Research Topics: Growth And Development Of Tourism And Hotels In Dubai

Ryanair Analysing Strategy

Critically analyze and evaluate the current strategic situation of RYANAIR making clear why you believe the company behaves as it does   Low cost airlines have been a trend nowadays anywhere in the world. There are many airlines that have adopted this strategy and have become more successful because of this. The low cost airlines have the advantage over the premium airlines due to the fact that they will never get their costs to a point where they can make a profit at low fares in bigger markets. Among these low cost airlines that are in existence nowadays in Ryanair. The Irish airline company Ryanair is the first low-cost, no-frills European airline to have any impact. Ryanair was launched in 1985 and targeted the Irish ethnic market between Ireland and the United Kingdom by offering a more or less traditional type of service with a two-class cabin but at much lower fares than was the usual. It stimulated a rapid growth of passenger traffic across the Irish Sea, much of it diverted from the sea ferries. On the London-Dublin route, where traffic had been stagnant for three years, the number of passengers more or less doubled in the next three years in response to the low fares introduced by Ryanair and to the lower fares forced on Aer Lingus and British Airways as a result of Ryanair’s strategy (Doganis, 2001). However, Ryanair was not profitable. Its unit costs, though lower than those of Aer Lingus, were not low enough to sustain its low fares strategy. By 1991 its accumulated losses amounted to close on (Sterling) £18 million and the airline was facing serious cash flow problems. It had also gone through five chief executives (Doganis, 2001). But in the long run, the independent airline company was able to succeed. The strategy for Ryanair is the closest to the original Southwest model overall. Like most European flights it offers a point-to-point rather than a hub service, it has absolutely no frills (meals, seat allocation or frequent flyer program). It aims to turn flights around within 25 minutes and routes are consistently the shortest of all the LCCs. Interestingly, Ryanair is one of the most profitable low cost airlines in the market (Strategic Direction, 2006). In business, Ryan Air got the low-cost religion during the year 1991 (Pustay, 1992) and started aggressively hitting the newly liberalizing European market soon after Stelios popularized the no-frills concept to the masses. Unlike easy Jet, however, Ryan Air refused to take on popular routes at congested and expensive airports, sticking to a strict diet of cheaper regional flights to keep its prices the lowest in Europe. Owing to this offering of much lower fares, Ryanair’s market share increased rapidly and before the end of the decade such established carriers as British Airways and KLM were launching their own ‘low-cost’ subsidiaries. The spread of ‘low-cost’ airlines to medium-haul international routes and possibly even long-haul will increase the downward pressure on fares (Doganis, 2001). Commercial aircraft industry has too many uncertainties, which contain risks and factors that could affect its overall success. Economy, terrorism and globalization are three factors that could significantly affect or influence Ryanair’s strategic, tactical operational, and contingency planning. 
Arial">The airline at present has reins on the pricing, profit margins and a string cash flow. However, given the volatile and fluctuating nature of the airline industry, Ryanair has to take into consideration when making strategies several very important factors. Formulating effective strategies for achieving business goals has been, still is, and will continue to be one of the most important concerns of business organizations. In this context, perhaps no other organizational practice has captured more of the attention of academics and practitioners in recent times than offshore outsourcing. As more and more companies transfer their functions beyond the confines of national boundaries, new insights are needed to deal with the associated complexities. Offshore outsourcing refers to the practice of migrating routine business processes to overseas locations with the aim of achieving lower costs and at the same time maintaining quality. Competitive advantage derived from cost leadership results “when the company sets out to be the low-cost producer in the industry” (Porter 1985, p. 12). Even if a company manages to be the lowest-cost producer, some other company may dethrone it by pursuing low-cost strategy on a more aggressive scale. This has been the phenomenon in most industries and is not new. To regain lost cost leadership, the company would have to search for a new vendor that could provide at an even lower price than can the nearest competitor’s provider. The search for low-cost providers becomes a continuous process. The low-cost position that Ryanair achieves through off sourcing enables them to serve target customers more effectively by providing lower costs of services, and by extending newer, differentiated services. The downward pressure on yields also will in turn make cost reduction a major priority for all airline managements. Cost cutting is no longer a short-term strategy to deal with short-term economic downturns in the airline business. Cost reduction has become a continuous and long-term necessity for financial success. The aim must be to continue to reduce unit costs and this has been continually the aim or Ryanair. The long-term stability in the price of fuel will help, but it is not enough. The focus of cost reduction strategies will inevitably be on reducing labor costs, which for most airlines represent 25 to 35 per cent of total operating costs (Doganis, 2001). Labor is also a major cost differentiator between airlines competing in the same markets, since so many other input costs, such as fuel, landing fees, aircraft purchase and ground handling, will be broadly similar. Airlines will try to reduce labor costs first of all by improving labor productivity through reductions in staff numbers, by renegotiating work practices and by changing business and service processes. This is unlikely to be enough. Product and service quality is both an integral part of an airline’s marketing strategy and a significant cost determinant. It is also an area of cost over which an airline has much greater control. However, airlines do not have complete control over such marketing costs except in those few cases where an airline operates on its own, as a monopolist, on all or most of its network. This is most likely to occur in domestic operations. In order to cut labor costs more dramatically airlines will increasingly try to outsource what were, hitherto, in-house activities, as is discussed in the previous paragraphs. In the case of Ryanair, the airline company may even ‘relocate’ many key functions to low-wage economies or employ flight or cabin crews from these countries. The higher the wage levels in an airline’s home