Tourism is one of the most important sectors of the world’s service economy and it is experiencing major

growth in terms of the global economy (Yasin et al., 2003). People travel from one place to another

including both national and international destinations need to contain an accommodation. Their expectation

is to obtain food and drink to sustain them and somewhere to sleep. Thus, hotels are established in order to

match these demands. The boundaries between tourism, travel, leisure and hospitality are not easy to

determine, as they blend gradually into or over lap with each other. From the hospitality industry

perspective, the key point is that people at tourist destinations demand a range of activities includes

accommodation, food and beverages (Knowles et al, 2001).

The aim of this is essay to critically assess how an organisation can become more proactive in developing

and re-engineering their Hospitality & Tourism products. This essay looks at product portfolio of the

targeted establishment, issues with product portfolio, and company’s current position in tourism area life

cycle. From that point of view it further discusses re-engineering methods to be a sustainable product.

The targeted establishment for this discussion is Birmingham Marriott Hotel, Birmingham, UK. Marriott

international is worlds one of the largest hotel companies, has over 2800 hotels & resorts from New

York to Sydney. Among these Marriott offers range of brands and various products (Marriott, 2008). In

order to build its image “Do whatever it takes to take care of the customer” had always been maxim of the

company. Birmingham Marriott is one of the most famous hotels in the country’s second largest city.

Tourism and hospitality consists of a complex blend of tangibles and intangibles elements of products. Key

products can include a destination itself, accommodation, food, beverages and service. Products provided

by Birmingham Marriott are Business tourism, Visiting friends and family, and Leisure tourism.

Marriott’s business tourism product reflects from business opportunities in Birmingham. The growth in the

economy and in exporting has led to a parallel growth in corporate travel (Holloway, 2002). This hotel is
located close to city centre, next to city’s NIA, ICC and Symphony hall where many concerts and

conferences lakes place. Conservatives party of the UK had their annual conference on 28th of the

September 2008 at ICC. Conservatives conference brought more than 20 million pounds flow in the city.

This impacted from hotel booking and increased trade to restaurants, bars and shops driven up by up to

20,000 delegates travelled to city (Birmingham post, 2008a). Birmingham city has country’s largest event

centre NEC, which holds many different events like motorcycle show, WWE, BBC Good food

show, BBC Garden show amongst others (NEC group, 2008).

In addition to business tourism product portfolio Marriott also provides facilities for conference where

businesses can hire place for their meetings, events and product launches. The meeting, Conferences and

Exhibition industry is extensive and rapidly growing. It has large association with travel for business

purposes (Ladkin and Spiller, 2001 cited in Buhalis and Dimitrios 2006). As discussed above business

opportunities in

Birmingham, Marriott considers it very demanding for their revenue and its one of the highest profit

making division among their product portfolio.

According to Buhalis and Dimitrios (2006) the relationship associated with relatives and friends provide a

powerful stimulus to repeat travel. As Birmingham being very diverse cultural city, there are people living

from almost every part of the world. Hence it is very likely to have a lot of international tourists travelling

to Birmingham to visit their friends and families. Marriott provides 4star standard lodging facilities. It also

accommodates food and beverage requirements in West 12 restaurant & bar, which is fine dining

restaurant. Thus it can be seen diverse range of products are offered by Marriott to tourists visiting friends

and family.

In addition to Marriott’s product portfolio, another product offered is leisure tourism. Birmingham city
itself is a unique leisure product for tourists. It has many destinations to offer like Cadbury world, Brindley

place, Warwick castle and the shopping land mark the Bullring amongst others. Birmingham Marriott can

be identified as an ideal place to stay, as Marriott has its trust in the market by providing excellent lodging

services built over 80 years of experience. Marriott always work towards their mission “to be world’s

leading provider of hospitality service.” There is a "Marriott Way." It's about serving the associates, the

customer, and the community. Marriott's fundamental beliefs are enduring and the keys to its continued

success (Marriott, 2008).

Having considered the link between various tourism products and explained Marriott’s product

portfolio this essay evaluates issues with its product. In order to evaluate issues are affecting

Marriott’s product portfolio, it is essential to do a PEST analysis. PESTanalysis looks at four sectors

by whom tourism and hospitality gets influenced, they include: political, economical, social and

technological.

