Introduction:
the hotel industry of Singapore is suitable and adoptable for kind of customers having right from the minimum budget to star rated. The challenges exists in the Sing htl ind is purely based on the price, location and convenience because all the facilities are mostly provided by all the hotels so it is very difficult for the customers to differentiate the service provided by the hotels.
Since it is tough to differentiate the service rendered by the hotels, many hotels are involved in creating a niche market, like providing unique facilities to the customers for example honeymoon packages, specialists holidays, etc.
The Singapore hotel industry experiences a very high growth rate in luxury travel market, high -end travelers market and family travel market in the past months.
The recent economy reveals the restaurant sector has market Growth rate of sixteen percentage because of the increase in the consumer spending on sit – down meals. The eating out habit has become a life style for the youth and even for the middle aged married couples with their children and these aspects stresses on the importance of healthy food. Nowadays, the consumers are expecting different styles of food and drink from the various parts of the world and all these shows if the hotel provides a variety and healthy food and drink, it will be able to attract more customers in the future.
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The Singapore travel and tourism market shows a high growth by having the occupancy rate of 90% in the past one year. The Singapore government’s effort in providing low cost service airlines and its efforts to triple the tourists to Singapore in the coming up years. The 30% increase in the trade conferences and exhibitions conducted in Singapore has also revealed that the hotel industry in Singapore has very good business opportunities in the coming up years and if proper, good development strategies are adopted by the hotels, they will be able to earn a large market share in turn more profit.
Backgrounds:
. The MHCCH is located in three acres of prestigious land in Singapore. The hotel is very near to the tourist attractions like a theme park, a museum, etc. The management has made many changes in the infrastructure facilities of the hotel by adding luxury bedrooms, a bistro; a beauty salon .The hotel has also purchased a land near to that for expansion and modernized the hotel for creating new business opportunities. In order to give a luxurious appearance for the hotel, the management has created a new spacious foyer and the hotel has also started a beauty salon to offer beauty treatments to its customers.
Problem of the case:
By analyzing the scenario of hotel industry, i undertake SWOT analysis of the hotel MHCCH and help the newly joined partner of MHCCH to select the best strategy out of the below mentioned strategies namely sell the cash cow, undertake no serious steps or undergo diversification in business so that he will be in a position to convince the other partners of MHCCH.
In this case , the challenges in the external and internal environment industry and the analysis regarding the Strengths, Weaknesses, Opportunities and Threats of the MHCCH is to be done.
In the second part of the study, with the help of utilizing Ansoff matrix and Porters Grid, how the management can improve the profit in the next two years and for that what strategic decisions it has to take are discussed.
Challenges in the micro and macro environment:
Business environment is classified into three environments namely Internal environment, Market environment and External environment.Many variables which are existing in the internal and external environment affects the company (MHCCH) either positively or negatively. So before taking strategic decisions, it is important to analyze these environments to find out the factor which highly influences the customers of the hotel industry.
The following table focuses on the key factors of the three environments.
Micro
Environment
Market Environment
Macro
Environment
Vision, Mission, Objectives of the Hotel
Climate
Assets
Capability of the management
Consumers
Suppliers
Competitors
Intermediaries
Social
Technological
Legal
Political
Economic
Physical
The main challenges which need to be assessed in the internal and external environment are that hotel has to concentrate on different type customers like corporate guests and other kind of guests like nature lovers, family oriented and managing the hotel to delight these customers becomes a challenging work in the field of marketing. So in order to delight these consumers, the hotel should monitor the changing expectations of these customers and should try to delight them.
The employees of a hotel play a major role in attracting the customers. The hotel should try to recruit skilled persons because the quality of service rendered by the employees acts as an important factor in delighting the customers. So getting skilled and qualified employees is another challenge in the hotel business environment.
The hotel should try to have good suppliers (Electricity, soft drinks & carbonated water, Perfumes, cosmetics & other toilet preparations, different kinds of liquors, Soap and detergents, etc) who provide products/ services with good quality and good intermediaries who are in direct contact with the customers before they enter into the hotel.