country the greater will be the pressure to relocate labor-intensive activities to countries with low wage structures (Doganis, 2001). Depending on the country where the airline has decided to outsource, successful operations and resolution of company- and industry-specific problems depends on forging good relations with the government with which the airline is operating under, using joint ventures and large sized investments and on long-term presence in the country. This is one legal responsibility of Ryanair and of every airline company, to follow country or area soecific impositions on the airline industry by different governments. Foreign firms had to conduct normal business operations in a politicized and bureaucratic environment. The safety of their passengers is also a legal responsibility since this would reflect on the capability of the aircraft used. When a plane crashes by accident without any outside manipulation, for example, it is almost always to be taken as a legal responsibility of the airline. Most often, the airline involved would have to pay whatever compensatory damages arise.             The government can influence an airline company’s strategy by imposing laws and legal restrictions. Business has never been fond of government’s having an activist role in establishing the ground rules under which it operates, but then organizations have no choice. Government regulatory actions can often force significant changes in industry practices and strategic approaches. And it is a company’s legal responsibility to follow government regulations. In some instances deregulation has proved to be a potent pre-competitive force in many industries including the airline industry (Sims, 2003).             Within the constraints imposed by sector times and by what competitors are doing, an airline has considerable freedom to decide its marketing strategy. This means not only deciding which markets to service, it also includes pricing policy as well as decisions on the types of product and the quality of services that the airline wishes to offer in those markets (Doganis, 2001). One key element of running an airline profitably is turnaround time. Ryanair has shown this core competence. When the aircraft is on the ground, it does not generate revenue but costs money in the form of running costs, costs for using the airport, capital costs and depreciation charges. Ryanair has reduced the time the aircraft is on the ground. By not providing proper meals or newspapers, the aircraft does not have to wait for them to be taken on board. The clear-up of rubbish is done by the staff on board during the flight when passengers are asked to dump any rubbish in a bin carried around the cabin by the crew; passengers have to come early to the gate to make sure everyone gets on board quickly; there is no fixed seating (this is particularly clever because it does away with the cost of having a computer system to allocate the seats and it is an encouragement for all passengers to be at the gate early to get a good seat, thus ensuring no late passengers which could delay departure and cause problems at the other end), etc. By doing away with everything that extends the time on the ground Ryanair can turn around in 20 minutes, can afford to sell cheap tickets and has a core competence (Nilson, 2003). Separating business travelers on a low cost airline is difficult to achieve as it increases the vitally important costs to the airline and requires reconfiguration of the aircraft. If the passengers do not see the product as meeting the current business class standards, which three in four passengers are already criticize as lacking value for money (Company Barclaycard, 1999), such a scheme would seem unlikely to be successful. Similar price discrimination is also practiced by Ryanair with their introduction of business fares which has open fares that are most suited to meet the ticket flexibility needs of business travelers (Company Barclaycard, 1999). Even if Ryanair’s strategy has been doing very well in the market, the airline company can still benefit from a few recommendations and changes. Ryanair and other low cost airlines can improve their service quality image by communicating these attributes to passengers through a variety of means. A bright future awaits those carriers that recognize that providing excellent service quality can be done efficiently. As regional airlines continue to upgrade their fleets (including jets), it is clear that regional airlines will play an increasingly important role in the transportation system. In recent years, there have been a number of changes in global airlines industry which have had profound effects on the development of this very volatile sector of the economy in most countries of the world (Pustay 1992). The essence of the marketing concept incorporates three basic elements of customer-orientation, integrated marketing efforts and the resultant company profitability and customer satisfaction. In this process, continuous relationship between airlines and their customers has become the watchword and airline industry standard (Kaynak 1987). Customer satisfaction is very important in the repeat purchases. In terms of developing strategic marketing plans, airline executives at Ryanair should place more importance to those attributes which are deemed most important by passengers. In the development of new services and utilization of newer type of aircraft, consumer driven type of input should be utilized (Pustay, 1992). The boom in low-cost airlines all over the world, fuelled by tax incentives, is increasing the level of toxic gases in the atmosphere and displacing less polluting and more efficient means of transportation for shorter distances, like trains. In addition, one strategy that Ryanair can employ to overcome negative perceptions about the safety of low cost airline is to educate existing and potential passengers of the enhanced safety features of the new aircraft. Such an educational effort may be accomplished through direct advertising programs, sales calls with travel agents and flight announcements and literature.             References Company Barclaycard, 1999. 1998-1999 Travel in Business Survey, Company Barclaycard, London. Doganis, R. 2001. The Airline Business in the Twenty-First Century. Routledge. Kaynak, E., 1987. Global Marketing: Theory and Practice. Journal of Global Marketing, 1, 1/2, pp. 3-24. Kotler, P. 1972. Marketing Management, 2nd edition, Englewood Cliffs, NJ: Prentice Hall. Nilson, T.H. 2003. Customize the Brand: Make it More Desirable and Profitable. Wiley. No Author. 2006. Easyjet and Ryanair Flying High on the Southwest Model; Charting the Ups and Downs of Low-Cost Carriers. Strategic Direction Vol22 No6. Porter, M.E. 1985. Competitive Advantage, New York: Free Press. Pustay, M. W. 1992. Toward a Global Airline Industry: Prospects and Impediments. Logistics and Transportation Review, 28, 1, pp. 103-128. Sims, R.R. 2003. Ethics and Corporate Social Responsibility: Why Giants Fall. Praeger.   Credit:ivythesis.typepad.com

