Hospitality Industry. Marriott International, Inc - Assignment Example

MARRIOTT - OPPORTUNITIES IN LIVERPOOL AS CAPITAL OF CULTURE 2008 Role and Opportunities offered by Liverpool as Capital of Culture Marriott International, Inc. is a global leader in the hospitality industry with over 75 years of experience. It has more than 2,700 lodging properties in the United States and 65 other countries and territories. Marriott's core values are an enduring belief in associates who are considered as prime assets. Marriott culture is designated by the, "Marriott Way" which is about serving associates, customers and community. Its fundamental belief is providing a Marriott experience to its customers. Marriott is unstintingly supportive of its associates, seeks to provide them maximum opportunities and its customers superior service. (http://marriott.com). Liverpool is a city on the growth path. It has seen fastest growth amongst all the key cities in Great Britain between 2002 and 2003, far in excess of regional and national rates. In cultural diversity it is home to many ethnic communities, varying from Irish, Welsh, Scots, English and different religions and countries Jewish, Muslim, Hindu; Chinese, Greek, Italian, Spanish. Even people from the Caribbean, Somalia, Yemen, the Balkans and Middle East have made Liverpool their home. (http://www.liverpool.gov.uk). This diverse conglomerate of communities creates unique opportunities for attracting a wide diaspora to converge in the city during the year 2008. Liverpool has a vibrant culture, it is the original home of pop and music is supplemented by humor, writing and performing arts. It is a port city with principal traffic to the United States. Liverpool is a major regional shopping hub. (http://www.liverpool.gov.uk). A number of international retail giants as Zara and Armani have large outlets. These will be further expanded to cater for the massive influx in 2008 from European and global tourists. Thus it has a unique advantage of being a business and culture hub of Britain. This trend is being encapsulated in the concept of Capital of Culture. The central focus is on, The World in One City. The supporting themes are Create, Participate and Regenerate to be progressed by the vision of Yesterday, Today and Tomorrow. All this is within the overall culture strategy of the Liverpool City Council. (http://www.liverpool08.com). The underlying themes of recreating history, reflecting the present and projecting the future can also be encapsulated in Marriot's philosophy of exploiting the past to sustain profits for the present and beyond. Liverpool Culture Company has been set up with a Chief Executive and a Board to manage promotion and oversee implementation of the Liverpool Capital of Culture. This will provide government and agency support for the project. The assured support of all agencies will enable its successful implementation. (http://www.liverpool08.com). Liverpool's bid for the project had been endorsed by the entire North Western Region, to include North West Development Agency, North West Arts Board, North West Sports Board, Sport England North West, the North West Tourist Board and the North West Cultural Consortium. (http://www.liverpool08.com). Marriott's culture of associate support and customer excellence will enable it to place itself in the forefront of Liverpool's successful management of the primary event, Capital of Culture in 2008. Since there is total commitment of city authorities including the Liverpool Culture Company and regional organizations, this offers synergy in implementation, which can also be exploited by Marriot affiliating with local authorities to sustain growth. Marriot has properties in Liverpool and Manchester. These can be networked to generate additional revenue during the Year 2008, as availability of hotel accommodation in Liverpool per se is likely to be at a premium. Proposed Strategic Response Marriot is essentially seen as a company focused in the United States with a network of properties in other countries. Europe receives maximum tourists every year. Liverpool will receive a large proportion of these tourists in 2008. Marriot should be able to use this event to provide a greater thrust to its operations and emerge as a European tourism power house. This is also an opportunity for Marriott to sustain its position as a global brand in the hospitality industry. The strategic response is thus being considered within this broad purview. Strategies for growth as per Whittington are three fold, innovation, corporate linked strategies of diversification, integration and acquisition and internationalisation. Innovation can be adopted in a varied manner, be it of product, process, organisation or management. (Whittington: 1992). Diversification can be horizontal or siloed. Related diversification is carried out more easily as the management has good knowledge and understanding of the current state of business and can build on its core competencies. (Whittington: 1992). With high pressure for global integration and low need for local