Extent Of Vertical Integration At The Hotel example essay topic

Bangkok is amongst the world's dynamic cities where you can find various features unique forms of tourist attractions like graceful Buddha Temples, shopping malls, food, etc, to entertainment areas and magnificent hotels. And, one hotel that holds a unique feature is the Holiday Inn Crowne Plaza, conveniently located on colourful Silom Road, next to the river and right in the heart of the shopping, jewellery, business and nightlife districts. Attractions such as Chao Ph raya River where they can take a river taxi to the Emerald Buddha and Grand Palace, and Patong are within easy walking distance. Plus, the new SurasakSkytrain station is only a few steps away. The hotel is approximately 40-90 minutes drive from Don Muang International Airport depending on the day and time and the second stage expressway cuts travelling time between the hotel and the airport to an average of 30 minutes. Starting July, the old name "Holiday Inn Crowne Plaza will be re-named as "Crowne Plaza Bangkok".

This strategy is to differentiate the hotel from its competitors-making it a "class of its own". The Crowne Plaza is well known worldwide for its reputation of pro-viding exceptional services and unforgettable experience. Its commitment to continually meeting customer's satisfaction has created a high rate of guests' loyalty to the hotel. With its new brandname, the hotel's management is refocusing its target market. The Crowne Plaza targets niche market - upscale leisure and business travelers, while at the same time maintaining its midscale guests. The Holiday Inn Crowne Plaza Bangkok is designed in the modern style with a touch of traditional Thai decor which is suitable for the business and traveller.

It has a total 726 guest rooms situated in two towers, Plaza Tower and Crowne Tower. - The Plaza Tower has 385 tastefully decorated guestrooms. Featuring high ceilings including seven suites, 175 king leisure rooms with leisure / work areas. All rooms have individual thermostat control, central air conditioning with bathroom, color TV with 7 channel cable, on command video channels, radio, telephone with IDD facility, mini bar and hair dryer. - The Crowne Tower has 341 well-appointed Superior and Deluxe guest rooms including 17 Executive Suites and 1 Presidential Suite. Furthermore, they also have 1 room specially designed to accommodate wheelchair bound guests.

The doors are wider, switches are located lower, railings in the toilet and large spaces to maneuver. All our public areas are wheelchair accessible. The hotel has a wide choice of dining options, which include Window on Silom serving international favourites, Tandoor featuring northern Indian delicacies and Thai Pavilion showcasing the best of Thai cuisine. The Orchid Lounge serves light meals and high tea, and Cheers Pub offers a friendly pub atmosphere. 24-hour Room Service is available. Thai Pavilion A superb and authentic Thai dining offering deliciously spicy and unique dishes from the exotic Kingdom of Thailand.

The Thai Pavilion is open for buffet lunch and a la carte dinner. Enjoy traditional Thai music with dance performances every evening except Sunday. Capacity: 120 Window on Silom This smart and relaxing restaurant offers an extensive variety of International and Asian favourites from the a la carte menu with tantalizing breakfast, lunch and dinner buffets being a daily attractions. Capacity: 200 Tandoor North Indian restaurant offers the finest selection of North Indian cuisine in town, accompanied by a classical Indian band. Located on the 6th floor and open for both lunch and dinner daily. Capacity: 95 Orchid Lounge A comfortable rest stop and an ideal place to meet up with friends situated in the lobby where you can enjoy leisurely afternoon tea, a light snack or a full meal.

Capacity: 100 Cheers Pub A cozy, convenient meeting place with a friendly pub atmosphere where you can enjoy your favourite cocktail and relax to the sound of live entertainment nightly located on the lobby level of the hotel. Capacity: 90 Crowne Plaza Bangkok Conference Network provides a professional meeting service, giving the conference organiser unique benefits and services so that the conference can be planned and carried through with ease and confidence. Crowne Plaza Bangkok has highly trained, efficient and friendly conference network coordinators to ensure that all aspects of your event go as intended. State-of-the-art audio-visual equipment such as LCD Projector, Overhead Projector, Slide Projector, Screens, Flip Charts, Whiteboards and Standing, Lapel, Wireless Microphones, together with a fully equipped Business Centre, will accommodate all meeting needs. - The Crystal Ballroom has a total area of 910 square metres / 9795 square feet, with a capacity for hosting up to 850 guests for cocktails and 550 for a sit-down dinner. The ballroom, located at the lower level of the hotel, is flexible in its layout and can be separated into three function rooms.

This allows organisers to tailor the venue according to their requirements. The Crystal Ballroom has state-of-the-art equipment and ensures a successful conference, seminar, exhibition or meeting. - The Emerald Room accommodates up to 200 guests theatre style and 130 conference style and may also be used for banquets and receptions. The Emerald Room can be divided into three smaller rooms: Emerald I, II and. These rooms can hold 70 to 80 guests each theatre style and from 20 to 30 boardroom or meeting style. Each room features phone, multiple electrical and microphone outlets and individual controls for sound, air conditioning and electricity.

A selection of audio-visual equipment is available. - The Topaz Room is a small room situated next to the Emerald Room, and it can accommodate 40 guests in a theatre-style set-up. This room can be separated into two rooms which can be used for small meetings of ten persons. Recreational facilities include fully equipped health club, tennis court, sauna, Jacuzzi, steam bath and massage services, and there is an outdoor swimming pool with children's pool and sun deck.

