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By doing this professional profiling module I try to do a research and analysis of an Indian Airline company Kingfisher Airlines how it become the most prominent and qualitative airlines in Indian subcontinent and also become world famous Indian airlines.

I also saying about the SWOT analysis of Kingfisher airlines and what are the marketing tactics that they were using in their business field. I also do an analysis study of PESTEL in which I find out how the Kingfisher airlines affected or affected by Political, Economical, Social, Technological, Environmental and by Legal.

1.2:Objective

The main objective of this professional profiling module to say how the SWOT analysis relates to Kingfisher airlines whether it affects directly or indirectly.

I also mentioning about the PESTEL analysis of Kingfisher airlines through this Professional profiling module.

To study how kingfisher airlines survives from the high competitive field in India and from other pressures by other airline company in India.

To study about in which all fields they wants to make changes to improve and by that they can improve a lot in the airline field and they can become the best airline in the world itself.

1.3: Introduction

Kingfisher airline is an airline group in India starts by the United Breweries group and its head office in Vile Parley Mumbai .Kingfisher airline is one of six airlines in the world to have 5-star rating from skytrax.Kingfisher daily operates 400 flights to over 72 destinations by 50%of low cost.

The marketing stratergy that used by Kingfisher airline is that they were uses the friendly business tactics towards the guest(passengers) by giving a hearty welcome to their offices and flights and give also “special kit” to the guest.

The ticket rates all they divided into two classes such as SEC-A and SEC-B(socio-economic class) clearly defined target audience in the age group of 25 above.

2.0 PESTEL Analysis

2.1 Political

Open sky policy

It is mainly for opening a free market for the airline companies.

In the domestic airlines the foreign airlines were not allowed to buy the stake.

Closing down of domestic flights due to decreasing in the number of passengers and due to other issues.

Rules and Regulations in the International route lines.

2.2 Economical

Contributes more income to Indian economy.

It increases the Indian economy.

Investment in the sector aviation.

The growth of the middle income group family affects the aviation sector.

It causes for the shortage of the infrastructure capacity.

Rising of cost fuel

2.3 Social

It creates a lot of job opportunities in the wide areas.

It makes a lot of safety regulations.

Developing of cities leads to the better services and airports.

The status attached to a plane travel that compares to the other ways of transportation.

2.4 Technological

Now the technological system in the airline system is improving day by day.

Now the navigation is based on the satellite information which brings a lot changes in the airlines field.

The new technological methods were found out the new ways of route lines.

The airports were modernised and privatised.

They were using the most advanced technological systems for their works and in the organisations.

2.5 Environmental

It causes for the increase in the global warming.

If it is not carried out in a proper way it may results in the pollution like,

Sound pollution

Water pollution

Air pollution

The sudden and unexpected behaviour of the atmosphere .

The dependency on whether.

2.6 Legal

Inflexible rules and regulations

Treaties between the two states-Bilateral treaties.

3.0 SWOT Analysis of Kingfisher airlines

Here it is the analysis of Strength, Weaknesses, Opportunities and Threats of Kingfisher airlines.

3.1 Strengths of Kingfisher airlines

They were providing the qualitative hospitality and very good service to the customers which attracts the customers attention towards kingfisher airlines.

They have both the domestic flights as well as the international flights which links to the different parts of the world.

They providing the special promotions during every year to the customers.

Kingfisher airline is the first airline with the new fleet of aircraft.

They already have the special training academy and well qualified air hostesses crew.

They offers a luxury journey with the cheap rate that compares to the other economical airlines.

3.2 Weaknesses of Kingfisher airlines.

The main weaknesses that facing by the kingfisher airline is their airline office and head quarters in the metro Politian cities and in the big cities so they can provide the efficient service who living in the towns and the metro Politian cities.

They cannot provide good service to the people who living in the rural areas because it is very difficult to contact with them due to problem in the way of communicating each other.

The development of the places affects the proper working of the airlines.

Kingfisher airlines is not in a high profit because it is not the main source of transportation that compares to the other way of transportation method.

The other main weaknesses that face by the kingfisher airline is the slow increasing of the Indian economy and declining of the Indian economy.

High ticket pricing that compares to the other charges of transportation so the people also not interested to journey with it and they also have some limits by giving the offers to the passengers.

Increasing the price of fuels and the other commodities.

If the flight is rescheduled the service from the customer care of Kingfisher airlines to the customers is very weak.

3.3 Opportunities of Kingfisher airlines

They can increase their profit every year by promoting the special schemes in the rate of air tickets during holidays and during the seasons of annual vocations.

They can starts the new flight trips to the different tourist places because there is a lot of tourist visitors to the tourist spots.

They can also starts the flight trips to the different parts of the world because they didn’t have much competitor as the international flights that compares to the domestic flights.

They want to start their offices at different places other than the cities and towns they wants to come across the rural areas thus the people came to know about it and thus they can get more customers for their each trip.

They want to improve their customer care services by opening it’s service for twenty four hours thus customers can trust the airlines than any other.

They want to find the proper solution if the flight is rescheduled and the customer loss their things such bags and luggage’s.

They want to know the customers the advantages of travelling with the kingfisher airlines.

They want to give membership or any other exciting gifts to the customers if they were using Kingfisher airlines for their trips for longer times.

3.4 Threats facing by Kingfisher airlines

The main threats that faced by kingfisher airline is the high competition from the domestic flights to the same places.

They also threatening about the increasing in the rate of fuels and the increase in the rate of other commodities.

They also threatening about the unavailability of qualitative and efficient crew’s.

The other problem faces them by the declining of economy and the arising of the middle class people in the society.

The government also starting the other methods of transportation to the different parts of the country with cheap rate.

The government exposing heavy taxes to the private organisation specially the airline companies.

They want to give huge amount to the customers if there is any accident happens during the trip.

They also threatening about unexpected climatic changes.

Some of the outstanding services done by Kingfisher airlines other than the other Airlines.

Reservation: It can be done by visiting their company or just by online method. The amount can be paid by cash or either by debit card and by the credit card.

There were no differentiation in the classes and they just wants to wait little time in the ground and the efficient handling of delays.

4.0 Recommendations

They want to simplify the flight operations they wants to make it for all the people in the urban areas as well as the in the rural areas.

They want to reduce cost of air ticket which favour for all people who have the wish to journey in a plane.

Reduce the labour cost.

Want to make a friendly customer care services to the customers which can be given in the whole days means that the twenty four hours.

Give insurance policies to the customers during the journey if any accidents may happen.

Get smart on fuel.

Promote safety, comfort and luxury journey to the customers.

Make parternership between the other airline companies.

Aware the whole people about the facilities and advantages of airlines other than the other airlines.

5.0 Conclusion

As the time passes Kingfisher airlines dominating the major role of airlines in India that compares to the other airlines as well as it faces a lot competition from other airlines they facing a lot of challenges and threats throughout every year and they were manage to clear it. But still there is some challenges they were facing they want to manage it other ways they lost their priority in the airline fields.

They want to improve their customer care service and they want to make example of other International airlines which is very high in the position of the airline fields. Great hands of business man Dr.Vijay Malia led the foundation of the growth of the Kingfisher airlines and his ideas give its way the main role in the airline fields in India.

In comparison to the offer that were given a couple of years ago and now for the fares and other facilities are of no more match. Ticket fares these days have gone down to”0?as well, because of the massive competition occurred in this sector. Another stratergy that can be deployed is by achieving service quality, namely the in-flight and also the post -flight services given to the customers. Providing extra attention to fragile areas or areas where performances haven’t met should be taken special care.

5.2 Appendices

For the report of this presentation I read some books that tells about the success of Dr.Vijay Malia and his life story what are the ideas that he used for the foundation of Kingfisher airlines and make the number one airline in India. I ask some of my friends who travel in kingfisher airlines and their experiences while travelling in the Kingfisher airlines. I also got one chance to met some officers who working in Kingfisher airlines they gave me more valuable points about the Kingfisher airlines, when I go back to India during the last vocation.

This research will use the theory of competitive strategy using both qualitative and quantitative information, SWOT and Porters Five Forces to analysis and explore how low-cost carriers can obtain success in the Chinese airline market. Using existing information, research can be undertaken to discover what the major impact is on the low-priced airline carrier business in China and how to select desirable competing strategies to accomplish higher market share.

This research take advantage of both quantitative and qualitative methods. Strauss 1987 cited in bell (1999) postulated that the qualitative study technique employing a grounded theory approach would provide the basis of an idea. This is an alternative view considering that it furnishes an alternative technique to the confirmation or refutation of a hypothesis. The method takes advantage of analysis traits specified in such a way that the study doesn’t state an exact hypothesis to be disclosed. A qualitative statement of the information is accepted for specific research exploration. With the “creation of an idea” construct provided by bell (1999) we can assume the method and objective of the research means to generate hypothesis unlike proving the case that the underlying hypothesis is unknown. The qualitative research technique becomes of value when performed this way. In this research we actively look for answers from academics on the foundation of past and present papers. By looking into the story of Chinese Airlines We can see how things have changed since the Chinese government had more of an open door policy in respect of inclusion of other airlines, outside the scope of the nationalised version run by the government.

3.1 Case Study

The case study technique is applied if there are several sources of information (yin 2003a). This differs to the quantitative study approach. Effectively, the case study technique is broadly deeper and hinges upon the context of the investigation. Unavoidably, this idea applies additional variables, and these inevitably bring up additional sources of information. Then again, the context of the investigation is significant to the case study prototype, and incorporates the investigation of communications between the theory and the surrounding it’s held within (yin 2003a). It’s distinguished as a process of choice if the “phenomenon under study is not readily distinguishable from its context” (yin 2003a:4). A case study analysis is inclined to be assessed instead of mathematically dissected (bell 1999), and it is also dependent on intuition and valuation.

