Raffles Hotel free essay sample

The macro-environment analysis with PESTE method2 3. 2The industry dynamics analysis with Porter’s five forces3 3. 3 The evaluation of key successful factors of external factor4 4. Internal audit5 4. 1Raffles’ strategic segmentation5 4. 2Raffles’ market positioning6 4. 3Strengths-weaknesses analysis of current resources and competences7 4. 4Value chain and value networks8 5. A strategic plan for the next 3 years9 . 1An evaluation of strategic options9 5. 2The development of a sales target10 5. 3A mix of suitable strategies and a monitoring, control and contingency plan10 Reference11 A marketing plan on Raffles Hotel 1. Introduction Recent days witness a rapid growth of scale of the starred hotels in Singapore. Singapore hotel industry gives service to about 1. 44 million visitors in 2012, which is 9% higher than the data in 2011. Although the growth rate is lower than the last two years’ 20 per cent and 13 per cent. Singapore can achieve the goal of 1. 7 million visitors in 2015. This means from 2013 to 2015, the annual growth rate of visitors is 5 per cent to 6 per cent. We will write a custom essay sample on Raffles Hotel or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The expansion of hotel industry also leads to a more fierce competition in the hotel industry. Singapore was ranked among the top three cities whose hotels have the highest Average Daily Rates (ADR), along with Hong Kong and Seoul, according to CBREs Asia Hotels MarketView report for H1 2012. The boom of hotel industry also accelerates the competition of hotels in Singapore. On the one hand, the construction of domestic hotels is accelerated; on the other hand, the entries of other top International hotel brands will have a huge influence on the market share of the hotel industry. In Singapore, there are more than 313 hotels, ranging from express hotel and 5 star hotels. Orchard Hotel Singapore, Resorts World Sentosa Equarius Hotel, Swissotel Merchant Court Hotel, the Regent Singapore and Four Seasons Hotel Singapore are all substantial hotel In Singapore. The fierce competition forces hotels to focus more on the marketing strategy in order to attract more customers. Raffles, one of the famous luxury hotels in Singapore, is considered as elite in Singapore’s hotel industry. In the new time, faced with the violently fierce competition, how to absorb successful marketing strategies, reform marketing strategies and draft a suitable marketing strategy for Raffles is of great significant. 2. Brief company overview Raffles Hotel is one of the best hotels in Singapore (McClatchy Tribune Business News ,2012). It was established in the colonial period when Singapore was occupied by the UK. So it has a colonial culture. Two American brothers, Martin and Tigran Sarkies, set it up in 1887. Later, three other brothers joined them. With their hard work, they construct the hotel in Singapore’s most bustling area. The hotel was named after Stamford Raffles, who was the father of Modern Singapore. In recent years, Raffles was controlled by Fairmont Raffles Hotel International (Simon, 2010). The motto in Raffles is: true luxury is not just about what you do, it’s about how you feel. In the following 125 years, Raffles pursuits to provide the best service, the lavish experiences and the warmest memories to their customers (Bernstein, 1999). And till now, the tradition is handed down from one generation to another all around the world. Not only in Singapore, but also in Dubai, Seychelles, Paris and Beijing, the name of Raffles equals with words such as honorable and extraordinary (Arabianbusiness, 2010). On October 1, 2005, Raffles hotels amp; Resorts embraced a new spring of its management life. With the acquisition by Colonial Capital, LLC, Raffles create a high profile-transaction. This transaction obtains the identification from top hospitality leaders, investors and financiers. With the development of our corporate, we can ensure that no matter where our guests travel, they can find the Raffles inherited with the royal tradition from the origin. The spirit of adventure, luxury and sublime service will never decay. Exciting charm, refresh and revive, the raffles is loved by people who have the spirit of adventure and tastes the best. 3. External audit 4. 1 The macro-environment analysis with PESTE method The political analysis is mainly focused on the government policy. As the world is more and more united (Thoumrungroje, 2001)Singapores government has a vision, and actively introduces leading strategy (Business Monitor International, 2012). It provides powerful policy to support the tourism industry, offers capital support, and pushes a series of flexible and practical marketing strategy, according to market demand. It sets up exhibition brand and strives to develop award tourism market. The powerful policy support accelerates the development of tourism industry definitely. On the aspect of economy, today, Singapore has become tone of the most important financial center and International trade transfer station of Southeast Asia (Hai, 2013). In the face of economic globalization