Marriott Porter Five Forces Analysis

Published in Companies category by MBA Skool Team

Here is the Porter’s Five Forces analysis of Marriott that covers threat of new entrants & substitutes, bargaining power of buyers & suppliers and competitive rivalry.

Threat of New Entrants:

The threat of new entrants in the Marriott Porter Five Forces Analysis can be explained as follows:

Marriott is a leading & well established hotel chain company. Threat of new entrants would be low for Marriott. Marriott belongs to the hospitality industry, and it offers premium hotels, resorts, and suits for its customers. Any new entrant to open this business requires a considerable capital investment in infrastructure and advertisements. It is difficult for any new entrant to arrange this much capital. Moreover, after the Covid pandemic, businesses have switched their operations to work from home.

This could be a huge loss for the industry as their major customers were large businesses who sent their employees to these hotels because of business dealings. This will also discourage any new entrant from entering this business. Moreover, any International company can face stringent rules and regulations to open up a hotel business in other countries. Also, since a major part of five star hotel sales is permanent customers, it would be very difficult for a new entrant to create that customers base.

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Threat of Substitutes:

Below are the threats of substitute products of Porter’s Five Forces analysis of Marriott:

Threat of substitutes should be high for Marriott. The biggest substitute that has arrived in the recent period is homes.

People have started working from home, which has caused loss in business of 5 star hotels like Marriott. Apart from this, if any luxury seeking tourist visits a place, they will stay in luxury hotels and resorts. However, concepts like AirBnB has started capturing market share in the luxury hotel sector. Innovative and unique concepts like bubble rooms in Iceland, silo in New Zealand, treehouses, underwater houses, ice homes, etc., have been picking up that gives luxury as well as a unique experience to a tourist. Thus this could take up the market share of hotels like Marriott, which provides comfort and luxury but has a limited adventurous experience. However, with its excellent brand value, Marriott is still preferred by its regular customers who expect standard and quality service without getting into the hassle of searching for a new hotel.

Bargaining Power of Customers:

In the Marriott Porter Five Forces Analysis the bargaining power of the customers can be explained as:

Bargaining power of customers is moderate for Marriott. The customer base of hotels like Marriott can be divided into two parts. The first part is those customers traveling to the place in the luxury hotel for their vacations. The bargaining power of such customers is low as, as an individual, they are insignificant for the sales of the hotel. Moreover, their switching cost is high as they can not experiment with other hotels by pain such hefty amounts. Although the switching cost is low for a new customer, if they start visiting these hotels, they will start having a preference of one brand of Hotel over another firm. The second type is the business owners who send their employees for business dealing in these hotels. They have a tie up with the hotel and our regular customers.

Their bargaining power can be considered high as they cater to a high percentage of sales for the hotel.

Bargaining Power of Suppliers:

Following is the bargaining power of suppliers in the Porter’s Five Forces analysis of Marriott:

The bargaining power of suppliers in the case of Marriott is low. The suppliers of Marriott Hotel include the suppliers of infrastructure, maintenance, raw materials for food. Programs like the Diverse Supplies Program started by Marriott hotels show how it cares for its suppliers. Marriott pics its suppliers very cautiously back pose with the brand value of the hotel chain, and then it maintains a long-term relationship and trust with its suppliers. Whenever Marriott considers bringing a new item in their hotels, that item goes into a long inspection of design performance and pricing before being finalized. Suppliers also value Marriott as it is one of their biggest clients. Marriott, with its excellent brand value, has lots of options for its appliance, and this reduces the bargaining power of the suppliers of the hotel.

Competitive Rivalry:

The impact of key competitors in the Marriott Porter Five Forces Analysis is as follows:

Competition in the industry for Marriott can be said to be high. Marriott's competitors include hotels like Hilton, Carlsen, Hyatt, and Four Seasons hotels and resorts. All these hotels are at the almost same price range and with same facilities. They compete with each other by switching to more and more businesses to become their regular customers and by giving heavy offers and discounts. The industry has also taken up a plunge after the Covid pandemic, and this has furthermore increased the rivalry between the hotel chain. However, Marriott International is ahead with all its competition in terms of the number of hotel rooms in the construction pipe line worldwide with more than 400,000 rooms and is a leading hotel worldwide with respect to its sales.

Marriott is one of the most positively perceived hotel brand in the world.

To conclude, the above Marriott Porter Five Forces Analysis highlights the various elements which impact its competitive environment. This understanding helps to evaluate the various external business factors for any company.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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