This report will discuss research and findings for Fairmont Hotels and Resorts (FHR) and Marriott International (MI). The focus will be on the similarities and differences in the managing styles within the companies, more specifically, focusing on environmental analysis; organizational culture; social responsibility and ethics; planning and strategic analysis; organizational structure and; and finally an overall organizational alignment of how all these factors plays into each company’s success. Industry
FHR and MI are leaders in the hospitality industry and have numerous hotels established world-wide. Both companies are traditional in theory, with a rich historical background that dates back to the early 1900’s. However, competition in the hospitality industry is fierce with companies constantly improving themselves to remain relevant. The table below displays FHR’s and MI’s main competitors. Fairmont Hotels and Resorts | Marriott International|
Starwood Hotels and Resorts| Hilton Worldwide|
Four Seasons | Accor Group|
Wyndham Worldwide| InterContinental Hotels Group|
In 1907, Tessie and Virginia Fair introduced San Francisco to the first Fairmont Hotel. Since then, FHR has seen growth and expansion throughout the United States. In 1999, FHR merged with Canadian Pacific Hotels, bringing the Fairmont brand to Canada. FHR became a privately owned company in April 2006, where it was purchased by Kingdom Hotels International and Colony Capital LLC. This joint venture brought together three leading hotel companies: Fairmont Hotels and Resorts, Raffles Hotels and Resorts, and Swissôtel Hotels and Resorts. The three individual brands operate under the parent company called Fairmont Raffles Hotels International (FRHI). In April 2010, Voyager Partners Ltd. bought into the joint venture with $847 million, becoming the largest shareholder in the group with a 40% stake in FRHI. Kingdom Hotel’s stake decreased to 35% from 58% and Colony Capital LLC holds 22% (Laessing, 2010). FHR’s current CEO is Mr. William R. Fatt, and its president is Ms. Jennifer Fox (Bloomberg Businessweek, 2012). These two leaders, along with their executive team (Appendix 1. 1), manage over 25, 554 full-time employees worldwide. FHR has over 70 properties in 19 countries and has 11 hotels currently in development. Fairmont recorded a J. D. Power score of 818/1000, placing them 5th in the Luxury Segment within North America (J. D. Power, 2012).
MI was established on May 20, 1927 by partners John Willard and Alice Sheets Marriott. MI later became a publicly traded company in 1953. The couple opened an A&W Root Beer stand in Washington D. C. that was only able to fit nine customers at a time. It evolved into The Hot Shoppe, becoming a chain of restaurants in the food service industry. The Twin Bridges Marriott Motor Hotel was the first ever Marriott hotel, opening in January 18, 1957. MI is a publicly traded hotel chain which has now become the world’s leading lodging company. MI’s success is represented by their vast brand portfolio. Predominantly made up of upscale brands targeted towards business travelers, MI’s hotels is separated into seven categories: * Iconic Luxury – BULGARI, The Ritz-Carlton
* Luxury – JW Marriott
* Lifestyle Collections – Edition, Autograph, Renaissance Hotels, AC Hotels * Signature – Marriott Hotels and Resorts
* Modern Essentials – Courtyard, Springhill Suites, Fairfield Inn and Suites * Extended Stay – Residence Inn, TownePlace Suites, Marriott Executive Apartments * Vacation Clubs – Marriott Vacation Club, Grand Residences. The Marriott family owns approximately 30% of MI, controlling roughly 14% of MI’s outstanding stock (Rosenwald, 2011). MI’s executive council is fairly similar to many other companies. Their executive council consists of 17 people, with a recent change due to J. W. Marriott stepping down from his CEO position. (Appendix 1. 2) J. W. Marriott Jr. was CEO of MI from 1972 up until March 2012; though he has stepped down as CEO he is still an active and vocal contributor to MI. The new President and CEO of the company Arne M. Sorenson, is the first person without the Marriott name to take on a large role in the company. MI has nearly 3, 800 properties in 74 countries and territories, 3, 100 properties being in North America. There are over 275 properties in Europe, 65 in the Caribbean and Latin America, 40 in the Middle East and Africa and 29 in the Asia-Pacific. MI made up 4. 8% of the market share in 2011, making it the number one ranked hotel globally (Marriott, 2013). Currently, MI has approximately 300, 000 employees (Marriott, 2013). Why These Two Companies?
