1. Hotel Industry Obtaining Sustainable Competitive Advantage

2. Prepared ForPresented By: Scott Wachs Richie Rodarte Erik Spindola Anthony De los Santos Jeremy Moss 3. Purpose 1. What makes a firm successful in this industry?2. Why is Hyatt considered the bottom performer?3. How can Hyatt improve their competitive position? 4. Agenda Part I What drives industry success? Hotel Industry Analysis Factors Driving Profitability in Hotel Industry Part II Why is Hyatt the bottom performer? Performance of Incumbents Firm Level Analysis Part III How can Hyatt improve? Recommendations 5. Industry Definition Publicly traded U.S. hotel chains who have brands that serve multiple customer segments but do not exceed 500,000 rooms. 6. Hotel Industry Analysis Part I: What Drives Industry Success? 7. Ability to Create Brand Loyalty KSF Loyalty Programs o Ladder system Customer Relationship Customize ServiceKPI Number of Loyalty Programs o o o oMarriott- 31 million Hyatt- 12 million Starwood- 41 million Intercontinental- 63 million Switching Cost 8. Ability to Sell Additional Goods & Services to Hotels Guests KSF Restaurant and Bars o Food and BeveragesKPI Percentage of revenue from non-room fees o Starwood- 33% of total business Unique and positive experience Revenue increase 9. Ability to Exceed Customer Expectations Balance expectations with service delivery Cheaper to retainHotel Marriott Drives profitability with repeat visits Decreases customer acquisition costsRepeat Visits (As a % of total visits) 62%Hyatt30.30%Starwood50%Intercontinental43% 10. Ability to Maximize Returns on Available Room Inventory Balance price with customers Match price with perceived value Indicated by Revpar Room fees/ Total Rooms 11. Incumbent Hotel Performance Part II: Why is Hyatt the Bottom Performer? 12. Top & Bottom Performers RevParMarriott Hyatt Starwood IHGMarriott Hyatt Starwood IHGWeightPercentage of Revenue From Non-room FeesRepeat Visits (as a % of total visits)Total number of loyalty program members (Millions)85.15 116 164.780.14 0.19 0.330.62 0.30 0.531 12 41131.060.310.4363Rating 0.520.421.000.49Weighted Score 0.59Rank 20.700.580.490.190.5141.001.000.810.650.8710.80 35%0.94 20%0.69 20%1.00 25%0.853Bottom Performer Top Performer 13. Firm Level Analysis Part II: Why is Hyatt the Bottom Performer? 14. Creating Brand LoyaltyEstablished in 1996Established in 201041 Million Members12 Million Members 15. Selling Additional Goods & Services vs33% of Revenue from Non-room Fees19% of Revenue from Non-room FeesGreater ConsistencyComparable Offerings 16. Exceeding Customer Expectations vs50% of Guests are Returning Customers Customer Focused Training30% of Guests are Returning Customers Mistreatment of Employees 17. Maximizing Returns on Available Room Inventory vs$164.78 of Revenue per Available Room Successful Differentiation Strategy$116.00 of Revenue per Available Room Improvements Implemented (MaximRMS) 18. Recommendations How can Hyatt Improve Competitive Position? 19. Improved Loyalty Program 20. Health Food & Business Amenities 21. Improve Working Conditions 22. Conclusion Industry Analysis Create Brand Loyalty Sell Additional Goods & Services Exceed Customer Expectations Maximize Return on Room InventoryFirm AnalysisRecommendations Starwood is exceptional in every key success factor Create a disruptively innovative loyalty program Hyatt is the laggard compared to top performer Follow health trends Improve working conditions