Renaissance Hotels & Resorts: A Cherished International Brand - Research Paper Example

22 Jan. 2008 RENAISSANCE-A CHERISHED INTERNATIONAL BRAND Like its guests, RenaissanceHotels & Resorts is ambitious. Since 1997, Renaissance Hotels & Resorts has increased its global distribution by 94%. And, over the next five years, its growth goal is to double the number of properties worldwide. Renaissance Hotels & Resorts targets the Enjoyment Guest-guests who cherish the life well-lived. These savvy guests combine business and pleasure in pursuit of adventures andlife less ordinary. To forge relationships with these guests, Renaissance hotels are entertaining, stimulating, and developed around the brand pillars of Expressive Destinations, Delightful Luxuries, and Savvy Service. The Global Environment GLOBAL TREND IN HOTEL INDUSTRY In many countries, where tourism has become a major export industry, the hospitality sector is the focal point for concepts of globalization to take root. Indeed, tourism has become the worlds largest export industry, involving as it does enormous cross-border flows of people and capital. The hospitality industry is one of the worlds largest employers and arguably one of the largest traders of foreign currency. It is often also a focal point for local society, and is clearly at the center of the transfer of ideas and the cross fertilization of cultures. At its heart, the hospitality industry plays an important part physically in bringing people together in a global community. And those countries suffering from trade imbalances due to high imports frequently look to tourism and hospitality to close the gap. Hospitality is thus not only an industry, it is a concept -- and a major force in the rapidly evolving global marketplace. The global hotel market had an excellent year in 2007 according to first data from the HotelBenchmark(TM) Survey by Deloitte and is expected to remain so for the next two years. Supply has started to grow, but remains at modest levels thereby giving steady opportunities for new comers. High occupancies support continued growth rate. Lorna Clarke, Executive Director of HotelBenchmark(TM) at Deloitte commented about the global trends in Hotel Industry as 'Over recent years the global hotel industry has been on a roll - with many regions seeing double-digit revPAR growth. However, this is the first year we have witnessed all regions posting double-digit growth in both average room rates and revPAR. Hotel performance in 2007 has been underpinned by strong economic fundamentals, stimulating both business and leisure travel. Looking forwards, this is likely to be held back slightly during 2008, as the pace of world-wide economic growth slows.'Industry is doing well and will continue to through Qtr 3 of 2008. As far as the Middle East, they are not only celebrating double-digit growth in revenue per available room (revPAR) but also in average room rates. In UK, the overall market has been buoyed by strong economic conditions helping drive both corporate and leisure business. This has helped to counterbalance any fall offs in demand stemming from the strength of the Euro and overall European occupancy levels have remained stable at 69.9%. Although the region's sports and cultural event calendar was not as full during 2007, UK still remains on top of the world when it comes to revPAR performance. The Middle East took the silver medal on the world stage with revPAR increasing 16.8% to US$112. Development centre Dubai continues to command the highest revPAR in the region at US$284. The city endured a difficult second quarter after Cyclone Gonu hit in June. As a result, several hotels were forced to close, however unaffected hotels have been able to increase rates and overall revPAR for the year now stands at US$152 - a 52.8% hike compared to 2006. It is confirmed that Dubai is the hottest hotel market on earth with the most visionary projects first annual Arabian Hotel Investment Conference. This increased the demand for hotel bedrooms over this period and the investments in Dubai are well ahead of Chinese cities and Las Vegas in per capita hotel investment. Right now the Dubai hotel industry is red hot, with occupancy levels above 80% and room rates on the Jumeirah Beach strip at $150 per night, the highest in the region. Under these circumstances almost any hotel project looks a great investment. 2007 was a good year for the UK hotel industry also with double-digit growth in revenue per available room (revPAR) in the capital and a healthy increase across the regions. Latest results from the HotelBenchmark Survey by Deloitte' show that during 2007 revPAR in London increased by 10.8%. Against this, the performance of the regional UK market was more muted at 4.4%, but this was still an increase in revenue and marks the fourth year of consecutive growth. London's 10.8% growth in revPAR came on top of growth of 16.8% in 2006. Average revPAR has increased from 99 to 110, to reach its highest level since the technology boom days of 2000.But Marvin Rust, Hospitality Managing Partner at Deloitte said: '2007 has been another good year for the UK hotel market, with strong gains in many UK cities, despite a weakening economic environment in the last quarter. The question is how much longer double-digit growth can continue. So far, the UK hotel industry appears unscathed by troubles across the Atlantic and at home, but with an increasingly gloomy global outlook it would be a brave man to predict that 2008 will be as good as 2007.' Global Environment Roger Bootle, economic adviser to Deloitte agrees that next year is likely to be challenging. Commenting he said: '2008 is likely to be the year when the party ends. Consumer spending growth is likely to slow from around 3% last year to about 2% this year and corporations will not escape unscathed either. This will have a direct knock-on effect on the businesses that rely on the City for their trade, including hotels, bars and restaurants. At the same time Marvin Rust predicts the credit situation is unlikely to impact on new hotel developments: 'Although the cost of financing new developments may have risen, with land scarce and hotel projects