Case Study- 4 The Marriott-Starwood Merger: Navigating Brand Portfolio Strategy and Brand Architecture By Akanksha Bansal- 25010 Akhil Krishna- 25012 Anjali Agarwal- 25027 Namrata Agarwal- 25084 Marriott International 1. American multinational that manages and franchises a broad portfolio of hotels and related lodging facilities 2. Founded by J Willard Marriott 3. Largest hotel chain in the world. With 7,484 properties and 30 brands in 131 countries 4. Known for people first culture- they believe in taking care of the associates who in turn will take care of the customers 5. They are committed to create a positive and sustainable impact through their serve 360 program guided by the UN Sustainable Development Goals. 2 Starwood Hotels & Resorts 1. Starwood had 11 brands and owned, managed, or franchised 1,297 properties comprising 370,000 hotel rooms in approximately 100 countries before it got acquired by Marriott in 2016. 2. Originally formed by the real estate investment firm Starwood Capital to take advantage of a tax break. 3. Credit card partnership with American Express as a loyalty program 4. Had partnered with 32 airlines. 3 Facts about the case 1. 2. 3. 4. Marriott International acquired Starwood Hotel & Resort- $13.3 bn Marriott is world’s largest lodging company Sub-brands took over legacy hotel brands 11 brands to its already robust 19 hotel brand portfolio 5. Tina Edmundson, Marriott's global brand officer, was charged with making sense of the brand portfolio and designing a strategy that would clearly differentiate each brand from the others. 4 5 Question 1 Assess the health and efficiency of Marriott’s post-merger brand portfolio. What are you most concerned about? How might you address these concerns via brand portfolio strategy and/or brand architecture? 6 Answer 1. 2. 3. 4. 5. 6. 7. 8. Boost its room count, economies of scale & cost saving Potential for greater negotiating leverage against OTAs Inferior financial performance of starwood Overlapping of brands which could cause confusion Since each brand has their own loyal customers they have to stand alone Cannibalization Differentiate based on the value proposition Each Brand personality 7 Question 2 Is 30 brands too many/just right/too few for Marriott? Why? 8 Answer 1. Overlap-because they are too many 2. No proper differentiation, hard to “get” the brand idea 3. Just focusing on creating an asset light portfolio- reduces the risk and investment cost 4. Actualizing different value Propositions through product & service features to create a coherent brand experience 9 Question 3 Should Marriott retain all 7 of its luxury brands? Why or why not? On which bases should the remaining luxury brands be differentiated from each other? Specify a distinct role and scope of each brand. 10 1. The Ritz Carlton is the legendary brand that we can accept as the standard for luxury in the industry. For this brand, it’s all about our ladies and gentlemen creating indelible moments for our guests and that’s really at the heart of what the brand promises. 2. St Regis is a global destination where every detail, every interaction, and the environment that it lives in, is precisely designed. 3. Edition is a very sophisticated experience combined with a contemporary lifestyle. 4. W Hotels from a personality perspective is bold, playful, and extravagant. 11 5. JW Marriott as being the lens of approachable modern luxury, inspired by our legendary namesake. This brand is built around people who are really passionate about design and anticipatory enrichment, ensuring that guests leave more fulfilled than when they arrived. 6. Bvlgari is exquisitely styled, very contemporary hotels and resorts. The brand is founded on the principles of the renowned jeweler. 7. The Luxury Collection is a glittering ensemble of locally authentic hotels. We talk about this brand’s hotels as defining the destination. It has palaces in Vienna and Venice and haciendas in the Yucatan Peninsula. These hotels are really connected to the locale. 12 Question 3 Should Marriott maintain all 4 of its soft brands? Why or why not? 13 Yes, they should maintain all 4 of its soft brands because ● Able to differentiably curate Hotel property into a collection that reflected its appropriate market position. ● As the new brands after the merger resonate with the Marriott brand “Autograph” and easier to bring into the fold. ● More opportunities with increase in brand portfolio. 14 15 Question 4 How do you feel about Marriott’s use of dual-brand hotels? How do you feel about Marriott’s multi-brand advertising campaign, “Golden Rule”? Are these good or bad solutions to the company’s brand portfolio strategy dilemmas? What problems are they designed to solve? 16 Answer ● Dual branding helps to cater the two different customer segments within the same property ● Saves cost and give better ROI They operates in these two methods: 1. Linked Method- conservative and mandated that two brands are seperate 2. Blended Method- to morph the brands together as a whole 17 Marriott has launched its Golden Rule campaign for 4 select service brands to showcase this philosophy by highlighting human connections that occur as a result of treating others the way you would like to be treated. -To showcase the brand which celebrates humanity, warmth and human connections. -Beyond a campaign, this illustrates that the hospitality they deliver can serve as a guiding principle of how all people should treat each other. 18 19 Question 5 Evaluate how Marriott uses its corporate brand throughout its brand architecture system. What changes, if any, would you recommend for its use going forward? Why? 20 Answer 1. They are an employee first organisation and work with local communities However, 2. We would recommend the following changes. (based on few testimonials) 3. Aim to evoke a true passion for its entire brand ecosystem and what it stands for. Should train its employees at regular intervals to ensure consistent service delivery. 4. Personalised experience based on technology to create high guest satisfaction 5. Attract Millennials 49% last minute rest traditional lodging and 80% use social media to make decisions. 6. Engage the customers through their social media pages. 21 22 23 Question 6 ● What should Marriott do with the Starwood brand? 24 What should Marriott do with the Starwood brand? - They should retain the brand as the starwood brand also have loyal members (21 million). The starwood added 1300 new hotels and 370000 rooms. This merger was projected to cut down costs by $250 million. The starwood brand has a huge global presence, 51% of their rooms are located outside the North America generating 50% of their revenues. The starwood brand, although caters to the upper upscale tier, have offerings that are different from the offerings of Marriott’s. 25 ● How many brands does a company need to have and how should they best manage those brands as a coordinated portfolio? 26 ● How many brands does a company need to have and how should they best manage those brands as a coordinated portfolio? - - - Brands are expensive assets to develop, launch, and maintain which takes a great deal of time and efforts. So many companies stick to fewer but well performing brands. As long as the company have enough resources and infrastructure to fulfil the promises they make, without compromising on the performance and on the standards, they can have as many brands as they could. An unexplored market segment can be an opportunity for the competitors. So companies, if it is feasible, could have an offering for every segment in the market. 27 ● How to construct and manage an efficient portfolio that maximizes the company’s return while minimizing the company’s risk? 28 ● How to construct and manage an efficient portfolio that maximizes the company’s return while minimizing the company’s risk? 29 30 Thank You!
