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