Blue Ocean Strategy Proposal And Plan Tourism Essay
The service provided by One World Hotel is called ONE Service. Hotel guess can simply push the special ONE Service button through guess room telephone to request for any service. The services include housekeeping, maintenance, concierge service and food & beverage. Before arrival, the hotel’s concierge team connects guests to a dedicated Web Site that provides insider information about Malaysia, for example where locals eat, where guests can pick up local products and suggested activities. Guests can also send personal emails to the Concierge team to help tailor an itinerary ahead of the visit. Full access transportation is available through the Concierge, which includes transportation to and from the Kuala Lumpur International Airport. The hotel also provides free shuttle service to interesting places in Kuala Lumpur, which includes the nearest Light Rail Transit (LRT) station in Kelana Jaya, Sunway Lagoon Theme Park, KL Sentral Station and Petronas Twin Towels. Other services include babysitting/childcare service, limousine and taxi service, laundry and valet service and foreign currency exchange.
There are multiple facilities available in One World Hotel. For wellness and recreation, it has fully equipped fitness centre with professional coach and complete with sauna and steam rooms for both male and female, outdoor swimming pool, spa and massage, 2 floodlight hard tennis court and 2 artificial grass tennis court. For conferences, theme parties, business meetings and weddings, One World hotel has a business centre, more than 5000 square meters of meeting space, pillar-less Imperial Ballroom which covers 3100 square meters which is partition-able into three separate ballrooms and can accommodate up to 2000 people for banquets and 3500 persons theatre-style, an extensive foyer for pre-function facility complements the Imperial Ballroom which also has its dedicated entrance from the lobby level of the hotel, 15 versatile function rooms suitable for groups of 20 to 350 people for meetings, private dinners and weddings, 3 individual holdings rooms for dignitaries and a secretariat room are also available. Other facilities include up to 1000 basement parking lots for the convenience of hotel guests, non-smoking rooms and wheel-chair accessible rooms,
Besides services and facilities, there are three innovative restaurants in One World Hotel., such as Cinnamon Coffee House, a restaurant of vibrant taste, sight and sound, embodying local and international cuisine experiences in a single venue, Zuan Yuan Chinese Restaurant specializes in authentic Cantonese cuisine and Kura Japanese Restaurant reflects the genius of Japanese cuisine with an exquisite mix of rare treasured delicacies. There are also a few entertainment venue in One World, The Sphere Lounge is the perfect place for business or social gatherings with its sleek, modern design, yet cosy atmosphere, Poolbar and Grill is best for the hotel guess who like to soak in the sun enjoy exciting thirst quenching beverage, snacks, light meals or wellness cuisine, Long Bar is a place for nights of fun and entertainment in a trendy atmosphere and Havana Club is a special place for cigar lovers.
The nearby attractions of One World Hotel include 1 Utama Shopping Centre, Sunway Lagoon Theme Park, Petronas Twin Towers, National Science Centre, Lake Gardens, Kuala Lumpur Bird Park, Bukit Utama Golf Club, National Monument, Orchid farm, Batu Caves, Central Market, Chinatown, Suria KLCC and Genting Theme Park.
INDUSTRY ANALYSIS
Current Situation and Trend
Hotel business particularly has been badly affected by the global economic crisis in year 2008. This is because during the economic downturn, most corporate companies will introduce cost saving measure, especially ban on travel and stop on meetings, conferences and training sessions which mostly take place in hotel. Furthermore, leisure business is also affected as families do not want to spend extra on holidays due to jobs insecurity.
The economic downturn caused serious effect on choice of hotel, those budget hotels will win in the competition with luxury hotels during tough economic times. Corporate will make fewer, shorter and cheaper business trips, business travelers will care less on luxury instead they are concentrate on whether the hotel deliver the basics, such as good Wi-Fi access, an efficient check-in and a quiet room, rather than lavish facilities such as superior class restaurants, gym or spa.