FHR’s and MI’s company mission statements and visions illustrate two different directions. Fairmont Hotels and Resorts | Marriott International |
Mission – Turning moments into memories for our guests.| Mission – To be the world’s leader in hospitality services and achieving that through our spirit to serve. | Vision – To become the luxury hotel brand of choice.| Vision – To be the #1 hospitality company in the world.| (Fairmont Hotels & Resorts, 2012) (Marriott, 2013).
These statements are appropriate to the companies; taking into consideration the difference in size between the two organizations. MI is a much larger organization, in comparison to FHR, because of the many brands under its umbrella. It is clear from their vision statements that MI strives to be #1 in the hospitality industry as a whole. FHR is only looking to be #1 in the luxury segment of the market. FHR and MI are both effective organizations due to their effective managing style, establishing them success in a volatile hotel market. This is represented by the numerous awards the companies have received such as, “ Top 100 Employers in Canada (2013),” and “ 100 Best Companies to Work For.” MI also consistently makes appearances on the FORTUNE500 list. Environmental Analysis
Some of the general factors that affect the hotel industry are the world economy and technological advances. If the world economy grows, there will be increases in travel, leading to more hotel stays and an increase in leisure spending. Technological advances will provide a more efficient and accessible customer service experience, as well as streamlining operations to lower the costs of doing business. Technology in the hotel industry is used to book rooms for customers online, phone applications, organizing customer reservations, and use CRM programs to deliver the right experience for the customers of today. Suppliers in the hotel industry include property owners, developers, interior design companies, architects, training service providers, marketing companies, industry consultants, and information and computer technology (ICT) manufacturers. Developing good rapport with local suppliers is advantageous because the needs of both the companies and consumers are very region specific. It is critical that companies receive supplies in the capacities they require in order to run an efficient business. Specific Factors
One environmental factor specific to the industry is regulations placed on hotels. Regulations are dependent on regional jurisdictional constituencies, municipal and city by-laws, and federal law. Industry regulations are decided by the political climate in each specific region. Canada is an appealing country to invest in because of their combination of loose federal structure, flexible workforce laws, and low tax rates. At a federal level, marginal tax rates still remain high for foreign investment. The hotel industry is highly competitive with heavy weights such as Accor SA, Best Western International, InterContinental Hotels Group, and Wyndham Worldwide Corporation controlling strong portions of the field.
Competition relies heavily on three internal factors: expenditure on assets, integration of technology, and differentiation. Exit is just as difficult as entry, thus competitors have adopted the asset-light business model. This has allowed hotels to liquidate their assets at a quicker pace, inreasing capital for expansion. The integration of highly sophisticated technological systems is prominent among hotels because of the dependence on mobile communications and highly successful online intermediaries. Tracking hotel reservations and CRM are ongoing difficulties which rely on proven technological platforms. As a result of the high brand switching power customers hold, consistency and great customer service, complemented with a superior brand image, is the ultimate forumula for success in any major hotel. However, customer’s attitudes formed by the experience and hotel attributes is what differentiates the two hotels.
