Marriott+International-case__+3

Marriott+International-case__+3 Marriott International Putting Forth Its Own Brands of Hospitality Although Marriott opened its first hotel in Arlington, Virginia, in 1957, its experience in the service industry dates back to 1927. That’s when J.W. and Alice Marriott opened a small root beer stand in Washington, D.C., that later became known as the Hot Shoppe restaurant. The family aggressively expanded the business to include 70 Hot Shoppes in the district and seven states. They also began the very first in flight catering service and later purchased several well-known restaurant chains. In 1953, the company went public; J.W. Marriott remained president, succeeded by his son Bill in 1964. Marriott expanded its hotel business by building a variety of new properties and by acquiring successful, existing chains. In the process, the Marriott family name became one of the best-known brands in the entire world. Marriott later divested itself of the restaurant business, and eventually spun off its burgeoning food-service business in order to concentrate primarily on lodging. The moves seem to have paid off. In 1999, Marriott International was the largest hotel company in Fortune magazine’s ranking of the 500 biggest US firms. It was also one of the “Most Admired Companies in America,” according to a poll conducted by Fortune. Checking Out Marriott’s Product Mix Marriott International operates and franchises lodging properties that offer business and pleasure travelers an array of products from which to choose. Marriott’s eight primary brands are described below, in approximate order of their room rates: Ritz-Carlton Hotels—about three dozen hotels, intended to be synonymous with luxury and among the finest in the industry; purchased by Marriott as an established chain. Marriott Hotels, Resorts and Suites—the company’s flagship brand, providing upscale, full service lodging. Renaissance Hotels and Resorts—strategically located in major cities to attract upscale business and pleasure travelers at about the same price levels as the flagship properties. Residence Inn by Marriott—moderately priced, spacious suites with kitchens for people who need a place to stay for an extended period of time. Courtyard by Marriott—a moderately priced brand that emphasizes consistency in fulfilling the needs of business travelers. Spring Hill Suites by Marriott—the company’s upper moderate, all-suite brand, targeted at business and leisure travelers, with an emphasis on women and families. Towne Place Suites by Marriott—another extended-stay chain in the lower moderate-price range. Fairfield Inn by Marriott—the company’s upper-economy chain, targeting both - 1 - business and pleasure travelers. Keying In On a Successful Branding Strategy Several different product-mix and branding strategies are evident in the hotel industry. For instance, Choice Hotels International has seven brands, each targeting a different marker segment. To keep them distinctive, none of the brands mentions the name Choice and each brand has its own toll-free reservation number. According to a Choice Hotels senior vice president, these strategies help the company avoid market conflicts. Hilton is at the other end of the branding spectrum. With a primary focus on the upscale and midrange markets, every property owned by the company carries the Hilton name as part of the brand. The company recently launched a new brand, Hilton Garden Inn, to compete in the moderate-price segment. Hilton strategically places these new hotels in suburban areas to ensure they will not compete with existing Hilton properties. Despite this decision to target an additional market segment in the hotel industry, Hilton has no plans to downscale further. “We would not go into the budget arena, ”stated a corporate vice president. “We can’t research the Hilton name further down the market.” Marriott falls somewhere between Choice and Hilton on this dimension of branding. Even with a broad product mix, Marriott displays its name on most of its hotels, although sometimes in a secondary position. The brands that don’t contain the company name were acquired and already possessed strong, well-known brands. “We have the Marriott name on all our products except for Renaissance Hotels and Ritz-Carlton,” explained a vice president who oversees branding. “We feel there is great equity in the name, particularly when a traveler seeks out a room on short notice.” Some critics contend that this strategy might create confusion. After all, some consumers might connect the Marriott name with Fairfield and its limited amenities and economy price, and others might associate it with the more luxurious and higher-price Marriott resorts. That’s why Marriott places such a high premium on providing a