The US Hotel Chain Marriott

U.S. hotel chain Marriott International is one of the largest transnational corporations in the world. According to the corporation’s data, every fourth tourist in America stays in Marriott International hotels.

Rapidly spreading its influence in the world, Marriott sets the goal to win and retain the leading position in the hotel market, showing a special concern with respect to the guests, business partners, employees and society as a whole. The business of Marriott Corporation is built on fundamental ideals of service provided to customers, employees and society. These ideals are perpetual, unique and make the company a successful manager, being the cornerstone for all employees of the company.

In this section, the main study focus is on the data of exploratory research conducted with the purpose of identifying current practices of Marriott International under the conditions of globalization and the impact of globalization on Marriott’s sales, marketing, HR, and brand positioning approaches, while outlining the main advantages Marriott international within this context.

History of Marriott International, Inc.

The history of this hotel corporation is a vivid example of the embodiment of the American dream traditional for several generations of U.S. citizens. Thousands of now flourishing companies started their long journey to success just like Marriott.

In May 1927, a 26-year-old man from Utah, John Marriott and his wife opened the eatery for nine seats in Washington. John’s lucky fortune and business skills helped him to survive the collapse of the U.S. economy during the Great Depression – in the late thirties he was already the owner of a regional restaurant chain The Shoppe Inc. and the eponymous company specialized in the delivery of hot meals for passengers of local airlines. John Marriott acquired his first hotel in 1957. It was called the Twin Bridges Marriott Motor Hotel, and was located in Arlington (Virginia). John wanted to create a family business and eventually handed over the management of the company to his son. Marriott Jr. conducted business as thoroughly as his father did (Marriott and Brown, 1997).

In 1964 the company was renamed as Marriott Corporation. The Corporation expressed interest in everything that was associated with restaurant and hotel business, and when in 1977 the sales revenues of enterprises in which Marriott had a franchise crossed one billion dollars, John Marriott Jr. realized that the property management brings no less benefits than its owning. The Corporation developed its own concept of hotel network with a limited set of services by the end of the 80’s and actively operated in three sectors of the hotel market in the U.S.: managing the network of hotels with full service (Marriott suites), inexpensive hotels (Residence Inn) and a network of cheap motels (Fairfield Inn) (Marriott and Brown, 1997; O’Brien, 1995).

In the early 90’s, Marriott Corp. had only a few dozen hotels outside the U.S.A. Based on the principles of diversification, kept by the most of the major companies in the world (in other words: “Don’t put all your eggs in one basket”), in 1993 the corporation was split into two companies: Marriott International (hotel and real estate management) and Host Marriott (real estate transactions and food delivery). That moment laid the beginning of the active promotion of Marriott International in the international market as the management company (Marriott and Brown, 1997).

At the moment, Marriott International Corporation has more than 3500 lodging properties located in the U.S. and in 69 other countries around the world (2010), employing 137,000 people (Marriott International Company Profile, 2010).

Table 2.1. Marriott International Hotel Brands and Property Count

(December 2009- December- 2010)

Marriott-12-31-10-Hotel-Count-global

Globalization Strategies and Practices

Marriott controls more than half a million hotel rooms worldwide, while owning only 0,3% of them. Half of the remaining rooms is a franchise. This means that hotel owners allocate 5% to 6% of their incomes to Marriott as a fee for using the company’s name as well as for using rooms’ reservation system. Marriott manages the other half of hotel rooms by charging the owners of the hotel fee for providing this service (Boo, Hillard and Jin, 2010).

Acting as an operator, Marriott takes about 65% of income, paying out from this sum the expenses for salaries, utilities, insurance, and purchase of food. 29% of revenue goes to the owner of the hotel. Of this amount, he pays property taxes and mortgage rates, and the rest (if any) he counts to his earnings. Even though some people may be disgruntled and demonize Marriott, the company still has much to be proud of: 55% Marriott hotel owners would like their next hotel to be run by this company (Jang and Tang, 2009). Brand and the Marriott reservation system are worth it.

Regional offices Marriot Inc. include (Table 2.2.; Table 2.3.):

North America (NALO)

Asia, Pacific, Australia (APA)

The Caribbean, Latin America (CABL)

United Kingdom, Ireland, Middle East, Africa (UKIMEA)

Continental Europe (CE)

Central Europe (Germany, Austria, Switzerland)

Western and Southern Europe (France, Belgium, Holland, Spain, Italy, Greece, etc.)

Eastern Europe (Russia, Armenia, Georgia, Poland, Czech Republic, Romania, Hungary, Kazakhstan).