1. Political (Legal) factors:

The hospitality and tourism industries are two of the fastest growing and most dynamic sectors of the

UK economy and both of them are highly labour intensive (Jameson and Holden, 2000). Thus hotels

require lot of staff to work. Government also has great power to regulate its labour and the wage

rate. Previously, the National Minimum Wage was 5.52 pounds per hour, but it has now increased to

5.73 pounds per hour from October 1st 2008 (Directgov, 2008). This explains Marriott will be paying

out more wages than last years. In addition, Employment law shows difficulties for Marriott to

terminate its labour contract. Tax legislation creates a large tax burden on Marriott. The power of

government on tax affects the profit of Marriott. In addition, immigration policies make it more

difficult for foreigners to enter the country. Fewer foreigners come to the country leads to fewer

customers for Marriott. This policy shows negative result to Marriott on the number of customers.
2. Economic factors:

Within the UK, tourism industry has grown over the past decade. Tourist spending including

domestic tourist accounts for approximately 4 per cent of GDP (Knowles et al, 2001). The recent

increase of price level in England affects both the local economy and Marriott. Inflation brings

difficulties to the hotel, which can not control its costs. Currency exchange has also become unstable

recently. The currency exchange is one important element that affects the motivation of international

customers. This issue also has impact on local expenditure. The profit of the hotel depends on local

expenditure. Food and beverage service manager at Marriott said, Marriott has 500 cover less

booked comparing to last year for Christmas parties. Marriott sells Christmas dinner for average of

35 pounds. In this case Marriott will lose this year approximately 17,500.00 pounds worth of revenue

out of their Christmas business (Balaji, 2008).

3. Social cultural factors:

More customers are likely to choose budget hotels because of the reasonable price. This issue forces

Marriott to try and reduce its price. The numbers of vegetarians are growing and the Marriott, as a

four-star hotel in a cosmopolitan city, has to think about making changes to its food and beverage

choice. The population demographic becomes bigger and the travellers’ group becomes stronger.

There appear a new kind of traveller, “back-packer”. The appearance of back packers reduces down

the customers of the hotels, especially luxury hotels. Shaw (1990) points out in Europe the average

age of the population is now increasing steadily. Fewer babies are being born and improving medical

provision is allowing more people to live longer. Marriott is facing an ageing population, which

means that a higher percentage of customers will be older. The hotel needs to consider the diet and

habit of old people and the fact that an ageing population could result in the growth of disabled

visitors. The hotel needs to provide facilities to cope with this factor.

4. Technological

The world becomes a net world. The internet has become more popular by bringing convenience to
customers and hotels with features such as online advertisements, on line booking and online

payment becoming the norm. It is therefore becoming very competitive for the Marriott, because

internet brings competition so closely. We can check and compare price and view facilities of

different hotels at same time sitting on one computer; where traditional we had to visit travel agents.

The Marriott has to improve its internet equipment to keep up with its rivals.

In addition to PEST analysis, there are two further more issues affects
Marriott’s product portfolios. Firstly according to Telegraph, 2008 Official
figures showed wholesale food prices rose by 7.4 per cent in the past 12
months - more than three times the headline rate of inflation. If the price
level increases, hotels have to pay more to buy the same item from the
supplier. Hotels exist to make money and be profitable (Hughey et al.,
1997), thus the price of the products depends on the cost of materials. On
the other hand, once one item’s price is higher than its value, this item may
be taken away from the menu or fewer facilities provided by the hotel.
From the customers’ perspective, they are always looking for exceptional
services and variety of products at a low price. The increase of price level
brings to customers a higher price on each item, thus some buyers do not
accept some of the products and some buyers will probably refrain from
purchasing any products.

Secondly according to the NDTV (2007), the new UK visa policy has been taken out at the end of 2007.

Before the British government officially announced the new visa proposals, for non-European people come

to the UK needs to get a valid visa from relevant bureau. Travellers from non-European countries to

the UK have just little difficult in obtaining a visa if they provide enough relevant documents of

themselves. However, the new immigration and visa rules are a clear indication to Non-EU populations that

they are no longer welcome.

