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The following report is based on the marketing of Red Carnation Hotel which is an International chain of Hotels having its business spread over USA, UK, South Africa and Switzerland. The following hotel is owned and run by a family and offers luxury, state of the art hotels to the customers. The hotel started its operations from South Africa in the 1950’s and started its operations in the United Kingdom after 25 years and has now 17 luxury hotels and spas across the countries where it operates. The hotel believes that providing a luxury service to customers depends mainly on the effectiveness of the staffs and thus they ensure that their 2500 number of strong staffs leaves no stone unturned while performing their duties. The management of the company thus ensures that the right persons are selected for the job. They recruit the best people in the particular position according to their needs and quality. The performance of the hotel has helped them to get listed on the top 10 of the 100 best companies of the Sunday Times for the past three years which describes the amount of confidence and trust that the customers have for them.
The mentioned hotel chain has been searching for new hunting grounds and thus they have decided to hire an international marketing consultant. The main purpose of this report is to carry out a detailed analysis of the market of four different countries namely China, Thailand, Nigeria and France and in accordance to the findings of the report the company will be selecting the best possible market and also the best possible way of entry into the market. The main aim of the researcher is to carry out a detailed analysis of the market by using different marketing frameworks like and Analysis tools like SWOT, PESTLE, Porter’s 5 Forces and 12c’s Framework.
PESTEL Analysis
There are numerous macro environmental trends that have a direct or indirect impact on the hotel industry. According to Leonidou, it is the responsibility of the management of the hotel to make sure that the stakeholders associated with the hotel are well aware of the current events associated with the industry (Leonidou et al. 2015). The PESTEL Analysis of the global hotel industry will enable the readers to get an idea about the recent trends of the ever growing hotel industry. As mentioned earlier there are both positives as well as negatives that have a direct impact on the hotel industry. The globalization of the market including changes in the environmental part of the globe has presented an altogether new picture to the global hotel industry.
Political Factors- Political factors are the first determinant of the PESTEL Analysis as political factors have a deep impact on the smooth and efficient running of the hospitality industry. According to Niewiadomski and Piotr the changes in Government or the changes in the policies of the government and the new challenges to tackle the terrorist activities have a direct effect on the industry (Niewiadomski and Piotr 2016). The hotel industry will always be benefited if the countries have a political stability. A state of political instability always hampers the cause of the hospitality industry and takes a toll on the GDP of the country. Taking the example of Egypt or some West Asian countries where tourism is believed to be the main earner of foreign exchange has seen a sharp decline in the last few years because of the political crisis. On the other hand absence of political crisis in Europe and Asia has attracted more tourists. UK recently suffered a major jolt after it executed its decision to exit the European Union. The increase in terrorist activities especially the rise of the terror outfit ISIS has made life more difficult for the hotel industry to survive.
Economic Factors- Economic factors are one of the main concerns of the hotel industry and it has a direct impact on the performance of smooth operations of the industry. The availability of labors, increase in the amount of disposable income and a sharp increase in the hourly income of employees has helped in the growth of the hospitality industry. Such a productive turnover has shown a positive picture for the industry to prosper in the coming years. The introduction of new economic packages for customers has also been helpful to increase the demand of the customers. The recession period of 2008 was a great challenge to the hospitality industry and the hotels were one of the worst sufferers of the situation. Recession took a toll on the purchasing power of the customers and thus the hotels had to lower down their rates in spite of making huge losses. Therefore global economy is a huge consideration in terms of the success of the hotel industry.
Social Factors- Socio-Cultural factors have a great hand in shaping the future of the global hotel industry. Globalization has been a serious factor behind the changes in consumer preferences. Changes in consumer preferences like lodging and private accommodations are the examples of some of them. Some of the larger and more reputable hotels have also started innovative techniques like arranging tour programs for them, arranging cultural programs and many more as such. The main aim of the hotels is always to ensure the satisfaction of the customers and thus they try to implement all the necessary things needed to satisfy their demands.