Apart from these challenges, the hotel should also focus on the socio- cultural changes (changes in the preferences of the customers), political changes (changes in the law), and technological changes (providing variety food, appearance of the hotel, introducing packages, etc,).
SWOT Analysis:
Before selecting a strategic option for the marketing plan of MHCCH, the hotel should do SWOT analysis to find out its strengths, weaknesses, opportunities and threats.
Strength deals with the hotel’s core competencies and the weaknesses of the hotel deals with the present drawback which has to be rectified in order to capture the customers in the future. Strengths and Weaknesses mainly focus on the factors which are fully under the control of management but the opportunities and threats focuses on the business environment. Opportunity deals with the market which yields more profit to the hotel that is the area to be covered by the hotel to earn more customers in turn more profit. Threat deals with the factors which are to be considered seriously before taking any business decision. SWOT analysis of MHCCH is discussed below.
Strengths of MHCCH:
The employees of the hotel are having good experience in customer care in order to provide quality service; the MHCCH has invested a lot in changing the appearance of the hotel and in providing different styles of food and also already the MHCCH is having satisfied customers ( revealed in the table non-business guests occupancy rate). The hotel is situated very close to other entertainment locations.
The credit worthiness of the hotel is high that we can take the fund from bank in order to do the successful performance of the hotel.
Weaknesses of MHCCH:
Corporate and family non – business guest’s occupancy rate is low and so the company has to invest a lot in adding facilities to the hotel.
Opportunities of MHCCH:
Nowadays consumers like to eat outside in restaurants rather than before and they don’t hesitate in spending more money tasting different varieties of food. Eating out style of the youngsters and middle aged married people has become very common. Singapore government’s decision to triple the investment in the tourism industry shows that there are large opportunities for MHCCH to capture more customers and in turn to improve profit.
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Threats of MHCCH:
Competitors are the major threat of MHCCH. Due to the lack of differentiation in the hotel industry, the competition is fully based on the price, location and convenience. The hotel has to face competition from the hotels of same infrastructure and also from motels. The hotels which are dealing with niche markets will also acts as a good competitor for MHCCH. In order to attract the customers of different age group, the hotel has to focus on changing the appearance of the hotel, providing food of different countries, etc costs more but still the hotel has to invest and at the same time the hotel cannot fix a high price for its services because the competition mainly focuses on the price. The hotel has to focus on the packages too because the small hotels may capture the market by providing specialized facilities in one area alone like for example honeymoon packages alone.
Conclusion:
Thus the challenges in the micro, market, macro environments of hotel industry are discussed. The SWOT analysis revealed that the MHCCH has more strengths and opportunities when compared to weaknesses and threats. Since the opportunities are high, revealed by increase in the market growth rate and the capacity of the MHCCH to raise fund from the banks and the availability of space for further expansion activities to be carried out by the MHCCH is good and with this strength, the MHCCH has more power to capture the market share. The MHCCH need not worry about the threats posed by the competitors if MHCCH have an eye on competitor’s price and variety of services provided by them. So with the help of its strengths, the MHCCH can move forward to attract more customers.
b) Ansoff’s Matrix:
The Ansoff matrix is a technique that aids people in the business field to take decisions regarding product development and market growth strategy.
Ansoff matrix focuses on the new products and the product already in the market in order to increase the profit of the business.
The Ansoff’s 3* 3 box grid or matrix:
Markets
Market Development
Partial Diversification
Diversification
Market Expansion
Limited Diversification
Partial Diversification
Market Penetration
Product Expansion
Product Development
Products
The major four boxes are Market Development, Market Penetration, Product Development and Diversification.
