Environmental Assessment of Marriott Hotel - Essay Example

?Table of Contents Table of Contents ENVIRONMENTAL ASSESSMENT OF MARRIOT 2 INTRODUCTION 2 PESTL ANALYSIS OF MARRIOTT IN UK 3 IMPACT OF TECHNOLOGY OVER PAST THREE YEARS 4 PORTER’S FIVE COMPETITIVE FORCES 6 THE COMPETITIVE STRATEGIES ADAPTED BY YOUR CHOSEN COMPANY AND ITS TWO CLOSE COMPETITORS 7 EVOLUTION OF ORGANISATION OVER PAST YEARS 9 CONCLUSION AND RECOMMENDATIONS 12 List of References 14 ENVIRONMENTAL ASSESSMENT OF MARRIOT INTRODUCTION Businesses are significantly affected by the environments in which it operates. There is constant interaction between the environmental factors and the businesses. This interaction allows business to exploit opportunities offered by the environment as well as strengthen itself to deal with threats posed by the environment. Identifying the role of environment for the business, this report is aimed to analyse the impact business environment on the performance of the organisation. The environmental assessment explores the impact of political, economic, social, technological, environmental and legal factors in the business. For the last two decades the impact of technology has changed the structure of every industry either it is service industry or product industry. The technology is now considered as one of the basic driver of growth. Among various industries, hospitality industry has also received a great impact of technological advancement in the last decade. The organisation selected for the analysis from the hospitality industry is Marriott international. Marriott international, Inc. is one of the leading lodging companies in the world. The company is headquartered in Bethesda, Maryland, USA. It has more than 3,800 lodging properties in more than 72 countries and territories with the reported revenues of nearly $12 billion in fiscal year 2012. Marriott has more than 50 hotels in UK and operating as one of the most renowned hotel in UK (Marriott, 2013a). The report will analyse the environment of the Marriot specifically in UK. PESTL ANALYSIS OF MARRIOTT IN UK POLITICAL UK has a stable political environment and the regulatory bodies have a strong control over the business conditions. The hospitality industry in UK is growing because of stable political environment. UK ranked among the top three countries in EMEA region to attract investment in hotel industry (Ernst & Young, 2013). On travel and tourism competitive index for 2013, UK stands on the leading 5th rank among 140 countries (Blanke and Chiesa, 2013). All these provide opportunity to Marriott to continuously grow and expand in UK. . ECONOMICAL Recession in the UK economy had affected the purchasing power of people and it had a negative impact on the tourism industry as well. The recovery has started but customers are still on hold due to the inflationary pressures unemployment due to Euro zone crises (Ernst & Young, 2012). The Travel and Tourism index of 140 countries rank UK on 10th position for business environment while natural resources availability that is critical for this industry is immensely attractive and ranks on third place (Blanke and Chiesa, 2013). Hence, the revival of the economy holds attractive opportunity for Marriot. SOCIO-CULTURE The consumer behaviour is changing continuously and the trends are modifying all across the world. Human and cultural resources for the hospitality industry are in abundance in the UK and country ranks on sixth and third respectively on the competitive index for Travel and Tourism (Blanke and Chiesa, 2013). The tech-savvy element has taken dominant place in culture and hotel are steering strategies to adopt changes all across value chain (Ernst & Young, 2013). Marriot is consistently accounting this element of change in social trends such as Marriot took initiative and went digital on wine (Incentive Travel, 2013). TECHNOLOGICAL Technological advancement is at its peak everywhere. Conventional ways are converting in to digital ways. The online existence of the firms is now looking necessary (Mcindoe, 2013). Technological advancement has also affected the hospitality industry of UK. Social media, mobile connectivity and other technological dimensions have changed the way to reach customers (Ernst & Young, 2013). Marriott has always been an immediate respondent for technology change and this feature of Marriott is giving it a competitive edge in the hospitality industry e.g. the online service related to wine received overwhelming response from customers (Incentive Travel, 2013). ENVIRONMENTAL Environmental factors carry fundamental position in driving the hospitality industry as the industry aims to provide relaxing and tension releasing environment. United Kingdom stands on the top 15th rank among 140 nations among natural resources viable for the hospitality industry (Blanke and Chiesa, 2013). Marriot has always been considerate on selecting locations for providing breath taking views and environment to the customers. IMPACT OF TECHNOLOGY OVER PAST THREE YEARS The technology has had a great influence in the hospitality industry. Hotels are implementing new technological systems to enhance the business performances. Technology is beneficiating the businesses in many ways. For the last three years Marriott was highly focused on the