The Future Development of Swire Hotels - Essay Example

HBD- portfolio Contents Contents 2 Introduction 3 Operational concept 3 Product/s and service/s offered 4 Geographical location/s of operation/s 4 Key market/s and segments 4 Brand Portfolio 4 Business positioning strategy 5 Existing market/s and segment/s 5 Marketing and promotion strategy 6 Sales techniques 6 Existing capabilities 7 Basis of existing competitive advantage 8 Existing competition 9 Existing and future development strategy 10 Existing growth strategy 10 Existing operating model 11 Recommendations 12 References 13 Appendices 15 Introduction Operational concept Swire Hotel Group has its headquarters in Hong Kong and was formed in 2008. This Group manages and creates wide range of small luxury hotels in United Kingdom, Hong Kong and Hong Kong. Swire Hotels are mainly a collection of three famous brands such as The House Collective, Chapter Hotels and East. This group creates unique hotels by working in collaboration with talented designers and architects. Product/s and service/s offered Swire Hotel Group has set its market position by offering quality service to all it customers. Hospitality industry is highly competitive market segment where uniqueness should be key focus. This group deals in individual lifestyle hotels and provides a friendly environment to all its guests. The guests at Swire Hotel Group are served with spontaneity and freedom reflected through personalities of all hotel staff. Geographical location/s of operation/s This Group as their unique hotels located across United Kingdom, China and Hong Kong. The House Collective comprises a range of individual hotels located across Asia. East brand has its magnificent business hotels located in Hong Kong, Miami and Beijing. Chapter Hotels part of Swire Group are located in heart of British cities. They are mainly found in Exeter and Cheltenham. There are two other hotels of this Group located in Brighton and Bristol. Key market/s and segments Swire Hotel Group mainly focuses on upper income class segment. There are two categories of individuals who are mainly targeted. One belongs to business class and the other represents tourist visiting a place from around the globe. Hotel’s architecture is designed by taking into consideration taste and preferences of mentioned customer segments. Brand Portfolio Swire hotels can be stated as a profitable division of Swire Properties. Swire Properties is a wholly owned subsidiary of a blue chip company known as Swire Pacific. This Group comprises of three major luxury hotel brands such as The House Collective, Chapter Hotels and EAST. Business positioning strategy Existing market/s and segment/s Swire Hotels was launched in 2008 and it encompasses urban hotels in United Kingdom, Mainland China and Hong Kong. The launch of Swire Hotels Group has provided wide range of choices for its entire customer segment. Synergy of investment and mixed-used developments has strengthened the market position of the firm. This Group mainly deals in luxury hotel and targets upper income class segment. The hospitality industry can be stated as an intensely competitive segment and this factor has enabled the Group not to restrict in one particular location. UK market possesses high purchasing power and this can prove to be a positive factor for growth or success of business. On the other hand, markets of Mainland China and Hong Kong are economically stable (Swire Hotels, 2014). This has facilitated Swire hotels group to launch a wide array of unique style hotels. It is a big group and encompasses three luxury hotel brands. Lump sum investment is made by the group so as to create memorable experience for all its guests. 117 luxury hotel rooms have been structured by the company so as to deliver appropriate service to guests. The market trends for this luxury hotel group depicts that customers are more inclined towards quality service and room facilities. Since 2008 the guest base at Swire Hotels Group has magnificently been increased. Positive word of mouth has even motivated other customers to visit luxury brand hotels of this group (Barney, 2007). In its region of operations the company is focused towards developing exceptional architecture. Marketing and promotion strategy Marketing can be stated as an essential component when it comes to communicating brand message to end customers. Swire Hotels Group has been operating in a highly competitive market segment from the past many years. The company has retained its market position with the support of wide array of promotional tools. This group majorly focuses on designing big scale events. These events are hosted by the hotel management and it serves as a medium to attract large base of guests (Porter, 2013). On the other hand, unique hotel designs implemented by the group are targeted toward a particular customer segment. Business class people can only be attracted by hosting corporate events or advertising in corporate magazines or newspapers. This medium has been adopted by the firm and lump sum investment is made by the company for generating desirable revenue margins. In the recent years, the firm has also incorporated social media as a platform to advertise brand features (Capon, 2008). It can be stated that the firm has been inclined towards both type of media such as traditional and electronic media. Customer loyalty program is also an innovation way through which the hotel group attract new customers as well retain existing ones. Swire Hotel Group belongs to hospitality industry and focuses on offering good service to all it guests along with additional amenities. There are no such intermediaries utilized by the group since it is a wholly owned subsidiary (David, 