Hotel du Vin: International Marketing Expansion Strategy Report

This report provides a comprehensive analysis of Hotel du Vin's international marketing strategy, focusing on its expansion into overseas markets. It begins with an introduction to international marketing in the travel and tourism sector and then provides a SWOT analysis of Hotel du Vin, highlighting its strengths, weaknesses, opportunities, and threats. The report further delves into micro and macro environment analysis, including customer, government, and employee factors, as well as political, economic, social, technological, environmental, and legal (PESTEL) factors. A competitor analysis using Porter's Five Forces model is also included. The report then explores current international practices and identifies the US as a potential market for expansion, discussing market entry methods such as licensing. Segmentation, targeting, and positioning strategies are examined, with a focus on high-income segments and customized service offerings. Finally, the report addresses methods for evaluating marketing costs and potential issues with the chosen strategies, concluding with a risk assessment and implementation plan.

INTERNATIONAL MARKETING FOR
TRAVEL AND TOURISM

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
CURRENT INTERNATIONAL PRACTICE.................................................................................5
MARKET EXPANSION.................................................................................................................6
SEGMENTATION, TARGETING, POSITIONING......................................................................6
METHODS TO EVALUATE COST..............................................................................................7
ISSUE WITH THE STRATEGY....................................................................................................8
PROMOTIONAL STRATEGY......................................................................................................9
RISK ASSESSMENT AND IMPLEMENTATION.....................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
International marketing has become essential in the travel and tourism because of the
competition in hotels as well as increasing demand for travelling. This has forced the
organization to market their hotels internationally so that different country traveler can be
attracted towards it. This report talk about the Hotel du Vin which is the luxury and boutique
hotel as this hotel has been established since 1994 and it has expanded its branches in 16
locations (TERMS & DE TA ILS , 2016 ). Further, it is planning to expand its branches in the
overseas market and for that micro and macro environment analysis is carried out to identify the
opportunity. Further, the emphasis will be laid on selection and market entry method which will
be adopted to expand it chain. Lastly, the target market and the positioning will be selected to
effectively market the services.
SWOT analysis
In the present era, with the increasing competition, it is required by the organization to
develop effective marketing strategy. As the competition in the travel and tourism industry is
increasing effectively so because of this reason, the hotels are required to build competitive
advantage among its competitors. Hotel du Vin is the luxury boutique hotel so they are required
to analyze the current situation to effectively market their activities (Hollensen, 2015). The tool
which can be used for analyzing the market is SWOT.
Strength
 The main strength of the hotel is its location as it is established in the areas which are the
prime location of UK. Due to this reason the hotel becomes the preference for the
customers.
 The target markets of the Hotel du Vin are small and are they are ready to spend lavishly
to experience the service of hotel.
 It has expanded its chain locally so the marketing activity will not require much finance
to make the customers aware.
Weakness
1

 They always work in the small scale environment, so they are not technologically
upgraded which effect sales of the hotel.
Opportunities
 Demand for the luxury hotel is increasing in developed countries, due to this reason they
can expand their hotel chain outside their nation.
 Further, Hotel du Vin can adopt the internet technology to market their activities
effectively (Helms and Nixon, 2010).
 With the increasing tourism, demand for the hotel is increasing oversees.
Threat
 The price war between the luxury and boutique hotel are intense which directly affects
the profitability of the organization
 In expanding overseas, Hotel du Vin has to change its operations according to the needs
and preferences of the local citizens residing there. This will incur huge cost.
Micro analysis
 Customers- They are the important factor, it is required by the hotel to provide the
services according to their needs as well as expectations.
 Government- There are several types of laws and regulations regarding the food quality
in hotel are made. In this case, Hotel du Vin is required to follow all the policies
regarding safety to support the government.
 Employees- To expand the organization internationally, it is required by the Hotel du Vin
to train the employees effectively. This will make them skilled and will help the
organization in competing with the competitors.
Macro analysis (pestle)
In this, political factor like tax affects the revenue and profit of the Hotel du Vin, so in
this case, the major barrier is the tax regulations of government. Further, the organization is
required to consider the economic condition of the country at the time of carrying out the
marketing activity. They can expand in the area which is having high purchasing power. Besides
this, according to the social trends, the Hotel du Vin is required to carry out the operations. On
the other hand, by considering the technological factors and preference the hotel can market the
2

