Author: Andre Coleman

Abstract

In the present context of an increasingly globalized world, and the nature of the tourism industry, it is worthwhile to note if Porter’s Diamond framework still provides answers to the changing competitiveness of Thailand’s tourism and identifies success factors and factors detrimental to its competitiveness. A revised version of the Diamond framework has been proposed for the given context of tourism industry and Thailand state. This paper tries to analyze Thailand’s Tourism industry using this revised form of Porter’s Diamond Framework, identifying the various sources of competitiveness or the lack of it thereof. It attempts to identify key areas for improvement based on the above analysis and suggests solutions for the same.

Keywords: Competitiveness, Thailand, Tourism, Diamond Model, Revised framework

Introduction

For any country tourism impacts not only revenues but employment and economic development as well. For Thailand, this is even more so. It is therefore important for Thailand’s tourism industry to be competitive not just in ASEAN region but globally. Subsequent to the success of Visit Thailand Year in 1987, Thailand, a small country in the Asia Pacific region became the biggest growth story in the region with a growth rate of 7 %. Subsequently its economy (GDP) grew at an astounding 10.9 %, 13.2 % and 10 % respectively in the next three years – i.e. an average of 11.7 % from 1998 – 1990, about the best in the world. However, it did not maintain that growth subsequently, and its tourism industry faced many adversities. This paper will analyze the recent developments in the tourism industry to help understand the reasons for the same in today’s context.

Today when not only individuals, products, firms compete against each other but industries and nations themselves strive to outdo the competition, it becomes imperative to understand what it takes to beat the completion and stay competitive i.e. to acquires a good understanding of the determining factors of competitive growth. This paper proposes to do such an analysis for the tourism industry of Thailand.

It also, argues a case for revising the Porter’s Diamond Model framework for the given context.

Porter’s Diamond Model Framework

Besides traditional resource advantages like land, location, labour, natural resources and size of population Porter (1990) argued that grouping or ‘clusters’ of interconnected firms and stakeholders like institutions, suppliers and related industries provide ‘competitive advantage’ which are not inherited and which can be acquired. To get a better understanding of the determinants for such attainment of competitive advantage, Porter (1990, 1998) provided the famous diamond framework (Fig. 1). This framework helped in the analysis of not only industries but also nations.

The four vertices of the diamond indicated four groups of determinants. These were: factor conditions (also called ‘input’ conditions), demand conditions, related and supporting industries; and firm strategy, structure and rivalry. These were the basic determinants.

There were however two external or additional factors – chance; and government.

All these factors were not isolated but interconnected. Thus, demand and factors conditions were connected. So were the factors: related and supporting industries; and firm strategy, structure and rivalry.

The national factors of production like natural resources, infrastructure and skilled labour are the key factor conditions. The nature of domestic demand for product and services chiefly define the demand conditions. The presence (or absence) of suppliers, related industries which are themselves competitive (internationally) form the related and supporting industries vertex. The domestic rivalry between the firms and the conditions that govern their formation, organization and management form the last vertex of the diamond in the framework.

The framework is useful in identifying not only the sources of competitive advantage but also identifies key problem areas to be addressed. Oz (2006) illustrated this when identifying the sources of competitive advantage of Turkish construction companies in international markets. The success factors like dynamic domestic market, variables favourable to entrepreneurship, and intense domestic rivalry pressures effects were brought to fore along with the trouble causing areas like government induced hindrances, difficulties in financing and weak consulting and design engineering capabilities positioning of Turkey in the international arena. However, there are limitations to this framework and many researchers have combined this with other form of analysis like Rugman and Verbeke (1993) used SWOT for comparison, citing flaws like difficulty in making it operational i.e. of putting it in practice. It is noteworthy that this framework is been applicable to services as given by Lee and Spisto (2007).

The case for the Endogenous Role of Government and Chance

Apart from the limitation attributed to the diamond framework above, another flaw in it is that it does not include government as one of the basic factors but only considers it as an external factor despite the fact that it greatly affects all the other basic factors. To compensate for this Wickham (2005) re-conceptualized the framework for the Australian context. It had government as an integral basic factor at the centre of the framework, depicted as government surrounded by all the other factors as vertices of a hexagon with the chance factor in incomplete (dotted) lines giving it a separate identity as an external factor alone.

He also suggested that the role of chance be considered in with new attention when applied to a regional economic model like that of the Porter’s Diamond.

Fig. 1: Determinants of Competitive Advantage: Porter’s Diamond Model Framework

Factor Conditions

Chance

Firm Strategy, Structure & Rivalry

Related & Supporting Industries

Government

Demand Conditions

The importance of government policy initiatives to promote and develop the industry can be seen for the tourism context in Prideaux (1996), who on examining growth trends of Taiwanese inbound tourism to Australia, studied the factors responsible for this and listed them as better air connectivity, promotions and organization of Taiwan’s travel industry. Suggestion was also made that repeat visitations would be greatly beneficial and to achieve better tourism prospects with Taiwan steps like forging links with operators in Taiwan, increasing frequency and connectivity of airlines, cultural education including language training, and customization of products to suit Taiwanese tastes should be undertaken. The importance of the study lies in the fact that it provides a model for Thailand to replicate with neighbouring ASEAN nations. It provides inputs as to what it should do to target a lucrative, individual nation like China. Clearly government policies and trade agreements with regional nations play a great role in determining the relative competitiveness of Thailand as a tourist destination.

The role of government and chance here, for the Thailand tourism industry plays a crucial role given the recent history of Thailand – it was the epicenter of the Asian financial crisis of 1997; it faced the Indian Ocean earthquake followed by Tsunami on 26th December 2004; it dealt with global recession post September 11, 2001 attacks, the financial downturn of 2008, SARS (and H1N1 Flu phenomena) and more recently domestic political chaos. These seem to have impacted tourism severely. This builds the case of chance being a critical determinant in the diamond model – leading to the assumption that it should definitely be regarded as an endogenous factor and not just one having an exogenous role in the whole framework.

Pine, Chan and Leung (1996) have outlined the impact of the Asian economic downturn and stated that the economic downturn which affected adversely the tourism industry has led to slowing or halting of many projects in the hospitality arena. It noted that intra-regional tourism had grown due to the region’s strong economic growth. They further expect the tourism to be adversely affected (based on limited data); intra-regional tourism was expected to decline but increase from Europe and Americas in the light of the recent currency devaluations. Zhang (2005) has reported after analyzing industry data that China’s outbound tourism got distributed as a result of the Tsunami. The South East Asian and South Asian nations lost out on many Chinese tourists to hitherto new choice of destinations. The perception of the region was one of high risk and this eventually led to loss in tourist numbers and revenue. The new destinations garnering attention even saw escalation in prices. Travel insurance was more sought as a result of the tsunami phenomena. Also, Ichinosawa (2006) provides highlights as to how Tsunami stigmatized Phuket as a tourist destination. Leiper and Hing (1998) studied unrelated four events in 1997-98 in the Asian context and the impact on the tourism industries of the respective nations. The events included huge forest fires in Sumatra and Kalimantan, Chinese takeover of Hong Kong, the triggering of Asian Economic Crisis with currency collapse in Thailand and social and economic unrest in Indonesia; and political and economic crises in Cambodia. These they inferred resulted in decline in international as well as domestic tourism. Thus, chance was a major factor here.

Malhotra and Venkatesh (2009) have explored how vital it is to have contingency plans for crises and provide guidelines to proactively design a crisis management plan; even to take care when things go really bad. They compared Hong Kong’s strategy and Thailand’s response to the Tsunami and the SARS outbreak. Based on such deliberations they advise having fluid structures and policies with regards to the organizational design, so as to effectively and timely deal with uncertainties of various kinds. They name various kinds of crisis, along with all their stages and depending upon the readiness of the affected entity (nation etc) determines the gap that needs to be filled in terms of crisis management. This they argue is the responsibility of the hospitality and tourism industry. The role of the government in formulating beneficial policies then becomes crucial given the above chance factor is so influential in the tourism industry. Thus, roles of chance and government are said to be critical in relation to the tourism industry. The influence chance has over government policies (and even governments themselves) implies that chance is way too important and thus should be regarded as intrusive, internal factor integrated with the whole framework of the diamond model. Clearly, for the case of a highly specific industry like tourism and a country where the government (directly or indirectly) holds more than half of its net capital stock (Phongsathorn, 2001), the government cannot be left out as just an exogenous factor. It is too important to be dealt as an influence. Thus, government should be thought of as an endogenous factor in the model. Also, government today has more a role of a collaborator than just an influencer or policy maker.

Considering that the diamond framework has not been applied to services as it has been to manufacturing industries, and also less work is done specifically on the tourism industry using the model, the role of the external factors need to be seen in new light. Besides, tourism itself is such an industry which in the case of nations like Thailand may incorporate the whole country as the operating area. More recently, Pettus and Helms (2008) have included government in an endogenous role in the diamond model framework, while analyzing the case of Argentina.

Though, Porter (1990) has opined that chance events are outside the control of the industry, nevertheless its effect can be negated. Also, prudent investment and preparation can actually prevent the occurrences of man-made disasters and reduce the probability of many untoward incidents. Besides, the operationalization of chance even outside the diamond as an external factor is also very difficult.

It is noteworthy also that chance even affects the government and its role. In the scenario of much globalized world where two countries are not isolated anymore and the events in one country affects the other in a more significant way than ever before the model requires an upgrading. Thus, a case has been made for the exogenous factors – Government and Chance to be treated as endogenous. Therefore, in effect the diamond model gives way to the proposed model (fig.2).

Fig. 2: The Proposed Revised Porter’s Diamond Model Framework

Factor Conditions

Government

Related & Supporting Industries

Firm Strategy, Structure & Rivalry

Chance

Demand Conditions

Research Methodology

The study identifies the key variables that act as constituents to the various determinants of competitiveness of the tourism industry of Thailand. It also looks into the role played by Chance and the Government in altering the industry’s competitiveness. For this, unforeseen events and government policies and their impacts were studied and extensive literature reviewed to achieve the above stated objectives. A couple of telephonic interviews with Thai people were conducted to probe into specific areas and to corroborate findings. Thus, primarily the analysis is qualitative in nature.

Discussion and Analysis
Factor Conditions

Factor conditions like infrastructure have been in the government’s eye along with the human resources. However, it is perchance that the multi-million dollar airports that were to be a gateway to Thailand and its scenic beauty was the centre of anti-establishment protests and subsequently two airports were then shut down.

Thailand’s natural resources like beautiful beaches definitely provide a competitive edge. This factor condition is also one of the key variables for the tourism industry. Its spicy food, hospitality and exotic culture are inherent attractions.

The significant external markets for the tourism industry are widely spread across the world and include major European countries, the U.S. and now even China.

Thailand’s ideological commitment to liberalization and open economy has had major impacts on the industry dynamics especially over the long run. Knowledge resources also have grown. Capital resources which were an area for concern has been dealt well in recent times and policy measures for financial markets has made it more sound and less prone to international volatility in comparison to earlier years.

Location is definitely an important issue here. Singapore and Taiwan are so important for global businesses because of their strategic location. Quality and quantity of highly skilled work force for the industry is also a huge concern. Serious policy initiatives are to be taken by the state in this regard. Recommendations include the continued development of various transport related infrastructure and maintaining and enhancing a skilled labour pool.

The Tourism Authority of Thailand Travel Industry Portal provides online training for the industry personnel.

Another facilitator for easy travel is a rail link from Suvarnabhumi International Airport to Bangkok by means of a sky train. This initiative reduces the travel time to 15 min and is greatly appreciated by travelers. [1]

There is growth in the road linkages. The newly formed North South Economic Corridor links Thailand to other Asian countries by means of a twelve hundred km R3A road highway which links Thailand with Laos to China emerging from Chiang Rai in Thailand was developed successfully in 2009. Thailand is becoming known for its status as a definitive hub for regional aviation. It has strong aviation linkages and airlines presence. Now, many countries have more flights from Thailand than most others in the whole of Asia. There are weekly 131 direct by around 13 airlines connecting Middle East Asia. Thailand is served by over seven hundred flights per by charter, scheduled and low-cost airlines from all over the world. Thai Airways has also launched new routes to Abu Dhabhi and Jeddah form Bangkok. Tehran-Bangkok link has been proposed. Similarly, rival Emirates Airlines have inducted Airbus-380 aircrafts for its Bangkok route to provide daily service from the city of Dubai. [2]

Human Resources: Labour Force Statistics 2009 (Source: NSO)

Total population is 66.72 million of which persons who are aged below 15 are 14.15 million, and persons aged 15 years old and over 52.57 million. Total labor force (Available for work) 37.53 million. Persons not in labor force (Not available for work) are 15.04 million. Thus, employed persons are 36.50 million, unemployed persons are 0.78 million. Of these seasonally inactive are 0.25 million. Household workers are 4.93 million, students are 4.41 million, and others are 5.70 million.

Fig. 3: Comparison of number of employed persons between Quarter 1 of 2008 and 2009 by Industry
Unit: Million Persons

(Source: Labor Force Survey 2009, NSO)

The physical and natural beauty of the beaches and islands of Thailand are the greatest attraction for tourists. Thailand’s most popular beaches and island destinations include along the Andaman Coast: Phuket, Mu Ko Similan Marine National Park, Mu Ko Surin Marine National Park, Ao Phang-nga National Park, Krabi, Phi Phi Islands, Mu Ko Lanta Marine National Park, Tarutao Marine National Park; along the Gulf of Thailand: Cha-am (Hua Hin), Ko Samui, Ko Pha-ngan, Mu Ko Ang Thong Marine National Park, Ko Tao and along the Eastern section: Pattaya, Rayong & Ko Samet and Ko Chang Marine National Park.

The National Telecommunications Commission Act of Oct 2004 along with the earlier Telecommunications Business Act 2001 has done a lot to setup the competitive environment for telecommunications industry. The formation of the Universal Service Fund by CAT (Communications Authority of Thailand) and TOT (Telecommunications Organization of Thailand) has provided impetus to the development of the industry. This has been instrumental for the growth of the tourism industry of Thailand.

Car (rentals), train, bus; taxi services are available for transportation. A host of other offerings are available for inland transportation which includes motorcycle taxis, Tuk-Tuks, tricycles, bicycles and Song Thaeo or the very popular pick-up trucks. Charter, scheduled and low-cost airlines make up the air travel avenues; cruises, boat, etc provide water transportation facilities. Railways provide access to a large network of destinations in Thailand, providing economical and efficient transportation.

Firm Strategy, Rivalry

Corruption and bureaucratic hurdles created by the government is another deterrent to it reaching its competitively superior position. Anti-trust policies of the Government are few and far between. There is a lot to be desired on this front from the Thai government. A recently enacted anti-competitive law had a monumental flaw in it as it did not apply to state-owned enterprises (that enjoyed monopoly). Environmental regulations are being looked into by the state.

To be competitive on the global platform requires efficiently producing goods and services of value more than that provided by other competing nations. It is important for Thailand to do so for the tourism industry to make a mark for itself on the global platform especially when its productivity levels are low.

Firms should lay emphasis on retention of and attracting intellectual capital. Within the industry as well as across the industry technology should be shared.

The Trade Competition Act 1999 and thereby the Trade Competition Board helps provide fair trade. The General Agreement on Trades in Services (GATS) furthers this cause. However, the anti-trust policies are not very effective as these are biased in favour of the government. Also, the players pay a high price for the illegal or unethical practices of rivals. The governmental officials prove a bane as there is rampant corruption and cases of corporate cronyism provide hinder fair competition between the players. The rivalry is also relatively less intense than it could be to get more value for the consumers for the services offered. The local base of the competition makes the rivalry worthwhile. Employer and labour relations are adequately cooperative to discourage any untoward strikes or major hurdles in provision of productive output.

There is adequate decentralization of various corporate activities and delegation of responsibility and authority is a prevalent phenomenon. However, the corporate boards leave more to be desired in terms of efficacy.

The cry for greater privatization is justified as it would certainly help in making the industry more competitive. Greater role of the private sector would ensure better management and corporate governance practices, reducing the business related corruption highly prevalent today. This process could be expedited by better corporate control activities, maintaining ethical business standards, sharing management know how, devising incentive based compensation systems, applying performance based appraisal systems, and having collaborative partnerships with local players with an understanding that practices to be in the right spirit, having joint investments, etc. Considering the significant role of the government in this industry, Private public partnerships (PPP) could effectively achieve the requisite competitiveness for being one of the best globally.

No doubt that if this is implemented properly over time then the incident revelations from CNN’s survey of global travel and tourism that Thailand was the best on the basis of value for money amongst all countries in the Asia Pacific region would not be an isolated event but among a series of similar results.

‘Turtle Conservation Plan’ in Mai Khao area which involved beach and reef cleaning also is a PPP initiative for environmental considerations.

Interestingly, many hotels in Thailand have raised the quality standards in terms of environment friendliness by going smoke-free i.e. promoting anti-smoking measures.

Thai Airways and Nok Air have decided to cooperate to boost up domestic traffic over specific routes like Bangkok to Phitsanulok, Bangkok to Ratchathani and Chiang Mai to Mae Hong Son

Already Thai Airways is part of the Star Alliance – the world’s first major global airline alliance which aids its network operations.

Demand Conditions

The internal demand though grown is limited by the population size and disposable incomes. Reductions in prices have encouraged local demand in recent years. However, Thailand may not be able to charge the premium it did during the hey-days. And any further price increase will discourage domestic demand. However, the internal demand for Thailand’s tourism industry offerings has been seen to grow in recent years.

Advantage for Thailand exists in the offerings in terms of varied services and a competitive value proposition vis-a-vis other countries. Also, the active tendency of the local tourists to readily accept the latest offerings offered by the tourism industry makes the demand.

A few regulatory standards for tourism based trade and environment are exacting in nature. Even the intellectual property rights and safety standards for online transactions are less than desirable providing less encouragement for innovation and stimulation of demand.

However, not only does the internal demand conditions condition the industry to become competitive globally it provides an avenue for experimentation and more importantly provides revenues when global tourist inflows ebbs below expected levels. Increasing internal demand could then easily be used as a hedge for fluctuations in collections from international tourists especially during the off seasons.

Specialized market segments for specialized services and distinctive benefit segmentation provides impetus to the internal demand and subsequently to the external demand. In this regard providing incentives for innovation and aiding multinational corporations should be the policies pursued by the industry.

There are various activities that a visitor or tourist can undertake for pleasure. Thailand offers a wide array of such offerings which include shopping, golf, adventure treks, hill tribe visit, special cooking and food, elephant rides, special festivals and celebrations, spa, spiritual and religious insights and learning (especially Buddhism), meditation, water sports, etc.

Water sports include diving, sailing, yachting, cruising, canoeing and kayaking, swimming and snorkeling, fishing, windsurfing, rock climbing and bouldering, jet skiing and wakeboarding. Medical-tourism and business events also form an integral part of the range of offerings.

Many indigenous events attract visitors from within and outside the country thereby stimulating demand. Some key events that happened from time to time in Thailand are the Luang Phor Thuad and Sunflower Field Festival dealing with the first blossoming of sunflower at a distinguished temple and paying tribute to Luang Phor Thuad, Chinese New Year Fair where prayers are offered the Chinese way, and there are opera shows and a food festival for vegetarians, Chinese Lantern Festival where a competition for lanterns and its decoration is held, World Wetland Day involving environmental related activities and awareness, bird watching and games, Eco-tourism and Kasalong Flower Festival involving bonfire and camping activities, showcasing of rare species of wild flowers and visiting caves, Thailand International Kite Festival that showcases traditional kites from different regions, kite flying competitions, etc; Thai Sky Festival involving a show of Skydiving by skydivers from many countries, Traditional Gold Leaf Covering Ceremony at Kuiburi Temple involving prayers and religious rites and as the name suggests gold leaf covering, Blooming Lotus Festival providing a tour of the Lotus Pond and trekking, Hua Hin Jazz Festival where Jazz concerts are performed, Hua Hin Regatta involving a race of sailors, Hua Hin (Cha-am) Golf Festival involving golfing contests, Hua Hin Vintage Car Rally which involves parading vintage cars.

Many sports events, trade events and festivals had been planned for attracting visitors to Thailand in 2009. Important among these were the 1st World Comedy Film Festival, Thailand Grand Sale 2009, Thailand Tourism Festival (TTF) 2009, LPGA Thailand 2009 (Golf), The 2009 King’s Cup Elephant Polo Tournament, 1st Asian Martial Arts Games, Loi Kratong, Candle Festival, Songkran Festival and the 14th ASEAN Summit. New attractions like Sirindhorn Museum and Phu Kum Khao Dinosaur Excavation site, Chiang Mai Zoo Aquarium, Dragon Descendants Museum, etc have come up.

It is interesting to note that Thailand was voted as the best sailing venue in Asia in a poll conducted by Top of The Gulf Regatta. Also, Phuket King’s Cup Regatta was the winner for best regatta in Asia. Thailand was also voted as the ‘Asian Spa Capital’ for 2009 by AsiaSpa magazine. Also, Thailand won the Destiantion Spa of the year for Six Senses Destination Spa in Phuket.

The major destinations chosen by tourists are (by region):

Central Thailand: Ayutthaya, Bangkok, Hua Hin, Kanchanaburi, Cha-Am, Chachoengsao, Lampun, Nonthaburi, Petchburi, Phetchaburi, Prachuab Khiri Khan, Pranburi, Samut Songkhram, Saraburi.

Southern Thailand: Koh Lanta Island, Koh Phi Phi Island, Koh Samui Island, Krabi, Phang Nga, Phuket, Trang, Chumphon, Hat Yai, Khao Lak, Koh Phangan Island, Koh Tao Island, Nakhon Si Thammarat, Ranong, Suratthani.

