Shangri La Hotel Competition and Business Analysis

Shangri La Hotel Competition and commercial enterprise AnalysisIntroduction paradise Hotel is a realism class deluxe Asian hotel arrange which provides services and places for business and leisure travelers according to its Asian standards of hospitality. enlightenment Hotel provides customers with a number of excellent services. to a greater extent specifically, guests may enjoy in high spirits superior elbow room services and resort, facilities such as sauna, Jacuzzi gym, lounge and pub. Moreover, the hotel chain also provides distinguishable and unique products like, The Spa at several hotels and resorts. Through its high quality services, enlightenment receives international awards and recognition from prestigious publications and diligence partners.Historical data promised land Hotels and Resorts was founded in 1971 by the Malaysian-Chinese tycoon Robert Kuok and managed by Westin until January 1983. The headquarters atomic number 18 located in central Hong-Kong. Its na me was inspired by James Hiltons legendary novel Lost Horizon. In 1982 the community incorporates enlightenment Hotel and Resorts.Business Description nirvana Hotel is super recognized for its service h sensationsty. The hotel chain highly supports its mission statement, according to which customers should be delighted each and every eon More specifically, the play along focuses on fling customers an unforgett competent experience by blending cultures, exotic art and lively ambience. . Shangri-La Hospitality has actual five meaning principles respect, humility, courtesy, helpfulness and sincerity. These core principles deal positively affected the successful running of the business and thus they have as a result the creation of pleasant customers and employee relations.The service principles that Shangri-La has positive is consistent to every pastoral they operate. In different words, customers receive the alike level of services and treatment in every hotel no matter th e country of location. This is very substantial as the customers identify Shangri-La hotels as high quality and trustworthy.The company operates 62 deluxe hotels and resorts under the Shangri-La and Traders Hotel brands in Asia and centerfield East. Moreover, the company is willing to expand in Europe and North America. Apart from Shangri-Las causeership and operation of hotels, the company also leases commercial office buildings, retail space, apartments, touchable estate development and operation and golf club ownership and operation.CompetitionCompetition in general is one of the factors that affect companys existence and growth. Even though Shangri-La is one of the top luxurious hotels in Asia, there is still fear from other top companies operate in the diversified hotel management industry. The gainfulness of every company depends on efficient operation because many costs argon refractory and on effective commercializeing. The top three competitors of Shangri-la hotel argonThe Hong Kong and Shanghai Hotels Ltd which also operates in Asia, Australia and North America with 24 deluxe hotels, commercial and residential properties.New World Development is the second competitor of Shangri-La the company develops and invests in properties in Hong Kong, brinyland China, and Southeast Asia. Its property and infrastructure developments embarrass apartments, office buildings, hotels, department stores, roads, and water and power plants.The third competitor is Mandarin eastern Hotel Group which is incorporated in Bermuda and owns, manages and operates 40 upscale hotels in two dozen countries.The 2008 Olympic Games Event has affected Shangri-La Hotel since premium hotels such as Regent, Ritz-Carlton, Hyatt and Sheraton expanded in various cities in China, particularly in Beijing and Shanghai. Since Shangri-La is an Asian Company, it is highly recognized in Asia, the hotel chain had a matched advantage as far as brand aw atomic number 18ness is pertain. H owever, as many prestigious and luxurious hotel custody started expanding in the Asian continent Shangri-La faced more intense competition than before. The primary competitor of Shangri-La could be identified as the Marriott chain, which operates the Ritz-Carlton, Renaissance and Courtyard brands (26 hotels in China and expanding its portfolio to snow by late 2010.)Driving rages in the companyIn format for the company to continue to compete within in the industry, Shangri-La decided on expanding its hotel chain. It went through a rapid expansion in the early 1980s and built 29 hotels over the next decade, and by the end of 1999, it was proclaimed that they were operating 35 hotels within the Asian continent. Shangri-Las management group decided on expanding even more aggressively and therefore took advantage of their current success and raise fund during this period of time for further expansion. As a result during the early 00 Shangri-La began entering new markets through bot h management contracts and owner/operator development. In 2003 Shangri-La Dubai and Sydney were opened.The innovation of core brands of Shangri-La Asia Ltd, including the four-star Traders which was established in 1989, provides luxurious experience and