in 21st century, investors seek for new development opportunities in Singapore and a series of economic development thought have been put forward. To sum up, the economic environment is potential. Singapore has a favorable social environment (Toh, 2001). Singapore enjoys a reputation of international convention. It holds exhibition in the Asia-pacific region and is the first choice for business and leisure travel. Singapores superior geographical environment, convenient transportation, clean and efficient government management, the free and open social environment, the perfect conference and exhibition facilities and favorable tourism image creates the advantageous condition for Singapore’s tourism. As to the technology analysis, Raffles believes that high-tech is the most efficient productivity in modern industry. In the past 100 years, along with the innovation in science and technology, people’s life is changed in every aspect. Technology is significant both in the version of a nation and in the version of a firm. In the field of hotel management, GDS and CRS changes the traditional way of promotion and the efficiency of promotion, high-tech accelerates the innovation of promotion and service. If the hotel cannot use the GRS or GDS properly, it will be dropped by the fierce competition. 4. 3. 1 The bargaining ability of hotel suppliers Like other corporates, hotel needs to acquire lot of material from the external environment. Economic entities which provide material are called the suppliers. They construct the corporate from two aspects: affecting the profitability by adjusting price and affecting the hotels’ competition ability by providing low quality material. Raffles hotel has got through its preparation period and now is a mature entity. The suppliers are companies who offer daily consumables, and those consumables are not need to be tailored. Now, the numbers of hotels and suppliers are relative huge, monopoly cannot be organized. The advantage of Raffles is it has branches over the world, so it can benefit from group buying. 4. 3. 2 The bargaining ability of guests The guests of the hotel are various. The resources of the guests, the quantity of rooms, and the time of booking are all different, so the bargaining abilities are not the same. In the next chapter, we can conclude the bargaining ability of different customers by discuss market segmentation. 4. 3. 3 The threats of potential competitors New hotels enter Singapore last year, and there were as many as 1200 new Hotel rooms. 70% of the hotel is located in Sentosa and the bay area, such asEquarius Hoteland W Singapore Sentosa Cove. 4. 3. 4 The threats of substitutes The substitutes of luxury hotels is limited, mainly refers to advanced apartment. Now some advanced apartments provide short-term rent. As the apartment can offer more private space and is equipped with kitchen applications which the hotel does not have. For some clients, especially guests stay for more than a week, may prefer the apartments. The newly arising advanced apartment is a great competition point which needs to be watched out. 4. 3. 5 The competition among competitors Raffles confirms hotel according to the geographical location, the market position and the overlap of customers. The competitors of Raffles are luxury hotels such as Orchard Hotel Singapore, Swissotel Merchant Court Hotel. In recent years, more hotels are opened in Singapore, such as Resorts World Sentosa Equarius Hotel. 3. 3 The evaluation of key successful factors of external factor There are mainly two opportunities for Raffles. To begin with, the tourism in Singapore is promising. As the world is recovered from the financial crisis, the global economy has a promising growth in the future, which drives the International trade. This trend is more obvious in recent days. The occupy rate is 86. % in last year, which is little higher than last year. Among them, the demand of advanced hotels increases most, the occupy rate increases by 2. 6%. Secondly, the economy in Singapore witnesses a sustainable development; the GDP in Singapore was $ 222,699 million in 2012, which is top ten in Asia. The development of economy will attract more investment and expand the tourism industry. The threats also e xist. As more hotels enter the Singapore market, the competition is more violent. The low price strategy may be applied more widely among new hotels. In this way, Raffles hotel may be challenged. 4. The EEF matrix analysis According to the steps of constructing EFE method, this paper chooses two main opportunities and one threats as the most important external environment factors and weight each item according to its significance (Cappsamp;Glissmeyer, 2012). The score of each item ranges from 1 to 4. ‘1’ stands for very bad, ‘2’ stands for the average level, ‘3’ stands for above the average level, and 4 stands for very good. Key Internal Factors| Mark| Weight | Weighted score| Opportunities| | | | 1. The booming tourism industry in Singapore 2. The prosperous economy in Singapore| 43| 0. 50. 35| 1. 81. 05| Threats| | | | 3. Many hotels enter Singapore| 2| 0. 2| 0. 