After five years of unprecedented progress fuelled by an buoyant local market and building on the regional development strategy in Maldives and Reunion Island, Mauritian had Coastline Hotels Group (CHG), a major operator of resort hotels has seen its income and profitability nose area dive therefore of rising functional costs, lower yields and occupancy rates, customer dissatisfaction and a slipping market talk about. The global tough economy, a fall in overall Vacationer arrivals from its major aim for marketplaces, changing customer requirements and trends and losing 60% of its share value during the last half a year have only added to CHG's problems, thus an immediate need to proper re-assessment, redirection and re-positioning.
Since independence in 1968, Mauritius is rolling out from a low-income, agriculturally based mostly current economic climate to a middle-income diversified market with major professional, BPO, financial, and holiday sectors. Much of the Mauritian success story can be related to its Travel and leisure industry. Mauritius is mostly a holiday vacation spot for beach-resort travellers. It possesses a wide range of natural and man-made visitors attractions, looks forward to a sub-tropical environment with clear warm sea waters, attractive beach locations, tropical fauna and flora complemented by way of a multi-ethnic and ethnical inhabitants that is friendly and welcoming. These tourism investments are its main durability, especially when supported by well-designed, well run hotels, and reliable functional services and infrastructure.
1. 3 Coastline Hotel Group (CHG) - An Introduction
CHG, founded in 1987 is a significant player in the Mauritian hotel industry. It partcipates in the operation and management of seven resorts composed of 1200 rooms in Mauritius. CHG is continuing to grow from new entrant to a major player within 6 years through sustained acquisitions because of its development. CHG thus also possesses and handles hotels in other islands of the Indian Sea such as Reunion and in Maldives.
While the whole Tourism industry all together continued to are affected amid the global monetary slowdown, CHG has seen revenue and profitability street to redemption dramatically submitting a 365. 07 million rupee ($12 million) pre-tax damage for 2009 against a income of 277. 04 million in 2008, while revenue dropped to 2. 39 billion from 2. 47 billion. The view for 2010 2010 seems as uncertain, and despite an increase in room capacity, the group's income for the nine months stagnated at rupees 1. 7 billion and can optimally end with 2. 27 billion, still way down 2. 47 billion it come to two years earlier.
CHG's outlook in today's environment remains challenging. This job looks at evaluating the talents, weaknesses, opportunities and dangers of CHG to ascertain CHG's tactical position and determine how CHG can improve its proper positioning, functional efficiency and profitability.
PART 2- SWOT Analysis
2. 0 Introduction
This section will aim at evaluating CHG's internal strengths and weaknesses, its opportunities and risks through an evaluation of its external general environment also called macro environment, its specific exterior, also known as micro environment and doing an organisational audit. It will conclude with a SWOT analysis on an enlarged TOWS model.
Strengths and weaknesses are interior to an organization. They determine proper capabilities of any organisation which break on its resources and competences. It's important to understand what these are, how to analyse and evaluate them and, eventually, how to use this analysis in expanding strategies and programs. The end aim of internal examination is to identify threshold features and capabilities for competitive advantage. These include tangible and intangible threshold resources, unique resources, threshold and center competences which would allow CHG to remain competitive effectively and stay prior to the game.
Organisations do not exist in a vacuum but in a host, and it interacts with the surroundings where it runs. This conversation is not really a one-way but a two-way process, with the organisation being influenced by outdoors factors over which it does not have any control.
Opportunities and dangers are part of your organisation's industry and macro environment. Identifying and analysing opportunities and risks within an organisation's environment allows the business to determine how better to build on opportunities and prevent threats. In addition, it helps deciding where areas resources need to be devoted or diverted.
Assessing CHG's advantages and weaknesses, opportunities and risks will entail analysing CHG's basic external environment or macro environment, its specific exterior environment or micro environment and conducting an organisational audit.
