Royal Hotel Strategic Plan: Business Environment Analysis

This report presents a one-year strategic plan for the Royal Hotel, commencing with an executive summary that outlines the report's objectives and methodologies. The core of the report involves a thorough business environment analysis, leveraging frameworks such as SWOT, PESTLE, and Porter's Five Forces to evaluate the hotel's internal strengths and weaknesses, external opportunities and threats, and competitive landscape. The analysis considers economic and socio-cultural factors, alongside micro-level assessments of the hotel's specific operational context. The strategic vision, informed by Bloom's Taxonomy, emphasizes exceeding customer expectations and achieving high occupancy rates, supported by overarching strategies that address location disadvantages and leverage the hotel's unique attributes. The report concludes with recommendations for enhancing the hotel's market position, including differentiated pricing strategies and promotional activities.

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Hospitality
Student’s Name
University Name
Author’s Note

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Executive Summary
The report will deliver one year strategic plan for the Royal Hotel. In depth analysis of the
business environment of the hotel is conducted by means of the frameworks like SWOT,
PESTLE and Porter’s Five Forces analysis. The perception of the hotel group towards the guests,
stakeholder groups and colleagues should be incorporated in the strategic plan considering the
outcomes of the environmental analysis conducted in the report. Innovative marketing strategy
development will rest on the macro environmental factors incorporated in the report. The
ultimate mission of the Royal Hotels group is to provide a customer experience that exceeds the
expectations and make the users feel that the experience is worth the money.

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Table of Contents
1. Introduction..................................................................................................................................4
1.1 Business Background of the Hotel........................................................................................4
2. Discussion....................................................................................................................................4
2.1 Macro Analysis of the business situation..............................................................................4
2.1.1 Economic Factors...........................................................................................................4
2.1.2 Socio-Cultural Factors....................................................................................................5
2.2 Micro Analysis of the hotel...................................................................................................6
3. Porter’s Five Forces analysis.......................................................................................................7
4. Recommended strategic vision under Bloom’s Taxonomy.........................................................9
4.1 Overarching strategies...........................................................................................................9
4.1.1 Analysis..........................................................................................................................9
4.1.2 Evaluation.....................................................................................................................10
4.1.3 Recommendations and conclusions..............................................................................10
Projected sales.......................................................................................................................10
Reference List................................................................................................................................12

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1. Introduction
1.1 Business Background of the Hotel
Royal Hotel had been a contemporarily non-operational hotel that has been set up in the
year 1883. Initially registered as a hotel and then a nursing centre, the building of the Royal
Hotel had been preserved as a heritage property site in Australia by the Queensland government.
The building is single storied sandstone built building in the Bondi Beach. The facility started to
be used as a hotel in the 1880s when the pastoral runs started to be developed in this area. There
were two other hotels set up in the same area in the same locality. However, this is a currently
booming industrial smote that have been developing as a locations for foreign influx site also.
2. Discussion
2.1 Macro Analysis of the business situation
2.1.1 Economic Factors
Major economic trends have been dominating the hotel industry of Queensland when the
hotel was being taken over. In this context, it deserves mention that the factors determining the
consumer purchase of the most potential consumer groups of the hotel is the very dynamic. The
interest rates and taxation rates have been high fluctuating and with chances of recent election,
change in organisational regulations is apprehended. As stated by Robinson et al. (2016), the
inflation rate of the hospitality sector is also not stable and that is why the revenue based
projected balance sheet cannot be prepared for this hotel. It is best to keep flexible cost for the
first two financial years during operation.

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The internal cost factors have also been fluctuating in Australia. Keeping an eye on the
cost of running the hotel, it has to be stated that the owners will get the favor of exemption of the
real estate cost. However, along with industry specific wages the company have to provide
culture oriented training to the employees of the hotel apart from arranging for accommodation
facility of the staff.
Another important factor that will be detrimental for the revenue generation of the hotel
under the current prospect of the hospitality industry is the foreign exchange rate of the Australia
currency. Considering this fact, the dynamic rate of fluctuation of the AUD against the USD will
determine the annual revenue generation (Kensbock et al. 2016). This is an issue that all the
hotels of Australia have been facing. In order to clarify the issue it can be reflected that if the
valuation of the Australian Dollars is high, there will be the need to convert large valuation of
British Pounds or Euro or USD in order to gain small amount of AUD. Considering this fact, it
can be analyzed if this is case for the upcoming financial years also, Australia will no longer
remain a favored destination for the British, European or the USA tourists.
2.1.2 Socio-Cultural Factors
Population Dynamics
In the hospitality industry, the business travelers are the primary targets of the luxury
hotels like the Royal Hotel. Hence, the demand base of the travelers for the luxury hotels is
supposed to rise because of the fact that the number of people from foreign countries getting
absorbed in the organized sector of the country is gradually increasing. As stated by Prayag and
Hosany (2015), with this perspective in view, it can be stated that acquisition of target customer
base will be easier.