This will result in more difficulty in taking a holiday in the UK. NDTV (2007) says that the UK is trying to

tighten its borders, which means that the Labour government could lose the South Asian community's

support in Hotels. The visa policy restricts international travellers especially Asian travellers come to UK,

so it is likely that Marriott’s customer rate will be reduced. Therefore, the visa policy undermines

Marriott’s potential profit. In addition, also because of the reduced number of travellers and in order to be

sustainable, all hotels will be competing for customers. The competition in this market will become more

intense. The problem that Marriott faces is limited and on going reduced customer numbers.

According to Hanlon (1999), there are three fundamental factors affecting the demand of customers:

incomes, fares and service level. The hotel industry grows fast so the market becomes more intensive faced

with competition. Many small and medium size hotels have appeared. To survive in the market, these small

and medium hotels win customers with both their quality of service and attractive price. The result is that

customers like to spend less money on enjoying high quality products and services. Price war results

among those providing the same standard quality of service. Therefore, the demand for big hotels has

decreased. There is an example of a B&B (Budget Hotel) providing a standard room at 20 pounds per

night. The room is almost the same size as a standard room at Marriott. The texture, decoration and

facilities of B&B’s room takes on a family feeling. Compare the B&B’s room with Marriott’s room;

customers are likely to choose B&B’s service.

Further more this paper introduces Tourism area life cycle and reviews its origin and uses. This concept

helps Marriott to establish where the company stands in TALC and what further actions are required to re-

engineer the product. In can be argued that tourists are dynamic, they evolve and change over time (Butler,

2006). The evolution includes variety of factors including changes in the preferences and needs of visitors.

The pattern which put forward here is based on the product cycle concept. In this case sales of a product

proceed slowly at first, experience a rapid growth, stabilize, and subsequently decline (Butler, 2006). As an

example, initially tourists come to a destination in small numbers restricted by barriers like lack of access,
facilities, and local knowledge. With marketing, information dissemination, and further facilities popularity

grows. This leads to increase in numbers of visitors. The rate of increase in visitor declines as levels of

carrying capacity are reached. However in case of Marriott rather than carrying capacity global economy

slow down is more effecting factor in terms of decline in number of customers.

Charts given below explain in further detail how Butler’s TALC can apply to Marriott.

Chart 1, Birmingham Marriott, Forecast report for year ending 2008 (15th December 2007)
Chart 2, Birmingham Marriott, Food & Beverage Forecast against Rooms (15th December 2007)

The charts compare the Food and beverage forecast against rooms in Marriott for year ending 2008. Charts

provide vast information which is helpful to determine company’s current position in TALC. It can be

easily seen from the chart 1 Marriott’s total occupancy for first quarter of year is forecasted at pick. As it

approaches towards the second quarter of the year and at the end of the year it gradually slows down with a

pick month of July. However this decline rate is not as worst as food and beverage. Form the month of

July till end of the year forecast is decreased dramatically to more than 50 percent of the pick. It can be

argued Marriott’s food and beverage facility have become least popular among their resident guests.

In addition Marriott’s conference facility, this is claimed to be most profit making product among portfolio

(Balaji, 2008). It has forecasted through out the year less the 50,000 pounds a month. As it approaches

towards the end of the year, where previously hotel has been at busiest time in terms of conference and

banqueting, this year ending 2008 for the last quarter of year it is declined by 50 percent of the mid year.

Decline in Marriott’s business is mainly due to Global economic slowdown (Balaji, 2008). As said

previously Marriott claims 500 less customer than last year for Christmas parties. With raising food price

Marriott has very minimal profit margin this year. However Glaesser (2003) argues as far as the local

economy is concerned; the tourism industry has in many countries achieved such a leading position. It is

counted as one of the most important sources of income and foreign exchange. On the other hand positive

development of the tourism industry is gradually threatened by negative events. Events’ indirect effects like

the rise in transport and travel costs across the globe, which threatens especially the competitiveness of

long haul tourism destination.

