MGNT922 Research Report: Changing Trends in the Hospitality Industry

This MGNT922 research report investigates the changing trends in the Australian hospitality industry, with a specific focus on Novotel Wollongong. The report begins with an executive summary outlining key findings, followed by an introduction that establishes the research problem: assessing the impa...Read More

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MGNT922
7/13/2019
Student name

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Executive summary
The Australian hospitality industry has experienced various changes since centuries, where the
major reason is the use of technology in the industry and introduction to digitalization. Novotel
Wollongong was founded and initiated in 1989 with the availability of eighty rooms. From the
statistics, it can be said that the demand and opportunity for the hotel brands have increased in
Australia along with increased Australian destinations. The research problem is to identify and
assess the changing trends in the hospitality industry to meet customer needs and factors
influencing the consumer-purchasing decision. Considering the nature of the problem, the data
collection method used for this research is secondary data collection.
It has been identified that the company is been serving in 60 nations with more than 526 hotels in
various nations across the globe. According to the statistics, 1.05 bookings have been recorded
every minute for the brand. Bargaining power of buyers is quite a large threat for the company
and it will affect a large percentage over Novotel hotel Wollongong. The direct competition of
Novotel Wollongong North Beach Hotel includes sage hotel, which is a four-star hotel in
Wollongong. One of the major competitors of Novotel hotel that is hotels by Marriot group that
are offering mid-scale hotel service as well. Social media marketing has been an effective
strategy for the company, it can be identified through the analysis of Twitter followers of the
brand in the last six months. Digitalization has played major role in the changing trends of
hospitality business as the company provides various platforms to book the hotel through online
mode and other online services; for example, trip advisor is one of the recent change in trend in
the hospitality industry. Thus, it eventually affects the consumer purchasing decision, reflecting
smarter consumer to look out for the rating before purchasing the product and service from the
hotel. Some of the key limitations of this research included the use of only secondary research
and the limited scope of the study that is the research was limited to the Australian market.

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Contents
Executive summary.........................................................................................................................1
Chapter I: Introduction....................................................................................................................3
Chapter II: Literature review...........................................................................................................4
Chapter III: Research Methodology................................................................................................6
Statement of Problem..................................................................................................................6
Research Questions......................................................................................................................6
Research Methodology................................................................................................................7
Problem Definition..................................................................................................................7
Research Design & Plan..........................................................................................................7
Research Limitations...................................................................................................................7
Chapter IV: Research Analysis and Interpretation..........................................................................8
Chapter V: Conclusion and Recommendations.............................................................................16
References......................................................................................................................................17

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Chapter I: Introduction
The main research problem to be considered in this research proposal would be assessing the
change in environmental factors and assessing its effect on consumer behavior considering the
hospitality industry. The research report will focus on providing solution to five key research
questions pertaining to the research problem. The report will be based on relevant secondary
sources in order to make the resort more relevant and valid. The organizational case considered
to be discussed in detail for better understanding is Novotel Wollongong hotel, that is part of the
Accor hotel group (accorhotels, 2019).
Novotel Wollongong was founded and initiated in 1989 with the availability of eighty rooms.
The service provided by the company is extraordinary with being located at a prime location in
the Illawarra area and is identified to be the market leader. Considering the current scenario, the
company consists of 280 staff or more, where thirty percent of personnel are recruited on a full
time basis and around five percent are part-time workers. The company has considered regular
training and development programs in order to attract maximum customer by providing the best
quality services and bring innovation through services and experience provide to the customer
(accorhotels, 2019).
The Australian hospitality industry has experienced various changes since centuries, where the
major reason is the use of technology in the industry and increase in digitalization. It has been
observed that providing the services using human resource talent is not enough in the hotel's
industry to attract customer, neither do the décor of the hotel. The technological advancement
has changed the scenario of the hotel industry that would be discussed in detail in the report
further. The competition has increased to a large extent which has impacted the buying decision
behavior of the customer, that is the criteria for the customer to make the purchase decision has
been changed since with the changing trends in the industry in Australia. Moreover, the demand
for leisure has also increased, due to which the innovative ideas have to be adopted by the brands
to sustain in the market and retain the customers (smh, 2019).