For business travelers, there's high-tech Business Centre and exclusive Executive Lounge. Additional facilities include free morning newspaper delivered to the room, internet access, iron and ironing board, separate hanging closet and wake-up calls. This hotel is owned and operated by HRH Holdings Ltd. and it is a subsidiary of InterContinental Hotels Group, Inc. With all these incentives and amenities, no one can resist the temptation of staying in this hotel.

And, the best reason for choosing this hotel is simply because you " ll feel like you chose to stay with someone you know. They not only provide fine facilities but the quality, attention to detail and service that you " ve come to expect from a "jewel in the crown". Five Force Model Threat of intense segment rivalry Since the hotel business is much more competitive than an oligopoly. There are many buyers and many sellers. While there are limited numbers of brand names that appear to control the market, the relationship of franchisor to franchisee in hotel is not at all like ownership and the real fact of the market place is many independent owners "renting" franchise brands from franchisors.

Thus, no one company exercises control over the market. Most of the hotels are trying to increase their target to specific market segments because in most markets there is more than enough hotel capacity to go around. Another way of saying this is that more hotel rooms were built than there is demand for. Therefore, there is intense competition between hotels resulting in the need for heavy rate reductions to stay competitive. As well as services and amenities are crafted to meet the needs and preferences of particular target markets.

So they have to compete with an excellent service in order to get customer from their competitors. And since the public can easily accessible information that covers key competitors' pricing, future sold out dates, group clients, marketing alliances, customer incentive programs, product and service improvements, advertising media placement, marketing collateral materials and news releases is invaluable. So the hotel can effectively manage its competitive position by reviewing this body of information regularly and making the appropriate adjustments. The hotel industry is engrossed in the idea that brand equity and global market share are the instruments of success. 1.

Competitive Structure 1) Firm size and concentration. For the hotel business in Thailand there is a high competition. Because there is more supply of hotel room than there is demand for. The total number of hotels only in Bangkok is about 109 hotels which are divided into 3 stars for the total number of 36 hotels.

For 4 and 5 stars hotel there are 54 and 19 respectively. This number is excluding other types of hotel and also other substitutes so we can see that there is a high competition in this industry. Total number of hotel in Thailand Province Rate of Hotel Total 3 stars 4 stars 5 star Bangkok 36 54 19 109 Chiang Mai 9 11 11 31 Krabi 5 12 4 21 Pattaya 20 17 7 44 Phuket 20 60 11 91 2) Speed at which competitive actions / reactions happen. For hoteliers, the ripple effects of the recent incident mean finding ways to deal with sharply lower occupancy rates and constrained marketing budgets. But identifying what action to take and planning how to rapidly address the changing realities raises a multitude of questions. We believe that hoteliers should adopt, with utmost urgency, a proactive strategy that includes consistent efforts to differentiate from the competition and embrace co-operation, joint marketing initiatives and eDistribution.

A proactive strategy will not only soften the impact of the current crisis, but also allow hoteliers gain market share faster and cheaper. It is obvious that hoteliers should continue to utilize all traditional marketing channels at their disposal. But what is not obvious is what hoteliers should do beyond the norm. Since there is a high competition in the hotel industry so each hotel have to provide or set up strategy in order to compete with others. To use any strategy besides service the hotels have to consider other factors such as economic situation, environment, high or low seasoned. But the most important thing for hotel to keeping their customer is to provide an excellent service.

3) Extent of innovation in the industry. Whether change is short or long term, operational or strategic, for expansion or for managing scarce resources, a key role of the effective hospitality manager, at any level, should involve facilitating such change and innovation. With ever-increasing customer demands, changing technology and concomitant change in co-workers's kills, all organizations in the hospitality industry have a constant need to facilitate such change for the benefit of all their stakeholders. Nowadays, technology is the best ally of hotel. For instance, eDistribution is by far the lowest cost channel of distribution. Used properly it increases occupancy rates, improves the bottom line, opens new markets and attracts more affluent customers in these difficult times.

That is, the larger the extent of innovation, the more the profit in the hotel industry. 4) Product quality. Pricing is a huge factor in terms of competition among competitors. As of now, there is a strong impact, yet this rivalry will level off; balance itself out and the top companies will continue to compete on a mid level in the areas of benefits, services, attractiveness and general quality. 2. Exit Barriers.

- Since the hotels have high operating cost and they have to invest a lot of money so there is a high exit barrier for the operator. Normally, the hotel investment divides itself naturally into two parts: 1. Exterior assets - land, building and fixed plant. 2. Interior assets - furniture, fittings, operating equipment and working capital.

The purchase of exterior assets provides such a situation. If a hotel fails, they can be sold to cover the initial investment. However, the risk is much higher from interior assets which tend to have low resale value. That is, the hotel has high barriers to exit and it should be concerned that there are many fixed costs in business and it thus runs the business in order to survive. 3. Demand - Demand for the hotel room in each period of the year will vary according to the environment situation for example whether, economics, politics of a particular country, etc.

So the rate of hotel room will be very high during the high season and will be lower in the low season. Another condition, which has an impact on the demand for hotel room, is the travelers themselves. For the leisure traveler they are price sensitive, which is opposite to the business traveler. They are not price sensitive but the condition that they consider in traveling is the economic situation and investment in that particular country. On the other hand, demand can also be classified into two levels as following: At the primary level: 1. Basic demand is an existing demand for hotel facilities which can satisfy need.

2. Displacement demand is a demand arising from the clients of other competitors where their needs are not being fully met. At the secondary level: 1. Created demand is a demand which has not existed before.

