International Hospitality: Marketing Strategic - Essay Example

?Table of Contents 0 LITERATURE REVIEW – Marketing Concepts 2.0 MARKETING STRATEGY OF 3 HOTELS – Marriott, Hyatt, Hilton 3.0 IMPORTANCE OF BRAND BUILDING IN THE HOTEL BUSINESS  4.0 CHALLENGES FACING THE HOTEL INDUSTRY 5.0 REFERENCES LITERATURE REVIEW Unlike in the olden days when the demand far outstripped the market supply, the hotel Industry today is facing intense competition. It follows logically that a hotel has to market its services in an appropriate and efficient manner in order to survive in the hospitality industry. The marketing should be such that guests are easily attracted, retained and converted into goodwill ambassadors for a hotel in the long run, (Lowson, King, and Hunter, 1999). This is possible only when the products and services match the best possible industry standards and then excel in as many aspects as possible related to customer service and experience.  Sales and promotional activities, aimed at promoting and marketing a hotel are taken up by every management but effective ones do this in a way unique to them. Marketing concepts of the hotel industry need to be understood as the process by which the customer is informed about the availability of the services and goods that meet their expectations and needs on the right time and at the right place, (Frolick, and Ariyachandra, 2006). It needs to arouse their interest and sustain it in what the hotel has to offer. The marketing aspect should be able to arouse a strong desire in the minds of the customer to try out what is offered, and then gently nudge them towards being the client of the hotel in the long run. The Hospitality industry provides both tangible and intangible services. Good food that satisfies the appetite, comfortable beds that provide a good night restful sleep, wide range of beverages that provide a sense of having tasted some of the finest drinks available, are some of the most tangible benefits that the clients look forward to during their visits, (Aylsworth, 1996). If a hotel management staff fails to meet any of these above client expectations, then it is hard for them to sustain in the competitive hospitality industry. As a result, it is important for the hotel management to meet these standards and must closely focus on every little edge they have over the others in order to please and attract customers, (Lowson, King, and Hunter, 1999). A Hotel’s efficiency and effectiveness will depend on the ability of its management staff to frame the right strategies for marketing and lead the marketing team and the entire staff in implementing that strategy. It goes without saying that such an approach requires the marketing department to be staffed adequately with the right kind of personals. However, there should not be extravagant expenditure on the marketing aspect.  The Hospitality Industry has definitely changed with times. By its very nature, it is a matrix of several inter-related consumer oriented services, each of which can be seen as an independent one also. It can face unexpected crises, surges and slumps, challenges and opportunities. Hotel Industry needs to possess strategic planning techniques in anticipation as well as in speedy response to such situations. Such preparedness has to be maximum in marketing functions. Uncertainties challenge the ingenuity of the hotel staff and management and effective planning has to factor in the long term goals of the management, into the current and contingency plans in response to emerging uncertainties, (Aylsworth, 1996). This way, the management can avoid the derailing of their long term goals when challenges arise. Such integrated planning both for long term goals and current realities is called Strategic planning. Marketing on these lines is called strategic marketing. Strategic Marketing should be able to convert challenges into opportunities, in keeping with the hotel management’s long term goals. In fact, a well designed marketing plan is actually the integration of strategic plans with the various aspects of marketing. Due to the ever changing market scenarios and market volatility, it has become necessary for the management to plan their marketing activities more strategically, (Moutinho 2000). Strategic planning takes into account internal strengths and opportunities for eliminating weaknesses of the staff. It needs to balance goals and opportunities with challenges and restricting factors. Strategic planning normally covers a time horizon of three years. Such a time span can give an idea of trends which need to be countered and those that need to be cashed upon. Hotel business, like any other one, has its business cycles and strategic planning must keep this aspect in mind when working out plans. Strategic planning also is required to make provisions in case of contingencies - that is to say, unexpected developments that may impact the hospitality business, (Okumus, 2001). The marketing plans should be constantly reviewed and revised if need be to respond promptly to threats and opportunities. Elements of a successful strategic marketing plan are: Alertness towards emerging political, economic and business realities around the enterprise. Business plans that enable the hotel management to cope with the changes Possess predictable plans of responses to stimuli and also a pattern of response to emerging new