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Figure 1: (Source: (tourisminvestment, 2019))
From the statistics presented above, it can be said that the demand and opportunity for the hotel
brands have increased in Australia along with increased Australian destinations. Therefore, it has
been observed that the Australian hotel industry consist of the major parts of the economy of
Australia and providing large employment opportunity in the nation. As per the statistics by the
Australian Bureau of statistics, approx. 90,000 people have employment in the accommodation
sector in the nation (aha.org, 2019).
Chapter II: Literature review
Consumer behavior will be determined by various factors and influence due to appointments and
happening in the internal and external environment of the business. Hospitality market changes
are the key aspects reflecting the business of the various brands within the industry and
influencing the purchasing decision of the consumers (Alvai & Wahab, 2013). The trends that
are changing in the industry could be studied through one of the strategic frameworks that are
Porter's five-force model. As per this model, five major forces are the key reasons for the
changing behavior of consumers and change impact business within the industry. The first factor
as per this theory is the threat of new entrants, which includes the threat or opportunity for a
company due to entering of a new company into the market that may enter into the industry with
new technology and idea and may act like a major threat to the existing company (Birasnav,

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2014). According to the researchers, the industry rivalry is one of the major threats among these
five forces that reflect the key competition in the industry and the way a company can gain a
competitive advantage after analyzing the key trends adopted by the competitors. Third factors
include bargaining power of buyers, which reflect that the consumers are the king in every
industry and it depends on the demand and supply if the negotiation power is in hands of buyers
or company and the way company can reduce the bargaining power of buyers (Jesus, 2015).
According to the research, the bargaining power of suppliers also depend on the availability level
of the raw material required by the company that will reflect the monopoly of the suppliers or
not, that may affect the company’s profit margin and manufacturing cost depending on this
factors. The last factors of the theory are a threat of substitutes (Calboli, 2015). There are
various products, which serve a similar requirement of the consumers, which may influence the
conduct of business and changing consumer decision towards the brand (Chari & Feng, 2018).
According to the scholar, targeting a market is an essential strategic decision by a company that
will largely depend upon the success factor for the company. The consumer behavior is
considered to be a field of study that includes the reason and ways the consumer will make the
purchase of services and goods offered for the company’s attempt to increase the customer value
for which the initial step is to target the correct audience (Jesus, 2015). Market segmentation is
the initial step for preparing the marketing strategy which includes a process to identify the
group of the customer considering a homogenous traits for whom the needs will be understood
and fulfilled. This includes the process of targeting and segmentation, which would lead to the
way to position the brand in the market (Camison & Fores, 2016). The positioning includes
creating the correct perception regarding the brand in consumer minds which could be based on
the tangible factors of the goods offered to the customers that are the product advantages. It may
also position through the pricing strategy of the company, placing strategy, return policy and
many more factors that the researchers believe important to the consumers while making the
decision regarding purchasing (Ho, 2014).
Considering the upsurge in competition and enormous supply in the market, retaining the
prevailing customers for subsequent purchase befits very challenging. Customer retention is the
organizational capability to retain the customers once visited the store of initiated the
relationship with the company through its product or services (Zielke, 2014). According to the

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researchers, which are relevant to this research, study, innovation and digital marketing are two
strategies in customer retention. Digital marketing strategy mainly includes the social media
market in order to keep the customer informed and attracted towards the brand and related offers.
Moreover, the key sustaining strategy would include innovation as the key; this could be
innovation considering processing, product or services (Zhang, 2015). As per the scholarly
review, various kinds of innovation include radical innovation, digital innovation, technological
innovation, new product development, services innovation that could be helpful for a company to
have a competitive advantage over the other companies and sustain for long in the market.
Digitalization is one of the transformations observed in the economy that has affected the work
and action taken by the companies, which have majorly affected the consumer behavior as the
use of the digital appliance and the internet of things has changed the social scenario completely.
This has also affected the organizational strategy and planning that includes the conduct of
business, which has led to the transformation of the business from traditional brick and motor to
e-commerce business that is the online mode of business (Zhang, 2015).
Chapter III: Research Methodology
The research methodology is one of the important chapters that will depict the methods applied
to the research including the theoretical analysis and principles that will be related to a load of
knowledge applied to the study.
Statement of Problem
The research problem is to identify and assess the changing trends in the hospitality industry to
meet customer needs and factors influencing the consumer purchasing decision.
Research Questions
RQ1: Assessing the external factors that reflect changing trends in industry and impact on
Novotel business within the Australian market
RQ2: Identifying the appropriate target market and customer segmentation for Novotel hotel to
increase customer database and retain customers

