This paper analyses and compares two major global hotel chains, Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. Both chains have extensive investments in and outside the US. They have very strong brand names and are quite competitive. However they differ in their strategies, like the market segment each one targets, the role of technology in the business, the financial efficiency of their systems etc. The paper discusses the extent of globalisation that each firm has taken and what is their strategy in terms of global expansion. The paper also analyses the benefits and demerits each chain faces as a result of the individual strategy they had adopted. They also analysed the effect the recent financial recession had on each of the groups and how well or not they were placed to deal with it. 2
Marriott is one of the leading players in the $144.9 billion U.S. hotel industry. It operates globally in 68 countries in Americas, Europe, Africa, and Asia-Pacific, employing about 137, 000 people. It has 3178 properties under 14 brands operating in a portfolio of different segments.1 Starwood is another leading hotel company in the world. It has 942 hotels in more than 100 countries with 145,000 employees. In contrast to Marriott, Starwood primarily operates in luxury and upscale segment. It has 706 hotels under Westin, Sheraton and Le Meridien brands. 1 3
Strategies for Globalization
The most important strategy for Marriott is its complete brand portfolio. The company operates in five business segments: North American full-service, North American limited-service, timeshare, luxury and International. Each segment has several brands targeting different customer bases: luxury, upper moderate, moderate and lower moderate. As result, Marriott’s strong and rich brand portfolio gives it high brand recognition and diversified revenue resources.2 Another strategy on globalization is the Marriott’s Automated Reservation System for Hotel Accommodations (MARSH), a technical innovation. It established a global database of all of Marriotts’ customers in the world. Along with another technical innovation, Property Guest Objective Oriented System (PGOOS), an automatic price auditing tool developed to lower labour cost and ensure price advantage in recession, Marriott implements its e-business strategy globally and provides better customer services. 2 An important globalization strategy of Starwood is to capitalize on the growth of emerging markets such as China and India. It has 155 hotels in Asia-Pacific region, and it plans to double its hotels number in China, where the economy prosperity would lead to Starwood’s revenue growth and diversification.3 4
Marriott has broad portfolio of lodging brands in the world, with more than 3,400 lodging properties in the US and 68 other countries and territories. The company develops, operates, and franchises hotels and corporate housing properties under 19 separate brands. Marriott has strong international presence in countries like Canada, Mexico, UK and Germany. And there has been a remarkable growth from emerging markets like China and India over past few years. From the financial data in 2004-2009, we can see that the company achieved high revenue and stable profit margin from 2004 to 2007. However, influenced by the financial crisis in 2008, instability in the financial market and weak consumer confidence all contributed to a difficult business environment in 2008 and 2009. Lodging demand in the United States, as well as internationally, remained soft throughout 2009. About 14.12% revenue in 2009 came from international markets. 4.2
Starwood Hotels & Resorts Worldwide
Starwood’s hotel portfolio includes owned, leased, managed and franchised hotels totaling 871 hotels with approximately 266,000 rooms in more than 100 countries. The top 5 international markets ended 2009 are Canada, Italy,...
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