It is a time of real opportunity for budget hotels to expand on market share. However budget hotels still need to compete on more than price, this is because despite the downturn, travelers still expect to have a good service. In other world, offering a highly customized services that generate a positive impact on guests makes them return and establishing a solid long-lasting ties.
Performance Review
One World Hotel has prevailed and successfully established its name within the increasingly competitive hotel market. However, like most of the hotel, One World Hotel was hit by the global economic downturn. Its revenue declined by 15 percent from RM 64 million posted in 2008. (Business Times, 2010) Despite the economic downturn, One World is facing competition from nearby 5-star hotels such as Armada Hotel, Saujana Hotel, Eastin Hotel and budget hotel such as Tune Hotel.
Due to time consuming, our team assessed the existing service performance of One World Hotel based on consumers’ independent hotel reviews and comments shared by a few travel sites such as TripAdvisor and Agoda. In order to have a more accurate and actual data, the hotel is highly recommended to conduct a market analysis survey to evaluate what is the reason behind the business decline. From the assessment, they can find out the percentage of which category suffer more losses due to economic downturn, whether it is business traveler or leisure traveler and their preference and trend.
In this proposal, our team assumes that due to economic downturn, the losses of business traveler are equal to the losses of leisure traveler.
Key Issues (SWOT Analysis)
In order to fully recover from economic downturn and thrive in the coming years, One World Hotel must assess its overall strengths and weaknesses as it moves forward through the new millennium. The following SWOT Analysis shows some of the strengths and weaknesses of One World Hotel and also some opportunities and threats that await the hotel.
Strength
One World Hotel is a well established hotel with great architecture and facilities. The room is very comfortable and spacious; the hotel is well kept and clean. One World is in a great shopping location adjoining a huge and great shopping mall with everything you need, One Utama. One World also has seven innovative restaurants to cater the customers’ need.
Weaknesses
From the customer review, the front desk service is rather poor and the check-in process is quite slow, customer service staffs may need some training. One World also lack of after sale service. One World has a high room rate with an average room rate of RM310 which may become a problem when price is a concern. One World is not convenient if hotel guest need to go anywhere in Kuala Lumpur because the hotel is not in the city centre, an hour is needed to get to the KL Central and there is no light rail transit (LRT) within walking distance. Although the hotel provides free shuttle service, the endless traffic is also a problem.
Threat
Global economic crisis in year 2008 was a major blow to the hotel industry, a similar situation may occur again and could result in another downturn. Competition from other luxury and budget hotels also poses a threat to One World
Opportunity
One World Hotel should turn the impact of last two years into opportunity. One World should find a new market strategy instead of competing in the red ocean. An economic downturn may be an opportune time if One World provides value those customers expect and where possible, exceeds their expectation. New products and services can be developed by One World.
IMPLEMENTING BLUE OCEAN STRATEGY
Reconstruct Market Boundaries
As sales declined by 15%from $64 million posted in 2008, a mix of desk research, qualitative and quantitative research is strongly recommended in order to understand the underlying trends. Problem happens whenever ideal state is differs from actual state. Typically, a proper plan research answers most of the questions and leads to conclusion, recommendations and decision that solve the problem and identify the market opportunity. One World Hotel management should allocate resources for this survey prior to reveal actions. However, our team members would like to diagnose this scenario base on some customer post purchase evaluation shared in website. No doubt, it is subject to data distortion and difficulty to interpret due to small number of sample size, but it is a practical approach to provide at least some information when resources are limited.
Given that there are more than 50 hotels (range from budget to 5 stars) serving business and leisure traveler in this area, a value curve of Petaling Jaya Hotel Industry in year 2008 is drawn in order to understand the current state of play and develop a strategy canvas. Customer- perceives performances in most of the service attribute are counted and measured scaled relative to competitors. For instance, price, convenience, facility and hygieneThis showed us the competitiveness across entire market. The objective for both luxury hotel and budget hotel are charted in the value curve. In this case, luxury hotel is interpreted as an upscale hotel and costs more than the average accommodation RM180 per night. Those below RM180 are categorized as budget hotel.
