running the
hotels. They have over 30 brands that include popular hotels like Ritz-Carlton, Sheraton,
Renaissance, and many others.

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 - Price strategy - Marriott International’s price varies with different hotels, customers, and
locations. The prime motive of the company is to deliver a top-notch experience that
exceeds customer satisfaction for the price they pay.
- Place strategy - Choosing the ideal place and distribution strategy has played a vital role
for Marriott in its journey over the years. Since its foundation, it has established itself in
more than 131 countries and the placements of its hotels are mainly centred in and around
major cities and towns of a country.
- Promotion strategy - Marriott International has been in the hospitality industry for almost a
decade now and the name “Marriott” speaks for itself. It is one of the positive beneficiaries of
“word of mouth” promotion.
- Apart from that, Marriott primarily focuses on promoting itself and its brands through
digital mediums.

Strategic and marketing approach

Tools for analyzing strategic positions could be: Swot analyses, Pest analyses, Porter's five. In
this case study it will be described SWOT and PESTEL ANALYSES for the above mentioned
hotel's group. There will be given comparison and benchmarking with Airbnb. Also, it will be
described 7s McKinsey model, BCG matrix…

SWOT analyses of Marriott International

Marriott’s strengths: global presence, market leadership, excellent reputation, strategic

partnership, profitable acquisitions, loyal customers, strict code of conduct, highly innovative.

Marriott’s weaknesses: ineffective data protection, poor positioning, negative publicity, too
strict etc.

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Marriott’s opportunities: shifting demographics, focus on emerging economies, diversify
offerings, expand into related sectors.

Marriott’s threats: global pandemic, stiff competition, looming recession, trade tension, risk of
terror attacks.

PESTEL ANALYSES

Political factors that could effect Marriott are the danger of terrorism, international relations and
the political climate in popular tourist destinations. The biggest threat here is a terrorist attack or
a military conflict that could disrupt international air travel or frighten people away from
traveling..

Economic factors - that could affect Marriott’s business are the slowing of economic growth in
China and the ongoing economic turmoil in Europe.

Social and cultural factors -Cultural changes that could impact Marriott include increased
numbers of Chinese and other Asian travelers. Populations in the United States and Europe that
are growing older could increase the demand for certain kinds of travel experiences, such as
packaged tours and luxury resorts. Also, it seems as if more people are willing to travel and pay
more for the experience. Interestingly enough.

Technological factors - Technology could have a huge impact on the hotel business in the form
of online rental services such as Airbnb, which lets private individuals rent rooms or homes
directly to travelers.

Legal factors - The major legal factor that will impact Marriott’s future business is the status
of services like Airbnb. Authorities in cities as diverse as New York, New Orleans and
Barcelona have fined Airbnb and its hosts for violating zoning laws, hotel regulations and health
and safety regulations.

Environmental factors - A potential long-term environmental impact on Marriott could include

increased electricity costs created by efforts to curb greenhouse gases by limiting the burning of

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coal in power plants. Climate change could harm Marriott’s business by raising ocean levels and
flooding resorts or creating storms that discourage beach going.

BCG matrix

The BCG matrix / Growth Share matrix comprises four quadrants along two axis – market share
and rate of growth. The four quadrants / components of BCG matrix / Growth Share matrix are –
Questions Marks, Dogs, Cows, and Stars. Each quadrant represents a certain degree of
profitability.

Cash cow business shows us that Marriott Int should continue to use the revenues from these
businesses to reinvest into the faster growing segments..

Stars shows Marriott Int should continue to invest in these businesses to not only defend the
present market share but also to increase market share and profitability.

Question marks - If Marriott Int have resources to turnaround the business by either by
procuring new technology, hiring skilled human resources, or building better processes then it
should invest in the question mark. If the organization after analysis comes to a conclusion that
investing into a question mark is not feasible with resources at hand then Marriott Int should
divest from the segment and employ those resources in star businesses.