2009). It has its hotel chain located across three main regions such as Mainland China, UK and Hong Kong. Sales techniques Marketing strategy is followed by adoption of appropriate sales technique. These techniques usually differ from one organization to another. Companies belonging to hospitality industry have to be more concerned about architectural designs and their service quality level. These features tend to attract guests more. Customer satisfaction level needs to be high for a firm when it competes in intensely competitive hospitality industry (Simerson, 2011). Merchandising has been utilized by the Swire Hotel Group as a mechanism to promote their hotel designs and develop a strong base of guests. The company recruits talented architects who can deliver required designs. These designs are then approved by management and transformed into real world features within the hotel (Grant, 2013). Environmental surroundings are taken into consideration while structuring hotel design. This form of merchandising is usually done so as to offer an exceptional experience to all its guests. Service being delivered by hospitality industry is an intangible element and cannot be measured by customers. However merchandising or retailing is sales technique for firms in hospitality industry so that guests are able to witness certain features being offered by the hotel group. Swire Group merchandises certain amenities which add on to quality of service offered by their wide range of hotels. The awards or certificates achieved by the management or the hotel chain as a whole are also merchandised (Porter, 2008). This influences customer’s mind positively in context of decision making and being assured that they have selected the best hotel group. Merchandising basically serves as a tool that is utilized for perception building. Existing capabilities Swire Hotel Group is a part of blue chip Company known as Swire Pacific Limited. This organization is responsible for supplying funds as and when required. There is a specific target market for the hotel group since it is inclined towards designing large number of luxury hotels. The major competency of the firm is that it is a subsidiary of a large firm. Hence funds required for architectural designs or meeting standards of business class segment can be effectively met. This even enables the firm to survive competition since funds can be obtained easily. On the other hand, the firm even maintains a base of talented architects who deliver desirable designs for the hotel group. Brand value is also generated through a wide base of guests. Swire Hotel Group has been operating in the market segment from the past many years. This has supported the firm to develop a strong base of customer who repeatedly visits hotel chains of the group. It can be stated as a competitive advantage as new entrants into the industry would not be able to develop such a wide base of loyal guests. The firm has its main resources in the form of employee base, operational resources, marketing and financial resources (De Wit and Meyer, 2010). This group has secured great deal of experience which guides the firm toward success and growth. In overall context, customer centric approach of the firm has developed its brand values and facilitated unique selling proposition. Basis of existing competitive advantage The generic strategies were identified by Michael Porter in order to provide competitive advantage. Focus, differentiation and cost leadership are generic strategies which are often implemented by a firm to remain competitive. In many cases a particular generic strategy is not implemented by a company but market condition determine time period for adopted generic strategy (Mcfarlin and Sweeney, 2008). Cost leadership strategy is inclined towards reducing overall costs so as to ensure that best prices are offered to customers. Differentiation strategy deals with incorporating certain innovative features within a product or service. This in turn adds value to the offerings but even increases its cost. Focused strategy takes into consideration a particular segment or even a group of market segments (Johnson, Scholes, Whittington, Angwin and Regner, 2014). All the strategies that are formulated by a company are aligned with chosen market segment. This generic strategy has two major divisions known as focus cost strategy and focus differentiation strategy. Swire Hotels over the years has been known for their group of luxury hotels and high quality of service. It can be stated that focused differentiation strategy has been implemented by the organization. This has provided the firm with competitive advantage in intensely competitive market segment. The major reasons behind the firm selecting this strategy are its unique target market segment and goal of building exceptional architectural designs (Henry, 2011). Cost of its service has always been high but the company believes in offering value for money. Differentiation strategy applied on a specific target market has separated the firm from other players in the marketplace. Existing competition Swire Hotel Group faces a lot of competition from large hotel chains located in the same market place. It can be stated that the company has been able to explore upon it strengths and develop innovative business strategies. The major strength of the firm is its wider geographical base of business operations. Swire Hotel Group has not remained confined to specific locations such as only Hong Kong or Mainland China but its operations have even diversified into United Kingdom. The company currently employs more than 1, 20,000 people and all team members are well trained to offer best quality service. Funds are easily available