Sustainable Tourism Development in Australia - Essay Example

? Market Plan Table of Contents 0 Introduction 4 2.0 Sydney 5 3.0 Market background 5 4.0 Capa Demand and Service 8 4 Strategies to MaintainEquilibrium between Capacity and Demand in Peak Season 10 5.0 Hotel Design and Management 12 5.1 Company Summary 12 5.2 Company Ownership 13 5.3 Management Summary 13 5.4 Design 15 6.0 Service Mix 15 7.0 Service 16 7.1 Marketing Strategy 17 7.1.1 Inquiries Generation 17 7.1.2 Service Trial 18 7.1.3 Traffic 18 7.1.4 Rate of Booking 18 7.1.5 Loyalty 18 8.0 Service Product Model by Gronroos 19 8.1 Theory 19 8.2 Perceived Value Model by Gronoroos 20 9.0 Conclusion 22 1.0 Introduction Tourism is the driving force for Australia. Tourism industry contributes 3.7 percent ($38.9 billion) of total GDP of the country. More than 0.5 million people work in the tourism industry and the industry employs five percent of total workforce in the country. More than six million tourist visits the country every year. There are ample opportunities for marketers to lure tourist by designing systematic service mix. Visiting tourists spent an annual average of $25 billion on purchasing various merchandises during their stay in the country. The country has seen slow growth rate for last three years due to fluctuation of Australian dollar value. China and Indian tourism market has emerged as major threat for the Australian tourism industry. The country is trying to use its natural resources to attract nature loving tourists. Australia has unique combination of desert and sea with lush green seaside back ground. Sydney, Melbourne and Adelaide are the major cities in the country. Other cities in the country also plays crucial role to generate revenue for the travel industry (Australian National Audit Office). Sustainable tourism has emerged as latest trend in the tourism industry of Australia. The country is gifted with natural resources. Tourism industry of the country is dependent on its biodiversity, cultural landscape and breathtakingly beautiful natural resources. Great Barrier Reef of the country is one of the major attractions for the tourists. Great Barrier Reef is the largest nature made reef structure in the world and it is two thousand and three hundred km long covering northeast coast of the country (Global Ministerial Environment Forum). 2.0 Sydney Sydney has been selected as location to open new hotel. Sydney is the home ground of architectural beauty of the country. The city is the unofficial capital of the country. Sydney Opera House and Sidney Harbour Bridge are major attraction for tourists. Travellers prefer the city for its cultural heritage and traditional metropolitan structure. Sydney Airport is one of the busiest one in the country. More than three million tourists visit the city annually. The city was focal point of attraction during summer Olympics in 2000. Tourists visit has increased by sixteen percent in last ten years. The government has predicted that there will be another four percent increase in the industry in next two years. The country has already submitted bid to host 2022 football world cup and government has planned to promote Sydney as game location. Government is emphasizing on infrastructural development of the city to promote it as international location capable of hosting big sports event. Darling Harbour and Olympic park are example of infrastructural development made by government. 3.0 Market background Sydney is the largest city in the country with a population of five million. It is forecasted that the population will grow more than six million by next decade. The city is the premium business and travel destination for visitors across the world. Sydney is the international gateway and business hub for the country. The city has distinctive cosmopolitan flavour with ethnical diversity. Almost thirty percent of residents in the city are come from outside the country. The city enjoys the stature of being one of the most important business hubs in the Asia pacific region. More than sixty five percent international multinational companies has selected Sydney to establish headquarter due to its growing economy, stable political structure and international connections. Sydney airport contributes more than fifty percent of total arrival and departure of international tourists. Annually more than thirty five million passengers use Sydney airport for travelling purposes (New South Wales Government). (Source: The NSW Government) Sydney hotel market is performing strongly for last one year. Revenue per available room is showing high value for four and five star hotels in the city. Upscale hotel segment like four and five star hotels are showing better growth rate with respect lower segment hotels. (Source: The NSW Government) High demand of upscale