five force model for ntt docomo
SAMPLE STRATEGY MODEL ANALYSIS PAPER
INFO 6790
Five Forces Model
Marriott International
Marriott’s Goal, Industry and products (GIP)
• Goal: To enhance the lives of their customers by creating and enabling unsurpassed vacation and
leisure experiences.
• Industry: Lodging industry, hotels and Resorts Services.
• Product: Luxury Suites, premium suites, select suites and longer stays suites.
Barriers to Entry – Low Risk
• Economies of Scale [good]: Marriott’s operating expenses for 2019 were 19.172 million
(Marriott Annual Report 2019).
o Hilton’s operating expenses were 7.876 million in 2019. (Hilton, 2020)
o Hyatt’s operating expenses were 4.823 million in 2019 (Hyatt, 2020).
• Capital Requirements [good]: Marriott’s capital expenditures were 653 million in 2019. This
was an increase of 97 million since 2018 which can be attributed to the 2019 acquisitions of New
York – Union Square and Elegant (Marriott Annual Report 2019).
o Hilton’s capital expenditures were 295 million in 2019 (Hilton, 2020).
o Hyatt’s capital expenditures were 369 million in 2019 (Hyatt, 2020).
• Access to Distribution [good]: Marriott International is composed of 30 brands that make
Marriott Bonvoy the leading loyalty program in travel. Marriott’s brands encompass over 7,000
properties positioned in 131 countries located all over the world and together provide a range of
experiences, locations, and price points for Marriott customers. Marriott continues to increase
loyalty engagement by providing new ways for members to earn and redeem Marriott Bonvoy
points through rooms, experiences, and food (Marriott Annual Report 2019).
Supplier Power – Moderate Risk
• Presence of Substitute Inputs [bad]: Marriott’s lifeblood depends on capital markets &
liquidity. In the 2019 year, Marriott altered their multicurrency revolving credit agreement (the
“Credit Facility”) to extend the maturity date of the Credit Facility and expand the mass amount
of available borrowings to up to $4.5 billion. The Credit Facility deal ends on June 28, 2024. The
Credit Facility includes distinct pacts such as a single financial deal that restricts Marriott’s
maximum leverage (including a ratio of Adjusted Total Debt to EBITDA) to not more than 4 to 1
(Sorenson, 2019).
• Supplier Concentration [good]: Marriott is a global operator, franchisor, and licensor of hotel,
residential, and timeshare properties in 134 nations under 30 brand names. Through the asset-
light business model, Marriott administers or franchises hotels rather than possessing them.
Marriott possesses less than 1% of its premises; on the other hand, 98% are operated by
2
franchisee or management agreements. This is a decentralized model that places most investment
on the investor instead of the Marriott (Marriott International, 2019).
• Importance of Volume to Supplier [bad]: Service Properties Trust has ended its management
agreements with Marriott International for 122 hotels due to $11 million in missed payments by
MAR. In addition, in the Fall of 2020, Service Properties Trust mailed Marriott a document
utilizing its privilege to end the management agreement. Afterwards, Service Properties Trust has
created a new agreement to transfer 98 hotels from Marriott to rival Sonesta (HNN Newswire,
CoStar, 2020).
Buyer Power – High Risk
Bargaining Leverage
• Buyer Switching Costs [bad]: High concentrations of hotels in high-travel areas lead potential
customers to check initial prices about rooms rather than negotiate with a company itself. This
leads the company with a constant risk of losing new and returning customers in those areas
(Trainer, 2020).
• Buyer Concentration [bad]: Marriott retrieves customers from travel agencies and marketing
strategies. If these two avenues were to fail any way, then the rate customer acquisition and
retention would lessen greatly (Marriott Annual Report 2019).
Price Sensitivity
• Price Total Purchases [good]: $112 million of Income Taxes decreased over the last year
(Marriott Annual Report, 2019).
