Marriott’s winning formula
How the largest hotel chain in the world keeps attracting guests to its, 8500+ hotels. What makes Marriot so special?
If there is only one key point you should take away from this article, it’s this:
Marriott International, the world's largest hotel chain, excels in franchising, much like well-known restaurant chains. This asset-light strategy allows rapid expansion and minimizes risk by shifting most operational costs to franchisees.
The success of Marriott's Bonvoy loyalty program further enhances this model by fostering customer loyalty and driving repeat business, offering unique value to frequent travelers with its vast global network.
Want to know more? Keep reading, then.
Marriott International, the world's largest hotel chain, offers everything from highly luxurious brands like The Ritz-Carlton (starting at $500 per night) to more affordable brands like Moxy Hotels (around $100 per night).
The franchise concept
Restaurant companies such as McDonald's, Domino's, and Subway use franchising as an attractive business model. But did you know that Marriott is also big in the franchising industry?
Marriott operates over 8500 hotels in more than 133 countries worldwide. 99% are franchises or managed by individuals/companies.
In our analysis, we noticed how appealing franchises are to investors. A few reasons:
First, Marriott is asset-light because the franchisee invests most in the hotel. Marriott can grow rapidly (5% annually), like Hilton and Hyatt, which also use the franchise model.
Second, franchises reduce Marriott's risk. The franchisee bears the main risks by paying rent, employees, and other operational expenses.
Finally, Marriott's strong brand draws (new) franchisees. Marriott grows because franchisees pay a percentage of revenue or profit. This model lets Marriott earn nearly 50% net margins on net revenue.
The Bonvoy machine
The rapid growth of Bonvoy users complements the attractive franchising model. Marriott's loyalty program Bonvoy keeps guests loyal and wanting to come back. Marriott members can redeem points for discounts.
The 8500+ hotels worldwide make the Bonvoy loyalty program stand out. This global presence makes the Bonvoy program highly valuable to frequent travelers, offering a competitive advantage that most other hotel brands cannot match.
We are grateful to our readers and members and hope to welcome you soon.
Great report!