Marriott n its Forthcoming Strategies on Emerging Competition

Chapter 1: Introduction……………………………………………….1

Chapter 2: Literature Review…………………………………………5

Chapter 3: Marriott’s Marketing Strategy…………………………….9

Chapter 4: Competition ………………………………………………12

Chapter 5: Analysis and Findings……………………………………..16

Chapter 6: SWOT Analysis……………………………………………28

Chapter 7: Recommendations.…………………………………………30

Chapter 8: Conclusion.…………………………………………………31

Marriott started its operations from a nine seat, root beer stand in Washington D.C. in 1927. From a small operation to a leading provider of Hospitality Services worldwide, Marriott International has built-up highly successful business based on strategic growth and commitment to excellence. In October 1933, Marriott Corporation through a special dividend transaction split its operations, into two separate and distinct companies, i.e. Marriott International, Inc and Hort Marriott Corporation. The purpose of the special dividend was to allow shareholders to realize the value in each company by separating Marriott’s ownership of properties from its management operations. Marriott International employs more than 153,000 associates.

Over 250 Marriott Hotels, Resorts and suites, with more than 106,000 guest rooms, are presently operating in the United State, Canada, Latin America, The Caribbean, Europe, Australia, South America, the Far East and the Middle East.

The objective of Marriott International is:

Marriott Islamabad was taken up as a project of Marketing Management as to see, how Marriott will cope with new competition Serena. The project gave us an opportunity to study how Market Leader reacts when competition emerges for the first time.

Most of the information has been gathered by following means:

The project is designed in the following manner:

Chapter 1: covers the background of the company, significance, methodology and organization of study.

Chapter 2: covers the Literature Review.

Chapter 3: covers Marriott’s Marketing Strategies.

Chapter 4: focuses on Competition faced by Marriott and strategies adopted to encounter the competition.

Chapter 5: gives the analysis and findings of the Consumer Survey.

Chapter 6: covers SWOT Analysis.

Chapter 7: Recommendations

Chapter 8: Conclusion

Marriott Islamabad has been a market leader in the hotel industry in Islamabad- Rawalpindi region for a long time. With Serena launching its operations in Islamabad, Marriott will face a long awaited competition, which might threaten its position as a market leader. In the literature review, we will briefly describe what are services and components of hospitality management. We will then discuss the market-leader strategies and what a market leader should do to retain its position as a market leader.

A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to any physical product.

There are many segments of the service industry, which broadly defined include hospitality, banking, health care, insurance, amusement, machine repair, education, the law, and so forth.

Clothing

Carpets

Software

Design

Marketing

Research

Psychotherapy

Pure

Goods

Pure

Service

Fig 1. The physical goods-services continuum

Many industries contain one firm that is the acknowledged market leader. This firm has the largest market share in the relevant product market. It usually leads the other firms in price changes, new-product introduction, distribution coverage and promotional intensity.

Unless a dominant firm enjoys legal monopoly, its life is not altogether easy. It must maintain vigilance because other firms keep challenging its strengths and try to take advantages of its weaknesses. The market leader can easily miss a turn in the road and plunge into second or third place. A product innovation may come along and hurt the leader.

Dominant firm wants to remain number one. This calls for actions on three fronts. First, the firm must find ways to expand total market demand. Second, the firm must defend its current market share through good defensive and offensive actions. Third, the firm can increase its market share further, even if market size remains constant. In the context of our project, we will only discuss what a market leader does to expand the total market demand when it faces tough competition.

Marketing in hospitality industry depends upon aesthetic appeal, good advertisements, newspapers publicity and competent sales person. Marketing differs and changes because of shift in market needs. A city like Karachi or Lahore will have a different marketing plan due to high competition and city like Islamabad will have different strategy.

Islamabad Marriott Hotel devises a tentative marketing plan at the beginning of each year. This plan is based on past experiences and forecast of market trends and corporate business environment.

“To arouse aesthetic sense of our potential customers is our best source of marketing.” This was the reply to our query regarding Marketing Strategy of Marriott.

Marketing plan focuses on introducing various events like Eid Gala, Basant Festival, New Year Eve Celebrations, several food promotions, throughout the year. Cost is determined for these events; that is how much cost can be borne by the hotel itself and how much sponsorship is required. Various packages are introduced to attract customers during summer season, as it is considered as an off-season.

Hotel Industry is very sensitive to changes in the economy, that is why, Marriott chalks out a tentative marketing plan which is tailored during the year according to the prevailing trends in the economy, like when Gen. Pervez Musharaf took over the reins of the country, hotel’s capacity was under utilized, while after 11 September 2001 attack on World Trade Center and shifting of world focus towards Afghanistan, it was over loaded.