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Cultural Factors
There are some specific facets of the customer consumption trends because of which the
revenue generation trends of the hospitality sector might be affected. The customer base for the
hotels of Australia (luxury hotels) is not potential savers. This implies that they prefer to enjoy
holidays in the exquisite locations. The average spend of convenience is also high among the
general Australian tourists (Brien, Thomas and Hussein, 2015). This is a specific aspect of
westernization of the tourism culture and the luxury hotels like Royal Hotels would be enjoying
the benefits of that.
2.2 Micro Analysis of the hotel
Strengths
Australia is highly appealing as a foreign tourist destination. The Australian Dollar had
been weak in exchange rate in comparison to the USD. However since 2020 the exchange rate is
supposed to be stable which will provide stability to the revenue generation of the organisations
under the hospitality sector of the country. Significant trends in investment over the digital
marketing activities are common among the hotels of Australia. Almost all the Australian luxury
hotels are having their own website which offers booking facilities to the customers. Another
major factor of strength for the Australian hotels is that the luxury hotels are above the intense
market competition which is mainly waged between the boutique hotels of Australia. However,
McPhail et al. (2015), states that the intense competition among the hotel Groups will be
accounting for the intense influx of tourists in Australia and the luxury hotels will gain tertiary
benefits of this high influx of the tourists.
Weaknesses

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The European economy is under deep concerns of recession because of which the
average expenditure on trips to Australia have been cut short by large proportions. In this
context, it can be analyzed that even the potential tourists from Europe (who makes the
maximum expenditure on tourism in Australia, compared to any other foreign tourists) will be
showing lesser interest in boarding at the luxury hotels. On the contrary, they will prefer the
boutique hotels as well as the home stay facilities in Australia ( Huang, van der Veen & Song,
2018).
Opportunities
Proximity of Australia to the Asian region which is growing in income as well as aviation
capacity (to/from Asia) will lead to emergence of large proportion of tourist from Asia. Other
than that, softening of the outbound demand might lead to a reduced load factor in the short term.
This might subsequently lead to reduction of airfare and because of this the Asian customers will
have the facility of spending more on the hotels.
Threats
The bilateral aviation caps will limit the future growth opportunity in the traditional hotel
industry of the country. As informed by Patiar et al. (2017), this will lead to the decrease of the
competition which might impact the price sensitive leisure industry of the country. Again, there
is increased competition from the tourist sector some of the major and emerging tourism centers
like New Zealand, Thailand and so on.
3. Porter’s Five Forces analysis
Bargaining power of suppliers

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The bargaining power of suppliers is moderate. On one hand, there is large number of
local suppliers. On another hand, the collective power of the suppliers in modifying the prices is
high. However, there is an atmosphere of collaboration between the suppliers and the hotel
inventory managers.
Bargaining power of buyers
The bargaining power of buyers is high. After the financial crisis of 2008, it has been
observed that there has been a growing trend of cost cutting on the part of the buyers. The group
of potential buyers prefers to stay in budget hotels and boutique hotels rather than the premium
hotels. Hence, in order to sustain in this business environment the hotel have to provide unique
convenience to the customers at an industry specific price.
Threat of new entrants
The threat of new entrants is ranging from moderate to high. The group of potential
buyers prefers to stay in budget hotels and boutique hotels rather than the premium hotels.
Hence, the atmosphere of the hotel industry of Australia is becoming constantly competitive with
the entrance of new entrants in the business.
Competitive Rivalry
The competitive rivalry is low, with all the major premium hotel groups having their set
of potential customers.
Threat of substitute products

