INTRODUCTION:

Marriott International, Inc. is a worldwide operator and franchisor of a broad portfolio of

hotels and related lodging facilities. Founded by J. Willard Marriott, the company is now led

by son J.W. (Bill) Marriott, Jr. Today, Marriott International has about 3,150 lodging

properties located in the United States and 67 other countries and territories.

History

Marriott was founded by J. Willard Marriott 1927 when he and his wife opened a root beer

stand in Washington D.C. As a missionary in the sweltering, humid summers in Washington,

Marriott was convinced that what the city needed was a such a place to get a cool drink. They

later expanded their enterprises into a chain of restaurants and hotels.

The Key Bridge Marriott in Arlington, Virginia is Marriott International’s longest operating

hotel, and will celebrate its 50th anniversary in 2009. Their son and current Chairman and

Chief Executive Officer, J.W. (Bill) Marriott, Jr. has led the company to spectacular

worldwide growth. Today, Marriott International has about 3,150 lodging properties located

in the United States and 67 other countries and territories.

Marriott International was formed in 1992 when Marriott Corporation split into two

companies, Marriott International and Host Marriott Corporation.

In 2002 Marriott International began a major restructuring by spinning off many Senior

Living Services Communities (which is now part of Sunrise Senior Living) and Marriott

Distribution Services, so that it could focus on hotel ownership and management. The

changes were completed in 2003.

Marriott International headquarters in the Bethesda area of unincorporated Montgomery

County, Maryland, United States

In April 1995, Marriott International acquired a 49% interest in the Ritz-Carlton Hotel

Company LLC. Marriott International believed that it could increase sales and profit margins

at the Ritz, a troubled chain with a significant number of properties either losing money or

barely breaking even. The cost of Marriott's initial investment was estimated to be about

$200 million in cash and assumed debt. The next year, Marriott spent $331 million to take

over the Ritz-Carlton Atlanta and buy a majority interest in two properties owned by William

Johnson, a real estate developer who had purchased the Boston Ritz Carlton in 1983 and

expanded his Ritz holdings over the next twenty years.

The Ritz began expansion into the lucrative timeshare market among other new initiatives

made financially possible by the deep pockets of Marriott, which also lent its own in-house

expertise in certain areas. There were other benefits for Ritz-Carlton flowing from its

relationship with Marriott, such as being able to take advantage of the parent company's

reservation system and buying power. The partnership was solidified in 1998 when Marriott

boosted its interest in Ritz-Carlton to 99 percent. By 1999 revenues from the 35 hotels it

operated around the world totaled about $1.4 billion.

Marriott International owned Ramada International Hotels & Resorts until its sale on

September 15, 2004 to Cendant. It is the first hotel chain to serve food that is completely free

of trans fats at all of its North American properties.

In 2005, Marriott International and Marriott Vacation Club International comprised two of

the 53 entities that contributed the maximum of $250,000 to the second inauguration of

President George W. Bush.

On July 19, 2006, Marriott announced that all lodging buildings they operate in the United

States and Canada would become non-smoking beginning September 2006. "The new policy

includes all guest rooms, restaurants, lounges, meeting rooms, public space and employee

work areas."

Vision :

To become the leading provider and facilitator of value-based luxury, leisure and business

experiences across the globe.

Mission :

“To create an environment conducive and helpful to both our employees and customers,

thereby encouraging our employees to work at their maximum capacity in being of service to

our customers whilst providing our customers with Good Food & Good Service at a Fair

Price”

MARRIOTT BRANDS

Full Service Lodging

Marriott Hotels & Resorts

JW Marriott Hotels & Resorts

Renaissance Hotels & Resorts

Marriott Conference Centers

Ritz-Carlton Hotels & Resorts

BVLGARI Hotels & Resorts

Edition Hotels & Resorts

Autograph Collection Hotels & Resots

Select Service Lodging

Courtyard by Marriott

Fairfield Inn by Marriott

SpringHill Suites by Marriott

Extended Stay Lodging

Residence Inn by Marriott

TownePlace Suites by Marriott

Marriott ExecuStay

Marriott Executive Apartments

Timeshare

Marriott Vacation Club International (MVCI)

Marriott Grand Residence Club

The Ritz-Carlton Club

The Ritz-Carlton Destination Club

COMPETITORS

Marriott’s competitors include, Hilton Hotels, InterContinental Hotels, The ACCOR Group.

