Business Strategies of COMO Hotels and Resorts - Case Study Example

A case study on COMO Hotels & Resorts Introduction COMO Hotels & Resorts is an international group in the hospitality industry and is a part of the big COMO group. The COMO Hotels & Resorts was invented in the year 1991 by Christina Ong. This international hotel group operates across the world through its wide range of hotels and resorts. The group is having as of now a total of nine properties that are in Bangkok, Maldives, Bali, London, Turks and Caicos Islands, and in Bhutan. In 2012 in Forbes it was listed that Christina Ong was amongst the 50 Asia’s Power Business Woman. The company has its headquarters in Singapore and is a limited private ownership company. Ong before started off the hotel chain was the founder of Club 21 which is luxury retail and manages all the top most fashion brands such as Giorgio Armani etc. The Halkin Hotel was the first that was established in London and the company than added on more properties in a span of few years. In the hospitality industry it is very important for any company to establish high quality standards of services so as to facilitate the travel experience of the guest. The intangible products are added value through the gesture and behavior of the people delivering the services. The aim of the COMO group is to produce an exceptional experience and a memorable stay at their hotels and resorts. The company thinks itself to be a part of the community in which ever location it selects to perform the business operations. One of the most exceptional qualities of the company is that it believes that creating memorable moments for the guest is very important for the companies in hospitality industry but it is equally important to support the environment, economies and the local cultures (Ross, Lashley 96). The company even aims at delivering the best of services to its guests in the form of the best quality foods served at its restaurants, quick room services, organizing some game for shows its guests, and even developing the best of infrastructure so that the guests staying at their hotels would have a homely as well as exotic experience. The qualities that the group possesses have made the company on many awards in the past few years for its beautiful properties, architectural designs, restaurants etc and even made the name of the company occur in may esteemed magazines. COMO hotels and resorts have incorporated some of the well known designers in its operation so that the guest can have a pleasant stay in their hotels both in the time of locations as well as properties. There is one more outstanding quality that the company has is maintaining a long term relationship with its guests and follows a well defined customer relationship management (Barrows, Powers 196). The company has incorporated a loyalty program in the form of membership cards in which the guests who have visited the hotel once are given special offers and discounts. The company does not only aim to expand its business and invite more of guests but also maintain its existing customer base. COMO hotels and resorts have not compromised in its quality and the award it has won is a proof for its exceptional service quality (Gill 39). The company in the present scenario has a total of eight properties and is subdivided into three major categories such as Island Resorts, Urban Hotels, and Adventure Retreats. The Parrot Clay resort of the company is a well known amongst the list of properties and many celebrities have a stay out there and even it has hosted many weddings of some well known celebrities such as Ben Affleck etc. The success of the company is in the form of its business expansion in just few years and acquiring a decent market position in the hospitality industry. In the initial stages the group was very small in front of major players in the industry such as Hilton, Hyatt etc., but its efforts and quality consciousness have made the small group into an established name in few years. The company has faced failures in the form of more of efficiency in its business operations and acquiring more of properties (Dransfield 167). The past failures of the company were in terms of lack of funds to further expand the business into some other locations. The company operates in a highly competitive environment where it has not been able to set up diverse properties and obtain competitive advantage. Brief overview of the state of the industry segment and the firm’s current competitors (700) The hospitality industry is a very broad category that involves some of the major aspects within a service industry such as cruise line, transportation, lodging, event management, etc and even some of the factors of the tourism industry. The hospitality industry has a worth of about some billion dollars and it majorly depends on the disposable income of the people and very importantly their leisure time. The most important variable in the hospitality industry is the usage rate or the vacancy rate. In order to maximize its customer base all the aspects which are a part of the hospitality industry they function in every other sector. There are various factors that need to be considered while performing analysis of any industry like the barriers to entry and even the current key players of the industry with their competitive advantages. The competitive advantages are gained by the players only through locations, ongoing investments and adapting the most innovative practices by the marketing team of the organization (Brotherton 123). There is no such tangible product that the hospitality industry offers so it’s very important that the characteristics of the personnel working in the different sectors of the industry should be such that they are able to create an impact on meeting with the customers. The major competitive advantage by the players in the industry can be gained through having their main aim on professionalism, concerned on