Hospitality Business Strategy

Hospitality Business
Strategy
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Table of Contents
Introduction......................................................................................................................................3
PART -A..........................................................................................................................................3
Pestle analysis:........................................................................................................................3
SWOT analysis:......................................................................................................................6
VRIO analysis:.......................................................................................................................7
Porter's five forces analysis:...................................................................................................9
PART B..........................................................................................................................................12
Ans off matrix:.....................................................................................................................12
Strategic marketing plan.......................................................................................................13
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18
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Introduction
Strategic analysis is a tool that is used for the purpose of understanding different activities that
are part of external and internal management of organization so that there can be formation of
proper business strategies in order to survive for a longer duration of time period in the market.
In case of hospitality Industries with the changing dynamic environment it is very essential for
all the brands to consider the factors that are impacting them in both positive and negative
manner. Present report is based on Hyatt Hotel that is one of the biggest hotel chains having 750
Hotel that are part of this chain (Lasserre, 2017) . There is discussion of external analysis tools
such as Pestle analysis and understanding of internal factors with the help of SWOT analysis.
Then further there is use of porter's five forces model and then there is building up of a strategic
marketing plan that can help Organisation for achievement of certain laid down objective.
PART -A
Pestle analysis:
Pestle analysis is external market with that is applied for understanding of different factors that a
part of micro environment below mentioned is the pestle analysis of Hyatt Hotel:
Political: Political issues are affecting the hospitality industry in a very significant manner. In
case of Hyatt Hotel it is a worldwide luxury that is affected by the taxation policies that have to
be paid and this affects their overall profitability margins. This is a negative manner in which
Hyatt hotel gets impacted because of the political policies.
Economic: Economic issues related with the economy of a country in which a particular
organization is prevailing and running their operation. In case of hotels and corporations they
were impacted by the issues of brexit that was exiting the European union and this lead to
reduction of British tourism by 7% in the year 2017. In 2016 Hyatt Hotel open 59 hotels in
European Union and British region and tourism was very down in the time period of 2017 this
impacted their overall generation of revenue from this investment. The scenario had a negative
impact on the prevailing profitability structure of Hyatt hotels.
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Social: Social factors are related with the changing preferences and demands of people in the
society. Concept of factors like income distribution when there is proper distribution of the
disposable income to people than it leads to higher purchasing power and has a direct impact on
the sales and profitability of various hospitality organization (Schilling, and Shankar, 2019). In
UK there has been a shift in preferences of people towards health consciousness and population
growth rate have also declined these situations have lead to reduction in the amount of sales for
hospitality industry.
Technological:
There are Various technological factors that are prevailing across globe in the hospitality
industry. In the present scenario of globalization of Hyatt hotels, technology is one of the
essential factors that is leading to adoption of innovative Technologies. They are willing to move
towards use of digital media and social marketing sources with the advent of internet. This is a
scenario of adopting latest technology by Hyatt hotel for the purpose of increasing the sales by
organization.
Legal:
Legal factors are having relation with adoption of the entire legal Framework that is developed
by the regulatory and concerned authorities in a country. These have to be compulsorily adopted
by organization. In case of hospitality organizations government are altering policies and making
increase regulations that are having a straight impact and concern on the functioning of
organization. There is requirement of development of a selling scheme and harmonization of
authority policy by Hyatt Regency (Hyatt Hotels Corporation Fundamental Company Report
Including Financial, SWOT, Competitors and Industry Analysis, 2020).
Environment:
External environment is full of uncertainty and this has affected organizations in such a manner
that there is more focus on sustainable development. In Hyatt Hotel Regency there are efforts
made to reduce and minimize impact of all the plastic usage so that they are able to contribute
towards sustainable development of the environment.
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PESTLE analysis is a tool that is very important for understanding the different macro
environment factor and how are they going to affect the organisation in long run.
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SWOT analysis:
Strength: Weakness:
1) Hyatt hotels are having a worldwide
portfolio that consists of 488 properties and
different hotels.
2) They are having collaboration with top
corporate.
3) Hyatt Hotel is able to maintain customer
experience and hiking standard
4) They are one of the most popular Hotel
chain brands
5) usage of technology up gradation with time
1) There is limited market share because of
presence of high competition because of many
domestic and international players
2) Employees are highly discontentment
because of many salary issues and there is
global penetration that is leading towards high
pressure on employees.
Opportunities:
Threats:
1) There can transfer improvement of policies
to increase the employee retention for ensuring
satisfactory policies for their existing
workforce.
2) Hyatt Hotel can use higher standards for
setting up of room division.