Marriott’s target market comprises of Business Executives and upper class visitors.

Mostly the main focus of Marriott Islamabad is on:

Over the last 20 years Marriott has built a strong reputation, so most of the people trust Marriott’s brand name. The name Marriott itself assures quality service, thus the loyal clientele of Marriott always comes back.

The sales personnel of Marriott have been assigned customers. Sales targets have been set for them and they have to achieve that target. The sales people contact various organizations, which are interested in arranging conferences and seminars at Marriott and then packages are specially designed for each customer.

Government and tax policies affect all the businesses operating in the country. Hotel industry is no exception. Any changes in tax structure are bound to affect the hotel industry too. Government has levied high sales tax on hotel industry.

With such high tax rates, Marriott still manages to retain its customers. Even if discounts are given on some packages, tax has to be paid on the basis of original rates. So what Marriott does is that it itself bears the extra cost i.e. over and above cost of discounted package to make the customers satisfied.

The government of Pakistan does not allow the serving of food at marriages. The only five star hotel in Rawalpindi is serving food at marriages but Marriott is unable to do so due its location in the Federal Capital.

Marriott considers the following hotels as its competitors at the National level:

At the local level, Marriott Islamabad considers Pearl Continental Hotel Rawalpindi as its main competitor, while Holiday Inn Islamabad as their cheap competitor.

When Marriott was established, Serena and Sheraton had their plots in Islamabad. Now Serena has been launched and is in competition.

If the competitors of Islamabad Marriott Hotel are analyzed we can say that it has major market share in the Federal Capital. The upcoming Islamabad Serena Hotel is a direct threat for Islamabad Marriott Hotel because of many reasons.

Islamabad Marriott Hotel enjoys a very good location however, the location of Islamabad Serena Hotel is attractive as well, and it is situated at the gateway of federal capital just behind the Convention Center. As Serena will be a five star hotel as well, therefore it will be in direct competition with Islamabad Marriott Hotel. There will be hardly any difference in facilities that are being provided by Marriott Islamabad Hotel, but the area of competition for both will be provision of quality service. The one providing better facilities and quality service will have a competitive edge.

To cope with forthcoming threat Islamabad Marriott Hotel has renovated its room. They have increased the number of facilities in their rooms such as international direct dialing, 24 hours room service, childcare etc. They are also constructing new conference rooms, halls etc. Besides all this, they are more dedicated to provide quality services to their guests for which Marriott is famous worldwide.

Construction of Serena took place over a period of few years, it did not just mushroom up out of nowhere. So Marriott had ample time to change its strategies to fit the emerging scenarios. Marriott devised strategies one and a half years ago to encounter competition given by Serena. In 2001, the Marriott decided to concentrate that the key to success would be exceptional customer care. The challenge was to secure a hotel-wise approach to quality as compared to new Serena Islamabad.

Marriott’s reward program is the world largest and most preferred guest program, which gives reward points for every time you stay in Marriott or do business with Marriott. It includes three bonus levels Silver, Gold and Platinum based on the number of points acquired by the customers. Marriott also has collaboration with 18 airlines and any customer buying tickets from those airlines will also be rewarded with points.

Management of Marriott is not desperate to call customers by reducing prices rather they believe in attracting their customers by providing good services, delivering quality, comfort and convenience. Price reductions are only on the basis of reward program or on the business provided.

Marriott has made teams of sales persons who are assigned different corporate clients and the information regarding their likings and disliking to provide personalized services each time they visit Marriott.

On the basis of customer survey and personal observations, few key areas of both Marriott and Serena are identified and evaluated. The basis, analysis and observation of survey are as follows:

Sample Size: 15

Sampling Method: Convenience sampling

Age Group: 20-50

Occupation: Students, House wives, Professionals and Businessmen

Key areas Identified: Quality of service, Quality of food, Décor, Price and Location

An in-depth analysis of both the hotels reveal that Serena outperforms Marriott on the basis of décor and location but Marriott has an edge over Serena in terms of better quality of service and food as well as better prices. People are visiting Serena to satisfy their curiosity but in the long run, to survive, it has to work on its quality of food and service.

Marriott faced a major threat by the establishment of Serena but till now people still prefer Marriott to Serena, because of better service. If Serena improves its quality of food and service, Marriott may face serious problems in the future therefore, to keep ahead of competition; Marriott must strive for continuous improvement.