2. 2 Research of CHG's basic external environment
Government awareness and support to the Tourism sector through its advertising arm
corporate taxes has been reduced from 30% to 15%
Economic development rate has stagnated around 3%, well below the ecological 6. 5% projected
Inflation has been below the projected 6%
Improving requirements of living are creating a sizable local market of vacation makers
Changing local life-style, health consciousness and welfare are creating new sections for hotel spa services
Extensive use of online information options is further customising holiday seasons and increasing delivery complexity
Online booking is promoting disintermediation
Increasing use of technology is improving management information systems and customer marriage management (CRM)
Greater environmental recognition is turning the idea of green tourism into a distinctive proposition
Environmental pressure categories are monitoring air pollution and waste removal by large institutions
2. 3 Analysis of CHG's specific external environment
Common models used for analysing the precise external environment of organisations, also called the micro environment of organisations such as CHG is the utilization of the Porter's 5 Forces model (appendix 7) and analysis of the competitive market structure. Porter has suggested that it is the "collective power of these pushes that determine the attractiveness of the industry. Organisations should have a tendency to find a posture in the industry where it can either protect itself against these pushes or effect them in its favour.
Barriers of Access/Exit
The hotel industry is characterised by high original investment costs which act as obstacles to both accessibility and exit
Failing companies tend to be at the mercy of acquisitions often not reflecting their real worth
Availability of substitutes
The hotel industry is an extremely competitive one where primary products and offerings can be quite similar, thereby the need for differentiation
Communication of differentiating factors is vital for customers to recognise differences
Bargaining electric power of Suppliers
Over dependence on intermediaries such as wholesalers make a difference margins
Bargaining electric power of Customers
More customers are shopping on line for best deals
Customisation is making customer satisfaction more complex and costly
The industry remains competitive
Operations management and marketing is paramount to profitability
2. 3. 1 Analysis of Competitive Market Framework and Positioning
Competitor analysis sorts part of specific basic environment research. It allows companies such as CHG to better understand their own position by analyzing it against its challengers. Challengers are companies adopting similar segmentation, concentrating on and placing as well as similar product offerings. This is actually the basis for what Porter calling "competitor analysis". Rival analysis involves looking at the competition's strategies whether it is profit growth, earnings expansion or market show growth. In addition, it considers how they are fighting, whether in conditions of price, quality, customer support or some other factor.
The mapping of tactical groups in a particular industry can provide information about the competitive composition of the industry and the opportunities and constraints with respect to development.
CHG by its size, resources and visibility forms part of the leading 3 groups of hotels in Mauritius and as such can be considered a challenger as opposed to the two set up leaders, namely the brand new Mauritius Hotels group and sunlight Group. These hotels have very distinctive market setting and pricing and have adopted a definite differentiated leader's strategy. SUNLIGHT group trading markets its hotels under the "One and Only" vacation resort brand and two of its four main hotels, namely Le Touessrok and Le Saint Geran are among the best 20 hotels on the globe. This is the result of a highly differentiated strategy that they have adopted and that they have marketed over years. The same applies for the NMH group. Their long established specific hotel marketing recognized by the Beachcomber umbrella brand is well recognized and they too have adopted a highly differentiated strategy.
Compared to both of these main rivals, CHG as a comparatively new comer doesn't have a clear setting strategy and its corporate brand under which it market its hotels does not hold the same weight.
2. 4 Internal audit and appraisal of GHG
Internal Audits and Appraisals are part of inside analysis which allows Organisations to identify and analyse its resources, competences costs and performance. This exercise helps to balance its resources and cover
-the mixture of activities which collectively constitute the organisation's overall stock portfolio, and exactly how well these supplement one another
-the balance of skills and personalities of employees and they are linked mutually for competitive advantage-the flexibility of the organisation's resources and how well they are able to adjust to a changing environment
Infrastructure/ Basic Administration
Has limited proper capabilities and strategic planning systems
Coordination of value string activities among organisational subunits is questionable
High cost of funding for capital expenses and working capital
Good open public image, corporate and business citizenship and romantic relationship with policy makers.