Eastern Thailand: Koh Chang Island, Koh Samed Island, Pattaya, Chanthaburi, Chonburi, Koh Kood Island, Rayong, Trat.

Northern Thailand: Chiang Mai, Chiang Rai, Mae Hong Son, Sukhothai, Lampang, Phetchabun, Phitsanulok, Tak.

North-East Thailand: Nakhonratchasima, Khon Kaen, Loei, Nong Khai, Ubonratchathani, Udonthani.

Latest foreign technology is available to it and this should be made good use of by the industry players and the government. Use of ICT (info-communications and technology) in hotels and other areas is a step in the right direction.

The following of the Star Rating methodology for hotel standards by Thailand’s premier hotels was a step in achieving quality and recognition.

To the advantage of Thailand is the level of orientation of the tourists coming to Thailand and the internal tourists as well). These are more or less favourable for the state and should be capitalized upon. ‘Thailand Travel Mart’ was a large showcase for travel and events held in June in Bangkok. Such events promote the internal demand significantly.

Inadequate reliance on experts and professionals for managing the business and related aspects of the industry, poor managerial innovation, low level research and development activities for the tourism industry, provides a hindrance for Thailand to emerge competitive against other players compromising the very nature of its competitive advantage. The extents to which it brands its industry though much better now and steadily improving over the years even in quality, leaves more to be desired in this front. Basing compensation on incentives is another recommendation for the industry. Training staff, at various levels is required to put together a skilled workforce and efficient labour pool for the industry.

Related and Supporting Industries

The tourism industry is well connected and ‘linked’ with industries like the transportation and hospitality. Specialty services and has also provided impetus to the industry. However, the stigma of child prostitution and Aids epidemic is still a major concern for the government of Thailand.

Labour productivity of Thailand is also not competitive at all. The revenues per tourist to Thailand are less than many competitors in the region. Also, these have not gone up over the years. Understandably, this was due to the chance factor but nevertheless, it seems to compromise the competitiveness of the industry even further.

The importance of the framework applied here is that it helps identify sources of competitive advantage. One specific area of interest is the formation of clusters. Domestic rivalry and geographic concentration enhance competitiveness of Thailand’s tourism industry. The six factors depicted in fig. 2 help the framework act as system. Scalability, magnification and upgrading help provide linkages and networks. These thus help in forming clusters which provide competitive advantage.

Efforts should be made to build special business relationships with the various players. Partnerships and alliances between and across the industry could help get the maximum value to the consumer inevitably making Thailand more competitive and the formation of clusters more evident, thereby benefitting the industry greatly. Provision of incentives to encourage; and subsidies to support the entrepreneurial talent in the industry’s core and related areas could benefit the industry in many ways including the adoption of innovative tools, techniques and methods and e

In the previous, it is explained that a wedding trip or honeymoon was become easier along the way with the improvement on ways of going places that no longer hardship to stir from home to go to other places and it was a new concept of traveling for leisure purposes. The transportation kept improving and producing newer and better destinations until there was more place than the visitors. There was no record who was the first couple going for honeymoon, but no doubt they go honeymoon because everybody else did and it seems as a challenge for them to do the same as others. At the first time honeymoon was considered only for the rich, and as a cachet for distinction and further glory (Hoke, 1933). However, as time goes by, the travel get cheaper, transportation keep improving and more destination enhanced, number of couples take their honeymoon also increasing.

There are many various variables that today’s honeymooners may be looking for. They may be looking for the atmosphere, facility provided, romantic places, and so on. According to the Travel Industry Association of America, most couples are willing to spend more money on honeymoon rather than the regular trips. Moreover, some honeymooners also looking for the unique places for honeymoon. They want to feel a different experience once in a lifetime. For these travelers, it’s the time for a fantasy journey to destinations whose very names mean romance. They are choosing to go further away on their honeymoon to a different environment and that includes everything: a different language, culture, and food. However, for some couples who have a fulltime job and, as work schedules become more and more hectic, many couples are choosing to honeymoon close to home, enjoying a long weekend at local bed-and-breakfasts and country inns (Perementer and Bigley, 2000)

According to MacNair Travel Management survey, it is suggested that Hawaii is the top honeymoon destination. And it is supported by Hoke (1933), Niagara Falls and Washington were the first outstanding honeymoon resort. The honeymooners are most anticipating to beach and dining as a part of their honeymoon activity. Other than that spa also was the couples preferred activity on their honeymoon. With the evolution and innovation that spa could make health better, spa becomes ideal to enjoy and fashionable newlyweds often choose it for honeymoon.

2.2. Hotel Classification

Along with the desires of traveler that keep growing, Tourism Industry along with all the attributes in it also needs to be developed to meet their needs. The hotel industry is so vast that many hotels do not fit into single well defined category. Industry can be classified in various ways, based on location, size of property etc.

Based on location, for example is city hotel, is the hotel which is located in the heart of city within a short distance from business center, shopping complex. Airport hotels, these hotels are set up near by the airport. They have transit guest who stay over between flights. Resort hotel, is the hotel that cater consumer who wants to relax, enjoy themselves. They could be located in beach side, hill, and recreational area. Most resort work to full capacity during peak season

Based in size of property, this category is divided according to the number of rooms available in the hotel. Small hotel is a hotel with 100 rooms or less. Medium sized hotel, hotel which has 100 rooms to 300 rooms. Large hotel, is the hotel which has more than 300 rooms. Mega hotel is a hotel which has more than 1000 rooms available.

Based on the level of service there are three types of hotel which are upscale or luxury, midscale, and budget hotel. Budget hotel meets only provide the basic needs of the guest compared to the midscale and upscale hotel which provide a better service than the budget. Luxury hotel offers world class service providing restaurant and lounges, concierge service, meeting rooms, dining facilities. It is easy also to identify those types of hotel from the design of the hotel itself.

Based on theme, there are Heritage hotels, Ecohotels, Boutique hotels. Heritage hotel offers rooms that have their own history, serve traditional cuisine and are entertained by folk artist. Ecohotel, is an environment friendly hotels which usually use eco friendly items in the room. Boutique hotel is a hotel that provides exceptional accommodation, furniture in a themed and stylish, unique manner.

Based on target market, hotels are classified into commercial hotel, convention hotels, resort hotel, suite hotel and casino hotel. First, commercial hotel, they are situated in the heart of the city in busy commercial areas so as to get good and high business. They cater mostly businessmen. Second, convention hotel usually provide a large convention complex and cater guest who are attending conference, etc. Third, resort hotel, is a leisure hotel which are mainly for vacationers, leisure traveler, who want to relax and enjoy with their family. The atmosphere is more relaxed. Fourth, suite hotel offers rooms that may include compact kitchenette. They cater to people who are relocating act as executives who are away from home for a long business stay. Last but not least casino hotel, is a hotel with a gambling facility. This hotel usually attracts those leisure and vacation travelers.

Honeymooners as consumer could choose the type of hotel for them to stay in their honeymoon. They can choose to stay whether in city hotel, resort, large hotel, small hotel, upscale, midscale, budget hotel, theme hotel, and many more. However, wherever they choose the hotel to stay, there must be the reason behind why they choose particular hotel. In choosing hotel for honeymoon, there must be a decision between couples. Therefore it is important to observe on how husband and wife decision making. ( http://hotel-industry.learnhub.com/lesson/8842-classification-of-hotels)

2.3. Decision Making
2.3.1. Consumer Decision Making Process

In our daily life we will always faced with various decision. When we want to purchase product or services is also a part of decision.

No one purchase or consume something unless they have a problem, a need, a want or a purposes.There are seven major stage that consumer typically go through in decision making but however in this study will only explain six stage such as need recognition, search information, pre-purchased evalutaion, purchase, consumption, post-consumption evaluation.

Need recognition, is the stage when the consumers will sense the things that they believe the product have the ability to solve a problem is worth more than the cost of buying it. Therefore the marketers could make a product that can fulfill the desire of the consumers but they also have to keep the cost in line with the market they are targeted. At this stage, the consumer are influenced with many variables such as, personality, social class, income, past experience, prior brand perception.

Source of Information, is the stage when the consumers are obtaining informations they need to make a product choices are suitable with them. The source of informations could be obtained from marketer dominated or non-marketer dominated. Advertising, sales person, website, travel agentcy are the source of information that refers to marketer dominated. Friends, family and the words of mouth refers to non-marketer source of information.

Pre-Purchase Evaluation, is the stage when the consumers are comparing the various choices of brands, products, and services that which will most likely result in their satisfaction with the consumption. In this stage the consumers will influenced with their motivation, knowledge, attitudes and personality, lifestyle. Other than that they also will consider on the price, and quality of the product.

Purchase and Consumption, is the stage when the consumers have decided the ideal product or services for them and after that they consume the product or services.

Post-Consumption Evaluation, the stage when the consumers have experience the product or services and they will sense whether they are satisfied or not satisfied. They will feel satisfied when the performance of the products or services are matched by the precieved performance, when the performance fall below the precieve performance there will be dissatisfaction.

Those the stages above are might be went through by the individual or couples decision making process in general. During the decision making process there will be a negotiation between the husband and wife. The stages before the purchasing stage, couples will affected by push and pull factors which is come from the internal and external. (Blackwell, Miniard and Mason, 2001)

2.3.2 The Choice-sets Model

Research on individual’s decision making process is explained by applying the choice-sets model. There are three stages in individual choice-sets model. The final decision made by the individual is the result of consecutive process of reducing some alternatives in the consideration from large number in the early consideration set to just a few in the late consideration set. The process from the early consideration set to the late consideration set is affected by the push and pull factors. After that the situational inhibitors also influence the individual from late consideration set to the final decision.

According to Jang, et al. (2006) couples and family are the substantial objects in analyzing decision making in the existing choice-sets model. In family decision making process, there are many individual’s different preferences involve for the final decision. The choice-sets selection process of an individual is different from couples choice-set process in several way. First, there are two people are involved in the decision making process. Each partner brings their own preferences regarding the possible choices. Second, it is possible for conflict to be occurred because of the differences of idea and perceptions regarding the alternatives. Therefore there will be a discussion among them to find out which is the best option match for them. Third, couples will formulate one’s own early consideration set, based on elements of their own preferences and their partner’s preferences that already mutually identified through discussion. Thus, the couple choice-sets model consist of four stages, while individual choice-sets model consist of three stages, from the early consideration set to the final choice.

In addition, as explained by the individual choice-sets model, the relevant process is also competent in the couple’s choice-sets model in choosing honeymoon hotel. The number of hotel alternatives under each individual’s consideration will be lessening at each stage, before the final decision is made.

The choice-sets model below is adopted from Jang, et al. (2006) study and will be used as a reference on the following literature review.

Comparing the individual destination choice-sets model to a destination choice-sets model for couples

2.3.3. Couples Decision Making within the Household

The way of couple decision making is also found in a household. It is interesting to observe a relationship between household decisions making with its consuming behavior. A research on entire consumption and saving behavior can be as an example to be combined with the findings on household decision making (Ferber, 1973). Beside that the other simple example to be observed in household decision making is about economic. Every household must have put economy as their main primary concern.

In traditional families, the role of householder is hold by the husband. Therefore logically all the decision within the household is decided by the husband respectively. Based on the data collection from Davis (1976), it has been proved that the decision making in the household are mostly done by the husband. He has a significant influence in the household consumption for frequently purchased on goods and services and for durable. Most of the time the husband gives his suggestion and his preferences for something and the wife is the one who purchase and spent the money for purchases of goods such as beer, liquor, shaving cream, and others. Same goes to the decision making for contraceptive usage. The husband has the important role and greater influence to the final decision (Davis, 1976; Bankole and Singh, 1998).

In families today, there is more negotiation between husbands and wives occur in consumer decision making. The increasing number of career woman create the increasing number of dual-income family that leads to the influence of women have on consumer decision making (Razzouk, et al., 2007). The presence of women in the workforce today makes the women no longer seen as just homemakers and men as just breadwinner. As mentioned by Qualls (1987, pp.269) “husband and wife established their own position and preferences as individual, through discussion, individual preferences evolve into joint decisions”. Therefore there are some household decision making which is done by joint decision making which means that there is a corporation between the husband and wife in making decision. The simple example can be found in making decision on purchasing durable goods which is jointly consumed such as buying cars, home, villa, and many more (Davis, 1976).

It is not an easy thing to make a decision by two people. Sometimes there are some different desires or preferences on each of them. Even though they make decision together, actually they still have a different tendency for each aspect to decide. For example like husband will be more on deciding the price differences, whether the price worth it or not for some items to buy and wife will be more on how many items to buy, how the design, etc. (Bernhardt, 1974 in Davis, 1976). In other words, husband tends to have a control in all decision which is taking a consideration of functional attributes, and wife would be considering on aesthetic aspect or beauty.

Overall, the decision making within the household depends on the decision made by the spouse and also depends on what thing to decide. Sometimes husband has a significant influence in making a decision, and sometimes wife the one who taking a control in decision making, or sometimes both husband and wife put their idea and making a decision together, joint decision making. And how about couples decision in choosing honeymoon hotel? Is that would be the same situation with the decision making on regular consuming behavior within the household or not.

Based on the notion explained, the following hypothesis is proposed:

Hypothesis A1. There is a joint decision making between husband and wife in choosing honeymoon hotel.

Hypothesis A2. There is a different area on making decision between husband and wife in choosing honeymoon hotel.

2.3.4. Gender Differences towards Travel Behavior

There had been several studies conducted in the area of tourism and gender. It covers the role of women in tourism decision within the family. The various result gained depends on the difference roles among the family members, etc. (Fraj-Andres, 2010). Gender roles vary across cultures. There are behavioral differences between men and women that reflect the culturally determined differing roles of men and women. In some cultures, the traditional values point out the need for women to stay at home and take care of children. Women depend on men as breadwinners and women’s responsibility is to take care of a family and home (Jackson & Henderson, 1995).

Nichols and Snepenger (1988) compared men and women’s travel patterns and found that women preferred shorter trips, having fewer sports activities on their journeys and spending less money. Other than that women prefer on cultural and educational experiences when travelling, and men looked for action and adventure (McArthur ,1999). The other previous research result found that, in the choice of a hotel, expectations varied according to gender. Additionally, some demographic variables such as educational level, income level, have been useful for explaining the tourist behavior (Kastenholz et al., 2005)

Based on the notion explained, the following hypothesis is proposed:

Hypothesis A3. Each husband and wife has different preferences towards honeymoon hotel in the early consideration set.

2.3.4. Influence in Family Decision Making

In family decision making process is often dynamic and complicated. Suggested by Jang, et al. (2006) in family decision making, individuals’ different preferences plays an important role deciding the final decision. These different preferences can result from the differences objective and differences perception towards the relevant topic discussed. There are might be some disagreements created in the decision making process. However, those disagreements may indicate an attempt to accommodate and resolve the problem, so that the joint decision could be made (Spiro, 1983).

As mentioned by Strodtbeck (1951) in Spiro (1983), he tried to measure the power or influence of the husband and wife in the decision making. He observe the interaction between husband and wife in resolving the differences in the decision making process. There many influence strategy that might be used to make joint decision making. Spiro (1983) emphasize on six influence strategy that can be used to determine the type of influence strategy which is commonly use by couples to have a joint decision making. The result of his study was explained that there are many types of influencer strategies used by husbands and wives in attempting to resolve the differences of opinion or preferences. And some of the strategies that focus on this research are:

Expert influence refers to the influence that a spouse has specific information concerning the various alternatives. She or he can try to convince the other that she or he is more knowledgeable concerning the product by giving the detailed information under the consideration.

Legitimate influence reflects from one spouse’s attempt to shared the values concerning their role upon other’s feelings. The spouse is influenced by the shared belief that she or he should make the decision. For example husband is the man of the house, therefore he should make some particular decision.

Individuals may use many different combination of influence strategy simultaneously during their attempt to persuade one another in discussion to reach the modification consideration set. Thus, the following hypothesis is proposed:

Hypothesis A4. Husband has greater influence in making decision for modification consideration set

Hypothesis A5. Wife has greater influence in the in making decision for modification consideration set

2.3.5. Conflict in Couples Decision Making Process

Not only couples but also all the consumer will have a consideration and negotiation when they want to make a decision. The simple practice is how consumer selecting a product such as normal product, house, or travel destination. An individual will likely to interact with others during the decision making process and it will affect the final decision. In a couple, the husband and wife will discuss on the matters that they want to decide and undeniable that each of them should change their preference to the other alternative to reach the final decision and they will share their opinions on the desirable alternatives since they individually have different preferences (Spiro, 1983 in Jang, et al., 2007).

There is a possibility that conflict might happened within the couple decision making process. Conflicts may be happened because the impact of gender role orientation reflects the atitude of the spouses toward roles played by husbands and wives (Qualls, 1987) or primarily due to the difference of perception on objectives (Frikha, 2010). However, couples will have a discussion, negotiation, to seek an agreement to the final decision.

Hypothesis A5. Conflicts occur during the discussion due to the different preferences.

2.4. Push-Pull Factors Affected the Decision Making Process

In decision making process, there are many variables that could affect the consumers to reach the final decision. As mention in the concept of couples choice-sets model, the final decision is made by passing through several stages which are early consideration set, modified early consideration set or discussion, late consideration set to the final decision. As suggested by Crompton and Kim (1999) in Jang, et al. (2006) those continuous processes are affected by push factors and pull factors.

2.4.1. Push Factors

In making decision, consumers generally have some internal factor that will affect them in the process to find the ideal final decision. The internal factor which is the push factor, the needs and wants of traveler, are the reason of why traveler wants to get out from their home or regular place. Moreover, push factors also concern to the desire to travel (Dann, 1977 in Decrop 2006) and predispose consumer to travel. Asserted by Decrop (2006) push factors develop travelers internally causing them looking for something, situation, and events. To make it easier, push factor is a foundation of motivations (Kent,1990 in Decrop, 2006).

While there are many study on attitudes, images, perceptions and learning committed on the understanding on traveler’s behavior, motivation seems to be liable for describing much of the consumer’s tourism consumption behavior (Sirakaya, et al., 2003). Another suggestion said that motivation is a driving behind the consumer’s consumptions behavior, therefore motivated consumers try to fulfill their needs by acting on physiology and psychology. In previous research on tourism, the researcher was emphasized on the motivation-based because it could gives idea and comprehension for the marketers in developing and promoting the tourist attraction. Without an understanding on the consumer’s motivation, the marketers will not be able to generate efficient tourism marketing (Fodness, 1994) and will allow researchers to have a better explain on future travel pattern and behavior (Uysal and Hagan, 1993). Iso-Ahola (1982) also pointed out that motivation is one of the crucial elements of leisure traveler.

Exploring the leisure travelers’ motive that affected the choice of destinations or alternatives, Crompton (1979) mentioned that variability of consumer’s social, cultural and psychological needs could be the main motivation for travel. He also analytically mentioned seven motives as push factors for travel which are “escape from the day to day environment, exploration and evaluation of self, relaxing, prestige, regression, enhancement of kinship relationship, and facilitation of social interaction.”

Escape from the day to day environment, refers to the situation where the physically and socially different from the normal lives environment. Exploration and evaluation of self, motivations which travelers will get from the changes into new surroundings by physically and socially that could not be achieved by staying in their own environment. Relaxing, referred to a mental relaxation rather than physical relaxation. Prestige, it is a motive when travelers have a frequent travel, for them it is perceived to be less prestige. Regression, motive when consumers respond that leisure vacation provides a chance to do things extraordinary, different from their usual life. Enhancement of kinship relationship refers to a perceived value of leisure travel as a medium to enrich the relationship. Facilitation of social interaction, when the travelers bring motive to meet new people, therefore the travel will be people oriented rather than place oriented.

According to the description above, those motives also applicable on couples in choosing honeymoon hotel. Therefore, based on this concept, the following hypothesis is proposed:

Hypothesis B1. There is a motive of escape from the day to day environment when couples choose honeymoon hotel.

Hypothesis B2. There is a motive of exploration and evaluation of self when couples choose honeymoon hotel.

Hypothesis B3. There is a motive of relaxing when couples choose honeymoon hotel.

Hypothesis B4. There is a motive of prestige when couples choose honeymoon hotel.

Hypothesis B5. There is a motive of regression when couples choose honeymoon hotel.

Hypothesis B6. There is a motive of enhancement of kinship when couples choose honeymoon hotel.

Hypothesis B7. There is a motive of facilitation of social interaction when couples choose honeymoon hotel.

2.4.2. Pull Factors

Not only push factors that affecting consumer in making decision but also the pull factors. Pull factor is an external factor which created by the information of the goal objective, tourist holds and product’s attraction power (Gnoth, 1997 in Decrop, 2006). Different from the push factor which concern to the desire of travel, Dann (1977) explained that pull factor concern on the destination choice and attributes, that attracts traveler to a given hotel or destination and whose value is visible to stay on the object of travel. Furthermore, pull factors are those that appears as a result of attractiveness of a travel attributes. There are a lot of pull factors which affect traveler on the hotel selection process for travel which are novelty (Crompton, 1979), heritage/culture, entertainment, nature, rural (Uysal and Jurowski, 1994), facilities, easy accessibility (Kim et al., 2003), safety (Bogari et al., 2003) and so on.

2.4.2.1. Hotel Attributes as Pull Factors

Nowadays there are many tourist destination spread out over countries. Tourism industry has become increasingly growing and a highly competitive market. In the hotel environment, where competition dominates, hoteliers must study the strengths and weaknesses of the product or service they provide and accurately define their importance and performance. Many choices of product and services attract tourist differently in each destination. However, each tourist has their freedom to choose amongst a set of destination according to their motivation, preference and attitude to determine a destination to be selected.

According to Kozak (1999), tourist mentally categorize destination into three categories. First is ‘consideration’, where all destination that consumer is aware and likely to visit. Second is ‘inert’, where all destination that consumer is aware but no decision is made to visit in a specific period. Third is ‘inept’, refer to destination that consumer is aware of but has no intention to visit in a specific time.

