Fundamental Elements of Kimpton Hotels' Strategy - Case Study Example

Fundamental Elements of Kimpton Hotels' Strategy About Kimpton: San Francisco-based Kimpton Hotels & Restaurants is the first and one of the leading chain of boutique hotels in the United States and Canada. This group was founded in 1981 by Bill Kimpton. Kimpton Hotels offers services and design elements focused on care, comfort, style, flavor and fun. Every Kimpton hotel reflects the energy, personality and pulse of its location, history and architectural style. Each property features personalized guest services, comfortable in-room amenities, specialty rooms and suites They also provide a range of exciting culinary delights through managed by top quality chefs. Kimpton has many unique programs like Global business program, Kimpton In Touch, Kimpton Cares, Women In Touch, Earth care program, LGBT, Shop Kimpton Style etc. The Company also takes pride in its commitment to social responsibility and leads the hospitality industry in ecological practices through its innovative Earth Care programs. In order to woo ladies Kimpton had launched the Women In Touch program. Its features include offering comfortable and safe environments, in-room fitness and wellness options and other essentials catered to suit women. The Company is expanding rapidly and among the company's newest properties are the Hotel Palomar in Washington D.C., which opened in July 2006, and the Hotel Palomar Dallas, which opened in August, 2006. Additional projects are underway in Southern California, Texas, Florida and Virginia. Currently, Kimpton develops, owns and manages more lifestyle hotels than any other company in the United States. Kimpton's unique combination of style, four-star service and fine dining experience along with its constant focus on top line sales and bottom line results; have established the company as the first choice for many businessmen. Fundamental elements of Kimpton Hotels' strategy: The fundamental elements of Kimpton Hotels' strategy are care, comfort, style, flavor and fun. They try to ensure that these five elements are present in all the group hotels that they own. “Kimpton's signature elements are care, comfort, style, flavor and fun. These elements come through in everything we do.” 1 As part of these five pillars all Kimpton Hotels are thoughtfully appointed and managed to help guests maintain and enrich their lifestyles on the road. Each is individually designed to reflect the energy, personality, and pulse of its distinct location, history, and architectural style. Featuring highly personalized guest services, comforting in-room amenities, and one-of-a-kind specialty rooms and suites, Kimpton Hotels attract travelers with welcoming atmospheres that embrace its signature elements of care, comfort, style, flavor, and fun. Kimpton takes pride in its social responsibility, supporting select like-minded partners and is a leader in ecological practices. Kimpton Hotel serves their customer through their fundamental elements of Care. They try to ensure that this attitude of caring is reflected in each and every staff member to bring about a lasting and satisfying relationship with every customer. Service and caring—it’s an attitude. They are very careful about the customer needs and their services. Comfort: The Kimpton offers the customer through the plush, cozy spaces with luxurious amenities for our guests to relax and rejuvenate. In trying to anticipate the customer’s needs, wants or preferences, their intention is to see that guests are made to feels at home. Style: The Kimpton Group ensures that each of their locations are unique combining elegance with the whimsical. They design their hotels with the help of top quality designers and architects. They usually purchase existing property and modify it according to their needs rather than build entirely new building. Flavor: Imaginative and fun restaurants and lounges, which feature highly capable chefs that are favored by both locals and travelers. Fun: Fun and enjoyment is a favored theme and necessary activities are made available to see that customers enjoy themselves. All efforts are made to see that the guests enjoy a friendly and welcoming atmosphere SWOT analysis of Kimpton Hotels: A SWOT analysis of an organization will give a correct picture of its health. SWOT analysis is an acronym of strength, weakness, opportunities and threats and is essentially an exercise to identify each of these elements for the organization. The company can use the SWOT analysis to provide recommendations on its development and progress. Through the analysis of these factors they can understand which areas they are weak in and put in efforts to correct them. It can also show areas where the company is strong and put in efforts to maintain and even improve those strengths. SWOT analysis identifies the company’s strengths to build on, weakness to cover, opportunities to capture, threats to defend against. The Kimpton’s SWOT analysis identifies strengths and weakness and relates with forward looking opportunities and threats. Strengths: a. Business Philosophy and it adherence: An organization’s business philosophy can comprise of four components namely Vision, Mission, Culture and Values. This hotel group has a well defined business philosophy covering all the four