sophistication to the business traveler, Rasa Resort and Spa which was launched in 2006 as a new brand spa provides treatment and relaxation based on Chinese principles, Far Eastern Plaza Hotel and Shang Palace are the forces driving the changes in the industry. These hotel chains provide differentiated and unique products to a niche market.Key Success FactorsThe key success factors of Shangri -La Hotel are the adjacent1. Unique characteristics of Asian hospitality and high luxury quality of service and products offered to its customers2. Differentiated products (spa and treatment in hotels and resorts)3. The use of culture training program in everyday performance More specifically, Shangri-La Care Modules that line out what a serv ice personnel should do and how to serve their customers in the best thinkable wayCare 1 Shangri-La Hospitality from Caring PeopleMaking the guests feel special and important during their stay in the hotel and focusing on the core values of Shangri-Las hospitality.Care 2 Delighting CustomerDelighting guests consistently not just the first time they visit only when every single time in order to achieve srotng customer loyalty.Care 3 Re blot out to Gain LoyaltyThe importance of recuperation when mistakes happen. A well done recovery may be an opportunity to gain further commitment and loyalty, and the other way round if recovery is poor. The five steps to recovery as developed by Shangri-La hotels Listen, Apologies, Delight, Fix the Problem and Follow up.4. Take Ownership.Effective promotion and special offer to attract the customers attention about the Shangri-La hotel. promotion and special offer build long term relationship between Shangri-La hotel and their loyal customer. The promotion and special offer by the Shangri-La hotel include special festival, weekend special, value rate and value vacation.5. Effective process management perspective.This refers to the system used to assist the organization in delivering the service. Shangri-La demonstrates processes elusive in delivering the services provided into six encounters including among others check-in, room encounter, restaurant and breakfast, vacation trip, spa and check out.Check in Encounter Shangri-La stop ups that guests will be served straightaway at the receptionist counter or online.Room Encounter it provides extra room accommodation for guests. For example, they provide extra bed for children under 12 to stay with their parents in the same room.Restaurant and Breakfast Shangri-La provides Childrens Meal Plan this accommodates hotel guests under 12 can enjoy complimentary meals in Coffee Shops and Pool Cafes. spend Trip Specially trained staff is assigned in handling booklets with valuable training concerning rooms, airfare and car rental at popular Shangri-La destinations, in order to make guests planning vacation easier.The Spa provides unique service for treatment activities such as massage, aroma therapy and bathe.Check-Out same as check-in but may be crucial to determine the final out tot of satisfaction.6. The use of effective advertising through television and online commercial7. Compensation and Career reaping this is a driving force for the employees to perform high standard performances within the company and making its employees valuable. If employees are motivated they are willing to provide and make full customers in any circumstances, therefore gain customer loyalty.Resource strengths and competitive capabilities of the companyValuable organizational assetsOrganizational design is an important aspect in every company. Without an organized Chain of Command severe issues could occur in the company. Shangri-Las organizational design consists of five major levels in order to group its employees. More specificallyLevel 1 Divisional ManagerLevel 2 Departmental ManagerLevel 3 Sectional ManagerLevel 4 Front Front-Line SupervisorsLevel 5 Front-Line EmployeesNote Decision comes from the upper level of the structureValuable impalpable assetsThe employees are one of the most important intangible assets of Shangri-La. Therefore, Shangri Las corporate management heavily invests in employee development (to gain know-how asset)Another intangible assets of Shangri-La is its brand name, a synonymous for providing services with the unique characteristics of Asian HospitalityUnique products such as spa and treatments could also be considered as their intangible assetsValuable physical assetOne of the most important and crucial physical assets of Shangri-La hotels are its architectural design externally and internally. Every single hotel of the chain has different characteristics and features that differentiate it from other Shangri-La hotels in th e world. The design of every hotel matches the culture and environment where it operates. For instance, a typical Shangri-La hotel set in lushly landscaped tropical gardens with huge swimming pools that creates an oasis from the urban center thriving business and social center. Moreover, Shangri-La hotels and resorts provide hotel facilities like Airport Transfer, Parking, Foreign Exchange, Non-Smoking rooms, baby-Sitting or Child Care, Facilities for Disabled, Dining and Entertainment, Restaurant, Bar/Lounge, Sports