Comprised largely of the leisure segment at 74. 8%, the majority of hotel customers book their hotels according to their vacation itinerary. The business segment constitutes the remaining 25. 2% of the market. Seeing how tourism is an elastic industry, customers expect bargain rates, discounts, and high quality services. More than ever before, customers are expecting complex value-added packages such as free breakfast, parking, and cable television to off-set traveling expenditures. Globalization plays a key role in the diversification of hotel customers. According to their cultural background and region from which they come from; customers will search, plan, and book hotels differently. The industry must be sensitive to these local markets and meet the needs of sensitive customers. The trend to cater to the conscientious traveler demands eco-friendly practices. As well, corporate social responsibility (CSR) is continuing to gain importance. Environmental Uncertainty
The hotel industry as a whole is a relatively stable industry with good projected growth for 2016. However, the industry saw a decline after the recession in 2008, resulting in limited consumer spending. For example, the growth of the tourism industry in the Middle East has slowed because of war related conflicts. High tax rates in First World Countries cause uncertainty due to increasing marginal tax rates. For example, in Canada, the power struggle between the provincial and federal governments could lead to an uncertain marginal tax burden for foreign investment. Shareholders/Stakeholders and their Interests
Primary stakeholders in the hotel industry include anyone who relies on the industry for either its service or economic output such as people who are paid by the industry and the government. Secondary stakeholders include environmental companies such as Energy Star; a company that promotes energy efficiency in households and organizations. Government agencies like Canadian Tourism Commission, International Tourism Partnership (ITP), World Travel & Tourism Council (WTTC), and Brand USA are also secondary stakeholders. Hotel Industry Changes in 3 to 5 years
The hotel industry was in a decline from 2007 to 2011. Looking at Canada, their hotel industry had total revenues of $16. 4 billion in 2011, which represents a Compound Annual Rate of Change (CARC) of -0. 5% between 2007 and 2011 (Marketline, 2012). The Canadian hotel industry is expected to grow with a CARC of 5. 1% between 2011 and 2016 (Marketline, 2012). Technology is making it easier for customers to plan vacations and book hotels, aiding the industry to respond to changes in its operating environment.
A company’s organizational culture determines an employee’s values, behaviour and attitudes at work. Having a strong organizational culture is crucial to providing consistent service and reaching company goals. How Is Company Culture Established?
Both companies use organizational heroes to pass down the culture of the company. This is an effective method because these leaders/founders have shared a vision and established a standard of service that current and future employees learn to respect and value. These heroes are representative of what the company stands for and are role models for the employees. Fairmont Hotels and Resorts | Marriott International |
William Cornelius Van Horne – “ If we can’t export the scenery, we’ll import the tourists.”| John Willard Marriott – “ Take care of your employees and they’ll take care of your customers.”| (Fairmont Hotels & Resorts, 2012) (Marriott, 2013).
How is Culture Developed?
Organizational culture is developed through changing or improving the three levels of culture. FHR and MI have very similar characteristics in the “ seen” and “ believed” levels. 3 Levels of Culture
1. Seen (same between FHR and MI)
a. Uniforms are cleaned and pressed and kept on-site for employees to ensure a clean and well maintained appearance. b. Strict grooming and accessories rule apply
c. Friendly smile and welcoming.
FHR and Marriott have individual sets of values that share commonalities and differences. Fairmont Hotels and Resorts (FHR)| Marriott International (MI)| Respect| Put People First|
Integrity| Pursue Excellence|
Teamwork| Embrace Change|
Empowerment| Act with Integrity|
| Serve our World|
For two companies in the hospitality industry, it is not surprising to see that people and respect are among their top values. Treating everyone (colleagues and guests included) with fairness and dignity is important to their culture. There is also an emphasis on integrity among FHR and MI. This showcases both companies’ righteous stand on ethics and intolerance for inappropriate behaviour; hiring only employees who act with honesty and professionalism.