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RQ3: How to assess the role of innovation, in a social media context, in customer retention for
Novotel
RQ4: Understand the role of digitalization in changing trends of hospitality business in Australia
RQ5: Assessing the future trends in the hotel industry within the Australian market
Research Methodology
Problem Definition
Globalization and digitalization have brought up the new opportunity for the company
considering the use of technology and this could be the major threat for the company which led
the companies in the hotel industry to innovate and update to sustain. With the threat of new
companies entering into the market and increase in competition the key problem is to retain the
customers and sustain in the industry. Through problem statement, it can be said that research
will include assessment of the trends that are identified to be changed since years and have
affected the buying decision of the customers in the hospitality industry (tourisminvestment,
2019).
Research Design & Plan
For conducting, the research and providing a solution to the research problem and research
question framed include by initiating the relevant and valid data. Data collection may do either
primary from the scratch or from secondary sources. Considering the nature of the problem, the
data collection method used for this research is secondary data collection, where various sources
like new articles, scholarly papers, and existing research analysis will be considered for building
up the theoretical frameworks and analysis of the result regarding Novotel hotel. The research
conducted will be qualitative research that will assess consumer segmentation and the impact of
various changing trends over consumer behavior. Thus, it can be said that the type of research
considered for the paper is descriptive research analyzing the recent data that has already been
published will be analyzed for the key result and findings (Wel, 2012).
Research Limitations
Some of the key limitations of this research include the use of only secondary research; the
research could have been stronger if the use of primary data through a customer satisfaction

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survey would have conducted. Another limitation of the research included the limited scope of
the study that is the research was limited to the Australian market and subjects related to the
external environment and its influence on consumer behavior. There are various internal factors
like human research management, which may have affected the business, which was not
included as a part of the study.
Chapter IV: Research Analysis and Interpretation
Novotel Wollongong Northbeach hotel as discussed previously is one of the Accord hotel group
brand. The brands are serving Australia with the accommodation services and provide high-
quality services regarding the rooms, food, power and other services like swimming relaxing and
gym. The four-star hotel has provided the right comfort level 40 customers and served with the
ocean facing the mountain facing for the better experience of the guests. Considering the
literature review the key external factors that may have reflected the changing trends for Novotel
hotel business in Australia could assess through porters five forces model (Jing, 2016). The
threat of new entrants is one of the factors that may largely influence over Novatel business the
reason being great opportunity for which skin hotel in Australian hospitality industry, which can
come up with new and innovative idea, new interior and designing to attract more customers and
attractive prices due to fresh investment done by the shareholders. Some of the hotels that have
entered into Australian hospitality market in 2019 included date dream Island, Fullerton hotel in
Sydney, Fantauzzo Brisbane (Kaplan, 2015). This reflects that the threat of new entrants is high
for Novotel hotel however there is not any popular hotel recently open in Wollongong, Australia.
Moreover, Novotel hotel is serving Wollongong for years, which has made him build goodwill,
and brand recognition that could be helpful for the brand to diminish the threat of new entrants.
Therefore, it depicts that the threat of new entrants is medium in rate for affecting Novotel hotel
business (smh, 2019).
Industry rivalry that is increasing competition is another factor According to literature review
discussion, for which the direct competition of Novotel Wollongong North Beach Hotel includes
sage hotel, which is a four-star hotel in Wollongong. One of the major competitors of Novotel
hotel that is hotel by Marriot groups that are offering to start and mid-scale hotel service as well
(Mills, 2015). Hence it can be said that the competition is very high in the hospitality industry