aspects, in keeping with the company’s goals Constant and accurate flow of communication within the organization at all levels Eliminate chances of lack of clarity about goals and responses Creating and sustaining a culture of thinking in terms of organizational goals, which will ensure that responses are predictable along the entire company Managing fund flows appropriate to emerging needs Establish a pattern for the review and revision of plans, so that these occur smoothly when situations demand. Produce sustained growth and high returns on investments for the business   MARKETING STRATEGY OF 3 HOTELS  Marriott Hotels - Marketing Strategy - It is Marriott’s marketing policy to find, attract and retain High Value Customers through an integrated process of Sales and Marketing. They use e-commerce and revenue management along with channel strategy and analysis, and exemplary marketing support. There is a considerable effort going into building the brand and sustenance of Marriot. Demand generation strategies coupled with revenue optimization and customer service standards that give the right signal to the right customer produce an overall impact that ensures high ROI and equally high customer satisfaction rating. Loyalty is a given thing in the circumstances for the management of Marriot Hotels, (Marriott Hotels, 2010).   An elaborate tie up with world’s leading consumer brands create an unceasing flow of new customers who are willing to trying out Marriott’s properties and services. The Marriot management makes an effort to retain a new customer through proper customer service, and cultivates further in keeping with the customer’s tastes and preferences. The strategy pays off in terms of incremental occupancy of rooms and growth in revenue through other customer oriented services of the Marriot Hotel. There is a conscious effort to create market segmentation for the upscale customers to give a special feeling of being client of a great service organization. Marriott takes great care to meet the exacting demands of discerning customers, of course for a price, and retains their loyalty.   The Strategic Tools of Marriott include the use of Balanced Score Card and surveys. BSC is a reporting device, which basically serves as a measurement tool, aimed at helping Marriott achieve its vision. The balanced score card gives feedback on current performance and also to set targets for the future. Beyond just measuring performance, the card also evaluates and incorporates Marriott’s special services, collaborators, clients, partners, and avenues for standardization of any aspect of service, (Edwards, and Ewen, 2004). The other option employed by Marriot is the Guest Satisfaction surveys. There is an ongoing process followed at Marriot of obtaining customer feedback through its sophisticated Guest Satisfaction survey. This survey is tailored for each brand of the Hotel’s services and is evaluated and managed at the level of the Hotel. Marriott’s open encouragement of clients to rate the Hotel’s services and offer comments for improvement ensures customer loyalty.  Hilton Corporation – Marketing Strategy - Hilton Corporation’s business aim is to maximize revenue earnings and cash flow through enhancing the profitability of its existing assets. Long term goal includes acquisition of interest in synergic assets in related areas of business. This is sought to be done through the Franchise and Management contracts models. All the while, the development and value addition to owned properties continues. The strategy further aims at selectively realizing the perceived value of some of its Trophy properties by selling them at appropriate premiums, (Tourism Report, 2010). Logically this will be done through leveraging of the company’s world-wide network of assets, personnel and Clients as well as associates.   EPM is Hilton’s bedrock for Strategic Marketing plans, along with the Balanced Score card. This necessitates the Hotel to constantly monitor its performance levels to ensure that its leading position is not compromised. Technology driven areas like Front Office, F&B, telecommunications, Engineering House-keeping, Safety and Security etc are strong points of the Hilton Chain and they need to be maintained and further strengthened. The attractiveness   of all its brands needs to be synergized too. EPM comes in handy for this mission, (Tourism Report, 2010). The Strategic Management tools employed by Hilton are Enterprise Performance Management (EPM) and Balanced Score Card (BSC). After the acquisition of Promus, in 1999, the Hilton had become a huge group of properties. The new reality property needed a specific attempt to communicate corporate goals and strategy all across the conglomerate. It became obligatory that the performance parameters are met by all the units in the organization. The enterprise management tool was devised in 2001 with the goal of integrating the financial goals of the company with customer expectations and produces a style of management that served both the purposes. Enterprise Performance Management is based on the premises that corporate goals and management objectives in other aspects of the business can be spelt out in measurable terms and then monitored to watch the actual realization of goals. The Company’s strategic vision sets the concept in perspective and plans interpret these in terms of specific activities, tactics and attitudes, (Hilton worldwide, 2010).  