Various type of consumer profile such as level of age, income, occupation and personality significantly affect the choice to vacation and select the destination. In choosing destination for vacation, there several factors attract consumer externally. Regarding the hotel industry, Chu and Choi (2000) mentioned that room rates have been considered as the main factor that increases the cost for a trip. Other than that, price also affects consumer’s motivation to travel. The price for a destination becomes one of main attributes for motivation to travel. And usually price directly affected by the exchange rates (Kozak, 1999). Some tourists are preferred to travel to a destination that has a lower value than their own currency (Witt and Martin, 1987 in Kozak, 1999). The positive or negative variance of exchange rate of a country or destination may lead to the increase or decrease in the level of tourist product or services prices. Following by facility and services are the major thing that consumer meet during the vacation. An adequate and qualified of both facility and services in a particular destination will affect consumer to revisit the destination itself (Kozak, 1999). The services and facilities offered by a hotel or are those features of products or services that lead consumers to choose one product over others (Lewis, 1983 in Chu and Choi, 2000). The previous study have shown that tourists satisfaction with hotel properties, including services, facilities and price, seems to be one of the factors that could bring the hotel successful and create many patronages or loyal customers (Stevens, 1992 in Chu and Choi, 2000). Safety and security also becomes an important thing to be considered in choosing destination for vacation. Making tourist feel secure will become the plus point for the destination itself to be selected (Kozak,1999). Consumer will prefer to go to a place that has a lower rate of crime and high in safety and security matters. Hotel image also one of the factors that influence the consumers choice. LeBlanc and Nguyen (1996) mentioned the five hotel factors that may determine a hotel’s image to travelers. These five factors are physical environment, corporate identity, service personnel, quality of services and accessibility. Moreover, it is found that that cleanliness of the accommodation, followed by safety and security, accommodation value for money, courtesy and helpfulness of staff were identified as top attributes for travelers in hotel choice selection (Atkinson, 1988 in Chu and Choi, 2000). The previous study shows that

There are a lot of studies have attempted to analyze customer satisfaction in terms of both expectations that relate to certain important attributes and value of the attribute performance (Chu and Choi, 2000). According to Barsky (1992) the terms importance is accepted by customers as satisfaction. When a customer perceives an attribute as important, the customer will believe that the attribute will play an important role in influencing his or her choice (MacKenzie, 1986 in Chu and Choi, 2000). Those attributes will influence consumers’ purchase intention and as a comparison from competitors’ providing.

A comprehensive review of the literature for the hospitality industry suggests that attributes such as cleanliness, location, room rate, security, service quality, and the reputation of the hotel have been considered by most tourists in hotel choice decision. Those factors above are some of the pull factors that may be taken as consideration by consumer in choosing destination for vacation. However, there are many factors to be considered which may be affected couples in honeymoon hotel and no doubt those factors above are possible as well become the factors that affected their decision making.

Based on the description above the following hypothesis is proposed:

Hypothesis C1. Hotel attributes which falls under facilities and services are influencing couples late consideration set in choosing honeymoon hotel.

Hypothesis C2. Hotel attributes which is room rates are influencing couples late consideration set in choosing honeymoon hotel.

Hypothesis C3. Hotel attributes which is falls under safety and security are influencing couples late consideration set in choosing honeymoon hotel.

Hypothesis C4. Hotel attributes which is falls under hotel image are influencing couples late consideration set in choosing honeymoon hotel.

2.4.2.2. Advertising

In today’s globalization, marketing aspect has become an aspect which is keeps growing follow the world trends. Business to consumer e-commerce is fast replacing the traditional way of marketing. The electronic commerce is slowly changing the way businesses operating. The spread of web facility and the acceptance of the internet have requested businesses to establish internet website to maintain the relationship with customers, suppliers, employees and shareholders.

The development of the internet has been a major event in the hospitality industry and it will gradually revolutioniz

The energy crisis and global recession, in 1973/4 highlighted the structural deficiencies in the third world economies. The need of foreign exchange and employment, along with the concerns of inequalities, leakages and constant levels of poverty (Sharpley & Telfer, 2002). Even so, in the past two decades the Sub-Saharan Africa tourism has experienced a remarkable growth, a difference from 1.5% in 1970 to 4.5% in 2003 and is expected that the Africa’s share will increase to 5% of total international arrivals by 2020. Although, Mozambique tourism sector could not benefit from this recovery, because the two wars had occurred in between, a period that other nations including the neighbouring have managed to develop their own tourism industry. This essay is to explain the key factors that may contribute to the ‘success’ or ‘failure’ of tourism planning. Conscientious about ‘planning’ different terminology and thoughts, a range of illustrations and description that applies to Mozambique’s tourism plan (history, political, economy, social and development), and its aims will help a better understanding around the topic.

Planning

The absence of planning may cause unregulations, leading to a range of negative socio-economic and environmental impacts. So, in order to create and respond to the tourism concerns it is important to include a rational plan (Mason, 2003). Different approaches of planning have been presented: Boosterism; Economic; Physical/Spatial; Sustainable; Community and so on. Kadt, (1979), noted that the consequences of tourism planning are a result of the nation’s overall political economy, because it is what will determine the equality in the distribution of tourism benefits. Nonetheless, planning is a process for anticipation and implementation of changes that would maximize positive developments (William, 1998, cited by Mason, 2003). However, Mason, (2003) argued that planning is a very complex term and can be applied in many contexts, for example: in relation to individuals, groups, organisations and governments, but at same time to different geographic areas (urban, rural), or as well at local, regional and national levels. In accordance, Cullingsworth, (1997:5, cited by Hall, 2008) stated that planning is also, a sort of decision and policy making because they are connected and interrelated, planning is the process where goals are set and policies are made to implement them. However, it deals with interdependent and systematic decisions, rather than individual decisions. Many activities in the process cannot be isolated (bargaining, negotiation, politics, values) and the process of planning is only one part of the overall plan. Therefore, planning is more complex than Dror’s (1973) perspective of ‘set of decisions for actions in future’ (Hall, 2008). Besides, various such as Mason, (2003); McCabe et al., (2000:235) argued that the important is the process element of the plan, as it provides direction by enabling individuals to indentify ‘the path that is to be taken and the outcomes or end results’. On the other hand, Gunn, (1998) argued that by focussing on the physical design, there is a risk of failure in recognising the key principles of the planning process; the fundamentals that originated its creations, but he also added that by focussing on the process of planning rather than considering the product itself may possibly lead to planning being considered vague and theoretical.

Destination case study:
Historical

Tourism has been important to Mozambican economy since the Portuguese colonial period and was developed around three themes: sun and sea, wildlife and urban (dynamic environment). During the colonial period the Mozambique tourist arrivals were mainly from southern Africa and Portugal and were close to 400,000. However, since the colonial war conflict in 1973, tourism infrastructure and several animal species were destroyed, therefore the number of tourist and the tourism activity declined (Visser, 2004). After the peace-accord in 1992 initiatives to recovery the tourism industry has been applied (Sun, Sand and Sea, complemented by Eco-tourism; Culture; Water sports, Adventure and Urban Tourism).

Political

Frelimo has been in power since the country’s independence from Portugal in 1975 and has the majority of the parliamentary seats 191 out of 250. In 1990 a new constitution that provided for multipartysm was implement (www.news.bbc.co.uk, 2010). The country shift from one-party autocracy to multi-party democracy. Implemented institutional reforms for the re-schedulling of debt and loans; it ‘open up’ to the markets by adopting adjustment measures of liberalisation which included public/private cooperation (Kulipossa, 2006). There was a shift from centralised government approach based in a dictator state where single decisions were made and all the infrastructure belonged to the state (horizontal policy coordination across Ministries), to a decentralised approach (vertical policy coordination between different levels of govern) where the power of management was shared with regional and local levels since they were better positioned to deal with local needs and more able to implement policies and integrating the communities as part of the process . The government decided to open the nation market to private sector as they were better financially to build and reconstruct the infrastructures that were in need and because of their ability to bring foreign exchange to the country.

Even the govern of Mozambique being responsible for ‘Tourism Policy and Implementation Strategy’, is still fragile in experience and financial resources. To reduce the existing gap of linking policies with the actions, the nation’s government are dependent of foreign help, needing to defer the responsibility of tourism recovery, national or local economic development to the Non Governmental Organisations (NGOs) and Associations, (Rylance in Spenceley, 2008).

Economy

According to Rylance in Spenceley, (2008:29), the nation economy varies from inefficiency, poor infrastructure and high levels of corruption, which discourage foreign investment. Nevertheless, between 1993-2004 there was a growth of 7.2 GDP, an annual average of 8 per cent over the last decade. Additionally, there was a decrease on annual inflation from more than 54 per cent in 1995 to 13.5 per cent in 2003 and 9.1 per cent in 2004. Despite the achievements Mozambique remains one of the poorest countries in the world. The per capita income in 2004 was equal to $320 (UNDO, 2004 cited by Rylance in Spencely, 2008:29). Furthermore, the country remains very dependent of international help through donations and is largely dependent of the agriculture sector which employs 83 per cent of the population and is responsible of 80 per cent of the exporters and for 26 percent of national GDP (SNV Mozambique, 2007:3 cited by Rylance in Spencely, 2008). The influence and power of negotiation is weakened by the nation’s vulnerability and dependency upon a greater number of foreign companies. On the other hand, Mozambique governments have been accused of problems of corruption on the legislation and collection of revenues. Critics assert that Mozambique is pursuing mega projects that do not generate social benefit (www.news.bbc.co.uk, 2010). Nonetheless, during 2006 the tourism sector generated revenues around US$ 144 million, it is expected that the industry will became one of the major foreign exchange earner as it is increasing in its foreign investment (Jossai, 2010).

Social:

It has been recognised that as an economic sector, tourism has both positive and negative impacts over the society. However, with an adequate anticipation and implementation of strategic plan tourism can be developed with reduced impact in the natural areas: the several benefits of the industry upon the society can be maximised, and the disadvantages can be minimised or even eliminated. With this understanding Mozambican policies and planning developers have adopted sustainable actions aspiring a balance in the tourism development, humans, animals and ecological communities. The focus was to reduce poverty by adopting tourism sector as a tool for development, either by local supply of services and goods to tourism enterprises or by enterprises employing the poor; plus providing the means for improvement of health, education and sanitary conditions. Though, it may be assumed that the government have failed to provide the right tools for local involvement as it was incapable to support people with training and knowledge to reduce the barriers of getting locals involved in the tourism economies, did not have option than lead it to the NGOs and associations that have started to do so (Rylance in Spenceley, 2008). This is due to the government lack of capacity and low involvement in implementing and manage policies. Moreover, the shortage of available finance for small enterprises and the time needed to start a business, discourages the majority of locals from contributing to the sector. For example: to open a business in Mozambique it takes on average 153 days (World Bank, 2004 cited by Spenceley, 2008). McEwan, (2004, p7) argues that local tourism enterprises are prevented from getting involved in the business and remain very dependent of foreign investment and international aid. In fact foreign investment involves 70 per cent of the Mozambique tourism projects and local borrowing from banks, has high costs ’15 per cent interest in real terms’ (Rylance in Spenceley, 2008).

Development

As a reflection of predominance of business travellers, visiting friends/relatives and regional weekend trip of leisure segment, the average stay in Mozambique is around 2.3 days, comparatively low to Kenya 8.4 days average length. There are 2.030 tourist establishments in Mozambique which directly employed over 35.000 people. The southern borders are the visitors main entrance but investors are starting to show some interest in the northern areas (Pemba, Quiribas archipelago and Nacala). In 2001 the number of international tourist arrivals was just about parallel to the visiting numbers during the colonial period. The accommodation sector has a total of 12.000 beds, near 5,000 cope with the luxury standard or 3 star above on the international market. In compare, the city of Cape Town has something like 30,000 beds and Mauritius 19,600 beds. The national air lines are expensive and limited: operating three Boeing B737 which serves domestic connections from Maputo to the other main cities of the country (Beira, Nampula, Quelimane, Pemba, Lichinga, Chimoio and Tete) and regional routes to Johannesburg and Dares Salaam (Williams, 2006). The accommodations and tourism facilities (hotels, tourism resorts) are very expensive favourable for the wealthier customers. Furthermore, the human capital (residents, poor people) are mostly employed in low levels jobs such as cleaners and bar staff which reduces their chance of economic benefits as their wages and level is equally low (SNV Mozambique, 2006 cited by Rylance in Spenceley, 2008). The major investors of Mozambique’s tourism industry have recognised the uniqueness of the country, that is the fact of being the only in the neighbours that do not have Anglo-Saxon colonial past since was colonized by Portugal, and from the fact of having a mix of cultural environment and rich heritage of Arabic, Swahali, Portuguese and African influences (Williams, 2006). Conversely, as the majority of tourist are English speakers, this advantages is also a barrier since tourist and locals have communication gaps. In addition, the nation has a limited offer of tourism products, constrained to the ‘safaris games’ products. The investors and tour operates still reluctant in diversify and reach the unexploited areas by developing new tourism products and attract new markets. As a withdrawal affect the country competitiveness with exception of Malawi, is very low in comparison to the bordering neighbours (South Africa, Zimbabwe, Tanzania, Suazilandia, Zambia). Although, there are indications of economic improvement since the civil war: increase in the national GDP, reduction of inflation and levels of percentage of poverty however, the wealth distribution of income still irregular by favouring elite groups and elements of government. In addition the country continues dependent on food import and, also vulnerable to the global prices (EIU, 2010).

One aspect of the tourism industry is the negative impact that it causes to the destinations. It, has been suggested by many, such as: Kadt, (1979); William, (1998); Mason, (2003); Hall, (2008); Spenceley, (2008), that the destination plan should encompass the tourism alternative approaches. Moreover, even the existence of different plan approaches or reasons of plan, it is assumed that they are imperative for the insurance of pathways to be taken as a mean to anticipate and correct possible events. In this basis, by adopting the national strategic plan for tourism, Mozambique allowed itself for any readjustments if necessary. The focus of the Strategic Plan for the Development of Tourism in Mozambique 2004-2013, (2004), was the business modern management approaches, tourism towards to product service quality and conservation, rehabilitation of wildlife in specific areas, co-operation with the neighbouring countries to consolidate and expand conservations areas, promote professional hunting industry and support communities to actively and effectively participate in tourism process, with the aim of four million arrivals per annum by 2025. The government priority was to reduce poverty and prevalence of HIV infection which even high is still lower than the regional average. This was intended to be done by building country prestige, broadcast possible investments, job opportunities, income generation, developing health and education (Ministry of Tourism, 2004). Seeing that, foreign currency plus capital investment into the tourist destination, permits a faster urban, social, economic regeneration and that worldwide tourism is the industry that employs most people and had shown some ability in adapting quickly to crises that have affected the world economy. Tourism was identified by Mozambique Government as a mean to promote local economic development (Gunn & Var, 2002). To minimise the negative effects of the industry on environment and culture, while as well maximises the economic and community benefits, the tourism policy is guided by the Tourism Law. (2004) which regulates licensing, provides the basis for sustainable growth and criminalises child sexual tourism; Action Plan for Absolute Poverty Reduction (PARPA), (2006) which sets social policies and programs to promote economic growth through tourism; National Tourism Code of Conduct, (2007), elaborated between the Ministry of Tourism and the Mozambique Confederation of Business Association (CTA) (www.sustainabletourismnetwork.co.za, 2010). The objective was to generate new employments for the enhancement of people quality of life; increase the numbers of international visitors and investors by improving the balance of trade; fairly distribute the tourist benefits, and expand the industry in zones that present greatest potential, by providing a ‘more equitable development of the nation’, putting the emphasis on the relation between tourism and its environs; in addition for the tourism growth and for the creation of benefits to its people, the country was seeking for ‘greater national unity through tourism’; in order to protect regional architecture, monuments, conserve resources, balance planning of areas, and incentive the development of handcrafts and folklore, the tourism strategic plan recommends ‘protection of cultural and natural resources’ (Ministry of Tourism, 2004).

Conclusion:

An analysis of tourism in Mozambique, indicate that existing tourism mix are the ‘beaches’ and unspoilt ‘interior’ that offers greatest potential for the development of wildlife market. Conversely, the poor infrastructures contributes for low tourism products and, inhibits investment. Bearing in mind the nation natural resources as the tourism potential (2700 km of tropical coastline with diversity, rare ecological systems and rich historic cultural heritage), shall be said that the coastline is unplanned and uncontrolled becoming then, the biggest threat for the tourism sector. Moreover, the actions taken by the private business that are mainly interested in the immediate circumstances and profits, exclude factors of the market such as the preservation of public goods (parks, historic sites, beaches, infrastructures), externalities (simultaneous production and consumption of tourism, which restrict access to the coastal land, fishing and historic places) and external costs (not reflected like as the ‘opportunity costs’), causing the inability of the market system ‘Market failures’. Which prevent the nations ‘ achievement of the economic efficiency and reflect the social costs.

The key factors for Mozambique tourism planning are political, economic and social. Its ‘success or failure’ depends upon all organism together being able to share and achieve goals that would be difficult to achieve by themselves. Rylance in Spenceley, (2008) argues that there are ‘differences between the policy and practices of tourism-led LED in Mozambique’. Although, admits that there is a lack of statistical data for a firm conclusion. Nonetheless, the fact of government investment in megaprojects that do not generate social benefits may indicate a deviation from the key principle of the strategic plan: the business modern management approaches and the perspective of ‘development first’ instead of ‘tourism first’ (Burns, 1999). In conclusion, it may be said that tourism in Mozambique is in its early stages. It is very incipient, high levels of corruption, limited in air transport and road accesses, lack of experience and has expensive tourism services and facilities. Still, it can be said that it is hard to predict the directions it will take, and if the target arrivals by 2025 are realistic or not; so far there is potential, willingness and the initial steps were taken.

My friend and I have passion in tourism. My friend has several years of experience working for an international travel company in Ho Chi Minh City as a travel consultant cum tour operator. She have strong relationship with five star hotels and restaurants in Vietnam. I have chance to travel to many countries and study international tourism industry. I also have a part-time job as a tour guide for some travel companies. I understand what tourists expect from a knowledgeabe and friendly tour guide , quality service as well. Thus, combining her experience in Vietnamese tourism market and my understanding about international tourists’ demands, we decide to open a travel company, named “Luxury Tour Co.” in Ho Chi Minh City. Our target market is Spain. Within the next five year, we build “Luxury Tour” as the first choice for the Spaniard when they think of travelling to Vietnam. This name guarantees for “best service,best choice” as our slogan of “Think nothing, let us”. This marketing plan is designed to highlight significant steps and other related issues to run business well and meet the goal.

Market Overview

Tourism is considered as the key industry in the near future. Tourism involves three sectors, they are, domestic market, inbound market and outbound market (Helmut Wachwiak, 2006:48). Domestic tourism aims to local customers, while inbound tourism aims to attract international tourists to the country and outbound tourism aims to organising tour for local tourists who want to travel abroad. Among of which, inbound tourism is emphasized most. It not only creates more employment opportunities for the local people but also plays an important role to attract foreign investment in Vietnam as MICE tours becomes popular.

Tourism is based on a lot of factors. Here is the list of some changes influencing tourism in general and Luxury Tour business activities ( Lloyd E. Hudman, Richard H.Jackson, 2003:24)

Infrastructure in Vietnam . Understanding the contribute of the non-smoke industry, Vietnamese Government has invested in some projects, such as building metro, road etc. , and encouraged people take part in introducing beautiful image of Vietnam to the world ( Vietnam Tourism, 2010 )

Social behavior. For example, considering the tour price, it depends on the suppliers’quotation. They are five star hotels, restaurants, transportation etc. In peak seasons when several tourists come to Vietnam, lack of commodation or waiters/waitresses is predictable. As the result, the tour price is higher, but tourists are served less.

Increased gas/petrol price. That is to say, it leads to the increase of price in transportation, flight ticket etc.

The rapid development of Internet and e-commerce. According to the CIA Factbook, in 2009, 50% of Spaniard use internet, and this number is increasing repidly. It push e-commerce developped more

Stable VND-Euro currency rate makes tour price stable and more competitive than other markets ( Vietnam Central Bank, 2010)

Stable politics makes international tourists feel safety while staying in Vietnam

New tourism trend. According to ITB World Travel Trends Report 2010/2011, Southeast Asia is sparkling as an ideal destination to EU market. They prefer enjoying “sun and beach” and discovering Eastern culture

Increased income. That is to say, more tourists want to spend their holidays at the highest standard

Customer Information

According to World Tourism Ranking, Spain ranks 11th in the world in terms of spend on international travel, but there has been significant growth in recent years in outbound travel. Growth is expected to continue as more and more Spaniards have holiday habits .Besides , Spanish long-haul travelers take advantage of very favorable Euro to VND exchange rate. The weakening of the VND could attract more interest in this destination .To understand clearly, here is the Spanish Outbound Travel Trend.

aˆ? Destination: Some competitive destinations to Vietnam are: Fiji, French Polynesia, Australia, China, Japan, Mexico, and the USA . However, Europe remains the main destination for Spanish travelers , only 27 % of the outbound trips are far beyond the European borders ( World Tourism Organization, 2007 )

aˆ? Travel season : Most of the Spanish decide to travel abroad in August , September – the time of summer vacations . However , short breaks are spread more widely through the year, in particular around public holiday times. The average length of stay for holidays abroad is around 9 nights.

aˆ? Purpose : Leisure (54.3%) remains the main reason for travelling outside Spain , followed by business events or work related (20%). The key driver for taking overseas holidays is visiting other countries, learning about their culture and seeing and doing lots.