activity accordingly. Besides this, Hotel du Vin is required to follow the environmental laws for
safeguarding the environment (Terpstra, Foley and Sarathy, 2012). On the other hand, legal
regulations regarding the employee safety etc are required to be followed by the hotel.
Competitor’s analysis (porter’s five force model)
According to the porter’s five force model, it has been analyzed the intensity of the
competitors is high in case of hotel. Further, the as per the evaluation of the suppliers, there are
many hotels so the Hotel du Vin is required to carry out the business in terms of suppliers.
Besides this, the intensity of the substitutes is less because the tourist mostly prefers the hotel for
staying (Papadopoulos and Heslop, 2014). Threat of new entrant is more because many of the
companies are planning to enter the hotel industry. The bargaining power of buyers is more
because there are many competitors in the budgeted hotel.
CURRENT INTERNATIONAL PRACTICE
Hotel du Vin is operating the countries of united kingdom. Due to Hotel du Vin good
brand image in UK they have expanded its branches in those countries only. The hotel has
expanded internationally in those UK countries which have same taste and preference. With the
increasing competition and the demand, it is required by the hotel to carry out its international
operations in going across the UK boarder (Sheng, Zhou and Li, 2011). The hotel needs to
identify the potential countries in which they can expand its existing chain. As it is the luxury
and the boutique hotel so the best potential market for the hotel is the developed countries and
the tourist nations (Ghauri and Cateora, 2010). The hotel can plan to expand its operations in US.
This is the best option because the taste, preference and the culture of UK and US are same. In
this case, it will not be difficult for the Hotel du Vin to operate in this sector. Further, with the
increment in the tourism sector, the hotel can perform well. For making the hotel international,
the hotel needs to identify the opportunity and the target market. US are good opportunity for
Hotel du Vin because it will not face any barrier in terms of resources as it will assist in
establishing the business effectively. With the high purchasing power, the target market is huge
and US has been known for the tourism. So in this case, there is huge potential if the Hotel du
Vin expands its market in US (Meissner, 2012).
3

MARKET EXPANSION
In expanding its market, it is required by the Hotel du Vin to select the appropriate
market in which the hotel can provide services to the customers. Further, the hotel needs to
identify the method through which the hotel can enter US market. These aspects are required to
be taken care at the time of entering other country. In case of the market select, US are one of the
best options because as it is the developed country and even the economic condition are stable
(Hall, Timothy and Duval, 2012). Due to this reason, it will be convenient for the hotel to
perform the operations effectively and attract large tourists. By expanding in US, the hotel will
be able to build a successful stand in the developed country as this will help in identifying the
further opportunity for expansion.
The major concern is the method used for entering the market, there are various ways, but
it is essential to choose the most suitable way because the success of the firm is majorly
depended on the entry mode. Licensing is the best entry mode which can be adopted by the Hotel
du Vin to enter in US. This is suitable because the hotel has its own brand image so according to
their goodwill, they can easily enter the market and attract the customers towards their services.
In case of licensing, US are the licensor which will provide Hotel du Vin with the right of
resources which are required to carry out the operations (Dasgupta, 2011). The resources include,
land, labor etc. the main advantage of the licensing method is that it is good for the organization
which are first time expanding their markets in the international country. On the other hand,
there are some barriers which are witnessed at the time of adopting the licensing method. It has
been seen that lower income is generated as compared to the other entry modes. Besides this,
other partner will be operating the operations of Hotel du Vin so there is chance that the
reputation and the goodwill can be ruined by it. If these barriers are overcome by the hotel then
the hotel can successfully function in US (Kim, Chung and Lee, 2011).
SEGMENTATION, TARGETING, POSITIONING
The luxury and the boutique hotel customers are the one who want to experience the
lavish services of the restaurants. In this case, the segmentation is done on the basis of income.
The high income group is generally the business travelers as well as the tourists who come to
visit the place. Due to their limited capacity they are able to provide better services to the
customers. This segmentation has been chosen because they provide luxury experience, as they
4

