Competitive Advantage and Product Development of the Four Seasons - Research Paper Example

Independent Research Study Executive Summary  Four Seasons Hotels and Resort is a renowned premier luxury hotel management company. Currently it is operating 83 hotels across 35 countries and has built matchless reputation for trustworthiness, confidence and relation with its guests. As the hotel industrialist prepares to enter Orlando, this paper highlights in details the marketing plan for Four Seasons will apply the Micro and macro influences. Orlando presents political, legislation, economic, climatic and quality of life among others to draw a conclusion that attaining a local luxury hotel while using its business resources like partners as the best mode of entry for Four Seasons. Outstanding tailored customer services, which is an essential part of Four Season’s brand representation and strategy, is standardized and will used when penetrating Orlando. Acquiring Four Seasons in Orlando while retaining all the present staff will achieve the company’s objective in this endeavor which include: 1. Offering standardized services Four Season’s target come to receive and look forward to, while demonstrating an original Orlando experience for its guests. 2. Establish a genuine relationship with the local community and understand the culture of Orlando to be certain of a sustainable business atmosphere for future expansion. 3. To implement the most appropriate and proficient market strategy to quicken Four Season’s penetration in Orlando. Executive Summary  2 Macro
environment
Analysis

 4 Data presentation, analysis and key findings 4 1. Market evaluation and profitability 4 a) Economical situation of Orlando in the industry’s profitability and hospitality field 4 1.a.1 United State of America & Orlando GDP 5 1.a.2 Orlando FDI 15 1.a.3 Inflation rate of Orlando Fl. 17 In March 2014, United States’ inflation rate was recorded at 1.50% by the Bureau of Labor Statistics. It has an average of 3.33% from 1914 until 2014. The most essential categories in the changed Consumer Price Index for All Urban are shelter 30%, commodities not food and energy 20%, food 14%, energy 10%, transport 6% and Medicare services 5.5%. 17 20 Conclusion 22 Recommendations 23 Environmental analysis Macro
environment
Analysis

 To develop its product and see how the Cabana Bay Beach Resort will be sustainable, it is important to analyze the market the Resort will implement itself at. The economic situation of a country may have both positive and/or negative impacts on the business of the company. In this section, the researcher will provide an analysis of the macro environment of the Orlando market in order to measure how the Resort will develop its product within the market and how is the competition doing in such a market as it has a lot of effect on the product development of the upcoming resort. The Macro analysis will mainly show the trends and opportunities that the Orlando economic situation is offering, this analyze will provide information on the market showing if it is sustainable enough for the new upcoming resort. Therefore, an in-depth analyzes on the real gross domestic product (GDP), the foreign direct investment (FDI) and the inflation/exchange rate is needed. Data presentation, analysis and key findings 1. Market evaluation and profitability a) Economical situation of Orlando in the industry’s profitability and hospitality field This section will help the researcher to have an idea on the profitability (micro and macro environment) within the hospitality sector for Orlando. The data found will be used, as a support in order to forecast and see if the upcoming resort, the four seasons Orlando, within the Walt Disney resort, will be sustainable. A country’s economic environment can have a deep influence on Starwood’s organizational performance. Singapore’s government maintains a highly proactive role in shaping the country’s economic development by encouraging business, foreign investments, exports to take it to its present status as one of the world’s most prosperous nations, coming in as the 5th richest country in the world (Rogers & Johnson, 2011). 