The Balanced Score Card (BSC) is at the core of Hilton’s EPM strategy .It integrates strategic planning with the detailed day-to-day planning of activities at each unit of the Hotel. Performance is measured against the goals clearly spelt out. Until BSC was introduced, the company had largely relied on financial results as the measure of performance. Customer focus was mainly on timely resolution of grievances, (Edwards, and Ewen, 2004). Statements of financial results served as historical record of what happened during a given accounting year. The BSC provides a framework for managing the affairs of the company in a holistic perspective, and took care of ensuring future profitability and growth.  Hyatt - Marketing Strategy - The focus in Hyatt’s strategic marketing is on maintaining and further building up the brand value of the chain, while ensuring successful operation of the normal hotel operations. The chain has several brands under its umbrella. It is necessary to build up each of these as a unique entity and yet let it be seen as part of the corporate culture of Hyatt. With this end in view, the data collection and analysis process at the chain is done in a manner that facilitates detailed analysis of customer demands, Hotel’s responses and their impact on the Corporate success, financially and image-wise. The Brand segmentation in Hyatt is principally in Hyatt Gold Passport and Hyatt.com. Hyatt Gold Passport is a customer service and loyalty reward program. It targets enhancing guest satisfaction, recognition and preferential service to the more loyal guests. Hyatt.com is Hyatt’s online service for distribution of demand and enables the would be client with efficient online enquiry and reservation service, (Hyatt Corporation, 2010).  Expanding Hyatt’s presence in Attractive New Markets is the main strategy. Emerging powerful economies and new tourist destinations are avenues for expanding Hyatt brand presence and strengthening. Hyatt is on the look out for reaching out to these new avenues of work and further build their brand in the process. This desire stems from the realization that their physical reach around the globe falls short of its brand recognition status and the reputation for service standards. Hyatt is at an advantage that it can count on a whole range of advantages—its people and its strong market reputation. Capital adequacy and a large asset base is another added advantage for the Hotel management. The choice of locations for expansion is dictated by the extent to which each of these advantages can be leveraged, and the operational strategy would rely on Franchise and Management Contract models.  Another program of expansion is to spread the reach of Hyatt Place and Hyatt Summerfield Suites on a global scale. This is expected to support the overall global growth plan and enhance the Hyatt experience for the customers. New construction by third party developers, which would be absorbed into the Hyatt network on Franchise or Management contract basis, would be the strategy in these expansion plans. Brazil, Russia India, China, and the Middle East are the immediate target areas .in view of their growing middle class and the volume of Business travel. Franchising is stressed a great deal in the expansion strategy, since it would relieve the company of capital need for creation of the infrastructure. Creation of a special internal team to back up the franchisees is a clear strategy adopted for this purpose.  SWOT ANALYSIS This section will study the SWOT analysis for the above internationally renowned hotels Strengths 1. The 3 hotels discussed above follow a clear and a well established differentiation approach. 2. The employees and the hotel staff possess a wide range of modern hotel management skills for the benefit of the customers and are also provided training at regular intervals 3. The hotels promote a strong, customer oriented and high participative cultures. 4. The Staff and employees are motivated by employing effective performance management systems 5. International Brand power which are able to attract new guests and maintain long term loyalty among customers. 6. Strong Reputation both within the local and global market, also at the corporate levels, these three hotels are well known for their service. Weaknesses 1. The management approach that is adopted by the hotel is not clearly communicated to the employees, staff and also in the global markets 2. lack of proper information systems within the working environments 3. Regular training of staff is costly and requires constant motivation towards learning 4. Some hotel facilities may require renovation and up gradation with regards to the customer requirements Opportunities 1. An opportunity rests in the wake of after recession effects and growth of several medium economies 2. less competition 3. maintain long term and strong relationship with clients and suppliers Threat 1. In the face of global recession and continuously varying form of global economies, recovery may take more time 2. Entry of smaller brands or new companies which offer customized services at lesser rates may pose a threat 3. Also new forms of hospitality services like fully furnished apartments at daily rates is also an upcoming trend which may be a threat PEST ANALYSIS Political/Legal 1. Increasing number of environmental regulations set up by the local and national authorities which are required to be followed by the hotels 2. Increase in taxes within the hospitality industry 3. Problems faced by hotel management in obtaining travel visas for its clients and tourists 4. Terrorism has made a huge impact on the hospitality business worldwide which has led to a sharp decease in the clientage. Economic 1. Growth in income levels has contributed to increase in the business of the hotels and more usage of other competing forms of expenditure by the public 2. Due to the cyclic characteristic of market demand, business profits may vary considerably during peak and non-peak periods. 