The case study analysis conceives specified environments, as well as the parts and wholes of the method. Patton (2002) conceives the case study needs to be detailed and describes the situation, however, a different opinion is provided by miller and salkind (2002) contemplating that important issues and ideas need to be acquired as the researcher observes. The effect of this is that complexity of aspects increase, although (miller and salkind 2002) offer a different analysis where the researcher is an enquirer and produces written evidence producing a documented set of information. The case study analysis is to a great extent contingent on the circumstances and state of affairs. Patton (2007) expresses that a case study moulds an approach specified in such a way that it is a “totality or unifying nature of the particular settings” (patton 2007:59). Another perspective provided by Creswell (2003) determines actors and theory appropriate to particular research.

3.2 Questionnaires

Questionnaires are often used to obtain information for research purposes. Open-ended questions used in this way alongside interviews can provide an insight into information not available via other techniques. However, when questionnaires are used they must be carefully designed so the data provided is not subjective and only provides an even-handed objective analysis. Design of questionnaires is a skill in its own right, as they must provide useful data for the purpose of research. This is why questionnaires provided for marketing purposes, other than subjective research must be viewed with suspicion.

3.3 Quantitative/Qualitive Research Techniques Discussion

In contemplating quantitative and/or qualitative research as an aspect of research methodology, it is demonstrated that there are two cases of validity namely, “measurement” and “design” validity. Measurement validity is a criterion evaluated on a quantitative footing, but this is believed to be only as useful as the technique used to assess such data (newman benz 1998). The effect is widely considered to be only as valuable as the extent a variable can change. On the other hand we can also conceive design validity, as this comprises other independent variables, extending to the compartmentalization of outcomes viewed relevant (newman benz 1998).

The two facets of quantitative and qualitative research are not mutually exclusive. In qualitative exploration there can be an inclination to generalise outcomes, especially if it’s impractical to find specified and useful evidence on the topic in question. Consequently, there’s frequently an approximation supported by the most balanced method validity can be established. It is declared that enforcing measurement validity has priority, as “solid measurement rigour decreases the threats to internal validity” (newman benz 1998). Put differently, if there’s a possibility of extracting accurate, and verifiable outcomes it provides firmer grounds to demonstrate a case, compared to the alternatives used via the quantitative technique.

In qualitative research, it is necessary to observe the most frequently applied formula, as it can extract greater significance when used with research techniques such as questioning or document analysis (newman benz 1998). A questionnaire can be used to extract delicate data, but within this environment, the observation technique is less desirable. The observation method can sometimes skew the information as the researcher could have expectations which may be subjective, instead of objective i.e. it may be subjective depending on their personal experience thus causing the study to be invalid (newman benz 1998). Complications of this type may be created if the researcher doesn’t have a road map document upon which to base their research, resulting, in a bias investigation of the state of affairs (newman and benz 1998).

4.0 Introduction

The airline industry in China in the last decade has grown substantially and modernised in a global setting. According to the Civil Aviation Administration of China 2008 report, there were 387 million Chinese passengers. It expanded by 16.8% in 2008 compared to 2007. A recent forecast predicts that the number of Chinese passengers is expected to be 600 million in 2011. The net worth as a result of this is conceived to be CNY37.6 billion (CAAC 2008).

Evidently, it seems that the Chinese airline industry has a predictable and assuring future. However, from an investigation carried out by Li and Zhao, the air transport requirement for low cost airlines is still substantially down in comparison to the entire transport marketplace in China (Li and Zhao, 2007). In reality, the price of air travel in China is a primary factor. Most of the Chinese are not in a position to afford air travel. This can be evidenced by comparing the Chinese market to the US market. In the US citizen averages 2.2 air trips every year, but in China, only one person travels by air per thirteen people (Lei, 2008).

The Chinese airline industry has been changed substantially, since China joined the World Trade Organization (WTO) in terms of international air carriers participating in Chinas marketplace. The government now permits commercial airlines controlled by competing organisations (Cao, 2005).

The largest airlines in China are currently, Air China, China Easter Airlines and China Southern Airlines, and some are subsidised by the Chinese government. In the present position, increasingly private and low-priced airline companies are operating in the Chinese airline marketplace. They rely on their small-scale resources to compete with the existing large airline business’s all being state-owned. At the other end of the spectrum, however, China is a massive potential airline market.

The continuing trend to implement market deregulation in China is currently in progress. New, budget airlines have to discover ways to compete with the larger airlines. In recent times, the low-cost airline industry has evolved speedily in most modernised countries, such as Europe, America, Japan and Korea. The low-cost airline industry emerged recently in China where it has a large number of prospective customers in the marketplace. The low cost model should add an interesting aspect to the Chinese Airline market.

4.1 Recent Activity in the Chinese Airlines Market

According to the International Air Transport Association, air travel globally decreased last September after months of increases preceding this period for the first time in five years. However, passenger traffic overall was twenty-nine percent less year on year. Of these, Asia-Pacific carriers have taken the highest loss, with a 10.6 percent fall. A particular trend of note is that during the past three years, Chinese business travellers switched from being practically non-existent to fourth place on a top-ten listing of aviation markets. This was well documented by the Air France-KLM brand. At the current time when passenger counts are decreasing globally, the Chinese market for business travel has been dealt a comparatively soft hit states Eva He cited in Fitch (2009).

China’s economic slowdown is now anticipated to diminish and once again increase momentum towards the end of 2010. Therefore there needs to be a concerted push to grab opportunity while it is still rife. Experience in the field with Chinese travellers is essential, says Mark Arxhoek, of Air France-KLM. Mr Arxhoek has wide experience of the nature of this type of business and is the regional commercial director for Greater China (Fitch, 2009).

This new breed of Chinese travellers have different demands to Western business travellers, including on board comfort, outstanding customer service, and facilities. They require carrier brands that deliver “a secure experience of comfort and an unforgettable journey experience”. Chinese business travellers are frequently obtained by individualised services that denote status and standing in the business community. Local brand China Southern, for example, have introduced the High-End Customer Service scheme, where the airline records specific data such as seat details, food or magazine preference so its premium clients don’t need to be delayed standing in the queue in order to check in for their flight (Fitch, 2009).

It is recognised that although cost is a factor, in-flight services are also important when choosing a specific airline . Air China are very competitive in this arena as they consistently offer a higher standard of food and drinks than other airline brands. This can be contrasted to American carrier Northwest Airlines, whose in-flight staff provide small helpings of instant noodles as meals. Airline brands in the Chinese industry fair better when they devote attention to detail. An example is provided of Emirates Airlines, painting starry night skies in their cabins (Fitch, 2009).

Chinese passengers appreciate Mandarin speaking staff that can assist passengers to complete customs forms, supply information, or can attend to hotel reservations and transportation. Given China’s size and lingual diversity, occasionally Mandarin isn’t enough. The Finnair company assures clients there are a minimum of two cabin crew members on each flight leaving from China acquainted with the departure region in question, so there is provision for the localised dialect in addition to Mandarin. To allay marketing problems, the government is subsidising costs and proposing coupons and vouchers for tourist sites in destination cities for passengers who travel by air (Fitch, 2009).

There are wider European implications of the changes in the Chinese airline market. Helsinki Vantaa Airport, Finnair’s chief hub, was the first airline in the EC to display Chinese signboards and Mandarin-speaking employees to greet clients as they arrive from China. Air France-KLM adopted the same idea, declaring the Focus on China project, a primary objective with the function of tailoring in-flight services and training cabin crews and airport staff to match the expectations of Chinese clients (Fitch, 2009).

Chinese travellers are also creating a need for new destinations. In response Air France-KLM intend to provide services to Panama, and Trieste, in Italy, while American carrier Delta Airlines has declared they are merging with Northwest Airlines, connecting its Latin American to Northwest Asian destinations (Fitch, 2009).

Domestic travellers are seeking the cheapest and most trouble-free tickets available. In direct contrast to international business travellers who book seats based on the best services available. At the other end of the scale, even for domestic clients the average ticket price for a flight inside China is expensive, being roughly RMB 800-RMB 900 (US$ 117 to US$ 131) in a single direction (Fitch, 2009).

Online bookings are available in China, but the process is often long and lengthy, due to existing visa application and approval procedures. Domestic clients (approximately 20%) tend to use online booking sites such as ctrip.com or elong.net to reserve tickets. Small, private carrier brands are appearing in China. The most successful has tended to be Spring Airlines, in connection with three planes that fly from Shandong to disparate tourist destinations around China. Spring Airlines will fly from Shanghai to Tianji with bus services to Beijing at half the price of a ticket on another airline. However, it is challenging for private airlines to compete with state-sponsored airlines that already claim much of the available space at airports. Some airlines, such as OK Airlines and Eastern Star, Spring Airline’s chief competitors have already gone bankrupt (Fitch, 2009).

Private airlines are in severe difficulties, and cannot compete with larger established airlines. Perhaps only experienced airlines have the resources to exist in such a complex industrial environment during such a complex time of radical change in China? Regardless of these potential pitfalls, the challenges for either of the domestic and international airlines in China also demonstrate indisputable opportunities and airlines must learn to get in touch with Chinese clients before the Chinese clients buy into flights (Fitch, 2009).

4.2 Aims and Objectives

Due to the current situation of low-cost airline business in Chinese market, it is interesting to study its opportunities of development in the future. The question of this dissertation research could be: how can low-cost carriers get success in Chinese market? What are the competitive strategies suitable for the low-cost carriers in China?