1.a.1 United State of America & Orlando GDP The gross domestic product of a country is all the goods and services that have been produced within a country, whereas Real Gross Domestic Product growth measures the rate at which the economy of the country is growing. This rate shows how healthy is the economy of the country, and also indicates the purchasing power of the country’s population. Orlando is the 26th largest metropolitan area in the United States and boasts a gross domestic product (GDP) of more than $100 billion dollars. http://www.tradingeconomics.com/united-states/gdp-growth Economical Influences For Four Seasons Resort to thrive in Orlando, economic factors have an important role to play. First, hotels are partially dependent on the availability of disposable income of the population (families and individuals). This case will be more accurate when we highlight families than individuals. Over the recessionary periods, consumers cut down on their spending which causes loss of income and failure. Generous spending becomes the true opposite in prosperous economic times such that increased disposable income results to higher performance in the industry. These factors coupled with Orlando’s economy and the fact that it is a tourist stop around the year is a viable idea for Four Seasons Resorts. http://www.reuters.com/article/2011/04/25/us-economy-florida-orlando-idUSTRE73O3KU20110425 Our economy benefits from a globally-recognized tourism industry that saw a record 57 million visitors in 2012. This sector alone has an economic impact of more than $27.6 billion. Orlando enjoys the benefits of being an internationally recognized tourist destination. Last year, it broke the record with over 59 million tourists having visited. The economic sector contributes to the country’s growth by more than 27.6 billion. Other equivalently successful industries in this are sectors are Simulation and Training, Modeling, Aerospace and Defense, Digital Media, life Sciences and Biotechnology among others. Main companies like Lockheed Martin, Walt Disney World, Northrup Grumman, Mitsubishi Power Systems and Darden Restaurants and several other worldwide powerhouses make Orlando a serene home (Stern, 2006, p.71). Table 1, according to EDC’s monthly Economic Indicators is aimed to act as a dashboard that present a quick outlook of the economic wellbeing of the economic. Economic Indicator as of Feb 2014(Table1) Employment By Industry Industry Percentage 1 Government 11% 2 Construction 5% 3 Mfg 4% 4 Trans/utilities 3% 5 Trade 16% 6 Information 2% 7 Financial Activities 6% 8 Prof Business Services 16% 9 Education & Health Services 12% 10 Leisure & Hospitality 21% 11 Others 4% Orlando is "leading Florida out of the economic recession" and "one of the fastest growing cities in the country" according to Reuters. Political and Legislation Influence Orlando is one of the peaceful regions in America an attribute of the political sanity. This has attracted unhindered opportunities leading to economical and political welfare. To sustain leadership in introducing new businesses in the region, Orlando continue to offer the broadest possible entrepreneurial opportunities for all, both locals and visitors. In fact, franchised ventures are most encouraged because they create jobs. One or two factors that Four Seasons know is that not every country that Four Seasons Resort is established is peaceful. Therefore, volatile conditions pose immense threat to the company because of the direct investment required to offer its services. As compared to product offering, the company is not in a position to immediately exit or leave permanently. In an attempt to cut back such effects, the company has created a managerial position that is solely committed to environmental scanning. This person is aware of possible changes and their effects on the company forecast. http://hospitality.ucf.edu/files/2011/08/DPI-Why-Hotel The Hotel Industry-Fail.pdf According to the government of Orlando the mutual benefits that exist between the franchisor and franchisees make the relation special in the business world. Enterpreneurs are presented with affordable means of quickening growth while accomplishing their goals with less risks. On the other hand, when starting a franchise in Orlando, companies (franchisees) should count on the franschise because the relation means being in the venture for yourself not by yourself. Orlando offers opportunities and not miracles. With the zeal, spirit and political sanity economic opportunity are bound to expand. Both Federal and local legislation could impact on the course of Four Seasons in Orlando. However, the federal government legislation tends to have more effects as compared to the local legislation. According to the Prohibition Act of 1919, many restaurants and hotels have been shut down due to failure in observing regulations. To avoid such occurrences, Four Seasons Resorts in other places serve meals and refreshments that are not alcoholic during the day. Alcohol is served in the evening and at night. Because Four Seasons Resort is an international brand, locating it in Orlando (an all year tourist spot), and the company is looks into things like minimum wage legislation, smoking legislation, the American Disability Act, Accelerated Depreciation Act among others. This has made it have clean records not only with government where it is in operation but across the world partly because of the marketing team and visitors reviews. Additionally Four Seasons Resort complies with the local legislation by offering parking spaces for their