Market Information

According to Vietnam tourism, in 2010, there were 5,049,855 international tourists travelling to Vietnam, which was 34.8% higher than 2009. Most of them were from China, South Korea, Japan and other Asian countries. Obviously, compared to other markets, Western tourists have not known much about Vietnam. With the wave of Asian culture, Asia becomes an ideal choice, especially Southeast Asia. Following the new trend, Vietnamese government have encoraged travel companies to study and make plans to expand busiess into Western markets.

According to World Torism Organization, in Europe, with 19.7 billion USD spent in international tourism expenditure (2007), Spain ranked 11th in the world . This number seems to increase annually. However, according to Vietnam National Administration of Tourism, the number of Spanish tourists to Vietnam for leisure purpose is still low and recently, the government with promoting activities is aiming efforts at opening Spain market as our main target market in the near future

In Vietnam, there are two major travel companies which target Spanish markets, they are, ASCO Lotus Travel and Exotissimo Travel. ASCO have years of experience for Western tourists to operate tour to Vietnam, Laos, Thailand and Cambodia and ASCO while Exotissimo opened branches in Vietnam, Laos, Cambodia, Indonesia and Myanmar. They aims to high-and-above-income maket while Luxury Tour aims to serve mid and high income tourists with the highest standard. As a Vietnamese travel company, Luxury Tour understand Vietnamese business behavior. Thus it is easier to build strong relationship with local suppliers.

Industry Information

Nearly 1.6 billion is the expected number of international arrivals forecasted by UNWTO’s Tourism 2020 Vision by the year 2020. Among of them, 1.2 billion will travel to other countries and 378 million will take longer trips. It is obvious that travel between different regions (outbound and inbound) tends to grow at a faster rate than intraregional travel (domestics) . In 2007, interregional travel increased by 8% as against a growth of 6% for intraregional traffic.

According to Vietnam Tourism(2010), from October 10th to December 31st 2010, following “Vietnam-your destination” campaign, international tourists were welcome to Vietnam without visa. With this opened policies, Vietnam was successful in attracting inbound tourists, especially in Western markets. In 2011, it is expected that Vietnamese Government will consider its effectiveness and efficiency to making further decision better.

Product/Service Information

Luxury Tour wants to approach mid and high income Spaniards. Most of them are businessmen, specialists, and professors etc. who are too busy to enjoy their time. With the slogan of “Think nothing, let us”, Luxury Tour wants to be the useful right hand by bringing them into the most comfortable world with families and friends. We offer several tour packages with high quality. All customer requirements are satisfied perfectly. From the moment customers contact Luxury Tour to the end of the tour, customers will be serviced by friendly and professional staff, such as travel consultants, tour operators, tour guide and others

SWOT Analysis

STRENGTHS

High-quality service

Operational efficiency

Experienced and highly customer-oriented staff

Strong marketing and sales forces

Strong relationships with both suppliers and Spanish travel agencies

WEAKNESSES

New brand name in the market

Limited budget

No representative office in Spain, so Luxury Tour can not contact directly to the target customer

Depend on Spanish travel agencies

OPPORTUNITIES

Spain is a new emerging or developing market for Vietnamese tourism industry

Less competition

Rapid development of e-commerce

Support from government (i.e.: opened policies to encourage tourism)

Social changes: more Spanish want to travel to Southeast countries

THREATS

Financial crisis

The increasing of potential competitors

Social problems: there are many beggers who follow tourists from places to places

Objectives

The key objectives for Luxury Tour are:

Within 5 years , Luxury Tour becomes the Vietnamese leading tour operator in Spanish market segment with 30% of share market .

Integrated marketing services are established to present a unified image/brand identity of Vietnam as an ideal destination .

The number of loyal tourists is increased

After the first five year, Luxury Tour will expand business into other Western markets, such as the Portugal, the Netherland etc.

Strategy

With Luxury Tour, tourists will experience the finest service, enjoy the most delicious Vietnamese cusine and stay at the most comfortable hotels. Our efforts are to make tourists remember uniqueness and hospitality of Vietnam in general and Luxury Tour in particular. It is can be measured by the increased number of Spanish tourists coming back to Vietnam annually.

What Luxury Tour try to sell is not only tours themselves but also benefits. A good tour operator knows how to control income factors and how to balance incomes and outcomes ( customer requirement) to satisfy three parties, that is to say, tourists are pleased with service, suppliers are happy to serve and Luxury Tour gets profits and more importantly, customer awareness.

Product

To be more competitive in the market , our tour itineraries are designed with two advantages : Quality and Customer service.

*** In term of Quality :Tour itinerary is designed based on 5H model , that is the combination of Hospitality, Honesty , Heritage, History,Heroic

**** In term of Customer Service :

Speed :We have hotline served 24/7 to answer all customers’ questions and complain

Flexibility : Tour itinerary can be re-designed to fit each customer’s requirement

Reliability : all needed info is provided to customers before they book tours , including warning (if applicable )

Pricing

Our target customer is from mid-income and above. They usually prefer to enjoy holidays in their own tastes and required to be served at the highest level. Thus we mix two price strategies, good-value pricing strategy and value-added pricing. Luxury Tour will design a basic package price which combines high standard, good service at reasonable price. From the basics, this tour is tailor-made to fix each customer demand. The price is changeable based on the seasons, supple-demand balance and other unforeseen situations. Normally our estimated price is around USD 2,200 / pax.

Distribution

For the short term , to perform activities to attract tourists from Spain to Vietnam and expand distribution channel to meet market needs and serve customers better, Luxury Tour has partnered with tourism companies in Spain. With this partnership, Luxury Tour has been in the big cities of Spain, such as Barcelona , Madrid , Valencia etc. For the long term, within the next 5 years , Luxury Tour opens one representative agency in Madrid to approach customers’ needs easily and efficiently

Promotion

Website:

Luxury Tour launches and operates Internet site effectively as a virtual tourist office in which customers can find a lot of information about Vietnam and useful tips for their tour . The website is designed with friendly screen and easy-to-follow instructions. Besides, our online travel consultants are willing to help customers design suitable tour itineraries with reasonable price and support them during and after journey.

Search Engines Optimisation:

To be recognized among millions of tourism websites, we will corporate with some internet search engine sites such as :

http://www.ivivu.com/

http://www.skydoor.net/

http://www.chudu24.com/

http://yeudulich.vn/

http://www.tourism-review.com/

Instead of buying a place on their website, Luxury Tour offer them a business corporation opportunity, this is, banner exchange. This is a win-win corporation

Advertising:

As a new brand name in luxury tourism industry, we decide to focus on bringing our image to the target customers. Our target customer segmentation is from mid and high income. Choosing a reliable magazine is the first choice. Among of which is “Travel and Entertainment” magazine – the publication of Ministry of Culture, Sport and Tourism and the leading magazine in tourism of Vietnam. It is available in Vietnam Airlines, Indochina Airline and Royal Brunei Airline.

Public Relations:

To build strong relationship with Spanish travel companies as well as to prove them our outstanding service offered, Luxury Tour usually invites partners and Spanish press to have trips to Vietnam for free of charge. It is not only a normal business trip but also a chance to introduce Vietnam beauty and its tourism potentials as well. Besides, Luxury Tour also have budget to sponsor for community activities such as planting tree, building houses for the poor etc. to emphasize that Luxury Tour image is not connected to business only, it is the combination between social responsibility, environmental protection and business.

Promotions:

Luxury Tour usually takes part in some trade exhibitions in Vietnam and foreign countries. This form of promotional activity enables promotion directly to the consumer for creating ‘word-of-mouth’ channel. We offer 10% discount for who books tours at exhibitions

Branding:

Luxury Tour wants to build a friendly image and impress current and potential customers by service quality. Our logo is design with the main color of green and the image of a typical tourist. Our slogan is “think nothing.Let us”.

Operational Plan

Sucessful tourism business depends on the service quality. Tourism is unlike other industries. We try to sell invisible products. The key points are how to persuade them to trial our service and how to make them feel undisappoited about their decision.To meet that goal, Luxury Tour must pay attention to setting up a quality control system strictly. Not only checking service from suppliers, employee force must be trainned to serve customer 24/7 . Any problems before, during and after tour need to be solved soon. After each tour, based on their feedback, Luxury Tour have some change to improve more and serve better.

Sales promotion

Dyring the first six month, Luxury Tour aims to attract customer awareness and introduce our service. We offer customers 5%-10% discount program. When customers know more about us, so discount strategy is not applied. Instead, we focus on added benefits, for example, booking tour to travel across Vietnam, tourists get one buffet ticket at Caravelle Saigon.

Advertising

Our target segmentation is mid and high income customers. Most of them are businessmen who usually travel by airplain. Thus in our marketing budget, there are amount of money spending to advertising on airline magazines, such as “Travel and Entertainment” .

Public relations

Public relation is a tool to improve company image positively. It needs long-term plan. Developing a brand name with the image of friendliness and hospitality, Luxury Tour will organize some special tours called “community connection”. Joining this, tourists do not only have chance to travel to Vietnam but also join community activities, such as teaching children, planting tree, farming etc. It makes tourists feel that their money is reinvested into society.

Direct Marketing

In term of direct marketing, there are many forms. To maximize marketing effectiveness, we suggest to combine direct mail, email marketing, social network, brochure and magazine advertising. To get the mid and high income customer database, Luxury Tour could buy from market research companies or take advantage of current database of Spanish travel agencies. Then we will send them our company profile and e-brochure to introduce our service and encorage them to log in our website to receive a 10%-discount travelling coupon for the first visit.

Online Marketing

Owning a well-designed and multi-function website is a tool to approach targeted customers. Our online travel consultants who comminicate well in English and Spanish are willing to assist customers to search info, design tour itineraries. Customers can book and pay online. The payment method is variable, from bank transfer to PayPal, Master Card, Credit Card etc. Once payment is done, confirmation, receipt, flight e-ticket and a package of Vietnamese information are sent to customer’s email box.

Budgets and action plan

Item

Jun-11

Jul-11

Aug-11

Sep-11

Cost

( USD)

Department / Employee name

Measure of Success

Making business plan, design logo, slogan and complete register documents

1st

1st

2,000

Nguyen Mai Ly – The genaral Director

Recuit human resource

1st

1st

1,000

HR Department

recruit experienced employees

Design tour itineraries and deal with suppliers

1st

31st

1,500

Operation Department

Tour itineraries are design to meet Luxury Tour targerted market requirement and local suppliers are pleased with our request and agree to offer competative price

Contact with some Spanish travel companies, pursuade them to corporate with Luxury Tour and sign the contracts

15th

15th

5,000

Operation Department

At least 10 Spanish travel companies are interested in our offers and agree to cooperate with Luxury Tours

Design Website and brochure

1st – 15th

1,000

Admin Department

The website is well designed , easy-to-follow and imformative

Discuss with tourism websites for banner exchange

15th

15th

1,000

Sales and Marketing Department

our banner is posted at all sites as listed

Print brochure and distribute at luxury hotels, Tan Son Nhat airports and other entertainment centers

15th

15th

3,000

Sales and Marketing Department

Our brochures are delivered to the targeted customers

Advertising on travel magazines and newspapers

15th June – 15th December 2011

700

Sales and Marketing Department

Luxury Tour information is advertised for 7 months ( June – December 2011)

Organize tours for 10 major Spanish travel representative and 10 Spanish travel journalists to Vietnam

15th

5th

20,000

Operation Department

All guests are pleased with our service and after this tour, ten articles will be written and published over the next month in major travel magazines and website in Spain

Opening ceremony

8th

2,000

100 invited guests, including suppliers, Spanish travel companies, press, Spanish businessmen in HCMC and others

TOTAL

37,200

This report will be divided into 5 sections. In the first section I will be describing the function of the company and the product it provides for its customers. The second section will provide an overview of the economics of the business and competition. The third section will describe the management structure at the company. The fourth section will provide both the PEST and SWOT analysis. Finally I will reflect on my time as a tourist guide, describe the job role and give my impressions of the company. Describing the company and what it offers Tower Bridge is a municipal enterprise owned, funded and managed by the City of London Corporation who are the local Government body responsible for the “financial square mile”. The City of London is therefore responsible for all commercial and operational matters relating to Tower Bridge. Funding of the enterprise comes from a long standing trust.

Description of the company

London Tower Bridge is located in the heart of London and is very close to London’s transport infrastructure and world famous historical sites such as; the Tower of London and HMS Belfast. It is a well known bridge that has become an iconic figure of London, spanning the River Thames, and is within walking distance of London’s other famous attractions such as the Globe Theatre and Tate Modern. Originally built in 1894 to ease traffic congestion on London Bridge and designed to allow access to large ships to the pool of London, it was subjected to a major conversion to become a tourist centre in the 1980s. Tower Bride is therefore both a monument to London’s past and a successful tourist attraction. The main offering is the Tower Bridge Exhibition which allows visitors to enter inside the Bridge allowing access to the High Level walkways with uninterrupted views across the city. This provides a unique selling point with which to market itself and provides a memorable and emotional experience for visitors. The tour also allows visitors to see the Victorian engine rooms from which the bridge used to be powered by. The company also offers corporate entertainment packages and a popular gift shop for visitors. Entry prices are at an affordable rate and for viewing pleasure, the Exhibition comes equipped with interactive screens, sliding window panels for better picture quality and excellent graphics on their giant screens. One of the most important features of Tower Bridge is its “bascule” mechanism system, which rises around 1000 times a year and is still in function to this present day. Bridge openings are very popular with the public and are part of its attraction and allure to tourists. This particular bridge is the only bridge in the world of its type that opens and closes.

Market and competitors

Another historical attraction within the same vicinity as Tower Bridge is the ‘Tower of London,’ which often competes with Tower Bridge as people tend to mix up the two because the structures are quite similar and this may sometimes lead to confusion. Moreover, the Tower of London was famous in Britain and around the world during World War 2 as an iconic landmark. Inevitably overshadowing Tower Bridge. Nonetheless the Tower Bridge is central to London’s historical heritage as a major commercial port. London has many other attractions including: the London eye, which can have up to 10,000 visitors every day and even the London Bridge Experience which opened in 2008. The Tower Bridge Exhibition has grown steadily since opening in 1984, with last year being its most successful in terms of financial surplus and numbers of visitors. With a small marketing team and budgets, Tower Bridge Exhibition relies heavily on organisations such as Visit Britain/London to document trends in visitors. Tower Bridge Exhibition targets throughout the year a very broad area including both the European and domestic markets. Within the domestic markets educational groups are also targeted but equal importance is placed on family groups. Advertising normally occurs through specialised magazines, in particular publications like the Times Educational Supplement or via websites such as www.vistislondon.co.uk where costs are generally lower then other mass media options. Trade shows are attended such as “World Travel Market” where the exhibition is promoted to a range of tour and group organisers and databases are created for direct mail campaigns. Tower Bridge Exhibition has a unique relationship with its competitors, although in direct competition with one another, attractions within London work together along with Visit London to bring people to the area. Tower Bridge Exhibition has a list of distributors which in return for a discounted ticket rate sell tickets globally, however they also promote competitors. Other key stakeholders of Tower Bridge Exhibition are Local and National Government and the EU who and impose rules and regulations. The local community and response services, the Tower Bridge charitable trust, all visitors, the media, internal trade unions and employees are also key stakeholders.

The cost of visiting the exhibition is ?7.00 per adult and ?3.00 per child (5-15) under fives go free, with a concession ticket costing ?5.00 and disabled guests getting in for free. Group discounts are available for 10 people or more and a promotion with Network rail allows 2 for 1 entry. Ad hoc promotions are run throughout the year targeting specific groups, for example the exhibition’s 25th anniversary was celebrated by letting local residents in for 25p.

Job role

As a Customer Care Guide at the Tower Bridge Exhibition I had a fair amount of duties, roles and responsibilities which was based on the nucleus of customers and their safety along with their well being which meant constantly putting there needs and requirements first at all times. Furthermore, that meant me providing exceptional customer service and care at all times and making sure that the customers visit was as enjoyable and pleasant as humanly possible. With that in mind I would have to posses a certain degree of knowledge regarding the bridge and the local vicinity. I would also be required to have a competent level of expertise relating to the bridges history, construction and design most notably for when I am positioned inside the bridge and doing a position that entails doing speeches regularly. For positions like these I must convey clear and precise information to the customers so that they are made aware of the process inside the bridge. In addition, I would also need to be fully aware of all the processes of the bridge if say there was a fire or an evacuation I would have to be mindful of the correct drills and steps that needed to be taken in order for a safe and secure evacuation to be achieved for all customers especially the disabled, elderly and those in a wheelchair. My duties included maintaining a high level of security for both the visitors and the exhibition items as well as always being on hand and available to interact and engage with visitors should they need or require any assistance or help from me at any stage during there visit. Moreover, if they had a query or wanted further information about the or the area.

Management Structure

A business structure is very important and every organization has its own structure. A company such Tower Bridge organizational structure is a hierarchical with a concept of subordination of entities that collaborate and contribute to serve one common aim. Most of the staff in Tower Bridge are all in the front office dealing the member of public and tourist, some have more interaction such as the Ticket Office and Customer Care Guides.

The mangers

Tower Bridge uses a functional structure which has the advantage of being easy to understand. The chain of command requires that an employee can report to one or more managers, but one manger such as Andy Nicholson, typically has more authority over the employee than their other manager(s). In Tower Bridge there are three mangers: one exhibition manager and two assistant managers. Having this structure means having layers of management that control the company by maintaining a high level of authority, with the power to make decisions concerning business activities. Employees such as customer care guide have limited authority to carry something out without prior approval. This organizational structure tends to focus on top-down management, whereby executives at the top communicate by telling middle managers, who then tell first level mangers, who then tell the staff what to do and how to do it. A limited number of employees report to a manager, who then reports to the next management level, and so on up to the Bridge Master or Tower Bridge Director.

The managers needs to be responsible for motivating the staffs and ensuring that any formal systems and practices that are in place are not undermined in anyway. In theory the managers at Tower Bridge are responsible for the business performance, as well as maintaining high standards of service and health and safety.

A functional structure of Tower Bridge can be illustrated by the following diagram:

The Managers are responsible for arranging shifts for their staff, creating promotional events and discount offers, deal with customer complaints, motivating staff, ensuring that staffs have the right uniforms, greeting customers and organising table reservations.

PEST Analysis

Political

Political factors that may affect the ability of Tower Bridge to operate include government and City of London polices. In fact it seems unlikely that these will impact adversely on the attraction in the immediate future given its high profile and historic status. Cuts in public expenditure may lead to higher admission prices and less staff running the exhibition. As the government recent decision to cut funding to Visit Britain by 18% has big consequences for all London Attractions most specifically the smaller attractions such as Tower Bridge Exhibition who relay heavily on its services. Flight and bed taxes could deter visitors away from the city. Terrorism threats threaten the entire London tourism industry.

Technology

With more people using the internet, Tower Bridge Exhibitions will have to review its current website, as currently ticket purchases are too complicated. Advancements in ICT have meant that statistical data on tourist trends is now simpler to collect and more easily accessible through websites such as Visit Britain. Tower Bridge still has old and new technology some of the original hydraulic machinery is still remain as exhibition in the engine room nowadays they use electro-hydraulic drive that open the bridge up.

Economic

The main external forces (macro environment factors) that affect Tower Bridge Exhibition are economic and social factors. London is perceived to be an expensive place to visit, so the exhibition will need to provide better value for money. This is possible as at currently utilises only one third of available space. It will need to consider joint promotions with other attractions. Changes in interest rates at home cause fluctuations in disposable income meaning leisure activities are often put on hold, exchange rates and the strong pound against the dollar has seen a smaller spend per person from the important American market.

Social

Tower Bridge Exhibition relies heavily on family groups, so a decline in traditional family set ups will require Tower Bridge to re-think its family tickets prices. Over the recent years are has been a changes in holiday patterns with people now preferring city breaks and long weekends. Terrorist attacks also cause fluctuations in the market with people looking for safer destinations.

SWOT Analysis

Strength

The business philosophy is not just about making money but emphasizes on educating and informing the public (particularly young people). On the tower’s walkways, there is a great view of London similar to the Millennium Wheel but not as detailed or exciting. Furthermore, on a positive note, this particular zone is free of congestion charge, which allows people to freely enjoy their journey over the bridge. Although the bridge is funded by the City of London council, it also makes a reasonable income by hiring the venue in the evenings for special occasions.

Weakness

Although it is an indoor attraction with a large view of London, a visit to Tower Bridge depends on the weather because the best sights are not always available due to the fact of the unpredictable British climate, for instance, on a rainy or overcast day, the views from the bridge can be very poor and distorted which could result in unhappy customers. What is more, London is an all-year-round destination so major attractions are not seasonal. Due to the fact Britain has such unpredictable weather, people usually carry sunglasses and umbrella because they never know what the weather can be like. This could have a bad effect and lead to a bad experience when coming to visit Tower Bridge on an unpleasant day. Firstly, the entrance to Tower Bridge Walkways is confusing for tourists who are unfamiliar with the area as there are no clear signs pointing in the right direction. Also, the journey to Tower Bridge is quite complicated if you have no knowledge of its whereabouts and may get lost. In addition, it is not pedestrian friendly as there tends to be lots of traffic and congestion upon entering the bridge. Secondly, in my opinion their main website is unappealing which doesn’t help to attract or interest people into visiting Tower Bridge. This apparent weakness and flaw could have a bad impact on tourists who have never been to London, as the websites layout and structure does not represent or give Tower Bridge an acceptable status (more life and colour in the graphics required to attract online interest). On the other hand, their website has easy access to different links that also caters to children’s needs such as fun packs for children’s discovery which is fun as well as being educational at the same time. Furthermore, to add to criticism the historical building needs substantial refurbishment to help increase the volume of visitors. Although people are aware that it is a bridge, some people are afraid of heights and may feel unsafe or in danger. Moreover, although the lengths of the walkways are reasonably lengthy, it is quite narrow and may have an affect on those who are claustrophobic. Security measures are paramount for one of the worlds most famous tourist attraction. When entering the Tower there is a single stage of security that visitors must pass through. Once their body has been examined and their belongings are check they are allowed to enter the walkway but it doesn’t mean the security level is up to standards. Reportedly, there have been cases where people have entered the building then proceeding through the security check in order to commit suicide. Fortunately, this has not changed people’s views to visit the attraction because any potential suicide incidents have been prevented. In reality, when the bridge does have a scheduled lift this results in a hold up of traffic. It is found that “An estimated 38,000 vehicles use the bridge each day, pushing it to capacity during peak hours”. This results in many delays for many people, who may decide to take an alternative route to avoid the traffic queues. Likewise, “Extra traffic is expected to increase impact damage to the extremities which flex under traffic loads.” This could mean that traffic queues are causing damage to the structure of the bridge, which may have a long term affect on the bridge. What is more, it is said that “these measures are expected to increase congestion either side if the bridge, adding to delays caused when it opens for shipping. Last year Tower Bridge lifted 925 times”. In my opinion, was this necessary?

