Planning Research in Hospitality and Tourism - Case Study Example

of essay’s assignment is due Literature review in tourism and hospitality research and analysis Introduction During the first six months of 2003, the average hotel in Sidney suffered a decline of 11.9 percent in Income Before Fixed Charges (IBFC) as compared to the same period in 2002 (Goeldner & Ritchie 2009). IBFC is described to be income before deductions for property taxes, management fees, amortization, depreciation, debt service, rent, insurance, capital reserves and income taxes. Factors that contribute to this decline are catastrophic events for instance the Iraqi War, fear of future terrorist attacks and the lackluster economy. The hotel industry is concentrating on the unmanaged segment in business that comprises of business travelers who are not subject to formal travel policies but whose employers reimburse their expenses. 11 percent of travelers were represented by this segment in 2000 (Robinson & Jamal 2009). In 2003, and spending amounts by this segment were to a projected 20.5 billion dollars (Robinson & Jamal 2009). By 2007, approximately 1 in 5 hotel bookings were made online, a figure that is higher than the 1 in 12 bookings in 2005 (Robinson & Jamal 2009). Most of these online bookings were made by unmanaged and leisure business customers. These business travelers are now improving their travel costs and experiences by turning to the internet. Problem statement Shangri-La Hotel is a mid scale hotel chain based in Hong Kong. It is among the top ten lucrative hotel chains in with hotels in Australia. Since the last quarter of 2001, Shangri-La Hotel has been encountering a decline in occupancy rate (Prideaux, Moscardo & Laws 2006). Even if this is the situation with the hotel industry in general, the executive leadership of Shangri-La Hotel believes that with a suitable business strategy in place, it can increase its occupancy rate. Mid scale hotels are quality hotels that described by their location either in major cities or suburban areas. Mid scale hotels are often near major business areas or expressways that are convenient to attractions and shopping. The hotels usually feature pools, fitness centers and medium-sized restaurants. The main competitors of Shangri-La Hotel within the context of mid scale hotels include Hampton Inn, Residence Inn, Ramada, Country Inn & Suites, Quality Inn, Sheraton, Four Points, Homewood Suites, Best Western, Howard Johnson and Doubletree. Considering the general current state of the hotel industry and the competitive threat that Shangri-La Hotel faces with its main competitors, the executive leadership of Shangri-La Hotel has decided to take on a new strategy that is focused on the customer so that the hotel can remain a market leader in the mid scale hotel market segment. This strategy is likely to noticeably enhance the hotel’s customer value proposition. The task of this research is to determine the needs of customers within the context of mid scale hotels. It is more likely that customers who book their reservations online also give helpful views into the internet of those hotels they stayed at given the growth in the use of the internet for booking hotels online. Research objectives Sidney is one of the world’s leading cities to do business in. however, little research has been done into the individual business traveler market in Sidney, as opposed to the exhibition market and the organized conference. Visitors come to Sidney on business trips from all over Australia and the rest of the world. Who are these business travelers and where do they come from? How often do these business visitors go on vacation in Sidney? How do the business travelers plan their trips? Do these business travelers have any leisure time and if so, how do they spend it? How much money do business travelers use and on what? How content are the business travelers with the facilities of the in Sidney? This paper determines some of the answers to these questions. The objectives of this research are how to better promote Shangri-La Hotel in an economically sound manner as well as ensure the continuity of Shangri-La Hotel and increase its exposure and net profit. These days, these objectives must consider social factors and be achieved in an environmentally conscious fashion. Literature review The business of hotels is attracting guests. There are nine major kinds of hotel customers and guests. The first type of customers is corporate individuals. These are hotel guests who are not part of any group and are traveling for business purposes. Corporate individuals usually stay one or two nights and are the most frequent users of lodging services. Typically, corporate guests stay in hotels 15 to 20 times every year (McCabe 2009). The most important factors that determine the hotels that corporate individuals select are previous experience they have with the hotel, the location, the price or value, the room rate, the reputation of the hotel or chain and the recommendation given by friends. 39 percent of corporate individuals use online services or the internet when making travel arrangements, while 37 percent use a travel agent (Altinay & Paraskevas 2008). This use of the internet in reserving hotel rooms is gradually increasing. The on-site hotel facilities that these business travelers use usually include room service, lounges and restaurants. Business travelers take advantage of business centers, concierge and exercise facilities. Business travelers have very specific opinions about what the hotels should avail to help them in doing their work done while on the road. Their highest priority is a desk to work on is, followed by proper lighting, access to a fax machine, a comfortable desk chair, access to a copy machine and a phone at the desk. High-speed Internet access is a desire that most business travelers who use laptop computers have. Business travelers are concerned about special treatment and recognition. Frequent-stay programs have proven particularly effective with business travelers. Business travelers may choose to patronize hotels and rental car companies that are tied in with frequent-stay programs and are also usually members of airline frequently-flyer programs. The second group of hotel customers is corporate groups. Just like individual corporate travelers, corporate groups travel only for business purposes. The differences between corporate groups and individual corporate travelers are that the former usually attend a meeting or small conferences at their hotel or at another facility near their hotels, and their travel agency or company book their rooms in blocks. These corporate group travelers usually stay two to four days. Top managers are normally assigned single rooms, while the middle and lower level managers usually share rooms. Corporate groups prefer hotels that offer private meeting rooms and dining facilities. The third group of hotel customers is MICE and Convention. MICE stands for Meeting, Incentive, Conference and Exhibition (Peters & Pikkemaat 