In any type of company, one of the significant challenges for leadership is connecting industry knowledge and business analytics. Bartlett (2013) observes that these two components serve as the primary sources of information for decision makers. Managers generally hold much insight and wisdom in their accumulated experience, but unfortunately, any gaps in the facts are commonly filled with opinions (Bartlett, 2013). Instead of relying on subjective sources, leaders can utilize business analytics to validate new ideas and test industry beliefs (Bartlett, 2013).
A starting point for effective business analytics is to recognize that data and information are not ends in themselves; rather, they are means to effective decision-making with measurable outcomes. Wells (2008) reflects this idea by saying, “. . . the heart and soul of analytics is about making a difference—providing the insight and understanding to support informed decisions and confident actions, and providing the feedback that is needed to create a learning organization” (para. 20). Data analysis works best with clearly articulated definitions of why information is being created and analytic activities are being performed (Wells, 2008).
This paper endeavors to apply the concepts of business analytics to the publically traded hotel company Marriott International, Inc. An overview of the organization is outlined, followed by a review of its future business objectives and how the application of data tools can be used to help the leadership achieve its goals. Specifically, the use of key performance indicators (KPIs), visual mapping, graphics (i.e. scatterplots/sparklines), and categorical data will be assessed. In the latter part of this survey, the material that has been collected on the company will be drawn together for evaluation. Finally, a closing analysis and recommendation will be given regarding which corporate actions should be taken. This suggestion will ultimately be based on the overall review of the data and which actions it appears to support given the past and present information.
Company and Strategy Overview
Marriott International Inc. is one of the largest hotel and resort chains in the world. The U.S.-based company has expanded its ownership over the years through various purchases, and currently has an annual growth rate of three to five percent (Marriott, 2015). The organization has added hundreds of properties to its chain every year through its organic growth and strategic acquisitions, and its domestic market share is currently at just over eleven percent. The strong financial position of the company translates to an expected fifteen billion USD in sales during the present fiscal year (Marriott, 2015).
The strategy of Marriott International, Inc., which is outlined in their latest annual report, demonstrates a corporate focus on three objectives (Marriott, 2015). First, the company wants to continue its aggressive organic expansion in the U.S. market by increasing its market share to fifteen percent by the end of fiscal year 2017. Second, the organization desires to diversify its revenue channels in the U.S. market. Third, the corporation seeks to maintain a healthy increase in diluted earnings per share. Based on these goals, it is critical for the company to ensure that such high-level strategic objectives are adequately translated into operational and tactical level goals which can be supported by business analytics (Sims, 2007).
Purpose
One of the company’s strategic objectives that will necessitate an analytical approach in order to evaluate it is corporate expansion. Specifically, Marriott International, Inc. is seeking to increase its U.S. market share to fifteen percent by the end of fiscal year 2017. This requires the opening of nearly one hundred ninety thousand new hotel rooms, which can be accomplish by constructing new locations and acquiring existing properties (Marriott, 2015; AHLA, n.d.).
Key Performance Indicators (KPIs)
One form of data analytics is the use of key performance indicators (KPIs). Sharma (n.d.) defines these elements as metrics which are used “to determine how you are performing against your business objectives” (para. 2). Essentially, by monitoring strategic data points that impact the organization’s bottom line, managers can improve their knowledge and increase the efficiency of their decision making. Consequently, the effects strengthen the overall company.
Tracking the number of the new hotel locations is a central KPI of the progress that the organization is making toward achieving its vision and purpose (Marriott, 2012; Sharma, n.d.). Yield per room and ROE across the brands are also key indicators. By knowing what is needed to achieve their target share, they can work toward this goal through various statistical means.
First, the company can analyze income demographics to develop an approach to best accommodate market needs. Marriott International, Inc. has generally focused on the high end market, but the company is now looking at the middle income group to increase its customer base through the promotion of its Courtyard brand (Renner, 2010). Second, focus can be given to attracting lodgers who are visiting from other nations. International travelers from countries such as China and Germany are among the biggest spenders worldwide, and 2012 marked the first time that the number of global travelers passed one billion people (Statista, n.d.). Third, the company can continue studying the trends of the next generation of travelers (Marriott, 2012).