Opportunities

Global advertisement could possibly result in an increase in the volume of visitors as many foreigners are unaware of a bridge that opens and this may be an attractive feature to witness in person. Perhaps due to the recession peoples lifestyles are changing, rather than individuals coming to the Tower Bridge they could engage in some promotion and coupons like the “two for the price of one”, “children of the age of under 12 go in for free” etc. Other attractions could work together with Tower Bridge rather than competing with them. They could cater for more languages by enhanced displays for overseas visitors such as Europeans and Asians. Provision of tour guides could be encouraged. Even though it is a self-guided exhibition they could offer a guided tour within the ticket price would encourage more visitors and may enhance the quality of the experience. Additionally, they should provide reasonable adjustment to facilitate for people who have disabilities. Due to the fact of the economic crisis the value of the pound has decreased. This is good news for the overseas visitors because of the currency exchange rates. In years to come the growth of tourism will increase despite the recession; London will generate tourist revenue from the 2012 Olympic games to be held in this city. This will boost and soar the volume of visitors in the capital.

Threat

The biggest threat to Tower Bridge is any potential terrorist attack perhaps of more concern is that there is no security check when going through the bridge and anyone is allowed to walk along the bridge. On the other hand, Tower Bridge is surrounded by a high level of competition with other tourist attractions equally famous like the Tower of London. In spite of the fact that other attractions complement each other it is possible that Tower Bridge will lose out due to the fact that it is less appealing. The economic downturn could have an impact on people’s lifestyles and their finances. Another way of viewing this is that the recession has changed our way of life. Culturally and socially people may prefer doing simple things like taking a walk in the park, instead of expensive vacations. After all a large proportion of overseas visitors come to visit the Tower Bridge. As a result this recession could have an significant effect resulting in a decrease of the number of visitors. In conclusion, it could be said that the current service could continue unchanged. The inherent advantages of location, history and unique appearance will service the attraction well in the future. However, improvements could also be considered namely a more attractive website, cater for different languages, refurbishment of the walkways. The main threats for the future are: economic downturn and limited attractiveness to a young audience.

Reflection

Working in Tower Bridge has taught me a number of things about how tourist attractions operate in the market and what factors lead to an attractions success. Even though my time at the Tower Bridge consisted of 400 hours work experience I still had to go through the same procedures as I would if I were applying for a permanent job. I was interviewed by Andy Nicholson who gave me a fair amount of information regarding the history of bridge and what they offer to the public. Even through the interview lasted over 3 hours it was very insightful and useful to me. I gained a lot of knowledge about Tower Bridge and its surroundings. When I started work it was the beginning of the Easter holidays. I didn’t get any training at first except on how to use a radio. I was thrown in at the deep end for the first three days as I didn’t know much but I guess that is the best way to learn. After a few days I was formally introduced to other members of staff and my official training started. The assistant manager gave me the correct uniform as there are different ones to wear for different positions. I was given a full guided tour and met all the security staff, the maintenance department and human resources. I was shown all the emergency exits as well as all the other exits and where to meet if we had to be evacuated.

I was given a radio with my own personal identification which was “uniform 13” which enabled me to communicate with other members of staff via the radio. After that I undertook three days of shadowing a full time tour guide and I was also given a big pack of information about Tower Bridge. I learnt 4 different speeches plus aborts and general information of the history of London. A big plus point for me was that I was given the chance to get to know the surroundings and I spent a couple of days visiting other tourist attractions such as the Tower of London, St Paul’s Cathedral and the Tate Modern gallery. I thought this was very helpful to me. After 1 week of shadowing and intensive reading I was finally ready to work on my own. My first position was to operate the north lift which takes the customers to the high level walkways and to give them instructions on what to do when they got up there. I did this a few times before trying out the other roles and positions. In total there are 8 positions, 1-3 are working in the lifts and the towers and the customer service areas. The only negative point about this aspect of the job is that it can become very repetitious.

Position 4 and 5 involve working in the gift shop next to the Victorian Engine Room. I was lucky to have this experience and to be till trained. Working in the shop has a lot of responsibilities, not only dealing with money and providing customer service, throughout the day you’re on your own and this can be quite stressful. There are many duties working at the shop in the morning before opening up, you are required to do a number of duties: making sure that there are enough products on the shelf and that these are neatly presented, knowing what’s not available and what’s low on stock so it can be ordered in, cash up the money for the till etc. Working in the gift shop can be pleasant but the only difficult issue that I faced was dealing with several customers at the same time. The gift shop is quite a small and confined area and it is where customers exit from the Exhibition. In some cases an unsatisfied customer will use his time in the gift shop to vent his frustrations and whoever is currently occupying the shop position is usually the one that is on the other end of the brunt of the customer’s fury. In addition to this, in most if not all the cases of a customer who was not completely happy with there visit and experience and demand a refund or if a technical malfunction occurs to any of the penny press machines then it is at the gift shop where all of the would be resolved.

Positions 6, 7 and 8 are what the company refers to as “footfall enticement”. These duties are intensive and consist of you dealing with customers at the front of the ticket office who are visiting the Tower Bridge Exhibition or are just walking pass as well as giving out general information about the bridge. I think the footfall position is a crucial role as it represents the Tower Bridge image and they are the first staff and port of contact to interact with the customers before they enter the exhibition. Throughout my work placement I have undertaken a fair amount of footfall and my view upon it is that it can be quite enjoyable. The only downside is that the footfall is an all year position which I think is unfortunate because Tower Bridge is on the river it can very windy and during autumn and winter it can be very cold. I did a few footfalls in April and even so it was extremely cold for me to endure and for someone to do this position you have to be mentally and physically strong. I don’t think people should have to work 8 hours outside in such cold conditions most notably during winter times and I think they should use the footfall personnel to go onto the walkways to give talks about the bridge and have one at the gift shop for assistance as the shop can get very busy and hectic at times.

After 200 hours I was given the opportunity to work at the Monument. My job role was to give out leaflets to those who completed the 311 steps and give brief talks about this famous landmark. I had a lot fun working there because it was a more intimate setting than the bridge so you got to talk and engage more with your work colleagues. It also meant that you could immerse yourself more in depth with the visitors and ask them more about their visit to the capital and how long they were intending on staying and where they were originally from. There is so much history written into the Monument which is intertwined with the Great Fire of London so for me to work there and to be a part of it was a good experience which contributed to my enjoyment there.

In terms of organization and structure there is much to change and develop. What surprised me is that staffs do not really work together and in some ways work in isolation from each other which seems inefficient and ineffective. There tends to be a gap and divide between the permanent staff who have been employed there for many years and the temporary staff such as myself.

Conclusion

Overall working at Tower Bridge has been a good learning experience for me. Like any other job there will always be positives and negatives but in some ways the work has provided some unique insights. I think Tower Bridge and the Monument are very successful tourist attractions for the reasons stated previously and there is no reason why it should not continue to prosper in the future with the right investment and a culture of continuous improvement. Many people who work at Tower Bridge have provided years of dedicated service for a prolonged period of time. Tour guides, ticket office, managers, security and maintenance people have worked their for a long time. A large proportion of them are 40 plus in age which is a change for me because it is the first time I have come across a situation like that. I think I have picked up some of their characteristics and learnt a lot from their experiences of being at Tower Bridge. On the whole I had a great experience and I would highly recommend it to other students who are interested in the tourist industry or those people who like history. Out of all the places I have worked in previously I can honestly say that this was the most interesting job and role that I have ever experienced. The majority of the staff I built and formed a relationship with not only as work colleagues but as friends outside working hours.

Introduction:

Pakistan is a multilingual country with more than sixty languages being spoken. English is the official language of Pakistan and used in official business, government, and legal contracts, ] while Urdu is the national language.

Pakistan is a good place for tourism as it has the most appealing and breathtaking views of mountains, plateaus and deserts. It has the high potential to attract a large number of foreign tourists, along with that, Pakistan Tourism Development Corporation (PTDC) had set up 27 motels and 3 restaurants for the convienience of these foreign tourists, PTDC need to intensify their marketing ability in order to attract tourists from countries like, China, Middle East Korea, Japan, and many other countries. Moreover Pakistan government need to take certain actions, in order to promote and acknowledge Tourism in Pakistan, as doing so will not only benefit us financially but will also bring unity, compatibility and harmony among nations. Moreover government also need to encourage private sector to develop tourism-friendly environment which will result in financial stability.

Source: PTDC page on mountaineering, http://www.tourism.gov.pk/mountain.html

Research methodology:

Most of the data obtained for this research will come secondary sources including book, internet, magazine etc but to increase the accuracy of information I will conduct primary research to validate my results from secondary data .

Primary research for this assignment was conducted through a telephonic interview with people who are influence by the tourists. I have taken a sample size of 30 people who belong to different places but have one thing in common and that is they have interest in tourism in Pakistan.

The sample selected [people who are either potential customer for tourism in Pakistan ir those who belong to promote tourism in Pakistan together with those who earn their living by providing service to foreign tourist.

Following are the few questions which I have ask to these people in order to gather the data for my research.

How are conditions in Pakistan for foreign tourists

Do Pakistan has got enough place for foreign tourist to visit.

How is security situation across the country

What place would you suggest to foreign tourist to visit

Do government of Pakistan taking enough steps to promote tourism

Do people of Pakistan welcome tourist in their country

In response to first question 70% of people interviewed responded that conditions in Pakistan are good enough to tourist. The condition include security situation but also include infrastructure road network and other conditions while the raining 30% were quall divide for example 15% said conational Pakistan are not favourable for foreign tourist while remaining 15% said they were not really sure.

Out of the total sample I have selected 90% people do believe that Pakistan has enough place for many tourist to see and therefore had the other issue such security etc resolve Pakistan has much to offer foreign tourist while 10% people were not sure if Pakistan had enough place to offer to foreign tourist.

In response to question of security conditions most people who were outside the Pakistan believe that Pakistan is not very secure country for foreign tourist and that accounted for the 80% of them while remaining 20% whom majority were Pakistanis in United Kingdom believe that Pakistan is though affected by terrorism and other issue but still security conditions in the country are satisfactory enough for the foreign tourist. While remaining people who were inside the country and when whether foreign tourist should Pakistan without risking their security have replied positively.

When I ask on few places that people know should be interesting for tourist many people replied by pointing out historical place such Taxila, Mohn Jo daro to sea beeches of Karachi and beautiful natural place in Gilgit-Bilistan. But sadly people who were outside the Pakistan were not really sure the famous places to visit in Pakistan.

In response to the question of whether government of Pakistan is promoting tourism in Pakistan whether it’s domestic tourism or foreign. Almost 70% of people said that government of Pakistan should do more and is not doing enough to promote positive image of the country. While remaining 30% were not sure about the government action to promote tourism.

When I ask the question whether Pakistani people welcome tourist almost 90% agree that Pakistani people do welcome tourist either they are coming from other part of the country or from the other of the world.

Tourism in Pakistan

Due to its diverse culture, people and landscape, Tourism is growing industry in Pakistan, even after considered as one of the most dangerous country in the world, According to British Magazine “The Economist”. In Pakistan there are number of varieties of attraction that ranges from the ruins of ancient civilization such as Mohenjo-Daro, Harappa and Taxila, to the Himalayan hill-stations that attract those interested in field and winter sports. Moreover, Pakistan has several mountain peaks of height over 8,000 metres (26,250 ft), that attract adventurers and mountaineers from around the world, especially to K2. Many domestic and International tourists visit these areas most often in the month starting from April to September. Tourism has become the source of income for local people.

In 2009, Pakistan was ranked 113 out of 130 countries to visit, According to the World Economic Forum’s Travel and Tourism Competitiveness Report (TTCR). Although due to Political instability, suicide attacks, religious conflict, kidnapping of foreigner and uncertainty in the country had badly affected the Tourism throughout the country, especially NWFP, which is currently renamed as Pakhtoonkhwa.

Source:

Eco tourism:

For decades, Ecotourism has become the significant part of the tourism business in Pakistan, as it has offered much tremendous experience along with the stunning mountains of NWFP, attracting number of tourists all over the world for hiking, skating, forest camping, climbing, and exploring the region’s natural parks and forests. Pakistan ecotourism destination is unforgettable for those who have ever visited it.

http://whc.unesco.org/en/statesparties/pk

Especially, Swat, Huns, Aruba, Abbott bad, Murfree, Narran and Kahn have yet been known as the ideal tourists spot for both summer and winter season. The snow-peaked mountains, the natural parks and the wildlife in the forests offered a thrilling experience especially for the one who is in search of adventure.

The natural beauty of this mountainous scenery has attracted number of tourists generating vital jobs for local people in the hospitality-related businesses. Moreover the Swat valley alone – known as the “Switzerland of the East” – has become the centre for 800 hotels. Over 40,000 local people Pakistan employed directly in hospitality.

http://whc.unesco.org/en/statesparties/pk

Impact of war on tourism in Pakistan:

Over the past decade, and especially since 2007, the rapid spread of terrorism have not only created uncertainty in the country but also crushed the major sector of economy that causes unemployment, Suicide bombing has become common in everywhere likewise, in shops, markets, public places, business centres and institutes. War and conflict is not limited to a particular city. Its effect is everywhere, anybody can be victim of it.

Due to fight between military and religious forces, the NWFP- which is considered 70% of the country’s tourists site, and where millions of people involved in the tourism industry are badly beaten. Continuous war and terror has weaken both the economy and defence of the area.

http://www.carnegieendowment.org/files/tellis_pakistan_final.pdf

Due to worst security situation and many of the popular location are converted into war zones, hardly few travellers now visit Pakistan. Although after 9/11 attack in USA, there was a slow decline of tourists in Pakistan but the recent military operations and suicide attacks have been the last nail in the smashing of tourism industry.

Since the initiation of the major religious and military offensive, the earning that comes from tourism has been declining dramatically. From Rs 16 billion in 2007, revenues halved in 2008, with a further major fall in 2009. The industry is now facing a $50 million annual loss as a result of the military operations.

The hospitality business had experienced a major fall of 40% in room occupancy countrywide. Moreover in NWFP, the insurgency has caused the shutdown of tourist industry. From the last three years the hotels have been closed while the industry has lost of Rs 600 billion. Moreover the transport industry is also going through tough times. Due to huge job losses in tourism and other related industry, majority of the people have migrated to other cities in the search of employment.

Moreover the revenue that was generated from tourism has been declined by 11.8% in 2008, while 12% in 2009. The average family involved in tourism business used to earn around 40,000 per mouth and soon after war their earning has dropped to 5000/ month.

With more than 25,000 people killed and more than a million displaced in the past year, planned hotel projects have been put on hold. The number of mountain climbers and foreign trekkers has reached zero. Barbarism and bloodshed now run rampant in places which once offered peace and tranquillity. No-one would dream of visiting these places for pleasure now.

http://www.carnegieendowment.org/files/tellis_pakistan_final.pdf

Moreover adding to the crises faced by these shattered tourism industry, the federal budget has also been cut by 36 percent for 2010-2011 comparatively with the previous year. The only project this year will be to reconstruction and renovation of existing buildings. There isn’t any scheme introduced in order to help overcome terrorism.

With the Pakistani political leadership appears to unaware of the real potential of industry, that show little or no prospect in the coming years of tourism attaining momentum that it lost. With the whole industry standing on the boundary of collapse the future looks blank for Pakistan most spectacularly beautiful locations.

http://www.carnegieendowment.org/files/tellis_pakistan_final.pdf

Pakistan strategy to control extremism:

In the eighth year of the global war on terror, the international community has realized that it is a war of ideas that cannot be won through force. Eventually Pakistan sees that countries today have adopted unique approaches towards deradicalization according to the requirements of their cultural, political situation, and social specification. The aim of these practicing deradicalization programmes in Middle East and South East Asia, at a collective level, is to change the worldview of the affected persons. Private sectors or at some places government and private sectors together adopted the approach of ‘rehabilitation and re-education of the detainees’.

The reason behind the failing of war on terror on both sides of Pak-Afghan border has also some structural causes such as refusal of Taliban from Afghan government, public perception of Pakistan’s policies as a key US ally, use of force as a priority option, continued US drone attacks, denial of any relief and transitional justice to the victims of military operation, issue of Afghan refugees, and lack of trust between US, Pakistan and Afghanistan.

There is a strong tie between lack of human security and terrorism. Rise in extremism can lead to human insecurity and vice versa. Since independence, government of particular south Asian states have not been providing their people with minimum security. Governments and ruling classes, instead of focusing on dealing with the issues of human survival and development, embarked upon perpetuating their poPakistanr and influence. Subsequently, no South Asian country has been able to free itself from discriminatory and exploitative policies, which led to increased insecurity and to the rising number of communal and terrorist outfits. Even after the problem these outfits have made, no serious action has been taken by the government or civil society in order to diminish rise in extremist trend at the initial stage. All of the regional states are facing the menace of extremism and terrorism in one or other form.

http://www.rferl.org/content/Analyst_Defeating_Extremism_In_Pakistan_Requires_Regional_Strategy/1368724.html

Currently south Asian region are facing serious security threat which is due to increment of terrorism and extremism. There are various factors that have led towards this situation.

The politics of violence and extremism in South Asia is mainly the result of faulty national policies and interference of external powers. The region’s vast potential is hostage to unresolved inter-state and intra-state conflicts. In most of the states, the governments (either democratic or military) have failed in providing good governance and solving social problems such as unemployment, social injustice, and poverty. The political culture in these states was unable to meet the imperatives of globalization. In addition, instead of promoting unity and integration (both at national and regional levels) it led to ethnic solidarities and identification with religion and culture.

Source : http://www.cssforum.com.pk/general/news-articles/articles/26177-causes-extremism-south-asia-pakistan.html

How tourism situation could improve in Pakistan

The tourism sector is being overlooked by the successive governments and quite tiny amount is allocated in Public Sector Development Programme that hardly caters for it demands. At global level, Pakistan is wrongly projected in the media and tourists are advised not to visit this south Asian country, which offer four-season tourism opportunities.

Security is just not only the issue that has haunt the terrorism but there are also some other factors involved which add to woes of this multibillion dollar trade the world over. These factors involve like,

Moreover, Lack of infrastructure, facilities to the tourists, transport, discouraging response from officials circles etc are also some of the areas that are need to be improved.`

Until and unless take this (tourism) industry on priority basis, Pakistan are not going to see it flourishing. Pakistan also needs to put in maximum resource in our tourism sector.

Pakistan has very diverse and rich culture to offer tourist together with lots of opportunity for adventure tourism as the four provinces and three territories of Pakistan are very diverse and so different that it doesn’t look like to foreign tourist that they are in same country with different culture, attractions and different seasons.

Pakistan should improve the image of country by first of improving security situation in order to convince foreign tourist that they are safe in the country because in the past the incident like kidnapping of American journalist and attack on srilankan team together with bomb blast in big cities of the country lead to a feeling among the west that Pakistan is not a safe country which is main cause of declining tourism in the country especially tourist from western countries are reluctant to visit Pakistan because of the fear that country is not safe enough.

Together with these measure Pakistan need to improve its image by promoting itself on various platforms around the world and together promoting hospitality industry through giving them incentives, Pakistan can catch significant number of tourist looking for adventurism or natural beauty visit Pakistan and contribute significant revenue for the government of the country while providing employment to big number of its population.

Security situation for tourist in Pakistan:

Pakistan have got a number of places where tourist can visit and these places are safe and secure especially the southern part of Pakistan is very much safe together with northern areas like gilgit and biltistan which are very beautiful and well received by tourist that even though when war on terror going on bu the tourism in northern areas is increasing and every more and more foreign tourist are visiting these areas. The mountain there are very clean and beautiful which catch the attention tourist and that s the prime reason why many people who visited Pakistan will be able to tell you that how beautiful the place which is though not very promote but well received by people around the world.

Source: http://www.eturbonews.com/15162/diversity-adventure-story-and-false-media-news-pakistan

Every year thousands fo people from the countries such India and china are coming to see the Pakistan and they came here andseee the country hwile goi ng back they told their families and friends about the country which is not told on media.every Pakistan receive a grea t number of adventure tourist who came here because they believe that Pakistan is safe when they return with positive experience they act as advertisement for the country.

Source: http://www.eturbonews.com/15162/diversity-adventure-story-and-false-media-news-pakistan

The people of Pakistan are welcoming and they give respect to visitors and greet them, show them local custome anad tribal way of doing things which tourist find attractive and interesting.

For the adventure tourist especially Pakistan is very good place, as in Pakistan there are huge mountains like the eastern Himalaya and other, these mountain have a height of over 8000 metres and are longest chain of mountain where people can do tracking, exploration, or anything in this beautiful area.