Objectives of the research:

Key issues of development difficulties for low-cost airlines in China

Identify the competitive strategies for the low-cost airlines business in China

Discuss and analysis the effects of the Chinese government policy and regulations on the low-cost airlines industry

Compare and analysis the situation of low-cost airline in Asia, such as Japan, Korean and Singapore

Adopt the business competitive strategies into low-cost airlines business model in China.

5.0 Discussion

5.1 South East Asia

6.0 Conclusions

References

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Singapore economy is one of most prosperous in the world. Singapore airline industry accounted for 5% of GDP and the industry value-added rate is 15%. As an important role in Singapore economy, Singapore airline industry has growing fast. In this paper will use the Porter’s “Diamond Model” (Factor endowments; Demand conditions; Related and supporting industries; Firm strategy, structure and rivalry; Chance Government) to analysis the competitive advantage of Singapore airline industry and explain how the Singapore airline industry developed its competitive advantages.

Introduction

Singapore economy environment

Singapore economy is one of most prosperous in the world. Singapore economy is a capitalist mixed economy, with minimal government intervention in the market. It has an open business environment, relatively corruption-free and transparent, stable prices and one of the highest per capita gross domestic products (GDP) in the world.

Airlines industry in Singapore

Air travel is a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries.

In Singapore economic environment, the Singapore airlines industry had total revenue of $5.8 billion in 2009, representing a compound annual growth rate (CAGR) of 1.7% for the period spanning 2005-2009. Industry volumes increased with a CAGR of 4.1% between 2005 and 2009, to reach a total of 18.1 million passengers in 2009. The performance of the industry is forecast to accelerate, with an anticipated CAGR of 11% for the five year period 2009-2014, which is expected to drive the industry to a value of $9.8 billion by the end of 2014 (Airlines Industry Profile: Singapore, 2010).

Porter’s “Diamond Model” of Competitive Advantage

The diamond model is an economical model developed by Michael Porter in his book The Competitive Advantage of Nations (Porter, 1990), where he published his theory of why particular industries become competitive in particular locations. Porter’s diamond model suggests that there are inherent reasons why some nations, and industries within nations, are more competitive than others on a global scale. The argument is that the national home base of an organization provides organizations with specific factors, which will potentially create competitive advantages on a global scale.

The analysis is classified into six broad factors incorporated into the Porter diamond, which has become a key tool for the analysis of competitiveness:

Factor endowments – a nation’s position in factors of production such as skilled labor or the infrastructure necessary to compete in given industry.

Demand conditions – the nature of home demand for the industry’s product or service.

Related and supporting industries – the presence or absence of supplier industries and related industries that are internationally competitive.

Firm strategy, structure and rivalry – the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry.

Chance events are occurrences that are outside of control of a firm. They are important because they create discontinuities in which some gain competitive positions and some lose.

Government can influence each of the above four determinants of competitiveness. Clearly government can influence the supply conditions of key production factors, demand conditions in the home market, and competition between firms. Government interventions can occur at local, regional, national or supranational level.

Figure 1: Porter’s “Diamond Model”

www.google.com_000.jpg

Source: The Competitive Advantage of Nations

By using Porter’s diamond, business leaders may analyze the competitive factors which may reside in their home country company, and what factors may be used to achieve global competitive advantage. Business leaders can also use the Porter’s diamond model during a phase of internationalization, the leaders can use the model to analyze whether the factors in the domestic market to support the internationalization process, and whether in the country eligible to create a global scale competitive advantage.

Analysis of Airline Industry in Singapore

Factor endowments

The factor endowments of airlines industry include human resources, capital, equipment and facilities, air space resources, etc.

In human resources, due to the characteristics of technology-intensive in airlines industry, the organization requires a lot of professional and technical personnel. Meanwhile, the aviation industry also needs administrative, financial investment and sales staffs. The multi-cultural Singaporean workforce is highly educated, highly motivated and highly productive. It is also proficient in English – the language of international business. Singapore has a large base of engineering talent, with the number of engineers in universities and polytechnics expanding steadily each year, in addition to the sizeable pool of skilled technicians. In addition, Singapore government through the open immigration policy enhances Singapore’s talent pool. This gives companies the opportunity to source for the best personnel from anywhere in the world (http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/knowledge.html). For these reasons, the Singapore airlines industries have good manpower.

In capital, airlines industry needs a large finance support, the aircrafts and airport cost millions of money. In Singapore, the world’s major banks have opened branches or offices. Therefore, the Singapore airline industries do not have problem in capital. For example, Commerzbank Singapore branch has 30 years’ experience in financing aircraft to arrange and manage the entire deal, and a complete suite of financing products (https://www.commerzbank.com.sg/en/financing/aircraft/aircraft_financing.htm).

Although the Singapore’s skies are limited, however the airline industry not far from reaching saturation point. According to Lee Kuan Yew (former Prime Minister of Singapore), due to the aid of advanced navigation technology, Singapore can shorten the distance of the aircraft flight and to increase flights density, therefore Singapore in terms of the open skies, still have a lot of space.

Demand conditions

Airlines generally have a large number of buyers. Many of these are individual consumers purchasing flights directly from the airline, although there are business to business sales to charter companies, discounters, and similar buyers.

With the increasing living standard, the customers are demand on convenient, comfortable and fast transportation. Travel by air is one of the best choices for Singapore customers. Firstly, Singapore has a strong international trade link, there are thousands of businessmen which from different countries doing business in Singapore. The businessmen through the air travel to make sure they can reach the right place on time. Secondly, Singapore is one of the most popular tourist cities in Asia. There are 10.8 million tourists visit Singapore in 2008. Furthermore, due to the population growth, Singapore has a great potential demand for air travel.

Table 1: Singapore Population Statistics
Year
2007

Total Population (‘000)

4588.6

Singapore Residents (‘000)

3583.1

Birth Rate (Per 1000 Population)

10.3

Death Rate (Per 1000 Population)

4.5

Infant Mortality Rate (Per 1000 Live Births)

2.1

(Source : www.singstat.gov.sg)

(Source: Airlines Industry Profile: Singapore, 2010)

According to the tables, it obviously shows that the passengers of Singapore airlines industry have increasing by year.

Related and supporting industries

The related and supporting industries including airports, air traffic control, navigation information, aviation fuel, air material and other support services, and aircraft manufacturing and maintenance of related industries.

From the supply-side perspective, the airport provide the basic conditions for airlines industry, it contains safety and quality service. Changi Airport is the main airport in Singapore which humble beginnings in 1981. Changi Airport also is a major aviation hub in Southeast Asia. Currently managed by Changi Airport Group, Changi Airport was corporatized on 1 July 2009 to bring Changi to the next level and deliver an even better Changi Experience. (http://www.changiairport.com/our-business/about-changi-airport) Serving more than 90 international airlines flying to some 200 cities in 60 countries, Changi Airport handles about 5,000 arrivals and departures every week and over 37 million passengers a year. With over 40,000 square meters of commercial space, Changi Airport is also one of Singapore’s largest shopping locations.

As the air traffic controller, Civil Aviation Authority of Singapore (CAAS) promotes a strong safety culture and embeds a robust safety framework, with a modern and progressive regulatory regime based on international best practices.

Aircraft manufacturing and maintenance are the most important supporting industries for airlines industry. For Singapore airline industries, Boeing Company and Airbus is the main supplier for aircraft. Fortunately, Singapore also has its local brand. SIA Engineering Company is leading aircraft maintenance, repair and overhaul (MRO) company providing total maintenance solutions to an expanding client base of international airlines (http://www.siaec.com.sg/).

Firm strategy, structure, and rivalry

Local conditions affect firm strategy. For example, German companies tend to be hierarchical. Italian companies tend to be smaller and are run more like extended families. Such strategy and structure helps to determine in which types of industries a nation’s firms will excel. Singapore is a hierarchical paternalistic authoritarian illiberal state. Cause of Confucianism is strong; Singapore society is based on a hierarchical order of things.

Rivalry in the Singapore airline industry is strong. Local rivalry forces firms to move beyond basic advantages that the home country may enjoy, such as low factor costs. The competitive landscape has several large companies, such as Singapore Airlines, alongside smaller competitors. Rivalry is increased by the presence of low-cost carriers in the market, as these companies can compete more intensely on price. Switching costs for buyers are low, which means that it is easy for them to change to a competitor. Cause of the globalization, there are many international competitors join in the Singapore market, such as China, Japan and India, etc.

Chance

The demand for air travel to the Asia Pacific is rising which is driven by increased economic activity in emerging Asian countries such as China and India. Traffic is projected to grow at 7% in China and India combined, above the world average of 5% in the fiscal year ended December 2007. Further, the share of Asia Pacific region in world passenger traffic is forecast to rise from 25% in 2003 to 31% in 2023.

According to the update of the United Nations World Tourism Organization, the global tourism will rebound strongly in 2010. With the anticipated growth, business and consumer confidence has picked up. This growth in world tourism industry will enhance airline business. Singapore airlines industry can capitalize on this increase in world travel and tourism to enhance its business and generate additional revenues.

Government

Government is the important variable of affecting the competitiveness of the airline industry. In the past, the airline industry was at least partly government owned. The airline industry has been strongly controlled by agreements and policies. Airlines couldn’t just fly to any destination or country without appropriate authorization. The deregulation of the Airline industry opens doors for more entrants to the market and increased competition. Singapore Airlines is still owned by the Singapore government and is still affected by such controls. Therefore, the government has great impact on the airline industry. In Singapore, the government is supporting the airline industry. The Singapore government has signed an agreement with the United States called “Open Skies” that gives both countries unrestricted flight access to each other countries. The open skies phenomenon is gathering momentum and more and more countries are signing up. Recently, the Civil Aviation Authority of Singapore (CAAS) will be setting up an S$100-million Aviation Development Fund to further develop the local aviation industry.