Figure 1: Value curve of Petaling Jaya Hotel Industry in year 2008.
From Figure 1, luxury hotels offers a list of “Stars” quality services including lavishly decorated room and modern facilities which provide extraordinary experiences that exceed customer expectations. This hospitality industry is not solely selling rooms or beds but customers’ satisfaction, the overall services provided by those luxury hotels in Petaling Jaya are barely meeting customers’ expectation despite of it is a key factor for these hotel to success.
Figure 2: One of the comments shared in internet. Source: http://www.tripadvisor.ca,25th September 2010
On the other hand, budget hotels score lower in quality services offerings. Their beds are less comfortable but located in city center areas which are a few minutes’ walk from bus stop, bus station or MRT station. Their target market is more constrain in “price” and they have less expectation for hotel. For them, hotel is only “a place to sleep”. Obviously luxury hotel and budget hotel are targeting at two different market segments.
Figure 3: Value curve of luxury hotel in Petaling Jaya indicating the One World hotel relative performance across hotel’s industry competition factors.
What is the strategic group from the perspective of One World Hotel? We identify 3 luxury hotels located in Petaling Jaya area namely Eastin Hotel, Hotel Armada Petaling Jaya and The Saujana Kuala Lumpur hotel. Obviously, One World Hotel which is widely accepted as luxury hotel is offering typically product attributes as compare to their competitors hence difficult to stand apart from the market place. Drawing a strategy canvas is not an easy job; however the management should reconstruct the competitiveness position in order to outcompete from other luxury hotels. But, the question is “How?”
Visualizing Strategy
To win the future, One World required a switch from existing approach of competing with their rivals like Eastin, Armada and Saujana Hotel. Instead of looking at current strategic position in this market position and caught up by operation detail, we shift our attention on the big picture. Like most of the business environment, One World is exposed to heterogeneous market. Looking at the location and business activities around the area and analyses the need why customer tend to stay around that area, we prioritized the target market for One World to be business trip customer. Due to the heavy traffic at its’ surrounding, it is unlikely that customer will choose this area for vacation. It is not convenient to go in and out of this area frequently and One World chooses not to challenge with this factor. Same goes for Bed and Room size and since they had invested on the hotel recently, changes are minimized to avoid modification cost. The exclusive characteristic here is well-off for shopping and surrounded by variety of food. Temptation for the business trip’s customer to stay within and opt for shopping or eating after work is high and these can be good reasons why customer chooses this area for their business trip. Other services like free shuttle and concierge shall be maintained.
From our survey and after a lengthy discussion over the competitive factors, we have discovered attributes which should to be raised, reduced, eliminated and created.
Figure 4: A side to side comparison on One World product attribute before and after implement Blue Ocean Strategy.
For this market segment on consumer needs and wants, consumer commonly aim for comfortable and convenient. They will not have ample of time to do their personal activities like shopping during their business trip. Therefore, it will be helpful if information on shopping center or food is simple, clear and easily accessible. To provide the additional convenience, One World can increase their services as information provider through internet. Kiosk and on-line station must be widely available at strategic area such as the lobby and main alleys within the hotel. For those customers who are not vice verse or dislike this gadget may approach the help desk, whereby the customer service may provides clear and detailed instruction.
Eliminate
Raise
Gym, Spa, sauna, massage and steam rooms
Help Desk service
Tennis court
Quick Information-Kiosk & Internet
Reduce
Create
Room rate
Personality
Number of Restaurant
Food variety
Affordable room rate
Butler service
Figure 5: Eliminate-Reduce-Raise-Create Grid for One World
One World should also prepare special butler upon request for this service at small fees to bring their customer around. This group of service staff needs to always keep up to date with the latest information for all the retail outlets as it is part of unique task to carry out. Customer satisfaction in this area of service should be their performance measure.
