Marriott International is an American International Hotel chain. It is counted in one of the world's most prominent hotel chains. There are over 500 hotels owned by Marriott International. It operates in more than 130 countries. It positions itself in the brand segment of classic premium. It owns 30 brands as per the annual report of 2018.
The expansion plans
In 2018, the number of Hotel rooms was 80,255. The number is expected to increase by approximately 5% net. The 30 district brands of Marriott International have entered Finland, Ukraine, Mali, Lithuania and New Zealand. The agreements 478,000 rooms were signed by the end of 2018
Marriott has shown a commendable growth and revenue as compared to the previous year. It has registered an increase by 146 million dollars from $685 million in 2017 to $831 million in 2018. Here is the pestle analysis that would justify the expansion of Marriott International.
2.1 Marriott International: PESTLE Analysis
The major political factors that could affect the growth of Marriott International are political stability of the respective countries, International relations of a country with other countries, hotel industry regulations, competition policy of the company, business policy and incentives, government spending and tax policies, disturbance due to terrorist activities, etc.
These factors can affect the hotel business in various ways. People from different countries may not travel to a country facing the threat of terrorism or an unstable government. Major changes in the business policies by the government of a country may result in broken business tie-ups.
The examples to such political changes are: a sudden political change in Ukraine is on the way, Mali's failure in accelerating the peace agreements since the political turmoil of 2012, the terrorist attack on Taj Mahal Palace Hotel and Oberoi Trident in 2008 in India, etc. Such political disturbances scare the international guests and hinder the business deals
The economic factors that can affect the business of Marriott International are interest rates, exchange rates, patterns of consumer spending, consumer income, inflation, recession, taxes, demand/supply, etc. The examples of strong economic factors that affected the businesses widely are the Great Depression of 1930, the Global recession of 2008, the stock market crash in China, the eurozone crisis, the Icelandic financial crisis, etc.
All such economic disturbances increase the rate of foreign currencies. This creates a problem for foreign travelers. The people who can bear the high exchange rates can only travel across the world. This results in financial inequality.
The social factors are demographic factors (age, income, sex, family, education, occupation, etc), consumer preferences, changes in lifestyle, religion and beliefs, health consciousness, emigration and immigration rates, etc. The social factors show a positive sign of growth in the long run.
The common technological factors that affect the business environment are 3D Technology, internet connectivity, wireless network, automation, digitalization, cybersecurity, etc.
We are in the era of Technology. Internet of things is one of the major technological factors that has provided ease and comfort to the customers of the hotel industry because of sensors. Digitalization has also brought a big change.
Legal factors are the factors generated because of law on a national or international level. If there are any laws, a company can never go against it. The legal environment of some countries like China is stringent. The freedom to do business and the ease of doing business helps all the industries including the hotel & tourism industry. For example, the rank of India in ease of doing business in 2017 was 100th and in 2018, it is 77th.
The examples of environmental factors helping in pestle analysis are our climate, weather, natural calamities, pollution, renewable, and nonrenewable energy sources and goods, environment-related laws, etc.
These factors also have a huge impact on the productivity of people. A country with frequent environmental disturbances is not promising for business. On the contrary, there are exceptions like Japan. Heavy rains can cause flooding of resorts. Natural calamities disturb normal life and people avoid traveling to such places.
2.2 Porter’s Five ForceS
The study of these five forces helps in developing the strategies and tactics to prevent losses. It happens by identifying the problems and examining them. Analyzing a problem is the first step to solve it. The five forces are the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, the threat from substitute products and rivalry among the existing players.
New entrants in the hotel industry are sure to come. They may bring in new ways of working with lower pricing strategies for price-sensitive markets. The new financial pillars with innovative strategies to reduce costs may provide attractive offers to customers.
Ways of Marriott International to handle it
By entering new markets (Ukraine, New Zealand, Mali, etc) in 2018, Marriott International is already set to establish a new customer base.
Marriott International has also opened 500 new hotels in 2018 which is a record-breaking number in itself.
Many hotels of Marriott International representing significant brands are undergoing renovation to compete with the innovative strategies of the new entrants. Removal of 1.7% of the rooms takes place in 2018.
Bargaining power of suppliers
If the suppliers are going to successfully negotiate in supplying the raw material at the rates they want, it is a big challenge. It may result in increasing the cost to a great extent. The quality is also required to be maintained. The hotel industry cannot compromise with taste.
Ways of Marriott International to handle it
Marriott International maintains multiple suppliers and does not depend on one single supplier for the entire stock. It helps in being in demand among suppliers.
The long term agreement corresponds with the changes in the legal environment of the country. It will help in controlling the demands of the suppliers.
Bargaining power of buyers
There are two golden rules of marketing. The first one says that the customer is always right. The second one says if the customer is wrong, remember the first rule. These customers are getting more and more demanding. This is one of the biggest challenges.
Ways of Marriott International to handle it
Marriott international knows very well to encash its credibility. It has already acquired a strong base of loyal customers. It gives the confidence to sell the services at the fixed rates.
Innovation at rapid rates helps in justification of the higher rates charged as compared to competitors.
Marriott International is full of zeal and ready to invest to impress the customers.
Threats of substitute products or services
If new products or services are served to the existing customers, there may be problems related to acceptance. The ways of catering to the needs of the customers change. It is a sign of development but initially, there is resistance among consumers. The price of such a new product or service is higher. This also poses another challenge.
Marriott International would handle it with training and development. It would train its employees with the expertise to impart it to their customers with ease.
It focuses on identifying the need of the customers and getting it in line with the substitute product or service to prove its relevance.
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