case Study Reflection
hasalb
aloft.pptxBringing Aloft To India
Tural Ismayilov
Vishal Gonuguntla
Introduction
Starwood hotels and resorts - hold, control and franchise hotels
Barry Sternlicht – Founder
Approximately 850 hotels under these brands
1994 - purchased Hotel Investors trust
Aloft - attempt to compete
Nine Brands
Summary
Starts with overview
Plans to open 50 hotels by 2010
Indian economy, trends and overall business environment
Discusses tourism and the hospitality industry (new business opportunities)
Increase in economic conditions in India (attracts FDI)
Big domestic players - Leela Ventures, Oberoi Group, Taj Group
Summary
Indian hotel industry looks promising, but hurdles
Corruption
Infrastructure limitations
Money laundering
High construction prices
Shortage of skilled labor
Cultural adjustment
Aloft - its features and benefits
Mid-priced select service brand developed by Ross Klien
Focus on new generation of travelers
Incorporates sea green program
Environmental Analysis
The broad environment
Success - internal and external
Successful company - analyze existing factors and forecast results
Most common tool - PEST framework
PEST Analysis
Rules and norms to operate in the country
Hotel industry in India:
Labor regulations
Environmental regulations
Merger regulations
Food and safety regulations
Cost to adhere to these laws - expensive
Laws regarding minimum wage
Laws governing treatment of employees
Heavy fines
Political
Economic
Favorable economic conditions - Attracts tourists (domestic and international)
Huge growth in Tourism sector
Liberalization reforms in 1990s - emerging market for FDI
GDP expected to rise from 6% - 11% by 2025
Hotel, Transport and communication sector - growth rate increased from 10.4 - 13% in 2007
Real estate sector - positive growth (construction expected to rise 4 times)
PEST Analysis
Economic
Inflation increased from 3.9 - 6% (overshadowed due to improved economic conditions)
Government allows owning 24% in publicly traded real estate for foreign shareholders
Improvement in financial market and advancement in electronic payment infrastructure
Indian citizens net income and demographic profile - rise
More people in high and middle income level
Stability and longer growth prospects
PEST Analysis
Socio-Cultural
Core objectives of hotel service - maximization, satisfaction and happy experience to customers
Knowledge about ethnicity, race and cultural backgrounds
Aloft
Change foodservice menus
Fresh fruits and juices
Food, beverage and meeting spaces in tune with mentalities
PEST Analysis
Technological
Modern infrastructure
Increasing use of internet
Aggressive advertising on the internet
High-tech information systems (Competitive advantage)
Increasing cost of energy
Improved payment options
Enhanced guest reservation system
Online booking facilities
Wi-Fi on-the-go
First mover maintains competitive advantage
PEST Analysis
Industry Analysis
Business tool - examines current business environment
Helps in detailed research on competitors, products and consumers
Most famous tool - Porter's five forces analysis
Identify intensity of competition
Profitability and attractiveness of industry to outperform competitors
Starting point for strategies and competitive position
Five Forces That Drive The Industry
Bargaining Power of Customers
Threat of New Entrants
Competitor Threat
Bargaining Power of Suppliers
Threat of Substitutes
Threat of New Entrants
Response:
Change tactics, prices, market shares, advertising
High capital costs
Manage spending in equipment, construction and pre-operational expenses
Good location - Target market
High quality service
Starwood - take advantage of brand image and loyalty
Taj, Oberoi and Leela - brand loyalty influences new entrants
Also control raw materials and distribution channels
Threat of Substitutes
When does it occur?
Different prices, amenities etc.