Technological Factors- Technology forms an important element of the modern day hotels. It forms the background of all operations carried out by different hotels starting from larger to medium and small scale hotels. The use of technology has facilitated the smooth communication and information transfer and has helped in bridging the gap between the service providers and the service users. The hotels have updated their kiosks and other facilities and have developed digital desks to facilitate a smooth communication channel. A number of different applications have been launched which provides the exact details regarding the location, accommodation, prices and other benefits of the hotels. These applications also provide the exact pictures of the accommodations and also provide the list of a number of different hotels that operates around the world.
Environmental factors- Fuel Prices are one of the main environmental factors that is a serious concern for the hospitality industry. A rise in the cost of the fuel prices will lead to a rise in the ticket prices and will lead to a downfall in the demand of the hotel rooms whereas the reduction in the cost of the fuel prices will lead to reduced fuel costs and in turn will lead to a huge demand for the hotel rooms. The change in the environmental scenario of the globe has led to the increase in the implementation of renewable sources of energy. Large hotels are gradually adapting to new and innovative techniques to curb greenhouse gas and reduce the carbon footprint. Increase in the levels of global warming is causing a deep impact in the temperatures of the places located near the seas or the beachside areas. This change is forcing some of the well known resorts to either shut down their operations or shifting to some other place.
Legal Factors- Legal factors are one of the crucial elements that determine the smooth operations of the hospitality industry. The hotels are often accused of compensating their employees with low wages without decreasing the working hours. There are many hotels that do not have the required documents to carry on the business. The practice of such unethical tasks is a major hurdle to the economy of the country.
The researcher has used the Porter’s Five Force Model to analyze the competitive advantage of the Hotel industry on a global basis.
| Power of customers · Presence of more hotels and competitors · Location Advantages · Increasing number of mobile applications | Power of suppliers · Weak Supply Power · Absence of Staffs · Salary Negotiation
|
| Threat of entry · Threat to market share · Product differentiation · Competitors providing High Quality Products
| Threat of Substitutes · Staying in some other residential accommodations · Caravan Parks and camping · Telecommunications can provide easy access to different parts of the world thus reducing travelling related to business
|
Source- (As created by the Author)
The Five Forces Model was prepared by Michael Porter. The following tool is a strategic business tool that is used to determine the competitive advantage of the business in the existing conditions of the highly competitive market.
Power of Customers
As seen in the above table the bargaining power of customers is the highest in case of the hospitality industry. The rise in the number of hotels and other accommodations has proved to be a boon for the customers. The customers verify quite a number o0f points before signing in some hotels. One of the main considerations is the location. Customers always prefer locations that are quite close to any place of interest (Huang and Cai 2015). The presence of a semi luxury hotel near the beach is much more preferable than the beach resort which is located much far from the beach. The emergence of smart mobile applications dedicated solely to the search of hotels worldwide helps the customers to compare each and every hotel based on their location, service provided, discounts, accommodation and fare structure. The best hotels are then selected in such a way.
Power of Suppliers
Bargaining power of suppliers in the hospitality industry is very weak. The suppliers have practically no power in such a field and totally depend upon the service providers. The need for a large number of workforces in the industry is one of the primary hurdles of the industry. Non availability of proper employees and labors create serious constraint to the management body of the hotels, involved in appointing employees for the hotels (Kim, Chan and Renee 2014). The employees of the hotel receive monthly salary as well as bonus for some special occasions, thus the employees have the full right to negotiate their salary for their hard earned labor.
Threat of New Entry
Hotel industry is one of the business sectors that attract every business organizations as well as entrepreneurs. The growth in the tourism sector across the globe has been influential in such a development. Most of the hotels makes huge amount of profits due to the absence of a proper competitor (Leonidou et al. 2015). The absence of a proper competitor helps the hotels to increase their amount of profit margins. Capital Requirements and product differentiation are the main barriers to the risk of new entry. Building a new hotel requires a lot of funding. All the three factors of Land, Labor and cost are included while starting the operations of the hotel. The cost of the building, employing the perfect persons for the job is required to maintain the high barrier to enter the industry.