having long build times I expect these to continue largely unaffected. New supply will remain subdued and demand is strong with the increasing focus of the world on London as we head for 2012.' With the increasing investment opportunities, new owners have emerged seeking somewhat different arrangements that have now limited the availability of brands in some geographic markets. These new comers have a good knowledge about the local community and provide enough competition in the industry. Meanwhile, with so many hotels under construction, there is a serious shortage of international brands to badge them. The big hotel management groups are clearly delighted that their competitive position in negotiating management contracts is so strong in Dubai, and perhaps that was another reason for the smiles in international brands BRAND LOYALTY Nowadays brand hospitality companies increase their market share and growth rates by increasing their brand loyal customers. The familiarity of international hotel brands will continue to prove a major consideration of tourists traveling to Arabia, despite the increasing number of brands originating in the GCC, according to a senior hospitality figure. Ed Fuller, president & managing director of International Lodging, Marriott International, said, "Global brands offer more robust distribution channels and services, rewarding guest loyalty programme, and have the strategic alliances with complementary travel suppliers that make journeying to far off places virtually seamless". This is a more profitable approach than other marketing activities, such as price cuts or promotional programs. As a mature industry, the hospitality business must pursue market-share gains, rather than market-growth gains. Acquiring new customers is expensive because of advertising, promotion, and start-up operating expenses. Besides, it is cheaper to serve current customers. Loyalty of a firm's customer has been recognized as the dominant factor in a business organization's success. And this can be used to raise the image of the brand. The familiarity of international hotel brands will continue to prove a major consideration of tourists traveling to Arabia. Thanks to a consumer promise of consistent quality, service and integrity, these new tourists are familiar with a global brand, which increases their comfort and confidence when they venture far from their home base or geographic region. This has been further quoted by Ed Fuller as "Several years ago, the World Travel & Tourism Council predicted an explosion in global tourism by 2020 as some 20 billion travellers were expected to cross their national borders. This groundswell is already underway and we are feeling the impact of tourists from emerging markets like China, India, Russia and Eastern Europe, through Asia, the Middle East and Europe." This familiarity amongst tourists can be cashed on by international brands and this gives a competitive edge for these brands. The relationships between aspects of consumption behavior- emotion, equity, and attribution have significant consequences on tourists' satisfaction. These three determinants determine different degree of satisfaction of the customer. The component of equity, which is affected by cultural background, is found to have a greater effect on tourist satisfaction than people had thought, even though it was kept hidden by tourists when on the tour. A proper channel of communication could be used as a moderator to facilitate tourist satisfaction response. This might help the travel industry refine its service quality and contribute to the literature of customer satisfaction attributes in the tourism industry. This is an important task for International Brands in this industry and in disguise a boon to them as they are already globalized and they can redirect their global assets to establish this communication channel. Further it is important for a global industry like Renaissance to cater to cater to different market segments. There has been a constant raise in the middle segment of the market and a lot of unfilled demand lies in this segment which needs to be catered. In the Gulf, traditionally a strong market for the big hotel names, new management companies such as Jumeirah International and Rotana have altered the shape of the marketplace and it high time for Renaissance to enter into mid segment of the market. RENAISSANCE BRAND Renaissance Hotels is a worldwide brand of hotels and resorts. The brand is owned by Marriott International and many Renaissance Hotels are managed by Marriott, however some are operated under a franchise license. Renaissance Hotels, Resorts and Suites cater to an upmarket segment of the traveling public. Expressive Destinations: This pillar is the foundation of the hotel design story and business positioning from distinctive, stylish, expressive design with a touch of whimsy to relevant street restaurants and bars that attract both hotel and non-hotel clientele. Delightful Luxury: For the discerning Renaissance Guest who lives life to the fullest, the Renaissance hotel indulges the Enjoyment Guests' lifestyle with memorable, irreverent touches and special amenities such as unique art work or passes to local yoga studios. Savvy Service: The language and behaviors of the hotel associates set the mood of the hotel. As a Renaissance hotel, the associates "serve with a style all our own." They delight guests with random acts of kindness and service signatures. Global Activities SWOT ANALYSIS: Strengths Well established brand: Renaissance is one among the most globally recognised brands and it can cash on its global nature to cater travelling segment. As far as Dubai is concerned it is in midway between east and west and this convenient location must be capitalised Global reach : With the networked world the global reach of Renaissance brand plays an important role. Due to its brand name and global reach most of its rooms are booked through internet and it accounts for 38% and it keeps growing Associated with leading international hotel company Marriott Marriott is an international brand and the association brings in a lot of advantage Diverse locations for its hotels