I'm a MBA student studying at NYU and we are working on a project to evaluate why Marriott is outperforming Hilton. (Marriott is investing less in capital than Hilton yet have an almost equivalent of return). Can you please let us know your thought on why you think this happens/why you chose Marriott over Hilton/Hyatt?
Thank you very much!
fp542, I will give you my input. It is a simple matter of supply and demand. Marriott covers a wider spectrum of brands, from courtyard to RC, It has more properties than Hilton, and when I check it can out price them. Loyalty programs are the same, Hilton treats their loyal people a bit better, but at the end of the day about the same so it comes down to price. I am a diamond at Hilton and a Platinum at Marriott, but head to head, my experience is I usually get a better price at Marriott.
It's been said that I have discriminating taste for finer things. I have found that Marriott satisfies my appetite. They have a wide range of brands that are individually distinctive with services to suit all. For me, what stands out the most is their excellent customer service (I have only had one incident that took several calls to resolve), luxury hotels, aesthetically pleasing renovations, and their awesome rewards program. Their rewards program is one of the best that I have found. I used to be a Hilton member, but when I started courting Marriott, I knew I was in the right relationship. Marriott is creative with ways to earn points to use towards hotel stays, flights, car rentals, purchases, and other hotel offerings.
I also wonder if "capital" is the correct thing to measure your supposition against (Marriott is investing less in capital than Hilton yet have an almost equivalent of return) The hotel business has changed a lot in the recent past, Marriott owns very few hotels anymore it is a management and marketing company for most intents and purposes. Years back both companies owned a lot of capital assets "hotels:" that is now greatly reduced ---- Something to ponder
With Marriott being overhwelmingly a franchised operation, like you rlswider, I'm not sure I understand the preamble to the question, but I'm sure fp542 has done his homework, so I'll do mine for fp542
Until 2005 I used hotels to stay wherever was cheaper and always within walking distance of my destination but the variable standards of unbranded accommodation and the improvement in Satnavs meant I wanted and could go with a major brand, even if not within walking distance to my days work.
Over the years I'd stayed in a few Hiltons, Holiday Inns and Marriott's and found that whilst all were similarly priced, the Marriott were altogether plusher, brighter, cleaner, nicer and seemed overall better maintained than the other 2. So it was with Marriott that I directed my stays. Once I achieved Gold with its lounge access, upgrades and free breakfast it became very difficult for the others to compete, since as a Gold member Marriott represented a better stay than the others were offering without status. Once I made Plat I found that factoring in the effective point rebate separated the competition even further. So what started off as simply slightly better hotels with Marriott became better rooms, free scran and lounge. And of course I then had to direct my hotel stays to Marriott to keep the status. So I did.
Now, I'm on the edge of Lifetime Plat and so no longer need to make the stays with Marriott. Furthermore folowing the merger I'm now Platinum with Starwood and Hilton has also given me a status match. Since October this year I've researched all future stays with Marriott, Starwood and Hilton, yet for reasons of price or location, none of those 15 nights that I've reserved have gone SPG/Hiltons way, which is a pity as I'd like to try something different.
Hope this helps and welcome to the boards...
I agree completely --- another thing to factor in is lifetime status as you mentioned brightlybob -- I was a longtime Hilton Diamond person long before they offered lifetime status. One of the main reason I switched over from the Hilton was the ability Marriott provided to gain lifetime Status. Hilton now has a lifetime status too but they only started this recently. I agree that once you are used to the benefits provided it becomes increasingly difficult to switch,
My story is very similar to brightlybob's. I signed up for MR when I had a 5-night stay at the World Center for a conference. A colleague told me it was a great program and I should sign up because 5 nights would get me quite a few points, and I'd be stupid not to. So I did. Now Marriott has spoiled me with lounge access, so I try to stay at a Marriott property whenever I can. For example, I had a conference at the Grand Hyatt in Hong Kong in November. There is a Renaissance right next door, so I chose that property instead so that I could get points, lounge access, etc. The Renaissance was a little less luxurious and less expensive and worked just fine for me, and it was actually one of the best properties I've ever stayed at even though the setting wasn't quite as posh as the Hyatt. I'd say about 20% of my business travel is at non-Marriott properties as I don't always have a choice in where I stay. Sometimes the client books for me, or sometimes I'm at a meeting where there are no nearby Marriotts. But they do have a lot of properties all over so it is often quite easy to find a nearby Marriott wherever I go. We also have MVCI timeshare points and find it pretty easy to use those at hotels, or to use MR points at timeshare units, etc. Marriott does a good job integrating its hotels with the timeshare program, and there are many, many options to use MR points aside from stays at Marriott properties. It's a very flexible program. Having said that, I have stayed at Loews, Hyatt, Hilton, SPG, IHG, Choice Hotels, Wyndham, Four Seasons, and independent properties quite a few times over the years and have enjoyed those stays as well. I can't say that I think Marriott is necessarily better than other hotel brands - it depends on the property. But the status does offer enough benefits to keep me loyal.