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within the Australian market which has also impacted the consumer behavior as along with the
demand, the supply of the services has been increasing four years. In order to overcome the
competition or gain competitive advantage Novotel hotel needs to implement innovative services
and include technical innovation. The reason being sustainability in such a competitive market
could be more challenging for Novatel hotel (Hudson & Roth, 2016). However, brand
recognition and global presence of the brand make up for the company to gain a competitive
advantage. From the figure below it has been identified that the company is been serving in 60
nations with more than 526 hotels in various nations across the globe. According to the statistics,
1.05 bookings have been recorded every minute for the brand, which has reduced the financial
risk for the company and the company can take higher risk for a higher return for each hotel
brand located at various locations, so as the Novotel Wollongong hotel (group.accor, 2019) .
Figure 2: (Source: (group.accor, 2019)
Bargaining power of buyers as discussed in the literature review, Is quite a large threat for the
company and will impact a large percentage over Novotel hotel Wollongong. The reason being a
higher supply of four-star hotels around the area which make the consumer the king and the
company would attempt to increase the services through innovation or did use the prices in order
to attract customers and also retain customers which is one of the challenges identified in the
previous section for Novotel hotel. This reflects that the negotiation goes around in the hands of
the customer to a greater extent to which the company works along in order to understand the
customer needs and expectations from the brand and attend to fulfil (Norman & Verganti, 2014).
Novotel has provided an unforgettable experience to the guest which is unique and utmost offer
has been provided to the customer along with the full-service experience and with recent change

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by implementing digital experience to the customer with full of elegance, the model is living and
not forgetting the simplicity. From the bed user rating collected from the Accord hotel website
reflects that the customer satisfaction is quite high from the brand as it included the feedback
from the customers until 2019 which also make the data more valid and reliable to state that the
customer satisfaction and customer rating for the hotel is more than four stars (accorhotels,
2019).
Figure 3: (Source: (accorhotels, 2019)
According to the literature review, the bargaining power of suppliers could also largely impact
the business. In case of Novotel Hotel, It can be said that the bargaining power of suppliers is not
very strong as the company strategy includes a child supply chain and good supplier relations
due to the historical background of the brand, which makes the cost to the company lower and
increases the economies of scale. The key suppliers for the brand of the vendors from whom the
food material are purchased by the company, materials like amenities that the company provided
in the form of bathing products, Electric appliances, services from the third-party regarding the
appliances regular services from the brand. Therefore it can be said that due to good relationships
with suppliers and agile supply chain strategy of the company the financial risk for the company
is not high due to this factor (Pansari & Kumar, 2016).
The threat of substitutes is another factor included in the literature of review which found to be
impactful for the Novotel business but not to the greater extent. The reason being it has been
identified that the company serving unique experience to the customer, who does not have any
direct substitute; however, some of the substitutes for accommodation could be a guesthouse,

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Penthouse that may be a threat to the company but not to the greater extent (Mohd & Sasmita,
2015). Another reason for low substitute threat for the company is the location strategy of the
company that includes providing accommodation for the guest-facing the beach and mountains
along with the unique combination of premium services and the brand recognition making works
the remaining job to attract the customer instead of other substitutes. The location of the brand is
visualized through the map presented below (googlemaps, 2019).
Figure 4: (Source: (googlemaps, 2019)

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Figure5: (Source: (grandviewresearch, 2019)
From the graph above, it has been researched that the hotel market share as per the segmentation
globally in 2017 reflects that the maximum hotels that own revenue and has largest market share
are business hotels then the priority list continues with airport hotels, holiday hotels, resorts and
spa and the remaining parts. Through this finding is it can be analysed and interpreted that the
customer segmentation that is appropriate for Novotel hotel includes with the priority list to
words the business travellers (grandviewresearch, 2019). From the annual report of Accord
hotels, it can be said that the Novotel hotel is part of Wollongong, which reflects that the
appropriate customer segmentation and targeting will include medium to higher-class people
considering the demographic factors of segmentation. Taking into account the psychological
factors of segmentation, the business persons will be the most approachable customer
segmentation for Novatel hotel (Sodhi & Tang, 2014). Moreover, from the financial statement of
a court hotel, it has been analysed that the revenue of the hotel grew by figment is maximum
with 38% in luxury an upscale hotel brands then comes with 34% towards mid-scale hotel brands
and least revenue by economy hotel brands with 28%. Through these findings as presented
below, it can be said that midscale hotel range consists of a large revenue source for the group
for which Novotel is the major brand. Through this, it can be said that the company needs to
retain the customer to a large extent and man must position the brand In order to create positive
perception by the consumer regarding Novotel hotel in Australia (Rialp & Rialp, 2007). Along