Conclusion

Airline industry in Singapore has growing fast. It’s due to have a good economic environment and stable politics. According to the analysis of Porter’s “Diamond Model” of Competitive Advantage, it obviously shows what competitive advantages of the Singapore airline industry have. Firstly, Singapore airline industries have the good human resources, finance support and other factor endowments. Secondly, the strong demand of market and the related and supporting industries. Additionally, the good opportunities and the government support. My recommendation for Singapore airline industry:

Keep strong emphasis on the brand name and quality of service.

Stay with the competitive advantage what the industries have, using the differentiation strategy.

Maintain the innovation and complimentary products.

CHAPTER 1

1.0 Introduction

The Air Mauritius was created in the year 1967 which helped connecting our small island to the rest of the world. The company now has direct flights throughout Africa, Australia, Asia and Europe which sums up to around 20 regional and international destinations (Air Mauritius, 2013). Voted best Airline in the Indian Ocean (according to the World Travel Awards, 2013), the company represents Mauritius and is the only airline company of the country till date, hence its flag carrier. The latter boasts to give unique, high quality services and a special attention to its customers (Air Mauritius, 2013). According to its Annual Report 2012/2013, the company currently has 2,340 employees, 12 aircrafts in their fleet serving 19 destinations. Having had a turnover of EUR 450 Million, Air Mauritius offered 1.8 Million seats but carried only 1.3 Million passengers and had only 10,080 number of flights during the 2012-2013 period (Air Mauritius Annual Report 2012-2013). These statistics show that 500,000 seats remained unsold which might be due to the recession affecting our main tourist market; Europe. However, Air Mauritius has slowly recovered from major losses in the previous years. In the 2011-2012 period, the company accounted for a net loss of EUR 29.4 Million but for the current period of 2012-2013, there was only a net loss of EUR 2.5 Million (Air Mauritius Annual Report 2012-2013). Making losses is always bad for business but the recovery was amazing and we hope to see more of it in the upcoming years.

Even though Air Mauritius recovered from losses, the company was not able to match the sales and revenue of previous years which proves the fact that the company is losing some of its customers. The company is partly owned by the government with 51% shares and 41% going to the shareholders. They all have a major role to play in order to protect the national flag carrier from stiff competition and the current economic crisis. It is very crucial for Air Mauritius to preserve its customers and attract new markets because the tourism industry heavily depends on it. The tourism industry is the main revenue generating industry in Mauritius and by being the only flag carrier; Air Mauritius plays an important role in the success of this economic pillar. Most of the tourists come to the island by air and we all want them to use Air Mauritius instead of coming through our fierce competitors like Air France, British Airways and Emirates.

Air Mauritius is currently negotiating with Air France for a strategic partnership since the negotiations have failed with Emirates (BusinessMega.mu, 2013). Now that the company is focusing more on the Asian market, Air Mauritius is developing new strategies to increase the capacity of passengers to and from China, Singapore and Kuala Lampur (CAPA, 2013). The company also increased the frequency of flights mainly to China and India in order to attract tourists from the current profitable target market of the tourism industry. In February 2013, the government of Mauritius and the Republic of Maldives have both signed a bilateral agreement which aims to target the Chinese market, especially with destinations like Beijing and Hong Kong where both the Air Mauritius and Mega Maldives Airlines will offer direct services (Gov.mu, 2013). In mid-2012, Air Mauritius has formed a codeshare partnership with Air Austral which has had some financial difficulties just likes our own flag carrier. The codeshare partnership helped to restoring the Mauritius-Perth route several times per week (CAPA, 2013). Both Air Mauritius and Air Austral agree that Australia is a great potential destination for growth.

A flag carrier is very important for countries that have it. It represents the image of the country but most importantly, it provides preferential rights, privileges and facilitates certain agreements with other countries. The government of Mauritius has recently decided to go towards an open sky policy for its flag carrier instead of sticking with the old limited sky policy. They are trying to imitate Emirates which has its success thanks to the open sky policy (Hough, 2013). This will prove to be successful for Mauritius only when sales at Air Mauritius are boosted again and there are more tourist arrivals.

The local government has a forecast of 1 million tourist arrivals for the current year of 2013, which represents an increase of about 2.5% compared to last year (BusinessMega.mu, 2013). However this will not be possible without the help of Air Mauritius since most of these tourists will rely on air travel to come here and they may opt for other rival airline companies because of flight prices. Air Mauritius plays a major role in the economy of Mauritius and helped the tourism industry grow throughout its operational years and this is still an on-going process despite the company is suffering an economic turmoil (Prayag, 2007).

The company’s fleet consists only of Airbus aircraft fitted with modern equipment and is it approved by the European Aviation Safety Agency. On-board the Air Mauritius, there are many services like the inflight entertainment, meals, duty free sales and magazines. The on-board menu consists mainly of the Mauritian cuisine but draws its inspiration from all around the world offering Asian, Indian and European flavours. The company also has certain strict no-pork and no-beef policies and even have special meals for needy people, like the diabetic meal for example (Air Mauritius, 2013). On its official website, the company describes the various types of meals that it can offer to its passengers. Some of these are the vegan meals, vegetarian meals, kosher meals, low-fat meals, child meals, baby meals and much more. This is quite an interesting strategy to satisfy customers and make them feel that they are well taken care of at Air Mauritius. Furthermore, the on-board entertainment includes popular Hollywood and Bollywood movies and documentaries to watch. There are various types of music to listen to and there are also some games for avid gamers or children.

There exist two classes of travel with Air Mauritius; the Economy class and the Business class. In the economy class, the company boasts to have large passenger space with a 79cm pitch which provides a comfortable and relaxing flight experience (Air Mauritius, 2013). It is not an important factor which customers are concerned about but it is good to know that the economy class has a seating configuration of 2-4-2 layout with two final rows of 2-3-2 for a total of 265 economy seats (The Sydney Morning Herald, 2010). This setting is mainly for the Airbus A340E and of course there are certain various depending on the model of the aircraft. Seating arrangements in the business class have recently been upgraded with new lie-flat seats on the Airbus A340 and A330 (Air Mauritius, 2013). These seats provide the passengers with some privacy and better comfort than the previous ones. They are large enough to accommodate any type of person. Its functions are well in grasp of the passenger thanks to a remote control. The lie-flat seats also come with a massage option.

Air Mauritius offers different flight check-in options for its customers. One may check in online on their official website and at the Sir Seewosagur International Airport or at various other airports like the Paris Charles de Gaulle, London Heathrow, Beijing Capital International Airport and much more. They also have a premium check-in reserved for business class passengers available at every airport. On its website, the company offers adequate accurate information about the check-in process and offers even FAQs to help out lost customers. These customers will also get help from Air Mauritius staff either at the head office found in Port Louis or at the SSR International Airport whenever they feel the need to.

The Amedee Maingard Lounge is the principal lounge of Air Mauritius at the airport terminal. The lounge offers assistance from staff, books & magazines, TV, business centre with computers, WIFI, children’s play area, and a bar & buffet area offering a wide array of food and beverages. Surely, all these come at a price. Business class passengers and Kestrelflyer Elite members have free access to the lounge. However an economic class passenger may get access as well depending on availability and at some prices. Normally an adult will pay MUR 2000, MUR 1000 for a child and free access for an infant (Air Mauritius, 2013). But these tariffs are subject to change anytime.

Recently, the SSR International Airport underwent major upgrades and introduced its new terminal which came into operation on 12 September 2013. The new terminal consists of three levels where the ground level where domestic arrivals and departures are taken care of. Then, level 1, where the Air Mauritius Lounge is situation alongside check-in counters and finally level 2, where international arrivals are taken care of. The Air Mauritius has been waiting for this upgrade eagerly and expects to increase customer satisfaction through a newer servicescape (Air Mauritius, 2013). With all these said, Air Mauritius expects to increase its number of customers while retaining the current ones and start making more profit again, in the years to come.

One of the biggest advantages of travelling with Air Mauritius is that the company holds a perfect flight safety record and is the safest company to fly with in the Indian Ocean (World Travel Awards, 2013). This perfect record contributed into our flag carrier winning the Indian Ocean’s Leading Airline Award for 9 consecutive years. The record suggests that an Air Mauritius plane never crashed or killed anyone on-board due to safety issues. However, some planes experienced some technical faults whether in flight or on ground which also lead to delays in departure or arrivals. Just recently, in October 2013, the MK 034 flight had some major technical issues when leaving Plaisance for Paris. Only ten minutes after taking off, one of the engines blew out and caught fire mid-air causing the plane to lose speed and altitude. The pilot informed the passengers about the incident and decided to drop fuel at sea in order to be able to land back at the SSR International Airport. The process took hours but MK 034 landed safely with panicked passengers. The plane was then grounded for repairs and replaced by another one to get the passengers to destination, Paris. It all occurred between 22h50 and 02h22 which caused a huge delay and a series of other flight delays the coming days because of a grounded aircraft (L’express.mu, 2013). These technical issues occur with almost every airline company in the world. The positive point for Air Mauritius here is that the pilot was able to get the passengers back on land safely.

