Marriott’s Innovations has it Sleeping Soundly (for now)

Marriott International has been facing a rapidly changing operating environment: consumer preferences are evolving and digital disruptors, like Airbnb and One Fine Stay, are providing attractive alternatives for travellers seeking lodging options.

Launched in 2008, Airbnb now operates in 65,000 cities in 191 countries and has quickly grown to almost four million listings globally, astonishingly one million more than the combined inventory of the world’s top 5 largest hotel brands. For years now, analysts and pundits have been warning of the San Francisco-based start-up’s potential to upend the hotel industry. [1] Airbnb is capturing a growing proportion of both Leisure and Business travellers (Figure 1), many of whom would have otherwise stayed in hotels (Figure 2).

Figure 1: Proportion of Travellers Using Airbnb

Figure 2: Accommodation Alternative that Airbnb Replaced (Airbnb users LTM)

While the extent to Airbnb’s threat has more recently been drawn into question [2], the start-up’s rapid ascent (in addition to the growth of Online Travel Agencies) has pushed hotel companies, especially Marriott, to explore more innovative ways to create a better experience for customers. To compete with the cost advantages offered by these digital disruptors, it is more critical than ever that Marriott deliver an extraordinary customer experience.

In the last year, Marriott has launched several significant innovations, spearheaded by the company’s industry-first in-house Innovation Lab. The innovations are focused primarily on providing more comfort and convenience to Marriott’s global customer base.

• The Marriott mobile application incorporates a number of new features, including Mobile Check-in, eliminating the need to wait at counters upon arrival; Mobile Key (Figure 3), enabling entry into rooms using a mobile device; and Mobile Requests (Figure 4), enabling customers to engage with the hotel’s concierges via chat on their mobile. [3]
• Marriott Rewards extension for Facebook Messenger, Slack, and WeChat enables members to use these applications to search room availability, discover activities where they’re staying, and connect in real-time with hotel concierges. [4]
• A joint venture with Alibaba will provide customers in China with a better end-to-end travel experience– from booking stays to planning activities at their destination – through user-friendly technology solutions. [5]

Figure 3: Mobile Key                                  

Figure 4: Mobile Requests                           

Also, Marriott has partnered with Samsung to explore the launch of “smart hotels”, where, for example, hotel rooms will understand a particular customer’s preferences and have them preloaded for the customer’s arrival.  In their Innovation Lab, Marriott already has full-scale models of these rooms built. The company is testing some of these innovations at its “M Beta” hotel in North Carolina, where it enables guests to provide real-time feedback as they are experiencing the technology. [6]

Click here to see Marriott’s IoT Guestroom Lab in action and here to see how it was developed.

Despite the significant and varied changes impacting its industry, Marriott has managed to continue to succeed while creating value for its customers around the world. No one can be certain what impact Airbnb and others will have on the industry, but Marriott’s intent behind its innovations is to create value for its customers in a way that digital disruptors will have difficulty replicating. Marriott’s efforts are showing in its financial results. Revenue per Available Room (RevPAR) grew 5% and 2% in 2015 and 2016, and occupancy rates increased by about 1% in both years. [7] Both metrics are expected to grow even faster in 2017 and, partially as a result, Marriott’s stock price rose by over 60% in 2017. [8] The company was also recently recognized as one of the top 20 most innovative companies in the world by Forbes, with the likes of Google and Amazon. [9]

While it would be rash to credit Marriott’s entire success to its use of innovative technologies, there is no doubt that these efforts have played, and will continue to play, an important role. Marriott is an excellent example of an incumbent defending against intensifying disruptive threats by leveraging innovative technologies to deliver an extraordinary experience for customers.

 

Sources

[1] “Future of U.S. Millennial Travel,” Resonance, p. 29-30, http://resonanceco-uploads.s3.amazonaws.com/wp-content/uploads/2017/09/29165115/Resonance-2018-Future-of-US-Millennial-Travel-Report-1.0.pdf, accessed January 2018.

[2] Emily Bary, “For Hotels, the Airbnb Threat Could be Receding,” Barron’s, November 10, 2017, https://www.barrons.com/articles/for-hotels-the-airbnb-threat-could-be-receding-1510335326, accessed January 2018.

[3] http://mobileapp.marriott.com/

[4] Melia Robinson, “The World’s Biggest Hotel Chain is Making Big Changes to Defy the Threat of Airbnb,” Business Insider, September 27, 2017, http://www.businessinsider.com/marriott-wants-to-be-the-next-airbnb-2017-9, accessed January 2018.

[5] “Alibaba Group and Marriott International Announce Innovative Joint Venture to Redefine Travel Experience,” http://news.marriott.com/2017/08/alibaba-group-marriott-international-announce-innovative-joint-venture-redefine-travel-experience/, accessed January 2018.

[6] “Marriott’s M Beta Hotel Uses Technology to Create a More Personalized Experience for Guests,” Hospitality Technology, February 13, 2017, https://hospitalitytech.com/marriotts-m-beta-hotel-uses-technology-create-more-personalized-experience-guests, accessed January 2018.

[7] Marriott, “2016 Annual Report,” http://investor.shareholder.com/mar/marriottAR16/10k-item7-p2.html, accessed January 2018.

[8] Rohit Chhatwal, “Can InterContinental Hotels Replicate Marriott’s Success?” Seeking Alpha, January 30, 2018, https://seekingalpha.com/article/4141426-can-intercontinental-hotels-replicate-marriotts-success, accessed January 2018.

[9] “The World’s Most Innovative Companies,” Forbes, https://www.forbes.com/innovative-companies/list/#tab:rank, accessed January 2018.