By targeting to raise the attribute of convenience of shopping and customized service, existing facilities on restaurant shall be reduced. With this reduction, it will provide benefit of space for kitchen, cashier and storage which will facilitate cost reduction. Maintaining only one restaurant in One World, this restaurant shall be equipped with special service where dine in customer are able to order food from external restaurants. The idea is to enable the customer to have variety of food and experincing it on the same table. Customers can order their food through special menus including Japanese, Indian, Korean, Mexican and more food from the restaurant nearby and delivery service will be provided right to the table. This service shall be planned in a way that only hotel guests are entitled for the same price of the food as if they buy it from the original restaurants. With this, food provided from One World itself is less but the hotel guests will access to more selection. Profit from food can be gained from the alliance restaurants, plus saving gained from reducing the maintenance of restaurants and the additional space.
On top of this, to achieve Blue Ocean marketing strategy, One World shall eliminate facilities like gym, spa, sauna, massage center, steam rooms and tennis court as to build One World into more focus hotel. All the eliminations as well as reduction in the maintenance of facilities to be carried out at One World will obviously cause the current status of 5 stars drop. However, this shall not be the limiting factor for us to pursue their new opportunity of Blue Ocean. One World shall disregard the common stars standard to customize their service so as to provide their customer on the benefit that they are looking for. In other word, One World is look up for a different standard of 5 stars hotel with only 3 stars price!
Area of focus which One World must raise is the training and minimal investment in database system. This is required as a tool for staffs to provide ‘personalized’ services. Every customer is precious and they shall return with ‘known identity’. For instant, customer’s name, preferences on food, interests on shop and more can be captured in the hotel database. All these information may help the customer service to prepare for appropriate information when the returned guests placed their booking before arrival. Through this way, it can help the staff to provide ‘personalized’ service. In addition, the service troop must be well fitted with appropriate social skill in providing their customized services.
To extend their market, One World can tailor their price to affordable rate if customer required staying for longer period. For stay which is longer than 7 days for example, this can serve as special package or discount. By doing this, their frequency in customizing work for different customer can be reduced and at the same time secure the business. This attribute of adapting special package price may help to open up market for loyal customers especially for the expatriates.
All the changes as describe above must be communicated to all levels of staff and ensure that all are aligned with the same goal. System such as incentive or reward system and suitable performance measure must be in place for operation and management. On top of this, continuous training and motivation are equally important to raise these attributes and sustainability at the highest service standard.
Reach Beyond Existing Demand
One World previous niche marketing strategies that focuses on price exclusivity had created a very small target market. In times of recession, this group of people has become smaller. Moreover, some of them might reduce some unnecessary expenses. Besides maintaining current market, One World has to reach beyond existing demand. In doing so, the new One World has to understand the needs and reach out to the three tiers of Noncustomers.
The first tier of noncustomers, are hotel patrons that are usually in search for packages with value for their money. These people are ready and prepared to migrate whenever there are better offers. They will stay in One World if there is value for their money and are more than willing to switch to nearby hotels such as Eastin Hotel if Eastin Hotel has more to offer.
The second tier of noncustomers is people who will usually use hotel service but chose not to visit One World. They may be environment travelers who like to be close to nature. Hence, this group of people will select hotels that are close to nature. Until and when One World has something that fit their criteria that is close to nature, One World could not reach out to these groups.
The third tier of noncustomers, are those who never think of One World market offerings. They are the house tenants especially the expatriates in Malaysia. The expatriates are in search of a warm and homey place to stay. One World definitely has something that can be tailored to suit their needs.
Hence, we searched for some common ground and found some key commonalities across the three tiers of noncustomers and existing customers. They are price, convenience, facility, food, leisure, room size, hygiene, shopping facility and other services such as receptionist, after sales service and personalized service.
One World can reach out to the expatriate market, the third tier of noncustomers. Often, these expatriates come alone and were given a huge budget as housing allowances. They may be seeking for a place with a good and convenience location as they are not familiar with the place. As their appointment may only be as long as a year or two, they are not too particular in searching for some real house.