Source: http://www.eturbonews.com/15162/diversity-adventure-story-and-false-media-news-pakistan

Pakistan is unique ! Situated in the heart of the South Asian sub-continent, it is a country with its own history and cultural heritage, fascinating in its own right. Pakistan was the site for one of the world’s earliest human settlements, the great prehistoric Indus Valley Civilization, the crucible of ancient empires, religions and cultures.

The land of Pakistan ranges from lofty mountains in the north, the Karakoram and the Himalayas, through dissected plateaus to the rich alluvial plains of the Punjab. Then follows desolate barrenness of Baluchistan and the hot, dry deserts of Sind blending into miles and miles of golden beaches of Makran coast. Come and Explore the Treasures of Pakistan with us. A visitor to Pakistan is more than a tourist – to us he is an honoured guest.

Competitive advantage of Pakistan over other countries:

In order to compete in this environment every country in the competition to catch tourist have to offer competitive advantage which is the things that country can do best. The possession of competitive advantage is in itself is not enough but countries like industries to communicate it to potential tourist in rest of the world. The basis of competitive is always lie in the resources of the country with prime important is the way that country use these resource in order to get competitive advantage and also with the fact that the resource which formed the basis of competitive advantage are of sufficient quantity and quality. The three major resources for country are financial resource, physical and human resource . While these resource of financial human and other physical are in economics refer as land, labour and capital with the basic skills entrepreneurship.

http://www.lonelyplanet.com/pakistan/images/badshahi-mosque-pakistan$24057-10

It’s a open secret that northern areas of the country are very rich for attracting the potential tourist where the natural beautify of landscape with their traditional cultural heritage have made a heaven for eco tourist especially. But sadly those northern areas of the country are not very well developed and considered by government and therefore are not very well protected and their natural beauty with their unique cultural heritage couldn’t effectively conserved by government of Pakistan till today.

Though when considering adventure tourism we think about Nepal and other countries located in the region but Pakistan has enough to offer in adventure tourism such as five out of fourteen mountain peaks of K2 are situated in the Pakistan where there height reach to as much high as 8000 meter and together with this some of the largest glaciers are situated within the territory of gilgit-bilistan as these are largest glaciers outside the polar region.

http://en.wikipedia.org/wiki/Gilgit-Baltistan

Mohenjo-Daro was a city located in the south of Modern Pakistan in the Sind Province, on the right bank of the Indus River. It was built between four and five thousand years ago, and lasted until 3,700 BP. It was part of the Harrapan Civilization, and the city had at least 35,000 residents. Mohenjo-Daro means “mound of the dead”. The city was approximately one square mile in size. In 1922-1927 large scale excavations at Mohenjo-daro Pakistanre carried out by R. D. Banarjee and continued by M. S. Vats and K. N. Dikshit under the direction of Sir John Marshall. E. J. H. MacKay carried out further excavations from 1927 to1931. Sir Mortimer Wheeler made small excavations in1950.

http://whc.unesco.org/en/statesparties/pk

In Balochistan there are many caves for cavers and tourists to visit especially the Juniper Shaft Cave, the Murghagull Gharra cave, Mughall saa cave, and Pakistan’s naturally decorated cave, the Mango her Cave. Pakistan is a member country of the Union International de Speleologie (UIS).

The northern parts of Pakistan are home to several historical fortresses, toPakistanrs and other architecture including the Huns and Chitral valleys, the latter being home to the Kalash, a small pre-Islamic Animist community.[Punjab is also the site of Alexander’s battle on the Jhelum River. The historic city of Lahore is considered Pakistan’s cultural centre and has many examples of Mughal architecture such as the Badshahi Masjid, Shalimar Gardens, Tomb of Jahangir and the Lahore Fort. The Pakistan Tourism Development Corporation (PTDC) also helps promote tourism in the country. HoPakistanver, tourism is still limited because of the lack of proper infrastructure and the worsening security situation in the country. The recent militancy in Pakistan’s scenic sites, including Swat in Khyber Parkton Kawa province, have dealt a massive blow to the tourism industry. Many of the troubles in these tourist destinations are also blamed on the frail travel network, tourism regulatory framework, and low prioritization of the tourism industry by the government, low effectiveness of marketing and a constricted tourism perception. After these areas Pakistanre being cleared off the militant groups in late 2009, the government, with financial support from the USAID, started a campaign to reintroduce tourism in Swat valley. Pakistan receives 500,000 tourists annually, with almost half of them heading to northern Pakistan

http://whc.unesco.org/en/statesparties/pk

Strategies to improve tourism in Pakistan:

1. Safety

2. Emergency evacuations

3. Easy bookings of hotels and resorts, train and air services, cabs etc.

Tourism is, in the current period, one of the areas that can provide regional and country, a profitable and economic development. Natural and anthropogenic potential which Romania has is necessary to be properly exploited, providing promotion and development of investment programs, able to attract a large number of tourists. The project is presenting a series of specific mountain tourism development through investment programs focused on strategic quality tourism services and protect the natural environment.

Airports are the gateway to the country. Facilities and handling provided at the

International airports from a lasting impression on the foreign tourist. Our airports suffer from a number of drawbacks despite the vast improvements undertaken in recent years.

Sufficient attention has not been paid to the periodic training and education of personnel involved in handling immigration, security and health checks. Personnel at the airports would be encouraged to learn at least one foreign language. Suitable financial incentive will be provided for this purpose. Facilitation counters located in the immigration area will be manned by the personal of PTDC. Accredited representatives of recognized travel agencies would be given identity cards valid up to airline and immigration counters.

Baggage handling and clearance system should be improved.

The tour operators will arrange insurance cover for the tourist groups handled by them. The existing requirement of police registration and restriction of movement of foreigners would be removed except where specifically required under security considerations. Most tourists visiting Pakistan require visas, which are issued by Pakistani Embassies or High Commissions in other countries. While implementation is satisfactory, visas are an irritant to tourism and add to the cost of a holiday. Visas for nationals from some neighbouring states include considerable restrictions, which puts significant limitations on the development of regional tourism.

However, as a part of its policy to facilitate tourism, the government has recently eased restrictions on visas.

Source : http://www.tourism.gov.pk/travel_guide.html

The Pakistan Tourism Development Corporation maintains 21 Tourist Information

Centres at various sites across the country; in addition, there are information offices

Operated by provincial tourism authorities. However, the standard of service offered invariable and a rationalization of all centres is required, with staff training in foreign languages and customer relations. High-tech Tourist Information Centres of the kind available at Karachi International Airport, with e-mail, fax, and website facilities need to be established at the other major airports and city centres.

A website of 1500 pages showing Pakistanis scenic tourist sites and cultural heritage has recently been launched which will greatly enhance awareness both nationally and internationally.

Source : http://www.tourism.gov.pk/travel_guide.html

There are approximately 41 tour operators in Pakistan that provide destination

Management services for domestic and foreign tourists. As their services are critical to the development of international tourism, they need to be treated as a primary sub-sector and supported accordingly.

Several areas of regulation impact negatively on tourism, such as the forbidden

Photography of bridges and airports, and restricted zones where trekkers require special permission to enter. These restricted areas could be limited and perhaps renamed permit zones. Tribal leaders may be involved in the development of tourism activities in their areas.

Although Pakistan possesses world-class tourist attractions, the international tourist

Potential of areas such as the Swat Valley has been considerably reduced because of the lack of planning regulations, over-development and environmental degradation. Due to lack of co-ordination between the tourism industry and authorities in charge of natural, historical or religious sites, the tourism potential of such sites is not fully realized.

Source : http://www.tourism.gov.pk/travel_guide.html

Conclusion:

It’s the only industry, which needed more and more exploration’ (Zamar Sheikh)

Pakistan is a major tourist attraction because it is blessed with natural beauty and

Historical places that can yield huge foreign exchange if properly and methodically

Exploited. Tourism could become foreign exchange earning industry for the country.

Though Pakistan, has lately taken initiative but still there is dire need of tireless efforts to exploit this sector and to add more dimensions to attract the tourists.

No proper attention was paid to harness the God gifted opportunity to earn more and

More foreign tourists and foreign exchange which would open up new vistas of

Employment in the tourism sector. Moreover the tourists may find and explore the market of their interest in Pakistan.

Involvement of private sector was important to give boost to tourism. Private sector

Should be given not only tax exemption but they also should be provided with vast

Opportunities to invest and they must be facilitated also in terms of money; a network of five stars hotels and motels should be constructed at all tourists’ spots and tourist

Operators may be provided necessary facilities, which on the one hand helped reduce unemployment while on the other harness foreign exchange.

Private sector should take initiative to develop and exploit all tourist attraction and

Historical location in the province, which unfortunately, has suffered due to negative

Concept about its law and order.

Good hotel industry acceptable to the international standards would give boost to the

Tourist industry, which has suffered because of a number of reasons and one of them, was lack of proper accommodation for local as well as foreign tourists. At present there are about 4000 to 4500 rooms available in five star hotels throughout Pakistan, which were insufficient to the demand.

There are problems n Pakistan which prevent this country from attracting its due share of international tourist and therefore to attract the tourist and to boost economy the government of Pakistan have to take serious measure to prevent threat of security to tourist together Pakistan need to promote itself as tourist destination at international forums but these both measure are equally important .

The most important aspect security concern of tourist and therefore without taking proper measures to avoid security threat of security. the government of Pakistan should be conscious and careful when people visit this country and must show them how humble and welcoming they are and how interested people in Pakistan are to greet the foreign tourist as well as local tourist alike. Pakistan has truly potential for being a hot tourist spot in region especially for adventure tourism and eco tourism its potential is not unseen but need of the hour is promote itself and to reduce the concerns tourists.

The South west airlines are part of the airline industry in U.S.A and are a low cost airline located in Dallas U.S.A.

An external analysis of the environment in the airline industry was carried out through a PEST analysis and the 5 forces of the Porter’s model and the below conclusions were reached.

Political environment-the policies that governments have come up with. For instance the UK government and environmental activists that aviation degrades the environment greatly and should therefore be controlled. A government is a very powerful entity and therefore it could pose a threat to airlines if it decided to impose regulatory practices on airlines.Limitations regarding the terms and legal obligations of the airline may make it hard for the airline.

Scanning the political environment in this case, we find that south west airlines sought to make use of the opportunity created by the airline Deregulation Act passed by the U.S congress in 1978.this law permitted interstate flights. But Southwest’s attempt to becoming an inter-state airline soon faced political obstacles. Southwest wanted to operate all its interstate flights from Love Field Airport which was very close to downtown Dallas. On the other hand, all the other airlines operated from Dallas Fort Worth Airport, which was far away from the main city. Rival airlines fearing that South west would get a larger share of passengers, tried to use their political influence to ban operation of flights from Love Field, Congressman Jim wright tried to pass this law.

Social environment. These have positively affected the industry in that with the introduction of more and more airlines, even people from the middle-class can now travel by air. Beyond that, there has also been more job creation through the establishment of these airlines. An important aspect of the social environment concerns the values consumers hold. Values mainly revolve around a number of fundamental concerns regarding time, quality, total environment, financial conditions and diversity. The ultimate taste of a business is its social relevance. When it entered the airline industry, the social environment for air passengers was discouraging, the fares were too high, flight schedules were not convenient for passengers and the time required for travelling from the city , to park and take off from the airport was lengthy and tiring. The aptitude of managers of southwest airlines is seen whereby they refuse to move their flight operations from Love Field. This was a clear indication that they were observing the social environment and building their organization against this. With this recognition of the social environment, the southwest Airlines gained popularity among the citizens and thus attracted more customers.

Economic environment. These can take several dimensions, first how the industries that airlines depend on affect airlines and how the airlines are directly affected by a country’s economy. The changes in the economy have had a tremendous effect on the airline industry. Another thing that the economy is affecting the airline industry is the competing airlines. The bigger airlines can afford lower fares which make it hard for the smaller airlines to compete. Different airlines have plans to expand but will not be able to until the cost of fuel is under control.Fuel price hauls and fluctuations are a major reason for the Southwest for not incurring more profitable operations. (Southwest counters this by strict financial spending on fuel i-e fuel-hedging) For the low carriers who allow advanced booking, they will need to work on a plan to avoid bankruptcy. This will make the airline industry continue to boost prices due to the fact that oil prices are expected to continue rising due to the supply.

Traveling by air is both elastic and inelastic depending on whom it is that is traveling. If a family is planning a trip just to take a vacation and the price of an airline ticket is extremely high, more than likely they will decide to wait on the trip until the prices are lower. This shows that the airline industry in considered elastic. However, if a businessman needs to be at a seminar across the country by the next day, he will need an airline ticket regardless of the cost. In this example, the airline industry would be considered inelastic because it is a necessity.

The current market has a big part in the supply and demand in the airline industry. For instance, with the price of oil rapidly increasing, the cost of an airline ticket is also increasing and the demand for leisure travel is decreasing.

After the bombing of the World Trade Centre on September 9th 2001, people were afraid there would be another terrorist attack involving a plane and the demand decreased. Another factor in the cost of an airline ticket is the date it is purchased. If there is an emergency and someone purchases a ticket close to the departure date, even though there are unsold seats available the cost will increase.

Technological environment. This basically means that some technological advancement has proven, and may in future prove to affect the airline industry negatively thus a decrease in the air travel demand. A good instance would be video conferencing which reduces the need for people to constantly travel. If not planned for properly, an airline could suffer greatly from ignorance to technology. Social networking sites like Facebook and Skype allow for people around the world to share information they may not have been able to before. One can chat with a relative and avoiding travelling by air throughout the world.

The 5 forces of Porter’s model

Threats of new entrants. There has been a never ending expansion of the aviation industry with new airlines coming up every day. Airline managers should therefore ensure that they are prepared and have a strategy on how to deal with new entrants into the industry. This can be clearly portrayed by the way Braniff and Texas international Airlines reacted to the entry of a new airline, Southwest Airlines, they even decided to work together in a bid to destroy the airline even before it started their operations. This would go to show that the treat of new entrants in the airline industry is very high.

Availability of substitutes. They exist because there is more than one way of doing anything. For instance when travelling, one can use vehicles, trains bicycles, airplanes, ship and so forth. Apart from alternative methods of transport, technology has gifted us with the gift to do a lot of things without moving. The ease of substitution in the airline industry is surprisingly very high the greatest contribution being from technological advancement. This has led to a drop in the demand for air travel causing airlines to constantly register losses. The ease of substitution in the Airline industry is very high since other alternatives have come up mostly due to technological developments.

Degree of rivalry among competitors. How competitive is the industry? Is there a dominant airline and many other small airlines or are there many powerful airlines how many other airlines are there in the industry. These are some of the questions that are raised under competition. If there’s one dominant airline then the degree of competition is quite low in the industry. The airline industry in the USA is very competitive and has a lot of rivalry going on. In the case of southwest airlines, its major competitors, Texas International and Braniff Airlines even joined hands in a bid to destroy the southwest airlines even before they started operations. This goes to illustrate how competitive the airline industry in USA can get, the competitors were threatened by an airline that hadn’t even started operations.

Bargaining power of suppliers. The bargaining power of suppliers is basically quite low in the industry in that, much bargaining doesn’t take place. Suppliers are mostly big shot aviation companies and can only compromise prices with airlines so that during their low period, they are able to negotiate prices with their buyers. It may not be exactly bargaining but it counts for something. And therefore the bargaining power of suppliers will be considered to be low.

Bargaining power of customers. The airline industry rarely allows room for customer bargaining, you can either afford to travel by air or not and with more and more new airlines coming up, almost all social classes are catered for. South airlines however haven’t classified their passengers which reduces discrimination. Through observing the social environment, the Airline has been able to cater for the diverse needs of the customers, this though does not count as bargaining power of the customers towards the airline. The bargaining power of customers in the airline industry is quite low compared to other industries.

Conclusion

After carrying out the PEST analysis and analysing the environment using the Porter’s Model the following conclusions were reached. There are threats and opportunities that affect the Southwest airlines

Threats

The decreasing demand for air travel

Fuel price hauls and fluctuations.

Terrorist activities make it more of a threat to travel.

Opportunities

There are still many national and international markets that are still untapped.

There are many industrial opportunities for development in the airline industry.

It can haul longer flights to cover more expansion.

It can also tap the travel business option for the business class passengers, and offer private flights.

It can get the latest technology, which would give it a further cost effective lead, as well as providing new services and products.

Internal Organizational Analysis and the competitive advantage the group may or may not have in establishing a presence in London

A schematic representation of the SWOT (Strengths, weaknesses, opportunities & threats) will be used to match the key external and internal factors. The following SWOT would provide us with a comprehensive organizational resource analysis of the Shangri La group alongside providing us with the competitive advantage the group would enjoy.

Strengths

Weaknesses

Situated at a premier location in London as has been evident in their properties throughout the world (Grayson & Hodges, 2004).

Legendary Asian Hospitality – the classic Asian Flavor – having a Chinese parent company gives them an edge over all the others in terms of having the Asian culture part of their corporate culture and thus a unique position (Hitt, Ireland & Hoskisson, 2009).

40 hotels worldwide – thus a broad base to share experiences and put learned lessons from around the world to good use (Robbins & DeCenzo, 2007).

Pre identified target segment of business and leisure travelers with an eye for class and culture (Robbins & DeCenzo, 2007).

Service approach of hospitality and flexibility embedded in corporate culture and marketing activities (Walker, Walker, Mullins & Boyd, 2010).

Sound financial backing.

First interaction with Western culture was Sydney – no other experiences as yet in the West

Marked difference in Sydney and London’s Culture

An effective and efficient management style played a major role in Shangri La Sydney’s success.

The brand is not that well recognized outside the Asian and now also Sydney’s market.

Opportunities

S-O strategies

W-O strategies

London 2012 Olympic and Paralympics Games.

New planned tourist attractions like International Dome in London.

Trend of using price promotions.

Comparatively lower value of Pound sterling

Growing emphasis of the local government on promoting tourism.

Growth of London as a financial sector – a conference and business destination.

Establish in London (S1,S2, O1,O2,O4,O5,O6,)

Extensive integrated marketing communication efforts. (W1,W4,O1,O5,O6)

Make use of opportunities in the West (W1, W5).

Threats

S-T strategies

W-T strategies

Recent trends show that luxury hotels have grown at a rapid pace in London. The competition in the near future will be cut-throat and intensive as more and more rooms will be added to the industry.

The presence of much more powerful brands in the luxury sector of the London hospitality industry

Substantial increase in branded budget hotels – around 13% last year

Uncertainty created by terrorist activities.

Aggressive investments in the sector by other Asian & Middle Eastern investors.

High barriers of entry

Niche Marketing and maintain that niche (S2,T1,T2)

Premium, Image Based pricing (S2,S5,T3,T5)

Based on the above analysis and the secondary research, Shangri La’s competitive advantage lies in its classic Asian Flavor and the ability to maintain a customer-centric approach which forms the basis of their corporate culture, thus also reducing the need for standardization of processes. The core values of the training are: respect, courtesy, sincerity, helpfulness and humility and the training modules focus on the group’s mission of “delighting customers each and every time (Honeycutt, Ford & Simintiras, 2003)”. Not confined to training programs, Shangri-La Care is a living culture within the group, strongly supported by top management and continuously cascaded through the organization.

Both these are bound to help Shangri La carve out a unique niche for itself in the London market. The only threat being the fact that other Asian and Middle Eastern players are also venturing into the hospitality industry. Whether those who are positioned based on their Asian ethnicity are able to bring out the same flavor in their culture remains to be seen!

2. An external analysis of the potential competitors and customers in London

London, that great cesspool into which all the loungers and idlers of the Empire are irresistibly drained.

-Doyle, Sir Arthur Conan

The past 20 years has seen an overall increase in the total number of visitors to London, despite any temporary downfalls seen intermittently in the short-term. Overseas visitor numbers have increased from 9.6m in 1990 to around 14.9m (estimated) in 2006 (Hooley, Saunders, Piercy & Nicolaud, 2008). Domestic visitor numbers to London have also grown over the long-term from 6.9m in 1990 to an estimated 11.8m in 2006. Domestic numbers however have seen the largest fluctuations (compared to overseas visitors) in the short-term, resulting in a slight downward trend in total visitors to London since 2002. This has been influenced by the increasing popularity and accessibility of many countries and growing competition from other major European cities (due in part to the ascension of no-frills airlines) (Flourish & Oswald, 2006).

The overall London market has been buffeted by a number of issues since 2001, including terror events, SARS and the outbreak of Foot and Mouth. However, a recovery in demand (particularly for international visitors) is evident and the London bombings in July have proved only a temporary setback. Improved room yields have supported investment in new hotel rooms in London, increasingly away from central London to the western and eastern parts of the city. The dispersal of accommodation represents opportunities for businesses outside of Central London, but also provides challenges for coordinating visitor infrastructure including transport and information services (Easterby-Smith, Thorpe & Lowe, 2002).

There has been strong growth in the budget sector of the market and this has provided visitors to London with a greater choice of accommodation. Moves to standardize the quality ratings for hotels will hopefully also provide visitors with greater information and certainty regarding their accommodation experience. Looking forward, tourism is expected to continue to grow (as forecast to 2016 in the 2002 PwC report and extended in this report to 2026) and when considered in combination with the additional impact of the 2012 Olympic and Paralympics Games (whose influence was not included in the PwC report), and the planned development of major tourism facilities, such as the International Convention Centre, it can be seen that substantial additional demand for accommodation on an on-going basis could be generated (Young, Weiss & Stewart, 2006). New accommodation is planned to meet future demand, closing the gap between the current room stock and the demand forecast in 2016 as reported by PwC, and the hotel market is upbeat about London’s prospects.

