Introduction of Renaissance Hotel Marriott in Sharjah UAE - Case Study Example

Introduction of Renaissance Hotel Marriott in Sharjah UAE The Renaissance Hotel chain is a part of the Marriott International Inc. This upscale hotel chain was developed to attract business and pleasure travelers all over the world at the same price rate as the Marriot flagship brand. The differentiating factor between the two chains is the focus that Renaissance hotel puts on introducing and enhancing the local flavors and culture for the travelers. The hotels themselves range from historic icons, chic boutiques or luxurious resorts, each with a unique charm of its own. Renaissance Hotel is of those brands which were acquired by Marriot when the brand name had already been established and was flourishing. The acquisition of Netherlands-incorporated Renaissance Hotel Group N.V in 1997 was a part of a long term expansion strategy of the company; currently there are 150 of these unique hotels in 34 different countries operating either as wholly owned subsidiaries of Marriott Inc. or under franchise license The Renaissance hotels have helped the company in capturing the market share of the travelers who are not only looking for comfort but also want to indulge in the thrill of new experiences and discoveries. The Guest Profile shared by Marriott for Renaissance Hotels defines their customers as: “Our guests are passionate about living life to the fullest, particularly when it comes to travel, architecture, design, food and wine, art and culture. They are confident and comfortable with themselves so they seek a more purposeful travel experience and want a hotel experience that allows them to get the most from a trip.” (Marriott News Center, 2011). Some distinguishing factors about these hotels are their organized service and lifestyle programs specially designed to appeal to their targeted customers. These include ‘ambassadors’ and ‘navigators’ who are trained associates in the Renaissance way of service and who act as personal guides to help cultivate an individual experience for each customer. Renaissance Rituals are celebrated in different hotels to mark milestones during each stay and the RLife LIVE which is a music and entertainment platform, launched in October 2011 to add an extra value for those staying at Renaissance Hotels. These differentiating aspects put the chain at a distinct advantage when entering a new market, as not only is its identity clutter breaking from other chains but the appreciation of local art, architecture, culinary culture etc would make the acceptability of the brand name much easier for native population as well. This point is important to factor in when considering markets which are more conservative in nature or those which have strong historical identities of their own. Globally, Renaissance Hotel has a strong presence in Asia, North and South America and Europe. This paper puts forward the suggestion that the Marriott Inc should consider Sharjah, United Arab Emirates as the next potential market to enter. In 2011, the Chain only had one hotel operating in the Region- ‘The Renaissance Dubai Hotel’ with the plans to introduce four more openings in UAE including Abu Dhabi and Bahrain by the end of 2012 (Marriott News Center, 2011). The region has a fast growing economy and tourism sector and with growing political support it would be advisable for Renaissance Hotel to establish their brand name in Sharjah as well. It would increase their overall brand equity and help in creating a uniform customer experience throughout the Emirates. Internal Environment The internal weaknesses and strengths of any brand are an indication of their expansion potential and the success rate they can hope to achieve in any new venture. For the Marriott Hotel chain, and Renaissance Hotels in particular there are a lot of factors at play which will make this move a strategically sound one. The Marriott strategy is globally designed and the fact that they are already expanding into the region gives the advantage of knowing the pitfalls and problems that can arise in establishing the new hotel. The Chairman and President of the company point out their plan to double their portfolio in Middle East and Africa, to more than 70 hotels by 2016 adding hotels in places such as Iraq, Rwanda, and Ghana in the Company Annual report 2011. Given these ambitious plans, Sharjah is a comparatively risk free investment for them. Some of the internal strengths that the Renaissance Hotel can capitalize on for this expansion include: Global Sales vision The Company has a standard customer centered approach for their operations globally. This vision to best serve and retain high-value customers has served them well over the years and it is managed by the Global Sales team which “leverages Marriott’s strength in the global marketplace in order to build preference, loyalty, and profitable account share.” (Mariott Brochure, 2008). The team offices are located in strategic positions all over the world and they provide a highly competitive edge for all expansion strategy for all the brands. Global Strategic Alliances These partnerships with strong global consumer brands increase awareness and assessment of Marriott properties and create an identity for the Hotels in new markets. The alliances made in UAE hotels so far will be of use to Renaissance Hotel when moving into Sharjah as well. Training a Multicultural Workforce. The customer centered approach and successful trials are only possible through a highly dedicated and efficient management and service team. Marriott invests extensively to make sure that their service across all price tiers is similar in quality; the training is multi tiered “including on-property and off-site classes, comprehensive written materials and manuals, self-paced individualized courses, videos and