responsiveness, a firm as Marriott hotels can adopt a global strategy with standardised offerings. (Whittington: 1992). Applying these strategic possibilities to the example of Marriott hotel, Liverpool and the opportunity presented by Capital of Culture in 2008, it is envisaged that all three approaches can be attempted. There is scope for process innovation by providing better quality of service through technological up gradation. Creating intelligent rooms which respond to a combination of machine, timed and legacy signals through computer links would provide substantial value addition at very low cost and will attract a large number of global visitors. Automation of the processes of booking, with better visual facility of areas and rooms could be another innovative approach. Diversification is the second facet of growth which can be envisaged in related fields as extension of conference infra structure, guided cultural tours and sports tourism with a number of golf courses in the near vicinity, and two premier league football clubs located in Liverpool. Space permitting and without affecting house guests, the possibility of shopping arcades in the premises can be explored as this is another revenue stream which is poised for growth with retailing generating maximum footfalls. This in turn will also support occupancy in the hotels as house guests prefer to do in house shopping. Trans European and international growth can also be envisaged exploiting the brand image of Marriott and offering brand linked loyalty benefits to attract more tourists to Marriott properties in Liverpool. Competition and sustainability are two problem areas. Competition will be from within the hotel industry, especially after 2008, when accretions carried out need to be sustained. This aspect is being covered in the final part of the Report. Application of Strategies for Growth - Marriott in Liverpool Marriott can become the leading hospitality partner with the Liverpool Culture Council for the event; this will provide it substantial lead over its competitors. The specific application of strategies to Liverpool is discussed in succeeding paragraphs. At present Marriott Hotels have two properties in Liverpool, the Liverpool Marriott Hotel City Centre, Queens Square and Liverpool Marriott Hotel South near the airport. These are in the prime areas of the City near the City Centre and the airport respectively providing substantial location advantage. These have been categorized as four star properties by the Liverpool hotels survey. There are two properties, the Crowne Plaza and Radisson SAS which have been categorized as four star deluxe and thus graded higher than Marriott. There are a number of other hotels in Liverpool which have been graded at par with Marriott. (http://www.liverpoolhotels.com) Thus up gradation of status to four star deluxe to attract customers will be one of the strategies for consideration. There is a scope for upgrading Liverpool Marriott City Centre and this facet can be explored. The Liverpool Marriott City Centre as the name suggests is located in the hub of the city well suited for business as well as leisure. It has 146 bed rooms including three pent house suites. (http://marriott.com). Its location in the City Centre can be suitably exploited for developing the leisure segment of the tourists business generated. Liverpool South has the advantage of being a hotel closest to the airport. It has 164 rooms, with 12 conference rooms. (http://marriott.com). It has been recently developed and will be preferred by the business traveler. The large segment of official and business travelers who will be commuting in response to the Capital of Culture Year 2008 can be effectively attracted by this property. The other Marriott property in the North West area is Marriott Manchester Airport. This can also be networked with the hotels in Liverpool to provide alternate accommodation during rush of tourists in 2008. For internal growth there is a need to consider two strategies, increase in the number of rooms and increase in tariff. Increase in the number of rooms will have to be undertaken as a part of a cohesive exercise of growth. Given that the problem is being examined in the current time frame, there is just about a year for enabling quantitative growth in terms of rooms. This can be undertaken in case planning for the same has been carried out earlier and necessary approvals from civic authorities have been obtained. This is particularly so in the case of Marriott City Centre as a preliminary survey indicates that there is limited scope for expansion. However the other areas for growth are improving room occupancy and enhancing revenue through tariff. Room occupancy during 2008 will be reasonably assured due to rush of tourist traffic. Thus the aspect which requires consideration is increase in revenue through enhancement of room tariff. A comparative modeling of revenue for week day room tariff for Marriott properties in Liverpool and four star deluxe hotels is being carried out as given below. Tariff - Crowne Plaza Radisson SAS