Rafi Mohammed

For Courtyard By Marriott...It's All About Value

Posted on June 26th, 2007 (0 Comments)

Last week while in Cleveland on business, I was booked to stay in a Courtyard by Marriott hotel. This chain was designed by a few Wharton School of Business professors using conjoint analysis, a market research technique focused on understanding what product attributes consumers value. Ever since I read an academic article written by Jerry Wind, Paul E. Green, Douglas Shifflet, and Marsha Scarbrough which describes how the hotel chain was designed (“Courtyard by Marriott: Designing a Hotel Facility with Consumer-based Marketing Models,” Interfaces, January – February 1989), I’ve wanted to stay at a Courtyard by Marriott.

A brief sidebar – several years ago I had the pleasure of meeting the lead author of this article, Jerry Wind, when I presented my greatest hit (note the singular tense) academic paper on bundling and the rock concert industry at the Wharton School. In academic circles, Wind is considered a rock star – he is one of the top professors in marketing and was rumored to drive a DeLorean car. When Professor Wind arrived at my seminar (a few minutes after it started), I got so excited that I knocked over my drink at the podium…not the smoothest way to make a good impression. I never did get to ask him about his DeLorean!

Back to Courtyard by Marriott…you may be wondering how conjoint analysis works. Imagine being asked what package you prefer: Package A (3 story hotel, courtyard design, $65) vs. Package B (12 story hotel, L shaped design, $55). Once you’ve answered this question, you’ll be asked for your preference between 2 new packages: for example Package C (3 story hotel, L shaped design, $55) vs. Package D (3 story hotel, L shaped design, $60). You can imagine that after being asked about your preferences in this manner, say 10 times (with the package characteristics being slightly different each time), your preferences and valuations for specific attributes can be teased out. A sample of conjoint analysis can be found here.

The results of Courtyard by Marriott’s conjoint analysis are fascinating. Conjoint found that business travelers (primary core target audience) didn’t sufficiently value traditional hotel attributes like an “action” lounge (…their phrasing, not mine), room service, upscale restaurant, bellman, concierge, or airport transportation. Instead, targeted business travelers valued items like a room that is slightly larger than most (1 foot), sink in a separate area, coffee maker, and décor similar to new Hiltons.

This analysis gave Marriott’s management confidence they were creating a hotel that best served their clientele. The real proof of the benefits of focusing on customer value is the overwhelming success of the Courtyard by Marriott chain. Starting off with 3 test hotels in 1983, the chain now has 699 worldwide locations.

So when Courtyard by Marriott claims that it is “designed by business travelers for business travelers” (this slogan was recently modified to be “redesigned by business travelers for business travelers”) …they aren’t kidding.

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