4| Summation| | | 3. 25| Figure 3-1: EEF matrix of Raffles 4. Internal audit 5. 4 Raffles’ strategic segmentation Market segmentation is to divide the whole market into several parts based on the customer’s need, consumption habits or behavior (Huntamp;Arnett, 2004). Through market segmentation, the manager can adjust the sales target, the advertising strategy and promotion strategy properly. With the market segmentation, the firm can concentrate its labor resources and capital on the most profitable sales channel. The following paragraphs specify Raffles’ market segmentation and its features. 4. 1. 1 The individual traveler For a five star hotel, the individual traveler mainly refers to tourist who comes to Singapore for business. They come to Singapore for visiting customers, joining the conventions, and training (Kim,2011). As a result, if the budget can cover the commendation fee, they won’t care too much about money. What they care most is the convenient and efficient service, comfortable and warm environment, and perfect facilities. Business guest is the control valve in the hotel price system. The number of business guest is huge, and they are scatted. Due to this, they are not sensitive to the price, and the hotel can benefit more from them. If the proportion of business guests increases, the bargaining ability of the hotel will goes up as well. The main income of the third-party website is from business guests. They purchase a relative high price compared with other guests. Although the hotel has to pay the commission to the third-party websites, it still is a very important market for the hotel. The third-party website is of great significant in opening up the market in the foreign countries. Without them, the guests know little about the hotel. There are also guests who order via the hotel’s own website or telephone. If the hotel can enlarge this part of the guests, reduce the intermediate links, the management efficiency can be improved. 4. 1. 2 The signed guest The Signed guest is the main source of the hotel’s income. Those clients are important corporations and organizations. Some big companies such as Pamp;G have an impressive contribution every year. In the hotel industry, the rule that twenty percent of the clients provide eighty percent of the whole income holds. These big companies may contract with many hotels in the same city. Faced with these clients, the sales department should hire experienced customer managers to maintain the relationship. They should visit the clients periodically, give feedbacks to the hotel instantly and at the same time, ensure the new promotion to clients on time. As the growth rate of large signed guests is limited, how to maintain the market share is the most important. 4. 1. 3 Team meeting The team meeting market is very important for a well-equipped luxury hotel. A large business conference or convention can increase the occupancy rate to 100% easily, and the price is relative high. Most importantly, the team meeting can accelerate the income of banquet hall and catering. Although the meeting team is regarded as separated market segmentation, most of the contracts are from the signed guests. Due to the above analysis, we can find to get the information about the plans of event, the product promotion release conference, dealers assembly, big training session and annual meeting of the signed company is the main sales channel. . 1. 4 The travel agency Reviewing the hotel industry, the relationship between hotel and travel agency is tight. The orders from travel agency are large and consistent, so it has great influence in pulling the occupancy rate. It is, however, not all the clients from the travel agency are quality clients. If the hotel doesn’t have a nice geographical location or it is in bad management condition, the competition in seizing the guests will be fierce. As guests from travel agency are not sensitive to high quality service, the competition may be severe. In this market, hotel with high quality has limited advantages and can charge a high price. The travel team can be divided into ordinary team and â€Å"series team†. The series team signs a contract with the hotel at the beginning of the year and has a fixed amount of travelers in a fixed period. This part of the business usually is the minimum guarantee of the hotel. It offers the lowest price in the whole price system. Raffles should keep a strategic relationship with these agencies to make the hotel make a proper income in the off season and benefit from the busy season by accepting quality teams. . 