Marriot International Inc. is an American multinational luxury hospitality company headquartered in Bethesda, Maryland. It operates, licenses, manages, and franchises such lodging facilities as hotels, residential, and timeshare properties in over 122 countries and territories globally. Founded in 1927, Marriot Inc. encompasses an expansive portfolio of brands offering a range of services in their hotels, lodges, and resorts. The organization’s objective is to become the world’s premier provider and facilitator of vacation and leisure experiences. Notably, Marriot Inc. operates a matrix organizational structure to enhance the management of the complex company whose operations traverses across numerous cultures, geographical boundaries, and jurisdictions. In this regard, the reporting relationship differs significantly from the traditional hierarchical arrangements to facilitate the employees’ accountability to more than one manager. Although the matrix work format creates organizational complexity in the command chain, it enhances the attainment of the company objectives due to the diversified ownership of their facilities.
Analysis of the Management Structure of the Marriot International Inc.
Marriot International Inc. operates a matrix organizational structure through which it satisfies the organizational complexity and diverse environments in which it functions. Adopting the appropriate workplace format is an integral component of every organization since it impacts many business aspects, including managerial effectiveness, performance, and ability to meet its outlined objectives and strategy implementation (Yabarow & Muathe, 2020). This implies that the overall behavior of a firm and the ability to streamline its business operations are highly dependent on the organizational structure adopted. For instance, Marriot Inc.’s arrangement is designed in a way that promotes the adoption of productivity-enhancing innovations across its facilities globally and positively influences the behavior of the operating units that comprise the organization.
As a multinational operating in multiple regions across the globe, Marriot Inc.’s structure is organized as a grid or a matrix instead of the traditional hierarchical arrangement. Consequently, employees have dual reporting relationships where they report to the regional heads and are also accountable to the managers of the facilities in which they work. Marriot Inc. adopted the matrix structure to enhance the seamless integration of its products and services across all its facilities and properties. This implies that the multinational nature of the business and environmental complexity in which it operates necessitate a cross-functional structure with regional managers. For instance, Marriot Inc. has geographical heads managing such zones as Caribbean and Latin America, Asia, Europe, Middle East, and North America. However, these regions are further fragmented into smaller business subunits of individual portfolios and properties. For instance, under these geographical units, there are functional heads managing such brands and business segments as luxury, signature, and mid-level leisure brands.
Additionally, Marriot Inc. is highly differentiated and includes many departments and specialized units designed to handle specific aspects or sectors of the business. In this regard, the organization is vertically and horizontally structured, which ensure that the company remains operationally efficient and clearly defines the roles of all mangers and subordinates. For instance, Marriot Inc. is headed by a chief executive who oversees the daily management of the entire organization. However, there are a few layers below the senior management position, which significantly eliminates the emphasis on managerial responsibilities. Cristobal et al. (2018) and Heeringa et al. (2020) contend that the combination of horizontal and vertical organizational structures allows an organization to reap the benefits of the two arrangements. For instance, while the former ensures optimized utilization of resources, creates opportunities for synergy, and enhances flexibility, the latter promotes quicker decision-making, minimizes ambiguity of duties, and promotes better design of duties.
Objectives of Marriot International Inc.
Marriot Inc.’s objective is to become the leading provider of premier leisure and vacation experiences globally. The company developed a simple but clearly defined goal to enhance its implementability and minimize ambiguity. In this regard, the company strives to leave a legacy of excellence in the hospitality industry by putting customers and employees at the center of their operations. Notably, Marriot Inc.’s thriving culture has been anchored on the company’s core values of putting people first, embracing change, and continually pursuing excellence. For instance, the company has a global footprint, which necessitates the development and integration of values that foster diversity and inclusion, and supports delivery of services to a broad customer base. Similarly, this tenet facilitates the organization’s ability to work with associates and property owners from across the globe.
How Marriot Inc.’s Structure Promotes the Achievement of its Objectives
Marriot Inc.’s operates a matrix organizational structure, which enhances the firm’s ability to achieve its objective efficiently and effectively. Abuga and Deya (2019) and Renani et al. (2017) contend that workplace arrangement is the foundation on which such crucial business functions as accountability, authority, information flow, and distribution of responsibilities are anchored. In this regard, Marriot Inc. is able to achieve its objective and implement its strategies by adopting an appropriate structure.
The complex nature of Marriot Inc.’s business requires cross-team collaboration to ensure consistency of quality services across all markets. Considering the complex nature of the multinational business, this necessitates the establishment of multiple managerial responsibility and accountability. For instance, while Marriot Inc. is responsible to ensure service consistency in all its properties and facilities, the managers of such establishments are accountable to the parent firm and owners of the hotels and lodges. This feature enables Marriot Inc. to sustain consistency of premium service across its outlets. Additionally, the organization enjoys increased company-wide interaction, which facilitates swift decision-making, enhances communication, and efficiency in resource utilization. In this regard, the organization recognizes the complexity of its business and opts to reflect the diverse aspects of its markets.
Notably, Marriot Inc. adopted the matrix structure to improve the way people collaborate, dismantle the traditional barriers to cooperation, and reflect the uniformity of the premium service globally. For instance, customers booking for a vacation under the Sheraton brand in Asia and North America can expect similar level of excellent service in the two geographical regions. This implies that the structure enables the company to adapt to the environmental complexities of the diverse world in which they operate. Moreover, there is a wide acceptance of decisions and increased transfer of knowledge between brands, regions, and outlets. Therefore, the matrix organizational structure promotes the attainment of Marriot Inc.’s objectives by reflecting the multinational nature of the business and the need to tailor services to suit the local needs.