have private bars and restaurants, they also provide the customized service according to the
needs and expectation of the customers.
Further, in this case, the targeting strategy which can be chosen for the Hotel du Vin is
focus or concentrated strategy (Sigala, Christou and Gretzel eds., 2012). In this strategy, the
hotel will not focus on all the segments of customers, their emphasis will be on the special users
who will be their potential customers in the near future. As it is small and the luxury hotel so the
customers who have huge purchasing power selects this type of hotel for their stay. In case of
US, it is profitable because according to the needs and expectations of the customers, the
marketing strategy of the Hotel du Vin will be defined (Luxury Hotels Market - Global Industry
Analysis, Size, Share, Growth, Trends, and Forecast 2015 – 2021, 2016). As it is the small
organization so they are not interested in serving all segments of the individual. On the other
hand, in adopting this strategy, one problem arises is that if the segment does not prove to be
profitable then the hotel will incur huge losses because a specified segment was targeted by the
hotel (Ayeh, Au and Law, 2013).
Further, the positioning strategy which can be adopted by the Hotel du Vin to market
their product is the services which the hotel will be offering to its customers. The hotel is
providing luxury services and as they are small in size so they can provide the services according
to the customer preference (Zeng and Gerritsen, 2014). Most of the tourists visit these types of
hotel because of the services which is rendered by them. This positioning strategy will be
profitable in US because the customers are attracted towards the services are provided by them.
The major positioning can be providing the customized services to the guests.
METHODS TO EVALUATE COST
It is important to evaluate the cost which has been incurred while carrying out the sales
promotion activity of the organization. This evaluation will help to identify the profit which is
earned by the hotel in promoting their products. There are several methods which can be used to
analyze the cost effectiveness in the sales promotion activity:
 Cost effectiveness analysis- In this approach, the cost effectiveness is evaluated of two
methods. Like in case of sales promotion, specific discounts are planned to be provided to
attract the customers, besides this, social media marketing will be used to promote their
5

activity (Joshi and Hanssens, 2010). In this case, the cost benefit as well as the expense
will be calculated to identify the effectives of the strategy. This is generally adopted by
the organization which uses two different methods to achieve one objective.
 Cost benefit analysis- This approach helps in identifying the benefits in terms of money
incurred by the Hotel du Vin while implementing this strategy. Further, the alternatives
will be evaluated according to the monetary gain it is giving to the hotel. It is beneficial
because, through this, the hotel will be able to identify that through adopting different
strategy it is giving benefit or not (Tan and Sousa, 2013).
ISSUE WITH THE STRATEGY
One significant issue which will affect the overall strategy is the increasing rivalry in the
field of hospitality industry. With the increasing tourism and demand for travelling, most of the
organization is focusing on the hospitality industry which is giving huge competition to the
existing brands which are already operating in this sector (Chaston, 2014). By this factor, all the
strategy regarding, targeting, positioning will be affected significantly. In US, the target
customers are many but as it is the developed country so there are many hotel chains which are
providing the same type of servicing to the guests. This makes it difficult for the hotel to function
effectively in the country. In every step they are required to compete with the competitors who
are selling the homogenous products. By analyzing this factor only, the hotel will have to change
the strategies which are adopted by them (Bertoli, 2013).
The main problem will be seen at the time of marketing its product and services. Due to
increasing marketing activity and technology, it has become necessary for the Hotel du Vin to
promote its product significantly so that the customers can be attracted towards it. In the present
era, strategy is made to compete with the competitors and earn huge profit. In US, there are many
luxuries and the boutique hotel chain so in this case, the Hotel du Vin has to adopt different
strategy which can lure the customers to take their services (Tuli, Bharadwaj and Kohli, 2010).
In case of market entry, Hotel du Vin has chosen the licensing strategy, as in this tactics, few
resources are given by the country to establish its business. In this case, competitors will have
negative impact on the business because with the resources they can be able to reduce the cost
which is used in developing the strategy. So it can be said that the intensity of the competitors
will have huge impact on the business of the organization. Besides this, for meeting the needs
6

and demands of the target customers, they will have to modify the strategy according to the
competitors of the US. In this case, making their mark in the country, Hotel du Vin will have to
compete with the competitors effectively (Ayeh, Au and Law, 2013).
PROMOTIONAL STRATEGY
Promotional strategy has become one of the significant tools which help the organization
in attracting the customers towards their products and the services which are offered by them.
For making it simpler for the organization, marketing mix can be used as a technique as this will
assist in analyzing every area which can market its products and services effectively. There are
basically 7P of marketing mix which are as follows:
 Product- The target audience is basically the rich sectors who are fond of luxury as well
as travel. For them, the positioning is carried out on the customized services which are
provided to them (Sheng, Zhou and Li, 2011). The product is service which is rendered to
the guests.
 Place- In case of distribution, Hotel du Vin planned to establish the hotel in the mid of
the city. This is because, the travel select their stay which is near to the places of visit. It
will be prove to be benefit for the travelers.
 Price- The target customers are the rich class segment who are not affected by the price
which is offered by the Hotel du Vin. According to the luxury and the comfort zone, the
price is stated high for the rooms (Dasgupta, 2011). This is done because if the price is
quoted low, then the customer perceives that it is not of their standard.
 Promotion-As the target market is the rich class customers, so the promotional activity is
carried out by using social media as a tool. In the social networking sites Hotel du Vin
will promote its services (Kim Chung and Lee, 2011).
 People- The target audience is are the prestigious customers so in this case, the hotel will
mainly focus on the complaint handling procedures. In this, the feedbacks and the
complaints regarding the services will be solved effectively.
 Physical environment- further, the structure, layout of the Hotel du Vin is made
according to the luxury of the customers. They will have royal experience when they will
enter the ambience of the hotel (Tan and Sousa, 2013).
7

