Hotel PESTEL and SWOT Analysis

Hotel PESTEL and SWOT epitomeHotel X operates in a fragmented exertion for the most part controlled by the invitees and their preferential needs. The strategic audit involved analyzing the macro-environment by the PESTEL mold, the competitive industry environment by the Porters Five Forces model, the key stake acquiters expectations and the internal strengths and weaknesses.This SWOT analysis concludes the strengths (products, brand, peck, VmV and accreditation/certification), the weaknesses (location, classic rooms, car parking, mathematical process management and technology), the opportunities (BRIC, Rugby World Cup 2011, market demographics, corporate responsibility pressure, and the 90 day trial catch law) and the threats (new national, convention Centre, long-term contracts with buyers/suppliers, economy, and technology).Hotel X should plan its outline or so differentiation by providing the highest quality products and services unique from the rest of the industry. Improving the hotels weaknesses is a realistic way to improve the proceeds and profitability for the organization. Recommendations be bequeathd for the improvement of Hotel Xs weaknesses.ContentsIntroductionIf you dont know where your business is going, any road leave behind get you there. (TVRheinland Group). Business strategy is a driving force in the success of organizations as long as the strategy for the organization is analyzed in terms of the environments. This paper is a strategic analysis of the environments for Hotel X1.Company BackgroundHotel X is a leading hotel in Auckland. The services and products declargon oneselfd include accommodation, food and beverage, event venues, spa and wellness club facilities. Their aim is to grow market shargon and profitability by maintaining 5 maven level services2. This is supported by Hotel Xs vision statement Know Our Guests, Build Great Memories.Industry Description Definition and DriversHotel X is positi integrityd in the h igh-end3hotel4industry within Auckland City5. The hotel industry is a sub-section of the Travel and tourism industryone of the most rapidly expanding fields (Go Pine, 1995, p. 26). It is a fragmented industry as hotels are driven by the services they leave and the consumers they can attract. Factors that influence this consumer plectron are the location of the hotel, the facilities available, the price per night and the size of the facility. High-end hotels in Auckland compete for independent and corporate travelers, both domestic and international.Macro-Environment AnalysisThe PESTEL model was used for analysing opportunities and threats to Hotel X and the summary of the major factors can be found in Appendix 2.(P)olitical FactorsNew Zealand general elections may bring changes to government and influencing legislation.Trade agreements have a positive correlation with tourism. Securing trade agreements with BRIC would create significant growth in business.(E)conomic FactorsWith o verseas economies in recession, the declining New Zealand dollar6, the increase in fuel cost and the GST increase, it is more expensive for people visiting New Zealand. There is a decrease in the reliance on overseas visitors and income.There will be short-term growth with the Rugby World Cup 2011.While this would yet be a small injection over the months of September/October, there is potential for resulting growth in returning thickenings.(S)ocial FactorsConsumer opinions on products and services can quickly build or diminish a brand and company image. The increasing use of kindly media to gain access to this information can be dangerous to growth for companies who do not monitor and maintain brand standards.The impact of economic factors is seen in the demographics of the Auckland market. The strong short-haul markets can be a benefit as they buffer the industry during periods of significant reduction in long-haul markets (New Zealand Hotel Council).(T)echnological Factors vici ssitude potential is held back by having to balance the needs of the guests verses what they are prepared to pay for. Technology does not replace personal touches, but allows for storage of information on the preferences of guests. Auckland hotels need to kick upstairs their services when compared to international standards in order to maintain consumer expectations (Hotel Technology Resource, 2011).(E)nvironmental FactorsThere is increasing pressure to be environmentally responsible. The pressure has created organizations such as EarthCheck who provide certifications to organizations meeting particular requirements7and Qualmark with their Enviro Assured Grading System8. Increasingly some consumers will only engage with companies which hold particular certifications.(L)egal FactorsCurrent union negotiations will determine the requirements of the hotels towards their employees, the impact of this will be determined after the negotiations.The 90 day trial period in employment law all ows companies to employ people best suited for positions. The best employees in the best positions increases efficiency, productivity, satisfaction and general wellbeing thus reducing costs to the company.Competitive Industry AnalysisThe Porters model9was used for analysing the industry competition for Hotel X and the summary of the major factors can be found in Appendix 9.Threat of New EntrantsHotel X has one of the largest function rooms in Auckland with capacity of 1500. This attracts some of New Zealands significant functions such as the upcoming Rugby World Cup Prize giving. The proposed National Convention Centre will threaten Hotel Xs long-term market share of functions.Bargaining Power of SuppliersEmployees provide most of the service for guests. Hotel suppliers do not hold much power, there are often a large number of suppliers available. Many high-end hotels have contracts with taxi companies. The cost of switching these contracts is high.Bargaining Power of BuyersHotels p rovide the alike(p) item to the same market so need a strong brand to differentiate from competition. There are limited times that customers elementary needs cannot be met10.There are large numbers of corporate travelers who stay in a hotel that they have long-term contracts with. Hotel X may deal to renew its contract with Telecom due to Telecoms move to the lower CBD.Power of SubstitutesThe threat of substitutes depends on the demands of the customer. As most guests wanting to stay in high-end hotels are expecting quality over cost, it could be expected