Leisure, Spa, Sauna, Steam Room and fitness Center. They have invested in these assets so as to provide customers with great experience during their stay in the hotel.Competitive CapabilitiesOne of the strongest competitive advantages of Shangri-La hotel is the service quality that is provided to its customer. Shangri-La is an award winning hotel as it is highly praised for offering world class service and gracious hospitality that has earned a reputation of excellen ce throughout Asia.Identifying strongest and weakest points of competitive forcesCompetitive pressures created by the rivalry among competing sellersCompeting with other world class luxurious hotels in the world is a strong competitive force that affects Shangri-la hotels. These other hotels have strong competitive strategies to maintain their position in the market. These hotels also provide the same high quality of service to the same target group.Competitive pressure of new entrantsNew entrants have always been considered as a threat by the existing ones. This is a strong force for the company since they target the same customers in the market.Competitive pressure from the sellers of substitute productsHigh quality Motels and other local hotels are considered to be substitute for Shangri-La. This is a weak competitive force in the company since Shangri-La customers seek for high and unique quality of serviceCompetitive Pressures Stemming from supplier bargaining power and supplie r-seller collaborationSupplier bargaining power is a strong competitive force to Shangri-La hotel. Shangri-La has numbers of different suppliers for example, food suppliers, material suppliers and information suppliers. If these suppliers increase price of goods and services to its customers then Shangri-la would also increase its operating costs .As a result, Shangri-La would increase prices, in order to cover its operating costs. Competitive Pressures stemming from buyer bargaining power and seller-buyer collaboration.Buyers bargaining power is a weak competitive force for Shangri-La Hotel since Shangri-La has a fixed price charge and this cannot be negotiated.Business StrategyStrategy for Expansion to the East and WestThe companys main strategic plan is to incorporate the goal of expanding the Shangri-La brand globally with a strong foundation and reputation for its excellence in Asia, the Middle East, Europe and North America. According to industry analysts, China was one of the most attractive destinations for tourists in 2008 since The Olympic Games were held there. For this particular reason new hotel developments started to pour in the region.Shangri-Las strategy to expand in the East is an asset since their core principles of cultural values matches most of the countries in the Asian market but is still a challenge since most of the luxurious top hotels in the world have the same approach.In general Shangri-La has slow expansion growth in other part of continents like Europe and North America. Nevertheless, it was announced that the company decided to expand its hotel chains in different parts of the world particularly in Europe, North America and Australia as to be able to compete with their major competitors in the market. Even though the company constantly enters new markets, they still maintain and provide its worldwide service quality standards to its customers and ensure that Shangri-Las quality and service standards are translated to new hotels in new markets in order to deliver consistent experience of Shangri-La Hospitality. When Shangri-La enters new markets in new countries, the company brings new cultural understanding and expectations to these markets. This is a challenge for the company since bringing the essence of the brand to new cultures is tough.Another strategy of the company is to enhance Corporate Social Responsibility activities in five key areas Environment, Health and Safety, Employees, Supply Chain Management and Stakeholder Relations.In the Environment section its main focus is in climate change, water use management, waste disposal management, ozone depletion and indoor air quality. Shangri-La has recognized that resource conservation, biodiversity and pollution prevention are ways to maintain a sustainable environment.By providing safe and healthy environment, Shangri-La protects its customers, employees, suppliers and the public. This includes training employees for emergency situation like fire, ea rthquake and any other natural disaster. Also, the company promotes wellness program to amend the health and well-being of the employees.As mentioned before, Shangri-La management recognizes that staff is one of their most important assets and so they are committed to providing reasonably employment opportunities, dignity and staff development. Shangri-La will provide an environment where employees may achieve their individualised and career goals and fair labor practices as to avoid any activity that results in human right abuse.For the company to be able to mange its direct and indirect impacts in the environment, Shangri-La has to work effectively with its supply chain partners. The suppliers need to meet the local legal requirements relating to the environment, human rights and other regulatory