Mr Bux – M2
Throughout M2 I will be looking at the different challenges that two companies face (Marriott,
Watermans) in two different economic environments and how it will affect them as a whole.
Marriott is a hotel that in worldwide and in the public sector whereas Watermans is a local theatre
that is in the private sector but is also heavily funded by the government.
Firstly I will be looking at how what will happen to Marriott and Watermans if there is a
low/negative GDP, or high inflation.
Attracting customers
When GDP is low then this is harder for Marriott. Attracting customers when the economy is in a
recession is a lot harder when you are a company like Marriott. This is because staying at a hotel is a
luxury and when the economy is doing badly, luxury items are the first things to be cut from a
person’s spending. When Marriott have problems attracting customers they need to think of
solutions to get more customers back. A way of doing this would be by lowering the prices or by
giving special offers to their customers. Watermans will also be affected in a similar way. For
example, it would be harder for them to get customers as the theatre is a luxury item for customers.
The result of attracting customers becoming more difficult would be that they would have less
customers and would have to lower their prices to get them customers back during a recession. The
outcome of this would be that the companies would not be making as much profits. The impact of
this would be that both companies wouldn’t be able to grow and could even lose profits. The
consequence of this would be that the company would need to work a lot harder when the economy
is doing good to get it back to how it used to be.
Hitting targets
Marriott and Watermans would need to re-evaluate their targets. This means that they would need
to lower their targets to maybe 80% of what it used to be as they would not be doing as well due to
the GDP being low. Marriott’s targets while GDP is low should be lower than when the GDP is high
because Marriott would not be able to get as many customers when GDP is low. This is because GDP
is usually what tells whether an economy is doing well or not and if GDP is low, then this would be
mean the economy is doing badly or is in a recession. This goes the same for Watermans. Both
companies would need to make realistic targets that they are able to achieve within a month or a
year, but they can set a realistic target during an economy’s boom but it would not be realistic if the
economy was in a recession. This means that both companies will need to rethink their targets.
Therefore, they will have to keep trying to achieve different amounts of sales. The consequence of
this would be that the companies would need to keep on calculating their profits and income rather
than their income being consistent. This can throw companies off and it can also affect their end
profits if they need to keep re-assessing their targets that they want to hit.
RevPAR
The revenue per available room will be affected greatly if the country is in a recession. This is
because RevPAR is the number of times a room has been used in a row by that same person. An
example of this would be one person using a room for 3 nights in a row. This would be affected if the
economy is in a recession because people would be saving their money and wouldn’t spend their
money on luxury items or services which is exactly what Marriott is. Marriott looks at RevPAR on a
quarterly basis as this would give them the most effective data to analyse. This would not affect
Watermans as they do not sell hotel rooms.
Throughout M2 I will be looking at the different challenges that two companies face (Marriott,
Watermans) in two different economic environments and how it will affect them as a whole.
Marriott is a hotel that in worldwide and in the public sector whereas Watermans is a local theatre
that is in the private sector but is also heavily funded by the government.
Firstly I will be looking at how what will happen to Marriott and Watermans if there is a
low/negative GDP, or high inflation.
Attracting customers
When GDP is low then this is harder for Marriott. Attracting customers when the economy is in a
recession is a lot harder when you are a company like Marriott. This is because staying at a hotel is a
luxury and when the economy is doing badly, luxury items are the first things to be cut from a
person’s spending. When Marriott have problems attracting customers they need to think of
solutions to get more customers back. A way of doing this would be by lowering the prices or by
giving special offers to their customers. Watermans will also be affected in a similar way. For
example, it would be harder for them to get customers as the theatre is a luxury item for customers.
The result of attracting customers becoming more difficult would be that they would have less
customers and would have to lower their prices to get them customers back during a recession. The
outcome of this would be that the companies would not be making as much profits. The impact of
this would be that both companies wouldn’t be able to grow and could even lose profits. The
consequence of this would be that the company would need to work a lot harder when the economy
is doing good to get it back to how it used to be.
Hitting targets
Marriott and Watermans would need to re-evaluate their targets. This means that they would need
to lower their targets to maybe 80% of what it used to be as they would not be doing as well due to
the GDP being low. Marriott’s targets while GDP is low should be lower than when the GDP is high
because Marriott would not be able to get as many customers when GDP is low. This is because GDP
is usually what tells whether an economy is doing well or not and if GDP is low, then this would be
mean the economy is doing badly or is in a recession. This goes the same for Watermans. Both
companies would need to make realistic targets that they are able to achieve within a month or a
year, but they can set a realistic target during an economy’s boom but it would not be realistic if the
economy was in a recession. This means that both companies will need to rethink their targets.
Therefore, they will have to keep trying to achieve different amounts of sales. The consequence of
this would be that the companies would need to keep on calculating their profits and income rather
than their income being consistent. This can throw companies off and it can also affect their end
profits if they need to keep re-assessing their targets that they want to hit.
RevPAR
The revenue per available room will be affected greatly if the country is in a recession. This is
because RevPAR is the number of times a room has been used in a row by that same person. An
example of this would be one person using a room for 3 nights in a row. This would be affected if the
economy is in a recession because people would be saving their money and wouldn’t spend their
money on luxury items or services which is exactly what Marriott is. Marriott looks at RevPAR on a
quarterly basis as this would give them the most effective data to analyse. This would not affect
Watermans as they do not sell hotel rooms.