Demographic change looking forward, tourism is expected to continue to grow (as forecast to 2016 in the 2002 PwC report and extended in this report to 2026) and when considered in combination with the additional impact of the 2012 Olympic and Paralympics Games (whose influence was not included in the PwC report), and the planned development of major tourism facilities, such as the International Convention Centre, it can be seen that substantial additional demand for accommodation on an on-going basis could be generated. is expected to provide a market opportunity for the provision of accommodation to the accessible accommodation market, although evidence suggests that London is not servicing this market as well as other destinations, which provides challenges for the future (Greater London Authority, 2006).

As one of the main tourist destinations in the world and with the 2012 Olympic Games on the horizon, London is set to be at the forefront of a recovery in the UK, and indeed European, hotel markets. Price promotions and the low value of sterling during the year allowed London to remain a popular tourist destination, with leisure tourism particular from Europe, offsetting the fall in corporate bookings, which had continued from 2008 (Smith, Berry & Pulford, 1999).

These would-be buyers have been attracted by the depreciation of the British Pound against the US Dollar and the Euro. Initial signs of a slowdown in the reduction of values, indicating that the bottom of the market has been reached also makes purchasing attractive to high net worth individuals and sovereign wealth funds. The lure of the Olympics is continuing to draw operators and developers into the capital, which is predicted to experience a 12% increase in new rooms (13,300) by 2012. With its high barriers of entry London continues to be an extremely competitive market place but one, as the recovery gathers momentum, that will remain a target for the majority of hotel investors, developers and operators with their eye on long-term gains (Murphy, Maguiness, Pescott, Wislang, Ma & Wang, 2005).

Worldwide, the majority of international tourist trips in 2004 were for the purpose of leisure and holidays (52%) with only16% being for business travel. The rise in the number of people (both international and domestic visitors) to London has been relatively modest since 2000, with the number of visits only now returning to the high point reached at the Millennium. However, over the long term there has been a steady increase in visitors to London. Nights stayed in London by international visitors have risen on average by 3.1% each year since 1993 (compared to 1.6% each year for the UK as a whole (Greater London Authority, 2006). In 2004, 33% of overseas tourist trips to London were for holiday, 27% were for business and 28% were for the purpose of visiting family and friends (IPS 2004, 2005 Growth has been particularly strong in 2004 and 2005, with growth of over 14% in 2004 and estimated growth of 6% in 2005.

However, growth was relatively modest in the early part of the 2000s with a number of circumstances (such as low cost airlines, exchange rates, terror events) reducing overall tourist arrivals, impacting on both overseas and domestic tourists. The events of September 11th had a similar effect on tourism, with the number of visits only returning to their 2000 high point in 2004 (Robbins & DeCenzo, 2007). The London bombings in July 2005 had only a short term impact on overseas visitor numbers with visitor numbers rebounding in the latter part of 2005.7 It should be noted that the PwC report produced in 2002 did not include the short-term downward trends noted above since these trends were only just in the cycle at this point (Greater London Authority, 2006).

Domestic visitors to London have also increased dramatically, given the ‘one of a kind’ millennium celebrations; the opening of several new and attractive tourist attractions. Until recently there has not been a proper understanding within central or local government of the importance of business tourism or its contribution to the local and national economies. One business tourist is worth at least three times the amount of one leisure tourist in employment and economic terms and business tourism is worth ?3.2bn to London, making the business tourism sector an important area for London to invest in. London, being a metropolis destination always had immense potential as a business destination (Hooley, Saunders, Piercy & Nicolaud, 2008). Understanding that potential, the government and the hospitality industry has finally started taking steps in this regard.

Currently the city lacks facilities that would allow maximum exploitation of the city’s potential but work has started on those lines. An international chain has just initiated “Duchess Rooms” in order to attract the businesswoman of today – especially the Middle Eastern market (Honeycutt, Ford & Simintiras, 2003). However, there remains a great deal of work that the city administration can undertake in a bid to rejuvenate the city’s illustrious image.

London caters to a wide variety of visitor specific accommodation needs. The only exception is the apparent lack of accessible accommodation for disabled visitors. Visit London estimates that serviced accommodation (including hotels, bed & breakfast establishments and guesthouses) accounts for around 76% of all bedrooms (with the remainder comprising self-catering, hostels and university accommodation) (Jensen, 2008). The budget hotel market growth and the increasing investment in up market hotels has led to a polarization in supply and gradual erosion of the three-star serviced hotels previously provided by Thistle and Marriott amongst others. It is possible that a situation could occur in the short to medium term where hotel grading and quality/service provision at the budget end of the market, could become blurred to some buyers (Guffey & Loewy, 2010).

With the near saturation of roadside and motorway sites, greater flexibility will need to be shown by both planners and developers if this demand is to be satisfied. For example some solutions may include the alteration or refurbishment of redundant buildings into hotels, rather than completely new build, as well as the development of sites around the M25 corridor and other key transport corridors. The continued growth of London s financial sector will mean more developments geared to this market and the meetings/ business tourism market generally. This is likely to include larger developments with leisure facilities, more bedrooms, but also with more flexible meeting facilities and (subject to planning), apartments, apart hotels, or even hotels with apartments located very close by that can enjoy the hotel s facilities ( e.g. Capital, St James and Ritz Hotels) (Hitt, Ireland & Hoskisson, 2009).

3. An analysis of Possible Segmentation strategies that the Shangri La could adopt

This refers to the process of choosing one’s target market. It needs to be clarified at the onset that marketing targeting is not synonymous with market segmentation. Segmentation is actually the prelude to target market selection. One of the most significant advantages of effective target marketing is that it improves the efficacy of all the four P’s of marketing (Aaker, Kumar, Day & Leone, 2010). The use of segmentation, as a tool to distinguish the entire market into “stratas” is a useful process. Firms can then decide which segment they are targeting and focus their efforts and energies towards that segment in order to achieve the highest return on investment (Robbins & DeCenzo, 2007).

Positioning, on the other hand, is a concept introduced in “Positioning – a Positioning – a battle for your mind”. According to the authors ‘Positioning is what you do to mind of the prospect’. Meaning it is how the customer perceives your product or what you are in the eyes of the beholder! Thus it is imperative that each brand is ‘Positioned’ in a particular class or segment (Al Ries & Trout, 1993).

Given the turn of the millennium and the growth witnessed in travel, each segment in the tourism industry has set its goals on increasing its share of the pie – thus trying to appear most attractive to the target audience. In this case, marketing communication helps differentiate similar accommodations and travel hot spots in terms of making their spot appear the most attractive (Arbuckle, 2000). But also in this case, it becomes essential that the target segment for the integrated marketing communication is identified beforehand. It is essential that marketers ensure that the destination is not competing with a competitor with greater edge; secondly, that the destinations’ position is not vague in the customers mind and lastly that the destination has no image or probably a negative image in the eyes of the customer. (Lovelock, 1991).

The hospitality industry based on the diverse nature of its offerings also witnesses a variety of positioning strategies. “The meeting place for sun worshipers”, is the positioning statement of Cancun, Mexico. However, positioning can vary greatly. Fisher Island has positioned itself as “where people who run things can stop running”. It all depends on the creativity of the positioning team (Bergh & Ketchen, 2009). An interesting positioning statement is that of Ritz-Carlton Hotels Group; it says “After a day of competition, you deserve a hotel that has none”. The degree to which marketing teams strive to be unique determines the extent to which a positioning statement is distinctive and appealing.

“By developing a creative campaign, an operator can market the fact that many Japanese visitors have been to the Grand Canyon, and were impressed by its awe-inspiring presence. This may include testimonials from previous visitors or tour operators’ example to illustrate this feeling who can make a direct appeal to the target market. However, since the feeling of awe is an intangible construct, positioning statements must show a tangible (Young, Weiss & Stewart, 2006).” There are many ways of communicating to the audience the position you want your brand to occupy in the customers mind. They might include a creative campaign; a testimonial by celebs’ or by previous visitors etc, but it is necessary to be able to convey the inspiration and the other intangibles associated with the brand.

The London hotel market could be segmented into several groups namely, bed & breakfast, inns, hotels (five star, four star etc,), country hotels, motor lodge hotel, town house hotel, youth & groups to name the broadest categories. The composition of branded hotels and luxury outlets in London has soared to around 13% of the total supply in the capital, with chains such as Whitbread, Premier Travel Inn, Travelodge, IHG s Express by Holiday Inn, Accor, Ibis, Choice, Comfort Inn and Quality Hotels increasing their exposure (Blaxter, Hughes & Tight, 2006). This growth in the budget hotel market throughout all parts of the capital, as elsewhere, has been the key trend in this industry over the last decade. In London, particularly, it has to some extent, replaced the traditional three-star hotels which were more in evidence in previous decades. The cost of building a three-star establishment, with its higher specifications, service and food requirement is generally considered to be prohibitive in London.

The gradual erosion of the mid-market three-star brands in London has possibly contributed to accusations that the capital is expensive and does not provide value- for money , Given that budget hotels have only been so evident in recent years and that central London prices are (like most major cities) high, this is unsurprising (Easteryby-Smith, Thorpe & Lowe, 2002).

However, as we will see later, both Paris and Geneva recorded higher average room rates than London in 2005. It is perhaps the perception of expensive that has to be addressed. In the central sub-region, it is still difficult to find cheap accommodation, unlike say Paris or Amsterdam and it is unrealistic to expect budget hotel developers to invest in the more expensive areas of the central sub-region, such as Westminster or Kensington and Chelsea, to any great extent. The dynamics of hotel demand and this industry’s development and operation economics will mean that future up market hotel development will continue to be more viable centrally. The international business visitor and high spending US, Arab and Japanese leisure tourists for example, will still choose to be In this context it should be recognized that a branded budget hotel, with limited service may still be awarded a two star grading, the same as a quality inn in the regions with good service, but limited facilities (Greater London Authority, 2006).

Hotels in London are concentrated in the central area, but are increasingly being distributed more evenly across London, located where the main attractions, retail and restaurants are located. “The luxury sector is amongst the fastest growing sectors in London – there are reports that as many as four thousand additional rooms can be operational in the next five years (Greater London Authority, 2006)”. The industry is set to become increasingly dependent on exotic marketing and luring of customers and tourists that arrive in London each year. It will require a “survival of the fittest” strategy from all major players to see through the competition.

Thistle is the largest provider of hotels and hotel bedrooms in London. The company has some 5,969 bedrooms, which equates to 6.4% of the total London supply of serviced accommodation. Hilton follows closely with 4,662 bedrooms (Greater London Authority, 2006). Both these groups operate in the upper tier category. The Inter-Continental Group operates across the tiers with its 5-star hotel in Park Lane, 4-star Holiday Inns and the budget brand Express by Holiday Inn. Accor, with its range of brands, provides bedrooms in each category, from the 5-star Sofitel to the 4-star Novotel, 3-star Ibis and budget Formula.

The main branded hotels comprise 12% of the total number of serviced establishments and 38% of the number of bedrooms in serviced accommodation. The identified branded hotels are most dominant in the high-end of the market, comprising over half of all 4 and 5 star establishments in London (Greater London Authority, 2006). The above mentioned names also will be Shangri La London’s main competitors. However, the difference between niche marketing and direct competition will prevail in this scenario. It is necessary for Shangri La to ensure that it is able to position itself well, with respect to its competitors (Etzel, Walker, Walker & Stanton, 2007).

The international business visitor and high spending US, Arab and Japanese leisure tourists are the main segments that Shangri La will target. As per the Greater London Authority carried out under the London government, he conference and incentive travel industry has evolved over the past few decades into a mature business sector. It is increasingly clear that businesses and associations cannot function effectively without face-to-face meetings. Over the ten years to 2004, there was a 50% increase in all business trips (with 27% of overseas visitors travelling on businesses to the UK in 2004) exceeding the overall tourism growth rate (Gilgeous & Chambers, 2001).

On a global scale, 16% of International tourist arrivals worldwide were for the purpose of business in 2004. For Shangri La, the discerning business and leisure travelers are the prime focus. The majority of the customers for Shangri La should hail from this segment and thus should be targeted using appropriate and relevant strategies (Young, Weiss & Stewart, 2006).

The positioning of Shangri La for the assigned market segments in London will be truly psychological image based positioning – aiming to create a unique position in the consumers mind on the basis of the classic Asian Flavor visible prominently in the corporate culture of the organization and in the nature of the hospitality services provided.

Introduction

In legal terms ‘Law’ is defined as, “a rule of conduct or action prescribed or formally recognized as binding or enforced by a controlling authority: asA aA :A a command or provision enacted by a legislature”.

Basically it is a set of regulation and regulations of conduct, which are practiced in general. These rules and regulations are bound by legislature.

In this assignment I will be discussing law in context with Consideration and Contract.

Question 1:

Marketing emphasises on meeting the needs of the consumers and providing them with value, and benefits, while at the same time handling the organisation in an efficient and profitable manner.

Marketing is a process that involves constant adaptation and implementation of the varying consumer trends, and demands. While at the same time having a competitive advantage over the competitors, and while at the same time ensuring that the satisfaction of these needs result in a healthy turnover for the organisation.

Objective of the coursework:

The objective of this assignment is to analyse the Manor House Country Club Hotel’s (MHCCH) external environment and internal environment. I shall use PESTEL Analysis, Industry Analysis and MHCCH’s Opportunity and Threat analysis to draw out the company’s external environment and Core competencies, Value chain, Ansoff Matrix, strength and weakness of MHCCH will be applied to illustrate the internal environment.

Overview of the Hotel:

In 1992, Manor House Country Club Hotel was established as a family owned business by the Jenkins Family, in Singapore. The MHCCH spans over 3 acres of prestigious reclaimed land, and is operating currently as a single hotel. The Hotel provides various varieties of Luxurious accommodations, and serves tourists from around the World. The hotel also serves its customers with various types of cuisines, from its modernised Restaurant; the hotel also has Bistro that is licensed to sell alcoholic drinks. For corporate meetings and conferences to be held in the hotel, the hotel has adequate premises and facilities. And other miscellaneous services provided by the hotel include a Beauty Salon. In short it can be said that the MHCCH stands up to the luxurious benchmark that it projects.

Analysis of the Micro Environment: (Internal)

The Micro/internal factors are the forces inside the hotel that can affect the performance of the hotel, thus through the micro environment analysis, we search for and devise a strategy to overcome those shortcomings that might hinder the progress of the hotel.

SW (Strength and Weakness) Analysis:
(S)trengths:
The MHCCH is located at a prime and favourable location, which is easily accessible.
The MHCCH successfully depicts its Luxury position in the tourism and hospitality industry, thus differentiating it from the competition.
It is licensed to serve alcoholic drinks in the hotel, thus widening its consumer base, and scope for profitability.
Additional accommodation was added by MHCCH in 2002, so now it can house more customers, hence an increase in productivity.
The Market value of MHCCH is eight times more than its actual value, which is the sign of a profitable and stable business.
(W)eaknesses:
There has been a consecutive decline in the number of corporate clients for the Hotel in the past years, while the number of trade conferences held in the country has gone up by 30%.
Over pricing of the room rates above the average price level for similar rooms in other competitive hotels may lead to a decline in the number of customers.
As for the current situation the MHCCH lacks direction in terms of a strategic plan for expansion, and its target consumers, those are essential for the development of the MHCCH.
Recommendations:
MHCCH can provide better meeting/conferencing facilities to its corporate clients to up the number of corporate bookings. Also it can reconsider its pricing policies and provide trade discounts to its clients.
The accommodation/room tariffs to be priced at a market competitive rate, and not at exorbitant prices, which might set the customers off.
A strategic marketing and action plan to be set by the MHCCH while keeping its prime priorities in focus.
Conclusion:

The shortcomings of the MHCCH are not of a major nature, they can be rectified by adopting simple corrective actions, like a strategic plan. It is quite natural for any organisations to face hurdles in its developmental phase.

Core competencies: (Micro Analysis)

Core competencies are what makes an organisation different from others, in most cases its’ direct competition. The MHCCH can develop its core competency on the basis of its luxury position in the market. It must aim at providing quality services to its customers at competitive prices. This also increases its foothold in the competitive market. As it is in the core culture of an organisation, to satisfy its customers and providing them the value for their money, that is what constitutes the basic differences among the various organisations.

Value chain: (Micro Analysis)

The basic motive of the value chain is to provide the customers with a certain level of value that surpass the cost of the activities and ultimately it appears in a profit margin. The value chain of MHCCH is presented below:

Quality Service: The hotel management has to ensure that the customers are provided with high quality services that are worth the price that a customer is paying. So that the customer is satisfied.

Satisfaction of customer needs: The second step is to meet the specific needs and demands of the customers as per their tastes and preferences, as the service industry tends to be very personal, tailor-made arrangements have to be made to meet the customer needs.

Trained and Efficient staff: Every customer expects to be treated in the most hospitable and best manner possible, thus MHCCH should be certain that the staffs is well-trained and efficient when it comes to dealing with the customers.

Marketing and Brand building: In this stage, MHCCH is looking for potential buyers to sell the services it offers and to do this they do advertising, pricing etc. And build a reputable image in the market, which is also a crucial factor to Customer satisfaction.

There are some aiding factors to the points discussed above which cannot be fulfilled without the help of these:

1). Infrastructure:

The aesthetic appeal of the hotel is a crucial factor of the quality it signifies in its service, thus the infrastructure should be as enticing and attractive as the services provided within the MHCCH.

2). Specialisation:

To satisfy the specific customer demands, the hotel has to keep in mind that meeting those demands is crucial and difficult at the same time, thus specialisation in fulfilling the customer needs is an essential supporting factor.

3). Human Resource Management:

The staff must be recruited and accordingly trained to deal with its customers, as the employees of MHCCH reflect the image of the hotel itself. Thus HRM is a bare necessity in the strategic planning process.

4). Marketing Research:

With proper analytical tools and a better understanding of the market, the task of marketing becomes much easier for MHCCH, leaving a long lasting impression in the customer’s mind.

Macro analysis: (External)

By scanning the macro the environment, the company can devise a better strategy towards overcoming the identified threats and to utilize the available opportunities.

OT: (Opportunities and Threats)

(O)pportunities:
Tapping the benefits of the high growth of tourism industry in Singapore.
High demand of varying cuisines/lifestyles.
Scope of expansion in conference/family travel groups.
Expand the MHCCH brand by investing in external property, through borrowing/re-investing profit.
(T)hreats:

Highly competitive hotel industry, competitive pricing, similar services, etc. If proper steps to maintain and expand MHCCH are not taken, then this could be a potential threat to the hotel.

Lack of Differentiation is another factor that serves as a threat to MHCCH as there are various segments i.e. budget youth hostels, five star hotels, backpacker lodges, etc. MHCCH should hold on to a particular segment and differentiate itself from others on its basis.

Increasing Bureaucracy and the various new rules and regulations imposed by the government can cause hindrances in the expansion plans of MHCCH, e.g. licenses and permits required to carry out some activities in the Hotel.

Pestel Analysis

PESTEL represents Political, Economic, Social, Technical, Environment and Legislative factors which are external in nature. The current and future change of six key areas can affect the MHCCH’s business. The PESTEL analysis explores the broad environment in which the MHCCH is operating.

Political Factor: These contain the rules and regulations implemented on the Hotel by the Government. The Singapore government is inclined on increasing its popularity as a tourist destination, thus a beneficial factor for MHCCH.

Economic Factors: Singapore is among some of the fastest growing eastern economies, thus the GDP and the public spending is on a constant rise, so is the purchasing power of the citizens of Singapore and the Tourists. Again it’s in favour of MHCCH.

Social Factors: The Cultural and social aspects of a country are highly important to the business, the current trend of the growing demand for new styles of food and drink is a sign of the change in the social factor.

Technological Factors: Technology is directly linked to modernisation, the hotel has to keep up to date with the latest technological changes in the business environment, for e.g. Wireless internet, Computer bay, HDTV’s, etc. This improves the quality and quantity of the stay of the customers.

Environmental Factors: Drastic changes are occurring in the global environment nowadays; also environmental awareness is becoming more common by the day. Environment friendly applications need to be adopted by MHCCH to balance its responsibility towards the environment.

Legal Factors: The MHCCH must abide by the legislation operating in their geographical territory (Asian Legislation). This affects their business hugely. It may serve in or against their favour, depending on the legislation.

Part B

The Manor House Country Club Hotel can expand its business in within the next two years by following these strategies/theories.

Ansoff Matrix:

The Ansoff Matrix is useful in deciding the company’s product and market growth strategy. The Ansoff Matrix in reference to MHCCH is:

Market Penetration: MHCCH is building a stronger market position by providing similar luxury services as the other hotels in the same market.

Market Development: MHCCH is investing in its site to develop its unused land into small leisure centres. These investments are aimed at developing a stronger position of the hotel in the market.

Product Development: The main focus of MHCCH is on developing its service package by improving the infrastructure and attracting more customers. By investing in the hotel, the services they offer can be developed

Diversification: This involves MHCCH entering a business that is not currently a part of their agenda, which at the moment it is not doing, but they can consider diversification into the alternatives in future, as it leads to added income and goodwill.

Porter’s Grid

Porter’s Grid is also well known as Porter’s Five Force analysis. These were developed by Michael E. Porter. The competitive environment of the MHCCH is explored in depth through the Porter’s analysis below:

1). Bargaining power of the Supplier:

The supply in this industry is largely based on FMCGs (Fast Moving Consumer Goods) which is quite flexible considering the fact that the Hotel buys its supplies in bulk quantities. Thus the ready availability of the goods by the suppliers and the perennial demand of the goods limit the bargaining power of the suppliers.

2). Bargaining power of Buyers:

There are many alternatives to choose from for the customers of MHCCH as there are rooms of varying levels of luxury and prices, ranging from basic single-bed room to ultra luxury Suite packages. There are other hotels offering similar rooms to them at competitive prices, thus buyers do have their share of bargaining power in this case.