 Process- The hotel staff performance are effectively monitored time to time, this will
help the Hotel du Vin to identify the loop holes in the services provided by them.
RISK ASSESSMENT AND IMPLEMENTATION
There are several types of risk which are witnessed at the time of implementing
promotional strategy. The main risk is of the technology, with the upgrading of the technology, it
is seen that at the time of implementing promotional strategy, the technology has become
obsolete. Or the social networking sites which are used by the customers have become old. In
that case, it is required by the Hotel du Vin to make the strategy flexible so that changes can be
executed (Bertoli, 2013). Further, another risk is the change in policy as well as rules and
regulations of the government. For this, the hotel is required to analyze the political scenario
effectively so that possible changes can be made at the time of implementation.
CONCLUSION
From the report it can be concluded that marketing has become important in travel and
tourism sector especially when the firm is planning to expand its operation in international
market. Hotel du Vin is required to make the marketing plan by analyzing the environment in
which it will be carrying out its operations. Besides this, for expanding it beyond UK, the best
country is US. As this will help the hotel to carry out the functions effectively and it has huge
target market for the luxury and the boutique hotel chain. On the other hand, licensing is the
good option for the hotel to enter the US market.
8

REFERENCES
Books and journal
Ayeh, J.K., Au, N. and Law, R., 2013. Predicting the intention to use consumer-generated media
for travel planning. Tourism Management, 35, pp.132-143.
Bertoli, G., 2013. International marketing and the country of origin effect: the global impact
of'made in Italy'. Edward Elgar Publishing.
Chaston, I., 2014. Small business marketing. Palgrave Macmillan.
Dasgupta, D., 2011. Tourism marketing. Dorling Kindersley, New Delhi.
Ghauri, P.N. and Cateora, P.R., 2010. International marketing (pp. 15-16). McGraw-Hill Higher
Education.
Hall, C.M., Timothy, D.J. and Duval, D.T., 2012. Safety and security in tourism: relationships,
management, and marketing. Routledge.
Helms, M.M. and Nixon, J., 2010. Exploring SWOT analysis-where are we now? A review of
academic research from the last decade. Journal of strategy and management, 3(3),
pp.215-251.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Joshi, A. and Hanssens, D.M., 2010. The direct and indirect effects of advertising spending on
firm value. Journal of Marketing, 74(1), pp.20-33.
Kim, M.J., Chung, N. and Lee, C.K., 2011. The effect of perceived trust on electronic commerce:
Shopping online for tourism products and services in South Korea. Tourism
Management, 32(2), pp.256-265.
Meissner, H.G., 2012. Strategic international marketing. Springer Science & Business Media.
Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in
international marketing. Routledge.
Sheng, S., Zhou, K.Z. and Li, J.J., 2011. The effects of business and political ties on firm
performance: Evidence from China. Journal of Marketing, 75(1), pp.1-15.
Sigala, M., Christou, E. and Gretzel, U. eds., 2012. Social media in travel, tourism and
hospitality: Theory, practice and cases. Ashgate Publishing, Ltd..
Tan, Q. and Sousa, C.M., 2013. International marketing standardization. Management
international review, 53(5), pp.711-739.
Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
9

Tuli, K.R., Bharadwaj, S.G. and Kohli, A.K., 2010. Ties that bind: the impact of multiple types
of ties with a customer on sales growth and sales volatility. Journal of Marketing
Research, 47(1), pp.36-50.
Zeng, B. and Gerritsen, R., 2014. What do we know about social media in tourism? A
review. Tourism Management Perspectives, 10, pp.27-36.
Online
TERMS & DE TA ILS . 2016. [ Online]. Available through:
<https://www.hotelduvin.com/about-us/>. [Accessed on 9th December 2016].
Luxury Hotels Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast
2015 - 2021. 2016. [ Online]. Available through: < http://www.prnewswire.com/news-
releases/luxury-hotels-market---global-industry-analysis-size-share-growth-trends-and-
forecast-2015--2021-300132533.html />. [Accessed on 12th December 2016].
10