1.1 Problem Statement

Air Mauritius holds a strong leading position in Africa among the competition, however many airlines have surpassed the company, globally speaking (Prayag, 2007). Nowadays, we have companies like the Emirates, Air France, British Airways, Etihad Airways, Air Seychelles, Condor, Thomas Cook and Lufthansa who have become great examples of successful airlines which are currently in direct competition with Air Mauritius (Business Excellence, 2013). They started small-time somewhere, just like the Air Mauritius but are now leaders of the skies ahead of our flag carrier. However, the company is going to show that it is still a competitor to look out for among its competitors since Air Mauritius is planning to increase flight frequencies of certain destinations like Johannesburg and Beijing which will help reinforcing their connectivity across the globe.

Since Europe has been affected by the economic crisis lately, the numbers of tourist’s arrivals have largely decreased. This is why the government of Mauritius has decided to re-orient the tourism industry towards a new market in order to increase demand. That new market is no other than Asia, targeting most precisely India and China. Thanks to this change, we can now clearly see why the Air Mauritius has increased flight frequencies towards these destinations and is constantly bombarding the general population with promotional packages to Beijing, Hong Kong or Mumbai. The “limited sky policy” and “no charter flights” helped boosting sales of the company in the past but recently in order to increase tourist arrivals and due to stiff competition, the local government is considering an “open sky policy” for a better future of the economy of the island (Prayag, 2007). This is being implemented because the government aims to boost tourist’s arrivals and expects millions of tourist arrivals every year. If this proves to be a successful step, the main economic pillar of the island; the tourism industry, will prosper and eventually increase the revenue of the country.

Having an excellent customer satisfaction is a great asset for an airline company as it will help with customer retention and the company will keep on achieving its primary goal; that is, making profit. But it seems that the Air Mauritius has not been able to satisfy all the customers lately. According to a reliable website that provides real customer reviews and much more information about airlines, Skytrax.com 2013, the service at Air Mauritius has worsened. Customers are complaining about poor food quality, rude on-board staff, uncomfortable seats, boring entertainment and the fact that the company is still using old aircraft with old technology while every other airline are investing on newer planes. These comments affect service quality and perception of customers in a negative way. Word of mouth may worsen the case and people will tend to think twice before buying a ticket at the Air Mauritius in the near future. Of course, whether they are true or not, these are just statements and it is my duty to carry out this research in order to find out what is really happening about the service given to customers at the Air Mauritius.

In today’s competitive airline environment, the on-board services of an airline are one of the aspects that customers lookout for before purchasing an airline ticket (Namukasa, 2013). Having poor inflight services will push these customers away from the airline company and they will tend to opt for another rival company. This is why the level of service quality must stay high at all times for an airline company or else it will not survive the stiff competition (Archana and Subha, 2012). There have been so many studies which examine the influence of airline service quality on passenger satisfaction and loyalty, for example, Archana and Subha (2012) in India, Huang (2009) in Taiwan and Munusamy et al. (2011) Malaysia but none for Mauritius, this is why this study is important.

Aims and Objectives of the study

The principal aim of this case study is to analyse how service quality has a major influence on passenger satisfaction and loyalty specifically at the Air Mauritius. This will be done by carrying out several in-depth data analysis and the collection of customer feedback as well. The study will help to identify areas where customer expectations are not being met at Air Mauritius and find recommendations to tackle these flaws.

The specific objectives are:

To understand the importance of Air Mauritius for the Mauritian economy.
To examine the relationship between pre-flight service quality and passenger satisfaction together with passenger loyalty.
To analyse the relationship between in-flight service quality and passenger satisfaction together with passenger loyalty.
To assess the relationship between post-flight service quality and passenger satisfaction alongside passenger loyalty.
To assess whether airline service quality has an impact on passenger satisfaction and loyalty and what are the positive and negative impacts, if any.
To make recommendations, based on the results of the study.
Outline of study

Chapter 1 introduces the subject matter including the tourism industry, the airline industry and the airline company involved in this research. It also describes the economy of Mauritius and how dependant the island is on its flag carrier for the survival of the tourism industry which is the main source of income for the country. The aims and objectives of this researched are also given in this introductory chapter.

Chapter 2 is the bulkiest of all and lays the foundations of this research with definitions, empirical studies and examples from other studies. It covers service quality in the tourism industry and in airline companies and describes the instrument used for this study. This chapter also defines the service quality in pre-flight, in-flight and post-flight services related to customer loyalty and satisfaction.

Chapter 3 gives enough detail about the methodology used for this research and how the sample size, the questionnaire and the whole research was designed.

Chapter 4 lays emphasis on the results of the survey carried out, together with appropriate discussions to interpret these results. This chapter makes good use of charts and tables to interpret the results of the study.

Chapter 5 is the final chapter of this research and is all about the conclusions and recommendations of the study. It proposes different approaches that Air Mauritius might take in order to improve its services and attract more customers. This chapter also includes the recommendations made by the survey participants and also depicts the survey limitations and what can be done in future researches in order to tackle these limitations.

The differences between the competencies of the two amusement parks are very significant to acknowledge. Ocean Park has its core competencies in nature and wildlife. This is very different from Disneyland. Ocean Park puts the emphasis on education and wildlife, hence combining education and an amusement park into their core competency. Where the amusement park gives the visitors an opportunity to view wild animals and beautiful scenery up close, which is a real rarity in urban Hong Kong. Ocean Park is also highly affected by the Chinese culture as they actively include Chinese festivals such as the Chinese New Year. Besides this they have seasonal holiday themes of Halloween, Easter holiday, summer holiday, Christmas, appealing towards more visitors. Hence, giving them competencies that cannot me imitated or obtained by others.

Resources

Ocean Park posses vary of resources at their use. These resources are assets that build the amusement park. These resources can be looked in two aspects, resources that are tangible and resources that are intangible. Tangible resources are physical resources such as the wildlife, location of amusement park, employees and administration. The intangible are all the non-physical aspects that are present in Ocean Park. Examples of this are the image of the amusement park, administration leadership, day-to-day management principles, and knowledge and experience of the workforce. It is important that these resources are built so that they can be recognised as a set of unique resources. The combination of the wildlife experience and the non-physical assets, Ocean Park has unique resources.

Besides this, it is important to mention that Ocean Park gives the option of having purchasing the SmartFun Annual Pass (Ocean Park). This will give the holder of such a card unlimited admission to Ocean Park and all of its attractions. Also giving discount on food prices and souvenirs, as well as receive discounts at Ocean Park’s business partners, which are numerous museums and Hong Kong Publishers. The reason for mentioning this is that, this is something Disneyworld does not offer. The idea behind the SmartFun Annual Pass is that the holders might be accompanied by new visitors, and as the visitors will not be paying entrance they are expected to spend money in others parts of the amusement park and hence boost revenue beyond the admission fees.

Strategic choices

Market segmentation

Business Level Strategy

It is important to identify how Ocean Park can compete successfully in the market that they reside in. Therefore it is important to have a look at the business level strategy. For this we make the use of the Strategy Clock (Cliff Bowman, 1995) model to identify the bases of competitive strategy for Ocean Park.

1

The Strategy Clock model gives us an indication of competitive strategy options. We would mainly place Ocean Park on the option no. 2 “Low Price”. The reason for this is that Ocean Park must obtain a low-price strategy (which they also intend to according to the case), in order to gain competitive advantage by having cost-leadership. This is mainly looking upon the potential visitors that Ocean Park will have, as they are recognized as very sensitive towards the price. However, it can also be argued that Ocean Park should be closer to a hybrid strategy. The reason for this is that it is a strategy that looks upon having a low cost base and reinvestment in differentiation. This is vital for Ocean Park to realize, as it is their competencies that must be differentiated in order to attract more visitors, hence gain competitive advantage. But this must be done on a low cost base. Differentiation as a business-level strategy (number 4) is not an option because this strategy chooses price premium as a pricing strategy, and Ocean Park cannot afford this.

In order to achieve competitive advantage by using the above mentioned strategies, then it is important that Ocean Park continue to differentiate themselves by using the competencies and capabilities that they have, to gain more awareness and an experience that other amusement parks cannot offer. The price issue is important, as the Chinese consumers are very sensitive regarding the price, so therefore the a price advantage must be present at all times to achieve competitive advantage. So therefore admission to Ocean Park must be cheaper then admission to Disneyland. As the main customers are from Hong Kong and Chinese mainland, it is important to work towards their best interest. Therefore the price is an issue, as well as the ideas and themes that Ocean Park comes up with. They must be appealing and worthwhile for the visitors. Last but not the least, the negative feedback from animal right organizations must be sorted out, as it is direct negative press relations for the most important aspect of the Ocean Park, its wildlife and nature. Only then can they pursue with competitive advantage and gain more market share.

Corporate Level Strategy

A corporate level strategy is a strategic decision level at corporate level, mainly regarding diversification into a new product or geographic markets. The most important aspect of corporate level strategy is to recognise the strategic directions you as a company want to pursue. For this we introduce the Ansoff Matrix (Ansoff 1988).

In the matrix above, there are four different directions that can be taken, market penetration, product development, market development and diversification. We would consult Ocean Park to emphasise on the existing market and looking upon the “products” that they currently offer, and maybe even look upon new “products” that they can offer.

Market Penetration

This direction will enable Ocean Park to stay in the current market that they are in and offer the same existing products that they offer at the moment. This will enable Ocean Park to build on its existing strategy competencies and capabilities without venturing into uncharted territory (Johnson, Scholes, Whittington 2009). This is an obvious strategy as it gives Ocean Park the chance to grow, to penetrate the market, and that is exactly what they require, to gain more market share. In order to do this, they will have to be more aggressive if they wish to penetrate the market. A more aggressive pricing strategy is a perfect aspect to look at. They can also be more proactive and develop their current themes and rides more aggressively, hence investing more in their existing products that they can offer, this can result in Ocean Park being more appealing and therefore attracting more visitors. However a constraint of the market penetration direction is that it can easily result in the competitor retaliating. If Ocean Park starts to actively seek aggressive options to penetrate the market, this can easily trigger Disneyland to retaliate so that they can defend their market share.

