Chinenye Ezeofor

Project 1: Marriott International External Environment Analysis

BMGT 495 6382 Strategic Management
Professor Holmes
June 3, 2024
 Company Overview
Marriott International is one of the world's leading hoteliers, founded in 1927 as a root

beer stand in Washington D.C. by John and Alice Marriott. The company, originally named the

Hot Shoppe, was initially created to provide hot food and beverages to customers. In the

following years, the Marriotts expanded and incorporated their company. They saw an

opportunity in the rising airline travel industry of the mid-20th century and opened their first

hotel, the Twin Bridges Marriott Motor Hotel, in 1957. Over the following decades, led by John

and Alice's son Bill Marriott as CEO, the company aggressively pursued an acquisition strategy

to become one of the largest hotel operators in the world. It is now headquartered in Bethesda,

Maryland, and led by CEO Anthony Capuano. Marriott International employs over 411,000

people globally and owns, manages, and franchises over 6,100 lodging properties across 140

countries and territories. In fiscal year 2023, the company generated $23,713.0 million in

revenue, representing a significant increase of 14.15% annual growth. Marriott International's

brands include leading hotel names like Marriott Hotels, Ritz Carlton, Courtyard, and

Renaissance, and it continues to seek new growth opportunities in the global hospitality industry.

Looking to further capitalize on renewed global travel demand, Marriott pursues continuous

innovation and expansion into new international markets to remain the top lodging provider

worldwide ("Company description," n.d.).

General Environment Evaluation

Marriott International is a publicly traded company. It holds a significant market share in

multiple industries in the United States, including intellectual property licensing, accommodation

and food services, hotels and motels, boutique hotels, and extended-stay hotels. Its strongest

market presence is in the hotels and motels industry, representing approximately 7.4% of the
industry's total revenue ("US company benchmark report 350259," n.d.). The following PESTEL

Analysis will examine Marriott International within the hotels and motels industry.

PESTLE Analysis

Marriott International operates in a dynamic political environment within the hotels and

motels industry. The political factors that impact Marriott International include government

regulations, policies, and geopolitical stability. One specific aspect of Marriott's political

environment is the regulatory framework. The company must comply with various government

regulations regarding labor laws, safety standards, and environmental regulations. Compliance

with these regulations ensures the well-being of employees, guests, and the surrounding

community.

Additionally, Marriott International operates globally, which means it is subject to the

political landscape of each country in which it operates. This includes political stability,

government stability, and political relationships between countries. Changes in government

policies or political tensions can affect Marriott's operations, market access, and expansion plans.

For example, The United Nations High Commissioner for Human Rights has expressed concern

over reports of retaliation against human rights defenders who oppose the development of the

Chhaya Center retail and entertainment complex in Nepal. The construction of the center has led

to the destruction of the historic Kamal Pokhari pond and disrupted the daily rituals and cultural

practices of the Indigenous Pradhan Newar community. The involvement of Marriott

International, which operates a hotel within the Chhaya Center, has raised additional concerns.

The UN experts have urged Marriott International to suspend its involvement until the Supreme

Court reaches a final decision and to ensure non-retaliation against defenders and respect for

human rights. They have also called on the Government of Nepal to protect human rights
defenders and resolve court cases related to the Chhaya Center. The UN experts have raised their

concerns with the government and relevant private companies but have yet to receive a response

from Marriott ("Nepal: retaliations against human rights defenders over business complex

'deplorable,' say UN experts," 2024).

Furthermore, Marriott International may also be affected by government incentives,

subsidies, or tax policies that promote or hinder the growth of the hospitality industry.

Government support, such as tax breaks for tourism development or infrastructure

improvements, can positively impact Marriott's business operations. Marriott operates within a

complex political environment that requires understanding and adapting to various government

regulations, policies, and geopolitical factors. The company must navigate these factors to ensure

compliance, maintain operational stability, and seize growth opportunities in the hotels and

motels industry.

