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Marketing analysis of the hotel industry in Singapore

3618 words (14 pages) Essay in Marketing

18/05/17 Marketing Reference this

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A. Introduction:

The hotel industry of Singapore is one of the fast developing businesses during 2004-2008. It has generated nearly 3 billion dollar revenues in 2008. In 2009, due to global recession, it has dropped about four per cent.

People come to Singapore from the different countries and different continents and they provide a very good business to the hotel industry so as to the Manor house hotel. Apart from the tours the other guests are the corporate guests, for whom the company pays the rent. There are mainly three types of customers come in our hotel. From those customers, some are non – business guests, the family non business type guests and the last one type are corporate type guests which includes the corporate company’s employees. These types of guests have very short stay in the hotel. So the profit gained from these types of customers remains lower. From Jenkins family’s hotel booking chart, we can see that the corporate guests booked rooms has been decreased. This may be due to the marketing department of the hotel interacts less to the corporate regular companies and the global recession period. For five years period starting from 2008 to 2013, the average growth rate forecasted is about 4.8% which may take the value of the hotel to about three and a half million dollars at the end of this period.

Domestic customers contribute near about 5 per cent of the revenue. International customers contribute near about 32 per cent of the total revenue. It shows great impact of tourism industry.

Challenges in the macro and micro environments : –

But, for the implementation of these ideas, we have to face lot of limitations and we have to overcome all the limitations. The macro environment factors which may affect are described as uncontrollable factors. The social limitation for the expansion of bar says that we can not serve the alcohol to the guests below 18 years old. It may also affected by government legislation, exchange rates, politics and culture etc.

PESTLE analysis could be used to explain the factors which are uncontrollable described as below.

• Singapore’s corruption free and stable government is the most efficient government in the all Asian countries. Free trade agreements with China & Taiwan also make it possible to widen the business markets. Financial and trade services have, also, experienced large surpluses. Singapore has a very favourable environment for business being one of the major trading parts of the world. Government is concentrating on waste management and biological conservation. Level of productivity kept falling in Singapore after 1980 and global recession has also made an influence the economy. Lower Birth rate and ageing population are challenging factors. For research and development sector, there is not enough financial support so in the competitive era; it is a very big risk. Government unnecessary intrusion in judiciary is impairing the judicial freedom. Increase In emission levels putting climate change on risk.

The micro factors can be described as the customers, suppliers, distributors and competitors. As we are going to expand the business of our hotel, there may be many micro factors can affect the business. As we have to buy the new property and the manufacturing time of the restaurant and bar can affect directly. We have to give more supply orders as initially we do not have any idea about the sales of the bar and restaurant. The competitors may try to take advantage of these conditions but as the guests will stay in our hotel, they will first prefer to have food and drink in the hotel itself. We can provide the 24 hours bar service on the guest’s requests. The hotel requires more distributors of the products and more staff is needed for the expansion of the hotel.

Property owners, real estate firms, developers, interior designing companies, management and training providers and marketing companies are the suppliers for the hotel industry.

• Quality and availability concern with high suppliers.

• Hotel Operators use expensive urbane technology.

• Management and training cost are high. Healthy competition gives independence to customers to buy the products or services. Brand reputation, also, helps to attract customers and also helps to retain them. Customers are always concern with the price as well as innovative and good quality. Travel and tourism industry introduces new entrants, which increases competition so as pressure on businesses. All competitors provide same basic services to stay but with some benefits such as spas, motels and also the restaurants and gyms.

SWOT analysis : –

The SWOT analysis explains the Strengths, weaknesses, Opportunities and the Threats to the hotel business due to expansion of the business. The hotel is well established and has very good location to attract the guests and the expansion of our hotel has brighter chance of profit. If we know our weaknesses we can know our strengths and we can make action plans to overcome the weaknesses and to increase the strength of the hotel. Due to the higher competition in the market place, there are lot of threats to the business. But our hotel is successful in the past years and as per the past experience, we have the best opportunities to expand the business to its newer heights. As the manor house hotel is expanding its business, there are lot of opportunities for improvements and to achieve the goals. The manor house hotel can have high occupancy rate by increasing spending consumer. Demand for healthy food can attract the customers towards our hotel. We can provide the best customer service to the guests and we can give them room delivery without any extra charge. With the opportunities there are lot of threats related to the opportunities as discussed below : –

Strengths : –

The main strength of the hotel is its location and success in last few years. The hotel has well trained and customer oriented staff which can provide the best service to the guests. The management is family owned having great strength. The most important advantage to all of the guests is that, they can have food of their choice in the restaurant itself. They can have the advantage of room service within few minutes. Business expansion by buying more property and future investments is one of the strengths of the Manor House hotel. It has very good products and it is the additional advantage over its competitor hotels. Most important thing is current successfully running restaurant of the hotel which could be introduced as a chain of the restaurant all over the country under the Manor house country club brand name.

For marketing plan, the company can utilise its strengths such as well – trained and customer oriented staff for the guests. Attractive location and arrangement of the tables and many other strengths like room service free and order directly from the room.