This offers opportunities to One World. One World can offer the same product as a landlord or land lady can offers. A place called home. Adequate room size with good hygiene and perfect quality bed is exactly what these expatriate are looking for. Instead of renting a big condominium for a single person, and having to clean the house themselves, these expatriate can opt to have it all under the roof of One World. These expatriate can have the same satisfaction from renting a house when staying in One World.
Third
Tier
Expatriate
Tenants
Second
Tier
First
Tier
Oneworld
Market
Figure 6: The Three Tiers of Noncustomers
Moreover, One World strategic location that connects to the shopping centre and food outlets offers convenience to the expatriates. With One World connections to the various outlets in One Utama shopping centre, the expatriates can spend their leisure time utilizing the sports facilities and gym in the shopping complex.
By entering to tenancy contracts with the expatriates, One World can be sure of their room occupancy and this guarantees some fixed income for the hotel. One World can allocate some rooms with various types for this long term occupancy. One World sales team can approach the multinational company to sell the concept ‘everything you need in one place’.
Get The Sequence Right.
One World hotel will provide upmost customer focus service – makes customer feels like home at an affordable price. The concept of feeling at home at hotel at an attractive price will compel customers to choose One World hotel as their first choice. One World hotel should strive on customer productivity, simplicity and convenience to attract mass customer. One World hotel new concept focused on the “personalized” service of customer. Every customer visited One World hotel will have the anticipation of returning with a “known identity”. Customer’s name and contact is common information which hotel may store. One World hotel shall go one more step further by storing not only customer name but also customer request such as need to have iron and ironing board on each trip, additional pillow, special design of pillow, or even the need to have a room with window facing east for Feng Shui purpose. All the previous information will be utilized during the next visit whereby the hotel can have preunderstanding on customer and prepare the required service.
One World hotel can strive to be different from other hotel by simply changing the way customer is usually treated. Providing good customer service is a norm in hotel industry but One World Hotel can provide service and care like family.
For example, it is a general practice that when a customer does not check in after 6pm and do not left an instruction that he or she will be checking late and provide credit card information to secure the room, the room reservation will be cancelled automatically. One World hotel can provide a service whereby all room reservation will be treated in such a way if a customer do not check in after 6pm, the hotel staff will contact the customer to obtain information regarding the customer arrival in order to ensure the customer will have a room upon arrival.
The kiosk or on-line station to facilitate customer’s shopping shall be user friendly whereby customer can learn to use in less than 5 minutes. This will encourage customer to utilize the technology to enable them to have a comfortable stay in the hotel.
One World hotel shall aim for strategic price lower than luxury hotel and comparable with budget hotel. By eliminating facilities mostly unused by mass customers, One World can maintain a low cost operation. By reducing facilities example gym and tennis court, One World can provide an economical price to customer and maintain a low cost to run its business. Investment in training of service troup (intangible) shall be much lower than upgrading or maintaining facilities which are not the main focus of customer. One World hotel can make offer to companies by providing room reserved specifically for their company with a lower price on the condition the company has to pay for the room for entire year. This will benefit the company if the company frequently send employee to stay in the area for business trip. Thereby, the hotel will not be fully dependable on seasonal customers. One World hotel can utilize the ‘slice share’ concept by offering their function hall, conference room or ballroom up for company reservation. One World hotel can offer to provide discount for customers who successfully recommend their friends or family to stay at One World hotel. This will enable One World hotel to achieve strategic pricing.
Adoption hurdle on execution of the new concept of treating customer like family members and providing “personalized” service while eliminating facilities such as gym and tennis court is the risk of having customer which required the facilities such as gym and tennis court. Thereby, One World will provide gym facilities by providing transportation for customer to nearest gym and sports recreation. Since the percentage of customer which required such facilities is less, thereby this will reduce the cost of purchasing gym equipments and the maintenance fees. One World hotel new goal is to aim for value innovation rather than facilities innovation. Another adoption hurdle is One World hotel need to convey their company mission to their employees as the new concept mainly focus on customer service which is dependable on employees effort. Thereby, One World hotel need to have a comprehensive training on friendly and effective customer service. One World can incorporate classroom training and apprenticeship program.