It derives from people who do not normally use a particular area of hotel. So, the attraction of the hotel itself can induce them to do so. 2. Future demand is a demand which arises due to changes in environment factors or consumer behavior. Determinant of Potential Entrants 1.

Economics of Scale 1. Volume discounts. The size of the hotels may sometimes mean the volume of services that they can offer to their customers. It means that if they can produce in large volume and reduce their costs simultaneously. They can also price lower than the smaller hotels. Moreover, if the new entrants have the strong partnership, they can offer the lower price but better service to customers.

2. Advertising. If the new entrants use huge budget to advertising, they are creating brand awareness to potential customers while the older hotels do nothing. Consequently, Regardless of flag, location or reputation, hotels are vulnerable for the simple reason that trying a new hotel is a safe form of adventure for a frequent traveler.

"Ready for a change of pace" is the death knell of the old stand by hotel. 2. Experience-Curve Effects 1. Experience hospitality process.

Although the new entrants may have huge sum of money, decisions about the capitalization of the project are absolutely critical to their survival. There are too many instances where the hotels cannot be viable because they lack of experience and expertise. 2. Skilled employees and management teams. In hotel management, it is necessary for a hotel to have specialist departments such as personnel, purchasing and management services. The costs will be lower due to effective performance.

Therefore, expert management and staff should do their best to achieve a complete resolution to maximize guest repeat patronage. 3. Brand identity. Very high, brand loyalty will create a large barrier for others to enter into the market. Brand loyalty takes into account quality of service, customer satisfaction, and reputation in the market. 4.

High Capital requirements. One on the most important factors of investment in hotel is the considerable amount of capital involved and this is the principal factor in any examination of the financial feasibility of a hotel project, subsequent to completion of the market feasibility study. 5. Favored Political Status. Regulations regarding entry create a barrier as well; meeting governmental standards in terms of regulation will also create a huge barrier for market entry. Determinants of Substitute Threat 1.

Buyers face low-switching costs 1. Some opportunity cost. There is opportunity cost in not choosing hotel service. Customers may not have the same services like hotel services and have limited choices.

Sometimes, they do not have the same quality in the same price. 2. Risk-averse buyers. Customers are able to have more security from hotel service because most hotels have the security policy to create customer satisfaction. Apartment service is still not popular relative to hotel service. Therefore, it hardly has any standard to guarantee quality of service apartment.

3. Price of equivalent alternative. Room rate of apartment is cheaper than of hotel and most are monthly payment. Major zones Room rates of apartment (monthly in baht) 3 stars 4 stars 5 stars Central 15,000-35,000 30,000-60,000 none Sathorn none none 35,000-85,000 North Sukhumvit none 35,000-60,000 none South Sukhumvit none 25,000-65,000 none Other none 18,000-65,000 none 2. Substitutes few and dissimilar.

Alternatives such as renting condos, taking cruises, and making use of campgrounds create options. Consumer preference would play a large role in making alternative decisions. However, nowadays, daily apartments can substitute hotels almost perfectly. - The best apartment with first-class facilities.

- Outstanding choices. You will be in good hands. - Good apartment with rooms at affordable price. Central Zone This area can be subdivided into 2 parts North of Rama 1 Road includes Som kid, Chid lom, Nai Lert. South of Rama 1 Road includes Henry Dunant, Rajdamri, Wireless Roads and Ruamrudee.

From the above map, most service apartments were located on the central location, thus creating convenience for travelers, especially business travelers. 3. Few number of service. When compared with number of hotels in the same level, except low segment, Apartments for travelers are fewer. So, the travelers can use service of hotel easier. Number of Apartment in Bangkok Major zones Number of Apartment Total 3 stars 4 stars 5 stars Central 2 4 0 6 Sathorn 0 0 2 2 North Sukhumvit 0 12 0 12 South Sukhumvit 0 39 0 39 Other 0 1 0 1 60 Determinants of Buyer Power 1.

Most purchasers are private individuals. Thus, they have a power to make up their mind to buy service or not. Remark: Overseas Thai Residents are not included As for above table, there are two major groups of customers. 1) Leisure travelers (on holiday): This group is more quantity than the other but lower value per unit. In a soft demand environment, the middle market drive-to locations should see profits grow as leisure travelers continue to be cost conscious and seek economical alternatives. 2) Business travelers.

Although there is lower quantity than the former group but this group makes high return to hotel industry in Thailand. Thus, this group has higher bargaining power than the first group... Lately many corporations set their travel budgets early in the fourth quarter of 2002, when there were few encouraging signs of growth. It is unlikely those budgets will be increased until 2004.

Anyway, these terms are still misleading because they all tend to a certain type of traveler, regardless of the market segment to which they belong. Then, the total hotel market is primarily composed of four segments as following: 1. Upper segment 2. Upper-middle segment 3. Middle segment 4.

Lower segment This classifying including all travelers both domestic and foreign corresponds to any type of hotel regardless of its location and principal types of customer. For instance, a business, traveling for pleasure with his family, may prefer to other segment and may thus be considered differently. 2. Buyers cannot integrate backward. Though they may have much purchasing power, they do not have the specialization in hotel industry. Consequently, if they want to integrate backward, they have to have much capital and use time to study this area.

3. Low switching cost. Buyers always change hotel's brand when they want. They may waste only time cost. So, in the hotel industry, hotels try to compete one another to create brand loyalty. It is commonly accepted that consumers change their minds and also their tastes in different period.