Dogs - if the profitability in the industry is also low then Marriott Int should just exit from those
businesses. But if the margins are healthy then a firm can choose to continue doing that business.
Secondly if the business is critical to other businesses of Marriott Int then it needs to continue
that business even though it is a low profit making business.

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The McKinsey 7S Model

The McKinsey 7-S Model is a change framework based on a company's organizational design. It
aims to depict how change leaders can effectively manage organizational change by strategizing
around the interactions of seven key elements: structure, strategy, system, shared values, skill,
style, and staff.

The soft elements of Mckinsey 7S model are – Staff, Skills, Style and Shared Values. They
are related to the people in the organization. The soft elements are most difficult to change in the
organization. For example if the organization decides to enter a new industry – it needs to align
the staff, skills and style of the present structure with those that can be effective in the new
industry. The criticality of the soft element can be understood by the rate of failures of mergers
and acquisition. More than 80% of the mergers and acquisitions fail. The most prominent reason
of the failures is – failure to integrate the culture and shared values of the two organizations.

The hard elements of the organization are – Strategy, Structure, and Systems. These are
the building blocks of the organization around which the organization build its soft elements.
Structure and Systems are the easiest to among the 7S to change.

Marriott Int needs to build a balance between short run cost savings and protecting its core
competitive advantage. Customers perceive Marriott Int products and services to deliver ‘value
for money’ proposition plus a bit extra. In its zest to gain more market share through competing
on prices, Marriott Int should avoid cutting costs that can result in inferior product and service
delivery.

The pandemic has questioned the current structure and supply chain management of the
company. To be more resilient organization and prepare itself for future disruption of similar
magnitudes Marriott Int should focus on – diversifying suppliers geographically so that climate
related, geopolitical, and other disruptions don’t impact the long term survival of the company.

Recruitment and remote onboarding – Because of the pandemic, a lot of employees are working
from remote locations. To make the environment more inclusive for the new employees, Marriott
Int should build system for remote onboarding such as – catalog of short videos, small groups
interaction, technical demonstrations.

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Marriott Int needs to put in place robust system for “work from home” employees so that there
can be greater interaction among the employees both online and in physical environment. It will
not only improve productivity but also increase the data security and cyber security

Marriott Int can hire fresh talent as more and more people are leaving their existing jobs because
they are not challenging them enough.

The leadership styles required in the physical location and in remote scenario are completely
different. In a physical environment manager can stop by a chat, provide inputs and go through
the work. But in the remote locations employees have to work in far more isolated environment.
To improve the workflow – leaders should pursue collaborative and inclusive form of leadership.
Leaders should build smaller teams as part of larger teams.

The organization has built a successful business model based on its core values, vision and
mission. It doesn’t have to change much in the shared values segment. One area where it can
focus more is – sustainability.

Potential comparison and benchmarking with Airbnb model

Airbnb has a greater supply available to meet the growing demand. Marriott is the leading brand
in the North American hotel industry. It had 1.5 million rooms across its brands in the second
quarter. That gives Marriott a 16% share of the U.S. hotel market, based on lodging industry data
at the end of 2021.

However, Airbnb offered 6 million listings on its website at the end of 2021. This gives Airbnb a
significant advantage over large hotel chains in being able meet surges in demand, especially
during special events in major cities that cause hotels to fill up.

Airbnb is growing faster than Marriott. Long term industry terms favor Airbnb. Marriott has a
large hotel footprint, with brands ranging from affordable hotels to luxury experiences like St.
Regis and Bulgari. But Airbnb's open platform, where anyone with an in-demand property can

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list it for rent and earn extra money, is driving incredible growth for the company. The advantage
in supply might explain why Airbnb has experienced a faster rate of recovery since the end of
2020 than Marriott. Over the last few years, Airbnb's revenue growth has nearly doubled the rate
of increase of Marriott.

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