Visual Mapping
The concept of visual mapping can be described as the process of linking a company’s objectives to observable, measurable goals. The exercise enables managers to better comprehend the steps of what needs to happen, how it is to be done, and what is required. This knowledge is relevant to all of the stakeholders of the organization because it helps the business leaders assign roles, define duties, and outline responsibilities in a timely and precise manner (Sharma, n.d.).
The map for Marriott International, Inc. outlines three areas: why the goal is important to shareholders, the aspects to be transformed and how to measure the changes, and how the efforts will be implemented (see Appendix A). First, the expansion goal is relevant to the shareholders of the business because they are the ones who stand to reap from the benefits of the growth and increased market share. As the company value increases, so does the stock price of the investors. Second, the transformation targets three areas: properties, class of clients (i.e. marketing), and experience of customers. Analytical measures to monitor the progress of these aspects include: number of hotels/rooms, size of market share, profit, cost, number of new customers, sales (both overall and by region), customer satisfaction and retention, and employee surveys. Lastly, the three ways to effect transformation in these areas are: provide organized leadership for expansion projects, refresh marketing and pricing, and create customer service standards for employees.
Graphics
Visual aids, such as charts and graphs, are often helpful for showing data that is retrieved through analytical evaluation. For Marriott International, Inc., a side-by-side comparison of the company’s sales and net profits relative to their competitors, Wyndham Worldwide Corp. and Hilton Worldwide Holdings, Inc., allows for a better understanding of the current landscape. (Note: this example has been outlined in graphical form in Appendix B.)
In comparing the data from these organizations in scatterplot and sparkline form, three comments can be made. First, Marriott International, Inc. is by far the largest company when it comes to sales. As of 2015, the organization was at nearly fourteen and a half billion dollars in sales (Marriott, n.d.). Second, all three of the businesses are in different positions when it comes to dealing with changes in the economy. While each company was impacted by the recession of 2008-2009 (Wyndham reported a negative net profit in 2008), the charts reveal how stable the businesses are today, as well as how volatile gains and losses in sales can be for the bottom line. Lastly, Wyndham Worldwide Corp. appears to be the most solid organization when it comes to financial consistency. Though their sales are roughly half of Marriott International, Inc., the data shows steady profits and no outliers, which may be due to conservative operations and customer loyalty. In either case, it would seem beneficial for other companies to take note of their success.
Categorical Data
Finally, the central function of business analytics is to gather statistical information and organize it into relevant feedback. As Bartlett (2013) observes, data is money, and the objective is to “invest in data to support smarter business decisions” (p. 197). This is particularly relevant for Marriott International, Inc. and their goal of increasing their market share in the U.S. through the growth of their hotel presence across the national landscape.
In order for the information to be supportive to organizational endeavors, data has to be gathered which assists the corporate leaders in their critical decisions. Such measures include: number of hotels, size of market share, profit, cost, national averages, and price per share, customer satisfaction reviews, and employee surveys. Through assessing these figures, the top personnel of Marriott International, Inc. can determine what is wise for the company and its shareholders. (Note: graphical forms of the following data are outlined in Appendix C.)
First, a basic overview of the finances and property of Marriott International, Inc. reveals that the company currently has sales of nearly fourteen and a half billion dollars, with a net profit near eight hundred sixty million dollars, and costs over thirteen billion dollars (Marriott, 2015). The organization has thirty-five hundred properties in the U.S. that comprise nearly five hundred fifty-eight thousand rooms, generating a national market share of eleven percent (Marriott, 2015; AHLA, n.d.). Furthermore, the corporation’s North American average occupation rate is near seventy-five percent, its average room rate is nearly one hundred eighty dollars, and finally, its average RevPAR is one hundred thirty-four dollars (Marriott, 2015). All three of these figures are above the national averages in the U.S. lodging industry (AHLA, n.d.).