since it is a part of Swire Pacific (Wintzer, 2007). This group even possesses strong industry recognition and this enhances overall brand image. There is robust growth in profits and sales with a strong financial base for future years. The major weakness of the company is maximum percentage of revenue is generated from Asian markets. On the other hand, the firm only focuses on a specific market segment and in turn loses on a greater percentage of market shares (Lasserre, 2012). Opportunities are mainly in the form of joint ventures or partnerships which can enhance business position. The hotel group can even diversify into other market segments and enter into unexplored geographic location. Threats for the firm are international and national regulations. Increased competition also appears to be a major threat for the firm affecting profit margins. Price wars might even disrupt the quality of service offered by Swire Hotel Group. Existing and future development strategy Existing growth strategy Ansoff’s directional matrix classifies different strategies which are incorporated by companies on basis of products and markets. This matrix is even at times stated as growth matrix and encompasses four important strategies such as market development, product diversification and development. Market penetration strategy is inclined towards present product and present market. This strategy is implemented so as to increase overall market share. Product development is another growth strategy and is all about new products in an existing market place. On the other hand, market development means entering into a new market segment or targeting a different geographic market segment. Diversification can be defined as entering into new markets with a range of new products (Porter, 2006). It is challenging to operate in hospitality industry and this is because customers belonging to same market segment possess different set of taste or preferences. In order to cater this market demand it is essential to implement an innovative strategy. Swire Hotel Group is part of a large blue chip company. It acquires desirable percentage of funds to sustain its position and strengthen their competencies. The firm mainly implements market development strategy within its system. This hotel chain not only focuses on acquiring new markets but is even inclined towards quality of products or services (Lynch, 2011). Swire Hotel Group aims at entering into new market places with highly distinguishable services. The company has a specific market segment and is only focused towards expanding on its geographic coverage. Swire Group in present scenario already owns three famous brands. These brands are known as The House Collective, Chapter Hotels and East. All of the luxury hotels under this group are located mainly in three regions such as United Kingdom, Hong Kong and Mainland China. As per the existing strategy of the company focus is on expanding geographical base so as to cover large percentage of market share (Peng, 2013). Market development strategy has facilitated Swire Hotel Group to set its position in the industry. The company’s existing strategy clearly states that the firm secures high revenue margins through its widespread operations. Though this growth strategy is a risky one but for long term growth often proves to be beneficial (Magretta, 2013). When a firm remains confined to a specific location it tends to reduce its growth extent. However Swire Group’s existing strategy provides it with a platform by which it can explore taste and preferences of different market segments. Existing operating model The parent company of Swire Hotels is Swire Pacific. Swire group is privately owned by John Swire & Sons limited. The Swire group is mainly started by John Swire. This company has diversified its business into many parts. Swire Hotels is one of the companies of Swire Pacific. Brian Williams is the managing director of Swire hotels. He looks after the whole business of this hotel. It is a single ownership firm. The operational activities of this hotel are performing on the basis on this. Swire Hotels do not have any franchisees to operate and expand its business. The company hires people according to its criteria. The management system of this company is very strict about its operating models. It hire individuals having specific characterizes and creative personality which will help the organization to improve its business and satisfying its customers (Johansson, 2000). Swire Hotel is not involved in joint ventures. The firms make various efforts to operate its business globally. The operating model of this company does not have any traditional training program or do not follow any written manuals. It wants its employees to operate its business process by themselves without following any written rules or regulation. The management structure of this company is very simple. As it is a single ownership business so it is guided by the rules and regulations of its owner. There are many managers in Swire hotels. In its top management levels it has senior managers. They report directly to the managing director, Brian Williams. The major decisions of the company are taken by him after discussing with the senior managers. Under his guidance all the hotels of this company runs its business. For developing its project design the company has ties ups with various international vendors and business partners. They all assist the hotel in delivering personalized services to the customers. The managing director of this company reports to Swire Pacific Company (Lewis, 2010). Then the Board of Directors of Swire Pacific deals with the issues of Swire Hotels. In many cases the final decision or permission is granted by