(g) The Internal-External (IE) Matrix
Strengths
Weaknesses
Competitive advantages – strong bands and worldwide presence
Group CEO has been in tenure for more than 35 years.
A proven business model of managing and franchising hotels rather than owning them
Group revenue is too dependent on lodging; not diversified in terms of products and markets, Too dependent on North America
Strong team of associates
Pricing strategy is comparative high
Portfolio expanded to 114 properties with another 55 in the pipeline
Limited ability to refinance existing debt
Rich diversity of culture make M stronger, culture more vibrant, business model more flexible and work more meaningful
Increased vulnerability to adverse economic and industry conditions, and to interest rate fluctuations
Award winning guest loyalty program
Inflexible to make, or react to, changes in business nature
Brand innovation – will open first two EDITION hotels, its new lifestyle boutique brand
High debt ratios with less repayment ability; less dividends
An information rich and easy to-use website, a multi channel central reservations system
Failure to maintain the integrity of interest or customer data could result in faulty business decisions, damage of reputation and/or subject us to costs, fines, or lawsuits
Cost saving measures and restructuring in 2008 and 2009 associated with Timeshare segment, hotel development, above-property-level management and corporate overhead
A failure to keep pace with developments in technology could impair our operations or competitive position
Discontinuation of synthetic fuel business in Nov 2007
Facing reduced coverages and increased costs of insurance.
Strong management/leadership – Mr J.W. Marriott, Jr with over 50yrs of leadership span in hospitality industry
Reduced in gains on sales of real estate to 10m in 2010 from 14m in 2008 and 39 in 2009
Brand name recognition, strong tradition in lodging industry; solid branding – promote demand for franchise; franchise fee growth from $296m in 2004, $329m in 2005 to $390m in 2006
Equity in losses of $66m in 2009 increased by $81m from equity in earnings of $15m in 2008 and primarily reflected a $30m impairment charge in 2009
Rev growth from $10.1b in 2004 to $12.16b in 2006
General administrative costs increased by $30m (4 percent) to $803m from $773m in 2007.
For eight yrs in a row, Marriott has been ranked by “Fortune” as among the “100 Best Companies to work for” which well justified its employee satisfaction to the company
Operating income decreased by $418m (35 percent) to $765m in 2008 from $1,183m in 2007 (2009 operating income??)
Diversed portfolio of 3000 lodging properties, representing 19 brands in almost 70 countries and territories
Interest income decreased by $14m (36 percent) to $25m in 2009, from $39m in 2008
Opportunities
Group revenue is too dependent on North America, accounting to 62% of total revenue.
Based on Direct Competitors Comparison 2005, Marriott is the largest market capital capitalization - $16.97bil as compare to its closest rival (Accor, Hilton, IHG).
the stock price has tumbled from a high of $37.89 in the second quarter of 2008 to $24.14 in the fourth quarter of 2009
Demand for more lodging supply in Beijing for the Olympic
M owns very few lodging properties. Unresolved disputes with the owners of the hotels that we manage or franchise may result in litigation
Not only in main Beijing city, but suburb/surrounding cities
Depend on capital to buy, develop and improve hotels to develop timeshare properties. M or hotel owners may be unable to access capital when necessary
New property openings in Asia, Middle East, etc…. (refer AR 07)
In 2009 the three major credit rating agencies reduced M’s long-term debt ratings to their lowest investment grade level ; further downgrades could increase cost of capital, limit M’s access to the capital markets, permit access only on terms that ar Marriot quarterly revenue growth in 2006 is 7.4% compared to Hilton’s margins of 29.4%. IHG’s gross margins at 54% is far exceeding Marriott’s gross margin 13.6%
RevPAR growth from 2003 to 2007, (show chart from AR07) – portraits the highest among its direct competitors
Synthetic Fuelconsisted of four coal-based synthetic fuel production facilities (the “Facilities”) because tax credits under Section 45K of the IRC are not available for the production and sale of synthetic fuel produced from coal after calendar year-end 2007, and because high oil prices during 2007 were expected to result in the phase-out of a significant portion of the tax credits available for synthetic fuel produced and sold in 2007, on November 3, 2007, we shut down the Facilities and permanently ceased production of synthetic fuel. Accordingly, we now report this business segment asa discontinued operation.
Marriott is the first company in its industry to serve food without any trans fat in its hotels in North America.
More restrictive than those of its current outstanding debt.
As of Sept 2006, all Marriott properties in N. America are non-smoking
Threats
Tab into ‘telecommunication’ market
Travellers fears of exposure of contagious diseases, such as h1N1 Flu, SARS, etc
Competitors (pricing strategies of Marriott’s competitor)
Terrorism (Aug 2003, terrorists attack, at Bali J.W. Marriotts)
Foreign currency exchange rate – fluctuating
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