The industry is highly fragmented and no player commands more than 20 percent of the

market share. Marriott enjoys a 9 percent share in the U.S. and 1 percent at the international

level.

Competition in the industry is generally based on the quality of rooms, restaurants, meeting

facilities and services, attractiveness of locations, availability of a global distribution system,

price and other factors.

Although Marriott’s global presence across 68 countries enables it to offer services to a large

number of customers, it lags behind its competitors who are present in 80-100 countries.

The following table compares Marriott’s performance to its competitors in 2006.

Comparison to Competitors

Accor Hilton Marriott Intercontinental

Number of Hotels 4,100 2,935 2,832 3,600

Number of Rooms(Thousands)

720 501 514 538

Geographical Presence(Countries)

182 78 68 100

Occupancy(Percentage)

84.2 72.5 74.4 N.A

Average Daily Rate(USD)

191.56 115.43 153.99 N.A

Revenue PAR(Revenue Per Available Room in USD)

136.33 82.46 114.61 N.A

Marriott’s occupancy rate of 74.4 percent (percentage of total rooms occupied) is one of the

highest in the industry, which also indicates that the company is more efficient in selling its

rooms as compared to its competitors. Further, although both Hilton and Marriott have

approximately the same number of hotels and rooms, Marriott charges a higher average daily

rate as compared to Hilton, which enables it to earn higher revenue per room available.

Hilton Hotels Corporation is one of the leading hotel and leisure companies in the world. It is

primarily involved in the management and development of hotels across the globe.

Earlier, Hilton focused on acquiring and owning more real estate. However, it has recently

changed its growth strategy, and it now focuses on spreading its operations through

franchisees. This enables the company to earn revenues in the form of franchisee fee without

incurring any additional costs to purchase real estate and construct hotels.

Increasing the number of franchisees also provides the company with a stable and predictable

stream of revenue, and shields it from any temporary downturn in the industry. The revenue

of a hotel company tends to fluctuate due to several reasons. One of the primary factors is the

number of customers a hotel attracts. Thus, in case the number of travelers coming to a

particular region declines, the revenues from the hotel in that region will also decline.

However, if the company owns the brand (and the hotel is run by a third-party), the company

is ensured a fixed amount (in terms of management and franchisee fee), the number of

customers coming to that hotel notwithstanding.

Intercontinental Hotels Group is the largest hotel company by number of rooms, with

590,361 rooms in over 100 countries around the world.[1] It operates a diverse portfolio of

brands across multiple economic segments, including Intercontinental Hotels and Resorts,

Crowne Plaza Hotels and Resorts, Holiday Inn, and Holiday Inn Express. IHG makes most of

its money by franchising hotels. Out of the nearly 4,000 hotels bearing IHG brands, it owns

only 18. [2] While this operating structure means that the company makes less revenue per

hotel, it also means that the company has to commit less capital to develop and maintain its

hotels. For instance, Intercontinental Hotels Group is working on a multi-year relaunch of its

powerhouse Holiday Inn and Holiday Inn Express brands, which comprise the vast majority

of its rooms. The company also has an additional 110,000 Holiday Inn rooms in the pipeline.

The relaunch is expected to cost $1 billion dollars in total, but estimates place IHG's share of

the expenses at only $30 million, as most of the cost will be borne by the franchisers.[4]

Accor is a French multinational corporation, part of the CAC 40 index, operating in nearly 100 countries. Headquartered in Courcouronnes, Essonne, France,[3] near Évry,[4] Accor is the European leader in hotels (Accor Hospitality) and a global leader in corporate services (Accor Services). Accor Hospitality, the Accor hotels branch, has more than 4,000 hotels worldwide, ranging from economy to luxury.

Through Accor Services, Accor also runs service vouchers to over 430,000 companies and institutions and 30 million users in 40 countries: Ticket Restaurant, Luncheon Vouchers, Ticket Alimentaçao, Clean Way, Ticket Service, Childcare Vouchers, Eyecare Vouchers, Bien-Etre à la Carte, Worklife Benefits, EAR, Accentiv', Académie du Service, Tesorus, Ticket Compliments.