The hotel and motel industry is a reliable barometer of domestic and international

economic conditions. One economic factor that has a significant impact on Marriott International

is the overall state of the economy. The hotels and motel industry is closely tied to economic

conditions, as it reflects the demand for lodging from various types of travelers. During

economic recessions, such as the one experienced after the terrorist attacks of September 11,

2001, the industry saw significant losses as travel and tourism declined. This resulted in cuts in

the hotel staff, stagnation in new hotel construction, and drops in room revenues and the food

and beverage business. Conversely, during periods of economic growth, the industry tends to

recover and experience increased revenues as business travelers and tourists increase in numbers.

For example, the industry largely recovered along with the global economy in the 2010s, leading

to increased revenues throughout the hospitality business (Auerbach, 2024).

 Another economic factor that affects Marriott International is the resurgence of corporate

travel. Corporate business significantly contributes to a hotel's bottom line, and when companies

see opportunities for business development, they conduct more business travel. The global

economy's health is integral in corporate travel growth, and with a resurgence of conventions and

business meetings, hotel growth is expected to continue. Additionally, attracting foreign travelers

is an essential economic factor for Marriott. The tourism industry, of which hotels constitute a

significant part, is one of the largest industries in the United States and is essential to most

economies. The number of foreign visitors to a country can significantly impact the hotel

industry's revenue. For example, the growth in foreign travelers visiting the United States from

2007 to 2018 showed the industry's resilience. However, the COVID-19 pandemic in 2020

severely impacted the tourism industry, with travel restrictions and business closures becoming

commonplace. The number of foreign visitors to the United States plummeted during this period.

The recovery of the tourism industry and the return of foreign travelers is critical for Marriott

International's growth (Auerbach, 2024).

Cost management and competition are also important economic factors for Marriott.

Managing costs effectively and remaining competitive in the market are essential for the success

of hotels and motels. The global economic crisis has kept energy costs in check, but the lack of

federal and state aid has increased commercial property taxes and higher taxes on room

occupancy, sales, and meals. These increased costs are passed along to guests, and unless hotels

lower room rates to remain competitive, potential guests may choose other options or forgo

travel. Furthermore, alternative rental models such as Airbnb have been a disruptive trend in the

hotels and motels industry. Such services offer competitive pricing and amenities similar to

traditional hotels, posing a significant threat to the hotel industry (Auerbach, 2024).
 Marriott International is also affected by various social factors. One key social factor is

the changing demographics of the consumer base. Age, gender, race, and family size all influence

consumer preferences and behavior ("LibGuides: Industry research: PESTEL analysis," 2023).

Changing demographics may influence Marriott to adapt its services and offerings to cater to

different demographic groups' diverse needs and expectations. Another important social factor is

consumer attitudes, opinions, and buying patterns. Consumer preferences and trends may shape

Marriott's marketing strategies and service offerings. For example, there is a growing trend

towards halal tourism, which represents a significant market segment. This trend may influence

Marriott by causing the company to adopt strategies to understand and accommodate the specific

needs of Muslim tourists by providing halal services and products that align with their cultural

and religious beliefs (Papastathopoulos, 2022).

Population growth rate and employment patterns are also social factors that impact

Marriott. Changes in population size and employment levels can affect the demand for hotel

services. Socio-cultural changes such as evolving lifestyles, values, and social norms influence

Marriott's business. For instance, there is a rising demand for personalized and customized

services that anticipate customers' ever-changing needs. Lastly, living standards play a significant

role in shaping consumer behavior and preferences. As living standards improve, consumers may

seek higher-quality accommodations and experiences (Papastathopoulos, 2022).

Technological factors play a significant role in influencing Marriott International in the

hotels and motels industry. Technological advancements have brought about new ways of

producing goods and services for Marriott. For instance, developing efficient and automated

systems has enhanced the hotel's operational processes, improving productivity and cost-

effectiveness. Additionally, technology has facilitated the implementation of sustainable

practices, such as energy-efficient systems and waste reduction measures, aligning with

Marriott's commitment to environmental sustainability (Kansakar, 2017).

Regarding distributing goods and services, technology has revolutionized the booking

and reservation systems within the hospitality industry. Marriott has embraced online platforms

and mobile applications, allowing customers to access and book their accommodations anywhere

easily. This has expanded Marriott's reach and customer base, enabling them to tap into a larger

market segment. Furthermore, technology has transformed the way Marriott communicates with

its target markets. The rise of social media and digital marketing platforms has provided Marriott

with various channels to engage and connect with customers. Marriott shares updates,

promotions, and personalized offers through these platforms, enhancing its customer relationship

management efforts. Additionally, technology enables Marriott to gather valuable data and

insights about customer preferences and behaviors, enabling them to tailor their services and

marketing strategies accordingly (Kansakar, 2017).