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The threat of substitute products is also high. The boutique hotels are also trying to
provide the same user experience to the high end customers like that of the premium hotels and
under a 30 to 40% lower price range.
4. Recommended strategic vision under Bloom’s Taxonomy
The objective of the operations of the Royal Hotel for the upcoming three financial years
is supposed to be including:
 Exceeding the customers’ expectations in terms of the providing convenience under
reasonable and industry competitive prices.
 Maintaining at least 70% occupancy during the peak hours during the first year and
projecting 80% and 90% occupancy for the same time period of the next two financial
years (Punitha, Aziz & Rahman, 2016).
 Assembling a line of experienced as well as expert staff. In this context, the appointment
of staff with professional degree in hotel management as well as working experience in
this sector will be preferred (Trianasari, Butcher & Sparks, 2018).
4.1 Overarching strategies
4.1.1 Analysis
Considering the surrounding where the hotel is situated, it can be stated that there will be
maximum accumulation of tourists in the hotel in the peak hours only and that is why it can be
projected in the business plan that it would be beneficial if the product pricing is differentiated
based on the peak and the lean seasons. Again, the price competitiveness cannot be ensured at
least for the initial period of operation because the number of rooms that can be developed in this

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one storied hotel is limited. At present there is scope for the development of 12 two bedroom
suites in the hotel along with 21 single outdoor rooms. Besides, as the hotel is supposed to have a
luxury component, it is expected that it has to at least accommodate the facilities like food store,
apparel weathering and laundry facility, dedicated recreation arena, clinic as well as front desk
territory. It has been projected that the initial three years of operation will be launched on an
absolutely experimental basis and in order to understand the consumption trends of the
customers of this hotel (for both the domestic as well as foreign customer groups).
4.1.2 Evaluation
Evaluating the strategic situation of the hotel industry when the hotel was incorporated in
to the circuit as well as depending on the analysis in the previous section, it can be reflected that
the hotel will have a strategic disadvantage since it is located 443 miles away from the airport.
However, the beautiful wilderness of the hotel during the summer months in the surrounding site
of the hotel will provide scope for the high influx of customers.
4.1.3 Recommendations and conclusions
In order to eradicate the location wise disadvantage of the hotel, the plan will be to create
a licensed kiosk at the airport for promotion of the hotel and based on market situation the people
who books room in advance from the kiosks at the airport will be provided with free transport
from the airport to hotel and the way back. Again, considering the strategic advantage of the
scenic beauty of the surrounding region, in the summer months the price per night of the suits
can be increased from AUD $85 to AUD $119. Again, the hotel group can organize a free detour
of the local scenic sites included within the package of AUD $119 per day.
Projected sales

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Figure 1: Sales Projection
(Source: Developed by the Researcher)

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Reference List
Robinson, R. N., Kralj, A., Solnet, D. J., Goh, E., & Callan, V. J. (2016). Attitudinal similarities
and differences of hotel frontline occupations. International Journal of Contemporary
Hospitality Management, 28(5), 1051-1072.
Kensbock, S., Jennings, G., Bailey, J., & Patiar, A. (2016). Performing: Hotel room attendants’
employment experiences. Annals of Tourism Research, 56, 112-127.
Prayag, G., & Hosany, S. (2015). Human resource development in the hotel industry of
Mauritius: myth or reality?. Current Issues in Tourism, 18(3), 249-266.
Brien, A., Thomas, N., & Hussein, A. S. (2015). Turnover intention and commitment as part of
organizational social capital in the hotel industry. Journal of Human Resources in
Hospitality & Tourism, 14(4), 357-381.
McPhail, R., Patiar, A., Herington, C., Creed, P., & Davidson, M. (2015). Development and
initial validation of a hospitality employees’ job satisfaction index: Evidence from
Australia. International Journal of Contemporary Hospitality Management, 27(8), 1814-
1838.
Huang, S., van der Veen, R., & Song, Z. (2018). The impact of coping strategies on occupational
stress and turnover intentions among hotel employees. Journal of Hospitality Marketing
& Management, 27(8), 926-945.
Patiar, A., Ma, E., Kensbock, S., & Cox, R. (2017). Hospitality Management Students’
Expectation and Perception of a Virtual Field Trip Web Site: An Australian Case Study

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Using Importance–Performance Analysis. Journal of Hospitality & Tourism
Education, 29(1), 1-12.
Punitha, S., Aziz, Y. A., & Rahman, A. A. (2016). Consumers' Perceptions of Green Marketing
in the Hotel Industry. Asian Social Science, 12(1), 1.
Trianasari, N., Butcher, K., & Sparks, B. (2018). Understanding guest tolerance and the role of
cultural familiarity in hotel service failures. Journal of Hospitality Marketing &
Management, 27(1), 21-40.