Internal assestment

Strengths

Large Expanse of Brands

Geographic Presence

Global leader in hotels market

More franchise means bigger OI -- they have more control that it seem

Website and Social Network

Focused divestiture Efforts especially with in’t companies

Excellent Strategies to attract and retain employees

Marriott culture retention balancing against the identities of the brands

Customer Hospitality / Centric

Brand Equity

Weaknesses

Focus on US instead of international establishments (over-reliance on US market)

Over dependence on luxury brands

Lack of low-cost brands

Marriott being targeted by fundamentalists or extremists.

Financial Analysis

The following table shows Marriott’s past performance relative to the revenue drivers.

Historical Performance

200820072006200

5Number of

Properties 974

2,741 2,832

2,9993,178Numb

er of Rooms

256,471 499,165

513,832 535,093

560,681

Occupancy Rate

72.2% 73.4%

74.4% 72.9%

73.5%Average

Daily Rate

$131.58 $140.26

$153.99 $141.60

$165.19 RevPAR

$94.97 $102.94

$114.61 $103.19

$121.34

Their current

ratio goes beyond

the industry

standard but their

quick ratio is less

than industry

2004 2005 2006 2007

standard

Liquidity

Ratios

Current

ratio2008

1.33 1.24 1.31 1.59

Quick ratio 0.55 0.7 0.84 1.04

Show’s Marriott’s Acquisition culture, where they use the shareholder’s investments when

venturing to other avenues.

Leverage ratios 2008 2007 2006 2005

Debt to Total Asset Ratio 0.84 0.84 0.7 0.62

Debt to Equity Ratio 5045 5025 2028 1.62

Long Term Debt to Equity Ratio 2.16 1.95 0.69 0.52

Times Interest Earned 5.37 7.17 12.15 3.69

Marriott is the leader in total revenue in the lodging industry but has low Net Profit Margin

and Profitability Ratios due to high costs (labor) and acquisitions

Profitability ratios 2008 2007 2006 2005

Operating profit Margin 0.07 0.1 0.08 0.5

Net Profit Margin 0.03 0.05 0.05 0.06

Return on Total Assets 0.04 0.08 0.07 0.08

Return on Stockholder’s Equity 0.26 0.49 0.23 0.21

Earnings per Share 0.99 1.75 1.41 1.45

Due to the economic recession that hit the United States during the mid to late 2008 and with

Marriott’s strong presence in the US, sales and profit declined significantly.