Threat of Substitutes
The threat of substitutes is one of the major concerns of the hotel industry (Kim, Chan and Renee 2014). Threats include the presence of cottages which are much more preferable than hotels. In most of the cases the cottages are built in a secular place free of unnecessary interruption. The serenity of the cottages makes it more pleasing for the customers. Apart from these facilities sometimes customers also lives in the house of some acquaintance or relatives. Camping is another new tourist attraction as many companies are now offering the facility for young and energetic adventurers. The huge technological improvement in the last decade has helped the business class travelers to conduct the meetings and conferences through video technologies. The absence of the business class travelers have led to a fall in the annual sales figures of the hotels around the globe.
Figure no 1- Value Chain Frameworks for Hotels
Source- (As created by the Author)
Value Chain Frameworks for Red Carnation Hotels can be segmented into two main categories. The first one is the primary while the second one being the different support activities that are performed within the hotel (Falk 2016).
Primary activities are further subdivided into 5 types namely;
Figure no 2- SWOT Figure
Source- (Falk 2016)
| Strength | Opportunities |
| · Trained employees · Five star service with luxury spas, luxurious designed rooms and themed rooms · Top 10 of the Sunday times best company · Best HR policies | · Attracting the ageing population can help the hotel to usher in revenues · Globalization has turned out to be a catalyst for the rise in the number of international tourists from developed as well as developing countries · Gradual increase in service quality |
| Weakness | Threats |
| · Too much dependency on IT infrastructure · Seasonal dependency is too much high · Absence of prompt reaction to climate changes | · Emergence of a large number of hotels · Political tension and terrorism has been one of the main threats of the hotel industry · Absence of proper training programs is one of the main threats to the global hotel sector |
Source- (As created by the Author)
Strength
The main strength of Red Carnation group of Hotels is its employees. Red Carnation hotels possess the best collection of trained employees who are always dedicated towards serving the guests at any time of the day. The hotel believes that the employees are their key strength. They offer the guests with the best customer service and local as well as delicious exotic cuisines (Leonidou et al. 2015). The mentioned chain of hotels offers the guests’ premium luxury rooms that have a blend of traditional as well as contemporary looks. The designed rooms are one of the main reasons behind the customer satisfaction of the industry. The HR policies of the hotel have been critically praised and have won an award for Recruitment and Retention (Promsivapallop et al. 2015). Another main strength of the hotel is the competitive advantage that it currently holds. It has been listed in the top 10 of the best 100 companies by the Sunday Times for the last three years. Most of the customers prefer the following hotel just because of such a rating achieved by the hotel.
Weakness
Red Carnation hotels boasts a well grown network of IT infrastructure. Too much dependency on IT infrastructure is surely a weakness of the organization (Andreu et al. 2017). In case of any network failure the hotel will surely suffer a huge loss. Another main weakness of the mentioned chain of hotels is the over dependency of peak seasons. The company gives much less importance in attracting people in the lean seasons. The failure of the company to attract people in the lean season may decrease the annual revenue of the hotel. The management of the hotel has also failed to react promptly to the changing climate situations around the globe. The hotel has failed to update itself to the use of renewable source of energy which is the main need of the hour.
Opportunities
The global business perspectives of the hotel industry offer a lot of different opportunities. Attracting the ageing population is one such opportunity. The retired persons especially have a special interest to visit new places and because of their age they always want to reside in the best possible accommodation and enjoy their holiday. Therefore the hotels should ensure that they market themselves to the following people in an appropriate manner so that they feel interested. The effect of globalization made a great effect on the development of the hotel industry. People now show more interest to visit unknown places which can be a potential source of revenue for the hotels. Apart from this increasing the service quality of the hotels can also turn out to be one of the potential sources of opportunity for the global hospitality industry (Aragon et al. 2015).