Second, the stock price of Marriott International, Inc. (MAR) can be measured by looking at its historic year-end trends. Going back as far as 2009, the value of the company’s shares has gone up two hundred fifty percent, from twenty-six dollars to sixty-seven dollars (Marriott, n.d.). The stock ended its highest in 2014 when it was seventy-eight dollars (Marriott, n.d.).
Third, two types of surveys that can be helpful for identifying and measuring corporate transformation are: customer-focused and employee-focused. Data for the first category shows that the Marriott Customer Satisfaction Benchmark has gradually risen from a score of seventy-seven in 2009 to eighty in 2015 (ACSI, 2016). The organization’s highest result of eighty-two was achieved in 2013, while its lowest score occurred in the year 2009, followed by another dip two years later in 2011 (ACSI, 2016). Data for the second category shows that the employees of the company are satisfied with their environment in the organization, whether in the home office or at a particular location. Specifically, the categories relating to the themes of employee pride, community involvement, staff friendliness, and overall work environment all earned scores somewhere in the range of eighty-eight to ninety-one percent (Great Place to Work, 2016).
Evaluation
Generally, Marriott International, Inc.’s products still remain to some of the most sort after products. The overall demand for its Marriott International Inc. brands is still at its peak. This can be seen from the fact that the development pipeline of Marriott International Inc. has generally increased. Available data show that in the first quarter alone, Marriott International Inc. saw an increase in excess of 275,000 rooms. This was a higher increase as compared to the previous figure of the previous quarter at 240,000.
It is important to note that innovation at Marriott International Inc. is not only centered on generating creative business ideas but rather it is also much to do with the aspect of reviewing ideas. Main aim of this approach is centered on identify those ideas that are viable and are most likely to bring about successful innovations. The only unfortunate thing when it comes to Marriott International Inc.is that mistakes are not easily identified in process of idea review processes. This therefore has the potential of resulting in possibility of rejecting some of the most potential and most innovative ideas in favor of less innovative ones (Marriott, 2015).
With regard to Marriott International Inc.’s brands, it is apparently clear to observe that Marriott International Inc.’s flagship brands, such as Marriott and Courtyard continue to be some among the most favorable brands. It is estimated that together, these particular brands make up about 35 % of Marriott International Inc.’s pipeline globally. On the other hand, it is observable that Marriott International Inc.’s seven newest brands, many of which are in the lifestyle space are so much popular with a new generation of travelers. These brands are also gradualy but steadily gaining boundless grip of the market. They comprise of more than 15 % of Marriott International Inc.’s pipeline globally.
Closing Analysis and Recommendation
Given the adjustments that Marriott International Inc. experienced in the last quarter where rooms increased to 275,000, compared to 240,000, it estimated that the company will carry on to effectively adjust and exclude some expenses such as transaction cost. These are costs related to Starwood acquisition. It is likely that the profit margins of Marriott International Inc. as well as the earnings drift, projected estimates of the assumption as well as the available number of lodging properties may add to Marriott International Inc.’s system in the future.
Since Marriott International Inc. is still an undisputed leader in its area of business. Marriott International Inc. should invest more in the following areas since these areas are major areas to watch in the near future: More hotels. Marriott International Inc. should invest in more hotels in order to ensure constant flow of profits. Marriott International Inc. should develop an aggressive growth plan. Such a plan is likely to be successful given the fact that it can easily be fueled by the already existing economic growth as well as the fast rising middle class. Marriott International Inc. should focus much on concentrating its expansion efforts majorly in Africa and Asia. These two continents have the potential since they are the continents that are experiencing the highest rates of rising middle class which is the focus of Marriott International Inc. there is also the need to change the international business model from that which is only focused on venturing on new areas but rather encourage and attract locals around the globe. Modern technology has become the game changer in the hospitality today. Marriott International Inc. thus needs to tap modern technology that is today sweeping across the business world today. Several changes are hitting the hospitality industry and these changes can be managed effectively by having the most appropriate technology in place. It is only by having this aspect put under consideration that Marriott International Inc. can be in a position to realize its business objectives.