clienteles compared to others hotels that have failed to do so and in the process lost massive returns. Climatic and Natural influences These changes have led to considerable impacts in the running of Four Seasons Resorts. For instance, the climate can be so bad (cold, heat waves, snowing and heavy rains) discouraging customers from visiting. On the other hand, sea foods become almost rare following loss of breeding grounds (common in Florida). Others are outbreak of Mad Cow in England, coffee shortages in Brazil and outbreak of Avian Flu in China. These factors are only slightly controlled by man and yet they have significant economic effects not only to Four Seasons but also the entire hotel industry. In one way or another, the resort has been able to overcome some of these challenges. First it should be worth noting that FSR is not just any other player in the hotel industry. First, it has developed into one of the most sought after brand. Through unvarying focus on customer services in each market, Four Season creates a brand that customer take pride in associating. For this reason, clienteles rarely feel the pinch when spending extra money due challenges arising from climatic and natural occurrences. However, it has not always been like this. Sometimes the FSR gives discounts to attract customers (customers become royalists). Such treats are meant to cover for any inconvenience but again they (inconveniences) are very rare. The fact that suppliers and distributors of many products and services would take the pride in associating with FSR is an additional value especially in a new market-Orlando. Regional and urban activities Orlando is known for variable and breath taking constructions. Because of this challenges arising from housing are least exprienced. The region enjoys diversity, affordability and availability. Because of diversity, housing alternatives and neighborhoods spread far and wide, from a city setting in downtown Orlando to the rolling hills of Lake County. Nevertheless, regional and urban activities contribute insignificantly to the hotel industry. This industry depends vastly on the convenience factors in clientele tastes. For the case of FSR, nothing has ever been so advantageous against it competitors. Its founder, Isadore Sharp is an architecture graduate. His degree helped him in building and designing unique constructions. In fact, his first hotel in Toronto Canada in 1961 was a gem. After that this trend continued, such that he built luxurious hotels with contemporary amenities such as air conditioning services way then. A new branch was established in 2011 where better standards were innovated. The hotel designs are met with ergonomic to make visitors most at home. It is these valuable skills that will enable Four Seasons Resort in Orlando thrive. Four season Resorts has this exceptional capability in hotel building and designs. The founder was not easily copied and no equal strategic capabilities. Thus, Four Seasons Resort have a superior innovation ability for development and exploitation of innovation ideas compared to the rivals. In its operation, it satisfies different customer’s demands in the most modern and effective approach such as gyms, spa, Jacuzzi and swimming pools among others. Although majority of the rivalries have tried copying these operations, the benefits have not been much one such competitor is the Starwood Hotels & Resorts Worldwide. Competition Ritz-Carlton is highly ranked with 858 out of 1000 points while Four Seasons comes as number two with 852 out of 1000. All their room prices remains higher compared to that of Four Seasons, it has been more preferred. Pestana poses the most obvious assets in that it understands the Portuguese culture since it is a Portuguese firm. The culture of Brazil and colonial links with Portugal to make the Brazilian market favorable market for Pestana, and the company’s outstanding performance demonstrate it is taking full advantage of its origin effects. With all its strategies Four Seasons is thriving well but as much as others. Starwood is also another strong competitor of the Four Season. It’s recognized as the world’s largest and geographically diverse hotel as well as a leisure company. Just like Four Season’s Starwood is a hotel management corporation for luxurious brands like Regis, The Luxury Collection and Le Meridien. Unfortunately, much of the Starwood does not appear in trade magazines particularly targeting the business community and this has denied it direct competition with Four Seasons. Lastly, Tulip is an inimitable hotel insomuch as it depends on universal standards of service and has been comparatively successful incorporating local flavors into its brand. It also advertises its local touches through its advertising campaigns, “International standards, local flavors.” Its worldwide reputation also lends it strong