Weaknesses : –

The major weakness in this type of expansion is initial higher cost and the time required to complete the expansion procedure of the bar and the restaurant. As we have to expand the restaurant, the hotel needs some time to build the building and make the arrangement which can be used later on. The attraction of the food is not much more as per the previous guest demands. The other weakness is providing quality training to the staff needs more time and money. Brand oriented franchises and large hotels in the city make it difficult to survive. Most of people like to have their food in franchises oriented restaurant like McDonald, Burger king, KFC and many other restaurants. It can affect our hotel’s restaurant. The fluctuation in the hotel and tourism industry may bring the manor house hotel at bottom.

Opportunities : –

Hotel has a very good business in the past as per the booking chart shown in the theory. The customers are spending in sit – down meal are now increasing and have the growth rate about 16% since last 6 years. The government has developed the strategy to implement the hotel and tourism business by spending £ 4 billion. High occupancy rate is one of the major advantage of the hotel and can encourage the owners to expand the business. The growing hotel industry and the current growing booking status in our hotel can create the best opportunities for the restaurants and bars to expand.

Threats : –

With the opportunities there are lot of threats related to the business expansions. The bureaucracy is the main threat for this hotel. The other major threat is there are lot of hotels in the market which provides some offers in lower rates than our hotel. The marketing department should always keep an eye on the competitor’s movements and should ensure that the growth of our hotel goes in the proper way compared with other competitors. Global economic slow down is also a considerable threat.

The SWOT analysis we discussed for our hotel can be utilising to make proper marketing planning and the growth of the business.

There are various other factors through which the marketing of the restaurant and the bar can be done. Hotel can provide special offers for the dinner and the lunch, and due to this effort, more and more guests can be attracted towards our hotel. The marketing department can make the advertisements on the internet and newspapers. They can provide some free items on purchase of particular large orders. The main reason for this marketing strategy is to expand the business initially and to use the reputation of the hotel which the guests have in their mind.

The other major requirement of the marketing department is to increase the sales of rooms to the corporate regular guests. There are many corporate companies in the market which can make contracts with the hotels to provide the food and accommodation in cheaper rates. The best way to fill the occupancy of the hotel is to sell the rooms to corporate guests. The marketing department can offer cheapest rates to the corporate companies and can add few more facilities such as room including breakfast or some drinks allowance can increase the occupancy for the corporate regular guests. As a marketing manager I have to contact new companies by providing them best rates for the hotel and giving them some commission as per the strategy of the marketing management.

As the marketing department is one of the most important department in the company, it has to be very powerful to attract the guests towards the business and should provide the best facilities and customer service as per the requirements of different types of the customers coming to the hotel.

B.

In 1965, Ansoff had developed a tool to assist in decision-making for setting the business objectives and strategies. To satisfy these objectives he introduced a method shown and explained below.

http://tutor2u.net/business/images/Ansoff%20Matrix%20w500.gif/bmi_orig_img/Ansoff%20Matrix%20w500.gif

The Ansoff’s Growth matrix provides help to decide about the planning for marketing growth and strategy of our Manor House Country Club hotel. This matrix suggests that our hotel’s growth depends on the markets which may be new hotels and the existing hotels available in the nearer area and the facilities provided and rates of other hotels.

The outcome derived by this matrix shows a series of strategies by which the direction of the business strategy could be set. By these directions, the strategies of business of manor house hotel can be determined.

They are described as following.

Market penetration

It is a growth strategy in which the business aims to sell the existing products into existing markets. For the development of our hotel, this strategy is also very important.

It has few objectives which are mentioned as below.

• To increase or maintain the market shares of the hotel by combining the pricing strategies, promotions, advertising and by finding more resourced to increase the business of our hotel.

• Secured control of the hotel over the market.

• Having a very aggressive approach of promotional campaigning which is backed up by smart pricing strategies, the market for our hotel’s business could be restructured. By having this kind of approach the market of the competitors becomes unattractive.

• Increasing the existing customer usage – Let’s say by launching some attractive loyalty promotions, the existing customers could be attracted.

This strategy is a general strategy which can be used by our hotel to keep their existing customer connected with them. For our hotel, we can develop this strategy to implement our business and to promote it in the market place. In this strategy, our hotel should try to grow its market by providing attractive offers and best facilities and for that we should have all the information about customers’ demands and competitors’ strategies. So overall, to apply this strategy, it is needed to invest much for the market research.

Market development

It is a growth strategy in which the business aims on selling existing products into the new markets.

There are some objectives to apply this strategy, they are,

• Exporting the product to another country is an example of new geographical markets

• Introducing the existing product with new dimensions or packaging.

• Creating new market segments by applying various pricing schemes to attract the different customers.

Product development

It is a growth strategy in which the business focuses on introducing new products into existing markets. For the development of our hotel it might be required to raise new competencies. The business also has to develop new and improved products to attract the existing markets.

Diversification

It is a growth strategy in which the business focuses on marketing of new products into new markets.

This strategy is very risky since the market in which the business tries to launch a new product is very new.