hotel segment might create a misleading picture for investors want to open hotel in the city. Many corporate visit Australia for mining purpose and they prefer to stay in Sidney due to business reasons. Hotel industry in the city is dependent on the activity of mining segment. This is not a good sign for the industry as a whole. Occupancy rate in the city is expected to rise to eighty eight percent in 2015. Hotel business in the city is shifting its focus from business travellers to leisure and sports travellers. Tourist’s profiles have been drastically changed in recent years. In the early 1990’s majority of travellers came from European countries to visit the country but now days Asian (mainly Chinese and Indian travellers) travellers are also showing interest in Australia. Customers from Mandarin region are showing interest in the country for travelling and leisure activity. Recent trend is showing that customers prefer individual travel over group travel. Sydney has been selected as favourite travel destination by British travellers for consecutive two years. They prefer the city due to its traditional heritage and cultural inheritance. 4.0 Capacity, Demand and Service Concept of demand and supply can be used to understand the capacity model for hotel business. Suppose the hotel can accommodate maximum 400 guests at a time. Four hundred guests can be accommodated in the following manner. Room Type No of Rooms Accommodation Capacity in terms of person Deluxe 200 Single Bed= 200 Deluxe 300 Double Bed= 300*2= 600 Largish 100 Single Bed= 100 Smaller 100 Single Bed= 100 Total 700 1000 (Source: Author’s Creation) Hence, the capacity of the hotel is 1000. Customers prefer to spend their holidays in Sidney. Asian and British customers prefer to spend summer seasons in Sidney and we can expect high room booking ration during the season. Demand for the rooms can be described in the following manner. Room Type Room Capacity Accommodation in terms of room Accommodation in terms of person Percentage Deluxe Single Bed 200 180 180 Deluxe Double Bed 300 290 580 Largish 100 90 90 Smaller 100 90 90 Total 700 650 940 94% Hence the demand is forecasted to be ninety four percent for the first year. Capacity planning requires detailed understanding of market demand and resource allocation. Capacity can be estimated by using time series analysis. Capacity planning can be done by creating alignment between capacity and demand and that should be supported by resource condition (suppose management is planning to accommodate 2000 guest in 1000 single bed room then it can be classified as resource mismatch) (Gattorna 200). Capacity in service industry can be subdivided into two portions, 1- fixed (long-term) & variable (short-term) components. The management of the hotel can face four types of demand versus capacity condition. 1- Underutilization- in this case demand for rooms is lower with respect to capacity of hotel authority to accommodate tourists, 2- Optimum Capacity- demand for room matches with the capacity of the hotel, 3- Queues- in this situation reservation system of the hotel fails to manage demand, 4- Insufficient Capacity- capacity of the hotel is insufficient to cater demand for rooms in peak season. In the peak seasons demand for the hotel rooms might exceed capacity of the hotel authority. In this situation there might be four constraints for capacity and they can be illustrated in the following manner. Capacity Constraints Nature of Impact Time Due to excess demand hotel authority might provide timely service to customers Human Resource Hotel authority might not have sufficient staffs to cater demand of customers Rooms No of rooms might be insufficient to accommodate all guests Facilities Facilities like swimming pool, gym, tour package might not be sufficient to satisfy demand of clients at the same time (Source- Author’s Creation) 4.1 Strategies to Maintain Equilibrium between Capacity and Demand in Peak Season Demand Side Planning Capacity Side Planning Differential pricing for hotel rooms might shift the demand equilibrium from high to moderate. Charging high room price for tourists will help the authority to decrease the demand. They can hire part time employees to provide service to additional guests. Installation of state of art reservation system will decrease the chaos on entry gate. Hiring staffs might be short term solution while constructing additional room to cope with demand in peak season might after analyzing last 10 year demand trend can be classified as long term planning. Encouraging customers to use the hotel service in non peak season by doing price discount on hotel rooms or offering incentives to customers and this way decrease demand in peak season. They can contact other small hotels to accommodate their additional guest and this