Growth ratios 2008 2007 2006 2005

Sales 0.85 8.30 5.28 14.37

Net income 47.99 14.47 9.12 12.25

Earning per

share

43.43 24.11 2.76 16.94

Dividend per

share

17.39 19.79 20.00 21.21

EXTERNAL ASSESTMENT

Opportunities

Emerging Asian Travel and Tourism Markets

Trend fro low-cost goods

Distinction amongst hotel service offered

Environmentally and Family Oriented

Decrease of cost of real estate in the US

Eco-tourism

Threats

Timeshare not popular anymore

Economic Recession = lower consumer spending

Boom of Economy Hotel Brand

Political instability

Increase of Real Estate in Asia

Terrorism

IFE

Strengths WEIGHT RATING WEIGHTED

SCORE

1. Large Expanse of Brands

2. Geographic Presence

3. Global leader

4. More franchise

5. Website and Social Network

6. Focused divestiture Efforts

7. attract and retain employees

8. culture retention against the

identities of the brands

9. Customer Hospitality

10. Brand Equity

0.08

0.05

0.1

0.05

0.07

0.04

0.06

0.03

0.09

0.03

3

2.5

4

3

3.5

3

3

2

4

3

0.24

0.125

0.4

0.15

0.245

0.12

0.18

0.06

0.36

0.09

WEAKNESS WEIGHT RATING WEIGHTED

SCORE

1. over-reliance on US market

2. Over dependence on luxury

brands

3. Lack of low-cost brands

4. targeted by fundamentalists

or extremists

TOTAL

0.15

0.12

0.08

0.05

1.00

4

3

2

1

0.06

0.36

0.16

0.05

2.6

EFE

Opportunities WEIGTH RATING WEIGHTED

SCORE

1. Emerging Asian Travel and

Tourism Markets

2. Trend fro low-cost goods

3. Distinction amongst hotel

service offered

4. Environmentally and Family

Oriented

5. Decrease of cost of real estate

in the ASIA

6. Eco-tourism

0.1

0.07

0.1

0.08

0.15

0.05

4

2

3.5

3

4

3

0.4

0.14

0.35

0.24

0.6

0.15

Threats WEIGHT RATING WEIGTHED

SCORE

1. Timeshare not popular

anymore

2. Economic Recession = lower

consumer spending

3. Boom of Economy Hotel

Brand

4. Political instability

5. Terrorism

Total

0.08

0.10

0.10

0.09

0.08

1.00

3

4

4

3.5

3

0.24

0.4

0.4

0.315

0.24

3.48

SWOT MATRIX

Strength

1. Large Expanse of Brands

2. Geographic Presence

3. Global leader

4. More franchise

5. Website and Social Network

6. Focused divestiture Efforts

7. attract and retain employees

8. culture retention against the

identities of the brands

9. Customer Hospitality

10. Brand Equity

Weaknesses

1. Over-reliance on US

market

2. Over dependence on

luxury brands

3. Lack of low-cost brands

4. targeted by

fundamentalists or

extremists

Opportunities

1. Emerging Asian Travel

and Tourism Markets

2. Trend fro low-cost

goods

3. Distinction amongst

hotel service offered

4. Environmentally and

Family Oriented

5. Decrease of cost of real

estate in the USA

6. Eco-tourism

Strengths-Opportunities

Acquire or establish hotels in Asia

Initiate Budget and Economic Brands

Divest in limited-service brands with

the economy brands of other companies

Differentiation of a particular brand in

certain locations

Apply eco-friendly efforts, and eco-

tourism across the chain

Acquire US properties to reduce

debt/cost of new establishments

Strategically Build hotels/resorts that

would most preserve the environment

Weakness-Opportunities

Expand in Asia

Build high-end inns

Joint ventures in other high risk

countries and use the local’s name

Build economy brands over cheap US

land where the savings in the land are

directly passed onto the

consumers/customers

Threats

1. Timeshare not popular

anymore

2. Economic Recession =

lower consumer

spending

3. Boom of Economy

Hotel Brand

4. Political instability

5. Terrorism

Strength-Threat

Company wide restructuring to reduce

cost and increase efficiency

Expand today to maintain lead and reap

the rewards later on especially in Asia

Provide financial assistance to

franchisees to start or expand operations

(preferably international)

Slowly depart from time-share hotels

Hire local employees by collaborating

with local government units

Hire, train and support the localities

where Marriott operates in to win the

hearts and minds

Weaknesses-Threat

Work towards expansions overseas due

to economic meltdown

Use relationship with employees to

temporarily reduce salary to be more

competitive

Joint Ventures with other companies

especially in new “low cost” businesses

Build economy brands now

BCG MATRIX

HIGH

MARKET

GROWTH

LOW

STAR

International

QUESTION MARK

CASH COW

Limited service

Full service

Luxury

DOG

Timesharing

LOW HIGH

MARKET SHARE

Space Matrix

Internal Strategic PositionAverage Points

Financial Strength (FS)4.28

Competitive Advantage (CA)-1.5

External Strategic PositionAverage Points

Environmental Stability (ES)-4.1667

Industry Strength (IS)4

Corporate level strategy:

EXPANSION

Marriott International announced plans to significantly expand its presence in the global marketplace with the addition of more than 30,000 new hotel rooms in countries such as

India and China. The Bethesda-based company will also add tens of thousands of hotel rooms to it’s U.S. and Canadian portfolio.

Despite the expansion Marriott has no plans to hire additional employees in its corporate headquarters, said Stephanie Hampton, a spokeswoman for the company.

Marriott made the announcement at a day-long investors conference in Paris, where J.W. Marriott Jr., chairman and CEO, and other executives outlined the company’s global strategy.