appeal and recognition worldwide, principally among the luxury and business vacationers. This, partially, because of international standards of service that global vacationers have come to recognize and rely on. http://hospitality.ucf.edu/files/2011/08/DPI-Why-Hotel The Hotel Industry-Fail.pdf Micro Factors Location Orlando is a universal-renowned destination, where every vocational dream comes true. That is why it’s nicknamed the City beautiful or the Theme Park Capital of the World. Orlando is admired and visited for its parks-Sea World Orlando, Universal Studios Florida and Walt Disney among others. Besides beckoning with world-class resorts, some of the most tempting dining opportunities and shopping opportunities for any budget, its tourist industry is brings millions of revenues yearly (attracts 51million visitors)not to mention it is one of the 13th busiest airport in the United States and 29th across the universe (Stern, 2006, p.120). From this point the location of Four Seasons Resort in Orlando is not a bad idea, therefore failure cannot be predicted. Although the location is not a success on its own, the demographics play a very essential role. It is worth noting that Orlando is a very busy region round the clock which increases the rate of spending. Additionally, as a hotel management company, Four Seasons has total control over every hotel operation, takes part in designing new ones, and earns about 3% of revenue from hotel owners besides collecting fees to cover for universal sales, marketing and reservations. For the last 12 years, Four Seasons Resort has been among the Fortune’s 100 Best Companies to work in. Reflecting at a customer’s psychology, a customer will frequently visit a place that he/she has visited, before because of the quality services or exceptional goods, over and over again. Since Four Seasons is international, many travelers have heard or read about it and the next thing is trying, and they should not be disappointed. There is integrity in its brand, coupled with the business pride inspired in employees internationally, and that is why Four Seasons Resorts charge premium prices. It has become famous for its unmoved standards. The royalists have confidence the standard will always be met. Quality of life The quality of life in Orlando sets it apart in a remarkable way. Those people who go to Orlando beyond the legendary tourist attraction can attest this is a uniquely “livable” place. Proximity to beaches, professional sports, cultural events, year-round recreation activities, affordable dining places, grocery shops, coffee spots and housing among other. All these contribute to a leisure and exuberant environment that prompts one to stick around for long. As a matter of fact, companies of all sizes and kinds find this matchless quality of life as a factor in sustaining employee’s recruitment and retention. That is why it suitably stacks up against competing business locations. Each of the Four Seasons and Hotel go all-out to attain the ideal balance when adapting to local environments as well as standardization of the services. Prior to building a hotel, comprehensive research of the market and country has to be carried out. This is done with an aim of finding out if it is possible to adapt to the locals style and create a bona fide experience for customers. This is unpredictable unlike what the competitor such as Ritz Carlton does. Although the hotel has to reflect the local cultures, services are the same across every Four Seasons Hotel. This is a major factor to the adaptation/standardization balance since service is deemed the company’s sustainable competitive advantage. Guest expects the same exceptional services, regardless of being in different states. http://hospitality.ucf.edu/files/2011/08/DPI-Why-Hotel The Hotel Industry-Fail.pdf Entrepreneurial Incompetence Most business owners in the hotel industry are entrepreneurs pursuing the dream of owning their own businesses. This is not the case with Four Seasons. Over time, Four Seasons settled on four strategic decisions that developed the pillars of the economy. The first pillar is centered on quality since 1970s, to constantly meet guest prospects from a single hotel to the next. It has since then represented incomparable quality with a focus of being the best in every region. The second one was to build the companies competitive advantage in service. Four Seasons was acknowledged for its superior exceptional services with the establishment of its first branded U.S hotel in Washington D.C. In the 1980’s the company expanded and introduced flagship hotels across U.S. The brand name started to develop and a unique brand representation was created. Over time, Four Seasons settled on four strategic decisions that developed the pillars of the economy. The first pillar is centered on quality since 1970s, to constantly meet guest prospects