Degree of Rivalry – High Risk
• Industry growth [bad]: The Marriott encounters strong competition as both a lodging operator
and franchisor. In the U.S alone, there are over 1,800 lodging management companies, and
approximately 18 of them operate 100 properties. Marriott also competes with companies that
have online travel services available; for example, online services such as Airbnb and
HomeAway allow guests to book short-term rentals of homes and apartments. Not only does the
hotel chain have to compete against lodging operators for guests with the online services they
also have to in other areas such as brand recognition and reputation, location, guest satisfaction,
room rates, quality of service, amenities, quality of accommodations, security, and the ability to
earn and redeem loyalty program points (Sorenson, 2019).
• Concentration and balance [bad]: The travel market has experienced many changes associated
with the growth of internet-based commerce. Online Travel agencies (OTA) and home-sharing
platforms like Airbnb and HomeAway are the two of the changes that have had a significant
impact. OTA made up 13.3% of bookings in 2016 while the entire hotel industry accounted for
17.7%. In the top 13 markets hosts (Airbnb) manage 30% of properties and earn 37% revenue.
There are around 55,000 hotels and a 70% are brand affiliated with the top five operators
representing them. Marriott operates 14% of the rooms in the U.S., the Hilton at 12%, with
Wyndham, CHI, and IHG at 8% each (Farronato, 2018).
• Intermittent overcapacity [good]: Gross fee revenue increased 5 percent to reach $3.8 billion,
worldwide revenue per available room increased 1.3 percent, and RevPAR index increased by
approximately 200 basis points. Paid room revenues increased 11 percent in 2019. Member share
3
of worldwide occupied rooms topped 52 percent in 2019, and reached 58 percent in North
America (Sorenson, 2019).
Threat of Substitutes – Low Risk
• Substitute products available [good]: Although there are current substitutes for hotels and
resorts such as cheaper alternatives that include camping or the use of family member visits, the
lodging industry is the most popular option. A large portion of Marriott’s revenue comes from
their loyalty program, Marriott Bonvoy; over half of Marriott’s rooms booked in 2019 were
booked through Marriott Bonvoy (Marriott Annual Report 2019). The lack of substitutes for in-
person business travel allows the lodging industry to capture 13% of the trillion-dollar industry
(Trondent, 2020).
• Buyer propensity to substitute [good]: Marriott uses their loyalty program, Marriott Bonvoy, to
encourage repeat customers. The loyalty program rewards members with free nights, travel
experiences through Marriott Bonvoy Tours, and miles with partnered airlines (Marriott Annual
Report 2019). Marriott’s reward program is a large reason why customers choose to continue
business with Marriott rather than explore substitutes.
References
• Farronato, C. (2018), Marriott International: The Next 90 Years. PG 7-10.
https://hbsp.harvard.edu/download?url=%2Fcourses%2F796874%2Fitems%2F618017-
PDF-ENG%2Fcontent&metadata=e30%3D
• Hilton, (2020). Hilton Q4 2019 earnings release.
https://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-V3/quarterly-results/2019/q4-
2019-earnings-release
• HNN Newswire, CoStar (2020), Service Properties Trust Ends Agreements with Marriott.
https://www.costar.com/article/1580980145.
• Hyatt, (2020). Hyatt Q4 2019 earnings release.
https://s2.q4cdn.com/278413729/files/doc_financials/2019/q4/Q4-2019-Earnings-
Release
• Marriott International 2019 Annual Report (2019). http://media.corporate-
ir.net/media_files/IROL/10/108017/marriottAR19/pdfs/Marriott-2019-Annual-Report
• Marriott, (2020). Marriott Q4 2019 earnings release.
https://news.marriott.com/news/2020/02/26/marriott-international-reports-fourth-quarter-
2019-results
• Sorenson, A. (2019), Marriott International 2019 Annual Report. PG 13.
https://marriott.gcsweb.com/static-files/178683c9-c9d9-47b0-b115-726588f43130
• Stevenson, D. (2020, March 24). Business Travel by the Numbers. Trondent Development
Corp. https://www.trondent.com/business-travel-statistics/
• Trainer, Paul. “Why Hotel Prices Change & How to Find Cheap Hotels 2019: Skyscanner.”
Skyscanner US, 25 Mar. 2020, www.skyscanner.com/tips-and-inspiration/hotels/hotel-price-
change.
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