Consolidation is an aspect that is also present under the first option, Market penetration. However, it does not support the idea of growth. Consolidation is where Ocean Park can focus on defending their market share with their current products. In order to not grow and still obtain the same amount of market share, Ocean Park will have to look at differentiation strategies, however this is not recommended as growth is vital in order to compete with Disneyland. The last option is also downsizing or divestment (Johnson, Scholes, Whittington 2009). This is not an option as this will result in the downfall of Ocean Park.

Product Development

This option is also very interesting for Ocean Park. This gives them the option to reside in the same market, but to develop their product line with new products in order to appeal towards a greater consumer base. This however, requires a great deal of innovation. This will be required by Ocean Park, to be more innovative in defining and developing new rides, concepts of hotels and restaurants and new technologies such as 3D and 4D. This will definitely appeal to more people; hence a potential market share is possible.

Market Development

If product development is seen to be too costly one other option is to use the same product line but introduce it in a new market. It is required that new segments must be identified, in order to enter an entire new market. This could be an option, however, it seems hard that the same products will be able to appeal towards newer segments in the Hong Kong area. A new geographical location can be considered, in Ocean Park’s case it will have to be a new country. This will require a successful internationalisation strategy. However, this is not recommended, as this will require massive capital investment and use of time and resources. Therefore growth in the existing market is recommended.

Diversification

This will take Ocean Market away from both its current products and market. This is therefore not an option at all. This will require a new concept and a new market; therefore the organisation Ocean Park will not exist anymore. Therefore competing against Disneyland will not be an option, as you will leave the market entirely and give your market share to Disneyland.

Travel is the movement of people between relatively distant geographical locations for any purpose and any duration. This is clarified by Aracely (n.d.) who identifies that different styles of travel give travelers a completely different experience. Usually, the type of travel can be defined by how much money is being spent on that experience. Travel is impossible to do if no cost is involved. People do think about the cost before traveling. Budget travel is suitable for those who willing to go for a travel with low budget. However, some people choose to travel in a luxury way to enjoy a trip to the fullest. There are some differences between budget travel and luxury travel. Comparison between budget travel and luxury travel are shown through different angles, which are accommodation, transportation, food and drink, places to visit and quality of travel.

A comparison of budget travel and luxury travel
2.1 Accommodation

Accommodation is one of the important aspects to think of during travel. To have a pleasant journey, first, traveler must have enough time to rest. The comfort ability of accommodation may influence the travel mood of a traveler. However, for budget traveler, they choose to spend less in accommodation. How could budget traveler do that? With limited budget, traveler can either choose to home stay in house of local residents, living in youth hostel or even camping. Home stay is when travelers stay in the house of local. Nowadays, many families join home stay program to welcome foreigners to stay at their houses during their vacation. Travelers will be arranged to like-minded hosts. This is clarified by Alex Robinson (2010) who indentifies that home stay in Japan works with around 1,000 hosts, from young Tokyo professionals to traditional rural families. For travelers who enjoy nature, they can choose to home stay with traditional rural families as their living style are more to nature. There’s no better way to get to know and love the city than through a well-connected local, Alex Robinson (2010). Besides that, youth hostel is also one of the budget accommodations. The website japan-guide.com states that young hostels are among the most inexpensive types of accommodation in Japan. Almost every country do has a youth hostel association. There are many hostels linked with this association, those hostels are usually cheap as youth hostel is purposely designed for youngsters who have low budget. Instead of home stay and youth hostel, camping is an ideal accommodation for those who have low budget in travelling. Camping can be done as long as there is a tent and a suitable campsite. This is clarified by Kelby Hartson Carr (2008) who identifies that there is no need to stay at an expensive hotel when visiting France. One of the greatest things about a France vacation is the wildly diverse range of low-cost lodging options, including camping. The France government regulates five stars rating for campgrounds, just like it does for hotels. Campsite is a commonplace in France, and it’s a much more social form of accommodation than a hotel. Although it may not be as comfortable as we stay in hotel, camping is definitely a different authentic experience.

On the others hand, for luxury travelers, they may choose to stay in luxury accommodation, such as hotels, bungalows and villas. They tend to spend more in accommodation so that they able to rest in a more comfortable place. Hotels with higher ranking, their services and facilities for sure are better. A high class hotel usually provides services and facilities such as meeting room, ball room, golf club, gym, sauna, massage room, swimming pool, shops and also restaurants. When big families go for travel, bungalows and villas are more preferred because bungalows and villas contain more rooms and have their own compound. Staying in luxury accommodation like hotels, bungalows and villas is much more relaxed and pampered compared to staying in budget accommodation as everything is well-prepared in luxury accommodation.

2.2 Transportation

Transportation is important during travelling. However, what form of transportation can lower the budget of a traveler? Firstly, train can be considered as an ideal transport for those who plan for a budget travel. Train has a large capacity; it can fit in more people once. People who travel for a long period are advised to take train as it safe money and time of driving. Besides, busses are an economical option to travel too. This is clarified by Icarus Annals (n.d.) who indentifies that bus travel is the cheapest means of transportation across the USA and bus stations are more common than airports. No extra charge is added to the bus fare if you compared it with air ticket. Special reduced fares are available for students and international travelers, Icarus Annals (n.d.). Airplanes are much faster, but bus let you see the whole country when you travel. Cheap airfare can be purchased in order to lower the transportation expense. Lower airfares usually require a weekday stay and advance purchase time of at least two to three weeks. Travelers are advised to read through the rules and regulation clearly when purchasing airfare if there is any add-on fees needed. Or else air-line company may offer you a cheap airfare, but charge you a high baggage fees. To avoid high baggage fees, one should online search the information of baggage fees and read through it to avoid any unnecessary payment.

People who travel luxury don’t really care about all these charges. To enjoy the whole journey, they can choose to take plane, cruises or even private jet. Plane will always be the first choice for those who go for luxury travel because plane takes the shortest time to reach a place. Cost of airfare is definitely higher than busses or trains. Cruises are also a type of luxury transportation. Cruise can be considered as a place to travel as there are a lot of entertainments in a cruise, such as casino, shopping spots, bar and etc.

2.3 Food and drinks

In addition, budget travel and luxury travel do have differences in terms of the food and drinks. In budget travel, the food or the way of eating is definitely more economical, such as self-catering, street foods, and after-hours eating (after the operational time, some food will be discounted or even free. For example, after 9pm, the foods will be free for public). Thus, public can enjoy cheap dinner or cheap foods and drinks. It’s such a great deal for tourists who are undergoing budget travel. For self-catering, tourists will spend special moment with their family as they cook together and enjoy it just like in their own house. Street foods are great and cheap too. Street foods usually reflect the food culture of a place. For example, street foods in our country such as ‘satay’, ‘apam balik’, ‘kebab’, ‘pisang goreng’ and etc reflect the food culture of our local citizens. Street foods are such a temptation for tourism. After-hours eating is the precious time for those budget travelers because they can enjoy their meals with a cheaper price or even free. However, the disadvantage of budget travel is that they cannot enjoy expensive foods. They cannot have what they actually want as limited budget prevent them from having extravagant meals.

During luxury travel, foods that preferred are usually hygienic, nicely set, high class, perfect and also expensive. Tourists that do luxury travel will never concern about their expenses on foods, as money is not their main problem. A great food is the priority for them. In fact, their stomach capacity is the main problem as they can have whatever they want. That’s what we call as extravagant meals. They also enjoy buffet which required much money in order to enjoy it. Moreover, they usually not prefer drinking mineral water or tea. In fact, they choose wine as their drinks.

It seems like luxury travel is better than budget travel. However, those who do luxury travel, can’t really enjoy those street foods. They used to enjoy their meals under air-condition instead of queuing up in the crowd.

2.4 Places to visit

Other than foods and drinks, in the two types of travel, places that visited by travelers are somehow similar, but luxury travelers do have more options.

For budget travel, tourists prefer going on their own trip instead of following a tour, because it’s cheaper. This is clarified by Aracely (n.d.) who identifies that budget travelers mainly visit to the less developed world. Therefore, places that they go are limited or in other words, they have fewer choices of places to go. Places that they usually visited are like cultural and historical places, cheap shopping spots, and free entry places such as museum, galleries and national park. Budget travelers like to explore and exposed to the nature. Thus, places such as the rainforest, seaside, cave, waterfall, or even island are some ideal places for them. Those places require low entry costs or even free for visiting. All of these places can be visited for those who do luxury travel. Nevertheless, in luxury travel, they have more options to choose. Such as, they can go to amusement park like Disney land. In addition, they can also enjoy cruise, and the beach’s games which are somehow expensive for budget travel.

2.5 Quality of travel

The very last angle for the comparison is quality of travel. Quality of travel can be seen by many different views. The first view is the level of comfort. By comparing budget travel with luxury travel, luxury travel seems to have the higher level of comfort. Budget travelers will usually stay in a low cost motel or hostel. Staying in low costs hotel usually will lacks of amenities of home, Aracely (n.d.). The beds are not comfortable, communication is limited because they don’t understand English, and utilities provided are bad. While for luxury travels, travelers usually go for a four star or five star hotels. Most of the four stars and five star hotels provide a spa service; the travelers can enjoy the services. This is clarified by Maryalice Yakutchik (n.d.) who identifies that different country has different style of spa; in California, their spa uses mud (clay with water) to put on the body and even face and hair, this is a mud treatment. Other than this, luxury travelers have the opportunity to shop in the shopping spots. In these shopping spots, they can purchase things that are with high fashion and designers’ label.

