Contemporary Developments in Business Management: Hotel Industry in Hong Kong
The Changing Competitive Environment
Competitive Environment is the part of an organization’s external environment that is consists of other firms that are trying to win the customers in the same market. It is also the segment of the industry that includes all the immediate rivals ( 2008).
In 2007, Hong Kong shows an increase in the number of their visitors. In September of the said year, there are about 2,120,835 visitors that have arrived in the said territory, showing a great increase of 15.9% year on year. Year-to-date arrivals have reached an amazing number of 20,363,764, an increase of 9.6% year on year (2008).
There are different factors that can affect the competitive environment of the tourism and hotel industry in Hong Kong and it can impact the different policies and activities of Hyatt Hotel in order to maintain their position in the ever changing market of Hong Kong, primarily driven by the behavior of the tourist in the said country.
Hotel Industry of Hong Kong
One of the most important aspect developments of hotel industry in Hong Kong is the soaring influence of China. China’s influence on both inbound and outbound tourism has grown enormously. China is not only the major source of the arrivals of tourism into the country but continues to grow at a healthy pace. Furthermore, China is also a major destination for the outbound traveler’s because of its relative ease of access as well as low-cost benefits for the Hong Kong-based travelers (2008). In 2007, there are about 11,321,149 Chinese visitors that have traveled to Hong Kong, a great increase of 10.9% year on year ( 2008).
It is also important to consider the retail produce portfolio stays small, which shows that the tour packages are still the backbone of the retail travel products in Hong Kong, but the product portfolio remains limited ( 2008). This is affected by the regional economic crisis that made other Asian destination cheaper ( 2008).
It is also important to consider the impact of the Internet with the hotel industry of the country ( 2008). There is different traveling and hotel companies that are offering online services that can make the life of the travelers or tourists easier.
Competitive Environment of Hotel Industry in Hong Kong
Hong Kong’s tourism industry is facing different challenges due to the changing tourist market, global competition as well as the territory’s repatriation with China in 1997. The said factor can impact the hotel sector of the country. The result, many investors are looking forward to invest in a hotel property in the said country due to the strong growth in the tourist arrivals. Tourism is considered as one of the most important earner of the foreign currency in the country ( 1994).
A community’s growth stimulates hotel performance, while hotels contribute to the economic, social as well as cultural development of the country. It can create 37,000 jobs in the country in 1993 and generate substantial amounts of revenue for the country ( 1994).
Figure 1 shows the five forces analysis of hotel industry in the country. The porters’ model focuses on the insight that a corporate strategy must meet the different opportunities as well as threats in the external environment of the given organization or industry. It identifies five important competitive forces that helped to shape each and every industry as well as market , 2001).
Figure 1 Porter’s Five Forces Analysis of Hotel Industry
In terms of new entry, figure 1 show that there are different aspects that are associated with the new entry in the industry. First is that, it is expensive to enter the industry, because there is a big need for experience as well as high initial investments and fixed costs. The industry also show a perfect competition but those existing players have their cost advantage because of their experience as well as their access to the distribution channels, primarily the travel agencies and airline companies. It is also important to consider the existing player already have their close relationship with the customers or tourists. In terms of competitive rivalry, there are many players or companies of about the same size, and they have the same similar strategies, and because of that, there is not much differentiation between the players, together with their products as well as services that result to competition in terms of price.
In terms of Buyer power, because the product and service of the players in the industry are considered as important for the customers and the products and services are differentiated and cannot be replaced by substitute, it can be say that the customers have a less power over the industry. However, it is also important to consider the price-sensitivity of the customers.
The market is considered as dominated by fragmented source of supply from the different airlines as well as travel agencies that are considered as the supplier of the industry that is the reason why the supplier doesn’t have that much power to control the industry. In terms of threat of substitute, it is important to consider the brand loyalty of the customers that focuses on the different customer relationship activities and current trends that can help to improve the quality of services.
Policies and Decision-Making
Changing Demands of Tourists
The hotel industry of the country is being affected by the different aspects of the changing demands and desires of the tourists regarding the structure and design of hotels. The result, the said industry is focusing on the four – and five – star hotels in the country ( 2008).
The said change can affect the decision-making and policies of the industry in terms of designing their rooms as well as their overall establishments and services. It involves complete redesigning processes regarding the rooms in order to meet the constantly changing demands of the new millennium traveler. It can also affect their decision in creating a room that will be suitable for the needs and demands of the discriminating business traveler.
