Hotel Line Business And Build Syuen Hotel Tourism Essay
Introduction
Syuen Corporation is company that started off as a small construction company and then invested in hotel line business and build Syuen Hotel. Syuen Hotel operates in service industry which gives customer service satisfaction in the hotel. This organization has been established for the past 19 years. Mr. Yan, the owner of the hotel use to be a tailor and most of his target market was big shots. Most of the customers of Mr. Yan were the politicians; business man and people link to royalty blood. As his business grew he started off a small construction business with the contact and influence of his network with the politicians and business people. Then he started to do housing project and development in a small scale and then developed to big construction development Company. Syuen Hotel was billed by his own construction company and that’s where he started his hotel line business.
As Mr. Yan’s business grew, he started to invest in other countries by buying lands and building hotels. Mr. Yan opened the second hotel in Laos and started to develop the country to a better and more civilized country. As times passed by Mr. Yan also invested in timber business and tea plantations. Mr .Yan left the management to Miss Maggie Ong to manage Syuen Hotel. Miss Maggie is the director of this hotel and she used all her expertise, network and skills to bring up the standard of the hotel. Now Syuen Hotel is also known as the best city hotel in Ipoh.
Laos is a single-party socialist republic. The capital city is Vientiane. Other large cities include LuangHYPERLINK “http://en.wikipedia.org/wiki/Luang_Prabang” HYPERLINK “http://en.wikipedia.org/wiki/Luang_Prabang”Prabang, Savannakhet, and Pakse. The official language is Lao. Laos is a multiethnic country with the politically and culturally dominant Lao people making up approximately sixty percent of the population, mostly in the lowlands. Various Mon-Khmer groups, the Hmong, and other indigenous hill tribes, accounting for forty percent of the population, live in the foothills and mountains. Laos’ “strategy for development is based on generating electricity from its rivers and selling the power to its neighbours”, namely Thailand, China, and Vietnam. Laos is practically a low cost country as is not that civilized and developed compare to other countries in this era. Their country development is way far behind then compare to other countries. Laos is the only landlocked country in Southeast Asia, and its thickly forested landscape consists mostly of rugged mountains. The highest of which is PhouHYPERLINK “http://en.wikipedia.org/wiki/Phou_Bia” HYPERLINK “http://en.wikipedia.org/wiki/Phou_Bia”Bia at 2,818 meters (9,245 ft), with some plains and plateaus. Local tradition holds that there are three seasons (rainy, cold and hot) as the latter two months of the climatologically defined dry season are noticeably hotter than the earlier four months. Laos has a very good quality soil that actually helps on agriculture activities. Subsistence agriculture still accounts for half of the GDP and provides 80% of employment. Only 4.01% of the country is arable land, and a mere 0.34% used as permanent crop land. The lowest percentage in the Greater Mekong Sub region and rice dominates agriculture, with about 80% of the arable land area used for growing rice. Subsistence agriculture is self-sufficiency farming in which the farmers focus on growing enough food to feed themselves and their families. The typical subsistence farm has a range of crops and animals needed by the family to feed and clothe themselves during the year. The labor cost at Laos is very cheap as most of the people don’t mind doing any hard job to earn money and survive there.
After observing all the pros and cons of Laos, Mr.Yan decided to invest at Laos and expend his hotel line business and utilize the advantages in Laos. Mr Yan practically used all the expertise and recourses that he have from Malaysia and import to Laos to develop the business in Laos. He focused on mainly on hotel line business and then he invested also invested on tea, herbs, bird nest and wood craft furniture. Syuen Corporation established another corporation name called Dansavanh hotel group representing Syuen Corporation in Malaysia. In 1997 the Malaysian Syuen Corporation started to develop Laos’s largest resort on more than 18000 hectar of national park land on island in the reservoir behind the Nam Ngum dam .One of the company’s first act is to set up a saw mill to process the timber logged from the development area (Dhirendra K., 2001). Then they build the first hotel called the Nam Ngum Resort and then followed by the Vientiane Hotel. Syuen Corporation signed master agreement with the Laos’s government on 6 January 2006 and open Nam Ngum Resort which is the first eco tourism resort. These hotels improved the tourism of Laos as it attracted people from other countries which eventually increased the currency exchange. Besides that, Syuen Corporation opened tea manufacturing company and timber manufacturing company over the years. The idea is to manufacture good quality tea and wood craft furniture with low labor cost and export to countries like Malaysia, Thailand, Cambodia and Vietnam with good price. This helped the company to earn good profit as they export quality material with a better price then other competitors.