The hotel must be aware of and responsive to the changing needs of potential consumers and also be aware of changing attitudes and trends within the entire hospitality industry. For example, previously, Holiday Corporation's sole brand was Holiday Inn and Marriott Corporation's sole brand was Marriott Hotel. Nowadays, they offer different brands attempting to satisfy the needs of different market segments. 4. Buyer information. There is almost perfect information in hotel market because now buyers can search information anywhere, especially Internet.

So, they have time to make up their mind and choose the best choice. A hotel should always improve its service and also its channel to keep contact with its customers. 5. Price sensitivity. The business travelers do generally not have price sensitivity. Hence, a hotel is difficult to use price strategy with this customer group.

In contrast, price is one of core factors for the leisure travelers to decide whether they buy. 6. Product is almost not different. Most hotels in the same level have the similar number of services but not the same quality in the customers' perceived value. Therefore, hotels have to improve their quality all the time. Determinants of Supplier Power Before doing hotel operation in each day, every hotel has to prepare for raw materials and materials such as food, kitchenware, glassware, furniture, bathroom amenities, uniform, system etc. to provide best services to customers.

If customers perceive good value of services which also come from good raw materials and materials from the hotel, the hotel will get their loyalty. If not, customers will not use its service anymore. To have raw materials and materials, hotels need to contact with suppliers. 1.

Suppliers have low bargaining power. In most hotels, food buying is the product of a negotiation between chefs and the head of the purchasing department. The chef will demand a particular imported item and the purchaser will offer a cheaper substitute. In addition, distributors say, food buyers often request fees or kickbacks in return for an order. The high-end sector is divided between international and domestically managed hotels. Many large foreign chains are represented in the international market, including Hilton, St. Regis, Marriott, Holiday Inn, Shangri-La, Ritz-Carlton, New Otani and Hyatt.

Some of these hotel chains are instituting group purchasing for some products to reduce bargaining power from suppliers. Products and Services Audio Visual Beverages Cleaning Consultants Decorations Design Renovations Construction Entertainment Food Food Service Equipment Furniture Fixtures and Equipment Guestroom Insurance Maintenance Office Equipment Uniforms Outsourcing Paper Products Parking Photography Printing Promotional Materials Purchasing Restaurant Security Supply Companies Tele Communications From above table, they are sample of products and services that supply to hotel industry. That is, hotels can buy from such a company who can offer best products and services. So, these are not influent in terms of income. 2. Although there are few suppliers who specialize in hotel area in Thailand, which means that this business is likely to have high switching cost, hotels can find international suppliers.

Moreover, they can contact with other domestic suppliers who do not specialize in this area but can offer exceptional services and products and create good relationship to hotels. Thus, there are many suppliers of these products and needs; difficulty should not be created when it comes to choosing a supplier. The switching cost is reduced. Except an uncertainty as to the most economic source of energy, after construction is completed, a switch in energy sources is usually not feasible. HOTEL SUPPLIER in Thailand SUPPLIER NAME TYPE Furniture Thai Furniture Genius Communication System Global Hotel Supply Kitchenware I.H.R. S Glassware N.I.B. H Uniform San co F&B TALMA F&B 3. Minimal threats of forward integration by suppliers.

Because such operators in the hotel industry are necessary to have specialization and experience definitely, the suppliers are then difficult to do forward integration. The best way that they can do is to be one of good partners in supply chain and to make good relationship with hotels. SWOT Analysis Strengths 1. High brand awareness: Hotel chains constitute a classic application of brand strategy. Brands are a quick way for hotels and hotel chains to identify and differentiate themselves in the minds of the customers. A brand symbolizes the essence of the customer's perceptions of hotel chains, its products, and services.

The favorable or unfavorable attitudes and perceptions formed by brand influence a customer's hotel preference. InterContinental Hotels Group is a leading global hospitality group, with over 3,300 hotels across nearly 100 countries and territories. Every year more than 120 million people find a welcome at one of its lodging brands as following: InterContinental Hotels Group Lodging Brands InterContinental (R) Hotels and Resorts offer an exceptional service for business and leisure guests seeking a luxury hotel experience. With a worldwide portfolio of 140 hotels in 75 countries on InterContinental Hotels Group have been welcoming frequent international travelers for more than half a century. Crowne Plaza, located in major markets worldwide, is THE Place to Meet. Whether it's a group meeting in the hotel, a one-on-one meeting with a colleague or clients, or a getaway with a loved one or friends, Crowne Plaza is the hotel for people who value the energy and positive interactions that take place when people come together.

Holiday Inn (R) hotels, with more than 1,500 Holiday Inn full-service hotels around the world today's Holiday Inn hotel offers 24-hour business services, meeting facilities and the Holiday Inn Meeting Promise TM. 2. The ability to innovate, a pool of competent potential workers / professionals, the best facilities which offer to the customers and technology development. InterContinental Hotels Group requires a strict adherence to standards that encompasses service, product quality, design, construction and operation - across ALL brands. One way to achieve such high standards relies on the underlying support of training staff. InterContinental Hotels Group provides training for hotel staff, including the management tools necessary to provide hotel staff with additional knowledge of the skills necessary to generate continuous improvement in revenue management, service delivery, and operating skills.

3. Improving continuously services to better meet the needs of its clients. Holiday Inn Crown Plaza always improves services by both its own policy and InterContinental Hotels Group's policy. That is, the hotel focuses on customer satisfaction first as measuring the quality.

