Strategic Analysis of the Hotel Industry: Red Carnation Hotels Report

This report offers a comprehensive analysis of the global hotel industry, with a specific focus on Red Carnation Hotels. It begins by examining the global macro environment and competitive factors within the industry, followed by a Porter's Value Chain analysis of Red Carnation Hotels. A detailed SWOT analysis is presented, highlighting the company's strengths, weaknesses, opportunities, and threats. The report then analyzes target markets in China, France, Nigeria, and Thailand, utilizing the 12C framework to assess each country's potential. Based on this analysis, Nigeria is recommended as a strategic target market for Red Carnation Hotels. Finally, the report concludes with a recommended marketing mix for Red Carnation Hotels in Nigeria, considering services, place and distribution, promotion, and pricing strategies. The report aims to provide a strategic overview for the hotel chain's international operations, and it is available on Desklib where students can find past papers and solved assignments.

Running Head: Hotel Industry
Hotel Industry

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Table of Contents
Introduction......................................................................................................................................3
Global Macro Environment in Hotels Industry...............................................................................3
Global Competitive Factors in Hotels Industry...............................................................................4
Porter’s Value Chain Analysis of Red Carnation Hotels.................................................................4
Primary Activities........................................................................................................................5
Support Activities........................................................................................................................5
SWOT Analysis of Red Carnation Hotels.......................................................................................5
Strengths.......................................................................................................................................6
Weaknesses..................................................................................................................................6
Opportunities................................................................................................................................6
Threats..........................................................................................................................................6
Analysis of the Target Markets of China, France, Nigeria, and Thailand.......................................7
Country.........................................................................................................................................7
Concentration...............................................................................................................................7
Consumer Behavior......................................................................................................................8
Choices.........................................................................................................................................8
Consumption................................................................................................................................8
Contractual Obligations...............................................................................................................8

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Commitment.................................................................................................................................8
Channels.......................................................................................................................................9
Communication............................................................................................................................9
Capacity to pay.............................................................................................................................9
Currency.......................................................................................................................................9
Caveats.........................................................................................................................................9
Country Recommended to Red Carnation Hotels.........................................................................10
Marketing Mix Recommended for Red Carnation Hotels in Nigeria............................................10
Services or Facilities..................................................................................................................11
Place and Distribution................................................................................................................11
Promotion and Communication.................................................................................................11
Pricing........................................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................13

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Introduction
This report is a brief study of the international world strategy focusing on the
environmental study of the Red Carnation hotels. In this regard, global macro environments and
competitive factors in the hotel industry are determined in the report. Identification of value
chain activities required by the hotel chain is followed by the SWOT analysis of the company.
Furthermore, the analysis of target markets of China, France, Nigeria, and Thailand for the hotels
of this brand is followed by the recommendation of a particular country for the hotel according to
the previous analysis. Marketing mix for the Red Carnation hotels is determined at the end of the
report.
Global Macro Environment in Hotels Industry
In order to understand the macro environment of global hotels industry, various factors
such as political, economic, social, and technological can be analyzed. According to Schengen
agreement, there will be no border control across 25 of the European Union countries which
include Austria, Bulgaria, Cyprus, Denmark, Finland, France, Germany, Italy, Poland, etc. The
agreement has made traveling easy and cheap as they do not need to spend their time and money
on fulfilling the visa requirements (Mucai et al., 2013). This has positively affected the hotel
industry by increasing the number of tourists visiting the hotels. However, ease of travel across
countries may affect the travelers' decision to stay at hotels for a shorter period of time.
Countries having cheaper currency as compared to others are more likely to be visited by
tourists. People tired of their regular schedules use traveling for refreshing and use hotels as
accommodation (Iraldo et al., 2017). With the advent of technology, people can book any hotel

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from any country using the internet and can also compare the prices in order to buy the best
available deal for them.
Global Competitive Factors in Hotels Industry
There are various factors that determine the level of competition in the hotel's industry.
Interaction abilities of the hotel personnel with the customers is the key factor in this industry to
survive the competition. In order to ensure efficient interaction, the hotels need to internally
analyze the resources, their capacities, the relation between activities so that they can be
integrated, and finally developing the interaction ability. Hotels can be transformed into learning
organizations by providing training to its staff and internships to the students studying hotel
management (Sharma et al., 2014). Human resources play a significant role in maintaining the
competitiveness in the hotel's industry. They are the ones who represent their hotels in all aspects
of related activities starting from design and creation to developing and delivering the services.
The technology inside the hotels and information technology among the customers is the most
emerging factor affecting the competitiveness in the hotel's industry.
Porter’s Value Chain Analysis of Red Carnation Hotels
The activities that help in creating and building value of any particular business are part
of the value chain. Value chain analysis helps the managers in identifying the value creating
activities and inefficient activities (Jani & Han, 2014). Porter has classified such activities into
two categories as "primary" and "support."