3. Salaries offered to employees an staff are not competitive levels to other industries, which may hamper the growth of the sector on large 4. Since the hospitality business is non essential in nature, in the time of recession, these expenditures are cut down Social/Cultural 1. The new culture of sap and other customized services have brought about a change in the society 2. Corporate demands also increasing in the wake of providing employee benefits and holiday relaxation to employees 3. As the hotel business increase, the pressure exerted by social activists to go green also increases 4. The supply of lower level staff also relates to partial unemployment at times within a specific region Technological 1. Use and integration of high information systems have boosted the efficiency of the management and staff engaged in performing customer oriented services 2. Online reservation system has brought about a leap in the business profits due to the faster, and efficient reservation systems available to customers online 3. Use of modern technology in consuming resources like water electricity etc had further decreased the costs for the hotels PORTER FIVE FORCES Threat of Substitute Goods In the case of the hospitality industry, the threat of substitutes may be marginal, as the three hotels discussed in this paper are internationally reputed and possess high brand values. However, still with the use of internet, the business can be expanded and more clients can be roped in to counter the internet campaigns of other brands or hotels. Bargaining Power of Buyers Internet has started providing cheaper options to tourists who allow them enough bargaining and negotiating. This reduces the cost of switching from one hotel to the other. Rivalry among existing competitors Rivalry is fierce in this sector. Best experience at lowest price is desirable by clients which tends the hotels to lower its prices. It is important to maintain the brand value and competitive prices in order to survive. Barriers to Entry Entry into a new market is difficult as compared to gaining grounds in local or well researched markets. However with the use of internet, barriers to entry can be significantly reduced as internet o capable catering to a larger section of clients on the net. Differentiation and lack of expertise are two other barriers of entry. Bargaining power of suppliers The bargaining power of suppliers is not a substantial threat to the hotels but the issue of labors can be of little impact. As the number of skilled people who are interested in working in the sector decreases, the cost of labor may rise. IMPORTANCE OF BRAND BUILDING IN THE HOTEL BUSINESS  Being a hospitality and service industry, hotel business is synonymous with brand equity. It has already been studied that the three global chains of international hotels are all focused on enhancing brand recognition and brand building in order to reap higher profits in due course of time. They are vying with their peers to excel each other in customer satisfaction, investor satisfaction and a genuine sense of pride in belonging to a well recognized brand of the hospitality sector, (Farquhar, 1990),. This is a two stage action that consists of stabilizing and building on existing services and units, and planning and execution of expansion plans.  All the three hotels closely focus on satisfying the existing customer and to retain his clientage, attracting and maintaining new ones at the same time, which has not been an easy task. The reason because today the customers have become increasingly demanding in nature. They have their choices and preferences which are aimed at by the hotel management. With no shortage of hotels in the hospitality industry, it is only the best who can hope to retain old clients (McCleary, and Weaver, 1991). Enhancement of customer satisfaction through various management practices is the only way out. New customers are easier to find than to retain. In an atmosphere of fierce competition for new clients, there has to be a perceived value enhancement for a customer to want to try out a new property or brand. Thus the concept of Brand perception comes into play. Existing leading brands strive to maintain their lead and the new ones in the hospitality sector try harder. The three hotels employ the following strategies for the purpose of brand building. Improving the existing Hotel facilities A major part of the strategies employed by these hotels is to constantly improve the existing facilities and increase the revenue and appropriately manage the expenses. The hotel management pays close attention on how to increase the hotel stay of the client and increase the number of guest visits by offering