components mentioned above. It vision is based on personal growth of its employees coupled with organizational growth. Its mission is equally praiseworthy and it is to getting new customers and keeping them for life. The same philosophy holds good for their employees as well. Culture is based on creating as atmosphere self leadership, creativity, performance and development. Values are based on creativity, passion, personality, focus and a system of continuous improvement. Even though many organizations have similar business philosophies, the hotel group has the ability to adhere to it. b. Treating guests as individuals: The Company takes great efforts to individually recognize and threat guests. They also have the software called Guestware to identify any guests who have once checked in before. c. Creating an ambience that is comfortable as well as fun. d. Unique architecture that is both whimsical and artistic. This is further made possible by the practice of purchasing existing buildings for their new hotels which enables them to have unique architectural styles for all their properties. e. Cost savings by following the above practice. f. Smaller number of rooms enables staff to extend more personalized service. g. A highly creative workforce on all their properties. h. Emphasis on staff training with the personal involvement of managers. A training facility called Kimpton University helps in achieving this uniformly across all it properties. i. Focus on ‘keep and develop’ of employees. j. Decentralized management but with focus on all the above mentioned points. k. Focus on environment through programs like ‘Earth Care’ This also helps them in cutting down on certain costs in the name of environmental protection measures. l. Formation of an hotel acquisition fund for development of porperty, the only boutique hotel group to have so. Weaknesses: It is to the credit of the company that it has managed to have few weaknesses of not much consequence. a. Strategy of choosing existing structures for their new hotels can result in the hotel being built in a bad or wrong location. b. Staying in the boutique category and not expanding to other areas like business or leisure. c. Laying off workers after the 9/11 attack slump in business instead of allocating them to other locations. d. In consistent service in some of the hotels regarding hotel policies and rules as reported by guest reviews. e. Nearly 51% of customers are businessmen. All other types of customers comprise only 49%. Opportunities: a. Expansion into other classes of hotels like business and leisure. b. Expansion into new areas and countries. c. Being a part of the tourism and hospitality industry which is one of the biggest industries in the world. d. Cash rich especially with formation of acquisition fund in 2005. Optimal use will help high growth. e. Enhancing brand value with more emphasis on environmental programs like Earth Care Program. f. Opportunity to become a real estate giant with its expansion programs. Threats: a. Competition: As with any industry, the biggest threat is competition and the hotel industry is no exception. There are many hotel groups bigger than Kimpton (Hilton, Marriott etc.) and they may copy or adopt the Kimpton model as a strategy for growth. b. The death of its founder Bill Kimpton in 2001 may result in the dilution of its business philosophy in the long run. c. Terrorism: The hospitality industry along with the airline industry is the biggest causality of acts of terrorism. Apart from the slump in customers, the property itself may be the target of terrorist attacks. d. Growing popularity and profitability may result in malicious attacks from competitors aimed at diminishing brand value. e. Growing costs: The general trend seen in rising costs such as fuel may be a dampener for the hospitality industry. f. Changing perception of the insurance industry due to emergence of new threats can affect the insurance aspects of the industry. g. Harsher environmental laws can have a negative impact on the industry. Earth care program: The Kimpton has developed many imaginative and effective programs like, Global business program, Kimpton in Touch, Kimpton Cares, Women in Touch, Earth care program, LGBT, and Shop Kimpton Style. The earth care program is aimed at environmental concerns. The main purpose of the earth care program is that the Hotel can focus on quality customer service coupled with environment friendly policies. As part of the Earth Care program development the Kimpton has had many diversified results like additional costs, risks and benefits. This program has enabled Kimpton hotels to provide a life long commitment to environmental responsibility. They review and develop new products and new practices nearly every three months. The Kimpton hotel’s objective is laudable for their efforts to reduce their impact on the environment. Kimpton hotel started their environmental program in 1985 though under a different name. The current program which was given the name Earth Care was introduced in 2005. The components of the earth care program include Cleaning Supplies, Soy Inks, Recycled Paper, Organic Beverages, Towel/Linen Reuse, and Recycling. The cleaning supplies plan is aimed at using eco-friendly products for cleaning across all their properties. Soy inks plan will see to