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Primary Activities
Following are the value chain activities that have been observed as primary ones for Red
Carnation Hotels. Interior design, motor service, food, and drink are the areas of attention for
hotels. In order to maintain the quality of inbound logistics, all the Red Carnation hotels follow
unique practices to ensure the quality of goods such as putting use by date color stickers on all
the food products. Operational activities include cleaning all the available rooms once the
customers check-out. Outbound logistics include all the presentation activities such as meeting
the expectations of the customers as advertised (Jani & Han, 2014). Marketing and sales
activities include offering online deals, combo packages, and cashback offers on various
platforms. Servicing activities include addressing the complaints of customers, after sales
services, etc.
Support Activities
Following are the value chain activities that have been observed as support ones for Red
Carnation Hotels. World-class infrastructure and uniquely designed rooms in all the branches of
the red carnation hotels have made the company a class apart. Human resource management
activities include training their staff to deliver the services in most professional and efficient
manner (Jani & Han, 2014). Technology development activities have made it possible for all the
customers to have a virtual tour of the rooms online. Procurement activities include making a
code of ethics for its suppliers and making them adhere to it.
SWOT Analysis of Red Carnation Hotels
SWOT (Strengths, weaknesses, opportunities, and threats) analysis helps the managers in
evaluating the competitiveness of the business in the market.

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Strengths
Red Carnation hotels strengths include the award winning boutique hotels, present in
almost all the major countries of the world (Leung, 2015). High-end IT infrastructure to deliver
quality services to its customers through a workforce of 2500 employees.
Weaknesses
Red carnation hotels being a chain of five-star luxury hotels charge very heavy for a
room per night which is unaffordable for an average household person (Leung, 2015). The
customer has to pay different types of taxes per night on booking the room and taxes on the
goods and services bought by the customer inside the hotel are very high.
Opportunities
There are various types of opportunities for red carnation hotels such as collaborating with other
businesses to provide the maximum number of in-house services such as in-house casinos,
discos, and fine-dine restaurants (Leung, 2015). During off-seasons when a number of visitors is
low they can organize discounted events in order to bring in visitors which may also result in
new potential regular customers.
Threats
Threats to red carnation hotels include boutique alternatives catering according to the
needs of the customer. These establishments can provide better personalized services at very
lower costs. Branches situated at politically unrested locations face the decline in the number of
tourists as the customer will be willing to travel only to safer locations until and unless
necessary.

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Analysis of the Target Markets of China, France, Nigeria, and
Thailand
In order to analyze the target markets of China, France, Nigeria, and Thailand, the 12C
framework can be applied as it is used to analyze the international markets by examining twelve
facts which are given below:
Country
China being the most populous country has the significant amount of middle-class
population which is growing at a very rapid growth. In order to satisfy this middle-class
population boutique or small luxury hotel are gaining popularity. France is the most popular
tourist destination in the world, the French hotel industry attracts the most number of visitors
(Nieves & Segarra-Ciprés, 2015). Nigeria's nice and continuously improving travel and tourism
policies have enabled millions of international visitors per year which makes it a potential market
for hotels. Thailand is ranked as one of best countries for its heritage and adventure activities
which make it a very popular tourist destination affecting the hotel industry positively.
Concentration
Market Occupancy of Chinese hotel industry is constantly increasing because of the
middle class population whereas French hotel industry seems to be growing at a slow pace
because of unavailability of space at main locations (Suyarov, 2017). Nigeria hotel industry is
improving their infrastructure to add value and Thailand hotel industry is expected to boom
because of record breaking international visitors every year.

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Consumer Behavior
Chinese hotel industry needs to concentrate on serving the middle-class people while French
receives the significant number of international consumers (Nieves & Segarra-Ciprés, 2015).
Nigerian industry does not have enough number of rooms to accommodate the customers
whereas Thailand has a higher expectancy rate of international customers.
Choices
The people of Nigeria do not have enough choices because of less number of hotels while
in China small luxury and boutique hotels are more popular. Despite being the favorite tourist
destination across the world, the limited amount of space makes it very difficult for new entrants
to please the middle-class people.
Consumption
France and Thailand receive the most number of travelers from all over the world during the
holiday season of December and January whereas customers in China look for boutique hotels
and international customers there go for brands.
Contractual Obligations
Nigeria offers the highest flexibility in the contractual obligations and policies among the
four nations with Thailand progressing in the same direction.
Commitment
Nigerian hotel industry seems to be the most committed one towards meeting the
demands of the customers with Thailand and China on the second and third places among the

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four. France does not seem to care much about the commitment towards the customers as they
already get enough to be served.
Channels
China has the most varied range of channels to get the customers because of varying
nature of population while Thailand and France receive most of the customers from international
channels.
Communication
The hotel industry in China is most challenging in terms of communication because of varying
nature of choice of the customers (Nieves & Segarra-Ciprés, 2015). Policies of Nigeria make it
most easy for communications to happen.
Capacity to pay
France and Thailand are found to be most capable among the four nations in terms of
their paying capacities.
Currency
Euro being the currency of France affects the hotel industry most positively among the
four with China being the second and Nigeria and Thailand at the nearly equal value of their
currencies.
Caveats
China is facing the challenge of varying desires of customers while France is unable to
provide any developments in the industry. Nigeria is facing the challenge of not meeting the
demands.

