Marriott International MAR Business Risk Report

Risk Report Outline for Marriott International (MAR)

I. Financial Risks

A. Revenue Fluctuations

1. Decreased consumer spending affecting hotel bookings: Marriott International may face significant revenue fluctuations due to variations in global consumer spending. During economic downturns or due to geopolitical events, discretionary spending on travel and hospitality can decrease, thus impacting hotel bookings and overall revenue.

B. Exchange Rate Risk

1. Exposure to currency fluctuations impacting international operations: As a global company operating in numerous countries, Marriott International is exposed to exchange rate risks. Currency fluctuations can affect the company’s earnings, costing, and profitability from its international operations, which form a significant part of its revenue.

II. Operational Risks

A. Cybersecurity Threats

1. Data breaches compromising customer information: Marriott International has previously experienced substantial data breaches that compromised customer information. Ongoing threats could lead to repeated incidents, damaging customer trust and resulting in substantial financial losses due to fines and reparations.

B. Supply Chain Disruptions

1. Dependency on suppliers for inventory, potential disruptions: The dependency on global supply chains for operating supplies, foods, and beverages makes Marriott vulnerable to disruptions. These disruptions can be caused by geopolitical events, natural disasters, or transportation halt, affecting the smooth operation of its services.

III. Regulatory and Compliance Risks

A. Labor Laws Compliance

1. Adherence to labor regulations in various countries of operation: Compliance with varying labor laws and regulations in countries where Marriott operates is crucial. Any non-compliance could lead to legal actions, penalties, and damage to reputation.

B. Environmental Regulations

1. Compliance with environmental standards in hotel operations: Marriott must adhere to strict environmental laws and policies that govern its global operations. Non-compliance could result in fines and a negative impact on its brand as consumers increasingly favor environmentally responsible companies.

IV. Strategic Risks

A. Competition

1. Increased competition from alternative accommodation providers: The rise of companies like Airbnb and other vacation rental businesses poses a significant competitive threat to traditional hotel companies like Marriott, potentially eroding market share and affecting its pricing strategies.

B. Brand Reputation

1. Negative publicity impacting consumer trust and loyalty: Marriott’s brand reputation could be critically damaged by incidents such as data breaches, service failures, or negative publicity. Maintaining a positive brand image is imperative for customer retention and business growth.

V. Market Risks

A. Economic Downturn

1. Decreased travel demand during economic recessions: Economic downturns typically result in decreased business and leisure travel, adversely affecting hotel occupancy rates and profitability for Marriott.

B. Pandemics

1. Disruption in travel and tourism due to global health crises: Pandemics like COVID-19 have profoundly impacted the global travel industry, leading to unprecedented revenue loss due to travel restrictions and safety concerns.

VI. Mitigation Strategies

A. Diversification of Revenue Streams: Marriott has been focusing on diversifying its revenue through various initiatives such as expanding into new markets, increasing digital services, and enhancing loyalty programs.

B. Implementation of Robust Cybersecurity Measures: Marriott continues to enhance its cybersecurity infrastructure and protocols to protect against data breaches and safeguard customer information.

C. Regular Supplier Audits and Contingency Planning: The company conducts regular audits of its suppliers to ensure reliability and has developed contingency plans for supply chain disruptions.

D. Ongoing Compliance Monitoring and Training Programs: Marriott invests in compliance monitoring systems and comprehensive training programs to ensure adherence to legal and regulatory requirements in different jurisdictions.

E. Continuous Market Monitoring and Adaptation of Strategies: The company keeps a close eye on market trends and demands, adapting its strategies accordingly to remain competitive and responsive to changing conditions.

F. Crisis Response Plans and Business Continuity Measures: Marriott has established detailed crisis response plans and business continuity strategies to manage emergencies effectively and minimize operational interruptions.