world class services. Performance based management is applied on hotel staff and various other departmental teams and incentives are offered to improve efficiency levels, (Murphy and Clevelen, 1991). Also, regular support in the form of modern tools, technologies and hotel facilities are being integrated into the properties so as to assist the management in catering world class services to the customers and establish a brand value for the hotel. Higher occupancy in existing Hotels. Here again it is the level of customer satisfaction that will make him to stay for a longer period. Increased length of stay and increased frequency of visit to the hotel by old clients translate into enhanced revenue for the property. In times of stress, it may even become critical to ensure break-even in operations. Segmentation of clients and addressing their specific needs is on strategy that has paid off in some Hilton establishments, (Tourism Report, 2010). Offering differentiated services to the clients based on their interests, special product and service package based according to the segments of the customers are regularly planned by the hotel management. Meeting planners, conference guests, leisure time clients, and travel guests are some of the segments. Also special guest loyalty programs are designed to show loyalty to regular clients. Associate’s Role Business associates like airlines, transport services, food and beverage suppliers are all suppliers of the hotel and are impacted by adverse situations of one kind or other. The hotel management also pays close attention to the service quality provided by these business associates. It becomes sensible to work out joint strategies on how to tackle the down trend in each other’s segment through a joint strategy, so as to distribute the degree of stress and come out victors. In order to assist, best possible talents are recruited and rewards are given to those associates who have shown remarkable performance in their field of operations, (Farquhar, 1990),. Improving Operational efficiency Concentrating on improving operational efficiency has been one of the major targets of the hotel management. Improving the finances of the company through better realization of revenues, elimination of unproductive expenditure, better systems for delivery of goods and services etc are part of such a strategy. Noteworthy alterations in the operations have been done due to a recent decline in the demands for products and services. This consisted of staff reduction, outsourcing of some services, amendments in contracts for lower prices and service modifications without changing the service quality. Creating the organizational culture of excellence and maintaining it is part of this challenge too. Also, introduction of quality enhancement strategies like TQM, Six Sigma etc. have vastly improved the brand building in these hotels. Capital Utilization and Strategic Alliances Leveraging of existing capital and other resource base of the hotel management company will help achieve targeted growth. This is no mean advantage in a business where cash flow is often a problem when it comes to acquiring new properties. This is one of the reasons why Brand building comes handy to negotiate merger and acquisition deals and also expansion via the Franchise mode, (Farquhar, 1990),. Management reputation is another brand equity aspect which facilitates expansion via management contracts. Expansion of presence in potentially profitable markets is catching up as a trend. Strategic alliances and acquisitions pave the way for this.  CHALLENGES FACING THE HOTEL INDUSTRY Growth is an organic process. When growth is achieved in an organic manner, it is smooth and bereft of problems and concerns. But mergers and acquisitions, considered as the short cut to achieve the benefits of an organic growth, bring in organizational, cultural and financial problems, not to talk of relationship and attitude problems among the management personals and the personals and the customers. Such problems can easily be converted into opportunities by deciding to introduce quality enhancement programs for the new establishment as a hole, including the parent one. The strategy eliminates sense of discrimination, and inferiority among the added personals. The search for world-wide brand identity is causing a frenzy of M&A operations, franchising and management contracts. There is always the risk that the strategic perceptions of today may not match of new management tomorrow. Brand images have been compromised in many cases by indiscrete M&A operations and subsequent fiascoes. The only thing that does not change is change itself. The industry will eventually learn to correct itself. REFERENCES 1. Lowson, B, King, R and Hunter, A (1999) Quick Response: Managing the supply chain to meet consumer demand, Wiley, Chichester 2. Edwards, M and Ewen, A, (2004). How to manage performance and pay with 360-Degree feedback, Compensation and Benefits Review. 3. Tourism Report. (2010). Company Profiles: Hilton. Business Monitor International, Q3, 49. 4. Murphy and Clevelen, (1991). performance management, London: International Thomson Business Press, 93 Spangengerg, (1992). 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(1991), ``Are frequent-guest programs effective?'', The Cornell Hotel, Restaurant Administration Quarterly, August, pp. 39-45 Read More