Threats
Hotels face a lot of internal as well as external threats that may be cause serious harm to their sustainability. One of the main threats that are faced nowadays by the different hotels is the rise in the number of hotels. The abnormal rise in the numbers has led to fierce and sometimes unhealthy competitions between them which create serious problems to their existence. Political stability is another main concern for the hotel industry as absence of peace situation will take a serious toll on the number of footfalls in a certain place. Similarly the rise in the terrorist activities has provided to be a problem for the industry as terrorist activities threatens the security of a certain area.
Source- (Falk 2016)
The 12C framework is a marketing tool that analyses international markets by examining twelve different factors including country, concentration, consumer behavior, choices and many more as such (Chaston 2017).
Country- The country is located in Asia and is one of the most sought after tourist destinations of the world. With a population more than a 10 million the country is the perfect place for the mentioned hotel to start its operations. According to the author the stable economy and political peace is another main cause for the organization to start business in the country.
Concentration- The concentration of important cities and the rapid urbanization has been favorable for business to grow in the mentioned area.
Culture- The culture of the country is mainly influenced by religion. The country has around 95 percent of Buddhist population who lead a self controlled and peaceful life.
Choices- Red Carnation hotels have been successful in choosing the following country as competition from foreign hotels have still not grown n a large amount which will make life easier for the organization.
Consumption- Thailand has a large market for tourism and its annual growth rate is 25%. The huge growth rate helps the organization to earn profits.
Contractual Obligations- The management of Red Carnation Hotel has taken special care to make sure that the hotel follows all the legal rules and regulations of the Thailand Government (Santos et al. 2016). The management must formulate the strategies keeping in mind the contractual obligations of the country.
Commitment- The Thai trade system does not possess any quantitative restrictions or licence to carry on trade with the Thai government. There are some tax that are paid by the mentioned chain of hotels on a yearly basis.
Channels- Red Carnation Hotels has plans to expand its base around Asia and thus Thailand is perhaps the best place to start the business. It can also open hotels at Malaysia, Singapore, Indonesia and many more such places which provide easy movement.
Communication- Communication is one of the most important features in the 12C framework. As mentioned earlier the hotel has taken the help of another similar local hotel of the country so that they can effectively communicate with the different people of Thailand.
Capacity to pay- Red Carnation hotel has carried out a marketing survey in Thailand and found out that there is a proper share of person that can pay for the luxury accommodation of the people.
Currency- The currency of Thailand is Thai Baht which is much less in value as compared to the currencies of the other countries where it operates.
Caveats- There is a lot of challenges that the mentioned chain of hotels has to face to make sure that the business remains unscratched. They have been discussed later.
Source- (As created by the author)
According to Andreu, hotels are an integral part of our modern society (Andreu et al. 2017). It has a variety of uses. It is used for travel accommodation, holidays, leisure’s, fun, business conferences and so on. The heavy competition in the market has enabled the hotel owners to implement the best possible strategies to experience a better competitive advantage in the market. Red Carnation Hotels has implemented some select range of strategies that has helped it to attain a class of its own.
The three trends in revenue management that have been influential in deciding the future of the company are;
Trends in revenue management- Managing the revenue of the hotel have been one of the main challenges of the organization. The management of Red Carnation hotels has maintained a revenue rate that has been influential in the growth of the organization. The management has put into use some strategic directions to reap additional benefits for the topmost and the lower lines, maintaining the food and beverage section and many more as such. The CEO of Red carnation hotel has described that their hotel has aimed to find, build and retain the cream of revenue management talent in the market. In addition he described that a set group of IT department of the hotel is constantly engaged in maximizing their presence in social networking platforms by tracking the reviews, blogs and views about the hotel (Yu, Woo and Timothy 2014).