5 Raffles’ market positioning Market positioning determines what position the firm will be in the market(Xie, 2006). Raffles pursuits a long term development and maintain its brand fame. In order to maximize their profit, Raffles should distribute its shares according to its own features. Some unreasonable proportions should be canceled, and the product design should be i ntensified to meet the demand of the main guests. It is obvious that different types of guests have various demands and if they consume at the hotel together, they will influence each other (Morgan, 2003). For example, guests in a travel team will come in and go out together, and they have meals together as well. If the hotel receipts too many travel teams, there will be many people appearing at the hall, carrying luggage in the lift and having meals in the restaurant. This condition will decrease the efficiency of the service as well as quality of the hotel, and the business guests will avoid checking in such places. On account of Raffles’ own condition, it should take advantages of its extraordinary geographical location, strengthen its brand fame, makes full use of its facilities. An ideal distribution of the guest resources is meeting and signed guests take 55% percent of the whole income, individual travelers take 30% percent of the income and travel agency take the rest proportion. In this way, Raffles can guarantee a minimum occupy rate and ensure the average price maintains at a high level. 5. 6 Strengths-weaknesses analysis of current resources and competences Raffles has several strengths in its internal environment. First of all, Raffles has an advantage in geography location. Raffles locates in Singapore’s busy area, and the transportation is very convenient. Raffles is a landmark building in Singapore. It takes 5 minute-walk to the subway station and Raffles city shopping center and it takes a 10-minute-train to the orchard road shopping district. The Singapore Flyer is 7 minute-drive from the hotel. Secondly,Raffles is equipped with the best facilities. Raffles has 103 rooms with various room types, and they are Raffles Inc state, suites with back yards, advanced suites with back yards, suites and advanced suites. The supporting swimming pool, the restaurant and the hall can fulfill the diversified demand of customers. Thirdly,it has the brand advantages. Raffles is a luxury hotel with a long history. It has a sophisticated visual identification system and consistent management system. It is famous over the world, which have advantages in attracting foreign guests. Fourthly, Raffles has the advantages in marketing channel. Raffles has its own ECF official which can welcome the orders of guests from the world. The convenient booking system makes Raffles takes the advantages in marketing channel. Fifthly, Raffles has loyal guest foundation. Guests who consume here identify the company culture and prefer to consume in Raffles in the next time. Last but not least, Raffles has a perfect training system. Raffles keeps the tradition of training customers consistently. The training standard follows the International regulations. The staff can learn through various channels: trainings from training department, internal trainings, cross-department trainings and trainings online. The employees not only have many opportunities to learn, but also opportunities of promotion. The weakness also exists in Raffles. The facility has been used for more than years and some becomes old as time goes by. The refurbishment of the coffee halls, elevators and some rooms has been done, but compared with new opened hotels, Raffles looks a little out of fashion, especially on the design of buildings. 5. 7 Value chain and value networks The value chain theory is proposed by Michael Porter in 1985 (Gibbs, 2013). He believes that each corporate is the collection of designing, production, sales, delivery and other assist process, which can be present by the value chain. Like other corporations, hotel creates value through a series of activities, which can be divided into basic activities and assist activities (Garetto, 2013). Those different but closely related activities form the dynamic process of value creation, that is, the value chain. The value chain can be seen in figure 4-1 Raffles hotel value chain analysis. Basic facility management Human resource management Ramp;D Purchasing Production Maximize the profit Basic Value Activities Marketingggg Supportive Value Activities Logistics After service Basic facility management Human resource management Ramp;D Purchasing Production Maximize the profit Basic Value Activities Marketingggg Supportive Value Activities Logistics After service Figure 4-1 Raffles hotel value chain analysis Different from other ordinary factories, hotel sells service and rooms, the beginning and end are all markets, in other words, the customers. Modern hotel marketing requires selling the management style, operation and branding as a whole. Raffles hotel has a mature sales team consisted of marketing elites. They first make the consumers to know the hotel by marketing activities, and then they make decisions on consumption. If the process of consumption is affected by the value chain, the consumer will enjoy a better and systematic service. In this way, the degree of consumer’s satisfaction improved, then the value of consumer is created. The achievement of consumer’s satisfaction can be expressed as purchasing will and repeating will. The achievement of consumer’s value is at the same time the achievement of Raffles’ value. When the value chain turns to the next circulation, Raffles can transfer the value to consumer again. Service is the key