Analysis
Gain
Grow opportunity
It may sound general, but it is undeniable as this is one of the main reasons for company to invest to another country. The Syuen Corporation owner senses the opportunities presented in the country, thus moved early to enter the market. Back in 1997, the company already started to develop the largest resort in Laos (Dhirendra K., 2001). Fast forward to today, the return are stunning, the corporation now own a resort with golf club and casino, a 4-star hotel and two more hotels in construction (Dansavanh Hotel, n.d.). The rise in number of tourist in Laos in recent years has boosted the tourism industry in the country, especially hospitality industry.
The hotel line business in Laos benefited greatly from the growth of tourism as the hotels are targeting upscale travellers, which are 12% from millions of traveller to Laos. Moreover, the hotel also offer tourism package at their hotel as addition to their growing revenue and capitalize on the tourism trend in Laos, where the government announced 2012 to be Visit Laos Year. Apart from that, the corporation hotel in Malaysia also provide tourism package that destination are going to Laos which include accommodation in their own hotel. The move to invest in another country gained the company diversity in their business and also growth in term of number market served.
Low labor cost
Laos remain as one of the country that the labor cost are relatively low. Syuen Corporation ventured into the country and enjoys low cost in term of wages, and allows them to have higher profit margin. The low cost condition not only benefited the hotel business line, but also the Corporation’s tea plantation and wood craft furniture business. despite the low cost of labor in the country, Syuen Corporation still face little competition as the threat of new entrance are very low , as Laos ranked 163 overall in “Ease of Doing Business” rank out of 185 economies(The World Bank, 2012). The company gain benefit of the first mover advantage as they are one of the most early company to set up sawmill and furniture manufacturing in the country. They also remain as few of the company from Malaysia to enjoy the low cost advantages.
Synergy from diverse business
The low labor cost also encouraged the company to venture into different industries, other than their main hotel line business, as mentioned in the introduction part of this assignment. Most of their business in other industries synergized well with their main business. For an instant, the Corporation involvements in tea plantation and wood craft furniture industry in the country also contribute to their hotel businesses. High quality tea are produced to be used in the hotel and also export, this reduce the cost of getting tea thus increases the profit margin of the Corporation. Similarly, the most of the furniture in the hotel are wood craft furniture of their own. This in turn saves the cost of setting up hotels in Laos, and the tea and furniture gain free exposure and advertising to tourist. Furthermore, the tea and furniture are also exported to Malaysia, and the Corporation hotel can get in a low price compared to the market price. The synergy created is beneficial to their businesses.
Shortcoming
Lao Government Forest Policy
According to J&C Expat Service, if want to start a business in Laos can be very challenging because Laos is considered one of the most difficult countries in the world in starting a business (J&C, 2012). Therefore, Syuen Corporation is facing few shortcomings when entering Laos to expand their business. First and foremost, the geographical location of Laos is covered by many mountains, plains and plateaus. There are over 70% of Laos consists of rainforests (Globalaware.org). Therefore, deforestation is the major impact on Laos which also indirectly affect Syuen Corporation business at Laos especially the timber and sawmill business. Syuen Corporation set up sawmills to process the timber logged from the development area (World Rainforest Movement and Forest Monitor 1998, 53). The environmental problems that encountered by Laos especially deforestation is getting more serious as expanding commercial exploitation of the forest and plans for additional hydroelectric facilities. Thus, in order to preserve valuable hardwoods for commercial extraction and to protect the forest environment, Lao government decided to set quota logging. Besides, the decision of setting the amount of quotas is complex and no transparency. Initially, the province will submit a figure to the Ministry of Agriculture and Forestry (MAF). The figures will be passing through many ministries and the decision is made without any consultation with officials from the Division of Inventory and Planning in the Department of Forestry (Vajpeyi, 2001; Southavilay and Castren 1999). Then, MAF will share the quota between the provinces and most of the provinces will get quota far below the timber processing capacity in that province (Vajpeyi, 2001). Consequently, Syuen Corporation’s sawmills business will be affected the most due to the quota logging set by the Lao government.
