Quantitative Analysis of Hospitality - Article Example

Quantitative Analysis of Hospitality Introduction An annual report is a complete collection of all the information relating to the performance of a Company for a period of over twelve months or of a past year, and one that is presented to the public or relevant authorities. This information could be on financial status, total output and any other important activity that took place in the Company during that period. Therefore, the major purpose of an annual report is to inform the stakeholders of a Company to on what has taken place over the past year. An additional purpose is to attract new donors in order to receive more financial support from outside. Another purpose of an annual report is to provide information to the public about the trends in a given Company. Diversification is a strategy for a successful Company. Marriot is diverse in terms of business activities it ventures in and in terms of regional exploration. Therefore, Marriott has diversified in order to gain financially from the business activities that they are venturing in. The roles of Chairman of the Board and the President of Marriott The role of J.W. Marriott Jr., as the executive chairperson and the chairperson of the board of Marriott is to oversee all the activities of the Marriott Company by establishing the broad policies and objectives of Marriott. It is also his role to appoint the Chief Executive officer of Marriott. Marriott Jr. also plays the role of approving the annual reports of the Company. Second in the rank of Marriott is the President and the Chief Executive Officer of the Company, Mr. Ann M. Sorenson, is to give advises to the board of directors in the organization, Mr. Sorenson also motivates the organization’s employees as well as driving for critical changes in Marriott Company. The purpose of performance highlights The purpose of the performance highlight in an organization is to compare the performance of two or more given years, for example, the financial status of a Company in the year 2012 and 2013.The major outcome of the Revenue per Available Room (RevPAR), for the Marriott Hotels experienced a great increase all hotels around the World. There was an increase despite the global financial meltdown that was experienced among the world’s major economies from the year 2008. The increase was greater in America because the economy of the continent grew stronger, and because the growth in modest industry supply. Performance of Marriott in different regions From the figures given in this annual report, the Americas are still far way ahead of other regions where the Marriott hotels have ventured. It has the number highest number of brands, open rooms and it has also ventured in many other countries more than any other region. Compared to other regions, the Americas is also doing better in terms of social responsibility activities that Company is doing to its society. However, the greater potential lies in the European region where the business of hospitality seems to be growing so fast. This is because as indicated in this annual report, the Marriott Hotels ventured in Europe three years ago, and the number of brands, rooms opened and the countries it has ventured is high. The Company is only in its third year since venturing in Europe, and it is already meeting the five-year goal target that had been set. The Middle East and Africa region is lagging behind because it has been over thirty years since the first Marriott Hotel was built in the region, yet, it has only 7 brands and 41 open properties. This compared to Europe is below average. The political instability and poor economy in this region are the major factors contributing to this slow growth rate of Marriott hotel in the Middle East and Africa regions. The potential risks and uncertainties to the Marriott brand. One of the major risks that the Marriott Hotels are exposed to is the financials loss due to the global financial recession that affected the globe in the year 2008. This has led to most of travellers cancelling their trips due to high costs. Many Companies, which could have held meetings in the Marriot Hotels in the different regions, now opted for other smaller hotels due to high costs investments. Insecurity is a very big threat to the hospitality industry. The changing face of terrorism is, therefore, a major threat to the Marriott Hotels. This Company therefore has to recruit a well-trained security staff as well as a reliable and a trusted security firm. This is because security in a hotel does not only mean the protection of customers and their luggage, but it also mean having an alert, informed and well trained security staff. The Company is therefore forced to invest a lot of cash into ensuring the security of its apartments and its customers. These counter terrorism activities are digging dip into this Company, thus, negatively affecting the financial status of the Marriott Hotel. Cyber crime is another potential risk that the Marriott Hotels are exposed to. Cyber criminals, today, incessantly hack the database of major Companies just like the Marriot Hotels; they have to invest a lot in cyber security. Invasion of the financial database of the Marriott Hotel could loss of millions of dollars in the Company. Major operational risks that could affect the brand According to this annual report, there are a number of operational risks that the Marriott Hotels are exposed include; cases of fraud and the mistreatment of clients. This happens internally within the Company as the very same employees of Marriott Hotels commit them. These employees may be tempted to steal from the clients. If such internal thefts are report and become public, the potential customers will lose faith in the brand. This will finally lead to eventual loss of the number of clients of the Marriott Hotels. Another operational risk that could affect the brand of Marriott Hotels is the fluctuation in regional and global conditions. Economic situation in the different regions in the world negatively affects the operations of Marriott Hotels, due to hard economic times; many clients from different regions have reduced their travelling plans, thus low financial gains in these hotels (Marriott International INC, 2013). Another operational risk is the outbreak of diseases for example the Ebola and H1N1, which have been experienced in the past few years. If some of the customers already receiving services in the Marriot Hotels are reported to be carrying any of these diseases, clients who would have wanted to book the services of this brand will keep off. The third operational risk that could affect this brand is the natural disaster such as the earthquakes, Tsunamis and Hurricanes that are rampant along the American and Asian Coastlines. Apart from the natural disaster that causes death among the potential clients of these hotels, the presence of political unrest in some regions where the brand has ventured also poses great threats to this Company. Development and Financial Risks Marriott Hotels continue growing and making investments by building new hotels. In order to make these developments, the owners of this Company come together and contribute towards improvement and refurbishing of the existing hotels. The developments of other lodgings are also not favourable because it total depends on third parties, which are the property owners. The agreements that they enter into with these owners are subject to contract terms that their competitors offer, thus are unreliable. Their developments are also subject to the risks associated with the real estate investments. These projects therefore expose them to financial cost as they have to pay for all these properties. In order to avoid these risks, the Marriott Hotels should use their profits in order to build their own hotel. What is a Timeshare? Timeshare is a type of property that has a specific type of ownership with its own rules and regulation, such as the Marriot Hotels. They are properties that are owned by a number of people. Timeshare are risky because joint ownership may result into misunderstandings among the owners of the business, leading to the collapse of the Company. Highlights of the “Lodging Results” Among the highlights of the lodging at the end of the year 2012 include. The Marriott hotels were able to build 3, 801 properties with 660, 394 rooms. They were also able to operate 43% of the hotels worldwide. It is also in that year that the operating income increased from $414 million to $940 million (Marriott International INC, 2013). Where revenues increased in 2012 from 2011 The revenues of Marriott Hotels increased in the available rooms. The Marriott Hotels experienced a great increase all hotels around the World. There was an increase despite the global financial meltdown that was experienced among the world’s major economies from the year 2008. The increase was greater in America because the economy of the continent grew stronger, and because the growth in modest industry supply investments. Marriot Hotel Company in 2013 By looking at the trend of the operating income figures that doubled in the year 2012, from that of 2011, it can be concluded that the figure will most likely rise by the end of 2013. The general and administrative expenses also decreased by over $107 million in the year 2011. This means an increase in the financial gaining of this Company. Net income of the company also increases over the years up to 2012, because the expenses decrease. With the development plans that this company has in place for building more properties with more rooms, in the year 2013, this will be the biggest hotel in the hospitality sector. This is evident since they have even built the tallest hotel in the world in Dubai. References Marriot International, INC. (2012). Annual Report. Read More