Competitive Strategies
Red Carnation Hotel is one of the biggest market leaders of the market and has a widespread acceptance among the customers about their products. The organization has attained such a feat just because of its premium service that it provides to its wide range of customers. As mentioned earlier in this report the hotel has dedicated much of its concentration on the decoration of the rooms to help the boarders enjoy the hospitality of a lifetime (Fraj, Matute and Melero 2015). The beautifully decorated rooms include exclusive linens, bed covers, paintings in wall, designer designs in the walls and many more as such. The strategic location of the hotels especially the scenic beauty of the countryside as a backdrop in some cases is definitely one of the main reasons that helps the hotel to maintain a competitive advantage.
Segmentation
The hotel has segmented out the customers based on a number of different types of categories like income levels, choices, living cultures and many more (Anansiriprapha, Pannatorn, and Xiu Wu 2016). The segmentation has been done accordingly and has helped the mentioned chain of hotel to fix its strategies. The presence of segmentation has helped the hotel to get an idea about the customers and present themselves before the customers in exactly the same way according to their categories.
|
| SUB MARKET SEGMENTS | ROOM NIGHTS |
| BAR 1 | 140 Euro | 660 |
| BAR 2 | 150 Euro | 760 |
| BAR 3 | 170 Euro | 1000 |
| BAR 4 | 180 Euro | 800 |
| BAR 5 |
| 250 |
| CORPORATE |
|
|
| LRA |
| 1350 |
| NLRA |
| 1500 |
| TOUR OPERATORS |
|
|
| FREE SALE |
| 750 |
| ALLOTTMENT |
| 1200 |
Table no 3- Market Segmentation
Source- (As Created by the Author)
Targeting and Positioning
The process of evaluating the market attractiveness of each and every market is supposed to be the targeting and positioning of the market by the organization.
Red Carnation Hotel selected Thailand as their venue for expansion. Though the company analyzed all the different markets but they selected Thailand as they wanted to have their presence in Asia (Yu, Woo and Timothy 2014).
As stated by, Dzhandzhugazova there are a lot of different entry modes into a market of a certain place (Dzhandzhugazova et al. 2015). The examples are joint venture partnerships, owning a franchise, owning a full subsidiary and many more such different entry modes. Red Carnation Hotel believes that the most suitable entry mode in the market of Thailand is joint venture. Communication in Thailand is a key factor to the success of the organization. The mentioned chain of hotels has selected such an entry as it will help them to connect with both the English speaking people as well as they can effectively communicate with the entire mass of Thailand. The need of a local guide is also important to understand the culture of the people.
The researcher has used the 4 p’s of Marketing to analyze the marketing scenario of the organization. The discussion about the 4 p’s has been completed in an organized process.
Product- The mentioned hotel in this research is one of the full sized hotels and as a result it has an extensive range of products to offer to the customers. Thailand is one of the most popular destinations of Asia and offering luxury products to the customer will help Red Carnation Hotel to gain a competitive advantage in the Thai market (Armstrong et al. 2015).
Price- Price is always an important marketing factor in business. In Thailand the location of hotel matters the most. Red Carnation must take into consideration about the location as hotels close to the beach have a higher demand rather than hotels located in the interior of the city. According to, Aragon, Martin and de la Torre the price of the hotels located in close proximity to the beach is much more than the same which are located away from the beach (Aragon, Martin and de la Torre 2015). Therefore Red Carnation, Thailand must fix a reasonable and appropriate price for its targeted customers.
Promotion- Thailand is one of the biggest tourist destinations of the world and especially Asia. Red Carnation has appointed a special marketing team for their promotion to reach out to the targeted customers. They have appointed a famous page 3 personality of Thailand to advertise their hotel. The use of innovative strategies like promotional vehicles and advertisement through social media has helped the organization to attain a degree of competitive advantage.
Place- As mentioned earlier a suitable location helps the organization to achieve a competitive edge over the other players in the market. Red Carnation Hotel has decided to open its branch in Pattaya, which is one of the best tourist destinations of the world. The presence of a large number of tourists especially from Europe will be an added advantage as such tourists will favor staying in the mentioned hotel. The preference of the mentioned hotel is just because of its reputation and wide acceptance in Europe.