implementation of new technology in the business operations for reduction in the cost and increase in the productivity. As the technology has taken driving seat for every industry, Marriott’s management has increased its focus on enhancing its operational effectiveness and efficiency. The management of Marriott had observed that the effective utilisation of new technology can give them a competitive edge (EFT, 2013). Marriot has enhanced its website through functionality and service improvements on its website Marriott.com. This enhancement was brought with the expectation of continually capturing an increasing proportion of property-level reservations via this cost-efficient channel. In 2011, Marriot also implemented enhanced technology solutions to the get the competitive advantage. The application or implementation of these two tools has affected the business performance of Marriot at a greater extent (Marriott, 2011). The two technological solutions are described below: RETAIL PRICING OPTIMISER TOOL ("RPO"): Retail Pricing Optimiser tool uses the market and analytics based assessment for determining the optimal price in different scenarios and conditions. The management of Marriott believed that it will enhance the efficiency in analysis and decision making process, and generates increased (Marriott, 2011). HIGH PERFORMANCE PRICING TOOL ("HPP"): High Performance Pricing tool facilitate the hotels to more efficiently control the rate setup and modification procedures with the use of web-based functionality. A greater pricing flexibility is provided by the streamlined process that decreases the amount of time used in rates development and maintenance, and enhances the pace to market with new products, services and packages (Marriott, 2011). Hence, Marriot has employed technological advancement to facilitate customers as well as technological tools to increase the value chain effectiveness and efficiency. PORTER’S FIVE COMPETITIVE FORCES Porters five forces model provides comprehensive review to the competitive landscape of the industry. For Marriot’s competitive environment assessment porter’s model is used as follows (Moore, n.d.): BARGAINING POWER OF BUYERS (CONSUMERS) In the hospitality industry the bargaining power of consumers is very high because there many highly reputed brands. The increasing usage of internet has also created more concentrated competition because the tourists have more discounted offers by different hotels on their websites. Also customer reviews on open platforms has increased the power of buyers. BARGAINING POWER OF SUPPLIER Suppliers bargaining power is moderately low because the big brand names have great powers to commands its dictation in setting terms and conditions of any agreement. The global presence of Marriot has differentiated it from many of its competitors. The suppliers are selected by Marriot after analysing all the factors that can impact on the business image. THREAT OF NEW ENTRANTS The treat of new entrants is moderately low in the hospitality industry. A huge investment and other investments for attracting customers affect the hospitality industry in UK. Also infrastructure of the hotel which is extremely expensive to develop and the cost of land at the desirable or profitable location are very expensive. Marriot’s strong capacity to gain such locations leaves it less vulnerable to this competitive pressure. THREAT OF SUBSTITUTE PRODUCTS Threat of substitutes is moderately high in UK as there different substitutes which are available at low prices. Alternatives such as low condos and other guests’ houses are increases threat of substitutes. Marriot’s long history and extensive services with technological adaptability have strong muscles to deal the pressures of these substitutes. COMPETITIVE RIVALRY The competitive rivalry in the UK market is high because there are many competitors who have global presence. The three main competitors are Intercontinental Hotels Group PLC, Hilton worldwide holding, Inc, and Accor S.A. The brand loyalty of all the global brands are very high in UK market therefore Marriot is facing a tough competition in the hospitality industry of UK. THE COMPETITIVE STRATEGIES ADAPTED BY YOUR CHOSEN COMPANY AND ITS TWO CLOSE COMPETITORS COMPETITIVE STRATEGY OF MARRIOTT Marriot has a great experience in the hospitality industry and it is initially realised by Marriott that one hotel brand cannot not cater to the needs of every guest. Therefore, Marriott uses a niche differentiation strategy. For this reason it has wide network of hotel brands which are serving different groups of traveler or consumers in the hospitality industry of UK. Brands range from upscale units like Ritz Carlton and JW Marriott Resorts and Spas for the customers wishing high-end and luxurious lodgings to the Courtyard by Marriott that serves the business traveller in-room offices space and to the Fairfield Inn which serves Marriott’s quality for travellers with budgetary. Hence, Marriott International has lodging brands that are able to fulfil about any customer desires (Harmon, 2010). COMPETITIVE STRATEGY OF HILTON WORLDWIDE HOLDINGS, INC A Hilton worldwide holding, Inc. is an American global hospitality company. It has 3,897 hotels in more than 90 countries. Hilton also has a network of brands to cater