Business Analytics and Industry Knowledge - Marriott
The document dwells upon the review of the corporate strategy of Marriott Hotels operations in the United States. The company is one of the largest hotel and resort chains in the world, with an annual growth of over 15% across its major locations. In 2015 alone, Marriott added over 300 hotels in its chain through organic growth and strategic acquisitions. In the US the company managed to grow significantly through the acquisition of the Delta hotels, adding 10,000 rooms in Orlando in other states across the country. The Strong financial position of the organization allows expecting a total of USD 15 billion investment from shareholders and franchising to support an aggressive organic and inorganic growth strategies across the country. The total of 24,000 rooms was opened on the US market in 2015, which raised the company´s market share in the market to 27%. The strategy, outlined in the latest annual report of the Marriott Hotel Group demonstrates the focus on the following objectives (Marriott, 2015):
Organic expansion in the US market to increase the market share to 35% by the end of the financial year 2017;
Diversify the revenue channels in the US market;
Increase diluted earnings per share by 24% in 2017.
Based on the above objectives, it is critical for the company to ensure that such high-level strategic goals are adequately translated into operational and tactical level goals and KPIs (Sims, 2007).
Recommendations for KPIs
Setting KPIs is a complex task, which should be grounded on the effective communication and demonstrate the link between the operational and tactical goals and overall strategic direction of the company. This means that there is not limit to how many KPIs should be utilized for each of the objectives. But the management should demonstrate the transparency and clarity in the purpose, definition, assumptions, future targets and benchmark to ensure that the KPIs are effectively set and delegated down the organizational level (Heneman and Werner, 2005). With that in mind, before setting the KPIs, each of the objectives should be drilled down to the specific goals. The below table is the example of the Scorecard, outlining the objectives, specific goals, and the KPIs, which are set within each of the three strategic elements (PWC, 2014):
The above five KPIs, ROCE, Debt to Equity Ratio, ROE, yield and new hotel openings adequately reflect the needs of the organization and demonstrate the link with the strategic objectives of the company. It is evident that one of the major concerns of the organization is to continue strengthening its position in the US market, which demands the strong focus on profitability and improvement of financial indicators. Moreover, the focus on financial elements and specific growth targets allows better translation of the strategic objectives into operational targets.
Conclusion
The current strategic position of the Marriott Hotel Group outlines that the company is in a good financial position to further foster organic and inorganic growth. At the same time, it is evident that volatility of the external environment and the competitive pressure demand simultaneous attention to the internal cost control. ROCE, operating yield and ROE as the KPIs for the Balanced Scorecard is an effective way to demonstrate the purpose of the operational and tactical goals and link the group performance to the cost-effective strategy. Growth targets set out clear and measurable goals for the management, which can be further drilled down to the middle and junior management level to delegate the responsibilities and assign smaller specific goals to each of the operational and commercial departments. Finally, debt to equity ratio is an effective KPIs for the financial and commercial departments to identify and apply the most effective growth and expansion strategy, placing limitations on the external financing. This target is especially relevant for the company as current financial positioning is tempting to increase the external debt based on the high degree of shareholder and external partner confidence in Marriott performance.
References
PWC (2014). Guide to Key Performance Indicators. Communicating the measures that matter. PWC [Online]. Retrieved 20 July 2016, https://www.pwc.com/gx/en/audit-services/corporate-reporting/assets/pdfs/uk_kpi_guide.pdf
Ronald R. Sims. (2007). Human Resource Management. Contemporary Issues, Challenges, and Opportunities. Charlotte: Information Age Publishing.
Heneman R. and Werner J. M. (2005). Merit Pay. Linking Pay to Performance in a Changing World. 2nd Edition.Greenwich: Information Age Publishing. Print.
Marriott (2015). Marriott Hotels Annual Report 2015. Marriott Corporate Website [Online]. Retrieved 20 July 2016, http://files.shareholder.com/downloads/MAR/0x0x884644/934434D3-0551-4E9D-94EF-687390A5AE6F/2015_AR.pdf