The difference between the two companies’ values is seen in MI’s strive for excellence, while FHR’s values highlights empowerment and good work behaviour among employees. 2. Believed
Beliefs are rarely spoken of and are unconscious assumptions. The following information in the Seven Dimensions of Organizational Culture chart is gathered through interviews with Fairmont HR Coordinator Madeleine Bell, Fairmont Director of Food and Beverage Mark Steenge, and Marriott Food and Beverage Manager Scott Robertson. 7 Dimensions of Organizational Culture (FHR and MI)|
Attention to Detail| High|
Outcome Orientation| High|
People Orientation| High|
Team Orientation| High|
Innovation and Risk-Taking| Low|
*chart in further detail in Appendix 1. 3
Employees of FHR and MI share a similar company culture. When it comes to dealing with customers, the final result is most important. Both organizations have high degrees of outcome orientation and attention to detail. This is expected as both companies rely on exceptional customer service to retain loyal customers. What is surprising is the low innovation and risk-taking rating for both FHR and MI. The low score is due to the structured and consistent service that both hotel brands are known to provide. Customers know the kind of service they will receive when visiting either a Fairmont or Marriott hotel. Employees of both FHR and MI also seem to be happy with their jobs. The high level of people orientation suggests that management does a good job of considering what effects certain decisions might have on employees. A big part of both companies’ culture is teamwork. Proven by the high level of team orientation and low level of aggressiveness among employees, employees are cooperative and engage in team activities. How is Culture Maintained?
A strong company culture allows the organization to remain consistent and stay true to the company’s vision. Though both FHR and MI ranked low in innovation and risk-taking, their ability to adapt is strong. The low innovation score is because of the need to maintain a certain standard of service and excellence. Both FHR and MI employees are given a lot of autonomy and are empowered to make decisions. According to Mark Steenge of Fairmont Hotels, when faced with an unhappy guest employees are empowered to make decisions without going to their managers in order to make the guest happy. This policy is also similar to MI. Both hotel brands have a strong sense of adaptability and are able to change with each individual customer. FHR and MI have training programs in place to ensure every employee is well aware of the company culture. FHR employees go through a two day orientation, teaching all new employees the company’s core values and beliefs. There is also a Service-Plus Committee active in FHR where employees are selected at random each month to refresh their memory of the company’s service promises. Most importantly, the organizational culture for these two companies remains consistent with their company vision. This ensures that a business will not lose sight of their goals and objectives and this strong culture will in the end play a positive role in FHR and MI’s business. Social Responsibility and Ethics
The CSR strategy of FHR and MI are both highly proactive in the hotel services industry. Each hotel has made at least one industry changing step into CSR. FHR is the first hotel organization to officially pledge support to locally grown and sourced organic produce in their everyday food operations (International Singapore Compact CSR Summit, 2012, p. 23). MI formed the first partnership between a private sector company and a foreign government to prevent deforestation (Marriott International , 2011).
More specifically both hotels have concentrated their CSR initiatives on particular issues that concern their industry. Both focus on green projects, cultivating hospitality talent, promoting diversity in the workplace, and combating sex tourism (Rice, 2009). The chart in Appendix 1. 4 compares the CSR strategies of FHR and MI with Intercontinental Hotel Group’s (IHG) prototype “ Green Hotel.” What can be determined from the chart is that both hotels are heavily invested at the most basic CSR level in the hotel services industry. However, FHR surpasses MI in the “ Unique Brand Drivers” class, exhibiting FHR’s pioneering footsteps into the hospitality industry’s CSR initiatives. Ecological Footprint
The exorbitant amount of waste the hotel industry produces is a burden on the environment. Both organizations offset their ecological footprints with internal programs and external partnerships.
The difference between FHR and MI’s environmental strategy is FHR’s adaptability to location. Each FHR location is authorized to implement a program that works best for them. For example, the Fairmont Chateau Lake in Alberta uses unusable oil products from kitchens and converts them into biodiesel to fuel shuttle buses (Fairmont Hotels & Resorts, 2012).
MI’s global strategy is broad and more consistent within the organization. Their CSR programs are shared by all MIs, only differing in location. For example, across North America, MIs are guided by their “ Spirit to Serve”:
Shelter and Food
Readiness for Hotel Careers
Vitality of Children
Embracing Diversity and Disability (Marriott International , 2011).