the parent company. For single ownership the operating process of this company is very smooth and less time consuming. Prompt decision and action are easy to take. Swire Hotel’s organizational structures are simple and have less managerial levels. Therefore the owner of this company has a strong control over its subordinates and management process. Recommendations The future development of Swire Hotels depends a lot on its marketing activities. With the increase and improvement of its marketing activities the company can popularize its brand more and attract more customers. The firm can strengthen its branding and promotional activities by using effective promotional and advertising tools. Presently the company is only involved in sponsoring different corporate events. It can use other promotional tools like bundling up its product and services with different other related things of tourism industry. Swire Hotels can give more advertisements on TVs and on the places where its targeted customers visit. Swire Hotel Group needs to make certain changes in its business strategies. This is because of the factor that competition in hospitality industry is rapidly increasing. Market development strategy has been currently implemented by the firm. However it is recommended that the firm adopts diversification strategy. This shall enable the firm to be focused on markets as well as its services. Diversification strategy is related to both aspects that is product diversification and market diversification. Product based diversification strategy shall facilitate Swire Hotel Group to offer services as per customer demand. Differences in service offerings would support the firm to capture larger percentage of market share. On the other hand, it shall even eradicate the standardized approach incorporated by Swire Hotel Group. Apart from product diversification the focus shall also be on market based diversification. The group is a collection of three luxury hotel brands. They have their hotel chains in limited locations such as United Kingdom, Hong Kong and China. It is recommended that the firm build its exceptional architectural designs across the globe. The major markets which can be targeted by the company are those gaining desirable revenue margins from tourism industry. Tourism sector is a highly profitable segment and hotel chains gain decent profit margins in this sector. Swire Hotel Group can open their hotel chains in most profitable tourist locations. This would give them an opportunity to attract large base of tourists and even set their strategic position in different locations. The company encompasses a pool of talented architects but it has a narrow market segment. This group offer services to elite class people and it can prove to be a drawback for long-term. It is recommended that the hotel group implements differentiation strategy so that services or room facilities are offered as per demand and purchasing power of guests. References Barney, J., 2007. Gaining and sustaining competitive advantage. 4rd edition. New Jersey: Pearson Education International. Capon, C., 2008. Understanding strategic management. New Jersey: Pearson Education Limited. David, F. R., 2009. Strategic management concepts. 12th edition. New Jersey: Pearson Education International. De Wit, B., and Meyer, R., 2010. Strategy: process, content, context: an international perspective. 4nd edition. London: International Thompson Business Press. Grant, R. M., 2013. Contemporary strategic analysis. 8th edition. New Jersey: John Wiley and Sons. Henry, A., 2011. Understanding strategic management. New York: Oxford University Press. Johansson, J., 2000. Global marketing. New York: Tata McGraw-Hill Education. Johnson, G., Scholes, K., Whittington, R., Angwin, D., and Regner, P., 2014. Exploring strategy: text and cases. Europe: Prentice-Hall. Lasserre, P., 2012. Global strategic management. Singapore: Palgrave Macmillan. Lewis, R., 2010. Hong Kong real estate - issues for responsible investors. Singapore: Responsible Research. Lynch, R., 2011. Strategic management. New Jersey: Pearson Education International. Magretta, J., 2013. Understanding Michael porter: the essential guide to competition and strategy. Boston: Harvard Business Press. Mcfarlin, D. B., and Sweeney, P. D., 2008. International management. New Delhi: Dreamtech Press. Peng, M., 2013. Global strategy. USA: Cengage Learning. Porter, M. E., 2008. Competitive strategy: techniques for analyzing industries and competitors. New York: Simon & Schuster. Porter, M., 2006. What is strategy? Harvard Business Review, 85 (6), pp. 34-76. Porter, M., 2013. On competition. USA: Harvard Business Press. Simerson, B.K., 2011. Strategic planning: a practical guide to strategy formulation and execution. USA: ABC-CLIO. Swire Hotels., 2014. Who we are. [Online] Available at: < http://www.swirehotels.com/en/Who-We-Are.aspx > [Accessed 5th January 2015]. Wintzer, E., 2007. Global competition and strategic management. Germany: GRIN Verlag. Appendices Questionnaire 1) In which locations Swire Hotel Group has expanded its operations 2) What is its major strength in context of global competition? 3) What are the unique features observed in services been delivered by the company? 4) How can you best classify current business strategy of the firm? 5) What is its present operating model? 6) Why do you feel the company has best utilized its resources and capabilities? 7) Do you feel promotional campaigns of Swire Group is effective? 8) What sales technique has been incorporated by the firm? 9) According to you what is the current position of the firm in highly competitive market place? 10) Any recommendations for future growth or development of the organization? Read More