4. Anticipating the potential requirements of a traveling businessman, for example, makes a hotel more attractive. Holiday Inn Crown Plaza capitalized on its ideal location and deliberately put in place amenities and facilities to suit the changing needs of the business traveler. There is the Business Centre equipped to provide all business needs. Services include stenography, telex, facsimile, cables, word processor, Internet connection, photocopying, mailing, translation, full secretarial services, courier service and other business-related services. Private conference rooms and offices are also available.

There is the Executive Lounge, a private retreat for Crowne Plaza Club floor guests, provides the little extras "Executive Service" like all day complimentary coffee and tea, evening cocktails and canapes, personalised wake up calls with tea, 24-hour butler service, one suit pressing on arrival, as well as a packing and unpacking service. The exclusive Executive Lounge prepares a complimentary continental breakfast, beverages all day with cocktails in the evening, and maintains a library of international newspapers and journals. 5. Central location, with easy access to entertainment place, and shopping centers, etc. At its very centre customer's discover the Crowne Plaza Bangkok. Situated on colorful Silom Road, next to the river, customers are right in the heart of the shopping center, jewelery, business and nightlife districts.

7. Competitive room rate but exceptional service. The new streamlined organization, which has in its portfolio leading brands including InterContinental Hotels, Crowne Plaza and Holiday Inn, is underpinned by more efficient use of regional and global resources and a structure that the group expects will drive greater innovation, customer focus and revenues by moving key resources closer to customers, partners and key growth markets. Hotel Rates Compared Crowne Plaza $61 Pathumwan Princess $65 Sofitel Central Plaza $71 Hilton International $72 Imperial Queen's Park $74 Evergreen Laurel $83 Marriott Resort Spa $86 Dusit Thani $97 Emporium Suite $106 Pan Pacific $106 Conrad $109 Landmark $111 Intercontinental former Le Royal Meridien $112 Le Royal Meridien $112 JW Marriott $115 Hotel Plaza Athene e $118 Royal Orchid Sheraton $118 Banyan Tree $125 Sheraton Grande Sukhumvit $133 Shangri-La $138 Sukhothai $167 Peninsula $171 Regent $191 Grand Hyatt Era wan $197 7. Several discretional facilities Each room offers individual climate control, central air conditioning, bathroom with marble fixtures, hairdryer, colour television with CNN, ESPN, Star TV and video channels, radio, minibar, work desk with lamp, direct dial telephone, modem port and voicemail. There are 29 suites, each with a separate living room, and the exclusive Crowne Plaza Club gives business travelers their own particular privacy.

One room is specially adapted for disabled guests. Additional facilities include: - Free morning newspaper delivered to the room - Internet access - Iron and ironing board - Separate hanging closet - Wake-up calls 8. Crystal clear target customer. Thus the Crowne Plaza can focus on our customers groups and accomplish the highest customer's satisfaction. 9. Support from its franchiser.

Marketing teams for each brand develop strategic programs at a local, regional, national, and international level. InterContinental Hotels Group's marketing groups work in conjunction with regional sales force to maximize efficiencies while maintaining focus on strong results. BHR Capital (BHRC) is an exclusive financing service for the franchisees of the InterContinental Hotels Group System. For all hotel financing needs, BHRC can get the most competitive terms and conditions available for qualified owners by coordinating with third-party funding sources and matching the specific funding need with the lender best suited to fill that need. BHRC offers a full complement of financial products to help the investors in our brands maintain superior hotel properties that create guest preference and deliver superior financial returns.

These comprehensive financial products are exceptionally competitive 10. The list of the world's top 20 hotel chain. The World Wide Web, as an interactive communication medium, is still in its infancy stage. At present it is mostly the larger hotel chains which have begun to explore its potential to develop long-term relationships with customers.

The smaller hotel chains are still not doing so, probably because they are lacking in financial and marketing resources, or only want to cater to a more localized or nationalized market. Thus, the Web still has a long way to go in terms of its development as a relationship market tool, which is very much dependent upon customers' demands, hotel companies' willingness to let their web sites assume a bigger marketing role, and the available technology. However, there seems to be widespread confidence within the hotel industry of the future of the web as a marketing mechanism. For Crowne Plaza, it is the one of InterContinental Hotels and Resorts worldwide which range in the world's top 20 hotel chain as shown in below table. Highest Number of Features (Top 10% of Hotel Web Sites) Hotel Chain No. of Web Features Sheraton Hotels & Resorts 27 Hilton Hotels & Resorts 25 Best Western International 22 Hyatt Hotels & Resorts 21 Marriott International 20 Inter-Continental Hotels 20 Destination Hotels & Resorts 20 Westin Hotels & Resorts 18 Days Inn of America 17 Rosewood Hotels & Resorts 17 Holiday Inn Worldwide 16 Rennaissance Hotels & Resorts 16 Radian 15 Shangri-La Hotels & Resorts 14 Weaknesses 1. No quiet and scenic surroundings: As the hotel is located in downtown, some tourists do not like these surroundings because it is very confusion.

The tourists may want to leisure in the place that is peace and beautiful scenery. Therefore, the hotel may loss some customers because of its environment. 2. Hotel's layout: layout strategy is not good in the aspect of Chinese people, especially, the crystal ballroom that is located at the lower level (underground) of the hotel. For Chinese people, they think negative because it looks like go down to the basement. If they would like to have celebration such as weddings ceremony, grand opening ceremony, etc.

