Operations Management Analysis: Fairmont Hotels and Resorts Report

This report offers a comprehensive analysis of Fairmont Hotels' operations management, beginning with an introduction to the company and a description of the hospitality industry. It explores Fairmont's mission to provide luxury accommodations and exceptional customer service, while also addressing the competitive landscape and the importance of efficient operations. The report examines Fairmont's strategic location choices, considering factors like population density and proximity to suppliers to reduce costs. It highlights the company's strengths, including skilled employees and a high growth rate, and uses the BCG matrix to assess its market position relative to competitors like Shangri-La Hotels. A PEST analysis is conducted to evaluate the political, economic, social, and technological factors influencing Fairmont's expansion into new markets, such as Nigeria and China. The analysis concludes with references and an appendix that provides market growth and market share data for Fairmont and its competitors.

Running Head: OPERATION MANAGEMENT 1
Operations Management
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Introduction
Description of the Firm
The first Fairmont hotel was opened in 1907 in San Francisco (Fairmont, 2017). The old
facility soon developed to become the city’s ideal location for most presidential visits,
accommodation and political meetings (Fairmont, 2017). Following its establishment, the name
Fairmont quickly came to be associated with place of the occasion, which was the auspicious
beginning that gave birth to the Fairmont Hotels & Resorts brand (Fairmont, 2017). Fairmont has
majored in its commitment to growth, expanding its hospitality operations into a global industry
leader with some services, projects, and existing hotels (Fairmont, 2017). The firm has built an
international portfolio of award-winning properties aimed at expanding by currently having more
than seventy hotels worldwide.
Description of the Industry
Fairmont’s primary mission is to become the best luxury site for customers, by offering
the best dining and accommodation services (Fairmont, 2017). It also aims at becoming the best
destination, hosting various events including conferences and weddings. With the rebirth of
Fairmont Century Plaza targeted to spend approximately $2.5 billion in Los Angeles, the firm
will attract even more prominent individuals, with the properties performing the best in the
respective market The chain, however, has continued to face competition from other hotels such
as Rosewood, Kempinski, The Langham Hotels and the Four Seasons among others (Owler,
2017). For a firm to be competitive in the hospitality industry, it must be able to demonstrate
excellent customer service, which ranges from service excellence, reduction in wait times and

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producing consistent, high-quality meals and services. Customer service is a vital aspect of
operations management; therefore, efficient operations management is of critical importance to
the hotel industry.
Fairmont chain would use the relative type of location to expand to new markets,
whereby the hotels are located about other locations, for example, the spectacular sceneries
offered by the three Pillars of Egypt and the history Century Plaza that is situated in the middle
of Century City in Los Angeles (Owler. (n.d.). Revitalization of the latter hotel which is to open
as Fairmont Century Plaza which will be added as a landmark hotel in the market of US will
expand and lead to the growth of the luxury space ("About Us - Fairmont Hotels & Resorts -
Fairmont," n.d.). The expansion of Fairmont chain into the roots of Southern California would
see the firm reap more profits ("Fairmont Hotels & Resorts to Manage the Historic Century Plaza
Hotel in Los Angeles - Fairmont Hotel," n.d.). Fairmont considers the location of other things
before deciding if to expand its hotels in the region. The landmark of Los Angeles, for example,
is near the most known neighborhood of 20th Century Fox studios, surrounded with over ten
million square feet next to offices of high class, restaurants, and Beverly Hills which is among
the areas in the United States with the highest grossing.
Additionally, the geographic location of Fairmont chain close to main tourist destinations
lures many customers to visit the hotels. For example, travelers may opt to attend Fairmont Nile
City’s Diplomatic Suite located in Egypt, to have a panoramic view of the River Nile and the
Pyramids (Owler, 2017). The scenery including the suits which are styled with Art Deco
furnishing is significant attraction sites that help boost the number of customers willing to spend

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part of their holidays in this hotel. Fairmont strategic location takes into consideration of the
population, which is considered to be the potential customers.
Fairmont’s chain located in the cities and close to the manufacturers and suppliers of
products helps reduce the company’s costs. The reason is that they cut on transportation costs-
which widely vary depending on the distance from the supplier-due to their proximity to both the
bulky raw materials and softer suppliers ("Resort Accommodations at Fairmont Hotels & Resorts
- Fairmont Hotels & Resorts - Fairmont," n.d.). The location of Fairmont can as well be termed a
reason for the high generation of revenue by the firm. The idea behind this is due to the vast
number of customers who gain access to Fairmont chain.
Fairmont chain has got specific strengths that enable it out-do their competitors in the
hospitality sector. First, they have got highly skilled employees ("Overview - Fairmont Hotels &
Resorts - Fairmont," n.d.). The company encourages secondary and post-secondary learning
programs to develop the best practice. Nonetheless, donations by the firm have aided them to
acquire qualified workforce that translates to delivering best quality services to the customers
(Heizer, Render and Griffin, 2016). Second, is the high growth rate of Fairmont, where, as
indicated in their website, has many of its locations where their buildings were the first to be
elected in developing cities for example across North America. Hence, they are termed to have
grown along with the early communities. Their buildings are as well marked as city landmarks.
BCG Matrix
The growth market share matrix is designed to assist with the long-run strategic planning,
to help an organization consider opportunities for growth by reviewing their portfolio products