strategic partnership will help them to earn revenue without taking the burden to increase capacity (Dasgupta 64). They can create specialized service for their loyal customers and service discrimination might help hotel authority to de motivate customers not to use the hotel. The hotel can request existing employees to work for longer duration in order to satisfy additional demand. Strategic De-marketing in terms changing targeting strategy from mass oriented to segment specific will help them to discourage demand in peak season (Foxall 10). They can cross train existing employees to cope with multi dimensionality of demand created during the peak season. (Source: Author’s Creation) Tourism industry analysis can be done with the help of Real tourism gross value added (RGVA) model. The formula is cited below. RGVA value for Sydney is more than thirty billion Australian dollars and showing a growth rate of more than three percent for last two years. The hotel can use RGVA data to analyze market demand. Tourism Research Australia has forecasted future demand of tourism in the following manner. Year Domestic visitors (%) International Visitors (%) 2012 0.4 4.9 2013 0.4 4.0 2014 0.4 3.9 2015 0.5 3.4 Source: Tourism Research Australia, Forecast (Issue 2) 2007 Figure shows that there will be increase in the visiting of international travellers and hence the hotel has the opportunity to design service mix to counterbalance the demand. 5.0 Hotel Design and Management Name of the hotel will be Blue Lagoon. Location for the hotel will be Sydney. Objectives for first two year operation will be. The company will provide superior lodging and dining experience to clients. They will maintain an occupancy rate of ninety percent during peak summer season and at least fifty percent during off season. The mission of Blue Lagoon is to become premium hotel service provider in the city. 5.1 Company Summary Blue Lagoon is located in Corner of York & King Streets, 75 York Street, Sydney NSW 2000, P.O. Box Q1646, Sydney NSW 1230, Australia. The hotel has all total seven hundred rooms. Capacity of the hotel is to accommodate one thousand tourists when operating in hundred percent. 5.2 Company Ownership Mr. X (Me) and Mr. Y (my partner) is the owner. 5.3 Management Summary Mr. X will be the manager for daily operation and he will supervise operational activity of hotel on daily basis. Organizational structure can be described in the following manner. Mr. X- General Manager Mr. Y- Assistant Manager Mrs. Z- Marketing Manager Mr. A- Tour Manager Mrs. B- Head of staff recruitment department Mr. C- Accountant Mr. D- Inventory Manager Service staff- 15 Cook- 5 Cleaning Staff- 5 Store room Staff- 3 Touring Guide- 2 5.4 Design Hotel design must maintain resemblance with Australian culture. Customization can be done in the internal design of the hotel like implementing Chinese structural design to lure Chinese clients, colourful vibrant paintings to appease Indian tourists, traditional European architecture to attract European customers. Australia is famous for desert, sea side beauty and bio diversity. Blue Lagoon will use blue and green colour to paint exterior of the hotel. The hotel will have two kitchen and one store room. Dining room has the capacity to accommodate five hundred guests and swimming pool of the hotel is large enough to accommodate twenty people altogether. 6.0 Service Mix Blue Lagoon has four types of rooms including Deluxe single bed, Deluxe double bed, Largish and Smaller. Total number of rooms for deluxe single bed and double bed is two hundred and three hundred. Largish and Smaller has hundred rooms each. Outdoor swimming pool will be important part of the service mix offered by Blue Lagoon. They will also provide domestic tour package to guests. Front desk service plays important role to appease tourists. Blue Lagoon will maintain prompt and customer friendly front desk service. Service mix of the hotel has six different characteristics. 1- Quality- Maintaining excellent quality in terms of systematic approach, service responsiveness, taking responsibility of tourists, performing duty in accordance with requirement, the hotel administration will create a multi cultural environment for tourists, food menu should include continental food, Indian food, Chinese food and Mexican food, they should welcome every customer in the same manner without differentiating them on the basis of social race and nationality. 2- Value pricing- pricing should synchronize with the delivered value by the hotel management and should not be more than industry standard, booking price for hotel rooms must not exceed tourism industry standard maintained by other hotels. 3- Uniqueness- Service mix should be uniquely designed with respect to other competitors, they should offer hotel service offering in complete new avatar that no other competitor can imitate. 