Instead of using facilities to attract customers, One World hotel shall focus on providing friendly and efficient customer service. This can be achieved by performing an assessment on the manpower in order to utilize their resources including hotel staff whereby they can reduce their direct labour cost.
Overcome Key Organizational Hurdle
3.5.1 Break through the Cognitive Hurdle
To convince the managers that there is a need for strategic shift in the hotel, they need to be really exposed to the problems faced by the hotel guests. So far, most of the comments and complaints are received either through front desk suggestion boxes, or online travel forums such as TripAdvisor where guests may post comments about their recent stay. However, there are significant numbers of guests whom may be very unhappy about their stay, but never gave any feedback to the hotel management. They just never come back. A check on the travel forums reveals that many guests are happy with the facilities provided by the hotel (except for the wireless internet), but have mixed feedback when it comes to the hotel’s customer service.
To bring out the real issues faced by guests and make sure the managers see them, a “Mystery Guests” program could be carried out. 20 participants would be secretly selected and invited to stay at the hotel for a given amount time. All expenses would be paid by the hotel. These Mystery Guests would be given instructions to evaluate the service provided by the staffs, making complaints to certain quarters, demanding for certain services to be provided etc. At the end of the program, a face-to-face meeting between the top management, department managers and the 20 Mystery Guests would be called. The Mystery Guests would then spell out their evaluations on the services received by them. Instead of going through the Communications Manager, we expose all the department managers to the comments and complaints from the guests. Through this, we would be able to convince the managers that a strategic and organization-wide change is imminent.
3.5.2 Jump the Resource Hurdle
To overcome the resource hurdle, we need to identify where are the hot spots and cold spots, and perform horse trading for the resources. In One World hotel, one possible hot spot is the staffs’ hospitality training. Guests are responding that the staffs’ services are good on one occasion, and horrible on another. These inconsistencies have caused much annoyance to regular guests who could not expect what will be the service level in their next visit. With more focus on the consistency of high level of service, guests can expect great service from every staff, every time. This activity does not necessarily involve high resource input, as much of the training structures are already in place. What need to be done are some adjustments in the training program to ensure the consistencies in the staffs’ service level. Front office’s staffs are also crucial in ensuring guests have a great experience the moment they enter the main entrance. Many guests made comments on the front office’s service, with mixed reviews on their performance.
Cold spots can be identified in the maintenance of some of the hotel’s facilities such as gym and tennis courts, and the operations of the hotel’s various kitchens. The resources invested in these activities are meant to provide more facilities to the guests, but these can be met through other methods such as the partnerships with One Utama’s restaurant and gym operators as explained above. By removing and reducing these activities, many resources can be redistributed to other critical areas of the hotel, such as ensuring perfect maintenance in the rooms for better sleep quality of the guests.
3.5.3 Jump the Motivational Hurdle
To overcome the motivational hurdle, we need to identify the kingpins of the hotel and manage them in a fishbowl. The kingpins of the hotel may be the department managers, who are each in charge of all the other employees under their respective departments such as Marketing, Front Office, Housekeeping, Food & Beverage, etc. These managers are essential in executing the blue ocean strategy, which requires them to be carefully managed by the top executives.
The respective department managers should be managed in a fishbowl, in which each manager’s performance could be transparently seen and gauged by others. A weekly meeting consisting of the top management and all department managers would be held to engage these kingpins. Their performance would be transparently appraised where performers would be rewarded while laggards being taken proper actions.
3.5.4 Knock Over the Political Hurdle
To overcome the political challenges inherent in implementing strategic change in an organization, the top management needs to identify who might be the angels and devils within the hotel.
Firstly, the General Manager needs to secure a consigliere in the top management whom will be having the duty of surveying the grounds, understanding staffs’ emotion and identify those who would oppose the new strategy. The consigliere needs to be one highly respected by all the staffs and could help the General Manager navigate the treacherous water of implementing new strategies. He or she will also help identify who the devils and angels may be within the organization.
Angels in the hotel could be the Marketing and Finance departments, as th