the market from luxury to full services as well as brand for focused services. The company has also developed separate units for the vocational trips etc (Hilton, 2013). Hilton also has differentiation strategy as it is offering differentiated services to the different sets of customers. For the purpose, the Company has developed various strategic partnerships and has hired Dottie Brienza as the first senior Vice President of global talent management to help more unified approach to talent management for achieving competitive edge (Eggleston, 2012). COMPETITIVE STRATEGY OF INTERCONTINENTAL HOTELS GROUP PLC Intercontinental Hotels Group PLC is a UK incorporated company. Intercontinental Hotels Group has 4600 hotels across over 100 countries (IBM, 2003). The company also seeks to get the competitive edge in differentiation strategy and has range of brands that provides set of customised services to the customers (IBM, 2003; IHG, 2013). The company insists on constant innovation in the industry. The company has always been focused on bringing innovations and novelties in business practices. Intercontinental Hotel Group has been the first company that had introduced the online reservations of hotel rooms to the customers. The company had received a great response as first mover advantage of online or logical construction. The main objective of the company behind making innovations is to provide complete convenience to customers (IBM, 2003). For instance, IHG has adopted strategy to take advantage from mobile to offer add value to the unique experience to customers (Marketing Week, 2010). InterContinental Hotels Group maintains its competitive advantage with improved responsiveness to needs of customers. EVOLUTION OF ORGANISATION OVER PAST YEARS Success of the Marriot over the years is attributable to two main factors. First, Marriot has been consistent in employing efforts to improve services in accordance with the requirement of the customers. This has offered significant learning to Company. The second factor that has enabled Marriot in evolving as successful business in the industry, despite rising competition, is the fact that Marriot has also been consistent in adapting to the changing market and environmental trends. Considering the rising impact of technological impact on the lives of the people all across the world and in UK, the Marriot stood the forefront to employ the technological advancement in its services to customers. For instance, a great innovative concept of wine menu was introduced by Marriot. The Marriott Hotel County Hall on London’s South Bank is the Group’s first hotel in UK to have a digital iPads-based wine list. Terrific feedback was received from the customers for this innovative idea. Marriot value the rising dominance of iPad in the lives of the customers; hence, offered similar experience in serving them at service desk of the Marriot (Incentive Travel, 2013). Furthermore, the role of mobile technology is also taken as important opportunity by the management of the company. Marriott management is concerned for converting the conventional operational activities in to digital platform. The management of Marriott is crafting a strategy to employ mobile as an important source of communication for doing all transactions. Considering the technological advancement that has become a fast paced driver in every industry. Marriot also offers facility to the customers through mobile apps of different brands such as Blackberry, iPhone etc. Hence, like offering wine Marriot is now working on apps using which customer can order food using mobile app (EFT, 2013). Hence, technological advancement in same pace as it is taking place in the external environment is being adopted by the Marriot. This constant adaption contributes significantly in the evolution of the business from mere desk based service to online booking and latest being the mobile apps based services. Environmental considerations are on vogue and companies all across the world are moving towards the global sustainability. Marriot moved in no distinction to other industries and adhered to the importance that customer gave to environmental friendliness. It recently participated in the campaign where four hotels in London initiated program to turn off its un-necessary systems at peak times. It was according an agreement with demand response Company KiWi power. This activity was undertaken with an objective of reducing carbon dioxide emission from the environment (Business Green, 2013). Marriot generated three benefits from this participation; first, cost saving, revenue generation (as were paid for it) and most importantly inculcated brand loyalty in customers as environmentally efficient business. Economic pressures in UK are also well evaluated by the Marriot. The evolution as successful organisation lends significant support from Marriot’s ability to deal effectively with economic pressures. Belonging to hospitality industry Marriot well acknowledge the importance of customers’ ability to associate with the company. Recent economic down turn in the economy has affected the business all across the world and so has impacted Marriot. Understanding the rising unemployment in the UK Marriot took an initiative and provided an opportunity to young and unemployed people. The