dependable level of service at every one of its 1,800 different locations. As a result, the company doesn’t worry that the lesser brands will detract from its overall image. Rather, it believes that using the Marriott name creates more value by giving travelers an array of lodging options and an assurance of consistent quality. Bill Marriott further explains the company’s strategy, using one particular metropolitan area as an example. “Atlanta is a tight market, but if a customer calls us, we can usually get him a room because we have 50 properties in the area. They have a better chance of getting their needs satisfied by us than they would by calling an individual hotel. ”To help Marriott serve its customers in this manner, it offers one toll-free reservations number for all of its lodging brands. This strategy seems to be paying off; Marriott’s occupancy rates are the highest in the industry in each market segment it serves. Making Room for International Expansion - 2 - In addition to blanketing the U.S. with Marriott properties, the company is seeking growth internationally. It already has more than 350 locations in over 50 countries. Now, Marriott is looking at Europe and Latin America to further globalize the brand. Courtyard by Marriott, which had no European hotels until several years ago, opened 10 in Germany and one in both France and Austria in 1998. This division of Marriott intends to open up to 10 hotels a year in Europe. According to this plan, Marriott will take advantage of the equity of the Marriott name by placing new Courtyards in cities that already have at least one Marriott hotel. By the end of the 20th century, Marriott had also established hotels in every capital city in Latin America, with the exception of Caracas. In many of these countries, Marriott has a more visible presence than any other hotel company. Seeking to capitalize on this strong position, Marriott announced plans to build new Renaissance and Ritz-Carlton hotels throughout Latin America. These plans for international expansion seem to make sense even in a city like Moscow. Despite a sagging Russian economy, depressed hotel occupancies, and falling hotel rates, the three Moscow Marriotts are faring much better than their competitors. Approximately 80% of the hotels’ guests are from the U.S. or Western Europe, for whom the Marriott name and its western style of management are strong attractions. The hotels’ employees are also impressed by the Marriott firm, so turnover is low, which is essential in providing a high quality of service. Marriott is hoping to further leverage its global brand name as the Official Lodging Supplier for the 2002 Olympic Winter Games and for all of the U.S. Olympic Teams through 2004. “The Olympic Games provide a tremendous opportunity for Marriott International as a new marketing effort to reinforce our growing presence around the world,” explained Bill Marriott. Accommodating Other Products In addition to its eight primary hotel brands, Marriott International operates time-share villas, conference centers, and corporate housing facilities. In total, these products comprise the broadest selection of lodging in the world, with more than 325,000 rooms and time-share units. Below is a description of the additional four brands: Marriott Vacation Club International—as the world’s largest vacation ownership company, offers time-share units at 38 resorts. Marriott Conference Centers—designed to accommodate group business meeting by providing meeting space and support, dining facilities, and recreational options. ExecuStay by Marriott—provides corporate housing for business travelers who require lodging for very extended stays. Marriott Executive Apartments—upscale apartments in major cities outside the U.S., featuring hotel amenities designed for business executives on an international assignment for an extended period of time. Marriott also operates a national network of food distribution centers and a company that offers contracting and procurement services to the hospitality industry. In addition, it has developed more than 150 senior-living communities throughout the U.S. You might think the only segment Marriott hasn’t targeted is the toddler set. Well, you could be - 3 - wrong! Creating Loyalty without Reservation In service industries, maintaining consistent and high levels of quality is very important, which makes employee retention a primary priority. This is a particularly difficult in the hotel industry. Consider the demographics of Marriott’s employee population. Almost 85% of its 135,000 U.S. employees are hourly workers, and many are single women trying to balance work with raising a family on a limited wage. Typically, turnover and absence rates are high, which in turn can damage service quality. As a