Revenue Optimisation Through OTA Marketing At Marriott International - Assignment Solution

• Introduction

Headquartered in Maryland, USA, Marriott International, Inc. (hereafter, Marriott or the Company) is a leading company in the hospitality industry with about 30 brands under its name and over 7000 properties across 130 countries (Marriott International n.d.(a)). The company was founded by J. Willard Marriott and Alice Marriott in 1927 (Marriott International n.d. (a)). Thereafter, they had constantly innovated, embraced changed, pursued excellence and had seen their company steadily grow to become one of the most recognised hotel chains in the world today. 

Marriott is a global operator, licensor and franchisor of hotels, residential and timeshare properties with various brand names and various service and price portfolios (Marriott International 2018). The Company boasts of having some of the best and choicest range of properties under its portfolio that any hospitality company can possible have.

At the end of 2018, the Company had 2020 company-operated properties comprising 566759 rooms and 4735 franchised and licensed properties comprising 729413 rooms (Marriott International 2018). Apart from these, it also had some unconsolidated joint venture properties. 

Marriott is guided by its principle of putting people first, whether it is their guests, subsidiaries, associates, shareholders, hotel owner, or any other who exist in the community of its operations (Marriott International 2017). It is with the commitment towards this guiding core value that the Company has grown from a nine-seat A&W root beer stand in Washington DC to the world’s largest hotel company today (Marriott International n.d. (b)). 

In 2016, Marriott acquired Starwood Hotels & Resorts and achieved huge cost savings, while also benefitting from the combined loyalty programs and leveraging Starwood’s portfolio. Such strategic acquisitions indicate the Company’s interest in higher market reach and more revenue generation. According to some industry experts (Mahmoud 2019), the future of revenue management in the hospitality sector lies with the Online Travel Agents (OTAs). OTA marketing is a growing trend in the sector as about two-thirds of all online travel bookings are controlled by the OTAs like Expedia, Booking.com and Priceline (Lawrence 2017). Although Marriott holds the largest share in direct hotel bookings among all other hotels, there is a significant revenue earning potential if Marriott can tap the growing trend of OTAs. 

Revenue optimisation through OTA marketing can help the Company reach a bigger share of the market, most of which are drawn to the OTAs. Therefore, there is a need to evaluate how an OTA marketing strategy can help Marriott generate more revenues. A further approach of this research will be to determine which customer segment opts for OTAs more and if Marriott needs to focus on that segment. The outcome of this research can help all the hotels under the parent brand Marriott.

• Research Topic

The overall research plan is to explore how much revenue earning potential the Company has vis-à-vis OTA marketing, although it had mostly, so far, favoured the traditional hotel booking norms, that is, through direct bookings through the hotel without any intermediaries. However, as Nohria, Joyce and Roberson (2003) had mentioned in their study What Really Works, “the essence of what you do will change little over time—you still need to be able to fine-tune your focus in response to new technologies, social trends, or government regulations”. This means that companies need to realign focus or re-strategize based on the market trends to derive maximum benefits. Many articles, industry reports and research papers point to the growing preference among travellers for checking lodging options via the OTAs. The reasons behind this will be discussed in detail through a literature review conducted later in this plan. However, based on a preliminary understanding of the market, it seems OTA marketing can positively impact the profitability of Marriott International, Inc.

Based on this, the main research question behind the plan is:

• How can OTA marketing optimise the revenue potential at Marriott?

The main research question generates some more associated queries, which will be discussed in this research. These are:

• Which customer segment in the travel sector are opting more for hotel booking through OTAs?
• What motivates this segment to choose OTAs over direct hotel bookings?
• Why have Marriott kept OTAs at bay as far as its sales strategies are concerned?
• Do the pitfalls of OTA marketing outweigh its benefits?

It is the objective of this research plan to explore this research question and the sub-questions. The conclusion at the end will tie back to these aims and objectives stated above.

• Strategy: A Vital Management Practice

Nohria, Joyce and Roberson’s (2003) ten-year long study on 160 companies and their various management practices revealed that there is certain pattern for success, which the authors called the 4+2 formula. This formula represents a winning combination of 4 primary management practices and 2 secondary management practices. Companies that abide by the 4+2 formula demonstrate remarkable business performance in 90% cases.

The 4 primary management practices identified by Nohria, Joyce and Roberson (2003) are strategy, execution, culture and structure. They also identified 4 secondary management practices as talent, innovation, leadership and mergers and partnerships. A company’s success, according to this study, depends on how well the company performs on the 4 primary and any 2 secondary practices.