4- Poly sensuality- Aesthetic appeal of the hotel acts as stimulant to increase brand visibility among customers, interior and swimming pool should be designed in beautiful manner, customers analyze the brand through all five senses and for this reason Blue Lagoon needs to stimulate poly sensuality of service mix. 5- Heritage- the elaboration technique to reveal past history of a brand plays crucial role to increase customer engagement, Blue Lagoon needs to have a previous success story or a story about satisfied customers to increase the credibility among customers. 6- Superfluousness- Many customers do not understand the difference between necessities and luxuries, the service mix must deliver additional value over functional characteristics to clear out the misperception of customers about luxury hotel service (Berry 7). 7.0 Service Service mix has additional three Ps (process, physical evidence, people) create value proposition among customers. Physical evidence can be termed as the face of the service mix and also the most visible part of the value delivery model. Customers analyze hotel services by using their visual senses. Physical evidences in a hotel can be categorised into three parts. Interior design of front office and service desk. Interior design of the dining hall, conference room, hotel rooms and swimming pool. Personality of hotel staffs and other service personnel. Blue Lagoon will give importance on five F of service mix to create a superior value delivery model. Function- The hotel has planned to provide premium accommodation service to tourist. They are not only providing accommodation facility but tour package facility also to customers. Finances- Blue Lagoon is offering the service in competitive rate. Hence customers do not need to spend huge amount of money to book hotel rooms. Freedom- Customers has the freedom to select tour package offered by Blue Lagoon. Many customers analyze service mix in terms degrees of freedom. Feelings- The service of the company will make the clients feel satisfied and pleased in terms of purchasing value for money offering. Caring nature of the hotel staffs and other personnel will increase the brand visibility among tourists. Future- Clients will book rooms due to satisfaction achieved during previous staying (Abrams, and Kleiner 134). 7.1 Marketing Strategy Blue Lagon needs to increase sales promotion activity to increase awareness among customers. They can create brand identity among clients by using following objectives of sales promotion. 7.1.1 Inquiries Generation This is the first step of sales promotion. The company needs to establish tie-ups with local travel agency to recommend their name to tourists. The can distribute free service brochure to tourist to generate brand awareness. Blue Lagoon is a small organization with limited financial capacity; they can use digital marketing to increase customer engagement. 7.1.2 Service Trial Companies distribute free samples of product or service to inculcate usage experience among customers. The technique is generally used for products associated with low risk factors (in terms of investment in the promotional process). The hotel management can organize promotional contest for tourists and lucky winner will get a chance to spend one day in the hotel without any cost. 7.1.3 Traffic Marketers use the traffic building techniques to increase customer engagement. Blue Lagoon can use local festivals as promotional medium to edify traffic. 7.1.4 Rate of Booking This is retention oriented marketing strategy to increase service booking ratio among customers. Blue Lagoon needs to create multi ethnic culture inside the hotel to increase brand recognition among customers and superior dining service to increase the penetration level of service mix. 7.1.5 Loyalty Building customer loyalty for a particular service mix is one of the most important aims of any marketers. A loyal customer not only repurchases the service but also helps to spread positive word of mouth about the service mix. Blue Lagoon will provide loyalty bonus to customers on each repeat booking in the form of gifts and free items (Moutinho, and Chien 200). 