from a single hotel to the next. It has since then represented incomparable quality with a focus of being the best in every region. The second one was to build the companies competitive advantage in service. Four Seasons was acknowledged for its superior exceptional services with the establishment of its first branded U.S hotel in Washington D.C. In the 1980’s the company expanded and introduced flagship hotels across U.S. The brand name started to develop and a unique brand representation was created. Culture was the third pillar, and would be an important role into a strong brand name. Therefore, the corporate culture was based on the Golden Rule that insists on dealing with others as we would like them to deal with us. There was then the fourth pillar, “to expand as a management company as well as a brand name synonymous with quality”. Four Seasons has developed a brand name worth much more in comparison to its real estate through the best services to luxury visitors across the world. http://www.orlandoedc.com/Data-Center/economy.shtml Orlando is "leading Florida out of the economic recession" and "one of the fastest growing cities in the country" according to Reuters. 1.a.2 Orlando FDI Foreign direct investments (FDI) are all the investments made by foreign investors into the country. The Orlando region has been named one of fDi Magazine’s (Foreign Direct Investment) top 10 “American Cities of the Future” in the large cities category. The region ranked 6th in human resources, 8th in infrastructure and 9th overall of large cities for foreign direct investment in the United States. http://www.orlandoedc.com/About-Metro-Orlando/factsrankings.shtml With a record 57 million visitors in 2012, Orlando has perfected the art of getting to and from here. In addition to the three international airports, the region is in close proximity to two deep water ports as well as extensive road and rail systems, all in the heart of the nations fourth most populous state. By 2014, SunRail, the regions commuter rail system will be operational from outlying areas of Central Florida to Orange County in the Orlando region. All of that connectivity is invaluable for business. As you can see, Orlando is one of the United States fastest growing business locations and is becoming more notable as an expansion location for international companies. http://www.orlandoedc.com/Relocate-Expand/International Business/foreigndirectinvestment.shtml 1.a.3 Inflation rate of Orlando Fl. In March 2014, United States’ inflation rate was recorded at 1.50% by the Bureau of Labor Statistics. It has an average of 3.33% from 1914 until 2014. The most essential categories in the changed Consumer Price Index for All Urban are shelter 30%, commodities not food and energy 20%, food 14%, energy 10%, transport 6% and Medicare services 5.5%. Four Seasons have to frequently check the inflation rates in Orlando. In case it goes as predicted by the Economic Intelligent Unit Group, an increase in the inflation rate is going to have immense effects on the operations. The entity might keep on altering prices to cope with the changes. Luckily, the prices postings are in the company’s website hence avoiding large costs needed for reprinting materials. http://www.tradingeconomics.com/united-states/inflation-cpi Higher inflation means a higher price not only for Four Season’s customers, but for the hotel components or partners where it gets supplies or does imports. Further, Four Seasons might think of using employee contracts that change for inflation to control the losses associated with fail purchasing power. The inflation was a result of sequestration. The drop from the fiscal cliff has been more chaotic than thought, causing the U.S hotel industry to suffer to date. This related to Four Seasons poses a challenge. 1.a.4 Orlando tourist’s arrivals http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx Last year Orlando welcomed over 59 million visitors, breaking an all-time record for Americans. The table is a representation in percentages comparing 2012, 2013 and 2014 growth rate. According to the Visit Orlando CEO, Orlando has been able to achieve such milestones because of a strong universal sales and marketing team. Orlando is going through one of the most momentous growth periods in the history’s destinations. Conclusions drawn from the table does not show any consistency. In 2013, there were more than seven new out of the world attractions and enhancements in the dining and entertainment districts. Again, the table show in both cases, there are more people visiting for leisure (12/13 at 2.6% and 1314 at 2.1%). This is an advantage for Four Seasons considering it is a new international brand in Orlando. According to underway plans, by 2017 Orlando will be one of the first destinations on-airport intermodal facilities in America as well as the first airport in Florida