3). Threat of new entrants:

The hotel industry in Singapore is facing tough competition not only from the entry of locally based hotels but also giant multinational hotel chains, the new entrants might turn up as a threat for the company.

4). Threat of Substitutes:

MHCCH basically provides accommodation oriented services to its customers, while there are a large number of substitutes available for them, to obtain similar services. The main differentiating factor here is pricing, and the difference in the quality of the services. There exists a strong threat of substitutes, but with a well planned pricing policy, this threat may be avoided.

5). Rivalry among competitors:

Rivalry among competitors is fairly high for MHCCH as the rivals offer the same services/products, and they operate in the same market and environment. While at the same time there are new competitors entering the market. And also the buyers have the power to buy the services/products at lower prices.

Conclusion

As of now MHCCH is operating as successful enterprise, which through proper strategic planning can be developed into a much more flourishing business, and a highly successful hotel.

But for Manor House Country Club Hotel to successfully expand its business in the next two years, it is advisable for them to adopt the Market/Product development strategy, as it provides them with an opportunity to utilise their available resources in an optimum manner, while at the same time continuing the routine functioning of business.

The Indian Hotel Company Limited (IHCL) is an Indian based Hospitality Company which provides accommodation services in four different market segments globally. The company has its headquarters in Mumbai, India. It is listed in Bombay Stock Exchange (BSE).

Company strategies

The growth strategy of the company is to operate 20,000 rooms from the current 14,000, in 25 major destinations around the world. They target on a group turnover of US$ 2 billion, from which 33% would be from international operations by 2012.

Company operations

The company portfolio comprises of 4 brands; The Taj hotels which concentrates on luxury market, The Vivanta which is upper upscale, The Gateway hotels which is upscale and Ginger their budget hotels. The company operates India’s only wildlife lodges called Taj safaris in joint venture with CC Africa.

Company Background

The Indian hotel company limited (IHCL) was established in 1902 by Mr Jamshedji Nusserwanji Tata. In 1903 the first hotel Taj Mahal Palace was opened in Mumbai. The year 1974 saw an expansion of the company by opening its second property at Goa and went on adding properties at a rapid rate fuelled by the Tourism growth in India. Till date it has added 104 properties across the globe to its portfolio. The company is listed on Bombay stock exchange (BSE).Tata sons limited which is the parent company holds 28.5% equity capital in IHCL.

Parent Company

The Tata Sons limited was founded in 1868 by Jamsetji Tata. It has its presence in various sectors such as Steel, Automobiles, Information technology, Communication, Power and Tea. It operates in more than 85 countries across 6 continents. It has a group turnover of over Rs.124, 970 crores ($24.5 bn). It accounts for nearly 6% of the total market capitalisation of Bombay Stock exchange (BSE).

Stakeholders
Shareholders
Key people
Mr. Ratan Tata: Chairman of Tata sons Limited

He became the chairman of the Tata sons in the year 1981 which is the largest Indian conglomerate. The group comprises of companies namely Tata motors, Tata steel, IHCL, Tata consultancy services (TCS), Tata Power, Tata tea, and Tata Telecom.

He graduated from Cornell University in architectural and structural engineering and joined the company in the year 1962. In 1971 he was appointed as the director in charge of NELCO which was in strong financial crisis. His risk taking capability and vision made him the successor of JRD Tata.

Tata sons under his leadership made a number of acquisitions such as Chorus steel, Jaguar motors and Land Rover. This made the company’s presence in global market.

Mr. Raymond.N.Bickson : MD and CEO of IHCL

He joined IHCL in the year 2003 as chief operating officer of the luxury segment. In the same year he assumed the responsibility of MD and CEO of the company. He carries more than 30 years of international hospitality management experience. Prior to IHCL he worked nearly 15 years as a vice president and general manager for The Rafael group.

An American national, Mr. Bickson attended the Ecole Hoteliere Lausanne in Switzerland and Advanced Management Programme at Harvard Business School. He is an active member of Leading hotels of the world and World travel & tourism council.

During his tenure, IHCL went through rapid expansion by acquisitions, managing contracts and joint ventures at domestic as well as international market.

Mr. Anil P Goel : Executive Director Finance

He overlooks the Taj Group’s Finance, Mergers and Acquisitions, Purchase and Legal & Secretarial function. He is a non-executive director for Taj GVK limited.

Mr. Abhijit Mukerji : Executive Director – Hotel Operations

He oversees hotel operations of the Taj Hotels Resorts and Palaces which include Taj Luxury Hotels – India and International, Taj Business Hotels, Taj Leisure Hotels, Taj Spas, Taj Trade and Transport and Indi travels.

Mr. Ajoy K. Misra : Sr. Vice President, Sales and Marketing

He represents Taj in industry organizations such as the World Travel and Tourism Council, India Initiative (WTTC II), World Tourism Organisation (WTO), Hotel Association of India (HAI), Bombay Chamber of Commerce and Industry, and the Confederation of Indian Industry (CII). He served as General Manager of the Taj President in Mumbai and Area Director in the Sri Lanka and Maldives region.

Mr. Prakash V. Shukla: Sr. Vice President, Technology and Chief Information Officer.

He is currently responsible for total IT deployments at the Taj Group and is on MD’s management committee.

Mr. H.N. Shrinivas: Sr. Vice President – Human Resources

Mr. Shrinivas has worked for 18 years with the Taj in Human Resources, Learning & Development and Business Excellence functions. He holds a Master’s Degree in Social Work from the National Institute of Social Sciences, Bangalore, and a Masters in Industrial Law from Bangalore University.

Mr. Veer Vijay Singh : Chief Operating Officer – Upper Upscale Hotels

He is responsible for the Operations and Overall Performance of 36 hotels in 26 locations spread across seven countries under upper upscale category. He graduated from IHMCT&N, New Delhi and had the opportunity to enhance his skills by attending training programmes conducted by Cornell University Singapore, INSEAD & Harvard.

Ms Jyoti Narang : Chief Operating Officer – Luxury Division

Taj Hotels Resorts and Palaces

She is responsible for the overall development and operations of the luxury category hotels. When she was the Chief Operating officer for the upper upscale division, she was instrumental in pioneering the launch of Taj Safaris which is a unique concept that offers adventure tourist a distinctive wildlife experience. In 2008, Ms.Jyoti was appointed as the Chief Operating Officer of The Gateway Hotels, the new upscale brand of the group, and was involved in developing the concept and launching the brand.

Mr. P.K.Mohankumar : Chief Operating Officer

Gateway Brand

Mr. P. K. Mohankumar has over 35 years of experience in hotel operations with the Taj Hotels, Resorts and Palace. He is an alumnus of Institute of Hotel Management, Mumbai and has participated in several senior leadership workshops conducted by Harvard Business School, Michigan University, USA, Cornell University, Singapore and IIM, Ahmedabad. Currently, he is the Chief Operating Officer of the Gateway hotels, and is responsible for the operations and performance of 19 properties in India.

http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?vid=3&hid=102&sid=ce8939c4-8df1-4962-9afe-f373f4140a95%40sessionmgr112 accessed on 23 Nov

Sustainable Tourism

EARTH (Environment Awareness & Renewal at Taj Hotels)

The EARTH program was launched in August 2008, put forward to reduce the impact of the Hotel group’s daily operations on the environment. EARTH programme has received certification from Green Globe. Currently 55 properties under IHCL are certified and the company is looking forward to put all the hotels under the certification by 2009-2010. The company focus on improving energy efficiencies, water management, solid waste management which helps to reduce the strong impact on environment.

Porter’s five forces

Competition plays a major role in today’s world. Competition can have both beneficial and unfavourable effects. Competition for profits goes beyond established market rivals to include four other forces as well. They are Customers, Suppliers, New Entrants, and Substitute products. To understand industry competition and profitability, we must analyse the industry’s structure in terms of the five forces.

Threat of new entrants: New entrants can put pressure on prices, costs, and the rate of investment necessary to compete. Due to globalisation and rapid economic growth of Indian market a favourable market has emerged for International hotel chains. Hotel chains like Four seasons, Marriott International Inc., Starwood Hotels and Accor Hotels have recently came up with projects across India. New International hotels such as Shangri la, Mandarin, Movenpick and Ritz Carlton are in pipeline. Entry of non-hospitality companies into hotel sector can be a threat; such as Reliance Industries. Due to dilution in the market the profitability of IHCL can be at stake.

Bargaining power of suppliers: Suppliers have more power if they have the monopoly or do not depend heavily on the industry for its revenues. As hospitality industry is hugely labour oriented, their trade unions and labour suppliers are powerful. As hotels chains are looking for rapid expansions and prime properties, the power of property owners is high. Inbound tour operators are having an upper hand as they provide huge volume of business to the hotels. Infrastructure suppliers have moderate power over the company.

Bargaining power of buyers: Powerful customers demand more value by forcing down prices for better quality and more services. This results in higher operating costs thereby bringing down profitability. Corporate clients due to their huge volumes have negotiated rates. Company had to come up with loyalty programme for retaining customers which incurs costs.

The threat of substitutes: A substitute does the same or a similar function as an industry’s product by a different means. The threat of a substitute is high when it offers an attractive price and service to the similar industry’s product. Luxury serviced apartments, camping and lodges are in demand. The Government’s introduction of bed and breakfast hotels can really be a threat. Web 2 which enables video conferencing is an emerging product which can be a threat to MICE (Meetings, Incentives, Conferencing and Events)

Rivalry among existing competitors: Rivalry among hotel chains results in discounting of price, new product launch, advertising campaigns, and improvement in service. If there is high rivalry the profitability of the company can be affected. The hotel products are highly perishable, which creates an urge to cut prices and sell the inventory below its profitable rate to cover the fixed cost.

Internal environment of the company:

The internal environment of the company can be divided into two types they are Tangible and Intangible resources.

Tangible resources include assets which can be seen and felt, like physical properties, Yachts, Flights, and other fixed assets which spread around 5 continents.

The intangible resources are the one which cannot be seen or felt but play a major role in the business like the brand value, Leadership style, Human resource etc.

IHCL being the subsidiary company of Tata Sons Limited, which has a company background since 1868. IHCL itself operates in hospitality sector in India for last 108 years, and have the market share of 22% in India shows the brand value of the company. In terms of leadership style the company has a style of innovations and pioneer of Luxury property and wild life lodges (Joint venture with CC Africa) and budget hotel chains (Ginger Hotels), Spa resorts and properties in India.

The human resources in the company is around 20,000, which includes permanent staff, Fixed term contract workers and other Executives and Corporate staff. The company has various staff development program such as TMTP (Taj Management Training Program) SPEED PLUS, HOMT for standardization of operations throughout the company.

External Environment:

It can also be called as Operating environment. Factors which influence organizations opportunities and risks; such as conditions, entities and events consists of its external environment.

PEST Analysis
Political:

Political instability in some parts of India made foreign investors cautious; in turn brought down investment from abroad and business travel. Due to the recent terror attacks on hotels in Mumbai, there has been a drastic drop in tourists arrivals. Most of the Embassies have send travel advisory regarding African and Asian countries which has reflected tourist inflow. As Government of India has reduced the tariffs and duties on various items, trade relations have improved. It encouraged travel and trade which resulted in growth of hotel industry. The Ministry of external affairs has implemented visa on arrival for several countries in an effort to promote tourism. The government has released a five-year tax holiday to promote the growth of new hotels. External Commercial Borrowings have been eased by the Ministry to elucidate the problem of liquidity being encountered by the hotel industry due to economic slowdown. The Ministry of Home Affairs has agreed to grant Long Term Tourist Visa of 5 years duration with Multi-entry facilities carrying a condition of 90 days on each visit to the nationals of the following 18 countries which are France, Iceland, Germany, New Zealand, Luxembourg, Japan, Netherlands, South Korea, Belgium, Argentina, Finland, Brazil, Spain, Chile, Switzerland, Mexico, Norway, and Vietnam on request of tourism ministry.

Economical:

Early 1990’s saw economic liberalization which led to a boom in the hospitality industry. The Government has allowed Foreign direct investment and Foreign institutional investment; which favours business travel. Compared to other South East Asian countries; tax structure in India is very high. Inadequate infrastructure facilities like Airports, Communication facilities and commuting facilities is a challenge for the Tourism sector. The effect of recession is causing serious problems for many hotels especially luxury hotels in particular. Hotels in certain global markets, mainly those operate in leisure sector, are less affected. All geographies are not equally affected by recession.(have to include graph from the site quoted in link , leading hotels of the world)

Social:

Indian customers are highly sensitive to price. A lot of them tend to compare services offered with price. Hoteliers face a challenge to design price strategy in each sector. There is a conflict between local community and hotels on space availability especially at beach destinations. The company has got an advantage of world’s largest concentration of young educated work force and thus decreasing the labour costs. Two religious communities being Hindus and Muslims have religious sentiments towards beef and pork which is consumed by foreign tourists. This raises conflicts between the organization and religious groups. Large scale tourism operation results in environmental pollution and an increase in carbon emission.

Technological:

The launch of E-commerce has revolutionized the hotel sector by reducing cost and increasing functionality. The introduction of Global Distribution System allows customers to access current time availability of products. The growing influence of video conferencing has got negative impact on MICE (Meetings, Incentives, Conference and Events) division. It is possible to get critical information on clients and products while away from desk due to wireless technology. This has improved customer relationships, saved time and increased revenue and profit.

Indian Tourism Scenario

Despite a drop in FTA’s in India due to economic slowdown, domestic tourism has showed an impressive growth of 15.5 % in the year 2009.Domestic tourism supported the industry during unfavourable condition.

India’s performance in tourism sector has been remarkable. During the period 1997 to 2009, India perceived an increase in the Foreign Tourist Arrivals from 2.37 million to 5.11 million. Because of global slowdown, terrorist activities and H1N1 influenza, growth rate in FTAs during 2009 fell by 3.3 per cent. The global tourism fell by 4.3 per cent. The plummet in India was less than that of the scale of global slowdown.

Foreign Exchange Earnings (FEEs) from tourism increased from Rs. 10511 crore in 1997 to Rs. 54,960 crore in 2009. The growth rate in earnings in 2009 vis-a-vis 2008 was 8.3 per cent. The percentage share of India in International tourism receipts has nearly doubled in past 12 years.

Solutions:

The Company has got only insignificant investments at political instable locations. To prevent future security threat the company has sought advice of security experts and invested heavily on improving security infrastructure.

To reduce the conflict between local community the company has come up with corporate social responsibility. For instance the company works closely with NGO’s to develop and train underprivileged housewives to earn their livelihood. The company tries to promote Indian culture by encouraging local artisans and craftsmen. This helps the local community in broadening their own outlook. Foreseeing sustainable tourism IHCL has come up with EARTH initiative to reinstate its vision and to preserve nature.

To overcome the revenue loss due to video conferencing the company came up with new strategy of marketing in- house video conferencing facilities for corporate clients.

SWOT ANALYSIS
Strengths

IHCL has a very dominant position in Indian hospitality industry with largest distribution of hotels around the country. Its key advantage is the established ‘Taj’ brand name. It has got a much diversified hotel and brand portfolio catering to different market segments which helps in capturing wider customer base. The company has got sales and marketing reach globally. The parent company being Tata sons limited which is one of the largest companies in India is an added advantage. Their presence in every segment namely luxury, upper upscale, upscale and budget allows more flexibility and stability. They have a well-diversified business model of subsidiaries, associates, joint ventures and management contracts which help in reducing risk and fuels faster growth. This asset light policy will help in revenue stability during economic turndown. Presently 45% of IHCL hotels are operated through joint-ventures, 40% are management contracts and 15% are owned in part or full by IHCL.

Source: Adapted from HotelierIndia Nov 2010, Press Release

The company has introduced a strong loyalty programme which helps in retaining customers. The company’s alliances and partnerships have helped it in entering into new markets such as wildlife lodges and air catering. They have the advantage of very strong corporate purchase chain whereby they can considerably reduce raw material cost. As the parent company is present in the production of FMCG’s they are able to procure items in a much competitive price. The company even have introduced loyalty programmes in conjunction with all leading airline companies.

Weakness

The less established brand name of the company in international scene can be viewed as a weakness. Nearly 75% of the company’s income is generated by domestic operation resulting greater dependency on Indian market. In domestic market even though company has its presence in more than 15 states; 66% of their revenue and nearly 90% of profits come from top six hotels in four cities. Even slight fluctuation in the country’s economy can affect profitability. The high dependency on higher-end luxury market can also be viewed as a weakness. Nearly 54% of the revenue is generated by these properties. Comparative size in line with international chains and insignificant international presence is a setback. The hotel industry in India is heavily staffed. In spite of international average 1:1 in India it stands at 2.1:1. Investments in acquiring international hotels have resulted in huge debt for the company.

Opportunities

Rapid growth in inbound and domestic tourism is a great opportunity for the company. Domestic tourism is growing at a phenomenal rate of 15.5% annually. Growing demand for budget and mid-segment hotels due to the growth of Indian middle class can be viewed as an opportunity. Healthy salary increases in corporate world is expected to create demand for leisure tourism. Launch of incredible India in both domestic and international market to promote destinations can be a boost in business. The introduction of medical visa may promote more volume and extended stay in all key destinations. The company’s entry into new markets such as wildlife lodges, luxury residences, and spas will create new growth prospectus. Budget airlines now have connectivity across the country with competitive rates and attractive offers which will inspire domestic tourism. Increased business opportunities in India again have paved path for growth of conference and event tourism.

Threats

Growing presence of international hotel chains such as Marriot international, The Four seasons, Accor group, Shangri-La, Dreams resorts and spas etc. can be considered as growing threat to the company. The expansion plans of Indian hotel chains like ITC India limited, The Leela group, The East India Hotel Company and The Lalit may affect the market share of the company. Due to the arrival of international airline operators and affordable international travel, there has been massive growth of outbound tourism mainly to south East Asia, Europe and Australia. This has increased risk for domestic leisure segment. Due the company’s portfolio of foreign currency debts, it is vulnerable to fluctuations in currency and interest rate risks. The debt equity ratio of the company shows drastic hike from the previous years which can really be a threat .

Source: Adapted from Annual Reports

“Debt to equity ratio indicates how the firm finances its operations with debt relative to the book value of its shareholders equity” (Fabozzi and Drake 2009 pp80). This indicates the comparison of equity and debt the company is using to back its assets. If the ratio is high then the company is said to be chancy as it is financed more by with debts and it might become even worse if the interest rates are high.

The company stands at a threat as the debt equity ratio shows a trend of escalation from .52 to .99 within a span of 4 years.

Strengths and Opportunities

Due the company’s presence across the country in different market segments it can capitalize the growth of domestic tourism. As the company has a well-established budget and mid-market segment hotels, it can benefit from the growing spending power of Indian middle class. Only IHCL has presence in wildlife lodge segment which shows growing demand every year. Loyalty programmes in tie-up with leading airline companies have resulted in greater exploitation of tourism growth in India. Company’s entry into wellness tourism by establishing Spas in its existing properties can milk governments plan to issue medical visa.

Strengths and Threats

By virtue of the company’s loyalty programmes and corporate tie-ups they would be able to hold to their market, even though new international players could stand a threat. IHCL have huge expansion plans in answer to other domestic hotel chains. By their plans to expand internationally it can lower the risk of outbound tourism.

Weakness and opportunities

Since domestic travel became cost effective, domestic leisure tourism turned robust and distributed, consequently reducing risk of concentration of revenue from key city hotels.

Weakness and Threats

To oppose the dependence on high end luxury market, the company has entered into budget segment which is stable comparing to the later. The company have international expansion plans other than existing properties outside India so that it will be resistant to domestic economic fluctuations.

Diversification

The IHCL has diversified its operation in hospitality sector from the hotel operation to other sectors like Air catering, Spa operations, Wild life lodges, Yachts, Charted Flights and Taj Khazana.

TajAir

TajAir is a charter flight operating company owned by IHCL, the subsidiary company of Tata Sons Limited4 pioneer aviation operator in India. TajAir at present owns 3 Air craft’s which can be chartered by guests for domestic and international air travel.

Ginger Hotels

The Ginger Hotels are self-service budget hotels operated by IHCL which targets mid-market sector.

Spas

Jiva Spas the subsidiary of IHCL which operates at more than 25 Taj hotels at 20 different destinations which offers different rejuvenating treatments and massages.

Taj SATS

Taj SATS is an air catering division of IHCL in collaboration with Singapore Air Terminals which caterers to domestic and international flights operating from 6 different cities.

Taj Safari

Taj Safari is a wild life lodge which operates in collaboration with CC Africa which is one of its kinds in India.

Taj Khazana

Taj Khazana is a signature boutique store of Indian handicraft, Jewellery and garments which operates at selected IHCL properties.

Current Situation

The Company has decided to raise Rupees 850 crores by issuing shares and warrants to the promoter company Tata Sons Ltd to fuel its rapid expansion plans.

Since the market is strong now the company has decided to raise its room tariffs by 10-15 percent.

The company announced the roll-over of 19 hotels under its new brand Vivanta by Taj Hotels and Resorts. The introduction of Vivanta which is a brand architectural exercise by the company will be slotted in the 5-star upper upscale segment in the Indian hospitality industry.

To exploit the on-going spree by Indian households on food and beverage spending, the company has rolled out several new F&B outlets in collaboration with world renowned chefs and restaurateurs.

To meet the current demands, they have invested a major share in Serviced Apartments, Wildlife lodges and Spas.

To achieve their goal of generating 33 per cent of total revenue from international operations, they are engaged in Management contracts and Joint venture oversees.

To capitalize the high demand of mid-market segment, IHCL has unveiled more than 20 budget hotels across India named “Ginger Hotels”

In order to recover the loss of revenue due to the dip of tourism in India, the company has gone into a new strategy of putting hold on salary hike and the incentive for the executives and freeze new recruitment in the company and predicts a profit of 15 cr.