This mission statement guides MI’s CSR programs; promoting closer ties of MI employees and associates with the local communities through a hands on approach. FHR’s approach to CSR is more aligned with the company’s formal environment; working at a corporate level with programs like Fairmont CAREs, UNESCO World Heritage sites, as well as a partnership with the United States Department of energy to reduce energy consumption (Turner, pg. 6). Employee Treatment
The commonalities of FHR and MI are that both hotel organizations value work diversity, providing more opportunities for women to work up to management, an accommodating workplace for people with disabilities, as well as special training programs for employees to work their way up in the company. Although each organization has programs installed for employee development and promotion, MI has a uniquely lower turnover rate in the hotel industry (CNN money, 2008). Coinciding with each company’s culture is the nature of FHR and MI’s official employee standards. FHR has a formal Code of Ethics booklet, while MI uses the less formal sounding Book of Integrity. Financial Fit
CSR programs give FHR and MI intangible value, increasing the brand’s equity and reputation in the industry. Stakeholders are prideful of their company and shareholders are rewarded by having their hotel earn international recognition. With the support of shareholders, both hotels have been able to address a wider concern in their industry, sex tourism and the exploitation of children. On record, MI’s shareholders have voiced their concerns about the issue and “ applaud” MI for making strides in an ethically sensitive area (CSR Wire).
Planning and Strategic Analysis
The first step in developing organizational strategy is determining whether each company’s strategy needs to be changed in order to sustain a competitive advantage (Williams, Champion, & Hall, 2012). MI undoubtedly holds a competitive advantage in the global hospitality industry, whereas FHR holds a different competitive advantage within a niche market. The SWOT analysis and Porter’s Five Forces analysis for FHR and MI can be found in Appendix 1. 5 and 1. 6. For Corporate Level Strategies, both FHR and MI use portfolio and grand strategies to determine what business they are in and what changes they need to make in order to adapt to their external environments. FHR’s portfolio strategy came from acquisitions and partnerships. When Fairmont partnered with Canadian Pacific Hotels in 1999, they acquired many Canadian properties.
Similarly, Marriott’s expansion into Acapulco, Mexico in 1969 was the beginning of the company’s global diversity. Its large portfolio of brands allows MI to minimize risk by offering a variety of services. This can be seen in the BCG Matrix in Appendix 1. 7. Both companies are expanding internationally, focusing on brand extensions. This growth strategy will increase FHR and MI’s profits, revenues, and market share in the future. Looking at industry level strategies, both MI and FHR positions their companies by differentiation. FHR puts itself at a competitive advantage by positioning along luxury and heritage hotels (Twst, 2005). This is shown clearly in Appendix 1. 8. MI holds competitive advantage by having a large number of properties and by keeping its brand loyal customers. Both companies can take advantage of social media to determine changes in their environment, observing the wants and needs of potential customers. This information can be used to encourage repeat visits and create a wider portfolio of loyal customers (Tripadvisor, 2013). Companies’ Future
After looking at the SWOT and Porter’s analysis for FHR and MI, it can be determine that the tourism and hospitality market is still recovering from the economic downturn. FHR and MI have been successful at positioning their brands for appropriate markets; allowing them to overcome external threats. FHR has captured a luxury market, whereas MI offers diverse brands for both luxury and leisure travellers. From a corporate level, FHR still has room to grow and maintain a growth strategy that will help the company capture a larger market share such as that of MI. As FHR expands internationally and establishes a brand for itself overseas, FHR should adapt and change from a prospector to a defender approach. MI uses the adaptive strategy and holds its position as a prospector by constantly taking on new market opportunities and maintaining its position as a leader in the industry. Organizational Structure and Design
FHR and MI are mechanistic organizations. Both companies have very similar organizational structures, differing only in departmentalization and formalization. Creating an effective organizational structure involves decisions about the six key elements in organizational design. These include: * Work Specialization