3) Various campaigns and customer loyalty
programs can be setup on their existing sources
of digital media and social media platforms.
1) There is high amount of competition that is
prevailing because of better room services that
are provided by other competitors like TUI
group, Starwood hotels, Trident hotel, Taj
hotels and Hilton.
2) There is loose of many business Travellers
because of the domestic Group of Hyatt hotels.
3) There are many issues related to security
levels.
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4) There can be adoption of strategies that is
being used by many competitors like Hilton
Marriott that is use of various membership
plans.
VRIO analysis:
It is the internal management tool that is used for making a resource based analysis of
organization.
Valuable:
There are certain resources that are extremely valuable for Hyatt hotel concept of wide variety of
food and beverages, their presence that is they are usually having locations in high density areas
like airport sub-urban destinations and urban areas (Meyer, Neck, and Meeks, 2017). They are
having business presence across Europe Asia and North America. Apart from this they are also
having headquarters in Chicago. The multiple brands are also a very important resource that is
possessed by this organisation it consists of Hyatt Regency place at residence Hyatt centric.
Luxurious and Quality Services is another feature of Hyatt Hotel that is helping them in
attachment of a differentiation position. Qualified and Competent workforce is most valuable
resource that is helping them in achievement of competitive advantage.
Rare:
There are certain resources that are rarely found in organization and that actually help in getting
them a long term competitive advantage. In case of Hyatt hotels, this resource includes the wide
presence; luxurious service and multiple brands association are some resources that are rarely
found in any hospitality organization.
Imitability:
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All the resources that are possessed by organization cannot be easily copied or imitated by other
competitors (Rothaermel, 2016). In Hyatt hotels, such resources include wide presence and
competent workforce that cannot be easily adopted by any other competitor of Hyatt hotels and
is helping them in achievement of a competitive advantage.
Organization:
All the resources are to be kept organized by organization that is helping them in smooth
functioning. In Hyatt hotel, resource consists of the worldwide presence and the locations at
which Hyatt is present. This is one of the most differentiation advantages that is possess by this
hospitality brand and is helping them in having a long-run competitive advantage (Hyatt Hotels
Corporation Fundamental Company Report Including Financial, SWOT, Competitors and
Industry Analysis, 2020).
Analysis from resource based view of Hyatt Hotels Corporation:
Worldwide
presence
Multiple
brands
association
Competent
workforce
luxurious
service
Value
Yes Yes Yes Yes
Rareness Yes No Yes Yes
Imitability Yes No Yes No
Organization
Yes No No No
Long term Short run Temporary Sustainable
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competitive
advantage
competitive
advantage
competitive
advantage
competitive
advantage
Porter's five forces analysis:
Porter's five forces analysis is basically a tool that is used for understanding the external threats
from major five forces that are present in the Macro environment (Varelas, and Georgopoulos,
2017). It is a tool that is very essential in order to understand the short term and long term impact
of all the factors that can self information of various business strategies. Below mentioned is the
five forces that are part of external environment and is a high threat or low threat Hyatt hotels.
Bargaining power of suppliers:
Function is related with the number of organization that is available as options for increasing the
power of suppliers. In the present scenario, it can be said that Hyatt is having long term
association with their supplies and they are offering them competitive prices that is helpful for
them in maintaining competitive power of suppliers and there is low bargaining power of
suppliers.
Bargaining power of customers:
There is high bargaining power of buyers because there is presence of large number of
competitors of Hyatt hotels. Such as it includes brands like Hilton Marriott Starwood TUI group
all these are leading to presence of high amount of competition and large number of options for
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the customer base. This leads to development of some strategies like high quality or high caring
for their present base of customer in order to retain these customers for longer time period.
Threat of new entrants:
There are many new hospitality brands that are entering the hospitality industry of UK and there
is a danger of entry because of globalization that is taking place across world. There is also an
imbalance of the demand and supply that is leading to high threat for entry of many new
competitors of Hyatt hotel (Wellner, and Lakotta, 2020) .
Threat of substitute:
There are many competitors of Hyatt Hotel that are leading to presence of many options for their
existing customer base. This is creating a situation of easily switching and substituting of
services of a particular brand and shifting to another one. So, it can be said that because of
presence of zero switching cost there is very high rate of substitution that is present for Hyatt
hotel and this is leading to a situation of working towards development of some competitive
scenario so that there can be association of customers for a longer duration of time and they are
not willing to switch to other substitute brands like Hilton Marriott, Starwood hotels, TUI etc.
Competitive rivalry:
There is Presence of very high competitive rivalry because of number of competitors of Hyatt.