CD-ROMs, and online learning tools” (Mariott Brochure, 2008). One of their programs for managers is the Four-day Foundations of Leadership program, offered 25 times per year. This program strives to introduce an understanding about psychosocial factors and different personalities which in turn lead to effective communication. Similarly tailored programs will prepare the Sharjah team for the new culture and environment they will be working in. It is also a strength for the brand that they have a focus on diversity; Twenty-six percent of management positions are held by minorities. Local employees can be hired under existing management and training programs to ease the burden of service and to create value for the community. Strong Financial Structure. In 2011, reported revenue for the Hotels totaled more than $12 billion and an increase of 10 percent of more than $1.3 billion (Annual report, 2011). The strong financials allow the Brand the freedom to customize their operations if necessary as well as to invest as much capital as needed into development of the property, service and brand identity. The Renaissance Factor: Sharjah has its own cultural values, traditions and experiences. The culture of the hotel provides it the unique position to include these factors when designing the aesthetics and experience for their customers. It will generate greater appeal for both foreign and local visitors. External Environment Political Conditions: Sharjah is currently going through a bout of increased development and economic activity, largely fueled by an enthusiastic and determined Government. There is a lot of Political support for the tourism and hotel industry as the number of international visitors to the region is increasing. Very recently 60 leaders and representatives of the hotel industry met with the Sharjah Commerce and Tourism Development Authority to discuss Sharjah’s Hotel Classification and Licensing Law and any changes that are needed. The two day meeting was held in August with the objective of upgrading and improving quality standards of the hospitality sector in the emirate and to bolster the growth trend. (BTN, 2012) Economy. The Sharjah Investment and Development (Shurooq) was established in 2009 to speed up the process of economic development. The population of Sharjah is young and growing with the needs for employment and prosperity opportunity, the government is trying to provide the best possible options to these people. In a statement in 2012, it was indicated that the four sectors which are to be the focus of the government are travel and tourism, transport and logistics, healthcare, and environment. The government is also investing in a lot of transport-related projects to capitalize on their geographic location between Europe and Asia and establishing trade routes. A strategy is underway to increase FDI in the regions specially from Asia (including Malaysia and China) and Russia, efforts are being taken to tap into the global market to spur growth at home (The Middle East, 2012) All of these efforts have the indirect result of increasing the number of international visitors and hence the need for a supportive and suitably premium Hotel sector to cater to these visitors. Infrastructure Housing development schemes are underway, which also require an update of basic amenities like water and fuel supply, roads, and others. Tourism Industry and Culture. According to the latest data from the Sharjah Commerce and Tourism Development Authority report, issued in November, the data shows that tourists are staying longer, with a total of 1.3m occupancy nights recorded by hotels and hotel apartments. This is a direct result of the efforts made to promote the area is the hub of Arabian culture and a good investment for any globetrotting traveler. There has been an 18% rise in the number of Asian tourists to the Emirates in the first half of 2011 and more than 157,000 Russian passport holders passed through customs in the first nine months of the year (The Middle East, 2012). The government has introduced Sharjah in travel trade fairs in London, Moscow and Singapore to further increase recognition of the region. The tourism industry is going to be helped by introduction of more Air routes to Sharjah including Air Arabia (to Russia) and Jet Airways (from India). Sharjah was named ‘Cultural Capital of the Arab World’ by UNESCO in 1988 and is named as the Capital of Islamic Culture for 2014 because of a host of cultural and Islamic events hosted annually by the Emirate (Government of Sharjah, 2010). There is also traditional arts and craft still practiced in the region including Pottery, weaving and embroidery, knife carving, henna, wood carving and others. All of these distinct cultural features are being used as an incentive for tourists to visit the area, a significant success has been achieved in this aspect and a growing Hotel industry is needed to meet the needs of these tourists. Renaissance Hotel has to move in to the region to take advantage of these factors. Entry Mode Selection For the Company at this time the correct option would be to introduce Renaissance Hotel as a wholly owned subsidiary. This move will ensure that the control of management, finances and services is in the hand of the Marriott Inc. and this will make it easier for them to impose quality control as well as take proper advantage of their strengths in employee training, affiliates and others. The government interest in developing the sector puts further pressure on the Brand to maintain their standards; as it is a new market they cannot take the risk of letting a franchise owner introduce the brand to the locals. After the first hotel has been established it is possible that the company could look into franchising any other of their property brands in the region for increased market penetration. International