UK government made two dramatic changes in their legislation during the month of November 2008. One
is on November 6th 2008 Bank of England reduced interest rate by 1.5 percent (Times, 2008) and another is

Chancellor Alistair Darling announced a 13 month temporary VAT reduction form 17.5 percent to 15

percent (Birmingham Post, 2008b). Form Marriott’s perspectives both of these decision made by

Government are helpful to regain maturity from decline point.

Firstly the cut in VAT - which brings in 83billian pounds to the Treasury in a
normal year - forms part of a "fiscal stimulus" package designed to inject new
vigor into Britain's economy. Mr. Darling, the Chancellor hopes that by putting
more money into consumers' pockets, he can encourage them to spend more
and keep British shops and manufacturers in business. It can be convinced that
whole seller will have to reduce their prices by 2.5 percent due to VAT
reduction. Hence Marriott will have opportunity to buy their supply at reduced
price and also present bills to their customer at new VAT 15 percent. This will
apply to both accommodation and food. Thus Marriott can afford to reduce
their prices to maintain their sustainability.

Secondly Bank of England’s interest rate reduction will help people to allow
more spending as they will have more cash. This dramatic cut for Christmas
could give customers the confidence to spend at what is many retailers’ most
important time of the year The Bank's move means that homeowners with a
150,000.00 pounds interest-only tracker mortgage, which is pegged to the base
rate, could save as much 190.00 pounds a month.

Homeowners repaying the capital as well as the interest on the loan will see a
133.00 pounds saving on monthly payments. This will have great impact on
Marriott’s re-engineering strategy as on one hand Marriott can reduce price, on
another hand people will have more money to spend.

In addition to further opportunity according to the Foreign and Commonwealth Office (2006), Britain is

one of the most open economies in the world. UK prosperity depends on its ability to trade and invest
freely. It has been ranked as the fifth largest international trading nation, and the second largest exporter of

services. The UK Government works to promote an open and stable economic environment in which trade

flows freely, stimulating growth and contributing to sustainable development. On the other

hand, Britain was one of the first countries to sign the General Agreement on Tariffs and Trade (GATT) in

1947. It has seen the benefits brought about by successive 'Rounds' of GATT negotiations that tariffs have

fallen, trade has increased and the world’s economy has grown strongly.

The UK trade policies bring a good chance to all organizations and enterprises to invest in this country.

International business groups outside the EU fall within the Common Commercial Policy of the European

Union. Under the trade policies, they also have a freer access and better chance to run their business in

the UK. As trade is a key contributor to economic growth and the creation of jobs throughout the world

(Foreign and Commonwealth Office, 2006), business organizations’ and enterprises’ survival and

success depends on their trade ability and rate. The more profitable trade those business organizations have

done, the higher the probability that they will succeed in the industry.

Marriott’s perspective is to provide quality products and services with a low cost. The core element for this

hotel to be sustainable is to purchase materials at a wider range and competitive price in order to build up

its own competitive advantage. Under the UK trade policy, the competitiveness of firms increasingly

hinges on their ability to buy materials, components and services on a global basis (Foreign and

Commonwealth Office, 2006). Therefore, the trade policy brings better trading opportunities and more

choices to Marriott.

Marriott also practices empowerment strategy in order to be sustainable, as it provides more attention to

customer’s details. Empowerment in business re-engineering is bestowed on individuals, rather than

acquired, and also understood as a form of control. Empowered employees on one hand feel sense of

motivation and on the other hand they are able to use their discretion to satisfy customer’s requirements

(Grey and Mitev, 1995). Empowerment is the attempt to move away from bureaucratized forms of
organisations. Empowered employees do not follow rules, but make them. Therefore Marriott address their

staff as associates. Marriott’s idea of empowerment is to provide contemporary customer service by

motivating associates (Marriott, 2008).

To sum up, this essay tries to evaluate what changes have impacted on hospitality organizations’ activities

and how a hospitality organisation reacts to the changes. From the case study of Marriott, it demonstrates

how various factors like political, economical, social and technological impacts an organisation. These

impacts from the effecting factors have been identified and strategy has been evaluated in consideration of

most effective. In the future, the hospitality industry will be more dynamic. To be sustainable in

competition, it is necessary for the hospitality industry be more aware of the changes of its environment.
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