There is very high competition that is impacting the long run profitability of Hyatt (Bhatia,
2016). There is development of certain measures to deal with the presence of high rivalry such as
for the purpose of enhancing market size there is requirement to develop a differentiation
advantage and Hyatt is focusing on providing high quality services to their customers so that
they are able to survive for longer period of time.
Critical analysis from Porters five forces model:
Elements Power
Strategy for dealing with high
power
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Bargaining power of
customers:
High There must be focus on
retaining of customers so that
they are vale to remain
associated with the brand for a
longer duration of time period
Bargaining power of
suppliers:
Low There is use of long term
association by providing and
offering profitable deals to
their present segment of
customers.
Threat of new entrants:
High It is necessary to adopt
globalization as a strategy and
franchising to establish in
countries where they are not
having any presence.
Threat of substitute: High Use of high quality and cost
leadership position
Competitive rivalry: High According to VRIO analysis
string brand image can be
adopted for the purpose of
developing a long run
sustainable competitive
advantage
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PART B
Ans off matrix:
Ans off matrix is a tool that is used for the purpose of understanding different strategies that are
available for organization.
There are basically four different types of strategies that are part of the ansoff matrix and can
help in development of a strategic marketing plan:
1) Market penetration:
In the strategy there is use of existing products and the market also exists. There is no new
product that is launched by organization for their existing segment of customers
(YudionoWilopo, and Iqbal, 2019). In case of Hyatt Corporation this strategy is very helpful in
expansion of their present base of customers by enhancing the quality of existing services that
are offered by the organization.
2) Market development:
Market development is a strategy that is used for the purpose of estimating overall sales and
maximization of profitability in this there is use of New Market segment for the purpose of
targeting according to the existing products of organization. The strategy can be used for the
purpose of achievement of higher growth and there is a completely different set of market that is
approached by organization. In case of Hyatt hotels market development will help in enhancing
revenue of Hyatt as there will be different set of target market.
3) Product development:
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In the product development strategy there is development of new products but the market
segment exists that is no new market or customer is being targeted by the organization. In the
strategy there is focus on existing base of loyal customers who can help in enhancing the revenue
of Hyatt. There can be used of certain effective strategies based on development of a customer
marketing campaign in form of certain loyalty programs that can lead to long run association of
existing customer base with Hyatt hotels.
4) Diversification:
This is a strategy that is related with launching of new products and the market segment is also
completely different from the existing customer base (Hernández, . and Garcia, 2018). In Hyatt
this strategy can be used for the purpose of making changes in their existing products in terms of
price or quality. This is a very attractive strategy in case when a organization is not satisfied with
their present level of sales and willing to make some new changes.
Above Discussed are the major four strategies that are part of the Ans off growth matrix that can
be used for the purpose of attaining higher growth.
Strategic marketing plan
Executive summary:
Hyatt hotels was founded by Hyatt Mouse Hotel that was presence in Los Angels it was earlier
known as Global Hyatt corporation and it was later changed its name to Hyatt hotels
Corporation. They are handling 14 premier brands and they have more than 36000 employees
then that are helping them in achievement of high recognition across different parts of the world.
They are having presence across 50 countries and on more than 700 portfolio (External Factors
Affecting Hyatt Regency, 2017). In the present scenario there is preparation of a marketing
strategy that can help in development of long-term survival options for this brand according to
prevailing conditions of external macro environment.
Mission: Mission is to deliver distinctive experience to their customers who they treat as the
guest.
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Vision: Create world of care and understanding.
Tagline:
“world of understanding"
Objectives:
Based on the mission and vision according to available options there are two major objective that
have been set up by management of Hyatt hotels Corporation:
1) Intangible objective: Hyatt Hotel is looking to break the stereotype and enhance their position
of brand just more than a hotel stay.
SMART objective:
1) They are willing to increase their rank in fortune 500 magazines and in the list of best
employees according to diversity by the year 2020.
2) Enhance their market share by 12 percent by the coming year 2022.
STP strategy
Segmentation:
Hyatt hotels have segmented their market based on basically two categories that is business
travel and leisure travelers.
Target:
The target market of Hyatt Hotel consists of national state and all the regional Association
travelogue initiations major corporations and specialty market accounts like education religious
social military and fraternal (External Factors Affecting Hyatt Regency, 2017).
Positioning:
Hyatt hotels have able to create differentiation position in the market because of using the latest
technology luxury facilities and white present.
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Marketing mix analysis:
1) Product:
Hotels will be using their renowned brand image for the purpose of achievement the above
discuss objectives and they will also work towards enhancing the quality of the luxurious
services according to the prices so that they are able to develop a competitive factor according to
other brands who are offering similar Quality Services but at Higher prices.