Same service, different price
Constant challenge - Make customers choose them over competitors
Recession
Hotel relationship with customers
Change in demand and supply of hotel rooms
Competitive Rivalry
Fierce competition
Internet – Key role
Customer inclination – Price Sensitivity
Intensity of competition – Factors
Product differentiation & low switching costs
Bargaining Power of Suppliers
Provides raw material
Dependent on products & services
Long-term relationships
Quality
Experienced staff
Bargaining Power of Customers
Higher power
Increase threat of backward integration
More exposure to internet
Compare prices
Eradication of intermediaries
Loyalty programs
Strategic Issues of the Industry
Access & Connectivity
Amenities
Human Resources
Security
SWOT Analysis
Strengths
Weaknesses
High Reputation
Brand Loyalty
Geographical Reach
8 Different Brands
850 Hotels
150,000 Employees
More focus on domestic brand
Small Brand
International Brand Awareness
Opportunities
Threats
Vacation Ownership Market on the rise
Aloft in India
Digitalized Media
Skilled Labor
Competition
Political Disturbances
Developing the Strategic Plan
Strategic Direction & Major Strategies
Target Market – Upscale business
Online presence & Sales capabilities
Loyalty Programs
High quality services at best costs
Cross promotion of complimentary products
Evaluation of Opportunities &
Recommendations
Top Managements – Evaluate shortcomings & benefits
Digitized Media – Problems & Security concerns
Internet – Cost effective tool for marketing
Reputation – Time & Effort
Positive & Negative comments
Excellent prospects, but economically dependent
Cross-Selling
Organizational Resources Analysis
Strategic Direction
Internal Environment
Values (Promises)
Enriched Performance
Management
Financial Analysis
Financial position
Profit from each available room
Comparison of revenues per year
Conclusion
Nine Brands
Aloft’s target market – Mid range
Indian hospitality sector – High prospects
Government incentives & concessions
Critical obstacles & challenges
Shortage of skilled labor
Many ethnic & cultural backgrounds
Indian industry analysis
Cater to Indian lifestyle & way of living
References
Ante, S. (2007) Six Sigma Kick-Starts Starwood. Retrieved from
Brenner, A. (2006). Starwood Hotel and Resorts, Inc. Global companies. Retrieved from: www.ilr.cornell.edu/globalunionsconference/.../reports/starwood.pdf
Clough, R. (2014). In Focus: Starwood brands performance update. HVS Dener. Available at: www.hvs.com/article/.../in-focus-starwood-brands-performance-update/
Council of Supply Chain Management Professionals (CSCMP). (2011). Logistics Management. Retrieved from: http://cscmp.org/aboutcscmp/definitions.asp
Farrell, R. (2014). Environmental Business Analysis. Hearst Newspaper. Available at: http://smallbusiness.chron.com/environmental-business-analysis-43238.html
Fritz et al. (2009). Integrated Company Analysis. Wisconsin School of Business. Retrieved from: business.library.wisc.edu/resources/kavajecz/.../starwood_pres.pdf
Gemkow, W. (2010). A Case Study on the Implementation of Six Sigma within Starwood Hotels & Resorts. Retrieved from: http://content.grin.com/document/v167854.pdf
Hotelstockindex (2014). Starwood Hotels advances asset-light strategy. Retrieved from: http://www.hotelstockindex.com/Article/12993/Starwood-Hotels-advances-asset-light-strategy
http://www.businessweek.com/innovate/content/aug2007/id20070830_103596.htm
Jameson, D. A. (2011). The Rhetoric of Industrial Espionage The Case of Starwood V. Hilton. Business Communication Quarterly, 74(3), 289-297. Retrieved from: http://bcq.sagepub.com/content/74/3/289.short
Lee, K., & Carter, S. (2011). Global marketing management. Strategic Direction, 27(1). Retrieved from: http://www.emeraldinsight.com/journals.htm?articleid=1896770&show=abstract
Prajapati, K. B., Jadeja, S., & Goswami, M. (2014). PEST Analysis for Indian Luxurious Hotel Market. Asian Journal of Research in Business
References
Economics and Management, 4(3), 205-213. Available at: http://www.indianjournals.com/ijor.aspx?target=ijor:ajrbem&volume=4&issue=3&article=016
Starwood, (2014). Company values overview. Starwood Hotels and Resorts Worldwide, Inc . Retrieved from: http://www.starwoodhotels.com/corporate/about/values/index.html?language=en_US
Starwood (2014). Starwood Hotels & Resorts. Retrieved from: http://www.starwoodhotels.com/corporate/careers/paths/description.html?category=9916&language=en_US
Tavitiyaman, P., Qu, H., & Zhang, H. Q. (2011). The impact of industry force factors on resource competitive strategies and hotel performance. International Journal of Hospitality Management, 30(3), 648-657. Retrieved from: http://www.sciencedirect.com/science/article/pii/S0278431910001416
Zhao, W. (2009). Issues, challenges and trends that facing hospitality industry. Canadian Research & Development Center of Sciences and Cultures. Retrieved from: www.cscanada.net/index.php/mse/article/download/j.mse...006/816
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Executive Officers |
Division managers |
Corporate officers |
|
Steven J. Heyer, Chief Executive Officer |
Stephen Alden, Senior Vice President, St. Regis & The Luxury Collection |
Tom Conophy, Executive Vice President & Chief Technology Officer |
|
Javier Benito, Executive Vice President, Chief Marketing Officer |
Geoffrey A. Ballotti, President, North America |
Jeff S. Drew, Senior Vice President, Corporate Finance and Treasurer |
|
Vasant M. Prabhu, Executive Vice President, Chief Financial Officer |
Raymond L. Gellein, Jr., Chairman & Chief Executive Officer, Starwood Vacation Ownership, Inc. |
Christie Hicks, Senior Vice President, Global Sales |
|
David K. Norton, Executive Vice President, Human Resources |
Miguel Ko, President, Asia-Pacific |
Alan M. Schnaid, Senior Vice President and Corporate Controller |