the well being and happiness of their customers, and having authenticity in their operations. Any industry segment can be further briefly analyzed through the PESTEL analysis tool. The political environment can be defined as the degree of intervention or the government’s rules and regulations in the economy. In the case of hospitality industry there is a strong support from the government which forms its backbone and even the reason behind the sustainability of the industry. The tax rate that is charged by the government is hug for the luxury and the star facility hotel and the industry can be greatly affected by a small political change. On the contrary there is huge incentives given to this industry and there exist political support for the growth and development of the industry (Salkind 56). The economic environment comprises of tax rates, inflation rates, interests, exchange rates etc. In the recent years it has been observed that stable economic conditions have influenced people to possess the disposable income for luxury category hotels and other functions in the hospitality industry. The willingness to pay by the guest would make the hospitality industry more prosper. However in the scenario of economic recession the hospitality industry faces a major turmoil because in that case people would have enough disposable income to spend on such luxurious aspects and even the rapid changing global economy is causing less of leisure time of the people for such industry (Hayes, Ninemeier 179). The social environment can have a great impact on the industry as the changing social trend would influence the demand for an industry’s product or service. In the hospitality industry it is very important for the top management to be cautious about all the social class segments and possess appropriate services for all of the classes. The social environment influences the growth of the hospitality industry and it is highly important to strike a balance between all of the demographic ratios (Allen 133). The technological environment relates to the need of the technology in a specific industry. In case of hospitality industry it is highly essential that the firms possess the modern technology that would help to progress and advance the property. Technology has always been used to reduce the manpower and increase efficiency of the business operations. The adoption of the modern technologies would facilitate more of the customer service provided by the firms in the hospitality industry. The environmental factor is a major factor that needs to be considered by an organization as it can have an adverse affect on its functions (Hales 141). The centre stage of the customer’s preferences and expectations is thee social and the environmental responsibility. It is very important that the firms in the hospitality industry adopt the best of business practices aligned to pollution reduction and proper waste disposal. The strict environmental laws make it a necessity for all of the firms operating in the hospitality industry to be highly concerned with the environmental impact cause of their operations and adopt the best of measures to avoid such an impact (Barth 209). The minimum wage rate in the recent years has been increased and this has impacted the hospitality industry in terms of controlling their operating cost and delivering the best of competitive prices to its customers. The firms in the industry has to maintain legal standards and principles with the suppliers, contractors etc. The PESTEL analysis clearly describes the state of the hospitality industry in terms of the scope of the potential new entrants and the risk factors that are concerned with the different environment that would have an impact on the firms in the hospitality industry. The COMO hotels & resorts have been able to maintain uniqueness amongst its competitors through its differentiation facility and unique property locations. However the industry in which the company operates is of intense competition and the company even faces strong competition from some players in the industry (Sloan and Legrand 105). The major competitors of CMO hotels & resorts are Banyan tree, Amanresorts, Six Senses hotels & resorts, Four Seasons resorts, and One-and-Only resorts. These are some of the current competitors of the firm which influences the firm to constantly upgrade its policies and customer service to remain at par with the competition. Discussion of the “premise” COMO hotels & resorts have been able to maintain a very good reputation in the market through its existing customer base. The company has an exceptional restaurant facility in all of its properties. The company even has tried to maintain a competitive advantage through the unique locations of its properties, high customer value and great hotel service, and differentiating facilities. The company has got a small chain of hotels and resorts which facilities easier and better management. However there are certain issues related to the company (Nathan, Kiecolt 75). The major issue is that though the company has gained many awards for its exceptional service but it is not being able to acquire much of the target market customers unlike its other competitions. This has made the company to gain fewer profit margins making it very much difficult for the smooth flow of its operations. The less revenues generated by the COMO group through its services is making it difficult to maintain a large employee base (Jones, Pizam 92). The maintenance of the overhead costs is becoming very difficult for the company in the present years. The company has a major problem in getting connected with the target customers as they do not possess self owned online sales channel that can facilitate the revenue growth. The company has the lack of funds to build up an infrastructure in order to support the ecommerce facility. The company even does not take the initiative to maximize profit from other sources such as