Marriott Alumni Magazine

Winter 1989 Exchange

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STRATEGY J. W. Marriott, Jr. The following is an edited version of a presentation delivered on October 28, 1988, to the School of Management’s National Advisory Council. It’s nice to be home. I used to be a member of this organization [the National Advisory Council] and enjoyed my trips out here, particularly to see my kids. I am very pleased that our family is participating in the growth and the future of this wonderful institution, this great university. And I really do believe that the university’s mission – of graduating excellent young men and women who can further the business and free enterprise opportunities of our nation along with the growth and development of the Church – is extremely important. I’ve been asked today to talk about strategy. I have a couple of our senior executives in the audience, and I’m sure they are interested in what I’m going to say. I probably ought to ask them to either leave the room or come down here and make the speech. The most important element of strategy is, of course, to have a mission, to decide where you are going. And we have defined the mission of our company as being the best food and lodging company – by treating the employees in ways that cause them to create extraordinary customer service and shareholder value. We want to take care of our customers – and take care of our employees so that they will take care of our customers. They key to all our efforts is the word “people.” They are the core value, the core of our mission, because our goal is to provide people something of value – to provide our customers an exceptional experience in service with consistently good products and fair prices; to provide our employees the respect they deserve, an opportunity to receive fair treatment, and an opportunity to advance – and to maximize shareholder wealth. The final results of our mission are: to remain a growth company, to remain the preferred employer of our people, to become the preferred provider to our customers, and to be the most profitable company in our industry as measured by return on equity, return on investment, and continued growth in cash flow and earnings. Roughly, our business is divided into two main segments: lodging and food service. The lodging segment includes what we call the traditional lodging segments and the other lodging segments. The traditional lodging segments include full-service hotels and resorts, international hotels, Courtyard hotels (our entry into the moderate price segment), and Fairfield Inn (our entry into the economy lodging segment). The nontraditional lodging breaks into Marriott Suites, which are a little bit like Embassy Suites; Residence Inn, a suite product for the long-term-stay guest; time-sharing, or what we call Marriott vacation resorts; retirement centers; and conference centers. Our food and services management group handles about 2500 accounts across the country including some 600 hospitals and health-care institutions, some 600 colleges and universities, and about 1400 business and industry accounts where we do the feeding. We have entered into a new business, facilities management, and also maintenance management for institutions such as schools and hospitals. These are part of our food and services management group. Our host division has restaurants in more airports than any other company in the country – in about 50 airports. We are the largest food provider on toll roads and highways, with over 100 units. And we have a division called Roy Rogers, a successful fast food chain in the Baltimore-Washington-New York corridor on the east coast. We are the largest provider of in-flight service meals to the airlines, and we have several chains of restaurants that we hope someday to convert into a new chain called Allie’s, named after my mother. Fifty-five percent of our sales are in lodging, 45 percent are in the food and service groups. This year (1988) our sales will exceed $7.5 billion. In 1989 they will be over $8 billion. We have the blessing and the opportunity and the problems of employing over 230,000 employees. This puts us in the top ten employers in the nation and represents a major part of our strategy for the future, in terms of how to manage such a large, widespread, diverse group of people. We have operations in all 50 states and in 27 foreign countries. And as we look at the criteria we have tried to apply in developing our business through the years, we have decided that any segment of our company must have an opportunity or a shot at being number one in its industry. It also must fit with our strength in taking care of customers. We must have operating skills that can apply to this business. 26 EXCHANGE

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