The location of Renaissance Hotel in Dubai is right at the heart of the city of Dubai and Dubai International Airport is situated at a distance of 10 minutes from the Renaissance Hotel at Dubai. This centralized location can give it a great advantage for traveling customers. Established customer base and customer loyalty Renaissance is one among the major brands to have earned a lot of customer base through all this years of hospitality service and it is time for them to use it in new markets Renaissance has built brand awareness Weaknesses All Renaissance's don't have the same set star rating, resulting in consumers not knowing what to expect Renaissance mostly caters to upper class customers. In coming years there will be a great surge in the middle class segment and its important for Renaissance to plan its market strategies keeping an eye on this. Opportunities Expansion into African markets Expansion into other Gulf and South-East Asian nations Threats Intense competition There has been great surge in the Hotel Industry in recent years and there is an intense competition. Further already there are lot of international Brands an UAE and UK which can bring in a lot of competition Possible decline in economy Doomsayers have predicted in recent years that there will be slow down in the economy in 2008 and if this goes correct then there is possibility of customer loss. Exchange rates There has been a constant variation in the exchange rates and this has great impact on pricing of the rooms and service. Foreign Markets served Renaissance has its Global Reach to most of the countries except for the few. In upcoming year its strategy should be to enter into South East Asian and African markets. To do so it must make itself competitive enough to enter into various segments of market. In future it should enter into alliance with various Tourism and Travel industries to further its global reach. cultural issues and ethics As stated earlier cultural background of a customer as a much bigger impact on the customer's loyalty than it was thought earlier. It's necessary for Renaissance to study their customer's cultural and ethical background to serve them better. This would help to increase the loyalty of customers and in turn improve the brand's name. Standardisation Vs Adaptation brand advertising and promotion in the uk and in Dubai Brochures, Newsletters and Emails: The Marriott has one of the greatest online bookings due to its marketing strategies through Internet. It issues its advertisements in a lot of online magazines and contacts its customers regularly with offers through newsletters. It is also in regular contact with its customers through emails. It must continue these efforts in its new markets also. Reward systems and Websites: The Marriott International is already practicing giving rewards and offers to its prestigious customers. It also issues prestige cards which can be utilized in foreign Renaissance hotels and offers can be availed. Its website provides online services ranging from booking rooms to availing tourist details. It provides tourism and travel options through its strategic acquisitions and association Advertise through Strategic partners: UAE and UK both have very high tourism potential. It also attracts a lot of entrepreneurs who travel to these places in connection with their business. Renaissance can consider forming Strategic partnerships with the Tourism and Travel Industries and give their customers some special offers. Further these industries provide a very good advertising base for Renaissance brand. brand product and service strategies in the uk and in Dubai: In UK Parking Fewer suites More Conference facilities Limited choice of F&B outlets UAE Parking More Suites Less Conferences facilities More F&B outlet choices As far as UK is concerned it has more number of Business visitors and consequently requires more number Conference halls compared to UAE. In contrast UAE has more tourists and travelling customers and hence has more F&B outlets Brand Pricing and Strategies As far as pricing of the products is concerned it is necessary to take care of international exchange rates and segments catered. While increasing the number of segments it is necessary to perform proper analysis of new segments to price them. In coming years more and more people from middle segments will be travelling around the world with airfares getting cheaper. This necessitates Renaissance to concentrate its attention on the needs and attitude of the middle segment customers. Apart from regular it also has to price for offers to strategic partners. In this case the volume of customers they attract can be taken into account for pricing. Further the rewards should be planned properly so the customers properly valued and retained. Brand Distribution Strategies: Direct marketing: Marriott and individual hotel website The website of Renaissance to offers facilities for online booking and travel. This should be extended to new markets. In Direct Marketing Use of intermediaries such as Travel agents Tour operators Incentive travel house The total Global Marketing Effort Global Integration: As a global organisation it is the responsibility of Renaissance brand to integrate all its global establishments to provide sufficient service to its customers. Further the present day globalisation necessitates it to expand its presence in a number of new countries so as to cater to its customers. Standardisation Vs Adaptation: As far as UK is concerned standard policies adopted by Renaissance will pay off. But with UAE adaptation a lot of new strategies are necessary to cater to a number of needs. Also it necessitates concentration in more segments so as to cater the market. Recommendations: Catering to New Market segments Improving Pricing policies Adapting to specific market needs Make Strategic Acquisitions Works Cited Arabian Conference. 30 April 2007. The 3rd annual Arabian Hotel Investment Conference (AHIC). 21 Jan. 2008. Dubai: Hotel investment capital of the world. 26 May 2007. 21 Jan. 2008. < www.ameinfo.com/59055.html> Emma Davey. Arabian Business.13 Dec 2007. Are there enough hotel brands 21 Jan. 2008. Read More