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Country Recommended to Red Carnation Hotels
On the basis of above 12C framework analysis, it has been noted that all the four nations
have the different kinds of the market for any new hotel to make an entry. The hotel industry of
France and Thailand are already blooming, and all the bigger players are already present there to
serve the customers in the best way possible (Lee et al., 2015). With this France has additional
problems for a new entrant to make an entry, compete, and survive the market push. China being
the most populous country makes it very difficult for the new entrant to serve all kinds of people
who have the wide range of demands. Although the international customers in China are
consistently raising the presence of big players will require a new entrant to be strong enough.
Nigeria is to be falling short of hotels in order to meet the demands of the customer (Faraj et al.,
2017). Also, the government of Nigeria is considering the issue tourism very seriously and thus
have made flexible rules and regulations for the hotel industry to bloom. Hence, Nigeria is
suggested as the most potential target market for Red Carnation hotels because of the high
demand of hotels by the people they need not think much about the competition. The
authoritative rules and regulations also support the entry of any new entrant.
Marketing Mix Recommended for Red Carnation Hotels in Nigeria
For the success of Red Carnation hotels in Nigeria, it is very crucial to determine a
marketing mix for hotels in order to target the specific guests and market segments. Following
are four focus areas of marketing for the hotels in Nigeria:

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Services or Facilities
Services and facilities act as the frontline presentation factors for the potential customers of a
hotel (Pollitt, 2007). Hotels need to ensure quality in the services offered such as food and
beverages, rooms, halls and lounges, health wellness activities, etc.
Place and Distribution
This basically refers to the location of the hotels such as in the main market of the city or
in the outskirts. In order to reach its customers, hotels use either direct methods such as
advertisements or indirect methods such as travel agents.
Promotion and Communication
Effective communication and promotions strategies are necessary for the hotels such as
television commercials, online websites, social media, banners, etc. (Pollitt, 2007).
Pricing
Pricing is the most important aspect of the marketing mix. The products and services should be
priced as per the existing competition. Prices are also defined according to the type of seasons
such as peak season or off season.
Conclusion
On the basis of the above discussion, it has been concluded that hotel industry is most affected
by the travel and tourism of people within the country and across countries. Other secondary
factors included the type of customers, location, rules and regulation imposed by the
government, and competition. After studying various target markets for Red Carnation hotels,

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the market of Nigeria has been suggested as the most potential one on the basis of the demand,
competition, flexible rules and regulation, and other factors.

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References
Pollitt, D. (2007). Red carnation blooms through management training. Training & Management
Development Methods, 21(3), 559.
Fraj, E., Matute, J., & Melero, I. (2015). Environmental strategies and organizational
competitiveness in the hotel industry: The role of learning and innovation as determinants of
environmental success. Tourism Management, 46, 30-42.
Nieves, J., & Segarra-Ciprés, M. (2015). Management innovation in the hotel industry. Tourism
Management, 46, 51-58.
Leung, X. Y., Bai, B., & Stahura, K. A. (2015). The marketing effectiveness of social media in
the hotel industry: A comparison of Facebook and Twitter. Journal of Hospitality & Tourism
Research, 39(2), 147-169.
Jani, D., & Han, H. (2014). Personality, satisfaction, image, ambience, and loyalty: Testing their
relationships in the hotel industry. International Journal of Hospitality Management, 37, 11-20.
Mucai, G. P., Mbaeh, E. K., & Noor, A. I. (2013). Extended Marketing Mix and Customer's
Satisfaction in Classified Non-Star Hotels in Meru Municipality Kenya. International Review of
Management and Business Research, 2(3), 691.
Sharma, A., Moon, J., & Strohbehn, C. (2014). Restaurant's decision to purchase local foods:
Influence of value chain activities. International Journal of Hospitality Management, 39, 130-
143.

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Lee, Y. K., Kim, S. H., Seo, M. K., & Hight, S. K. (2015). Market orientation and business
performance: Evidence from franchising industry. International Journal of Hospitality
Management, 44, 28-37.
Suyarov, A. S. (2017). BOUTIQUE HOTELS AND THEIR EFFECTS TO THE
HOSPITALITY INDUSTRY OF UZBEKISTAN. (4), 92-95.
Iraldo, F., Iraldo, F., Testa, F., Testa, F., Lanzini, P., Lanzini, P. & Battaglia, M. (2017).
Greening competitiveness for hotels and restaurants. Journal of Small Business and Enterprise
Development.