2) Price:
There will be use of price penetration strategy for the purpose of enhancing brand image. In this
all the new services that will be launched and the special campaigns will am at offering
reasonable prices to their existing customer base so that they can observe some profitable
changes according to their viewpoint as customers.
3) Place:
Hyatt will focus on more franchising activities for increasing the presence.
4) Physical evidence:
This organization is looking to break the stereotypes and enhance the position of brand by just
more than a hotel stay (External Factors Affecting Hyatt Regency, 2017). In the year 2017 the
acquired Miraval group and that has helped them in providing a different range of experiences
and Wellness to their customers so that they are able to experience the personalized services.
5) Promotion:
Hyatt Hotel will be using their present brand image like they have been ranked 9th in the Fortune
500 magazine as a promotional strategy and they will also be offering many different types of
loyalty programs club memberships and campaigns that will be done on special social media
platform like Facebook and Instagram so that millennial generation can be approached with the
help of this effective promotion strategy.
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6) People:
In the past there have been scenario of Hike dissatisfaction on part of the employees in Hyatt
Hotel now according to the present marketing plan their will be development of strategy to
enhance the satisfaction level by increasing the amount of flexible working hour compensatory
leaves and working conditions for their work force.
7) Process: Franchise agreements are used for the purpose of expanding to different parts of the
world by Hyatt hotel m
Tactics:
There can we use of certain practice for the purpose of preparation of strategy in order to achieve
higher sales. In the present scenario the distribution strategy will be used to reduce the
dependency on own property. There will be for the use of brand equity as a marketing strategy.
There will be launch of IPO just like they did in the year 2009 that help them in entering in 45
new markets and 15 different countries (Marketing Strategy of Hyatt, 2018). There will be
focused on increasing their present customer base of national and international brands for
organization of conferences government organizations foreign nationals. All these are focusing
on the Corporate Affairs now there will be more focused on family holidays and leisure activities
so that there can be different types of segment of customers that can get Association with this
brand.
Monitoring and controlling:
This is the last stage of strategic management plan where there will be evaluation of the achieved
objective after there will be completion of specific time period. There will be a detailed analysis
of overall deviations that have taken place from the desired results and the actual achieved
performance (Marketing Strategy of Hyatt, 2018). If there is any high amount of deviations then
those have to be minimized and efforts will be made towards achievement of all the laid down
objective according to specified objectives.
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CONCLUSION
It is been concluded from above discussed models and frameworks that strategic marketing plan
is very essential for every organization to ensure their long run survival. For the purpose of
external macro environment analysis pest analysis is the most appropriate tool and for the
internal analysis SWOT analysis & Vrio analysis is used for making a detailed resource based
view of organization. Further another tools like porter's five forces model is also important for
developing a detailed overview of Basic five elements that can impact the functioning of
organization. Ansoff growth matrix is also very crucial tool for developing a prospective of
growth opportunities that are available for organisation. Based on the information and analysis
made a strategic management plan can be developed that can help a hospitality organization.
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REFERENCES
Books and Journals
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Rothaermel, F.T., 2016. Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized
hospitality sector–the case of a Greek tourism destination. J Tour Res, 18, pp.121-131.
Wellner, S. and Lakotta, J., 2020. Porter's Five Forces in the German railway industry. Journal
of Rail Transport Planning & Management, p.100181.
Bhatia, J., 2016. Porter's Five Forces Industry Analysis of Indian Passenger Car Industry. Pacific
Business Review International, 8(7), pp.113-123.
Yudiono, N., Wilopo, W. and Iqbal, M., 2019. VRIO Analysis to Measure E-Business Readiness
in the Automotive Industry in East Java (Study on Otobus Company Kalisari and Otobus
Company Menggala). Wacana Journal of Social and Humanity Studies, 22(4).
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração IMED, 8(2),
pp.222-235.
Online
External Factors Affecting Hyatt Regency, 2017, [online] Available through:
<https://www.ukessays.com/essays/commerce/external-factors-affecting-on-
hyatt-regency-commerce-essay.php>
Hyatt Hotels Corporation Fundamental Company Report Including Financial, SWOT,
Competitors and Industry Analysis, 2020, [online] Available through: <
https://pdf.marketpublishers.com/bac_swot/
hyatt_hotels_corporation_swot_analysis_bac.pdf>
Marketing Strategy of Hyatt, 2018, [online] Available through: <
https://www.marketing91.com/marketing-strategy-of-hyatt/>
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