The second view is the level of cleanliness. The comparisons between budget travel and luxury travel shows that luxury travel has the higher level of cleanliness. Budget travel normally shows us the ugly side of a country. As budget travelers usually visit to rural areas other than developed city, they can truly experience the surrounding environment. However, these places usually are dirtier; rubbish littered everywhere, even to the rivers. This is clarified by Aracely (n.d.) who identifies that local picnic spots that she visited were littered by Styrofoam and plastic trash. Amazing lakes such as Lake Atitlan in Guatemala are a toxic mess. Crude oil contaminates the drinking water of Amazonian tribes. Mining chemicals like cyanide flow into the rivers. While for luxury travels, environment are better and so those places are cleaner. Damar Harsanto (2005) in a media release ‘The Jakarta Post’ identifies that, in Singapore, unlike Jakarta, regulations exist and they are followed; they also keep the cleaners busy. Receptacles around street-stalls require cleaning every 30 minutes during peak hours. With an estimated 40,000 public toilets in the city, this is a lot of work, and 10,000 cleaners are employed in the city each day. Keeping eating places hygienic is another of the government’s priority. Luxury travel shows a better condition and this will lead to a better health.

The third view is the safety of travelers. From this view, luxury travel is having more advantages. Budget travelers will choose to be home stay rather than staying in hotel. There is a risk of staying in a stranger’s home. This is clarified by Kathryn Vercillo (n.d.) who identifies that entering the home of someone that you don’t know means that you are taking the chance to let this person to have ulterior motive of attacking you. Home stay required self care; it won’t be the same compare to own home. They need to care about their luggage, healthy and wealth. While luxury travels have more facilities. In discussing the issues related to airport facilities (grenadagrenadines.com), airport provides services such as charters, security service, overnight parking, refueling service and cleaning service. Most of the passengers are highly concern on the security. High class airports will corporate with international standard of security service so that the passenger will trust them more.

The forth view is efficiency. The budget travelers have to go through many processes that are slow and inefficient all the time. This is clarified by Aracely (n.d.) who identifies that purchasing a plane ticket requires travelers to get number from ticket machine, wait in a lobby for 1.5 hours and then watched the clerk shift the plastic credit card hand held machine over the carbon copy and our credit card. This was for a major airline in Argentine. However, the budget travelers must used to it. While for luxury travel, travelers will receive a special offer; once they register themselves under the hotel, they will have the opportunity to enjoy all the facilities at the first time. For example, most luxury hotels do help travelers to settle the transportation matters.

The last view is experience gained during travel. Different ways of travel will definitely have different kind of experiences. Budget travelers will have an authentic experience while luxury travelers will have an extraordinary experience. The budget travelers have the chance to know more about a country’s culture, eating style and habits. For budget travel, travelers will have a simple breakfast served with tea or coffee, own paid lunch and dinner which recommended by the citizen. Foods recommended by local citizens are usually cheaper. During luxury travel, travellers will have the chance to enjoy a superior experience. BC Doan identifies that The Poseidon of Fiji underwater resort is built 40 feet below, and was opened in year 2009, Doan (2008). This resort offers a 16-passenger luxury submarine tour, and guests are also provided with a personal Triton submarine for excursions on their own. Staying in the undersea hotel definitely will bring them an extraordinary experience.

Conclusion

Travel can be classified into two types, which are budget travel and luxury travel. Different people prefer different ways of travel as different experiences can be obtained through both budget travel and luxury travel. Both of them have their advantages and also disadvantages. Budget travel allows people to visit different places in low costs but with some limitations, whereas through luxury travel, people keen to enjoy a trip without bothering the costs. In general, travels do have a lot of benefits. People get to explore to more new places, reducing stress level which lead to a better health and learn the way people live and their traditions.

Millions of guest visit tourist attraction each year. The majorities of them enjoy the experience and tell their friends about the attraction. The extent of attraction development is increasing throughout the world. The nature and type of attraction now available may be a large theme park, with several “white- knuckle” thrill rides, a historic property, a museum, a heritage center, a cave system, a zoo, a brewery or distillery, a cathedral, or even a nuclear power station.

Tourist attractions are an essential ingredient for successful tourism, destination development. “Attractions are designed to attract; they are prime motivators for visiting a destination or resort” – (Clare Gunn, 1972). Attractions are clearly at the forefront of tourism, both culturally and economically.

Unfortunately, a succinct, rigorous definition relevant to all visitor attractions does not exist. Attractions can, however, be identified and categorized by applying the following criteria. A visitor attraction is a feature in an area that is a place, venue, or focus of activity and does the following:

Sets out to attract visitors (day visitors from resident and tourist population) and is managed accordingly.

Provides a fun and pleasurable experience and an enjoyable way for customers to spend their leisure time.

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Is developed to realize this potential

Is managed as an attraction providing satisfaction to its customers.

Provide an appropriate level of facilities and services to meet and cater to the demands, needs, and interest of its visitors.

Today we have many of escaping, but tourist attraction still growing in number and admissions are increasing. The reasons are not mystical. In fact, the fundamental reason remains the same enjoyment. Increasingly, enjoyment is now qualified by other deeper sociological and psychological motivations such as enhancing life and experiencing things first-hand.

Today’s attraction markets are more sophisticated in their tastes than the predecessors. The new generation of hands-on museums and exploration centers involve the customer in complex experience that is both enjoyable and interpretive. Attractions, now more than ever, have to animate, or bring to life, their message, be it fun or educational, be it heritage or thrill-creating.

Although the nature of all attractions is similar, their particular individual quality is different. Each offers a unique experience to its customers. The operation and management of attractions do, however, share a number of similarities and common features. Each attraction has to operate effectively and efficiently and achieve a high degree of visitor satisfaction within the resources available to it.

Comparing and contrast two different distinct types of visitor attraction-

The word “castle” may be seen on English maps against all manner of different sites and buildings, some fortified, some purely residential, from long abandoned prehistoric camps to pseudo- Gothic shams. A castle was a private fortress, of king or noble, and was a product of the feudal system. The castle, then, is the fortified residence of a lord and a manifestation of feudal society and more especially feudal lordship.

Leeds Castle is perhaps the loveliest, most romantic castle in England. This fairy- tail structure is situated on two islands in the middle of the River Len near Maidstone, Kent , not far from London.

The history of Leeds Castle England can be traced to the 9th century, when a Saxon lord built a manor on the one of the islands on the River Len. The most famous resident in the history of Leeds Castle was King Henry VIII, who made further additions to the

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structure, converting it from a fortress to a royal palace for his first wife, Catherine of Aragon.

Leeds Castle England has been open to the public since 1976 and is maintained by the Leeds Castle Foundation. A Leeds Castle tour includes visits to the old keep, the Gloriette, named after Eleanor of Castle. Dog lovers will enjoy the unique dog collar museum, also part of the Leeds Castle Tour. Outside, the Leeds Castle tour features the Culpepper Gardens, a classic English country garden; several aviaries of native and exotic birds, including a duckery with rare black swans; woodland gardens; a grotto; and a yew-tree maze. The extensive parkland surrounding the castle was landscaped in the early 18th century. Many of the trees that were planted then still remain. The park is split by streams and lakes that are home to over 30 species of waterfowl. The Duckery provides habitat for ducks, geese, and swans. There is a lovely woodland garden, at its best in spring when daffodils, narcissi, and anemones are in bloom, and an English Cottage Garden. Leeds Castle is also home to the National Collection of Bergamot. In the gardens is an aviary housing rare and endangered bird species from across the globe. More exotic still is the yew Maze, planted and trimmed to resemble a topiary castle. Within the Maze is a secret underground grotto. There is even a 9-hole public golf course.

Leeds Castle provides a venue for many country events in Kent. The castle can be booked for conferences, weddings, and other private gatherings.

Heligan is a modern miracle. Until the First World War, the estate gardens at Heligan were one of the glories of Cornwall. But they were left to sleep for many years.

The Lost Gardens of Heligan, Cornwall were created mainly in the 19th century, of were one of the finest gardens in England of their period, with 57 acres of planted gardens, around 100 acres of ornamental woodlands, and 300 acres of rides. Scattered throughout were follies and temples. Henry Hawkins, Tremayne and John Claude Tremayne in turn created and planted the gardens and ornamental woodlands with walks and rides. They were noted botanists and horticulturist and by the 1900 had a amassed a wonderful collection of trees and shrubs from all over the globe, many of which can be seen today. It was the centre of the community with 20 house staff and up to 22 garden staff, with the local economy dependent on the estate for their income and

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parishes assisted by the Tremaynes benevolence. Created as a horticultural playground for experimenting with the new passion for subtropical plants that swept the country one hundred and fifty years ago, this twenty two acre steep-sided valley garden is home to some of the lushest vegetation in the country.

The Pleasure grounds- The pleasure grounds house rare and exotic shrubs, collected by plant hunters, from all over the world in the 19th century. There are lots of parts to the Northern Summerhouse with its sea views, the Italian Garden, the Fern Ravine, the Wishing Well, one of the finest beehole walls in the country and the Crystal grotto whose interior was lit by candles for romantic summer evenings. Recently opened in 1997 is the walled sundial garden. And there is the cast herbaceous border described as the finest in England in Victoria times.