To adopt this kind of strategy, the business must have very clear and honest idea about expectations and the risk factors involved with it.

Porter’s grid

In 1985, Michael Porter had set different approaches to run the business which are also called as ‘generic strategies’. They can be adopted for any product or service by any kind of business. Firstly, he described the generic strategies into two types which are cost leadership, differentiation and focus. Then, he divided the strategy of focus into ‘cost focus’ and ‘differentiation focuses. In our hotel we can apply these method to run and growth of business.

These strategies show the ways to get the competitive advantage in the market.

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Cost Leadership

This strategy is about to find the ways to minimise the cost of delivery of the products and services. It takes the organization away from the competitors by developing an edge. It can be achieved by following two methods.

By reducing the cost, profits could be increased and charging the industry average prices at the same time. In our hotel we can apply this method to increase the profit.

By charging the lower prices, the market share could be increased and because of reduced costs, the profit is still reasonable.

There is big risk involved in this strategy because the sources of the cost reduction may not remain unique. The other hotels in our area can do the same with their prices to increase their market. So it is always necessary for the manor house hotel to keep finding the ways to reduce the cost at every stage.

Differentiation

This strategy is all about developing new products or services which is different and more attractive than the competitors’ products. In our hotel we can provide better accommodation facilities, bar and restaurant facilities which make the difference than other hotels and we can grow our business compared with them. It depends on the type of the industry, products and services backed up by features, durability, brand value and support.

While adopting this strategy, our hotel has to do following things.

Research and development.

Be able to provide good quality products or services.

To show the benefits over other hotel, the sales and marketing should be effective.

Focus

It is a strategy in which an organisation aims on specific targetable markets. By researching the demands of the market, organisation develops some specific low cost products for that market. By adopting this strategy, it becomes possible to build our hotel’s brand stronger among the customers which also makes competitors’ hotel unattractive.

Now, if the focus strategy is chosen, it is not enough. Our hotel needs to adopt either cost focus or differentiation focus. To achieve success by adopting this strategy, it is necessary to add something extra because you are serving a specific market. We can provide room service free or we can provide some extra facilities in rooms and restaurant.

Strategy for the our hotel

As per the Ansoff’s matrix, the hotel needs to adopt the product development strategy, as the whole range of products is new for the hotel but it is the existing market. It is also necessary for the hotel to provide new but different products from those of the competitors. For example in the restaurant, an interactive computerised table menu could be provided. Initially, it is an expensive investment, but if we think about long term, the labour cost of the waiting staff could be reduced and more important is that customers will get new and different kind of service. It helps to attract more and more customers.

As per the Porter’s grid, the hotel should adopt the strategy of differentiation, since customers’ demands always changes. So, to sustain and make better profit in an existing market like restaurant and bar, hotel needs to provide wide range of food dishes as well as drinks. For example, like an innovative idea of interactive menu on the table with different languages, we can provide customers to choose by their own mix and match food or drinks which are also available on the interactive screen with animated display. So even if the customer does not know the language, the items could be recognised by the picture. When customer finishes mixing the food or drink, the screen should provide approximate test, calorific value, allergy advice, cost etc. Especially, the problem of dropping down the number of corporate customers could be solved gradually because the corporate customers always look for the innovative facilities. They do not come to the hotel for very long stay so while having a short stay; they always look for a service which is unique.

Hotel could expand its business by investing in external properties to develop the brand name of MHCC because it is currently a running a successful bistro, so it is a bit convenient to start a restaurant and bar chain in the different areas of the country. To attract more and more customers, apart from the latest facilities like advanced foyer, saloon, the hotel could introduce more facilities like hookah bar, multinational food menu, special game zones, casinos etc. Under the brand name of the hotel, special cruise tours could be introduced with all the facilities available in the hotel. These tours could be free of charge with honeymoon packages. In the restaurants, for a special attraction, different cultural themes could be used. For example every month, restaurant could be decorated according to different culture and food menu, also, could be provided as per the chosen cultural theme.

With regular tour packages, some facilities like massage, ayurvedic treatments could be provided at little extra cost in the saloon. On all the premises of the hotel, restaurants and cruise, there should be a free Wi-Fi facility for all the customers. Further, theme parks and water parks could also be introduced under Manor house brand name.

First year : While the chain of restaurant and pub is under construction, to increase the business of existing products and services by adopting the market penetration strategy, we should provide some additional benefits like spas, gym, restaurant and bar facilities in the hotel at a lower cost. Some loyalty schemes could be given to the regular customers. The newly introduced suite, new foyer, saloon will support to maintain the hotel to sustain against competitors. During this time period, we can get the customers’ reaction by market research or by putting a sample of this service as a promotion for marketing purpose.

Second year : In second year, major areas of our business expansions are ready to work. The profit earned from the first year business and some financial help by the bank if needed will be taken for more expansion. Online booking for all the restaurants will be provided and because of having a big chain of restaurant customers can choose their convenient place. Some direct links to the tours and travels will be provided through our hotels. So it can help us not to rely only on tourism industry. So in next two years, this kind of service will definitely get success like never before.

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