weddings, conferences etc. The lower margins of revenue are causing an impact on the employee satisfaction as they are offered considerable lower wages compared to other firms in the same industry (Lucas 104). The employee dissatisfaction level is increasing in the COMO group which has put forward in press releases in a conversation with the employees. The unsatisfied employees would in turn affect the quality level of the services being offered by the group to the customers. In the highly competitive hospitality industry it is very much essential to maintain the best quality standards or else the possibility to maintain customer base and obtain desirable profit margins would be very low. COMO group have all its properties located in the rural areas not in the bigger cities though this was initially a competitive advantage but the company is facing a lot of problems with the growing number of hotels in the bigger cities (Zainal, Hashim 112). The technology used in the hospitality industry is rapidly changing and it requires constant up gradation by the companies to sustain in the competitive environment. There is a lack of technology adoption by the COMO group as there are insufficient funds which make it very difficult for the company to maintain a loyal customer base (Handlechner 133). The group has been able to achieve significant success in the past 20 years but still the group has not been able to establish a strong position in the market place. There already exists a major threat in the form of economic slowdown. The group needs to develop strategies so that they can overcome any economic recession in the future years and sustain its business operations (Lockyer 167). The creativity, style and passion to explore the different markets through differentiation have been the major strength of the company, but there have been plenty of opportunities in the form of technological innovation, customer growth, acquiring properties in the big cities, maintaining customer loyalty, and establishing a renowned brand position which are unexplored by the company. Appropriate exhibits to support the case As stated in the above case the hospitality industry have gained much of importance in the recent years with people having more of leisure time and disposable income. The maximum revenue is generated through hotels and resorts in the industry as stated through the gap below- (Reynish, Tseane 212) The occupancy levels in the hotels and resorts have undergone significant changes due to large number of players in the market and multiple choices with the customers reduces the power of control with the hotels and resorts. (Dasgupta 45) However the COMO group has seen a downfall in its sales in the present years and its incompetency to be at par with the intense competition. The declining sales have caused the company to restrict its expansion of business operations and is making very much difficult for the group to sustain its operations well. The below figure depicts the declining sales – (Patzer 144) The facts and figures would help to analyze the case of the COMO hotels and resorts and arrive at a strategic decision for the future growth of the company. Three strategic questions that address the case The three strategic questions in relation to the case of COMO hotels and resorts would be – What are the policies that can be adopted by the company so as to build up a strong competitive position in the marketplace of the hospitality industry? Which are the strategic areas in which the COMO hotels & resorts were lacking in comparison to the key competitors of the company? Detailed SWOT analysis of the company. What is the strategic planning model that can be adopted by the company in the nearby future so that they are able to perform their business operations in the best possible way? Works cited Allen. Melanie., Analysing the Organisational Environment. UK: Select Knowledge Limited. 2006. Print. Barrows, Clayton. and Tom Powers. Introduction to Management in the Hospitality Industry. New Jersey: John Wiley & Sons. 2008. Print. Barth. Stephen., Hospitality Law: Managing Legal Issues in the Hospitality Industry. Canada: John Wiley and Sons. 2008. Print. Brotherton. Bob., International Hospitality Industry. New York: Routledge. 2012. Print. Dasgupta. Devashish., Tourism Marketing. New Delhi: Pearson Education India. 2011. Print. Dransfield. Robert., Corporate Strategy. USA: Heinemann. 2001. Print. Gill. Roger., Theory and Practice of Leadership. Singapore: SAGE. 2011. Print. Hales. Jonathan., Accounting and Financial Analysis in the Hospitality Industry. UK: Routledge. 2006. Print. Handlechner. Manuel., Risk Management. UK: GRIN Verlag. 2008. Print. Hayes, David and Jack Ninemeier. Human Resources Management in the Hospitality Industry. New Jersey: John Wiley & Sons. 2009. Print. Jones, Peter and Abraham Pizam. The International hospitality industry: organizational and operational issues. New Jersey : J. Wiley & Sons. 1993. Print. Lockyer. Timothy., The International Hotel Industry: Sustainable Management. Singapore: Routledge. 2013. Print. Lucas. Rosemary., Employment Relations in the Hospitality and Tourism Industries. UK: Psychology Press. 2004. Print. Nathan, Laura and Jill Kiecolt. Secondary Analysis. USA: SAGE. 1985. Print. Patzer. Gordon., Using Secondary Data. USA: Greenwood Publishing Group. 1995. Print. Reynish, Khunou and Pawson Tseane. Tourism Development. South Africa: Pearson South Africa. 2009. Print. Ross, Darren and Conrad Lashley. Entrepreneurship and Small Business Management in the Hospitality Industry. Hungary : Routledge. 2010. Print. Salkind. Neil., Encyclopedia of Research Design. USA: SAGE. 2010. Print. Sloan, Philip and Willy Legrand. Sustainability in the Hospitality Industry: Principles of Sustainable Operations. New York: Routledge. 2013. Print. Zainal, Ahmed and Abu Hashim. Current Issues in Hospitality and Tourism: Research and Innovations. Dubai: CRC Press. 2012. Print. Read More