Human Resource Management
Inappropriate rewards systems, for motivating and challenging employees.
Low level of employee drive and job satisfaction
Inadequate management information system in general
Inadequate research and development
Has not leveraged corporate and business procurement
Negative impact on timeliness and costs
Productivity, efficiency and inventory control lower as compared to key competitors
Marketing and Sales
Overreliance on wholesalers in travel industry
Low segment penetration
Image and reputation less than main competitors including the Sunshine group and NMH.
Low customer loyalty
Fair level of service, promptness and attention
2. 5 SWOT Analysis
A SWOT evaluation summarises key issues from the business enterprise environment and the strategic capacity for an company that are most likely to impact on strategy development. The aim is to identify the extent to that your advantages and weaknesses of your organisation can handle working with changes occurring in the environment. A SWOT is actually only useful in relation to competition. (Johnson, Scholes, Whittington, 2008, Pg 119)
SWOT offers a guide to management action and an excellent construction for decision making. The central purpose of a SWOT examination is to recognize the strategies that will best fit CHG's resources and functions to opportunities and risks of CHG's environment, play down weaknesses, avoid risks or use creativity and innovation to turn them into opportunities. It further helps identify and align a set of strategies at efficient/operational level, at business level with corporate and business level. (Hill, Jones, 2008, Pg 9)
A full SWOT evaluation for CHG is provided in appendix 1
2. 6 Summary- Finding the best fit
To conclude, a fit needs to be drawn between talents and opportunities even while managing threats and weaknesses. CHG can build on advantages it offers with the safe and secure location of its resort hotels as Travellers seek trusted resorts in the wake of international terrorism. Capacity building having reached saturation point, no new entrants in its main market of Mauritius may signify a more attractive market in the future. Improving benchmarks of living and changing local lifestyles are creating new sizable local segments of holiday creators which CHG can target to defeat seasonality and exchange deficits. This added to lower interest rates may also lessen the pressure of overgearing and improve success. CHG may further need to review its IT infrastructure to build on disintermediation and improve customer romance management (CRM) for higher customer commitment.
CHG can gain back competitive benefits and re-establish itself as a major player in the hotel industry. It could initially start researching its procedures to re-establish functional efficiency and success, reviewing the strategic positioning of the business, its marketing, communication and branding method of be more concentrated, identifiable and apparent. It could review the grade of its Customer support and improve its general customer approach that will go quite a distance to re-establish its development and improve its success.
Development of market show from 10 to 15% within the year by focusing on developing tourist markets such as China/India and new local segments
The financial point of view to be assessed by profitability, cashflow improvement, development in revenues and improved success, effective cost control and higher profits on invested capital
The customer support point of view to be measured by delivery and maintenance response times
The internal perspective onto it to be assessed by its efficiency
The advancement and learning point of view with service leadership to be measured by speed to market and velocity of imitation (adapted from Johnson, Scholes, Whittington, 2008, Pg 451)
Improving procedures for profitability
Quality of goods and services provided by the operations
Speed with which it provides its goods and services
Dependability with which it retains its delivery promises
Flexibility of the operation to change
Cost of producing its goods and services
All these performance objectives have both inner and external results. The internal effects of high quality, velocity, dependability and flexibility are generally to reduce costs within the procedure. (Pycraft, Singh, Phihlela, 1997, Page 65). Externally they create improved upon customer satisfaction which in turn brings about customer devotion.
Improving general services level
CHG has to improve on the quality, speed, dependability, overall flexibility and cost of its services. Boosting on these five levels would concurrently impact on customer satisfaction which lower CHG's costs and improve profitability. (Appendix 6) These five factors are major determinants of the company's competitiveness (Pycraft, Singh, Phihlela-1997, Page 52), especially in the framework of the Hotel Industry which has to provide maximum service in a 24/7 environment.