Providing quality service to customers in a hotel requires a large staff. It is impossible for any one employee to attend to the entire length of a guest’s stay. From check-in to check-out, there are many procedures and tasks that one must perform. For quality and efficiency, both FHR and MI have high degrees of work specialization. Work is split into separate departments, and within the separate departments, work is further specialized into individual roles, tasks, and positions. For example, Front Desk may have agents who are responsible for checking in guests, other agents who are responsible for responding to special requests, and employees who are responsible to strictly greet guests. This high degree of work specialization simplifies tasks and allows employees to quickly become experts in their job. The downside of having a high degree of work specialization is reflected in FHR’s turnover rate of 25-30% (Madeline Bell, Interview, January 30, 2013). To prevent high rates of turnover, both hotels have cross-training programs implemented to encourage job rotation. * Departmentalization
Looking at FHR and MI from a corporate level, both companies have split up their work through matrix departmentalization. Combining geographic and functional forms of departmentalization, FHR and MI have developed a multi-national organizational structure. Appendix 1. 9 and 2. 0 will outlines both FHR and MI’s organizational structures. When compared to FHR, MI’s matrix is more complex. Due to its brand portfolio of seven categories, MI’s matrix combines geographic, product, and functional forms of departmentalization. At a geographic level, MI operates in five major geographic regions. Hotels within each region are responsible for knowing the customers and retailers within their market. Product departmentalization comes from the seven categories of service that MI provides. Depending on each hotel brand, workers are responsible for producing a particular level of service. Finally, at the functional level, work is split into particular business functions such as accounting, sales, and housekeeping. FHR’s matrix includes geographic and functional forms of departmentalization, but doesn’t include product departmentalization. From a geographic level, FHR operates in five geographic regions. The majority of both FHR and MI hotels are found in North America. FHR is expanding with 11 hotels within the Asian and Middle Eastern markets. At a functional level, the departments are very similar to those of MI. * Chain of Command
Due to the large number of employees who work within the hotel, a vertical chain of command is ideal. With employees reporting to a direct manager, they maintain a unity of command so that there is no miscommunication between managers and staff. Managers can rely on a degree of standardization and quality control. As Mark Steenge from FHR likes to put it, this kind of authority is a form of “ healthy tension”. * Span of Control
Depending on the demand and sales, there will be a different number of employees in each functional department of a hotel. Both hotels have significantly larger amounts of employees in the housekeeping department, and smaller numbers for their security. As assumed, there is only one manager for both hotels’ security department due to the small number of staff the manager can manage. However, the housekeeping department has the largest number of employees in both hotels. To efficiently and effectively manage such a large number of employees, there must be various levels and help within the management team. A first-line manager oversees the whole department. Underneath the Director of Housekeeping, there are team leaders who help the first-line manager. Assistant Managers and Supervisors focus on facilitating work, ensuring teams are efficiently working together towards a common goal. * Centralization and Decentralization
Both FHR and MI have achieved worldwide success due to their “ people-come-first” attitude. One of FHR’s core values is empowerment. Similarly with MI, one of their values is to “ put people first.” These values define FHR and MI’s organizational structure towards decentralization. Employees are empowered to make decisions especially when it is to recover unhappy guests. As mentioned in the Management textbook, “ decision making is best when it is made as close to the client as possible” (Williams, Champion, & Hall, 2012). * Formalization
Both companies have high degrees of formalization. Their processes and rules are standardized to maintain a consistent level of service. Although both companies empower employees to make decisions, their decisions are still required to be within the guidelines provided by the company. The difference between FHR and MI is that MI is a franchise. To standardize franchisees and maintain consistency among the Marriott brand, there must be a careful selection process before approving the franchise. Even after approval of the franchisee, there is still constant evaluation of their performances through reports to Regional Managers and Corporate Heads of the company. Operation of Organization
Both companies are growing mechanistic organizations. Through high degrees of standardization and maintaining a vertical chain of command, both companies are able to maintain a consistent quality of service world-wide. By splitting work through geographic departmentalization, companies’ growth strategies allow each regional department to focus on the demands of their regional markets. Alignment