result, Marriott has experimented with employer-sponsored child-care centers. The first such joint venture, based in Atlanta, was funded by several hotels, including two Marriotts. Its goal is to provide affordable (and in some cases subsidized) child care during the hours worked by hotel employees. Although participation hasn’t been as high as anticipated, Marriott is considering revising the program and expanding it to other cities in the U.S. In 1991, Marriott launched another innovative program, called Pathways, which offers welfare recipients the training and support necessary to become productive employees. It has been so successful that President Clinton based his Welfare to Work initiative on it. For Marriott, such programs are designed to do much more than garner favorable public relations. Graduates of pathways have a first-year turnover rate that is much lower than that of other hotel employees. Marriott also believes that it has achieved a good return on its investment in a confidential hotline for employees who need assistance with everything from immigration issues to help with babysitters or care for elderly family members. Marriott strives to build loyalty among its employees and its customers. With 12 million members, the Marriott Rewards program is the largest frequent-guest program in the hotel industry. It gives Marriott customers the opportunity to obtain a variety of travel awards in exchange for points that are based on the amount of money spent at Marriott properties. When it was first introduced in 1983, the program was limited to Marriott Hotels, Resorts, and Suites. Some frequent travelers were displeased that they could not earn points from (or redeem them for prizes at ) other Marriott properties. In 1997, the program was revamped to include all of Marriott’s lodging brands. In 1999, readers of Business Traveler International magazine selected it as the “Best Hotel Reward Program in the World” for the third consecutive year. With a broad product mix and a number of innovative programs to satisfy both customers and employees, not to mention more than $8 billion in annual sales, Marriott is certainly providing a wake-up call that the rest of the industry can’t afford to ignore. Questions: 1. Analyze Marriott’s target marketing strategy. Marriott targests the middle class - 4 - Mariot Market Segmentation And Targeting 1. Identify several major categories of segmentation used by Marroitt. Marriott decided to enhance travelers’ value by segmenting the market and then targeting selected segments, each with a different brand. Then as now, Marriott was the flagship brand. Each new brand would support Marriott’s overall brand identity — a commitment to superior customer service — and train employees to have a passion for service. Marriott’s flagship brand continues to target customers needing fine restaurants, meeting rooms, athletic facilities, and other upscale amenities. But Marriott added seven additional brands according to its view on market segments — Courtyard by Marriott, Fairfield Inn, Residence Inn, TownePlace Suites, SpringHill Suites, Renaissance Hotels and Resorts, and The Ritz-Carlton. These are they core brands that were established for serving customer needs at different market segments. 2. Relate examples of specific services tailored to various target markets. As we pointed out different Marriott brands, we will define now their core distinct features and specifications. What are their functions, who are their targets, and how do they accomplish their tasks in accordance with general Marriott corporate marketing strategy? Marriott believed all customers require a base service level. It also believed that customers differ in their willingness to pay for different levels of comfort and luxury. Management also knew that many customers stay a few nights in a hotel — but a growing number, like business people on assignment — need accommodations for several weeks. Recognizing the varying needs of hotel customers, Marriott was the first major hotel chain to base its strategy on market segmentation. • Courtyard by Marriott: Target market: Designed for business travelers that are willing to pay a moderately price, but want hotel that can provide some amenities, like... 2. What is Marriott’s branding strategy? - 5 - Brand Strategy Performance Sample Properties Brochure Brand Strategy ?Marriott Hotels & Resorts, the flagship brand of Marriott International, commands first choice preference among business travelers, leisure travelers, and meeting planners—the highest customer preference of any lodging brand in the United 1States. With 520 full-service, upscale hotels surround the guests with services and amenities that inspire them to perform at their peak, while creating memorable experiences. Brand Positioning: Inspiring Performance Target Guest: Marriott Hotels & Resorts focuses on the Achievement Guest; individuals who are driven to perform, who thrive in excellence, whether it's for their company, their family or their own sense of accomplishment. Brand Pillars: The three brand pillars provide the foundation for the services, features, and amenities our hotels provide to inspire the Achievement Guest. Achieve The professional, performance-driven side of our guests and hotels; for example, large, well-lit ergonomic work desks that pivot to enable the guest to create a conducive environment in his/her room. ? Revive Purposeful luxury and more personal elements of the guest's stay; for example, aromatherapy bath products, connectivity panels on a high-definition TV to enable guests to connect personal entertainment devices such as iPods, and 300-thread-count sheets. - 6 - Culture ?Warm, friendly, sincere service built on our Spirit to Serve and providing a refreshingly human touch in today's hectic world. The New Guest Room Marriott Hotels & Resorts newly designed room creates the 2potential to increase trip-share and rate. Our spacious rooms include our signature bed from Marriott including full-sized headboards, quilted top mattresses, upgraded down blankets (some locations), oversized down comforters, 300-thread-count linens and down and feather pillows—amenities that help the Achievement Guest revive to perform at his/her peak the next day. The artwork in the room reflects the local environment. Some hotels will offer a flat-panel, high-definition television that serves as more than just a television—it's a monitor for laptops and the built-in, split-screen capability allows guests to work and watch their favorite program at the same time. Well-lit desks with large work space, task lighting, ergonomic seating, high-speed Internet access, and connectivity panels for iPods, Blackberries, and other personal entertainment devices support the guests' need to achieve their business goals. Performance Marriott commands the highest consumer preference of any 1lodging brand in the United States. In addition to being the brand most preferred by customers, Marriott Hotels & Resorts achieved a RevPAR index of 112.4% (see below), enhancing revenue opportunities for Marriott owners and franchisees. As the brand continues to expand worldwide, the strategy to achieve an even greater brand preference is centered on the brand positioning of Inspired Performance, and the goal to win over Achievement Guests with experiences that reflect and respond to their priorities. By combining this experiential strategy with the brand's unwavering commitment to operational excellence, Marriott Hotels & Resorts will continue to solidify its leadership position as an industry innovator. - 7 - Market Share , RevPAR* Index**: 112.4 , Occupancy Index: 102.1 , Rate Index: 110.1 * Revenue per available room ** Figures in excess of 100 reflect a market share premium. Source: Smith Travel Research Services, December 2007, year-to-date. Competitive set of managed and franchised hotels opened and operating at least one full year or longer (Starview Comparable). See franchise offering circular for franchise specific analysis. Awards , Marriott Hotels & Resorts: "Best Hotel Chain" in North America for Business Travel (Business Traveler 2006) , Marriott Hotels & Resorts: "Best Hotel Chain", including "Best Hotel for Business Service and Meetings" (Executive Travel 2006) , Marriott Hotels & Resorts: "Best Global Hotel Chain" and "Best Hotel Chain in North America" (Global Finance, 2003, 2004, 2005) Marriott Reservation System Contribution to Occupancy The industry’s foremost sales channels fully deliver over 66 percent of Marriott’s gross room nights in the U.S. and Canada. Source: 4th Quarter 2007 data. Includes 800 Marriott.com and area reservation number, GDS, sales offices (ARSO). ?Marriott Rewards Marriott Rewards members paid nights represent approximately 43% of total Marriott Hotels & Resorts room nights sold. Source: Marriott Rewards Loyalty News, 4th Quarter 2007. - 8 - Average Length of Stay U.S. and Canada: 1.98 nights Outside U.S. and Canada: 2.19 nights Source: Marriott Reservation System (MRDW), December 2007, YTD. Sample Properties Finely appointed and a standard bearer in the upscale hotel category, each Marriott Hotels & Resorts is a sight to behold. Click the links to view examples of Marriott properties in the United States and Canada and experience the reasons millions of guests return time after time. Photo tours: , Charleston Marriott , New Orleans Marriott Metairie at Lakeway , Visalia Marriott 3. What is Marriott’s distribution strategy? 4. What is Marriott’s pricing strategy? 5. What are the features of the product strategy in service industry? - 9 -