There are a number of risk factors that the management of Red Carnation Hotel faces, they are;
The research has covered all the necessary details regarding the topic and the use of different marketing tools to analyze the market condition has been highly successful. The researcher has carried out an in depth study of the market which has helped the report to be compact in nature. A thorough analysis of the report by the readers will help them to garner positive learning outcomes.
Book
Anansiriprapha, Pannatorn, and Xiu Wu. "Economic Factors on the Tourism Industry in Thailand." (2016).
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Chaston, Ian. "Entrepreneurship." In Technological Entrepreneurship, pp. 1-24. Springer International Publishing, 2017.
Falk, Martin. "A gravity model of foreign direct investment in the hospitality industry." Tourism Management 55 (2016): 225-237.
Huang, Z.J. and Cai, L.A., 2015. Modeling consumer-based brand equity for multinational hotel brands–When hosts become guests. Tourism Management, 46, pp.431-443.
Kim, W. Chan, and Renee A. Mauborgne. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press, 2014.
Mowforth, Martin, and Ian Munt. Tourism and sustainability: Development, globalisation and new tourism in the third world. Routledge, 2015.
Rogerson, Jayne M. "The economic geography of South Africa’s hotel industry 1990–2010." In Urban Forum, vol. 24, no. 3, pp. 425-446. Springer Netherlands, 2013.
Yu, Y., Byun, W.H. and Lee, T.J., 2014. Critical issues of globalisation in the international hotel industry. Current Issues in Tourism, 17(2), pp.114-118.
Yu, Youcheng, Woo-Hee Byun, and Timothy Jeonglyeol Lee. "Critical issues of globalisation in the international hotel industry." Current Issues in Tourism17, no. 2 (2014): 114-118.
Journal
Andreu, Rosario, Enrique Claver, and Diego Quer. "Foreign market entry mode choice of hotel companies: Determining factors." International Journal of Hospitality Management 62 (2017): 111-119.
Aragon-Correa, J.A., Martin-Tapia, I. and de la Torre-Ruiz, J., 2015. Sustainability issues and hospitality and tourism firms’ strategies: Analytical review and future directions. International Journal of Contemporary Hospitality Management, 27(3), pp.498-522.
Dzhandzhugazova, Elena A., Natalia A. Zaitseva, Anna A. Larionova, Maria V. Petrovskaya, and Vladimir Z. Chaplyuk. "Methodological aspects of strategic management of financial risks during construction of hotel business objects." Asian Social Science 11, no. 20 (2015): 229.
Fraj, E., Matute, J. and Melero, I., 2015. Environmental strategies and organizational competitiveness in the hotel industry: The role of learning and innovation as determinants of environmental success. Tourism Management, 46, pp.30-42.
Lam, Carmen, Grace KS Ho, and Rob Law. "How can Asian hotel companies remain internationally competitive?." International Journal of Contemporary Hospitality Management 27, no. 5 (2015): 827-852.
Leonidou, L.C., Leonidou, C.N., Fotiadis, T.A. and Aykol, B., 2015. Dynamic capabilities driving an eco-based advantage and performance in global hotel chains: The moderating effect of international strategy. Tourism Management, 50, pp.268-280.
Niewiadomski, Piotr. "The globalisation of the hotel industry and the variety of emerging capitalisms in Central and Eastern Europe." European Urban and Regional Studies 23, no. 3 (2016): 267-288.
Promsivapallop, Pornpisanu, Peter Jones, and Angela Roper. "Factors influencing hotel outsourcing decisions in Thailand: modifications to the transaction cost economics approach." Journal of Hospitality & Tourism Research 39, no. 1 (2015): 32-56.
Santos, Maria, Ana Brochado, and José Esperança. "Foreign direct investment patterns of global hotel chains." Journal of Business Research 69, no. 11 (2016): 5235-5240.
Sun, Jin. "How risky are services? An empirical investigation on the antecedents and consequences of perceived risk for hotel service." International Journal of Hospitality Management 37 (2014): 171-179.
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