Marriott International is significantly impacted by environmental and legal factors that

shape its operations and strategies. Environmental factors, such as the increasing scarcity of raw

materials, pollution targets, and the importance of conducting business ethically and sustainably,

are critical considerations for Marriott (O'Halloran, 2021). Legal factors, including health and

safety regulations, equal opportunities, advertising standards, consumer rights and laws, and

product labeling and safety, also significantly influence Marriott's operations ("LibGuides:

Industry research: PESTEL analysis," 2023).

Key Trends
 Marriott operates in a dynamic business environment influenced by various factors,

including the political climate, economic changes, technological advancements, social and

environmental concerns, and legal requirements. These factors shape the company's operations

and strategies. Technological advancements have a significant impact on Marriott. New methods

of producing goods and services, distributing them, and communicating with target markets

affect the company. A key trend in this area is the growing use of automation and robotics in

housekeeping and maintenance tasks, which can enhance efficiency and improve the guest

experience (Kansakar, 2017).

Environmental factors are also relevant to Marriott. The company faces challenges

related to the scarcity of raw materials, pollution targets, and the need to operate as an ethical and

sustainable organization. A key trend in this domain is the increasing emphasis on reducing

carbon footprints (O'Halloran, 2021). Legal factors play a critical role in Marriott's operations as

well. Important considerations include compliance with health and safety regulations, equal

opportunities, advertising standards, consumer rights, and product labeling and safety laws

("LibGuides: Industry research: PESTEL analysis," 2023). A key trend in this area is the focus on

consumer rights and laws, which necessitate that Marriott ensures transparency and protection

for its guests ("Consumer laws & the hospitality sector," n.d.).

In addition to these factors, Marriott must consider key political, economic, and social

trends. In terms of political trends, government policies and regulations have a significant impact

on Marriott International's business environment. Changes in tax policies, foreign trade policies,

and internal political issues can impact the company's operations and profitability. A key trend in

this area is the increasing focus on sustainability and responsible tourism in the political

landscape, with governments implementing regulations to promote environmental responsibility

and reduce the carbon footprint of businesses, including hotels and motels ("Tourism &

sustainability," n.d.).

Economically, Marriott's revenue is greatly influenced by economic growth and

consumer spending. Economic conditions such as growth, inflation rates, and job growth impact

consumer spending and travel patterns. A strong economy with rising disposable income can

increase travel and accommodation demand. Additionally, there is a notable trend towards

experiential travel in the hotels and motels industry, where consumers prioritize unique and

immersive experiences over traditional luxury accommodations (Papastathopoulos, 2022).

Socially, Marriott needs to understand demographic changes and consumer preferences. Age,

gender, race, and family size influence consumer preferences and buying patterns. A key social

trend is the growing demand for personalized and authentic experiences among travelers, with

consumers seeking culturally immersive stays and interactions with locals for an authentic travel

experience (EHL Faculty, 2023).

Analysis of Environmental Key Trend

The environmental trend of sustainability could significantly impact Marriott

International. As a global hospitality company, Marriott operates numerous hotels and resorts

worldwide, consuming substantial energy, water, and resources. The sustainability trend

emphasizes practices that reduce environmental impact, promote conservation, and support

social responsibility. By embracing sustainability, Marriott can enhance its brand reputation,

attract environmentally conscious guests, and potentially reduce operating costs (Rudd & Mills,

2009).
 To reduce energy consumption, Marriott can integrate sustainability into its operations by

implementing energy-efficient technologies, such as LED lighting and smart thermostats. It can

also adopt water-saving measures, such as low-flow faucets and toilets, to conserve water

resources. Furthermore, Marriott can prioritize waste reduction and recycling initiatives to

minimize its environmental footprint. By implementing these practices, Marriott can showcase

its commitment to sustainability, align with customer preferences, and contribute to the global

effort to combat climate change (Rudd & Mills, 2009).