Functions Operating in a new environment and under new laws is a very demanding process for any brand, service or product. But as mentioned before Marriot Inc and Renaissance Hotels have a global strategy which adequately understands the needs for these international functions and the challenges they may have to face. Luckily they have a precedent in form of Renaissance Dubai and Abu Dhabi to understand the requirements of this new market of Abu Dhabi: Human Resource Management. The work environment of Middle Eastern countries is much different than their Western and European counterparts. The laws for protection of minorities, women, labor rights and others are much different in structure and nature. The laws can be discussed and implemented with the help of hired legislators from Sharjah and by hiring experienced professionals from the existing Hotel Industry in Sharjah. The implicit cultural differences and expectations will be harder to navigate. While the customer experience can be in line with the Global positioning and experience of the Hotel chain, for the employees and workers the management should take the example of Dubai and Abu Dhabi hotels. These regions share a geographic and historical heritage and many of the local sentiments are similar. Hiring of local management (after training) will further help in the process. Finance and Accounting. For the regulations regarding these, Marriot Inc should collaborate with the Sharjah Commerce and Tourism Development Authority to correctly enforce and act upon the legal requirements. The Authority can provide legislators and guides to the management to support the whole process. International Marketing. The Brand will greatly benefit from using its international image to promote the Sharjah Hotel for foreign visitors to the area. They should capitalize on their established brand equity, loyalty programs and existing customer base to initiate the business flow. However, catering to local sentiments is also important and they should use the cultural icons of the area such as embroidery, daggers and knives, perfume, henna etc to make the advertisement unique and attractive. Care will have to be taken in the portrayal of the Sharjah populace as some groups might oppose to depiction of women or overt entertainment marketing. But though the brand has to be sensitive to the natives, they should not dilute their brand essence and keep the focus on the experience and cultural aspects of their hotel. Operations. These will have to exactly similar to Renaissance hotels all over the world- same luxurious and personalized treatment, excellent service and superb entertainment options. The offer has to be of global appeal but with the local flavor of Sharjah mixed in. Local employees will have to be extensively trained and management could be imported for the initial part of the set up until recruitment and training is finalized. Quality should be allowed to diminish. Cost/Benefit Analysis This venture will be of great benefit both for the Emirate of Sharjah and the Renaissance Hotel brand. Renaissance Brand will reach a new market place and population in line with their current expansion strategy. The costs they occur in research and marketing and training will be minimized to some extent because of their presence in other emirates which will guide them throughout the process. Basic infrastructure and economic opportunities are present for them to quickly gain a good supply of customers as well. It is expected that government enthusiasm will greatly smooth the process and aside from the start up and maintenance costs they will face no extra burden. The Emirate has already shown an inclination to develop their tourism and hotel industry both in order to cater to a growing economy and to contribute to that growth. Addition of the Renaissance brand will be a great indicator of their success in interesting foreign business and over all their hotel industry would benefit from increased competition. As the framework for development is already in place the government should not be having extra expense caused individually by the development of Renaissance Hotel in the region. The international and premium nature of the brand should remove any misgivings of the government about allowing Renaissance brand to enter into the growing Hotel industry in Sharjah. References Annual Report (2011). Marriott, Executive Letter. Retrieved from: http://investor.shareholder.com/mar/marriottAR11/letter.html BTN, (2012). Sharjah seeks hotel industry inputs on classification criteria to bolster growth. Breaking Travel News, Hotel News. Retrieved from: http://www.breakingtravelnews.com/news/article/sharjah-seeks-hotel-industry-inputs-on-classification-criteria-to-bolster-g/ CCP. Marriott Leads the Way to Customer Satisfaction - A Case Study of Marriott. Retrieved from: https://www.cpp.com/pr/marriott.pdf Government of Sharjah, (2010).Culture. Heritage, Retrieved from: http://www.sharjahtourism.ae/en/heritage/culture Marriott Brochure, (2008). The Power of Marriot International. Retrieved from: http://www.marriott.com/Multimedia/PDF/Hotel_Development/PowerofMarriott_brochureEMEA.pdf Marriott News Center, (2011). Renaissance hotels fact sheet. Retrieved from: http://news.marriott.com/renaissance-hotels.html The Middle East, (2012). Economic Update Sharjah: In search of FDI. Oxford Business Group. Retrieved from: http://www.oxfordbusinessgroup.com/economic_updates/sharjah-search-fdi The Middle East, (2012). Economic Update Sharjah: Widening the tourism net. Oxford Business Group. Retrieved from: http://www.oxfordbusinessgroup.com/economic_updates/sharjah-widening-tourism-net Staff Report (2012). Sharjah’s economy set to grow faster. Business Economy, Gulf News. Retrieved from: http://gulfnews.com/business/economy/sharjah-s-economy-set-to-grow-faster-1.1089574 Read More