PESTEL is a strategic analytical tool and the acronym stands for political, economic, social, technological, environmental and legal factors. Marriott PESTEL analysis involves the analysis of potential impact of these factors on the bottom line and long-term growth prospects of the international hotel chain.
There are some political factors that may affect Marriott International. Such factors include political stability, security and the risk of terrorism in a given territory, US-China trade wars, the rise of nationalism and terrorism and others. Moreover, the level of bureaucracy and corruption, freedom of press and trade union activities are also political factors with the potential impact on Marriott and other international hotel chains.
Political stability is essential for international hotel business. It allows hotel chains to operate in a predictable and safe environment, which is necessary for investment and growth. When there is political instability, it can lead to a number of negative consequences. For example, political instability can deter tourists from visiting a country, which can lead to a decline in demand. It can also increase the costs of operations, such as the cost of security measures and insurance premiums. In some cases, political instability can even lead to Marriott having to close its hotels in a country. For example, in 2022, Marriott was forced to close some of its hotels in Ukraine following the Russian invasion.
Trade union activities
Trade union activities can have a significant impact on hotel business, both positive and negative. Trade unions can help to improve the working conditions for employees. They can negotiate for higher wages, better benefits, and safer working conditions. This can lead to a more motivated and productive workforce, which can benefit Marriott’s bottom line.
Trade unions can also help to improve the quality of hotel’s services. Trade unions can play an instrumental role in providing Marriott with feedback from employees on how to improve the guest experience. Trade unions are often seen as a symbol of fairness and social responsibility. By being seen as a company that respects its employees and their rights, Marriott can attract more customers and employees.
There are also some potentially negative effects of trade union activities on Marriott International and other hotel chains. For example, trade unions can sometimes go on strike, which can disrupt Marriott’s operations and lead to lost revenue. Trade unions can also make it more difficult for Marriott to hire and fire employees.
High level of corruption in a market where Marriott operates can have severely detrimental effects on the future growth prospects of the largest hotel chain in the world. Specifically, corruption can increase the cost of operations, it can cause damage to brand reputation and even cause the hotel face legal liability.
The list of external economic factors that can affect international hotel chains is long. It includes the extent of economic growth in a country, the level of consumer confidence in economy, interest rate, currency exchange rate and others. Moreover, Marriott International, as well as, its competitors is also affected by the cost of labour, changes in consumer disposable incomes, unemployment rate, tax rate and a range of other factors.
Currency exchange rate
Marriott International runs a truly global business with hotel, residential, timeshare, and other lodging properties in 138 countries and territories under 30 brand names. Accordingly, changes in currency exchange rates are going to affect the profits of the hotel chain. A weak US dollar can make hotels more affordable for international travellers, which can lead to increased demand for the company’s services. For example, in 2020, the US dollar weakened significantly against a number of other currencies, such as the euro and the Japanese yen. This made Marriott’s hotels more affordable for travellers from these countries, and the company saw an increase in demand for its services.
A strong US dollar, on the other hand, can make Marriott’s hotels more expensive for international travellers with negative implications on the level of demand. This was the case in 2015, when the US dollar strengthened significantly against a number of other currencies and decreased profits for Marriott from international markets.
Cost of labour
Marriott International manages the employment of about 377,000 associates worldwide and accordingly, labour costs account for a large portion of its operating expenses. This is also true for many other companies in service industry in general, and hotel industry in particular. Changes in the cost of labour can have a significant impact on Marriott’s profitability. If labour costs increase, Marriott will need to raise prices or reduce costs in other areas to maintain its profit margins. Furthermore, the cost of labour for Marriott can increase due to changes in minimum wage laws imposed by governments, as well as, the results of unionization of the workforce. Increasing cost of living is also a typical cause for the increase of the labour cost.
Marriott International Inc. Report contains a full version of Marriott PESTEL analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Marriott. Moreover, the report contains analyses of Marriott business strategy, leadership, organizational structure and organizational culture. The report also comprises discussions of Marriott marketing strategy, ecosystem and addresses issues of corporate social responsibility.