Ryanair Analysing Strategy

Critically analyze and evaluate the current strategic situation of RYANAIR making...

Growth and Development of Tourism and Hotels in Dubai

Growth and Development of Tourism and Hotels in Dubai   Introduction             Tourism Industry is considered as one of the most significant and vital industries in the world. During the past few decades, it had been a great help for many countries, in improving their economies, by means of increasing sales, employment as well as currency earnings (Sinclair & Stabler, 1991). Furthermore, due to the different factors, including globalization and technology, together with the changing behavior of people, travel and tourism has become normal part of the daily life of people in the globe (Glaesser, 2006. p. 1).   Dubai             Dubai is the second largest as well as the most populous emirate of the United Arab Emirates or UAE, and it is still growing in terms of population as well as economic activity at an unbelievable pace. A multitude of developments aimed of making the country, bigger and better than anywhere else in the world are underway (Business Wire 2008). The leading industries in the country are trade, manufacturing, transport, construction, real estate, energy, telecommunications, finance and tourism (England 2006, p. 9).             Dubai is experiencing a vibrant development in its hotel capacity, entertainment options as well as tourism oriented luxury retail facilities that helped the country to position it in favorably with the tourists and markets or Europe and Asia (Globalysis 2008). Dubai’s Tourism Industry             Dubai can be considered as the representation of a country or nation that truly embraced the industry of Travel and Tourism as a catalyst as a weapon for economic growth and prosperity (World Travel & Tourism Council 2008).             Dubai is considered as well ahead compare to other cities in the Middle East, in terms of the travel and tourism industry (England 2006, p. 9). The country stunned the world during 2002, when the World Tourism Organization praised it for posting 31% growth in the tourist arrivals, it is considered as the highest for the said year. It had continued and kept its record by impressive growth levels in 2003, by posting 5% increase in the number of guests (XTV World 2007).             In connection to that, the air links of the country had increased dramatically. That is the reason why the country is not just a major gateway for the Gulf, but it is also considered as the commercial and tourism center in its own right served by 60 airlines flying to more than 100 destinations. The new Dubai Air Cargo Village has been an instant success that handles some 180,000 tones a year and it is growing at an annual rate of over 19%. The Dubai International Airport had handled over 5.4 million passengers, up to 23.8% compare the prior year. To tap the growing tourism potential, the government of Dubai is trying to develop both the business as well as holiday travel. The tourism is seen as part of the effort of the country to expand their economy. The result is that, the number of the hotel guests are quickly increasing, together with the tourism infrastructure. Furthermore, the government is realizing the country’s climatic and sea potential, and it is committed in promoting a clean green eco-tourism (The Middle East 1993, p. 39).   Dubai’s Hotel Industry             During 2004, the country had recorded a huge 37.2% of guest and total of 30.6% of hotel bed occupied. The total number of the guest nights during January-June was 7,662,308, compare to 5,584,850 of the same period during the previous year. During the first half of the said year, the 372 hotels and hotel apartments in the country had recorded total revenue of AED 3.076 billion, compare to the AED 2.059 billion for the same period of the previous year. It had recorded an amazing growth of 49.4% (XTV World 2007).             In 2004, the total number of the available establishment rooms in the country was 26,012, while the available hotel establishment beds available stands at 42,351, showing an increase of 4.2% (XTV World 2007).             The Dubai Department of Tourism and Commerce Marketing or DTCM had announced that the country had a striking and remarkable statistics for the 9 months to September 30 of 2007. It had revealed that the number of guests that are staying in the different hotels in the country had rose to 7% to 5.1%, while the hotel occupancy rates rose 4.1% to reach 86.9% (Dubai Online 2007).             