Reliability to providing on promises
Responsiveness to help customers and offer prompt service
Assurance with employees knowledge and courtesy and their capability to motivate trust and confidence
Empathy showing caring, individualised attention give to customers
Improve on tangibles such as physical facilities, equipment, personnel, and written materials
Aim for Customer Quality and Satisfaction in Every Service Encounter (Appendix 9)
(Zeithaml, Bitner 2003, Site 112)
Establishing Customer Relationship Marketing for customer Loyalty
By bettering on procedure and service CHG would ensure customer satisfaction and build customer devotion. This would suggest attracting, satisfying, keeping customers to be long-term relationship customers. Customer enhancement is key as higher customer retention levels reduce marketing costs and improve reputation. To deliver outstanding service, it is vital to create a customer relationship targeted culture by expanding, motivating, and handling their employees to provide exceptional personal service, build in ongoing improvement and ensuring professionals will be the key change-agents. (adapted from www. teamtechnology. co. uk, by Susan and Derek Nash, 2010)
Reviewing its competitive position and branding
The issues of branding and brand perception are fundamental to CHG's revival. The entire process of branding involves creating a distinctive name and image for something in the consumers' brain, through promotional initiatives with a regular theme. Branding is designed to establish a substantial and differentiated occurrence on the market that appeals to and retains dedicated customers. In today's increasing global market where in fact the consumers have enough choice to get confused brand commitment is the thing that will help a firm to survive. In fact, it's the ultimate goal of any business. When a customer develops brand loyalty he not only believes of his own gain but also the advantage of the brand he's focused on. Brand commitment differs by product, industry and sector. It is clear that the current corporate umbrella branding as Coastline Hotel Group has not really caught up customer attention despite heavy investment in Marketing.
It is therefore proposed that CHG dumps the corporate umbrella branding procedure and switches to specific hotel branding and marketing which appear to be working very well for competitors. For example, sunlight group is branding specific hotels like "Le Touessrok" and helping each individual hotel with the "only tag". The NMH group too is marketing hotels under their specific brands such as "Le Royal Hand" and supporting it with the Beachcomber network. This allows the two leaders to sell the distinctive features and unique selling proposition of the average person hotel even while having the unique "one and only" label. This completes and consolidates the differentiated strategy they have used as business strategy. This differentiating factor, according to appendix 5 will not keep for CHG. Customer belief of CHG's setting is vague and having less a strong brand does not help it, therefore the necessity of creating a solid brand for its future marketing.
3. 5. 1 Branding- the timing factor for CHG
Re-branding being truly a complex and risky exercise, it might be more judicious never to risk CHG any further for a while, and plan the rebranding exercise over two years. Therefore the purpose for the first season is to restore and re-establish market share and build on any new show within a calendar year and to seek to be a serious challenger to the rest of the two groupings with a total rebranding exercise within 3 years.
The Marketing goals should be to improve market share from 10% to 15 %. This can be attained by attractive to and bringing in a wider customer platform, increasing customer commitment and defeating seasonality. Because of the seasonal aspect of demand, revenues and room occupancy can vary significantly during optimum and non-peak intervals. CHG can make a special effort by attractive to two local segments which are expanding, specifically affluent and sizable nouveaux riches and medical consciousness and welfare seekers.
CHG should be placed as affordable luxury, similar to Bowman's Cross strategy (appendix 3) stressing the differentiated elements of each individual hotel, immaculate service and affordability, not in the sense of lower pricing but in the sense of affordability. This can meet and go over customer expectations which in turn is a strong basis on which to develop customer devotion.
CHG should also complement its Marketing effort by re-hauling its online arranging system and enhancing customer response. This can help CHG further reduce its reliance on intermediaries and become less vulnerable. Part of the margins saved from not paying intermediaries should be diverted towards improving the client offering and the worthiness for money belief. CHG should in the longer term use its unique natural environment to have systematic selective PR with the specialised international press on review and product knowledge tours, celebrity marketing and hosting of fact shows and prestige stunts. This will help raise the account and visibility of the average person hotels and help set up their new identities.
3. 6 Conclusion
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