Crowne Plaza's Global Expansion Strategy: A Case Study

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International Hospitality
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Table of Contents
Introduction................................................................................................................................3
Background to International Hotel Industry (and tourism)........................................................3
Background to Hotel Company..................................................................................................4
Task............................................................................................................................................5
SWOT analysis of selected hotel company................................................................................5
Background to Global Hotel and Tourism Industry – developed and emerging markets..........7
Background to Emerging markets..............................................................................................9
PESTLE of selected emerging market.....................................................................................10
Analysis of SWOT and PEST..................................................................................................13
Justification of strategies..........................................................................................................18
Practical application of strategy - 5 and 10 years ahead..........................................................19
Conclusion................................................................................................................................21
Reference List..........................................................................................................................22
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Introduction
Hospitality Management is the way through which the needs and wants of guests are satisfied
through means such as hotels, restaurants, food and other luxury services. The importance of
Hospitality Management is that it allows more scope of job creation through which
unemployment in various locations around the world can be exterminated. Globalisation has
a huge impact on the hotel management industry as several companies are now trying to
increase their market presence in the international arena and gain target audiences. In this
particular report, the case of The Crowne Plaza has been explored. In the following report,
several strategic techniques and methods such as Porter's generic forces, Ansoff Matrix,
and others will be investigated. These techniques assist a company to ascertain the direction
in which it will head. These specified methods assists in knowing if a company should focus
on its product or market growth or other similar aspects.
Background to International Hotel Industry (and tourism)
On an international scale, there are several Hotel Enterprises such as Marriot International,
Wyndham Hotel Group, and Hilton Worldwide with 5405, 8976 and 6542 properties respectively
placed all across the world. These businesses focus majorly on providing Hospitality Services
that include food and drinks, lodging and wellness services that provide comfort to its end users.
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Background to Hotel Company
Figure 1 - The Crowne Plaza
(Source: Anon, 2019)
The Crowne Plaza is an upscale multinational chain of Hotel services that are situated
within the United Kingdom. The company nearly has around 3600 Hotel that is present
across 100 countries around the globe with 118,000 bedrooms. The company was founded in
1970 and the hotel has multiple tiers of luxury rooms starting from king rooms to presidential
suites. As per the UNWTO Tourism highlights, within the international tourism market, there
is an expected increase in demand 3.3% in the next coming 20 years, which translate into an
increased sales of 1.8 billion dollars by 2030 (E-unwto.org, 2019). This is in the favour of
The Crowne Plaza as there would be higher travellers who would be interested in the
services of the business.
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Task
SWOT analysis of selected hotel company
SWOT is an internal analysis that helps to understand the capabilities of an organisation.
Figure 2 - SWOT Analysis
(Source: Okumus et al., 2010)
Strengths
 The organisation has noticeable properties at locations such as Liverpool, Denmark
and others where it utilizes renewable power source methods such as solar panels,
cooling fans, geothermal heating and other technologies.
 The Crowne Plaza has a loyalty card program whereby it allows customers to
become a member of the business and unveil new discounts, deals and other facilities.
 The organisation has a highly fortified relationship with his employees and creates an
optimal workplace where productivity and motivation thrives (Tribe, 2016)
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 The company has a high degree of goodwill in the market going owing to which there
are over 50,000 consumers visiting the companies' rooms every year.
Weaknesses
 When ranked against other companies hotels in the hospitality industry it has fallen to
the fourth position in terms of service provided (Lasserre, 2017)
 The company has a poor security system with there being several robberies in
multiple branches of the company in the past few years
 The company has not expanded in locations such as China, Japan and other Asian
countries where there is a high scope of growth
Opportunities
 The Crowne Plaza has the ability to increase its brand value by initiating new
marketing strategies such as social media, television advertisement, face-to-face
marketing and other tactics. Through these methods, the visibility of the enterprise
will rise in the market (Okumus et al., 2010)
 The company has the opportunity to implement technological advancements such as
suite check-ins and bookings. Through facilities like this, the consumer would be able
to stay better connected with the services of the enterprise
Threats
 Multiple companies that are active around the globe are a direct threat to the
functioning of The Crowne Plaza as more prices and services by Marriot
International, Wyndham Hotel Group, and others. It would decrease the success chance
of the business (Hitt and Duane, 2017).
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 Over the years, the company has an increased level of dependency on intermediary tour-
operators that increase the room rate that is being booked
Background to Global Hotel and Tourism Industry – developed and emerging markets
The hospitality sector is one of the largest developing divisions in business all around the
world. The total retail value of the Global hotel industry is estimated to be around 570.18
billion USD. This implies that a large portion of the consumers in the market is putting their
income in such services to derive utility. In the past five years, the hotel industry has seen to
have a massive growth in sales as with the introduction of increased social media presence.
Presently, it has become more accessible through the internet for consumers to know about
different locations and book means of transportation and accommodation in a much simpler
manner. The average daily rate of consumers in the hotel industry worldwide is estimated to
be at 106.19, 130.4, 132.42 and 140.97 in places such as Asia Pacific America Europe and
Africa respectively. These figures represent the total spending and normal consumer/traveller
makes on a daily basis in these areas in services such as lodging food and others.