2006). MICE and Conventions have a large number of people that usually run into the thousands. Delegates at conventions usually stay three to four days and share rooms. MICE and Conventions choose their hotels several years in advance, so a hotel often prolongs its selling efforts and may require cooperation from local visitor and convention bureaus as well as airlines. The fourth group of hotel customers is leisure travelers. This group usually travels with their families on trips to visit relatives or friends, or on sightseeing trips. They usually spend only one night at the same hotel, except for resorts. A room may be occupied by a couple and one or more children. Leisure travelers usually pay high rates since they usually travel during peak season. The fifth group of hotel customers is relocation guests. Relocation guests are mostly families or individuals moving to an area and require lodging until they can find permanent housing. They are usually military, government or corporate employees. Their needs include more living space than is obtained from a typical hotel room and limited cooking facilities. The sixth group of hotel customers is airline-related guests. Airlines negotiate with hotels on rates for the crew members of an airplane and for passengers in need of emergency accommodations. Hotel rooms for guests related to an airline are usually booked in blocks at rock-bottom prices. The seventh group of hotel customers is military and government travelers. These travelers are reimbursed on fixed a per diem allowance, which means that no matter what they have to pay for a room, they only receive a specific amount for lodging expense. For that reason, these guests stay only in hotels that offer very low rates or that have negotiated rates that are good enough to their organizations. The eighth group of hotel customers is regional or wholesale getaway guests. These guests are crucial to hotels that usually cater to convention and commercial groups on weekdays and advertise special weekend packages. Usually, these packages are meant to boost occupancy rates during low-demand time periods, for example during weekends and off-seasons. The ninth and final group of hotel customers is guest mix. This group refers to the mixture or variety of guests staying at a hotel. Guest mix in successful hotels is carefully managed. The guest mix in a hotel depends on its operating philosophy, facilities, size and location (Scott & Laws 2006). Goods are tangible, which means that a consumer can take goods with them and use them. On the other hand, services are experienced and intangible and cannot be possessed. A meal at a restaurant or a stay at a hotel is a service because the food and the room cannot be tried before being purchased. According to Saee (2006), when marketing a hotel, four factors need to be considered. The first factor is that since the services offered at the hotel are intangible, the customer needs to be contented with the experience of the hotel service itself. The second factor to note is that services offered are perishable. Services cannot be stored to be consumed later, and if unused and unsold at one particular time, these services cannot be resold or redone. The third factor to note is heterogeneity. Customers in hotels constantly interact with room service, the front desk, restaurant employees, sales and switchboard, where there are frequent vagaries in the delivery of service. This creates special problems for both the customers and management. The last factor to consider is simultaneity of production and consumption of services. Services are produced and consumed at the same place and time. Special problems arise from the fact that the consumer is part of the production process. A psychologist named Abraham Maslow wanted to give explanations as to what motivates people. Maslow learned that motivations are based on different needs that people have in different situations. Maslow branded his theory of motivation in people as the ‘hierarchy of needs’. This hierarchy of needs has survived over the years and has become the foundation of much of what we nowadays know about human behavior. Abraham Maslow’s hierarchy of needs (Reid & Bojanic 2009). The point of Maslow’s hierarchy of needs is that the lower level needs are the most important and they have to be met first before the higher level needs are addressed. Thus until physiological needs of breathing and food are satisfied, they remain crucial in human motivation. Once these physiological needs are satisfied, the safety needs of security of body and protection of property become crucial, and so forth and so on up the pyramid. Human behavior is based on Maslow’s hierarchy of needs. At the same time, Maslow’s hierarchy is only a foundation upon which Shangri-La Hotel must build. While motives turn on people’s behavior, it is perception that decides the route that behavior will take. Conclusion and recommendations The special facilities, staff and location of a hotel have a significant positive effect with customers. The closer a hotel is to a beach, transit facilities or downtown, the higher the positive effect that hotel has with customers. Special facilities like conference rooms and restaurants inside the hotel have a strong positive effect with customers. Communication facilities such as high speed internet and working phones inside the hotel will win over customers. Shangri-La Hotel should reassess the location of its Sidney hotel to determine their proximity to tourist attraction sites, airports, shopping centers and public transportation services. Customers want to do the least amount of traveling that is possible and at the lowest cost so at to reach their destinations. Shangri-La Hotel should also assess its current quality improvement programs and customer service to ensure they are effective. Shangri-La Hotel should also set up continuous monitoring of performance measures related to customer service. Shangri-La Hotel should assess the types of facilities it currently offers and possibly add new facilities for its customers. References Altinay, L & Paraskevas, A 2008, Planning research in hospitality and tourism, Butterworth-Heinemann. Goeldner, C & Ritchie, J 2009, Tourism: Principles, practices, philosophies, 11th ed, John Wiley and Sons. McCabe, S 2009, Marketing communications in tourism and hospitality: Concepts, strategies and cases, Butterworth-Heinemann. Peters, M & Pikkemaat, B 2006, Innovation in hospitality and tourism, Routledge. Prideaux, B, Moscardo, G & Laws, E 2006, Managing tourism and hospitality services: Theory and international applications, CABI. Reid, R & Bojanic, D 2009, Hospitality marketing management, 5th ed, John Wiley and Sons. Robinson, M & Jamal, T 2009, The SAGE handbook of tourism studies, SAGE Publications Ltd. Saee, J 2006, Managerial competence within the hospitality and tourism service industries: Global cultural contextual analysis, Taylor & Francis. Scott, N & Laws, E 2006, Knowledge sharing and quality assurance in hospitality and tourism, Routledge. Read More