fitness experience innovation presentation updated 12.05.14 1210am (1)
TRANSCRIPT
BUSINESS PLANFitness Experience – Marriott International
Rust Team
AGENDA
Fitness Experience – Marriott International
• The Idea
• The Customer
• Financial Analysis
• Market Share Analysis
• Assumptions and Risks
THE NEED
“health insurance premiums will increase by an
average of 10 percent to 13 percent”
Huffington Post
“ hours traveling add up and fast food wrappers
stack up” webmd
“Hotel food contain lots of sugar and starch that make you
sleepy”nutrition.about.com
“..your schedule is thrown off, you're in a new
environment, and time isn't necessarily on your side. –
Mens Health
“Quite Busy Hotel, Interesting Nearby Neighborhood,
Inadequate Gym” Trip Advisor
“There has emerged a retail sweet spot, the healthy lifestyle.” Commercial observer magazine
THE IDEA
THE CUSTOMERPrimary: Business Traveler
Secondary: corporate memberships, competing hotel chain business travelers, vacation travelers, and family members of business travelers
Clients forsee Mariott meeting multiple needs
Exposure through Mariott Rewards, in-hotel advertisements, email blasts, Mariott mobile app
FINANCIALS
Unit Price:
Basic: $24.99
Premium: $35.99 (10% FE Guests)
Avg Unit Price: $26.09
Total Unit Price:
Avg Room rate: $179.00
Avg Margins on room: 80%
Avg Room Margin: $143.20
FINANCIALS
Year 1 Year 2 Year 3 Year 4 Year 5
Hotels 31 56 111 226 461
Total Labor Cost $1,810,400 $3,352,160 $6,806,520 $14,188,280 $29,614,640
Total System Cost $1,000,000 $100,000 $50,000 $25,000 $25,000 Total Marketing Cost $1,000,000 $1,000,000 $1,250,000 $2,250,000 $4,250,000
Total Training $500,000 $300,000 $510,000 $1,010,000 $2,010,000
Total Costs by Year
$4,310,400
$4,752,160
$8,616,520
$17,473,280
$35,899,640
Costs
FINANCIALS
Revenue
Year 1 Year 2 Year 3 Year 4 Year 5
Total With FE Total With FE Total With FE Total With FE Total With FE
Yearly Occupied Rooms 2,945,276 20,312 5,320,499 36,693 10,545,989 72,731 24,322,281 167,740 43,799,108 302,063
Average Daily Rate $179 $26.09 $184 $26.09 $189 $26.09 $194 $26.09 $199 $26.09
Annual Room Revenues
$527,204,44
9
$978,971,82
2
$1,993,191,
950
$4,718,522,
570
$8,716,022,
513
Additional Revenue from FE $3,635,893
$529,94
7 $6,751,530
$957,32
3 $13,746,151
$1,897,55
1 $32,541,535
$4,376,33
3 $60,110,500
$7,880,81
9
Total Revenue Growth $4,165,839 $7,708,853 $15,643,702 $36,917,868 $67,991,319
FINANCIALS
yr. 1 yr. 2 yr. 3 yr. 4 yr. 5 Total Years
To-tal Costs by Year
4310400 4752160 8616520 17473280 35899640 71052000
To-tal Revenue by Year
4165839.3525
7708852.70129
15643702.1170165
36917868.2012914
67991318.9194367
132427581.291535
$10,000,000
$30,000,000
$50,000,000
$70,000,000
$90,000,000
$110,000,000
$130,000,000
Cost vs. Revenue
5-year Projected Profits: $61,375,581
Breakeven Analysis Year 1 Year 2 Year 3 Year 4 Year 5
Total Units Sold 20,310 36,690 72,274 148,070 302,360Total Costs $4,310,400.00 $4,752,160.00 $8,616,520.00 $17,473,280.00 $35,899,640.00Units Req for Breakeven 25,462 28,071 50,898 103,215 212,060
THE CUSTOMER – CONT.Acquisition Costs: Free introductory session labor and supplies ($740) and in-house ancillary advertising
Cost of service through staffing, marketing/advertising, training, and IT
Customer support through current hotel infrastructure- front desk staffing and web portal, central reservations, IT
MARKET SHARE• Avg. Occupancy 72% & ADR $179
• Avg. size hotel for FE: 359 Rooms
• 0.5% annual increase in occupancy• 1.8 rooms sold per night / per hotel
• 5 year growth to 74.5 occupancy
• Average annual increase in market share 2.96% for the FE portfolio hotels
ASSUMPTIONS & RISKS
• Risk of client injury with physical activity
• Low barrier of entry increases competition in the long run
• Potential dilution of Marriott brand name
• The Fitness Experience could fail in certain areas around the world
ASSUMPTIONS & RISKS
• Marriott brand reputation
• Additional revenues: Assumption that a percentage of the Marriott current population has an interest in wellness
• Fitness industry booming: solving community need
• Wellness is economy independent
• There is room for innovation and growth in the fitness industry
• Moderate projections considering only unique and new business to Marriott
Pilot Hotel Locations 1st YearBrand Location # Rooms
Renaissance Seattle 553Courtyard by Marriott San Francisco 374
Marriott Los Angeles, Airport 985Marriott San Diego, Gaslamp 291
Residence by Marriott Tempe, AZ 173Ritz-Carlton Denver 125
Marriott City Center Salt Lake 342Autograph Collection Kansas City 43
Renaissance Austin 463Courtyard by Marriott Minneapolis 243
JW Marriott Chicago 581JW Marriott New York, Essex House 394Ritz-Carlton New York, Central Park 259
Residence by Marriott Philadelphia 290Marriott Suites Washington DC, Dulles Airport 253
Marriott Miami, Biscayne Bay 579JW Marriott Atlanta, Buckhead 367
Marriott Vancouver, Canada 432JW Marriott Rio de Janeiro 229
Marriott Frankfurt 564Marriott Conference Center Paris, Rive Gauche 706
Marriott Madinah, Saudi Arabia 150Renaissance Tel Aviv, Israel 338
Marriott London 217Courtyard by Marriott Rome 155
Protea Cape Town, South Africa 349Ritz-Carlton Bangalore, India 277JW Marriott Beijing, China 344
Marriott Islamabad, Pakistan 269Marriott Sidney, Austrailia 518
Renaissance Moscow 267
THANK YOU