Technology is also one of the most important aspects that can impact the behavior of the customer regarding hotels and tourism. Technology is one of the most important factors that are being considered by different players in hotel industry of Hong Kong in order to maintain their competitive advantage. Most of the hotel companies are implementing different advanced equipment in their hotel rooms and services such as in-room confidential fax machine with personalized number, voicemail with two phone lines that is applied with the data port that enables simultaneous use of the telephone and laptop computer ( 1999).
Aside from that, technology is also being applied with the changing demands of the customers regarding entertainment. There are different hotel companies that are implementing their On Command Corporation or OCX that integrates entertainment with the technology for the hotel services. This focuses on the effective services which focus on the multimedia focal point of the hotel guestroom, where in the guest can access the cable and satellite TV, choose the latest Hollywood movies, utilize multi-lingual electronic as well as let the guest access the Internet ( 1999).
Increasing Demand for Cheap Package
Another important aspect that must be considered is the financial crisis that is going on in the international arena. This can affect the overall or global tourism industry, and all of the sectors that are connected with it. That is the reason why more and more hotels and shops are beginning to slash their prices. Another important aspect is that Cathay Airways pacific is offering different special fares as well as free stopover night in Hong Kong. As of now, in a nod to the common traveler, the airline’s new frequent-flyer program will include all classes of travel, instead of just first and business class as it did before (1998).
The said development or change in the tourism industry can directly impact or influence the overall performance of the hotel sector of the country; it can affect the decision-making and policy implementation of the Hyatt with accordance to their customer relationship and marketing strategy. The company is offering different packages and special offers that will let the tourists save money while enjoying the best of Hong Kong. Aside from that, the company is also offering different types of categories of packages that will help to meet the different demands of desire of their customer such as romance, relaxation, bed and breakfast and local discovery. The said decision enables the company to improve their customer relationship as well as follow the changes in the competitive environment of hotel sector and tourism industry in the country.
Application of the Internet
The Internet has a vital impact n the tourism and hospitality industry in the world as well as the hotel industry. In the country, the Internet is considered as the primary factor that causes the shift in the customer relationship activities of different companies that are connected with the said industry. As of now, more and more tourists are doing their transactions with their travel agencies and other tourism related companies via the Internet. According to the study of Forrester Research, in 2006, the Internet has a powerful impact on the hotel distribution because 71% of all the North Americans are doing their hotel reservation and tourism activities online, the said number will increase to 81% by 2010 ( 2006). The said number is important because North America is considered as one of the most important tourists sources of the country.
With the implementation and maintenance of websites, the tourists can search for the package that will be suitable for the tourist’s budget, desired date as well as category or their hotel needs. The said strategy serves as a marketing and customer relationship that enables the hotel industry to have a direct relationship and contact with the customers. Another important matter is that it enables the industry to offer low fare of budget packages to the tourists.
Cheap Packages
Another important aspect that must be considered is the financial crisis that is going on in the international arena. This can affect the overall or global tourism industry, and all of the sectors that are connected with it. That is the reason why more and more hotels and shops are beginning to slash their prices. Another important aspect is that Cathay Airways pacific is offering different special fares as well as free stopover night in Hong Kong. As of now, in a nod to the common traveler, the airline’s new frequent-flyer program will include all classes of travel, instead of just first and business class as it did before ( 1998).
The said development or change in the tourism industry can directly impact or influence the overall performance of the hotel sector of the country; it can affect the decision-making and policy implementation of the entire hotel industry in the country with accordance to their customer relationship and marketing strategy. The hotel industry is offering different packages and special offers that will let the tourists save money while enjoying the best of Hong Kong.
Areas for Improvement
It is important for each and every company in the hotel industry in the country to improve their relationship or connection with other players in the tourism industry, primarily the airlines. In leadership of Cathay Pacific, this is due to the fact that airline companies are considered as the primary entities in the tourism industry, and because of the Internet, they are having a direct relationship with their customers or the tourists. This is due to the face that it can help to improve the relationship with the customers or tourists as well as the entire marketing strategy.
On the other hand, it is still important to continue the industry’s relationship with other industry such as travel agency and airline companies in order to maintain other way of communicating or connecting with the possible customers.
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