Chinese people will not go to arrange the auspicious ceremony there. Because most of the Chinese people still believe in Huang Jui or Feng Shui. However, the hotel had an adjustment by used crystal chandelier in order to make the ballroom more elegant. 3. Medium number of guest rooms: The hotel offers 726 luxuriously appointed guest rooms situated in two towers, Plaza and Crowne. Crowne Plaza Club rooms provide the discerning traveler with exclusive accommodation and services for a more luxurious stay.

When compared with competitors, the hotel can not achieved in the economies of scale due to limited area. Crowne Plaza cannot expand. Therefore, the operation cost of hotel is higher that competitors. 4.

Many competitors in the same area. At Silom and Sathorn road, there are several other reputed hotels. That is, Crown Plaza tries to compete these by marketing strategy all the time. SILOM / SATHORN Monti en 54 Sura wong Road SILOM B 3300-6000 T awana Ramada 80 Surawongse Road SILOM B 3000-3600 Pan Pacific 952 Rama IV Road Suriyawongse SILOM US$120-350 Dusit Thani 946 Rama IV Road SILOM US$190-260 Swiss Lodge 3 Convent Road SILOM B 3375-3760 Monarch-Lee Gardens Bangkok 188 Silom Road SILOM US$95-270 Sukhothai 13/3 South Sathorn Road SATHORN US$135-650 Westin Banyan Tree Thai Wah Tower II SATHORN US$131-269 Park Suanplu Exclusive Residence 39 Soi Suanplu SATHORN B 2800-4500 Holiday Inn Crowne Plaza 981 Silom Road SILOM US$99-209 Shangri-La 89 Soi Wat Suan Plu RIVERSIDE US$135-240 Oriental 48 Oriental Avenue RIVERSIDE US$190-3750 Royal Orchid Sheraton 2 Captain Bush Lane RIVERSIDE US$90-165 Opportunities 1.

Growth in airlines discount, stimulating intra-regional travel and encourage tourist to travel. 2. 'Safe haven' markets capturing displaced leisure ad conference demand: Regional leisure travelers come to Thailand for one reason that is to shopping. Bangkok now has a good reputation for shopping from luxury goods at the Emporium to exotic handicrafts at the Weekend market. It remains to be seen how competitive Thailand will be for the leisure traveler in the international competition and whether marketing the country's natural resources and natural beauty will be an effective way to bring those travelers to Thailand.

3. Increased domestic and intra-regional travel Thailand Tourism Market Monthly International Arrivals 2000-2001 Source: Tourism Authority Thailand 4. Government support of faltering tourism industries. A new governmental campaign called "Be My Guest" was launched this November in London and is aimed at promoting Thailand as a value for money destination for 2002 and 2003. The Prime Minister will appear in the Be My Guest television ads, encouraging foreigners to come to Thailand under the "Be My Guest" program. The pitch in the new campaign is for visitors to enjoy Thailand's "unique hospitality and friendliness".

5. Weakened currencies against the US dollar, encourages international inbound and domestic tourism 6. High barrier to entry: Hotel entry barriers, which include economies of scale, infrastructure, and product differentiation, are significant particularly for those who will venture in deluxe or first class operations. Economies of scale force a new entrant to come in at relatively large scale and risk strong reaction from existing firms. Consequently, requiring substantial start-up costs and with the appreciation of land and high construction costs. Moreover, an entrant would need high start-up costs from advertising, image building to offset leverage of existing prominent hotels.

Training and development costs, necessary for quality hospitality services, are also considerable. Finally, hotel differentiation exists in the industry. Established hotel have brand identification and customer loyalties, which stem from past reputation and customer service. Threats 1. Further weakening of the world economies.

In addition to the general slowdown in Europe and North American, certain sectors have been hard hit, including IT and telecom. Business travelers to Thailand from these sectors are off significantly. There is as well as a noticeable decline in the number of bankers or others in financial business. The lack of bankers suggests a falling off in investment interest by members of the international financial community.

2. Lower American visitors demand How American travelers are responding to unprecedented challenge and change economic recession and 11 September have had a major impact on American travel. Business travel will decline more than 4% this year. Leisure travel will be up just 2%.

Total travel expenditures, which declined nearly 6% in 2001, will not recover until 2004. That is, American travelers have altered their behavior and traditional travel patterns. Americans went back to the basics. They are travelling more domestically and closer to home. They are travelling more by car and less by air. They are travelling with family members and visiting heritage, cultural, and outdoor recreation sites more often.

They are booking later and they are spending less. The impact of these changing patterns has been uneven. 3. Further contraction of already weakened Asian economies Economic Environment Source: Consensus Economics From graph, the growth rate especially in Western Europe and North America, reduces. Those are major target customer of most hotels in Thailand 4. Fall in consumer and business sentiment during war and SARS Growing alarm about Severe Acute Respiratory Syndrome (SARS) is having a far-reaching impact on Thailand's travel and tourism industry and is likely to deprive the country of tens of billions of baht in lost revenue.

The epidemic is now seen as affecting the travel industry more than the war in Iraq, which has also taken business away from airlines, hotels and tour operators. Fear of the virus has nearly wiped out all outbound tour bookings from Thailand between now and June, while inbound tourist numbers have dwindled by 20 percent in the first quarter. Updated data gathered by the industry showed that 95 percent of outbound trip bookings up to June had been cancelled. And inbound tourists dropped by 20 percent in the first quarter due mainly to the war in Iraq and the SARS outbreak. The majority of cancelled flights were made by American, Middle Eastern and Asian tourists, especially Japanese. If the situation does not improve, expect another drop of 20 percent or more in the second quarter As a result, hotel occupancy was now expected to be down 20-30 percent from the same period last year.