to opportunely maintain rail, air travel and ground transportation. The good thing about Orlando is there is something for everyone; thousands of million visitors arrive here annually to marvel at these wonders such as Kennedy Space, Universal Studio, Disney’s Magic Kingdom and Cinderella’s Castle among others. (Wolff et al, 2008, p.179). Orlando Visitor Forecast 2012 2013 % change 2012/2013 2014 %change 13/14 Domestic Leisure Business 52, 889, 000 42, 828,000 10,061, 000 54,008, 671 43, 958, 372 10,050,299 2.1% 2.6% -0.1% 55,046, 853 44,872,798 10,174,056 1.9% 2.1% 1.2% International Overseas Canada (eat.) 4,269000 3,184,000 1085,000 4,446,890 3,344,034 1,102,856 4.2% 5.0% 1.6% 4,621,769 3,490, 291 1, 131,478 3.9% 4.4% 2.6% Total 57, 158,000 58,455,561 2.3% 59,668,622 2.1% Detail may not to totals due to rounding Source: Tourism Economics, D. K Shifflet &Associate Ltd With a record 57 million visitors in 2012, Orlando has done well to attract a diverse pool of visitors. Besides the three international airports, the state is easily accessible through two ports, and is superbly served by a wide road and rail infrastructure. The fact that the state if the fourth most populous and there are still no signs of a suffocated road or transport network points to a well planned and executed transport system. In addition to the existing network, there is also the planned launch of the SunRail, in 2014. The rail system will serve and link Orlando with Central Florida and Orange County. Such developments are invaluable for business. From this, we can attest that Orlando is one of the fastest growing States in the United States. Most importantly, the region has the infrastructure and the capacity to grow immensely a factor which should sway most international investors. This is because operability and supporting growth factors are already in place (Metro Orlando Economic Development Commission, 2012). Key Findings Four Seasons Resorts is an international brand. For over 50 years, it has brought great changes in the hospitality industry by combining affability and success with the best traditions of global hotel keeping. In the long run, it has cultured luxury for the modern traveler. http://www.fourseasons.com/about_four_seasons/four-seasons-history/ Most of the macro and micro factors highlighted in this IRS are encouraging for a venture in Toronto. However, it is worth noting that more than 30% of the hospitality businesses fail within the first year. It is therefore very vital that Four Seasons Resort have an extensive review of factors that contribute to the success/failure. When it comes to competition, Ritz-Carlton has remained at the top of the charts in general customer satisfaction, while Four Seasons come number two according to a current survey conducted by J.D power and Associates. A part from meals and services, relatively inexpensive room prices as been a key to attracting guests. Other major competitors are Tulip, Pestana and Starwood. http://www.luxurydaily.com/ritz-carlton-four-seasons-tower-over-competitors-in-fee-satisfaction-ranking-jd-power Tourism and hospitality industries go hand in hand, and it is a long history of success. They both attract guests for one another. By its nature, Orlando is breath taking-it has the capability of attracting over 50 million visitors in a year because of the beautiful sceneries, good weather/climate, shopping amenities, and means of transport and from among others. On the other hand, the tourists feel most at home when taken care of- when they get good services, find clean, healthy and relaxed places that are affordable. Luxury also counts and Orlando all this to offer (Wolff et al, 2008, p.90). Four Seasons Resort has to frequently check the inflation rates in Orlando. In case it goes as predicted by the Economic Intelligent Unit Group, an increase in the inflation rate is going to have immense effects on the operations. http://www.tradingeconomics.com/united-states/inflation-cpi Orlando is a famous tourist destination across the globe. Besides the tourism and entertainment industry, is a dynamic and diversified economy. Currently, tourism and entertainment are the two driving factors behind the blossoming economy. They contribute to over $40billion annually. Therefore the three are interdependent. http://fcit.usf.edu/florida/lessons/tourism/tourism1.htm Conclusion Recommendations RefRR References Long, C. (2004). City dog: The national hotel & resort guide for you and your dog. West Hollywood, CA: City Dog Pub. Metro Orlando Economic Development Commission, 2012 Stern, S. B. (2006). Sterns guide to the greatest resorts of the world. Boca Raton, Fla: Sterns Travel Guides. Tourism Economics, D. K Shifflet &Associate Ltd Wolff, H. J., & Wimberly, Allison, Tong & Goo. (2008). 100 hotels & resorts: Destinations that lift the spirit. Mulgrave, Vic., Australia: Images Pub. Read More