References
ACSI. (2016). Benchmarks by company. Retrieved from https://www.theacsi.org/index.php?option=com_content&view=article&id=149&catid=&Itemid=214&c=Marriott
AHLA. (n.d.). Lodging industry profile. Retrieved from https://www.ahla.com/content.aspx?id=35603
Bartlett, R. (2013). A practitioner's guide to business analytics: Using data analysis tools to improve your organization's decision making and strategy. New York, NY: McGraw-Hill.
Great Place to Work. (2016). Marriott International. Retrieved from http://reviews.greatplacetowork.com/marriott-international
Hilton. (n.d.). Hilton Worldwide Holding, Inc. SEC filings. Retrieved from http://ir.hiltonworldwide.com/financial-reporting/sec-filings
Marriott. (n.d.). Marriot International, Inc. SEC filings. Retrieved from http://investor.shareholder.com/MAR/sec.cfm
Marriott. (2012). Marriott International Inc. vision. Retrieved from https://investor.shareholder.com/mar/marriottAR11/pdf/MarriottVision2012.pdf
Marriott. (2015). Marriott International, Inc. 2015 annual report. Retrieved from http://files.shareholder.com/downloads/MAR/0x0x884644/934434D3-0551-4E9D-94EF-687390A5AE6F/2015_AR.pdf
Renner, L. (2010). Strategic Analysis of Marriott International, Inc. Retrieved from http://islandora.wrlc.org/islandora/object/0910capstones%3A145/datastream/PDF/view
Sharma, H. (n.d.). How to translate business objectives into measurable goals. Retrieved from http://www.seotakeaways.com/translate-business-objectives-measurable-goals/#ixzz2IDHXR3ox
Sharma, H. (n.d.). Key performance indicators (KPIs) – Complete guide. Retrieved from https://www.optimizesmart.com/understanding-key-performance-indicators-kpis-just-like-that/
Sims, R. R. (2007). Human resource management: Contemporary issues, challenges, and opportunities. Charlotte, NC: Information Age Publishing.
Statista. (n.d.). Travel, tourism, & hospitality. Retrieved from https://www.statista.com/markets/420/travel-tourism-hospitality
Wells, D. (2008, April 8). Business analytics – Getting the point. Retrieved from http://www.b-eye-network.com/view/7133
Wyndham. (n.d.). Wyndham Worldwide Corp. SEC filings. Retrieved from http://investor.wyndhamworldwide.com/phoenix.zhtml?c=200690&p=irol-sec
Appendix A
Appendix B
Below are the financial figures of the three companies for the past seven years, followed by a scatterplot (scatter chart) which illustrates the past and present flow of the numbers. Note: the data is compiled from each company’s annual reports, and all dollar amounts are in millions.
Microsoft Excel offers a tool called spark lines, which gives users the ability to express data in smaller graphical forms. The previous sales and net profit can be highlighted this way:
Appendix C
First, here is a basic overview of the finances and property of Marriott International, Inc. (Marriott, n.d.). Note: categories marked with an asterisk (*) are dollar amounts in millions.
This data (blue) is now compared to the national averages listed below (red) (AHLA, n.d.).
Overall, Marriott International, Inc. has passed the eleven percent mark toward reaching its goal.
Next, the company’s stock price serves as an important piece of data as it reflects the shareholders’ interest in the goals of the organization. Below is the historic trend of Marriott International, Inc. (MAR), showing its year-end stock price dating back to 2009 (Marriott, n.d.).
Finally, two types of surveys are significant for identifying and measuring how corporate transformation occurs. The first is from the viewpoint of patrons, shown here (ACSI, 2016).
The second is from the perception of employees, recorded below (Great Place to Work, 2016).
