Businessmodel of Marriott

Customer Segments

Marriott has a segmented market business model, with customers who have slightly different needs. The company targets its offerings at consumers of varying economic backgrounds through hotel brands that offer different price points and service levels.

Value Proposition

Marriott offers four primary value propositions: accessibility, customization, cost reduction, and brand/status.

The company creates accessibility by providing a broad range of options. It maintains a wide variety of hotel brands offering different price points – ranging from the Fairfield Inn & Suites, a moderately-priced brand that offers limited frills, to the Ritz-Carlton, a luxury brand with numerous amenities.

The company enables customiztion by offering vacation packages that emphasize specific qualities of interest, such as family-friendliness or adventurous food options. The names of these packages are Culinary Getaway, Attractions & Adventures, Couples Only, Kids Eat Free, Family Fun, Inclusive Getaway, Ultimate Golf, Honeymoon Bliss, Retail Therapy, and Spa Getaway.

The company reduces costs by offering various initiatives. It maintains Marriott Rewards, a guest loyalty program through which travelers can earn points. Specified amounts of accumulated points can be used towards free merchandise, vacations, and frequent flyer miles, as well as other benefits such as room upgrades and gifts. The company also provides savings by operating “Deals” and “Packages” sections on its website that provide discounts for various types of trips.

The company has established a powerful brand as a result of its success. It was the first motor hotel, first drive-in hotel, and first hotel chain targeted at business travelers on the U.S.’s East Coast. It operates almost 4,500 properties in 87 countries and territories and generated revenues of over $14 billion in 2015. It maintains a number of well-known brands, including the famed Ritz-Carlton. Lastly, it has won many honors, including the following in 2016 alone:

• “Best Loyalty Program“ at the Freddie Awards
• Recognition as one of the “Top Travel and Leisure Companies“ by Forbes
• Recognition as one of the “World’s Most Ethical Companies“ by Ethisphere
• Recognition as one of the “Best Companies to Work For“ by Fortune
• Recognition as one of the “World’s Most Innovative Companies in Travel“ by Fast Company ### Channels

Marriott’s main channel is its website, through which it acquires most customers. The company promotes its offering through its social media pages, e-mail marketing, online advertising, direct mail, sponsorships, its guest loyalty program, and participation in summits, trade shows, and conferences.

Customer Relationships

Marriott’s customer relationship is primarily of a self-service nature. Customers utilize its service (lodging) while having limited interaction with employees.

That said, there is a personal assistance component in the form of foodservice, housekeeping services, and general customer support.

Key Activities

Marriott’s business model entails providing quality service for its customers.

Key Partners

Marriott maintains the Marriott Affiliate Program, through which it partners with third parties to extend its reach. These parties promote the Marriott brand on their platforms (websites, mobile apps, etc.) and earn commissions every time their visitors click on a relevant link, complete a hotel stay, or purchase a vacation package.

The commission rate is 4-6% for hotel stays and 3% for vacation packages. Partner benefits include access to product catalogs, an affiliate newsletter, a dedicated affiliate team, and Marriott’s “Look No Further, Best Rate Guarantee.“

Key Resources

Marriott’s main resources are its human resources, who include its customer support, foodservice, and housekeeping staff.

Cost Structure

Marriott has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements.

Its biggest cost driver is cost of services. Other major drivers are in the areas of customer support/operations and sales/marketing, both fixed costs.

Revenue Streams

Under Marriott’s business model, it franchises or manages hotels, rather than own them outright. The company has two revenue streams:

• Management Fee Revenues – Revenues Marriott earns through managing/franchising properties; they include base management fees, franchise fees, license fees, and incentive management fees.
• Other Revenues – Revenues Marriott earns through third-party licensing fees, land rental income, branding fees for third-party residential sales and credit card licensing, and other revenue.