Infrastructure low
Laos is an underdeveloped country, the poor access, short of infrastructure and many undeveloped destination are restricting the growth of the hotel and tourism industry in the city. There are only 5 airlines serve the Wattay International Airport, from regional cities such as Bangkok, Hanoi, Kuala Lumpur and Phnom Penh. (Horwathhtl.com, 2011)Therefore, to access to the city of Laos is very limited. Thus, the inconvenience of access ability in Laos will affect the hospitality business of Syuen Corporation. Moreover, Laos is facing the obstacles of establishing Internet connectivity due to the lack of skills and resources. The Internet connectivity in Laos is a slow process which indicated by the low levels of PC penetration and poor telecommunications network (Thongvilu and Houphanh, 1996). Although major towns are connected in Laos, placing a call between towns is often difficult. Such inconvenience and lack of infrastructure might affect the performance of Syuen Corporation business in Laos especially hotel business of Syuen. As the Internet connectivity service is low, the managerial department of Syuen Corporation at Laos will be affected and decrease the efficiency of the employees. In addition, customers might have bad experience with the WiFi service provided by the Syuen Corporation hotels in Laos.
Education level and health service low
The education level at Laos is not as high as other developed countries, the standard quality of the post-secondary school not high so they lack of professionalism and skill labor. This will affect employees’ performance of Syuen Corporation. Besides, the medical services at Laos very limited and low standard, causing the occurrence of morbidity is high and this will led to the reluctant of tourists come to Lao. According to Prof. Dr. Somboune Phomtavong, Prof. Dr. Kongsap Akkhavong and Dr. Somchanh Xaisida (2005) the lack of clean water, poor sanitation, inadequate nutrition and limited access health services are aggravating factors, which influence morbidity, particularly in rural areas. Moreover, low quality local mentors, educators and trainers in public health management programs. Furthermore, the acquiring science and technology skills are restricted due to the low level of the basic education and foreign language knowledge. Other than that, Lao Government requires that a company may have up to 10% of its employees as foreigners if those foreigners are unskilled, or up to 20% if they are skilled. In all cases, they must get approval from government in their employment. The company must obtain permission from government in order to increase the percentage of foreign workers it employs (Jclao.com, 2012).
Recommendations
Send for training and implement training programs
One of the shortcomings that operating business in Laos is the education level of this country is low. Most of the Laos people are not skillful and knowledgeable. They are lack of knowledge to handle the highly skill tasks. So Syuen Corporation can send the unskilled workers and workers who lack of experience to the Syuen Corporation hotel in Laos (Vientiane Hotel and Nam Ngum Resort) in order to learn how to perform all the tasks. For example, learn how to clean the guest rooms, how to communicate properly with guests, how to deal with the reservation and 1 on 1 business phone calls. After the Laos workers learnt how to perform the tasks, they can improve their performance. Besides that, the company also can provide some training programs for those unskilled Laos workers. One of the examples can be English Language training program. The Syuen Corporation can offer English language training program to make sure that all the workers can understand and speaking the English language fluently. This program is important for the workers because most of the hotel income gain is from the foreign tourists. So it is important for the workers to understand and speak English language fluently due to English language is the International Language. After their English skills improved, their performance also can be improved. The workers can improved in ability to respond to questions or requests and offer assistance in English or ability to participate in 1-on-1 business phone calls in English. Once the employees’ performance was improved, the customer satisfaction will follow to improve. And it will affect the company reputation and profits. Finally it can maintain and strengthen the company competitive advantages.
There has a successful case that an organization can improve its performance by implemented the English language training program. The organization is Hilton International Incorporate. With a largely English-speaking customer base that demands the highest level of quality and service, Hilton needed a global strategy for building the business English communication skills of its employees to help deliver on its brand promise. After careful evaluation, Hilton implemented the GlobalEnglish Corporate Learning Servicea„? (currently known as GlobalEnglish Edgea„?) on a worldwide basis and has realized significant productivity and performance improvements (GlobalEnglish, 2011). Furthermore, there also a successful case that the company sends the employee for training can improve the employee performance. SCA Company let the worker to attend a 2 week training program at one of SCA’s European offices in Gothenburg, Sweden. The program was filled up with meetings and facility tours with teams from product categories, R&D, sourcing and supplier development. The employee said that she was able to quickly learn about SCA’s businesses, products and markets around the world, and align itself with the global platforms and practices within a short time (Vivian B., 2009).