“The lodging industry is a global business and three factors dominate it: global wealth, demographics and trade,” Marriot said.

The global tourism industry is expected to generate more than $6 billion in revenue this year, according to figures from the World Travel & Tourism Council, with China expected to lead the world in tourism growth through 2016. Marriott currently has 30 hotels in China.

Marriott’s global expansion will include a number of its brands, such as Courtyard by Marriott and the Ritz-Carlton. About 400 of Marriott’s 2,800 hotels are located outside the U.S. In addition to China and India, Marriott will focus on building out in Asia, as well as in Africa and the Middle East. For example, the company has plans for a 274-room high-end JW Marriott in Algeria and several hotels in Qatar.

In the U.S. and Canada, Marriott has plans to buy and convert existing hotels to its own brands. All told, there will be an additional 85,000 to 100,000 Marriott hotel rooms around the world by 2009 for a total of 600,000 rooms.

Marriott now has 1,000 hotels with fast Internet

Marriott International is reporting that the more than 1,000 of its hotels worldwide have been

installed with high-speed internet access, representing the largest distribution of high-speed

internet access in the hotel industry. Marriott hotels in major business travel destinations,

including New York, Washington, D.C., San Francisco, Chicago, London, Frankfurt, Tokyo,

Singapore, and Hong Kong now offer high-speed internet access.

The service is available at Marriott, Renaissance, Courtyard, Residence Inn, TownePlace

Suites, Fairfield Inn and SpringHill Suites hotels.

Marriot Strategies

Marriott needs to pursue market development in Asia with new brands that extend its New

World and Ramada presence. Marriott has acquired an operating and development team of

experts with the Renaissance acquisition who are familiar with the market. It should use this

advantage and its superior management abilities to reach its goal of 200 hotels in the area by

the year 2000. Marriott can capitalize on synergies associated with managing New World,

the owner of which has agreed to further expansion, in order to gain more market share in an

area with high growth potential.

A potential implementation problem with this strategy lies in the threat of sour relations

between owners of the hotels and the Marriott (the operator). The owners of the hotels must

worry about financing in terms of generating enough net operating cash flows to provide debt

service and acceptable equity returns while Marriott is more focused on earning management

fees. This could be a potential conflict of interest, but Marriott has enough experience

internationally and with management that this issue should not pose too many problems.

Another implementation issue is associated with the brand names that Marriott has acquired.

New World exists in China and Hong Kong while Marriott holds the Ramada brand overseas

and HFS owns the US rights. The CEO of Ramada would like Marriott to sell the rest of the

rights to HFS (Diamond). I feel that it is in Marriott's best interest to hold onto the Ramada

name because it gives the company many international properties, but to consider changing

the name altogether to associate it more closely with the Marriott name. This would separate

the US operations from the International, and allow Marriott to further capitalize on its brand

equity. The New World name should be kept the same since it is so prevalent and well-

known in the Asian market that Marriott wants to expand into.

Marriott new sales force strategy:

Marriott International has launched a new sales structure ─ Sales Force One ─ a

companywide customer-centric initiative, aimed at simplifying the sales process for

customers and penetrating untapped markets. The structure of Sales Force One allows the

customer to work with one primary point of contact, who represents all brands and

properties, enabling Marriott, theoretically, to accommodate all of the customers’ needs in a

one-stop fashion.

Recognizing the increasing complexity and variety of channels through which customers

book rooms and meetings, Marriott International conducted extensive research to ensure that

current sales strategies resulted in efficiencies and elevated levels of sales performances.

The strategy also encompasses the relocation of sales representatives from individual

properties, in which they were primarily focused on booking business for one specific

property, to these regional sales offices, referred to as home offices, focusing on a select

group of accounts headquartered in a specific area in the market. As opposed to serving only

one property, these representatives have the ability to sell business for their accounts in any

property within their region and, if need be, nationwide. Additionally, to tie compensation to

results, representatives have a clearly-defined set of booking performance goals for their

accounts ─ and for specific properties within the region. Many of the smaller properties, with

little or no meeting space, will no longer have on-site sales associates, while some of larger

properties will continue to have on-site sales associates to handle larger and more complex

group business.