Marriot Inc. has improved its year-on-year performance in various key performance metrics as driven by a growing demand on its leisure services, improved efficiency, and reduction in operating costs. The company’s annual growth is demonstrated by its expansion from a family-owned business to a multinational establishment operating in almost all territories of the world. Additionally, Marriot Inc. has conducted many acquisitions and divestitures, including the buyouts of such established brands as The Ritz-Carlton Hotel Company, Renaissance Hotels, and Starwood Hotels and Resorts in 2016 (Smith, 2016). Notably, the latter’s acquisition resulted in the creation of the world’s largest hotel chain. Marriot Inc.’s luxury brand has been competitive over the years in the global markets, with the average occupancy of rooms exceeding three quarters in Asia, Caribbean and Latin America, Europe, and Middle East.
From 2016 to 2019, Marriot Inc.’s revenues had been growing steadily due to the additions of new properties and rising consumer demand for luxury leisure. For instance, in 2016, 2017, 2018, and 2019, the company’s gross revenues were $15,407, $20,452, $20, 758, and $20,972 million, respectively. In the same years, Marriot Inc.’s net operating income increased year-on-year, reflecting the consistent strengthening of the firm in the hospitality industry. However, the company’s earnings were adversely affected following the outbreak of the Covid-19 pandemic towards the end of 2019 (Marriot International, 2020). These results worsened in 2020 as the pandemic severely impeded the world travel patterns. For instance, Marriot Inc.’s worldwide average revenue per available room declined by 60% and the global occupancy levels fell to 35.5% towards the end of 2020. In the subsequent year, over more than six percent of the organization’s properties globally were closed compared to the previous year’s 25% (Marriot International, 2020). In this regard, the company’s financials have improved significantly and have demonstrated progressive recovery following the implementation of measures that enhanced better management and control of the virus.
Marriot Inc.’s total assets have been growing year-on-year from 2017 to 2020. For instance, in 2018, the company’s balance sheet showed that the firm had a total asset base of $23,696 million, which grew to $25,051 million in 2019. Within the same period, Marriot Inc.’s long-term debt has risen steadily over the years. This growth corresponds to the cash dividends declared per share, which increased consistently from 2016 to 2019. In the subsequent year, the dividends fell drastically, reflecting the adverse performance of the firm, which was attributed to Covid-19. Similarly, the company’s overall profitability declined sharply in 2020 where it recorded a net loss of $267 million from a profit of $1, 273 million.
An analysis of Marriot Inc.’s business segment demonstrates that a substantial proportion of the firm’s revenues is generated in the United States and Canadian markets followed by Asia Pacific. In 2019 and 2020, the former returned earnings amounting to $16,833 million and $7,905 million, with the reduction reflecting the declining occupancy and bookings (Marriot International, 2020). However, in 2021, the various market segments are showing steady recovery as the world emerges from the stringent travel restrictions due to better management and control of the pandemic. For instance, the Chinese business subunit recorded significant growth in luxury leisure bookings towards mid-2020.
Additionally, Marriot Inc.’s stock prices have recorded a steady growth over the years. However, the prices declined sharply at the onset of the pandemic, which was illustrative of the buyers’ anticipated decline in the company’s performance. The firm’s dividend history reveals a relatively stable return with minimal fluctuations. For instance, in 2020 and 2019, the company declared a $0.48 dividend payout while in 2018, the yield stood at $0.41.
Recommendations to Increase Profitability
Since inception, Marriot Inc. has projected itself as a provider of premium operator in the hospitality industry. In this regard, the company’s business model has been targeting a distinct niche market segment of consumers seeking luxury leisure and vacations. This implies that most of their establishments and services are of premium quality and are designed to attract high-spending client base. Since pricing is the most tactical lever that drives profits in the hospitality industry, adopting an effective strategy is integral in improving the financial performance of a business.
Among the prominent recommendations that Marriot Inc. can implement to increase their profitability is to develop a range of services targeting different classes or categories of consumers. For instance, the company can incorporate a new brand through which it would offer services to clients seeking vacations and leisure at competitive rates. Although this may not require the development of new properties or hotels, the existing establishment can be designed in a way that they incorporate medium spenders. Yang et al. (2017) contends that product and service diversification to suit a broad customer base is an effective way for operators in the hospitality industry to increase their earnings. From this perspective, Marriot Inc. should have a market segment that provides services to individuals going on vacation on a budget.
Additionally, Marriot should explore ways through which such costs and expenditures as renovations should be shared between the property owners and the company. Since the company operates and manages thousands of properties and establishments globally, renovation and upgrade costs constitute a significant proportion of the business’ expenditure. This means that the company could realize a substantial saving in expenditures if it would enter into a cost-sharing arrangement with the property owners.
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Heeringa, J., Mutti, A., Furukawa, M., Lechner, A., Maurer, K., & Rich, E. (2020). Horizontal and vertical integration of health care providers: A Framework for Understanding various provider organizational structures. International Journal of Integrated Care, 20(1), 1-10. Web.
Marriot International. 2020 Annual report. Web.
Yabarow, M., & Muathe, S. (2020). Organisational structure and strategy implementation: Empirical evidence from oil marketing companies in Kenya. International Journal of Management and Applied Research, 7(1), 42-54. Web.
Yang, Y., Cao, Y., & Yang, L. (2017). Product diversification and property performance in the urban lodging market: The relationship and its moderators. Tourism Management, 59, 363-375. Web.