Joint venture with Airline Company
By having a hotel in an underdeveloped country with short of resources and infrastructure, it makes tourists having difficulties in locating the hotel itself, as mentioned before, there are only five airlines that serve the Wattay Airport, finding the way to the hotel from the airport itself can be tricky and inconvenient to most of the foreign tourists, not to say exploring the city without any assistance and guidance from a trusted source can be worrying. By having above problem, Syuen is suggested to consider an arrangement of joint venture with one of the airlines in order to satisfy customer more by providing a package of services to them, starts from the airlines, allow customers to fly to Laos, and picking up guests from the airports and into the hotel and return, it can be a joint ventures of the hotel itself or develop a whole new set or package of services and offer it to the tourists, providing all transportation and tour guiding services which they able to enjoy once they disembark from their planes and arrive Laos. With the helps from the airlines partner, this action able to further satisfy more visitors, ensuring they have a safer journey within the period they spent in Laos, letting them to have a more convenient and comfortable journey. On the other hand, by having this set of services, it able to convince and attract more potential customers, by introduce the services to them, as visiting an undeveloped country is always perceived as unsafe and risky by most of the foreigners, a safe and comfortable journey is always the main concern in travelling.
The scenario of a joint venture agreement between an airline and a hotel can be seen in the Shanghai International Airport Hotel, as it is a joint venture enterprise by Chinese Eastern Air, which they provides a free shuttle bus to and from Shanghai Pudong International Airport and the Shanghai International Airport hotel mentioned. While in the hotel lobby and all the guestrooms, the flight activity will be show through a monitor for every guest to keep track of their flight information. And the Shanghai International Airport hotel also provides air ticket booking services and multiple location flight check-in services in the lobby (Sinohotel, n.d.).
However, it is still suggested that Syuen Hotel should offer more services in terms of transportation, guiding, compared to Shanghai International Airport Hotel, and put customers safety at the first place as the hotel is located in Laos which commonly perceived as undeveloped and unsafe by the outsiders, to ensure all the guests have a pleasant journey, and securing Syuen’s competitive advantages. While the labor cost in Laos is relatively low as mentioned earlier, Syuen is expected to be able to conduct this plan with ease while enjoying low cost advantage.
Enhance Relationship with Laos Government
From previously discussed, Syuen Corporation’s sawmills business had been affected due to the quota logging set by the Laos Government. In order to deal with this threat, it is crucial for Syuen Corporation’s to maintain a good or positive relationship with the Laos Government senior officials such as personnel from “Kong kouat ka Sapha-nyakone Pa Mai” as known as Forest Inspection Department (FID) in order to have more quotas on logging the woods and advocate the senior officials to strike the illegal logging activities inside the country. However, it is difficult for Syuen Corporation’s to do so because Laos Government senior officials do not always trust on the logging companies due to the risk of losing important administrative positions for inappropriately to approving logging operations as has happened to some senior government officials in the past. Thus, Syuen Corporation’s can approach senior officials together with the other trusted government officials, ones who can act as guarantor or give assurance that nothing improper will occurred in order to gain confident and trust from the Laos Government senior officials. Moreover, Syuen Corporation’s can offer benefit sharing based on the patron client relation to the Laos Government may in term of monetary or others to show the sincerities and loyalties of the company toward the Laos Government.
Search for logging quota alternative
Besides of normal logging quota, Syuen Corporation’s can search for special logging quotas that offer by the Laos Government as alternative. One of the examples of the special logging quotas can be use by the Syuen Corporation’s is deadwood logging quotas (quota mai leep lem) which allow Syuen Corporation’s to collect trees which are already dead such as standing dead tree (Deadwood) from wherever area they can be found in forest without restriction (Baird, 2010). This will allow Syuen Corporation’s have more woods and material to support the company sawmill’s business besides of normal logging quota. In year 2007, a logging quota of “deadwood” was issued by the Champasak Province in southwestern Laos to Development of Agriculture and Forestry Industries Company (DAFI) for the rosewood and the quota did not specify the quantity to be cut and the logging site (Baird, 2010).
Conclusion
A few years back, Syuen Corporation main business is in Malaysia hotel industry, as they continue to grow, their venture into Laos have gained them market share in 2 different countries. Their first mover advantages in Laos are still firm, as the country remain a hard place to go for new venture. Furthermore, their investment in Laos including the tea plantation and sawmill business synergized well with their main business. However there remain some shortcomings in Laos, such as the government forest policy which limit the growth of sawmill business of Syuen Corporation, and also low infrastructure level, education level and medical service.
Therefore, we have come out with 4 recommendations to counter the shortcoming and improve the company competitive advantages. We recommended workers to be Send for training and implement training programs, joint venture with Airline Company, enhance relationship with Laos’s government, and lastly search for logging quota alternative. As the alternative are proven to be practical, as they are either applied by other company or support by journal articles, we hope that the recommendation will be implemented and help the company.