concept was to provide the training to the apprentices. A good response was received with the starting of this activity (BTN, 2012). Such measures provide company benefits in many folds. For example, it gained the benefit of being recognised as an initiator to integrate recovery measure for the economy and such associations benefit company in great long run. Changing trends of the society and businesses has increased the importance of the stakeholders in the organisation. This aspect was also not left unattended by the Marriot and it has made consistent efforts to establish strong bonding with internal and external stakeholders. For instance, strong supplier relationship offers Marriot immense opportunity to offer best in town service to the customers as well as generated efficiencies in the best interest of stakeholders (Griffths, 2011). Furthermore, company evolved in managing its human resource and managed to be regarded as great place to work (Marriott. (2013b). Hence, in this era of down turn where discretionary spending from customers has shown shrunk, Marriot managed to take advantage of every single possibility that can benefit it in the long run. It is important to mention, the successful evolution is not result of all good stories and Marriot had some hard lessons as well. For example, recently Marriott Hotel attempted to honour 9/11 by offering free mini muffins and coffee for thirty minutes and labelled its crass and insensitive. A highly negative response was received from the customers for this activity and Marriot learned a strong lesson. However, what makes it evolution successful is the ability to successfully overcome the challenges and generate opportunities from them. Managers at Marriot have generated significant lesson from all changes in the environment. Further, instances mentioned in the above section also highlight that fact that companies which adapt to the changing environment are only ones to gain success like Marriot. CONCLUSION AND RECOMMENDATIONS Nowadays, customer convenience and satisfaction is considered as a one of the most effective tool in the service industry to get the competitive advantage. Marriot always focused on adapting the emerging and latest trends to stay competitive in the market. Competitive strategies that are followed by Marriott and its rivals are highly similar and hence each one is trying to gain the edge by loyalty programs and other technological adoptions. All the competitors and Marriot is continuously making efforts to sustain its position in the market. The environmental analysis has conducted to understand the impact of internal and external forces on the organisation. Since, technological advancement has had a great impact on almost every business in the world and so hospitality industry is affected significantly. Therefore, efforts to employ technological advancements by Marriot to remain competitive have been discussed with insight recommendations. Some media sources are mentioned in the report to analyse the evolving behavior of the organisation. In all that Marriot is competing successfully in UK hospitality industry. However, it needs to make a consistent research on understanding the changing consumer needs and preferences. It is worth mentioning that recovery in UK economy is creating the opportunity of business expansions. Marriott should focus on this phase and increase its marketing efforts to attract new customers initially in this phase. List of References Blanke, J., and Chiesa, T. (2013). The travel and tourism competitiveness report 2013. 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(2003). Intercontinental hotels group maintains competitive advantage with improved responsiveness to customer needs. Available from ftp://ftp.software.ibm.com/software/emea/de/rational/IntercontntlHotels_CS.pdf [Accessed 20 October 2013] IHG. (2013). Our brands. Available from http://www.ihgplc.com/index.asp?pageid=405 [Accessed 20 October 2013] Incentive Travel. (2013). County hall first UK Marriott hotel to go digital on wine. Available from http://winetimes.co/2013/10/15/county-hall-first-uk-marriott-hotel-to-go-digital-on-wine/ [Accessed 20 October 2013] Marketing Week. (2010). Case study Intercontinental hotels group (IHG). Available from http://www.marketingweek.co.uk/case-study-intercontinental-hotels-group-ihg/3020949.article [Accessed 20 October 2013] Marriott. (2011). Marriott International Inc., 2011 Annual Report. Available from http://investor.shareholder.com/mar/marriottAR11/pdf/marriott11ar.pdf [Accessed 20 October 2013] Marriott. (2013a). Marriott international company profile. Available from http://news.marriott.com/Marriott-international-profile.html [Accessed 20 October 2013] Marriott. (2013b). Marriott soars into top ten of best big companies to work for UK. Available from http://news.marriott.com/2013/03/marriott-soars-into-top-ten-of-best-big-companies-to-work-for-uk.html [Accessed 20 October 2013] Mcindoe, C. (2013). Six technology trends revolutionising the hospitality industry. Available from http://www.hospitalitynet.org/news/4060662.html [Accessed 20 October 2013] Moore, K. (n.d.). Marriott – individual company analysis. Available from http://media.wix.com/ugd/f4d8b7_ff0bcfd330d4cc3f05f362f8fd172099.pdf [Accessed 20 October 2013] Read More