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Hotel Industry: Marriott, InterContinental, Hyatt
Transcript of Hotel Industry: Marriott, InterContinental, Hyatt
Jeff DeLuca Business and corporate strategies Disruptive technologies? Hypercompetitive industry? Corporate strategy How do companies compete? Predictions Who will have competitive advantage? Recommendations Company/industy Overview External Analysis Internal Analysis ? Company Performance Brands: InterContinental, Crown Plaza, Hotel Indigo, Holiday Inn, Holiday Inn ExpressStaybridge Suites, Candlewood Suites
130 million room nights annually
12 countries account for 2/3rds of the world market by rooms; IHG has significant scale in most of them. Guests will be able to tailor every aspect of their hotel experience- personalized service- bedroom, pricing, communication, the journey, hotel experiences
The hotel of the future will be more personal, connected and responsive- intelligent furniture, adaptive rooms, individually tailored nutrition, personalized entertainment
1. Augmented reality- a blend of virtual and physical reality
2. Social networks 1. Brand
4. Investment support
5. Service - YES! Brand differentiation: 18 brands- luxury, lifestyle, extended stay, modern classics, timeshare. Global reach- 3400 properties (600,000 rooms) in over 70 countries.
Strategic objectives: double reach in Europe by 2015; make China largest market after Noth America - Numerious competitors
- Mature industry- large consolidated players, established alliences
- no real substitutes
- Barriers to entry- high (established brands, high capital investment and knowledge required, best locations are already taken)
- Competitive advantages among current players are very important A failure to keep pace with developments in technology could impair operations or competitive position. An increase in the use of third-party Internet services to book online hotel reservations could adversely impact revenues. Hyatt Managing: 46 %
Franchising: 52 %
Owning: 2 %
Result: more stable earnings in periods of economic softness while continued unit expansion. Resources Capabilities Governance Core competencies 2,000 business partners hotel owners throughout the world.
Franchising- largest part of the business: over 3,800 hotels operate under franchise agreements.
Managing- 633 hotels worldwide.
Owning-15 hotels worldwide (less than 1% of our portfolio). 4,400 properties in > 100 countries
2009: opening of > 400 hotels
World Rebrand of Holiday Inn : $1b
Largest Loyalty Program : 48 mil
Sales Force > 8,000
8% Share of Branded Market Intercontinental 445 properties in 45 countries
Focus: Luxury Hotels; New Property Development; International Expansion
Major Global Cities
21 of 25 most populous urban centers Hyatt Marriott 3,400 operated or franchised properties in > 65 countries
Operates > 1,000 of its hotels
Revenue : lease and management fees
2009: opened nearly 38,000 new rooms
Pursue growth in Europe and Latin America : joint venture with AC Hotels : 90 hotels
Focus: International Expansion : China
Pipeline : 600 hotels In the top 3 in 7 of the 12 largest hotel markets in the world. Marriott With 52 million members worldwide, IHG’s loyalty scheme, Priority Club Rewards, is the largest in the hotel industry. ICH Great hotels guests love. Hyatt "posh !" People. Places. Purpose. "the extraordinary" "diverse" "trusted and reliable" "the international traveller" "moving into trendy" "luxury for business travellers" moving towards family fun "dramatic design, creative cusine, attentive service" sophistication
The Whole Experience Luxury Wide Appeal "Tradition and Value" You're more than welcome.
Advantages: limited capital investment, reduced volatility of the fee-based income stream, compared with ownership of assets. Managed: 162
Increase focus on franchising
Pursue strategic aquisitions and alliances Member properties preserve their branding and personalities, while reaping the benefits of the chains's reservation, marketing and technology platforms. 2. Brand Differentiation 3. Global Scope As more customers use social media- new ways to connect and communicate with customers on
YouTube, Twitter, Facebook, and through blogs- "WOM effect" This strategy allowed substantial growth while reducing financial leverage and risk in a cyclical industry. Additionally, maintain financial flexibility by minimizing capital investments and adopting a strategy of recycling investments made. Business Strategy
Understanding who their customers are, their needs
and how to deliver value to them.
1. Improvement in the performance of existing Hotels
Increase hotel stays
Enhance operational efficiency
2. Expand presence in attractive markets How are they run? All:
Board of Directors
CEO as Head of Company
Line of Executives : Function : HQ
Line of Executives: Geography
Line of Executives: Based on Brand
Franchise and Owner Relation Group
1. Business model: manage and franchise hotels rather then own then- "their partners own the bricks and mortar." Competitive Advantages:
1. Experience and culture
2. Leading brands
3. Brand preference
Marriott rewards HUGE In Essence
is What can they do? Operating/Control System What they got? Great location advantages Sources: 2007 - Strong year
2009 - –Weak year
2010 - Corporate spending has returned, consumer outlook remains weak Marriott
Founded in the 1920s
Opened first hotel in 1957
Originally named Hot Shoppes
Founded in 1777
Based in UK
Founded by William Bass
Founded in 1957
Taken over by Donald Pritzker
Fastest growing hotel chain until 1972 1. Focus on corporate travelers 2. Plan construction when industry is in decline RevPAR contracted from June 2008 to March 2010, by nearly 20%.
Occupancy in 2009 hit 55%, not unprecedented; 2002- 59%, 1933 -50.6%
2009 Occupancy - 55% Competitive advantages:
reasonable prices yet outstanding services January 2010, YoY occupancy was flat, at 45.5%. In September, it rose to 59.9%. Overseas visitors fell 6% from 2008 to –2009. Outlook is positive in the future, predicted to rise 15% through 2013. Brands:
Park Hyatt (small, luxury, targets individual traveler, european feel)
Andaz (newest, personal style, innovative design, local identity, casual elegance)
Grand Hyatt, Hyatt Regency (core brands, serve culturally rich destinations, attract business and leisure travelers, large scale meetings, conventions),
Hyatt Place, Hyatt Summerfield Suites and Hyatt Resorts Unemployment has hurt the industry. Business travel likely to return to pre-2009 levels after public outrage over AIG. 3. Marriott - Steady Full recovery is still a few years away. 4. ICH - New Giant not going anywhere! 5. Hyatt - Consistent in Business nothing exciting strategy against independent competitors who are offering an unique product Hotel Distribution
Reservation Systems (online, twitter)
Travel Site Partnerships
Employee Training product differences ensure to deliver best experience and reduce threat of decrease in market share from other hotel chains Strategy:
"Where people power makes the difference: 'great hotels guests love' is not just a slogan for this global innkeeper. It's a business strategy that has dedicated and knowledgeable employees at its core." Result: employees who are committed to customer satisfaction Personal dedication is instilled as part of the culture at the giant hospitality firm, which owns seven premier brands including Holiday Inn, Crowne Plaza, and Intercontinental Hotels & Resorts "Great hotels guests love" became IHG's core purpose. Employees were taught a new way of working, one that stresses an appreciation by every individual of how her job relates to the company's business needs, clearly and measurably. "The Wheel." - distinct strategic priorities: "Financial Returns," "Guest Experience," "Our People," and "Being a Responsible Business." Horizon scanning, anticipation and rapid implementation will become some of the hallmarks of successful hotel groups-ability to spot risks and opportunities, embrace innovation, experiment, and implement change programs quickly. RevPAR
Rooms InterContinental 2009 Annual Report
Hyatt 2009 Annual Report
Marriott 2009 & 2008 Report
http://goddard40.clarku.edu:3470/NASApp/NetAdvantage/showIndustrySurvey.do?code=lng Failure to maintain the integrity of internal or customer data could result in faulty business decisions, damage of reputation and/or subject us to costs, fines, or lawsuits.