Marriott City Marriott South Current Tariff - Week Days 115 130 115 - 119 95 - 119 Comparison with Marriott + 10 to + 20 (Marriott South) + 11 to 15 and more - - Scope for Increase Marriott Hotels in relation to Crowne Plaza - - Nil Approximately + 10 Impact on Revenue - Increase by 5 - - - 820/day 4100/week 113200 whole year Impact on Revenue - Increase by 10 - - - 1640/day 8200/week 426400 whole year Impact on Revenue - Increase by 15 - - - 2460/day 12,300/week 639600 whole year Impact on Revenue - Increase by 20 - - - 3280/day 16,400/week 852800 whole year Table - Tariff Simulation From the Tariff Simulation Table above it would be seen that Crowne Plaza has a week day tariff for rooms at 115, Radisson SAS 130, Marriott South 95 to 119 and Marriott City Centre 115 to 119. Marriott City Centre tariff is comparable to the four star deluxe, Crowne Plaza and lower than that of Radisson. On the other hand Marriott South has some scope of increasing tariff from the lower scale of 95 to 110 or even to 115. That is an accretion of 15 to 20 per room. The variable of accretion ranging from 5 to 20 has been covered in the Table above. Taking for example increase in revenue of say 10 per room which at a rough estimate of 164 rooms will increase revenue by 1640 per day or 8200 per week for a five day week and 426400 for the year. Similar analysis has been carried out for an increase of 5, 10 and 20 in the Table. This will denote that a minor increase in revenue can result in substantial augmentation. On the other hand scope for increase in revenue of Marriott City Centre is limited as it appears fairly priced. Sustainability of Marriott's Business Sustainability in tourism industry has many connotations. Sustainable tourism includes development and marketing; this is achieved by promoting sustainable communities. The first facet is to increase and develop existing tourism stock. The next aspect is to sustain and encourage a collaborative culture in the community. (http://sut.itas.fzk.de) Sustainability in tourism also implies creating synergies between business generation and contribution to the environment and local culture. Social responsibility is thus an essential facet for which balanced growth is envisaged. Thus growth has to be achieved ensuring avoidance of environmental and social degradation. Liverpool needs to sustain the euphoria and momentum of Capital of Culture beyond 2008, which will be an important facet of sustainability for Marriott, so that investments made can be capitalized in the long term. The Liverpool Capital of Culture concept is designed to grow beyond 2008 envisaging creation of a new city which is more creative, international in outlook and also can exploit its heritage to advantage. It is envisaged that the year will be merely an indication of long term growth that will be launched with other business related activities as retailing, development of the waterfront and increase in overall investments in infra structure as well as business development. (http://www.liverpool08.com) This has been included in the plan for holding the event in 2008 and is holistic with principal areas of focus being, creating an inclusive European Renaissance City by 2010; be a 'Business Friendly' city; ensure national targets for schools, qualifications and employment are met by 2008, reduce levels of poor health, preventable death and disability towards the national average by 2010 and grow the population by 2013. (Liverpool Culture Company). This focus on community development with tourism covers sustainability. Global experience of events such as the Olympics, World Cup Football or Commonwealth Games suggests that infra structure and growth that is created provides momentum to development and growth of the venues which is invariably sustained. Sustainability is also viewed as a private public partnership. Marriot can provide private sector support for Liverpool City of Culture and beyond project by being an active collaborator and sponsor for selected events with the city council. It is seen that there is scope for other agencies and sponsors to join the venture and Marriott should not miss this opportunity of being the official sponsor for some of the events or activities related to the event of 2008 and beyond including health and education related community development projects. References 1. Whittington, R. and R. Whipp (1992). "Professional ideology and marketing implementation." European Journal of Marketing 26(1): 52-63. 2. http://marriott.com/corporateinfo/culture/coreValuesCulture.miWT_Ref=values_MIcorp (29 Mar 2006). 3. http://marriott.com/corporateinfo/default.mi. (29 Mar 2006) 4. http://www.liverpool.gov.uk/The_City/index.asp. (30 Mar 2006) 5. http://www.liverpool08.com/AboutUs/index.asp). (30 Mar 2006) 6. http://sut.itas.fzk.de/final_conference/05_session4/05_paskaleva_wrap_up.pdf . (30 Mar 2006). 7. http://www.liverpool08.com/AboutUs/Downloads/index.asp. (30 Mar 2006) 8. http://www.liverpoolhotels.com/index.htm (01 Apr 2006). 9. Liverpool Culture Company. Strategic Business Plan 2005-2009. BisPlan.pdf Read More