8.0 Service Product Model by Gronroos 8.1 Theory Gronroos in his service quality model emphasized that experienced service is concoction of technical quality (service value received by customer via buyer & seller interaction) and functional quality (how the service receiver gets the service). In accordance with Gronroos, these two qualities creates the corporate image of service providers in the mind of customers while perceived service value in comparison to expected service value by customers also depends on technical quality and functional quality (Brown 74). Many companies use Gronroos model to create augmented service to counterbalance demand. Although reliability, assurance, tangibility, empathy and responsiveness create the core service delivery model while technical performance helps to build augmented service delivery model. According to Gronoroos, technical quality alone cannot create strategic advantage for the service provider. Functional attributes should be integrated with the technical aspect of the service. Gronoroos has pointed out that word of mouth and customer needs create external image of service delivery model. In 1995, Lewis has described recovery (ability of the service provider to rectify previous mistake) as the sixth functional aspect of service delivery model. 8.2 Perceived Value Model by Gronoroos Gronoroos model never clearly mentioned about measurement techniques for service quality. The model needs to be integrated with Gummensson’s 4Q model in order to measure feasibility of product service model. Gummensson’s 4Q model Design Quality- service mix is designed in accordance with customer’s need, Production Quality- this model is for manufacturing services and not relevant for hotel industry, Delivery Quality- companies should try to meet service standard constantly, Rational Quality- interaction between customers and service personnel (Williams, and Buswell 45-53). Gronoroos Gummensson Integrated Model Blue Lagoon can use augmented service mix to lure customers. Augmented service mix of the hotel can be described in the following manner (Lovelock 68-69). They will provide tour guide on tour package and tour guide must be a polyglot to communicate with tourists from various nations. They will provide free knowledge session about Australian natural resources to help the tourist to understand bio diversity of the country. The hotel will design swimming practice session for children. It will be a free of cost benefit offered by hotel authority. Blue Lagoon will organize friendly beach volleyball competition for tourist and it will help tourists to share bonding with each other. 9.0 Conclusion Blue Lagoon has the capacity to accommodate one thousand people and the management wants an occupancy rate of 90% means accommodating 900 people during peak season. The hotel can use Gronroos model of service quality to create demand for the service. Functional image of the hotel can be created by maintaining following aspects. Reliability- The hotel will use loyalty program for customers to create reliability. Assurance- Customer can expect a worry free vacation with Blue Lagoon. Tangibility- Multicultural interior design will increase tangibility for the hotel. Empathy- Blue Lagoon has the mission to provide superior form of hospitality to customers. Responsiveness- Service of the hotel is prompt and according to the need of customers. Augmented service can be treated as technical aspects for service mix. An integrated approach of Augmented and functional service will help Blue Lagoon to develop positive customer perceived value. The integration will help the company to maintain equilibrium between demand and capacity planning (Gronroos 112- 115). Works Cited Abrams, Rhonda and Eugene Kleiner. The Successful Business Plan: Secrets & Strategies. California: The Planning Shop, 2003. Print. Australian National Audit Office. “Tourism Australia.” Audit Report No.2 (2008–09): PDF file. Berry, Christopher. The Idea of Luxury. Cambridge: Cambridge University Press, 1994. Print. Brown, Stephen. Service Quality: Multidisciplinary and Multinational Perspectives. Lanham, Maryland: Lexington Books, 1991. Print. Dasgupta, Devashish. Tourism Marketing. Upper Saddle River, New Jersey: Pearson Education, 2011. Print. Ford, Robert, Michael Sturman, and Cherrill Heaton. Managing Quality Service in Hospitality: How Organizations Achieve Excellence in the Guest Experience. Stamford, Connecticut: Cengage Learning, 2011. Print. Foxall, Gordon. Strategic Marketing Management. Abingdon, Oxford: Taylor & Francis, 1981. Print. Global Ministerial Environment Forum. “Engagement with the private sector for sustainable tourism in the Great Barrier Reef Marine Park.” Environment Forum Report (2006): PDF file. Gronroos, Christian. Service Management and Marketing: Customer Management in Service Competition. 3rd ed. Hoboken, New Jersey: John Wiley & Sons, 2007. Print. Lovelock, Christopher. Services Marketing. New Jersey: Pearson Education, 2010. Print. Moutinho, Luiz and Charles Chien. Problems in Marketing: Applying Key Concepts and Techniques. Thousand Oaks, California: SAGE Publications, 2007. Print. New South Wales Government. “Hotel Investment Opportunities in Sydney, Australia.” NSW Trade & Investment (2011): PDF file. Williams, Christine and John Buswell. Service Quality in Leisure and Tourism. London: CABI, 2003. Print. Read More