Shangri La Hotel Competition and Business Analysis

Shangri La Hotel Competition and Business summaryIntroduction promised land Hotel is a earth class gilded Asiatic hotel chain which provides swear verbotens and places for job and leisure travelers according to its Asian standards of hospitality. nirvana Hotel provides customers with a number of excellent goods. much(prenominal) than specifically, guests may approve towering quality room work and resort, facilities such as sauna, Jacuzzi gym, lounge and pub. Moreover, the hotel chain also provides divergent and ridiculous products desire, The Spa at several hotels and resorts. Through its richly quality services, heaven receives international poses and credit rating from prestigious publications and industry 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 military headquarters be determined in central Hong-Kong. Its name was inspired by Jam es Hiltons legendary unfermented Lost Horizon. In 1982 the accomp whatsoever incorporates nirvana Hotel and Resorts.Business Description promised land Hotel is highly recognized for its service excellence. The hotel chain highly supports its mission statement, according to which customers should be delighted each and every time More specifically, the company focuses on offering customers an unforgettable catch by blending stopping points, exotic art and bracing ambience. . Shangri-La Hospitality has developed five core principles respect, humility, courtesy, helpfulness and sincerity. These core principles have positively moved(p) the successful running of the problem and thus they have as a result the creation of gentle customers and employee relations.The service principles that Shangri-La has developed is consistent to every country they operate. In an some other(a)(prenominal) words, customers receive the selfsame(prenominal) aim of services and treatment in every h otel no matter the country of location. This is very all important(predicate) as the customers identify Shangri-La hotels as high quality and trus twainrthy.The company operates 62 deluxe hotels and resorts at a disgrace place the Shangri-La and Traders Hotel brands in Asia and Middle East. Moreover, the company is willing to expand in Europe and North the States. obscure from Shangri-Las ownership and operation of hotels, the company also leases mercenary office buildings, retail health space, apartments, real estate ontogeny and operation and golf club ownership and operation.CompetitionCompetition in general is one of the factors that actuate companys existence and growth. Even though Shangri-La is one of the perish aureate hotels in Asia, there is sleek over fear from other top companies operating in the diversified hotel perplexity industry. The profitability of every company depends on efficient operation because many costs ar fixed and on effective market placei ng. The top three competitors of Shangri-la hotel areThe Hong Kong and Shanghai Hotels Ltd which also operates in Asia, Australia and North the States 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, mainland china, and Southeast Asia. Its property and infrastructure developments include apartments, office buildings, hotels, department stores, roads, and water and power plants.The trio competitor is Mandarin Oriental Hotel Group which is incorporated in Bermuda and owns, manages and operates 40 upscale hotels in cardinal 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 competitive advantag e as farthermost as brand awareness is concerned. However, as many prestigious and luxurious hotel chains 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 motor inn brands (26 hotels in China and expanding its portfolio to 100 by late 2010.)Driving forces in the companyIn position for the company to continue to compete indoors in the industry, Shangri-La resolute on expanding its hotel chain. It went done a rapid involution in the early 1980s and built 29 hotels over the next decade, and by the end of 1999, it was announced that they were operating 35 hotels within the Asian continent. Shangri-Las forethought group decided on expanding even more aggressively and therefore took advantage of their current success and raised fund during this flowing of time for further expansion. As a result during the e arly 00 Shangri-La began entering new-fashioned markets through both 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 accomplished 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 east Plaza Hotel and Shang Palace are the force driving the changes in the industry. These hotel chains provide classifyd and unique products to a niche market.Key Success FactorsThe key success factors of Shangri -La Hotel are the following1. 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 course of study in everyday performan ce More specifically, Shangri-La wish Modules that line out what a service personnel should do and how to serve their customers in the best possible personal mannerCare 1 Shangri-La Hospitality from Caring PeopleMaking the guests feel special and important during their uphold in the hotel and focusing on the core value of Shangri-Las hospitality.Care 2 Delighting CustomerDelighting guests consistently not just the first time they visit but every single time in place to turn over srotng customer loyalty.Care 3 Recover to Gain LoyaltyThe importance of recovery when mistakes happen. A substantially 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 watchfulness about the Shangri-La hotel. Promotion and special off er build long term relationship amidst Shangri-La hotel and their loyal customer. The promotion and special offer by the Shangri-La hotel include special festival, pass special, value rate and value vacation.5. Effective process management perspective.This refers to the system used to assist the shaping in delivering the service. Shangri-La demonstrates processes involved in delivering the