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with comparison to those of their competitors. Fairmont chain main competitors are Shangri-La
Hotels and Resorts, Luxury Hotel Experts, and Rocky Point Ventures. Fairmont chain is
concerned with four factors that make it successful; the company focuses on customers as well as
the environment so that it achieves its goal of being environmentally friendly ("Competitive
Advantage," 2012). They also aim to maintaining the best quality of their products including
their meals and services offered. They focus on innovation where their buildings were first to be
erected, hence they are termed to have grown with the community, and lastly they concentrate on
responding to their customers by hiring the best workforce. Nonetheless, their competitors adopt
different or similar strategies, which if they take into account, they can be in a position to plan
for future growth to gain competitive advantage.
Shangri-La Hotel, for example, their strategy of marketing aims at delivering best quality
services, having affordable room rates, and returning benefits to the customers, as well as giving
the best competitive rates guarantee to their clients ("Essay: Competitive Strategy of Shangri-La
Hotel | Termpaper Queen," n.d.). It also adopts a loyalty program which is known as Golden
Circle Guest Recognition Program constituting of three levels which vary depending on the
client’s stay in their hotels, thus enabling it to return even more to its customers. If Fairmont
chain considers such strategies when determining their plan for growth, they can be in a position
to gain a better competitive advantage over their competitors.
PEST Analysis
A PEST analysis is a framework for analyzing the environmental factors-usually external
factors when conducting a market research. It is used when undertaking a market growth. The
chain targets at expanding its locations significantly considering both the political,economic,

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social, and technological factors. First, it has regarded expansion of its hotels to Nigeria, an
African nation ("Fairmont Continues Expansion Into Nigeria: Signs New Luxury Hotel in
Abuja," n.d.). The hotel will be situated in Abuja town thus fulfilling the rising demand for
luxury in the country and help in shaping the social-culture of this oil-producing nation. The
stable growth of the country makes it a world-class destination for leisure and travel. The
technology in the city, with the expanded road network, offers excellent access to the hotels.
Second, considering the economy and technology used in China, Fairmont has targeted to
open Fairmont Wuhan by 2017. The hotel is intended to house both business and leisure travelers
("Fairmont Hotels & Resorts Continues its Expansion in China with Fairmont Wuhan - Fairmont
Hotels & R," n.d.). The selection of Wuhan, capital to Hubei Province, is due to consideration of
its economic growth and level of technology, being a transportation hub, financial, as well as
education center for Central China, making the hotels to be easily accessible. The location of the
hotels will be close to the Hankou Railway Station, the Tianhe International Airport, and the
speedy railway system. All these considerations to the technological advancement of China offer
excellent accessibility to the Fairmont hotels. By expanding to this location in different cities, the
Fairmont hotels will have expanded into new markets, tapping new customers, hence boosting
their annual revenue. Thus, conducting a PEST analysis is essential as it identifies the best place
to locate their hotels for accessibility and other reasons.

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References
About Us - Fairmont Hotels & Resorts - Fairmont. (n.d.). Retrieved from
http://www.fairmont.com/about-us/
Competitive Advantage. (2012, November 22). Retrieved from
https://christiansaitportfolio.wordpress.com/management-environment/competitive-
advantage/
Essay: Competitive Strategy of Shangri-La Hotel | Termpaper Queen. (n.d.). Retrieved from
http://termpaperqueen.com/essay-competitive-strategy-of-shangri-la-hotel/
Fairmont Continues Expansion Into Nigeria: Signs New Luxury Hotel in Abuja. (n.d.). Retrieved
from http://www.marketwired.com/press-release/fairmont-continues-expansion-into-
nigeria-signs-new-luxury-hotel-in-abuja-2057171.htm
Fairmont Hotels & Resorts Continues its Expansion in China with Fairmont Wuhan - Fairmont
Hotels & R. (n.d.). Retrieved from
http://www.fairmont.com/press-room/articles/fairmont-wuhan/
Fairmont Hotels & Resorts to Manage the Historic Century Plaza Hotel in Los Angeles -
Fairmont Hotel. (n.d.). Retrieved from
http://www.fairmont.com/press-room/articles/fairmont-century-plaza-hotel/
Fairmont. (2017). Environment & Ecosystem. Retrieved October 9, 2017, from Fairmont
Fairmont. (2017). Fairmont Chateau Laurier. Retrieved October 7, 2017, from Fairmont

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J. Heizer, B. Render and P. Griffin. (2016) Operations Management: Sustainability and Supply
Chain Management, Second Canadian Edition, ISBN-10: 013438430X • ISBN-13:
978013438430 ©2017 • Cloth Bound with Access Card Published 01/20/2016 • Instock
Overview - Fairmont Hotels & Resorts - Fairmont. (n.d.). Retrieved from
http://www.fairmont.com/corporate-responsibility/environment/
Owler. (2017). Owler Corporation. Retrieved October 7, 2017, from Owler Website:
Owler. (n.d.). Retrieved from https://www.owler.com/iaApp/171396/fairmont-hotels---resorts-
competitors?onBoardingComplete=true
Owler. (n.d.). Retrieved from https://www.owler.com/iaApp/171396/fairmont-hotels---resorts-
competitors?onBoardingComplete=true
Resort Accommodations at Fairmont Hotels & Resorts - Fairmont Hotels & Resorts - Fairmont.
(n.d.). Retrieved from http://www.fairmont.com/about-us/ourhistory/

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Appendix
Market growth Market share
Fairmont hotels Over 70 hotels and 20 new
hotels opening
13.7%
Shangri La Has over 95 hotel
destinations and with over
13 more to open
12.4%