Marriott International manages and provides franchise of hotels under the brands of Renaissance, Marriott, JW Marriott, Ritz-Carlton, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Ramada International; the company develops and operates resorts in the vacation ownership under the brands of Marriott Vacation Club International, The Ritz-Carlton Club, Horizons and Marriott Grand Residence Club; it offers apartments in Marriott Executive Apartments, provides furnished corporate suites Marriott ExecuStay and operates conference centers (Table 2.4.).

Smith Travel Research data state that raising a Marriott flag in the front of a big hotel offering a full range of hotel services increases its sales by 13% if compared to sales of a hotel with the flag of, for example, Doubletree. Virtually all other Marriott divisions from luxury Ritz-Carlton to a commonly accessible Residence Inn – are ahead of their competitors in the indicator of hotel room income by 10% to 30% (“A problem shared”, 2005).

Product & Brand Position

The components of Marriott’s corporate style are a company logo, colors, fonts, letterhead, website, brand perfumes and accessories. Marriott logo is a rectangle with an image of a sphere the inscription “Marriott” itself”, designed in two basic colors: white and cherry, and golden. A well-established and recognizable corporate style is the key to Marriott brand promotion in the global market.

For example, when developing a program to promote a network of hotels in Moscow, Marriott used the corporate logo and brand image, which is the image of the famous Faberge Easter eggs, which embodies prestige, luxury, and very high consumer value, comparable only with the works of the most expensive and fashionable jeweler. For example, Marriott Tverskaya has as its symbol a stylized gold Faberge egg, Marriott Grand 5 *- the blue one, and Marriott Royal 5 * luxury – the scarlet one. Such approach to corporate style creation can be described as very competent and thoughtful. Relying on the widely popular historical and cultural brands and using country’s national colors, the company certainly enhances the image component of hotel marketing, combining high international standards of service with the national peculiarities of a country and its hospitality traditions (O’Neill and Mattila, 2004).

Moreover, in each room of Marriott hotel chain there are branded forms for letters and branded pens with the hotel name. The rooms use brand linens, and brand aromatic policy of Marriott hotels.

Recently, with the development of Internet and e-mail correspondence, the issue of corporate style of electronic documents has become very topical. Web site today is the first thing that a potential guest sees, and it can help to quickly create an impression about the level of the hotel, the service, room rates, to estimate the location and walk through rooms, restaurants, lounge, as well as to book a room (O’Connor, 2008).

Marriott Corporation owns over 3500 hotels, and for conveniency there is a single site from which one can get to the site of any hotel of the network in the world. Moreover, the web-sites of the hotels are designed in the same style and structure. Color differences depend on the brand. The common brand Marriott Hotels, Resorts & Suites unites many brands, each with its own color scheme: for example, Courtyard by Marriott has a green color palette. Site structure is common for all hotels (photo tour, guest rooms in details, hotel proposals, hotel background information, restaurants and halls, city guide, maps and transport, events plan, Marriott Rewards program, hotel’s fact-sheet in print format). The web-site is the embodiment of Marriott corporate style and world-class service.

Currently, Marriott is included in top 10 international hotel chains and actively moves to the top through expanding its franchise contracts and promoting high level of service and corporate style.

Sales & Marketing

The major instrument of the company is the fact that a very small percentage of real estate the company manages factually belongs to it. In 1993, Marriott transferred all of its buildings and most of the debt on the balance of the investment real estate subsidiary Host Marriott, headed by the younger brother of Bill Marriott, while Hilton and Starwood, in contrast, own 30% of hotels under their control. Since Marriott receives a fee for hotel management, vacant hotel rooms bring fewer losses to it than to the owners, who have to clear the mortgage (“A problem shared”, 2005).

Another component of the success of Marriott is the attention to details. For instance, the rules for cleaning a hotel room set in Marriott include 66 points. The company also shares the aroma marketing approach. Generally, Marriott with great zeal is looking for new clients and opportunities to open new hotels. Taking into account different groups of clients and their material resources, the network is developing a variety of brands, increasing the amount of service (Table 2.4.):

Marriott Hotels and Resorts – hotels with full service, managed through a franchise or independently.

Renaissance Hotels and Resorts – hotels offering full-service accommodation facilities for business travelers, vacationers.

Marriott Conference Centers – full service hotels for conferences and meetings.

Courtyard by Marriott – division responsible for a hotel chain with relatively low prices.

Fairfield Inn by Marriott – division responsible for economy class hotel chain.

SpringHill Suites – division responsible for the chain of secondary and higher-class hotels targeted at business and leisure travelers, especially women and children.