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with the business travellers the families will also be targeted who are there to enjoy Beaches
view And the purpose of occasion our holiday or spending time with the family together that is
to target the tourist (Petersen & Kumar, 2015).
Figure 2: Accord hotel revenue by segment (group.accor, 2019)
Brand positioning of Novotel hotel will be regarding the excellence of the service, did you
innovation for which the company has been working for now, And the premium experience for
the guest at the affordable prices possible. This will reflect a big group of the segment that has
been targeted by the company, which is also one of the major strength of the company by now
(Song, 2017).
Considering the role of innovation in the social media Context is one of the major strategies that
could helpful for Novotel to retain the customer. From the data analysis it has been found that the
company has been using Various social media platforms such as Facebook, Twitter, LinkedIn,
Instagram and many such platforms. It can be said that social media marketing has been an
effective strategy for the company through the analysis of Twitter followers of the brand in the
last six months which has been presented in the figure below (socialbakers, 2019). Through the
graph, it can be said that the followers of the brand have been increased to a greater extent with
Twitter is reflecting the innovative strategy of the company to enhance customer relationship
which is one of the keys for customer retention and customer loyalty. Moreover, as already
discussed digital innovation and use of technology is the latest strategy of the company, sourced

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from the annual report of the company which shows that the innovation plays a greater role in
retaining the customer (netmera, 2019).
Figure 7: Novotel Wollongong Twitter Followers (Source: (socialbakers, 2019)
Digitalisation has played lots role in the changing trends of the hospitality business as the
company provides various platforms to book the hotel through online for example trip advisor is
one of the recent change in trend in hospitality industry where the customer can compare various
hotels at the same page along with the prices available at various websites and The customer
rating across the globe for the particular brand are also available. The rating for Novotel
Wollongong north beach hotel is four stars which have been reviewed by 2494 customers among
which the most satisfying factor was the location with 4.5 stars then comes the cleanliness then
the service of the company and finally the value to the customer (tripadvisor, 2019). This factual
data source from official trip advisor application and website depicts the role of digitalisation in
the hospitality industry. Thus, it eventually impacts the consumer purchasing decision, reflecting
smarter consumer to look out for the rating before purchasing the product and service from the
hotel (Tuten & Ashley, 2015).

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Figure 8: Trip advisor ratings (source: (tripadvisor, 2019)
For assessing the future trends in hospitality industry, the graph below reflects that the the
revenue of accord hotels are neither very low nor very high in aisa pacific region. For which the
company must work towards the technology and service innovation.
Figure 9: Accord hotels Revenue by region (group.accor, 2019)
The current trends can also depict the future trends of the hospitality industry in Australia. For
instance, the figure below reflects the return on investment in the hotel industry in Australia
found to be positive, while analyzing the data for ten years until July 2017 (Soranno, 2014). This
depicts that the company has the large opportunity to grow in this industry in Australia and
impact positively over the consumer behaviors and purchase decision of the customers. In this

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increasing statistics in the hotel industry in Australia, the technology has played a major role,
which would be discussed in detail in the research report further (tourisminvestment, 2019).
Figure 10: Hotel Investment Returns (Source: (tourisminvestment, 2019))
According to one of the recent, published in global industry insight it has been identified that the
various industries such as many factoring healthcare and travel and hospitality industry include
managing mobility services (Zhang, 2015). This included in technological advancement, the
study reflects that the managed mobility services will be trending factors and the growth drivers
for the nations including Australia (globalindustryinsight, 2019).
Chapter V: Conclusion and Recommendations
From the Novotel hotel research report, it can be concluded that the company is one of the
brands of a “hotels group which was founded in 1989. Since then it has been serving more than
16 nations by now and the business that the company has provided to the group is 34%, which
influenced and reflect large contribution by the brand to the company. The key finding analysed
from the reports are the customer segment targeted by the company-included business travellers.
Bargaining power of buyers is quite a large threat for the company. The bargaining power of
suppliers could also largely influence the business. The threat of substitutes is another factor
found to be impactful for the Novotel business but not to the greater extent. From the analysis,
the key recommendation for Novotel hotel includes gaining competitive advantage through
service innovation that would include developing new product and services to retain the

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customer. In order to reduce the threat of the suppliers, it is recommended to the company to
create agile supply chain and increase the number of suppliers; this also reflect that the company
must enhance their vendor management. Another recommendation to the company is extensive
use of digitalization for sales promotion that is providing offers and discount through online
transactions and dealing through various traveling companies like Cox and king.

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