factor of hotel management, so improving the service quality is the important method to win in the competition. In the service industry, corporate’s basic activities is closely related with the assist activities. Product purchasing guarantees the service in the value chain. The application of technology is an important part in the value chain (Qu, 2013), and is the key factor of hotel’s competitiveness. In the 1990s, the Center Registration System (CRS) has been adopted by the International hotel management group. Recent years, due to the development of satellite communication and the integrated service digital network, GDS has been a significant channel for advanced hotels. Raffles has adopted the CRS and GDS system. The guest flow GDS brings to hotel is huge. GDS and CRS changes the traditional way of promotion and the efficiency of promotion, high-tech accelerates the innovation of promotion and service. If the hotel cannot use the GRS or GDS properly, it will be dropped by the fierce competition. The management of human resources is important in the value chain as well. All the service of the hotel is delivered by individuals, so the recruitment, training and salary welfare design is very important. Raffles hotel own a thorough training system, it takes the lead role of language training, skills training and management training. . 8 IEF matrix analysis According to the steps of constructing EFE method, this paper chooses six main strengths and one weakness as the most important external environment factors and weights each item according to its significance. The score of each item ranges from 1 to 4. ‘1’ stands for very bad, ‘2’ stands for the average level, ‘3’ stands for above the average level a nd‘4’ stands for very good. Key Internal Factors| Mark| Weight | Weighted score| Strength| | | | 1. Geography location 2. Well-equipped facilities 3. Brand fameamp; good will 4. Unique marketing channel 5. Loyal guests 6. Advanced training system| 443234| 0. 30. 250. 10. 050. 10. 15| 1. 210. 30. 10. 30. 6| Weakness| | | | Old fashioned furnish| 2| 0. 05| 0. 1| Summation| | | 3. 6| Figure 4-2: IEF matrix of Raffles 5. A strategic plan for the next 3 years 6. 9 An evaluation of strategic options TOWS analysis is called inverted SWOT analysis, it was proposed by Weihrich in the 1980s (Helms, 2012). TOWS stands for the four words: strength, weakness, opportunity and threat. The analysis sequence is opposite to the SWOT analysis. It firstly analyzes the market opportunity and risk, and then analyzes the advantages and disadvantages of enterprises (Banerjee, 2005). In fact, People tend to see the market rather than themselves firstly when making competition strategy. If the hotel makes sure of the market opportunity, and then considers whether enterprise can grasp the opportunity according to the advantage of the enterprise can avoid threats on the market, it tend to be more practical. Figure 5-1shows the TOWS Matrix analysis table and strategic development of Raffles hotel. | Strength-S1. Geography location 2. Well-equipped facilities3. Brand fameamp; good will4. Unique marketing channel 5. Loyal guests6. Advanced training system| Weakness-WOld fashioned furnish| Opportunity-O 1. The booming tourism industry 2. The prosperous economy| SO StrategyThe hotel can seize the excellent external opportunities, make use of the good service as the market segmentation, and rebuild the facilities based on Raffles’ solid capital. | WO StrategyAdd the supporting facilities, make over the rooms and other hardware to fulfill the need of customers. Threat-T1Many hotels enter Singapore| ST Strategy| WT StrategyMake the brand strategy, provide the best service to guests. | Figure 5-1: TOWS Matrix analysis table and strategic development of Raffles hotel Based on the TOWS matrix and the IEF and EEF matrix, Raffles determines to take the SO strategy, that is the seize the external opportunities, make use of good service and the brand fame, position on the advanced markets, and rebu ild the facilities to fulfill the guests’ demand. 6. 10 The development of a sales target As we have mentioned in part four, Raffles aims to select the advanced market. It should take advantages of its extraordinary geographical location, strengthen its brand fame, makes full use of its facilities. An ideal distribution of the guest resources is meeting and signed guests take 55% percent of the whole income, individual travelers take 30% percent of the income and travel agency take the rest proportion. 6. 11 A mix of suitable strategies and a monitoring, control and contingency plan According to the above analysis, Raffles takes the diversified strategy and aims to provide best service to the guest who pursues a delicate service experience. There are always some things that cant control, and risk always presents (Akhter, 2010). Managers should take various measures to reduce the possibility of a risk to occur, or control it in a certain range. Risk control includes four basic methods: risk aversion, loss control, risk transfer, and risk retention. Raffles should hire employees who are specialized in the risk control.