services provided into six enretorts including among others check-in, room encounter, restaurant and breakfast, vacation trip, spa and check out.Check in Encounter Shangri-La ensures that guests will be served directly at the receptionist counter or online.Room Encounter it provides extra room accommodation for guests. For example, they provide extra bed for children to a lower place 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 .Vacation Trip specially trained staff is assigned in pawling booklets with valuable information 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 outcome of satisfaction.6. The use of effective advertising through television and online commercial7. Compensation and Career Growth 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 satisfy customers in any circumstances, therefore gain customer loyalty.Resource strengths and competitive capabilities of the companyValuable organizational assetsOrganizational public figure is an important aspect in every company. Without an organized Chain of Command sever e 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 intangible 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 alike for providing services with the unique characteristics of Asian HospitalityUnique products such as spa and treatments could also be considered as their intangible assetsValuable tangible 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 disp arate characteristics and features that differentiate it from other Shangri-La hotels in the 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 city 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, exclude/Lounge, Sports Leisure, Spa, Sauna, Steam Room and Fitness Center. They have invested in these assets so as to provide customers with spectacular experience during their stay in the hotel. combative 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 of fering world class service and gracious hospitality that has acquire a reputation of excellence 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 go on their position in the market. These hotels also provide the same high quality of service to the same drive group.Competitive pressure of new entrantsNew entrants have invariably 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 topical anesthetic hotels are considered to be substitute for Shangri-La. This is a weak competitive force in the company since Shangri-La customers look for high and unique quality of serviceCompetitive Pressures Stemming from supplier bargaining power and supplier-seller collaborationprovider 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 add-on price of goods and services to its customers then Shangri-la would also augment 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 give waying out 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 i ts excellence in Asia, the Middle East, Europe and North America. concord 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 contest 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 unceasingly enters new markets, they still maintain and provide its worldwide service qua lity 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 somatic 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 disposition 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 i ts customers, employees, suppliers and the public. This includes training employees for emergency situation like fire, earthquake and any other natural disaster. Also, the company promotes wellness program to improve the health and offbeat 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 fair employment opportunities, dignity and staff development. Shangri-La will provide an environment where employees may achieve their personal and career goals and fair labor practices as to avoid any activity that results in gentle right abuse.For the company to be able to mange its direct and indirect impacts in the environment, Shangri-La has to work efficaciously 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 t o ensure that the food served is safe and of high quality.harmonize to CSR all stakeholders include customers, employees, members of the communities in which they operate, shareholders and suppliers will engage in a clear, honest and respectful way to the company.SWOT AnalysisStrengthsBrand recognitionUnique services and products quality (Shangri-La Hospitality)Expansion network in Asian ContinentLuxurious facilities like the Shangri-La Spa and TraderExpansion globally operose 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 positi oning in China since China has become the worlds fourth largest economy and one of the most attractive destination as far as tourism is concernedTraining program facilities to prepare first-line employees to more effectively utilize decision-making permitThe 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 adjust in a different environment..?Target MarketShan gri-La Hotel operates in the five class hotels industry associated with luxury and well-being for customers. Hence, the target market in general 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 margin 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 mess, either for business purpose, locomotion or other reasons. The location selected usually 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 billion 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 nearly 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 Sta tementOur personal Recommendations for Shangri-La HotelImprove and give more emphasis to its employees training program especially 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 reconcile 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 h igh number of people each year, either for business purpose, travelling or other reasons. The location selected is usually places that are well known for its tourism industry that are highly visited each year.