Residence Inn by Marriott – leader in the segment of the long stay hotels.

TownePlace Suites – division responsible for long stay hotel chain with relatively low prices.

Marriott ExecuStay – business unit that provides accommodation facilities for 1 month or more.

Marriott Executive Apartments – division that provides accommodation for business visitors for a period of more than 30 days.

Marriott Vacation Club International – division applying timeshare system; a guest can purchase a week off at the hotel of this class. The system includes 38 exclusive resorts.

Ritz-Carlton – leading hotel brand in the segment of luxury hotels.

The innovative approach that accelerated the development of Marriott, Inc., was also the bonus program for customers, launched in 1983, which now serves as the element of Marriott’s corporate style. Thanks to Marriott Rewards, Marriott Corporation has an opportunity to acquire more permanent guests of the Marriott chain. Marriott Rewards program encourages customers for giving preference to Marriott International and its partners, rewarding them for the choice of hotels of the network (Dube and Renaghan, 1999). The participant of Marriott Rewards receives certain points or miles that can be used as payment for accommodation (special certificates) in the hotels of the network or as a discount for buying airline tickets (applied to miles). Points can be used for free accommodation, purchasing discounted “packet” services around the world, including domestic air transport services, car rental, cruises, etc. Such programs later started to be introduced by other network hospitality companies, but the scheme, devised by Marriott, remains the best one: maximum discount combined the highest luxury.

Human Resources

Every corporate culture is an element of corporate style. Marriott’s corporate culture was founded in 1927 and is being kept till this day: “The better the company will treat its employees, the better employees will treat customers.”

Big corporations like Marriott, offer a high service level in many countries around the world. To make all the employees regardless of their nationality and educational level meet the high standards of the corporation, they should be trained in order to improve their skills. The key to training efficiency in Marriott is its perception as a corporate value which is consistent with the main strategy of the company. A continuous training helps to guarantee high quality service, comply with the company’s strict standards, motivate and retain employees, creating staff reserve. Continuous training is also the only way to keep abreast with the changes occurring today and be prepared to their growing pace (Hinkin and Tracey, 2010; Katzenbach, 2000).

Every year, Marriott celebrates the anniversary of its foundation (May 20) selecting a certain week for it to express the company’s gratitude to the employees who are the members of a huge international family Marriott. Advertising and promotion program “Marriott Rewards” is also a very important part of every employee in the Marriott Corporation.

Considering the case of hotel chain Marriott International, it should be noted that in a business famous for its high rates of revenues, Marriott is outstandingly competent at preserving talented managers, which is reflected in low satisfaction gap (Figure 2.2.) (Hinkin and Tracey, 2010). One of the ways to do that is a specific program that trains managers to solve business situations preparing and encouraging them to seek for promotions to top management positions.

Advantages of Marriott, Inc over Competition in terms of Globalization

Marriott International Hotels have the loading of 10% above the average in the global hospitality industry, while hotel rooms are sold at higher rates than those of direct competitors (Table 2.5).

The advantage in the loading percentage and selling prices is achieved by providing individual and group customers more services than they can get anywhere else. Booking of hotel rooms in the company’s hotels is conducted through its own global distribution system (GDS) or via the Internet. Moreover, the system uses the technology of “guest recognition” of hotels of all brands of the company, and rewards programs for repeat customers. In 1999, the company expended its use of the so-called “quality assurance teams”, assisting companies to implement advanced network management practices and reduce costs (Dube and Renaghan, 1999).

On a whole, Figure 2.3 shows the positive dynamics in RevPAR data for North America Marriott properties for the five fiscal years 2004 -2008 with a peak in 2007:

Figure 2.3. 2004-2008 RevPAR data for Marriot International (North America)

Figure 2

Conclusion

Marriott dominates in the market for one simple reason: it is successful in managing hotels worldwide. The hotel managed by Marriott becomes a large hotel with restaurants, shops and business center, room service, in-line and butlers. All hotels of the chain are characterized by the same service, which is based on a clear interaction between all structures and maintained tight control by the head office. Marriott International mission states that the corporation aims to become the best company in the fields of accommodation and services in the world due to the fact that its employees are seeking to provide their customers the best possible services, resulting in benefits for the company’s shareholders.

In recent years, Marriott International has shown a positive dynamics of development and continues to rapidly spread the chain all over the globe on the basis of franchise contracts. This practice, along with innovative approach to global hotel marketing, Marriott Rewards program, guest recognition technologies, high level of personnel training and constantly increasing level of service, helps Marriott International stay in the top five hotels chains globally.