that substitutes to this industry do not pose a large threat.Intensity of Industry RivalryThe strong industry growth in the tourism sector (Go Pine, 1995) should mean that there is a low rivalry amongst hotels as there are an increasing number of guests. However, the products that hotels provide are identical on a basic level (the quality may vary) and this low differentiation and ease switching leads to a strong competition.St akeholder AnalysisThe expectations of the individuals and groups that influence the business strategy for Hotel X are summarized in Appendix 11.The strategy for Hotel X was developed by the director and is entwined with his personal values his lettering to the organization ensures he retains control over strategy and growth.The guests and clients of Hotel X may see the hotel as important to them during their short term relationship even so only the business clients and guests who are engaging with the organization on a regular basis hold any importance for quality service on a long-term basis.Attitudes of the employees are orientated around providing quality service but the importance of the hotel to them is more for the opportunity of employment it provides.Hotel X understands the importance of the media in providing merchandising opportunities however the media do not have the same inverse need.Hotel X is also not of large importance for the topical anaesthetic government as, w hile the hotel provides local taxes and jobs, it does not have any impact on the growth of local government revenue. The attitudes of this stakeholder are consistent with the hotel on factors like environmental responsibility however not consistent with profit factors.Organizational Capabilities(S)trengthsHotel Xs products hold value between price paid and quality received. The products 411 rooms, four food and beverage outlets, spa and facilities, dozen function venues, all set 5 star standards and are upgraded as ideas develop.There is strong marketing of the Hotel X brand in the industry as luxury and elegance. The concept is carried through media, including social media which is heavily monitored to increase positive brand awareness.The multiple ethnicities of the 400 employees mean guest communication has become little problematic. Hotel X has used the Vision, mission and Values (VmV) to create a positive employee culture.Hotel X holds multiple accreditations including Best H otel from New Zealand Scenic Tours, Studiosus Award, and World Travel Awards, the Innovation/Sustainability Award from NZ Hotel Conference, EarthCheck Silver Status11, and Qualmark Gold Status12.(W)eaknessesHotel X in the upper CBD is a distance from city activities. While the hotel provides a shuttle around town, there is not the flexibility (or views) as a prime city location.The classic rooms have yet to be updated These rooms are of the same size as executive rooms but the dcor is dated and not up to the same 5 star standard as the some other products provided.The hotel does not provide car parks for employees or guests except for valet parking. The city location makes it is expensive to park in nearby buildings. Public transfer is limited.The processes in place for performance management are limited. Short term management is strong with recognition programs but the link is missing to annual reviews/promotions, proximo goals are not quantified.Hotel X limits its market by not yet having wireless internet available throughout the hotel. Technology is an area that would improve guest satisfaction and productivity.ConclusionThe summary of the SWOT analysis can be referred to in Appendix 12.Hotel X, seeks high levels of growth and profitability. While the product, brand and people are strengths, there is an issue keeping services consistent without good performance management. Organizations now have the advantage of a 90 day trial period to maximize the job-person fit in the organization which should correlate to lower costs and higher profitability. The location of Hotel X will place a limitation on the growth of the organization.The current products that the hotel provides are strengths. The 5 star quality of these products and services create value for guests. There are some weaknesses however with the dcor of the holy rooms, lack of car parking and limited use of technology. The hotel needs to remain on top of new innovations to ensure the products and services are continuously upgraded.Hotel X has the opportunity of the growing BRIC market and the upcoming Rugby World Cup. It plans to service these growth opportunities while still maintaining a hold in the domestic markets as a buffer to the threat of the economy restricting international tourism.The generic strategy that Hotel X should follow is differentiation. Already Hotel X has started to differentiate their product from the industry as supported by the strength of its accreditations and certifications. It is possible for Hotel X to differentiate not only through the strength of its products but also its people and the Vision, cathexis and Values.The strong brand and opportunity for recognition of corporate responsibility will allow Hotel X to develop a dominant position. The threat to this is the competitiveness of the industry difficulties with long-term contracts and the threat of a National Conference Centre.RecommendationsThese recommendations will focus on improving the weaknesses of Hotel X,Performance management schemes for employees should be introduced to maintain 5 star standards, as services the hotel provides involve guest/employee interaction. Goals set to manage performance must be decided on jointly between organization and employee in order to empower colleagues. Special salary and wage reviews should be initiated as well as an incentive scheme based around achieving key performance indicators.The classic room product needs to be redecorated to maintain product consistency to satisfy customer requirements.Technology in particular, a hotel wide Wi-Fi strategy needs to be developed, to keep up with 5 star international standards.Car parking needs to be addressed by negotiating with Wilson Parking to every take back the management of the car park or rent additional car parks. The extra car parks would have to satisfy the guest needs first.Location is one weakness that cannot be changed so the best recommendation for this is to increase the areas the shuttle bus drives to and renegotiating the taxi contract so that fares are cheaper for guests going between the upper and lower CBD.