Just last week the industry had been talking of a 10-15 percent decline. 5. In ASEAN country have high competition to persuade travellers and investors to their own country. 6. Some government policy. There has been a widely reported perception among investors and business people in the foreign financial media that Thailand's Government has been less than friendly to foreign investors and that the current government's has shifted policy away from foreign investment to encouraging populist policies such as the 30 baht medical system and the one million baht per village scheme.

This perception might also have been a contributing cause for the fall off in bankers staying in his and other five-star hotels. 8. A terrorist attack on the global economy and could be expected to put the South East Asian recovery on hold caused a major crisis in the airline, insurance and tourist industry. Tourism is a major contributor to the economies of many developing / low currency and developed countries like Thailand, Malaysia, and Singapore. Thailand is one of Asia's premier tourist destinations. So, how much of this was due to the terrorist attack, and how much to unrelated factors such as corporate malevolence.

The global terrorist movement was moving to base itself in South East Asia, as the Middle East, Europe and North America started to become too hot. With majority Muslim populations in Indonesia, Malaysia, the Philippines and even Southern Thailand, it was not that hard to blend into the crowd. It was also accepted practice that greasing palms of officials in those countries may cause them to look the other. South East Asia may well just have lost its brand as a "safe" tourist destination. In an increasingly unsafe world, tourists may opt just to stay home.

The tourism industry is key to the economic prospects of South East Asia. Foreign exchange. The spin off to retail, airline, and many other spin off industries is also significant. All in all, industrial and consumer growth, tourism industry in South East Asia slowdown in economic growth.

VERTICAL INTEGRATION AT CROWNE PLAZA Before we analyze the extent of vertical integration at the hotel it is important that we understand as to what do we mean by VERTICAL INTEGRATION. Vertical integration: -? IT is the extent to which an organization "owns" the network of which it is part. This consists of opening or purchasing a supplier to one's business - Backward vertical integration - or purchasing an organization that is a customer to one's business - Forward vertical integration. The act of integration is counted as a type of diversification, since it involves acquisition of a new business or it involves combination of two or more components of the marketing channel. There are many ways of utilizing backward integration. e.g. a restaurant or hotel gets into the bakery, linen, or produce an equipment.

Forward integration is not common in hospitality. e.g. a hotel purchasing a travel agency or reservation system. Often, firms that want to pursue integration strategies do not have adequate funds or expertise. Common options include; - Joint venture: is the combining of resources with another company for mutual benefit. - Strategic alliance: occurs when a smaller company, generally with expertise, time, and little money, joins with a larger company with money or available credit, business background or know how. - Franchising: is the licensing of others to operate a business using the firm's operating system and brand name. - Management contracts: include a variety of agreements between those that have the expertise and reputation for successfully operating a particular type of business and those that own the business.

- Acquisitions: are basically the outright purchase of another business that may continue to operate under its own name. - Mergers: occur when two or more firms are combined to create one firm. Objectives of vertical integration Benefits of Vertical Integration Vertical integration can have a significant impact on a businesses performance. There are so many advantages in several aspects. Costs Vertical integration can help a company reducing the cost by avoiding transportation cost, vulnerability of increases in raw materials costs, the transaction costs associated with dealing with vendors or retailers and capturing upstream or downstream profit margins. Moreover, a company can greater control costs and supply components through Product innovation The highly integrated businesses the more innovative product will be.

In both mature and growing markets, high levels of integration correspond to high rates of new product introduction. The same pattern holds regardless of whether technology is changing or whether the business has a small market share or a strong competitive position. Risk Reduction A company can reduce risk by product portfolio diversification and faster entry and payback of inputs so a company does not have to worry about lacking of raw materials or lateness of suppliers. Differentiation & flexibility Vertical integration provides more opportunities to differentiate by means of increased control over inputs.

It means that companies have more alternative to choose inputs in term of both variety and quality. Economies of Scale Because of large production quantities, the firm can benefit from economies of scale Drawbacks of Vertical Integration Although vertical integration has many attractive advantages, there are also some disadvantages that companies should consider. Costs To do vertical integration needs a huge budget for fixed cost and specialized management at multiple levels of systems. Moreover, this will require radically different skill and capabilities. So companies have to hire specialists to run these parts. Relationship The addition of the new activity by vertical integration places the firm in competition with another player with which it needs to cooperate.

The firm then may be viewed as a competitor rather than a partner. In addition, integrated firms must deal with transfer price dilemma which can create serious morale and other internal problems Flexibility & product variety Vertical integration results in fixed sources of supplied and less flexibility in accommodation due to previous upstream or downstream investments. Furthermore, if significant in-house development is required, vertical integration will decrease ability to increase product variety. Effects of vertical integration Quality Because firms can select raw materials by themselves, they have higher potential control of quality of products. Speed & Response time Firms can control producing time more efficiently due to producing their raw materials by their own manufacture. Moreover, they will be free from transporting time limited.