Thank you guys so much! We did our homework and we learned that Marriott is extremely asset light. They actually only own 6 hotels worldwide but signed a long term management agreement with most of its' franchises. We believe this is one of the main reason why it's performing better from a financial stand point.
For those of you who has more membership other than just Marriott, can you please let us know what do you think about the point system? i.e. Do you think your Marriott points worth more than the Hilton/Hyatt points? How easy is it to convert reward points to free nights/upgrade?
Thank you all again!
The longer that you are in one loyalty program the more attached that you get to it. It has similarity to working in a company with a defined benefit pension plan. It is hard to leave because you have so much invested in it. I keep six different memberships, Marriott, Hilton, WyndhamRewards, SPG, Accor and Fairmont. It is impossible for me to retain status in all so I decided to stay Marriott because it gives a better overall value. You can easily put the point programs side by side and they are pretty consistent. I convert points at all but Marriott to Airline points. I think that the point system is fine and with homework redemption is a good deal. Upgrades of some sort are frequent and almost transparent to the member. Upgrades to suites is less frequent, but not something that I need so I don't pursue. If you plan your travel converting points to free nights is easy. I have never tried to upgrade using points.
Once again I agree with brightlybob. MR is easier to redeem than IHG or HH, especially IHG. I have been trying to get a redemption with IHG in Auckland and it just seems impossible. So I turned to HH and they require a 3-night minimum stay to use HH points in Auckland. Because I am Diamond with HH, they waived that requirement and let me book 2 nights, but it takes a lot of points. So I think MR is easier to redeem than HH or IHG. I have not had problems redeeming SPG, and those points are a lot more valuable than MR. But that seems like a moot point now that SPG and MR are going to be merged.
Although SPG points are worth a lot more than Marriott's, they accumulate far more slowly with Plats earning only 3SPG points per $ spent, that's only one fifth of the Marriott rate, however SPG redemptions are not 80% cheaper, Marriott runs from 6,000 points per night to 45,000 whilst SPG is from 2,000 to 35,000.
A Lot more companies have decided sell and lease back their properties since they found too high an unproductive asset base. I am surprised that Hilton hasn't done that . even colleges don't tend to own ( at least new ones) dorms as they tend to have REITS build and lease back
In the works as we speak, as Hilton is following the highly successful Marriott 'asset light' off balance sheet finance strategy
Hilton, like Marriott did, is also spinning off the timeshare operation.
When Blackstone purchased Hilton in 2007 capturing the value of the underlying real estate was certainly one of their goals (they have had major success in equity investments and real estate plays) but the Great Recession hit.
One of Blackstone's first moves (probably concurrent with their investment decision) was to hire still current Hilton CEO Chris Nassetta who was running Host Marriott, the original Marriott real estate spinoff (now owner of all types of hotel brand real estate). Host is based in Bethesda (just like Marriott) and Nassetta didn't want to move, so Blackstone moved Hilton from Beverly Hills to Tysons Corner Va.
To answer the why Marriott outperforms Hilton in things like RevPar and Return on Equity - Marriott had better operating agreements (many of which Sorenson help negotiate as General Counsel) and much stronger operators. Hilton was limping along when Blackstone purchased, but is gaining ground, currently outpacing Marriott's going forward multiple in stock price valuation.
No question about it - Marriott are superb operators, financial managers, lease negotiators (several which end in litigation) and hotel marketers. We must be on our toes to avoid adding to Marriott's margins at our expense .
Ooh, more homework, go on.. I'll add a bit more.
I'm a U.K. member and here the major chains are:
IHG - 150 properties
Hilton - 60 properties
Marriott - 50 properties
Starwood - 10 properties
Hyatt - 3 properties
I am a member of both IHG and Marriott. I prefer Marriott hotels but with only around 50 properties it does have coverage issues and sometimes their London properties can be monstrously pricey, so IHG fills those gaps for me. Generally I maintain Marriott Gold/Plat on 40 nights a year and IHG Spire (that's IHGs name for its top tier) on about 25 nights. Some years I can do over 100 paid nights between the 2 groups, though I've never stayed more than 30 nights at IHG in any one year.