The focus of Sales Force One also revolves around proactively creating new leads and

opportunities through organizing and penetrating untapped markets. Research indicated

individual properties reported that they lacked the man-power and capital to successfully

reach all of their potential markets and clients. Sales Force One is Marriott International’s

solution to this challenge. By organizing untapped accounts into a nationwide database and

structuring the proactive development of relationships with potential customers, Marriott

International strongly believes it can more effectively penetrate the overall market.

By sharing sales resources, clearly defining roles and responsibilities, tying compensation to

results, and aggressively pursuing under-penetrated high-value accounts, Sales Force One is

Marriott International’s initiative to gain a competitive advantage in relationships with

customers ─ along with owners and franchisees ─ allowing for a better alignment between

all of Marriott International’s stakeholders. As Marriott International acknowledges, this

market-driven, new sales strategy and structure may undergo adjustments and modifications

as it is rolled out throughout the country to ensure its success and maximum impact in the

market. The implementation of such a wide-ranging program underscores the importance for

the hotel industry to address the ongoing changes in travel managers’ and meeting planners’

booking strategies.

Function level strategy

Provide best products possible

Customers associate quality with Marriott. They expect it and will pay for it. Managers must

see that customers receive that quality in every area by not compromising on the company's

high standards. Providing the best products possible also means giving customers what they

want. By paying attention to trends and preferences among diners and travelers, you can better

serve your customers. It all starts with basic quality. You can change or enlarge menus, increase

advertising, reduce prices, increase portions, renovate, change uniforms, or even increase

services. But the bottom line is quality. Restaurants, for example, must offer a variety of food

items that are always fresh, tasty, and attractively presented. Regardless of your operation,

maintaining quality will do just as much -- and probably more -- to improve financial results than

any other actions. In many cases, employees are instructed to follow Standard Operating

Procedures, recipe cards and similar guidelines to consistently produce the best product possible.

At other times, managers must rely on an employee's own style and initiative to do the job right.

Whether or not your employees must "follow the book," the attention you pay to their actions is

the true guarantee of a quality product being produced. A manager's job is to deliver an

outstanding product at a fair price and make money doing it. Managers must realize that there are

always operating costs that could be reduced through more effective scheduling of hourly

workers, through more competitive purchasing and through being careful about everything they

spend money on. As one of those managers, you must try to control your expenses and carry

forth the Marriott traditions of giving value to your customer along with attention to detail and

attention to your people. When you do, you will help ensure that the company's other tradition -

that of profitable growth - will always continue.

Keep units clean and attractive

Clean operations start with people who work clean. Whether it's untrained or sloppy

personnel, improper or inadequate equipment, or an unorganized work environment,

managers are always looking for the why behind an unclean situation so they can eliminate

its cause, not just clean up the mess. Exteriors should be maintained as carefully as interiors.

Parking lots, driveways and sidewalks should be cleaned daily or more often if needed. Areas

farthest from main buildings should receive the same attention as areas closest to main buildings.

Hands-on management

The more a manager has a sense for the details which make an operation or department

succeed, the more successful that manager will be. Operation managers learn these details

best from habitually managing "on the floor" - getting out of their offices to directly

supervise employees and interact with customers to learn what they want and how well they

are being served. Staff managers stay in touch with the operations and people they support in

order to understand and meet their needs. You exert a powerful, positive influence or your

people and customers through your willingness to Set The Pace, Be Involved In Details, and

Follow Through. Marriott managers constantly focus on results by continuously reevaluating

and challenging what they and their people are doing.

Concern for employees

Marriott's concern for employees starts with its "Guarantee of Fair Treatment" policy, an internal,

decentralized means for all employees to express problems and have them resolved in a timely

manner. In the early years, founder J. Willard Marriott knew most of his employees by name.

Even today, Marriott's top executives and managers make every effort to communicate through

property visits, memos, rap sessions, and regularly scheduled meetings. Yet, as the company has

become larger and larger, the tradition of top management knowing all employees has become

impossibility. Employees, however; still need to feel that they are important and that somebody

cares. That "somebody" is you, their manager. The time you take - in your own style - to show a

personal interest in your people is an investment that will pay high dividends in building

teamwork and increasing productivity.