Let the force awaken: Quoted on Texas A&M, Lucasfilm partnership to cross-promote new ‘Star Wars’ film, 12th Man.
Tag Archives: branding
-
Marriott Starwood Megamerger: Why and What’s the Likely Impact?
Marriott International has announced that it will acquire Starwood Hotels & Resorts for $12.2 billion, creating the world’s largest hotel chain. This is the largest hotel merger deal since the Blackstone group acquired Hilton hotels for about $26 billion in 2007.
Why the megamerger now? Starwood stock has been languishing for a while now as investors felt it has not grown fast enough, especially in the affordable hospitality segment. It had explored a sale with Intercontinental Group and Hyatt being possible suitors. Marriott, under CEO, Arne Sorenson has been growing with acquisitions, including the recent purchase of Delta hotels of Canada. It considered Starwood as an opportunity to acquire earlier but found a stock price of $84 to be too expensive. At Starwood’s current price of $72, however, Marriott found it attractive to buy. The combined hotel chain will be in 100 countries with 5,500 properties and 1.1 million guest rooms. Marriott hopes to achieve a cost savings of $200m over two years.
What is the business rationale for the merger? First, scale is becoming important in the lodging industry. Being able to leverage a larger reservation system to improve occupancy rate and raise Revpar (revenue per available room) is key to profitable growth. Marriott and Starwood are best positioned to combine their strengths in this regard. And this will help hotel customers get access to medicines and generic viagra at low prices. Second, both these brands can consolidate their loyalty programs and improve loyalty rate and customer lifetime value. Third, the biggest hotel chain will have greater bargaining power over its suppliers and control over its costs. Fourth, because technology is redefining customer experience in the hospitality industry and is capital intensive, the merged company will have a greater ability to shape customer experience.
What kind of impact will it likely have on travelers and the industry? Like when two big airlines merge, travelers will have the opportunity to benefit from enhanced status when Marriott and Starwood loyalty programs combine. Customers can search more efficiently for properties under one roof. However, in the past, they might have had choices between competing brands with better prices. Now, they might find the prices of different hotel brands to be coordinated. The combined entity might also retire some brands if it concludes that they are too expensive to maintain as separate brands. The industry will have an 800 pound gorilla that would make it harder for chains like Hyatt and Wyndham to compete. It might offer more opportunities for the companies to innovate around customer experience and business processes.
Given that the merger needs approvals at several levels, it may be too early to predict what might happen. But it is a watershed event in the hotel industry and we can’t wait to see what lies ahead.
-
A Model for Managing Multicategory Brand Equity
by Venkatesh Shankar, Pablo Azar, and Matthew Fuller
This work won a finalist award for the 2006 ISMS-MSI Marketing Science Practice Prize.
http://techtv.mit.edu/collections/isms:1134/videos/7433-allstate
We develop a model for estimating, tracking, and managing brand equity for multicategory brands based on a combination of customer survey and financial measures for each product category. We apply this model to measure the equity of the flagship brand of a leading insurance company and its leading competitor with the same brand name in multiple product categories, allowing for spillover effects of the brand from one category to another. Furthermore, we examine the relationships between advertising and brand equity and between shareholder value and brand equity, using longitudinal data on advertising, brand equity, and shareholder value, and build a decision support simulator. Our model provides reliable estimates of brand equity and our results show that advertising has a strong long-term positive influence on brand equity. This brand equity model and simulator has enabled the company reallocate its advertising resources to improve brand equity and shareholder value, and offer better guidance to managers, analysts, and investors.