MARRIOTT INTERNATIONAL INC. Case Study 11 MARRIOTT INTERNATIONAL INC. UNIVERSITI UTARA MALAYSIA (UUM) MASTER IN BUSINESS ADMINISTRATION BPMN 6053 – MANAGEMENT INFORMATION SYSTEM LECTURER – DR. THI LIP SAM Group Presentation by: URSULA G. JONGIJI (Matric No.: 803739) SUSANNA A. KOH (Matric No.: 809426) 22nd May 2011

Background Marriott International Inc. is the hotel management company that manages Marriott International Hotel Group. Foundered by John Willard Marriott(1900 –1985) Marriott International Hotel is the world famous hotel brand. Operates & franchises luxury & value hotels & lodging facilities throughout the world. Has 2,700 franchised & operated properties in 65 nations. Generates revenue of $12.9 billion in 2007. North America houses 2,300 hotels. Currently having 7 hotels in Malaysia.

Background Ritz-Carlton, KL JW Marriott Hotel KL Renaissance Kota Bahru Renaissance KL Hotel Renaissance Melaka Hotel Miri Marriott Resort & Spa Putrajaya Marriott Hotel (franchised property)

Case Study 11: Marriott International, Inc. Three top corporate priorities are: Profitability Preference Growth Revenue management -main function: analyzing revenue data for forecasting and marketing (adjust price according to demand )

Case Study 11: Marriott International, Inc. Marriott developed two different revenue management systems, one for premium hotels and a second for its lower-priced properties. Both developed using pre–Internet technology Systems upgrades required installing updates locally which were expensive and problematic. Two systems required two separate interfaces for entering prices into centralized reservation system. Facts: 62 million reservations annually at 2,800 properties! Facts: 62 million reservations annually at 2,800 properties! –from www.computerworld.com, March 14, 2005 Note: expensive & problematic because system upgrade & training required visits to hotel around the globe

Case Study 11: Marriott International, Inc. In the late-1990s, Marriott embarked on a project to create a single revenue-management system to be used by all of its properties. The new system, called One Yield, was custom developed in-house, using a process similar to the SDLC. IT professionals understood importance of user involvement, and formed a joint IT–business user team that developed business case for new system and jointly managed its development. Team provided constant communication to system’s future users, and used prototypes to identify problem areas early. Training is a continuing activity for all Marriott employees, and training facilities were integrated into new system. Objective was to lower cost & increase speed Functions: remains the same - to recommend prices for each room, given the day, date, current reservation levels, & history.

Case Study 11: Marriott International, Inc. One Yield computes the theoretical maximum revenue for each property and compares actual results to that maximum. Using One Yield, the company has increased the ratio of actual to theoretical revenue from 83 to 91 percent. That increase of 8 percentage points has translated into a substantial increase in revenues

Q1: How does One Yield contribute to Marriott’s objectives. Answer: Marriott top priorities are profitability, preference & growth. One Yield is an in-house Revenue Management system that is able to recommends prices for each hotel at any given day, date, current level of reservation & history. Attune to Customer’s preference improve the accuracy of its reservation forecasts and raise lodging revenue It has contributed more to the profit of the business & growth.

Q2: What are the advantages of having one revenue-management system instead of two? Answer: One Yield can provide a standardized, consistent revenue management tool for all their properties. All users will use the same system any where in the world. only need to maintain one system. Saves time Predict customer’s need More productive pursuit, i.e. focus on sales/marketing Boost flexibility-easy communication with IS dept

Q3: At the same time it was developing One Yield, Marriott chose to outsource its HR information system? Why? Answer: Promote Corporate Policy; Profitability. A strategic & competitive edge against competitors Custom made for Marriott’s hotels & properties. In-house expertise available. Outsource HR to focus on One Yield big project if successful will generate additional profit in millions.

Q4: How did outsourcing HR contribute to the success of One Yield? Answer: Outsourcing HR provides Marriott the opportunity to focus on developing One Yield and it is more likely to succeed because of the commitment of the management & users resources are only to One Yield.

Q5: Summarize the reasons why a company would choose to outsource rather than develop a system in-house. Answer: Management Advantage Cost reduction Risk reduction Expertise Availability Flexible Capacity Management Time Zone Coverage

Management Advantage Decrease spending on research, marketing & R & D. Employees can concentrate more on the core operations of business. The increase in profit making areas will increase in efficiency, productivity & profit.

Cost reduction Economies of scale- centralized Part time Indirect cost saving-focus on core business

Risk reduction Risks are lower with purchased software since the software has been tested before releasing to the market.

Expertise Outsourcing gives company access to the knowledge pool externally. In-house expertise might be scarce & expensive to recruit. In-house resources can focus more to the operations & profit making area of the business.

Availability Highly skilled people is hard to find and if available are expensive to recruit due to the specialized area.

Flexible Capacity Management enables company to manage its capacity and staff. The task of hiring personnel is passed on to an external provider .

Time Zone Coverage Using external providers, company can cover time zones that are not covered by their domestic operation. For example, off shore destinations need work force that is willing to work irregular hours.

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