Despite the potential benefits, there are critical areas of uncertainty related to the

environmental trend of sustainability that could impact Marriott's strategy. One area of

uncertainty is the cost associated with implementing sustainable practices. While sustainability

initiatives can lead to long-term cost savings, the initial investment may be substantial. Marriott

must carefully evaluate the financial feasibility of sustainability projects and weigh the potential

returns against the upfront expenses (Mohanty, 2015).

Another area of uncertainty is the response of guests to sustainability initiatives. While

many travelers prioritize sustainability, there may be variations in their willingness to pay a

premium for eco-friendly accommodations. Marriott needs to gauge the market demand for

sustainable practices and determine the optimal balance between sustainability and affordability.

Additionally, the interpretation of sustainability standards and regulations may vary across

different jurisdictions, posing challenges for Marriott's global operations. The company must

navigate these complexities and ensure compliance with local regulations while maintaining

consistency in its sustainability efforts (Mohanty, 2015).

Furthermore, the evolving nature of sustainability trends and consumer preferences adds

to the uncertainty. Marriott needs to stay updated on the latest developments in sustainability
practices and adapt its strategy accordingly. This includes monitoring emerging technologies,

industry best practices, and evolving customer expectations to ensure that Marriott remains at the

forefront of sustainability in the hospitality sector (Mohanty, 2015).

Strategic Analysis of Mission, Vision, and Objectives

Marriott's mission is to "enrich the lives of our guests worldwide through our innovative

spirit, exceptional service, and unique experiences." This mission highlights Marriott's

commitment to providing outstanding hospitality experiences and creating lasting memories for

its guests. Marriott's vision is to be the leading global hospitality company, focusing on growth,

innovation, and exceptional customer experiences. This is evident in their mission statement, as

they strive to enrich the lives of their guests through innovative and unique experiences.

Although the company’s objectives are not explicit, based on its mission and vision, it can be

inferred that Marriott's objectives include achieving global leadership in the hospitality industry,

expanding its market presence, continuously innovating to meet evolving customer needs, and

maintaining a high level of service excellence. Marriott International's mission, vision, and

objectives demonstrate its commitment to providing exceptional hospitality experiences, global

leadership, and continuous innovation. These strategic elements guide Marriott's operations and

growth in the competitive hospitality industry (Pereira, 2023).

Conclusion

The analysis of Marriott International reveals the complex and dynamic environment in

which the hospitality giant operates. It highlights the significant impact of various external

factors on the company's operations, strategy, and long-term success. The political environment,

characterized by government regulations, policies, and geopolitical instability, presents both

challenges and opportunities for Marriott. Navigating these complexities is critical for the

company to maintain compliance and operational stability and pursue growth opportunities

globally.

With its direct correlation to the travel and tourism industry, the economic climate also

plays a pivotal role in shaping Marriott's performance. Factors such as the resurgence of

corporate travel, the attraction of foreign travelers, and the impact of disruptive business models

like Airbnb require Marriott to continuously adapt its strategies to remain competitive in the

industry (Auerbach, 2024). The social trends, including changing demographics, evolving

consumer preferences, and lifestyle shifts, present both opportunities and challenges for Marriott.

The company's ability to understand and cater to these dynamic customer demands will be

critical to its long-term success.

Technological advancements have revolutionized the hospitality industry, transforming

Marriott's operational processes, distribution channels, and customer engagement. Embracing

these technological innovations will be essential for Marriott to maintain its competitive edge.

Environmental and legal factors also have significant implications for Marriott. The growing

emphasis on sustainability and the need to comply with a complex regulatory landscape requires

the company to adopt a proactive and responsible approach to its operations. Failure to address

these environmental and legal considerations could result in reputational damage, regulatory

penalties, and missed opportunities to capitalize on the growing demand for sustainable

hospitality services.

By thoroughly analyzing the PESTEL factors, Marriott can better anticipate and respond

to the evolving industry landscape. This understanding will enable the company to formulate

strategic initiatives that leverage the identified trends and mitigate the potential risks. Ultimately,
the external environment analysis is a critical foundation for Marriott to make informed

decisions, enhance its competitive positioning, and ensure long-term sustainability in the global

hospitality market.
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