it that all printed material of the group is printed on recycled paper using this eco-friendly ink. As part of towel or linen reuse they provides towel for the guests to reduce energy and detergent required for daily washing. They are careful to reduce energy and water in their rooms. As part of the earth care program they introduce environmental activities in every hotel such as such as recycling of coat hangers, elimination of Styrofoam cups, paperless check-ins/outs, organic flowers, etc. They also encourage the guests to participate in reducing waste. Other components \ of the earth care program include Green Cleaning, Pest control, Waste management, recycling. Kimpton hotels studies the chemicals they use on their premises and they are particular that only eco-friendly products are used. Again as a part of the Earth Care program, Kimpton hotel introduced modern method to waste management doing away with the traditional practice of burying or burning the waste. Recycling by reprocessing to make old material into new product is regularly practiced with the objective of preventing the waste of potentiality useful materials. Reducing the consumptions of fresh raw materials, reducing energy usage, reducing air and water pollution is also a feature of the Earth Care Program.. Implementation of SWOT and Earth Care Program: There are many challenges when implementing the SWOT analysis and earth care program. The main challenges are from their competitors. There are many competitors who are interested to prevent SWOT analysis and their Earth care program from being implemented. But Michael Pace can address those challenges through the various programs. For example, they have devised some programs to ensure the success of the earth care program that the group has named Vendor comparisons, Product sampling/testing ,Quality analysis - comparison to products in use Financial analysis - savings/loss on current costs and expenses ,Environmental benefits. The success of the earth care program was not only their commitment to environment but commitment to their maintaining the highest quality guest’s experience. The Kimpton hotel can overcome their all challenges once the implement the lessons they have learnt from the SWOT analysis and through implementation of the earth care program very successfully. Other key success factors of the Kimpton group are price segmentation, Customer Segmentation, Global Presence and Brand Management. Moreover exemplary services are another key success factor of the Kimpton hotels. The practice of buying existing property at low prices and the eventual escalation of its value is also good for increasing asset value. The Company also has greater latitude in product / service offerings at comparable profit margins. Customer Service, effective utilization of technology , brand loyalty, employee training and development, complementary services, revenue management systems, clean and comfortable lodging, strategic alliances and conveniences in making reservations are also being implemented or in the process of being implemented. Other strategies include access to growth capital and value-added services. The Kimpton Hotel and Restaurant Group’s organizational structure and approach to SWOT analysis and decision making helps in the successful implementation of its strategy. One of the highlights of its strategies is what is known as mongoose strategy. Company officials identify potential and comparatively low priced properties which they buy for the purpose of expansion and investment purposes. Eventually these properties increase in value. Kimpton hotels have managed their financial assets by effectively to build a hotel chain that is respected and valued. Michael Pace addresses those challenges by providing effective management methods to attract customer. These methods include location and style, Human Support System, Listening and Recovering, Hiring, Training, Empowerment, Rewards. The Kimpton should proceed the SWOT analysis, because without SWOT analysis any organization cannot take a good decision and make more profit. SWOT analysis is an essential success factor of any organization. Through the SWOT analysis any organization can search their strengths and weakness. If any organizations search their weakness they can make over it and they can make more improvement. Through the SWOT analysis any organization also can understand their threat and opportunities. Through this search an organization can find their opportunities and they can expand their business. Today the hotel industry is the very competitive field. The Kimpton hotel group has many competitors. So to overcome these competitors the Kimpton hotel should make a good SWOT analysis. The Kimpton hotel can overcome their competitors and they can make their business more profit by their SWOT analysis and the Earth Care Program. Competitiveness is the key to organizational success and strategies and programs that enhance this is an essential component for long term success and sustainability. Kimpton Group should definitely go ahead with the Earth Care program and implement the lessons they have learnt though the SWOT analysis. Reference Management services, Kimpton Hotels & Restaurants. Retrieved June 28, 2008, from http://www.Kimptonhotels.com/development/management-services.aspx Read More