Market Penetration:
It suggests the business people to focus on existing customers and on their own products what they are producing currently. If the business person adopts this strategy then his major objectives will be
Improve the market share of current products by fixing lower prices when compared to the competitors, advertising and sales promotion, etc. There are many advantages in introducing low prices , they are capturing more market and the low profit earned by the existing players makes the new entrants to have fear in starting the business in that sector. The MHCCH can go for introducing lower prices for the services but it should not incur any loss. The price reduction strategy to be adopted by MHCCH will not yield any benefit because already the hotel is having good occupancy rate in the case non business guests. And also the hotel is planning to invest a lot in the improvement of the hotel, so all these costs will be reflected in the price of the services rendered by the MHCCH. Even though the price war exists among the players of the hotel industry, for MHCCH, since it is having loyal customers, it is better to go for introducing new packages for the customers, rather than reducing the price.
Market Development:
It suggests the business people to focus on new customers and the existing products. Finding out new customers for the product. The MHCCH can also go for identifying the new customers like honey moon packages, etc.
Product Development:
It suggests the business people to focus on the existing customers and new innovative products.
(MHCCH) can focus on this aspect. it can select the last option specified in the case, expand the business by investing in buying an external property that means the expansion of a bar or restaurant to capture the customers. By providing healthier, tasty and variety food style and drinks to the different country people, the MHCCH will be able to capture more customers (corporate guests) from
different countries .And also the table revealed that the corporate guests occupancy rate is very low and so by implementing the above mentioned facilities, it will be able to capture more corporate guests and if they are satisfied ,the corporate guests will come and stay with their family, profit will be improved.
Diversification:
It suggests the business person to focus on the new customers and the new products that is entering into an entirely different field. Business people will take up this strategy when they want to diversify the risk of loss in the existing business. This case revealed that the competition is more and there are more prospects to earn a very high profit.
Selling a cash cow and entering into diversification is not good because this hotel business itself has lot of prospects which is revealed by the Singapore government’s decision to spend more than $4 billion in order to attract more and more number of tourists to singapore. So it’s good for the MHCCH to be in the business rather than diversification.
Porter’s Grid:
Threats of New Entrants:
More number of business conferences and meetings are being held in Singapore. the occupancy of hotel room rate being as high as in the past few months, Government of Singapore effort to improve the tourism industry attracts more players into this field. Infrastructure facilities, scale of economies and differentiation of product may act as entry barriers and so the MHCCH has to focus on these aspects.
Bargaining Power of Buyers:
Presence of more competitors in the Singapore hotel industry makes the consumers to demand more from the hotels regarding price, quality and innovative (variety of food, other facilities, etc) products. From the case, it is revealed that a tough competition occurs in the Singapore hotel industry, price plays a major role and its root cause is the customer’s expectation regarding quality and price and this strengthens the buyer’s power.
Bargaining Power of Suppliers:
The hotel industry is having a very high relationship with the other industries and so the supplier bargaining power is high in the hotel sector but if the competition is more in the other industries too then the supplier bargaining power can be reduced in the hotel industry and it is essential to study still more regarding the prevalence of competition in the supplier’s industries.
Threat of substitute’s products / services:
The economic hotels and motels may be the threat for the product of the substitute to MHCCH but concentrating on factors like fast food establishments which includes the surrounding environment, services provided by the catering department at the affordable price.
Conclusion:
Since the corporate guest’s occupancy rate is very low, the MHCCH can focus on the area of amenities and services provided in order to capture more customers and in turn to improve profit.
The MHCCH can go for providing different styles of food in order to attract the customers from foreign countries.
According to my views , I suggest the MHCCH to select the last option – expand by investing in external property and after getting some returns it can slowly move on to the third option -expand by investing in the site. The MHCCH can carry out the survey in order to search new facilities expected by the customers and also what the MHCCH ‘s competitors are doing to attract the customers and based on the results the MHCCH can decide the strategy to be adopted by the hotel in future.
Since there are a lot opportunities in the hotel industry, the MHCCH can go for making investments in order to earn profit in future. The MHCCH can convince the other partners by explaining the payback period of the investments to be made by it.
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