Hotel loyalty schemes typically break down into 3 types, those that offer in-stay benefits only, for example Fairmont, those that offer points only like Best Western and those that offer blended schemes with a mix of in-stay benefits and points. IHG, Hilton, Marriott, Starwood and Hyatt all offer blended schemes though I'd say Hyatt and Starwood concentrate more on in-stay benefits than free nights whilst IHG concentrates more on points for free nights with Marriott and Hilton offering the most even mix of solid in-stay benefits and points. So between Marriott and IHG it looks like this:
Marriott Platinum.... Room upgrade, lounge access, free breakfast, free top-speed internet, 15 points/$, 500 pts/stay
IHG Spire... Room upgrade, free basic internet, 20 points/$, 500pts/stay and 25,000 points on renewal each year.
As you can see, IHG isn't heavy on stay benefits but offers 1/3 more points and the annual 25,000 point bonus on renewal. Furthermore there's the annual point promos, both do 3 such promos each year, and this year I managed 40,000 bonus points over 40 nights from Marriott and a whopping 150,000 over 20 nights from IHG.
Now Marriott points are worth somewhat more than IHG points and I find I redeem them at about 1.2UScents per point whereas IHG redeems at around 1UScent per point.
So 25 nights at IHG spending $100 plus tax works out at about $3,000 and nets me 210,000 points, that will redeem at about $2,000. And 40 nights at Marriott spending $100 plus tax works out at about $5,000 and nets me about 120,000 points worth about $1,500. Comparing side by side, I get about 8,000 points per night spent at IHG worth around $80 and 3,000 points per night from a same-price Marriott worth about $40. However at IHG I will need to pay for my own breakfast and won't get access to the lounge.
FInally, redemption... well that's easy at Marriott, with its no blackout dates rule, Ive never had any problem redeeming at the places I want to stay. IHG is altogether more difficult, it only specifies that franchisees turn over a small amount of each hotels inventory to redemptions so finding redemptions within a month of a desired stay can be very tough.
So that's how it works out for me. I have found great value in both schemes and will continue to earn and burn very happily at both
Easy . Marriott International is a leading Diversified American hospitability company which has a history of more than 80 years and has a reputation of service excellence, integrity and innovation and now with the acquisition of Starward is leading the hotel industry. What else????
After 25 years of traveling extensively, I found service and room quality better at Marriott than any other chain, when considering price paid. I gradually settled in on choosing Marriott almost all the time. I barely reach Platinum each year so I need to stick with one chain for most of my travel and I have chosen Marriott.
Well if you're getting room service phctourist might as well go all out and enjoy a medium rare Marriott Burger with all the fixin's!!
Absolutely! My most serious complaint on my recent trip was the room service meal! I rarely use room service and the rs meal at the Monterey Marriott was atrocious! When I said (above) "service and room quality better at Marriott than any other chain" I did not mean "room service"!
I believe the hypothesis “why Marriott is outperforming Hilton” of the project is invalid on several counts.
Using the financial term of “outperform” is usually tied to analysts’ predictions of the stock against a benchmark and in this case, that benchmark is likely the “hotel industry” as the project is comparing two hoteliers. Assuming the hotel industry is the benchmark, Morningstar reports that out of 5 analysts, 3 are recommending “buy” for HLT or 60%; 4 of 7 for MAR or 57%. So these numbers are very close and do not indicate to me that either stock is going to “outperform the other.” There must be some other comparison, and as the post states, “Marriott is investing less in capital than Hilton yet have an almost equivalent of return.” Let’s look at that -->
Per Morningstar, HLT has a Return on Capital (ROI) of 5.98%; MAR is 4.74%. Consequently, that shoots down the second assumption of the MBA project as the delta in ROI is 1.24%, significant when comparing ROIs.
What about revenue growth? Citing Morningstar again, HLT is “kicking butt” versus MAR:
Could there be something I am missing? Let’s compare some additional key financial statistics:
|Dividend Rate (Yield)||0.28%||1.20%|
|Market Cap. (Billion$)||26.760||32.050|
|Total Assets (Billion$)||25.622||6.082|
|Total Equity (Billions$)||5.985||(3.590)|
|Total Liabilities and Equity (Billions$)||6.378||0.217|
|Forward looking P/E Ratio (analyst predictions)||28.170||21.010|
|President, Chief Executive Officer, Director of the Company 2015 compensation||10,217,500||12,975,500|
Based on the above, MAR “outperforms” HLT on the first five statistics – from an investor’s point of view. So perhaps this is what the MBA student is evaluating, otherwise the only other “outperform” is in the salary the CEO earns, clearly an MAR winner.