For the tourism and hospitality industry, the economy downturn in 2008 made a huge impact on aggregate hotel sales and net income. The industry has been recovering from the recession and is expected to grow steadily up to 2016. The Canadian market in particular is expected to have a CARC growth of 5% within the next 3 years. This presents a huge opportunity for both FHR and MI hotels. Because of an organization’s need to adapt to environmental changes, FHR and MI have been taking advantage of the rebound in the economy by adopting a growth strategy and expanding outwards into Asia and the Middle East. This is also reflected in the companies’ structure. As FHR and MI expand globally, they must split the work through geographic departmentalization, allowing each regional unit to focus on their specific environment and market. To maintain consistent service worldwide, both organizations have high degrees of standardization to serve as guidelines for employee behaviour. Fairmont
FHR’s mission, vision, and goals are clear, “ To become the luxury brand of choice through turning moments into memories” (Fairmont Hotels & Resorts, 2012). This goal resonates throughout the company’s strategy, culture, and structure. FHR’s distinct style of service and atmosphere is developed through a company strategy. Through a differentiation position, FHR has created a unique hotel experience guests. Positioning strategically along luxury and heritage hotels, FHR creates a competitive advantage that puts them closer to their goal of becoming the “ luxury brand of choice.” Therein lies FHR’s non-substitutable resource, important to FHR’s success in maintaining a competitive advantage. The company’s strong set of values contribute to their goals as well. By having a strong consistent culture throughout the company, every employee works with the same sets of values and provides the same quality of personal service that guests have learned to experience and love. Finally, the company’s organizational structure has led them to global success. The effectiveness of geographical departmentalization is represented by FHR’s ability to provide local experiences, appealing to tourists. Marriott
MI’s mission and vision to becoming the world’s top hospitality company will be achievable through their “ spirit to serve.” Similar to FHR, the is streamlined through the company by decisions about strategy, culture, and structure. MI’s extensive worldwide penetration is achieved by their portfolio strategy of acquisition. The company’s consistency with their growth strategy is also a main reason why MI has many properties worldwide. As opposed to FHR’s values, which are concentrated at the local level, one of MI’s values is to “ serve the world.” By having a global company vision, employees’ can be proud of working at a multinational organizational that cares about global integration and local community. Due to MI’s large number of properties and categories of service, the structure of the company effectively organizes its operations through geographic, product, and functional departmentalization. Just like FHR, this breakdown of work and operations allows for targeted customer experiences and a higher chance of organizational success. Who’s the Better Company?
FHR and MI are both very successful hotel industry leaders, competing in different segments within the hotel industry. FHR captures the niche market and specializes in luxury, heritage hotels. MI has a large degree of diversification with hotel brands competing in seven separate categories. Both FHR and MI have strong and consistent organizational cultures that define a colleague’s role and ethics while on the job. These values are the same throughout all respective hotels. Through well-implemented training programs, new colleagues at both hotels go through orientation, equipping themselves with the skills and knowledge to uphold a standardized level of service. With an increased awareness of issues affecting the hotel industry, FHR and MI have adopted “ green” initiatives for their CSR. Both companies’ growth strategies require the organization to be flexible to environmental changes in their industry. As the economy recovers from recession, opportunities for growth are present. MI has a significantly larger amount of hotels in comparison to FHR, partly due to MI being a franchise.
This contributes to MI’s goal of becoming the number one hospitality company in the world by penetrating the global market. When comparing an employee’s personal goals with the organization’s goals, both hotels are very well aligned. Based on interviews with staff, employees seem to enjoy their jobs and take pride in working at their respective hotels. Colleagues are internally motivated and seem to genuinely love hospitality and service. It is hard to determine which company is better managed. MI leads in terms of success and industry position. MI also has a low turnover rate which is rare in the hotel industry, showcasing high employee job satisfaction levels. Compared to FHR, MI is less formal and standardized. Management and employees have an open form of communication; however, there is still a vertical chain of command that keeps a consistent line of communication throughout the corporation. Their complex matrix organizational structure also effectively splits up management at a geographic level and product level. By separating the whole organization into strategic business units (SBUs), it allows each hotel brand to focus on their own specific unit, dealing with any specific and external environmental factors more efficiently. MI’s adaptability to global environmental changes, visionary industry initiatives, local community engagement, and care of its employees and guests, brings MI ahead of FHR in the comparative analysis.