work practices. Also, suppliers are expected to be part of the system to ensure that the food served is safe and of high quality.According to CSR all stakeholders include customers, em ployees, members of the communities in which they operate, shareholders and suppliers will engage in a clear, true and respectful way to the company.SWOT AnalysisStrengthsBrand recognitionUnique services and products quality (Shangri-La Hospitality)Expansion network in Asian Continent elevated facilities like the Shangri-La Spa and TraderExpansion globallyStrong suppliers relationshipInnovation of unique productsWeaknessesNot having enough number of hotel chains in Europe and N. America to compete with other luxurious five star hotels operating there.Shangri-La is dependant on other hotel owners companies since it doesnt own all of its hotel chainsOne of the problems that Shangri-Las hotels in China faces is the fact that front-lines employees are uncomfortable in making decisions. Chinese employees are dependent on operational guidelinesOpportunitiesIts market lay in China since China has become the worlds fourth largest economy and one of the most attractive destination as far a s tourism is concernedTraining program facilities to prepare first-line employees to more effectively utilize decision-making authorityThe Olympic Games Events in China increased Shangri-Las salesExpand to other geographic destinationsAcquisition of local hotelsThreatsIntense competitionLocal Hotels are considering forming alliances with international brands to manage and operate the business.Pressure on wages (expanding into high-wage economies)Since Shangri-La is an Asian company and has been operating in Asian territory, its management group is used to having lower labor costs compare to Europe and N. AmericaGlobal recessionSince Shangri-La is expanding with its principles values, its a great challenge for the company to expand beyond its Asian territory where cultures are different. Is the company able to adapt in a different environment..?Target MarketShangri-La Hotel operates in the five class hotels industry associated with luxury and well-being for customers. Hence, the targ et market mostly comes from the upper class. We focus on this section to the two Shangri-La Hotels and Resorts that produce greater profitability to the company.The Golden Sands Resort that is located in Batu Feringgi Beach that is mostly visited by tourists who come from European and Western countries. It is believed that these travelers have high consuming ability compared to local travelers. Therefore, Shangri-La management targeted the tourists that are of higher financial and consuming ability.The target market for Trader Hotel mostly consists of business travelers and those that come from the upper class groups of society. Business travelers can afford to purchase services from high quality hotels as their expenses are accommodated by their companies.Strategic PositioningAll of the hotels and resorts of Shangri-La are located at strategic locations that are frequented by a high number of people, every for business purpose, travelling or other reasons. The location selected usu ally consists of places that are well known for their tourism industry and that are highly visited each year.Business ModelFor the fiscal year ended in December 31, 2006 the management reported that Shangri-La net income was 202.2 million dollars from its services and products. The companys sales continued to improve in 2006 with 1,002.9 million dollars sale compared with 842 million dollar in 2005. The company owns 50 hotels in Asia and the Middle East and more or less of 40 projects under development in Europe and North America. The company employs approximately 18,400 employees worldwide.Shangri-Las case is unusual among international hotel companies since it owns a significant proportion of its hotels,As shown in the table below, Shangri-La performance in the industry seem to improve every year and ascend to better market positioning.Shangri-La Income StatementOur personal Recommendations for Shangri-La HotelImprove and give more emphasis to its employees training program especi ally for the front-line employees to build their confidence and efficiency at the workplace in order to improve its hand to hand interaction with the customers.Having achieved brand market leadership in Asia, Shangri-La should now try to increase the number of hotel chains in Europe, North America and the Middle East.Since Shangri-La emphasizes its cultural values in every hotel chains, Shangri-La should take a closer look of its environment in general, to see if the products and services that they provide match the needs of the customer in general. For example, if Shangri -La operates in foreign destinations like the Middle East, they should adapt to its culture and combine it into their own to avoid conflicts between two different cultures.In general, all of the hotels and resorts of Shangri-La are located at strategic locations that are visited by a high number of people each year, either for business purpose, travelling or other reasons. The location selected is usually places t hat are well known for its tourism industry that are highly visited each year.