Dependability Firms tend to more independent from supply chain. They do not have to care about supplier power which has ability to increase price or less productivity. Flexibility There are pros and con of vertical integration in flexibility. Firms have more flexibility in term of variety and differentiation but less flexibility in term of investment and accommodation as mentioned above Cost Firms maybe have increasing cost of investment in short term but they will gain more overall benefits according to less cost such as overhead cost, transportation cost and taxes by reducing risk in long run. Vertical integration strategy: When a firm decides to do a vertical integration it needs to formulate a strategy for this purpose. The strategy needs to focus on three main points which are 1.

The direction of expansion: - The firm needs to make a decision as to which direction will it focus to do its vertical integration whether it will go for a backward or a forward integration or both. This decision is important as the firm has to identify the link in the value chain, to which if the firm applies its vertical integration will benefit it the most. The direction of expansion is a very difficult one to decide as the manager of the firm would like to be close to the customer with forward integration and as well as save up on cost with the help of backward integration. 2. The extent of expansion: - After its decision on the direction of expansion the firm also needs to decide in its vertical integration strategy as to what extent will it expand in that direction. This decision mainly focuses on the firms decision as to whether it would like to a total integration that is do everything in upstream / downstream or be specific in choosing the activities that It would like to do and also as this stage of decision the firm has to choose one of the methods of vertical integration mentioned above to achieve its integration plan.

3. The balance among the stages: - After the above two decisions when the firm is in the process of doing a vertical integration it needs to focus and maintain a balance among different stages of vertical integration. This is a very crucial decision process and very tempting one too for the mangers as they realize the benefits of integration they want to go in to a complete integration and since the firm is new in the business it needs to be very careful and strike a balance between its core business and the one's its implementing in to its vertical integration. Forward integration at the hotel: - The crowne plaza uses a similar forward integration to other hotels in the group through the internet.

The crowne plaza uses its web sites such as web and web to get in direct touch with the customer in order to eliminate the travel agents during the choosing and booking process. Through the use of internet the hotel has a direct one to one interaction with its guests and gives them information as well as flexibility in choosing the dates, rooms & packages being offered by the hotel and at what prices. The internet booking process is fast, flexible and moreover less tedious and cumbersome when compared with the traditional booking process. With this forward integration it is beneficial to the guests in the way that they save money on calling up the travel agents and other additional costs for the hotels if they go through the middle men.

This is all the benefits that the guests receive from forward integration what's in it for the hotel? The hotel has even larger benefits involved with the forward integration as the guests directly book with the hotel it saves the hotel on the margins it has to pay the travel agents and third party web sites this increases the contribution margin per guest and profitability of the hotel as a whole. The effect of forward integration can be better explained with the help of the table below. Backward integration at the hotel: The crowne plaza hotel currently has two major backward integration initiatives going with the help of its sister hotels of holiday inn. They are doing the backward integration with the help of other hotel group members because doing this individually can ask for huge amount of resources as well as it would help the over all initiative of the group to cater the guests with the same quality all around the world.

Wine processing: The wine processing the newest venture which the crowne plaza has entered in to. Right now the objective of the hotel is to import the grapes from France, Australia and use local Thai varieties to process the wine in Thailand so as to serve its guests high quality of wine at lower cost. Besides the high quality and lower cost the purpose of the initiative is to minimize the import duties it pays for the alcohol import. As the analysis of threats reveals that in the future the hotel has to work at higher cost and the same revenue due to competition this way of lowering cost is very significant and important for the hotels long run. There is also the benefit from the economies of scale which it will get from processing for all the group hotels in Thailand.

Brochure printing: This backward integration has been a part of crowne plaza for a long time now. The hotel in association with other group members does its own printing of brochures and other printing because the first impression it creates in the guests' mind is through the print material about the hotel. The hotel purchases the best quality paper and printing ink to make its brochures as it wants to maintain its quality and also compete with the other hotels brochures the management took the decision that it should take this part in its own hand. The designing too now is done by hired employees of the group. The concern here more on the quality than the cost but since there is always the bulk printing of the other group members and cost divided it automatically becomes very cost effective for the hotel.

The printing factory is located in Bangkok and there is no big transportation cost incurred by the hotel. RECOMMENDATION The growing yet competitive global economy necessitates businesses to continuously seek ways to execute more efficiently while delivering products or services to customer expectations of quality and timeliness. Hotels delivering services matching or exceeding customer expectation will be more likely to survive. 1.

The hotel should curb customer wait times at the airport. Communications and employee training were two factors to the process that would likely improve the process. Significant improvement was noted in operator courtesy and friendliness and decreased wait time. Allowing time to analyze processes within an operation can yield rapid improvements often without major financial expenditure. For example, many travelers can make up their mind to pick service or not. 2.

Over the past year, the Hotel has been growing between 6 to 10 percent of revenue. The management is going to renovate the hotel to keep up with Hotel's competitors and reposition the property for the upscale market- for leisure and business, therefore, keeping with hotel's steady growth. However, when the management focuses on upscale market, it means that the hotel will lose other customer group and some revenues. In the hotel business, there are high fixed costs such as employee salaries; then, the management should manage carefully. 3. The Hotel should have the strong relationship with travel agents.

Tour operators, incoming operators and travel agency groups can play a very important role as coordinators and packagers of various destination-focused travel services. These entities have a great deal of experience developing and selling packaged travel. So, they are the major channel where the Hotel can communicate with customers. 4. Coordination as partnership is the right strategy in these difficult times. There has never been a better time to work together.

The Hotel can develop joint product offerings and marketing with other travel players, such as air & hotel city packages, car & hotel (Avis and Ramada), rail &hotel, theater &hotel, etc.

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