In 2008, there are 50, 306 hotel rooms in the country and the said number is predicted to increase more in order to accommodate the projected increased of the predicted 15 million number of tourists in 2015. During the first quarter of the 2008, the country had shown that it’s well on its way in order to meet its target with the hotel occupancy getting 1,891,253 numbers of international visitors, an amazing increased of 7%, compared to the same period of the previous year. The UK and Ireland market are considered as two of the most important drivers of the said growth, having 224,457, having an amazing increase of 11.3% compare to the same period of the previous year (CNN 2008).             The total 60% of all the hotel rooms in the country that are used to the hospitality market are 4- or 5-star category. Furthermore, the hotels in Dubai have an average occupancy of 85%, which is considered as the highest room-occupancy rates in the world (Go Wealthy.com 2008).             The number of the hotels as well as hotel apartments in the country is expected to increase to 488 by 2010, up from the 452 during 2007. By 2016, the said number is expected to grow to a total of 554, with the room capacity of 127,000.   Conclusion             All of the figures and statistics that have been showed in the paper show the overall development and improvement in the tourism industry of the country. According to the recent report of the World Travel and Tourism Council, the tourism industry of the country is increasing by 14% every year (CNN 2008).             That is the reason as well as the result of the extensive plan and focus of the government in improving their facilities and other projects that are related to their tourism industry. There are about 100 leisure related projects that are worth £35 billion that are currently underway in the country. That is why, the tourism industry accounts for almost a quarter or 22.6% of the overall annual GDP of the country.  Furthermore, the said industry is expected to generate a total of £40 billion and contribute to 6.4% directly to the GDP of UAE, at the end of 2008 that will expand to almost £70 billion in 2018 (CNN 2008).             One of the most exciting new development in the tourism industry of the country is the opening of Atlantis The Palm, that was scheduled to open this September 2008, and will be boasted a 50-acre waterscape with a marine park that will feature more than 65,000 sea creatures (CNN 2008). The said establishment is considered as the flagship resort on The Palm Jumeirah, because of its scale, awe-inspiring design as well as wealth of entertainment opportunities, Atlantis, The Palm, will definitely help to boost the country’s premium family product, that will eventually help to increase the number of their visitors that will help to improve and develop their entire tourism and hotel industry.                   References   A Current Analysis on the Outlook of Dubai’s Tourism Sector For 2008, Including Insight To Its… 2005, Business Wire, All Business, viewed 3 September 2008, < http://www.allbusiness.com/travel-hospitality-tourism/lodging-hote ls-motels/10187294-1.html>   Dubai’s Hotel Development Defy Economic Downturn 2008, CNN, viewed 3 September 2008, <http://www.ameinfo.com/166162.html>   Dubai Hotel Industry Experiences Room Crunch 2008, Go Wealthy.com, viewed 3 September 2008, <http://www.gowealthy.com/gowealthy/wcms/en/hom e/real-estate/property-digest/january/dubai-hotel-31-01-2008-1208072704625.html>   Dubai Tourism Continues Its Outstanding Growth 2007, XTV World, viewed 3 September 2008, < http://press.xtvworld.com/article1499.html>   Dubai Tourism Statistics Announced 2007, Dubai Online, viewed 3 September 2008, <http://www.dubai-online.com/news/dubai-tourism-statistics-annou nced/>   England, C 2006, Dubai, Explorer Publishing & Distribution   Glaesser, D. 2006, Crisis Management in the Tourism Industry. Elsevier   ‘Making the Most of the Opportunities’ 1993, The Middle East, April, no. 222, p. 39   Sinclair, T. & Stabler, M. 1991, The Tourism Industry: An International Analysis. C.A.B. International. The Globalysis 2008 Travel & Leisure Sector Outlook for Dubai, UAE 2008, Globalysis, Research And Markets, viewed 3 September 2008, < http://www.researchandmarkets.com/reports/c91107>   Travel & Tourism Leaders Forecast Continued Growth for 2008, 2008, World Travel & Tourism Council, viewed 3 September 2008, <http://w ww.wttc.org/eng/Tourism_News/Press_Releases/Press_Releases_2008/Travel_and_Tourism_leaders_forecast_continued_growth_for_2008_/>   Credit:ivythesis.typepad.com

Growth and Development of Tourism and Hotels in Dubai

Growth and Development of Tourism and Hotels in Dubai Introduction Tourism Industry is considered as one of the most sig...

Top