When enumerating the leading Hotel companies that operate around the globe, companies
such as Wyndham Hotel Group, Choice Hotels International, InterContinental Hotels Group
(IHG) can be mentioned. These companies operate at the top of the line with 8,976 6, 857,
and 6,542 properties respectively around the world. The collective revenue of all these
companies is over 22.2 billion dollars (Ioannis, 2013).
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Figure 3 - Emerging Markets
(Source: Ioannis, 2013)
Figure 4 - Emerging Economies
(Source: E-unwto.org, 2019)
In the hospitality industry, various markets and locations are emerging and developing that
draw in a large group of consumers all around the world. As per the UNWTO Tourism
highlights, these markets include places such as Europe, Asia, America, Africa, and others
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(E-unwto.org, 2019). The core reason locations such as these draw high attention from
travellers is that they possess cultural and local attractions. These attractions function as the
pulling force that pulls travellers from different areas for new experiences.
Background to Emerging markets
Illustrations of several emerging markets that have been mentioned above will be highlighted
here on below. This will be done to understand why these places are emerging and new
consumers are being attracted towards these places:
United States (America) - Two major continents add up to the United States, which are
North and South America. Within America, there are several top locations such as New York,
Los Angeles and others. The top attractions within the United States include places such as
the Grand Canyon, Niagara Falls, Statue of Liberty, The White House and other places.
Places such as this have a high significance in the cultural map of the country and bring pride
to its citizens.
Japan (Asia) - Japan is known for its rich traditional background and high respect and
humility that its citizens pay to others. Japan has multiple attractive destinations such as
Mount Fuji, Kinkaku-ji and others (Rothaermel, 2015).
China (Asia) - China is one of the most densely populated countries around the world and
has a high number of tourism potential with places such as the Great Wall of China the
Palace Museum summer palace and other areas.
Brazil (Africa) - Brazil is an enormous country that has several groups of tribal people
inhabiting it and has one of the best locations around the world. It includes places such as Rio
de Janeiro, Salvador, Manaus and others.
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From the above-enlisted countries, the best place in which The Crowne Plaza can
internationalize is in Beijing, China. The rationale behind entering this market is that the
number of consumers that visit the country and inhabit high-income travellers and individuals
who are able to afford premium services. This would enable the enterprise to grow in a short
period and have the scope of attaining a large market share, because there are very few
hospitality companies that are operating there.
PESTLE of selected emerging market
Figure 5 - PESTLE Analysis
(Source: Wheelen et al., 2017)
PESTLE analysis in an external form of analysis where a particular industry of a location is
evaluated through six factors (Wheelen et al., 2017). These factors include elements such as
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political, economic, social, technological, legal, and environmental factors that influence an
organisation.
Political - The political party that is currently provided within the country is The Republic of
China. This group is a dictatorship democratic party that is primarily controlled by the
working class union of several large industries. If a hotel company like The Crowne Plaza,
wishes to create its mark in a country like this then it must focus on building and creating a
cooperative employee relation through which political stability can be maintained. The
Republic of China is a self-sufficient and self-governing body that looks into the regional and
ethical needs of citizens and helps them be empowered. (Hill et al., 2014)
Economic - When observing the currency rate of China it can be observed that China's
currency has increased by 21% when compared to the value of the dollar and this concerns
the Chinese authorities, as export charges would likely be raised. In addition to this China has
recently become one of the best locations where outer countries can make foreign direct
investments (FDIs). Currently, the total accounts of FDI that come within the country are
above 30% of the total value added production that the organisations within the country
produce (Ansoff et al., 2018). Owing to factors such as this, companies such as The Crowne
Plaza would have to rely on more internal production of material and has a viable choice of
earning capital from share investors from the outer market.
Social - The current population of China is above 1,133,682,501 owing to factors like this
currently people are abstaining from engaging in population growth activities. Therefore even
though there is a steady increase in the population rate the number of birth rate in comparison
to previous years has fallen. In addition to this with the presence of globalisation the current
young generation is more career focused and puts less emphasis on creating a family as living
expenses increase.
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Technological - Companies such as Baidu and Tencent help there to be high technological
development within China. These organisations are creating new automation machines that
assist the hotel industry to eliminate cleaning staff members and install machines that clean
various aspects of their hotel. The rise in social media platforms such as Facebook, Twitter
and others has led to people interacting online. People are now able to book hotels more
conveniently and browse through destinations in China where they want to visit.
Legal - Inside China, several laws and regulations dictate and intervene in a company's
operations so that more employees are benefited in the long run. These laws assist in
lowering any form of discrimination that is present within organisations and giving more
opportunities to the subordinates to perform. Some of these laws include regulations such as
PRC Labour Law 1995, PRC Labour Contract Law 2007 and others (Loc.gov, 2019). Apart
from looking over the needs of the employees, these laws assist in supervising whether a
company is complying to the various rules that have been stated by the government. These
laws suggest that a governance professional must be hired so that every aspect of a company
is checked (Olsen and West, 1998).
Environmental - China is one of the largest industrialisation hubs around the world. Owing
to this, numerous factors that operate within the country there is constant production of
contaminated smoke, non-recyclable solids, toxic chemicals and other elements. These harm
the environment directly through infecting the air and water bodies that are present around
the nation. In addition to this, there is high growth in negative environmental phenomenon
such as the global warming greenhouse effect ozone depletion and others. More than 30,000
people are killed within China with the last year due to a large amount of carbon dioxide
emission.
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