The Vegetable, flower and fruit gardens- In previous centuries the Productive Gardens were called upon to supply the “Big House” with all of its day-to-day requirements of fruits, vegetables, herbs, ornamental plants and cut flowers. Four walled gardens complete with glasshouses, frames and pits, produced the flowers, fruit and vegetables for the Big House. The melon garden even gas a manure heated pineapple pit, the glasshouses produce citrus fruit, grapes and peaches. Here is also a wonderful collection of working buildings, a potting shed, a fruit store, tool sheds and a dark store.

The Jungle- the Big House looks down the valley which eventually winds its way to the fishing village of Mevagissy. The jungle was created to house a collection of sub tropical plants.

The Lost Valley- The latest in the string of restorations. The area has a history of charcoal burning and Georgian rides, with a water meadow and restored lakes. It was opened to visitors in 1998 to visit this native Cornish woodland- a circular walk of an extra mile now incorporates the Medieval Sunken Lane and additional sections of the original Georgian Ride. The lakes and ponds are home to several species of fish and skimming the surface of the water, magnificent dragonflies and damselflies hunt their prey on the wing. For all those with a spirit of adventure this is a unique opportunity to roam through a wild and beautiful landscape.

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Since it opened, visitors have flocked to Heligan. By 1998 it became the most visited private garden in Britain with over 200, 000 visitors. It also won the “Country Life” Garden of the Year award 1995.

Compare: The Leeds Castle and The Lost Gardens are opened for the public. They both have gardens. In the Leeds Castle there is a lovely woodland garden, at its best in spring when daffodils, narcissi, and anemones are in bloom, and an English Cottage Garden. In the gardens is an aviary housing rare and endangered bird species from across the globe. The Lost Gardens of Heligan, Cornwall are created in 19th century, of were one of the finest gardens in England of their period. There are few different kind of gardens- The Northern Gardens, The Vegetable, flowers and fruit gardens, The Jungle. In the both places there are located lakes. Leeds Castle has to be one of the most beautifully situated medieval castles in England, projecting into its natural lake. In the Leeds Castle, the park is split by stream and lakes that are home to over 30 species of waterfowl. In the Lost Gardens of Heligan, there is a place called The Last Valley. With its history of charcoal burning and Georgian rides, its water meadows and restored lakes and ponds. The Leeds Castle and The Lost Gardens of Heligan are open every day of the year. This two visitor attractions have their own web-sites where you can find out what information you need.

Contrast: The first visitor attraction is a castle and the second is a garden. This makes them different from each other. Leeds Castle provides a venue for many country events in Kent. The castle can be booked for conferences, banquets, weddings, and other private gatherings. Leeds Castle is not just a museum but also a place where people meet and special events bring the grounds to life. On the first Saturday of every month, the castle hosts Kentish Evenings, featuring a cocktail reception, a private Leeds Castle tour, and five- course meal. In June and July, Leeds Castle hosts large open- air concerts, featuring music and performances. The Lost Gardens of Heligan doesn’t offer

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such an option, people just go for a day- trip. But in the web-site they offer a hotel, where you can stay when visiting Cornwall.

Attraction is a good word; it releases managers and visitors from the limitations of the more popular but restrictive titles such as parks and resorts. It is also important to consider some of the less obvious reasons that people visit attractions, because these play an important part in the way customers are treated and how managers understand customer aspirations, their disappointments, and complaints. Customer perceptions can vary widely from the image that is promoted.

In the days before television, video, cable, or satellite communications and with little other mass entertainment for the growing populations of the main industrial countries, these “fun” attractions soon developed strong market interest. People worked longer hours in more difficult circumstances. Wars were never far away, together with considerable repression of either ethnic, religious, or cultural groups. People needed some magic in their lives to escape the rather difficult realities of everyday life.

Today we have many ways of escaping, but tourist attractions still growing in number and admissions are increasing. In reasons are not mystical. In fact, the fundamental reason remains the same- enjoyment.

Festival is an event that generally staged by a local community. There is a lot of festival in the world. There are many different festivals and also there are many similar festivals in the world. All of the country has different festival and they observe in different ways. There are many kinds of festival in the world. Historical festival, Social festival. Arts festival, New Year festival, cultural festival, film festival. Music festival. Food festival, folk festival etc.

2. Etymology of festivals: the word festival comes from English word fest, French word festivals, Latin word festivals. After 1580 it was recoded as noun. Before it was used as adjective. In this time it the word feste come form Middle English, from middle French, from Latin.

3. Countries of choice: to compare and contest of festival I have chosen two countries. Among these countries there are many festival observed every year. From these I have chosen two festivals to compare and contest.

5.1 Caribana festival in Canada: Caribana festivals come from Caribbean culture and history which is held in the summer across the city of Toronto, Ontario in Canada. Every year hundreds of thousand visitors from around the world the world come to the Toronto’s lakeshore. It is the largest festival in the North America.

It takes place about three weeks. In this time there held a different kind of event take place. Music festive, folk festive, and many others takes place there in the festival.

5.2 History of caribana festival of Canada: caribana was annually observed from 1967 in Toronto. It is a gift from West Indian community of canards. In the before years the main festival events organised by a nonprofits organisation of Toronto which name was Caribbean cultural committee (CCC). It was establish by the Caribbean organiser living in Canada. In 2006 this origination fall in financial crisis so they fail to arrange this festival at the end Toronto government give financial aid to run this festival from this it named Toronto Caribbean carnival (caribana) festival.

5.3 Events of caribana festival of Canada: the festival start with a massive parade. It took place in the first weekend of August. In this time a dancer called “mas player” along with live caribana music start from big speakers from 18 wheeler trucks. Calypso Tents Music Series is one of the most attractive events. Story telling is favourite event of this function. Art exhibition held in Royal Ontario museum on July 23 – August 15th. Hundred of works shone there. Mainly African-Canadian artists work. Scotia bank Caribana Gala takes place in liberty Grand on July 23rd. an event of arts and festival. King and queen show is another important event of the caribana festival. It held on July 29th in the Lamport Stadium. Another thrilling event is Pan Alive. In this event musical event are shown held on July 30t h. caribana food festival is an exciting new event takes place in the Ontario place on August 1st . There is another programme held in the Ontatia place which is De Scotia bank caribana Lime where you can take food, watch dance and enjoy live music at the same time.

6.1 Poyela Boishak festival of Bangladesh: poyela boishak is the first day of Bangla calendar. This calendar is followed by the Bangladesh, Assam, west Bangla, and Tripura. This festival is celebrated 14 April of every year. Main festival held in Dhaka the capital city of Bangladesh. About one million people attend this programme. In this day all stage of people attend this festival. In this day Dhaka become festival looks. All roads become colourful. People were colourful dresses in these days. Various types of placates, banners, festoon and many kind of colourful toron are displayed. Government declare holiday in this day. In this day different cultural programme are arranged. A lot of processions are getting out in this day. In this day a lot of fair arranged across the country.

6.2 History of poyela boishak: Hindu Vedic solar calendar is nearly to the Bangla calendar. The Bangla year commences in mid-April of the Gregorian year. At time of moghals period calendar are count for harvest with hijri year. But farmer cannot count this time. That’s why Emperor Akbar ordered to reform the calendar. After this order the famous astronomer Fatehullah Shirazi reformed the Bangla New Year based on Hijri & Hindu solar calendars. This New Year (fasli san) that’s mean agricultural year first introduce in the 10/11 march on 1584. In this time landlords are arranged different kinds of fair to celebrate this day. In this day Bangali traders open new account book called “halkhata” in this day traders finish all due with his customers and give them especial sweet.

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6.3 Celebration of poyela boishak: This day are celebrating two ways in the country. One in rural area and another is cities area. In rural area people were new cloths and they keep their home net and clean. In the cities people celebrate this day difference way from rural area. In the cities people observed this day by elaborate programme, Especially in Dhaka. Various kinds of agricultural products, cosmetics, toys, traditional food are sold in the boshakhi fair. This fair provides entertainment, by staging jatra (traditional plays), jari gan, sari gan, murshidi song, bual, arfoti song. Many stage dramas are shone in this day especially Yusuf-Zulekha & Radhe- kisno.

Events, kite flying in the Dhaka, in the village games are bullfights, flying pigeons, boat racing. In the cities people get up in the morning and ware especial cloths, young women were white saris with read edge, ful(flowers) of their head and, Man were Panjabi(shirt) and lungi (long skirt). In the morning Cities people eat pant-bath (rich with water) with fried hilsha fish. A lot of people gather under the banyan tree at Ramna Park. In this place famous song a¦?a¦?a‹, a¦?a‡ a¦¬a?a¦¶a¦?a¦-, a¦?a¦?a‹ a¦?a¦?a‹ (come, o boishakh, come, come) sing to welcoming New Year. Social cultural organization take out procession and parade around the town, university of Dhaka also take out another procession into the campus, news paper give out especial addition, radio, television broadcast live this function.

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7. Significance: now I will describe about the significance of these festival.

7.1 Significance of caribana festival of Canada: caribana is great festival for the Canada, by this festival Toronto get especial definition because a lot of people around the world come to attend this festival that’s why it become familiar to all over the world. This festival is held not only Toronto but also Ontario, province, caribana, festival are also celebrate in the America. Immigrants from Trinidad and Tobago introduced this caribana festival. Now it is the third biggest Caribbean festival in the world.

7.2 Significance of poyela boishak: poyela boishak is now recognized as multicultural because many people around the world attend this programme. In this day all Bengali around the world together celebrated this programme that’s why it become famous in the subcontinent, in the subcontinent about 30 core people speak in Bengali so poyela boishak is always a model festival for these huge amount of people.

8. Conclusion: festival is always important for every country, It familiar one countries culture and tradition to the worlds. In the festival people get recreation, there are different types of festival in Canada and Bangladesh. And there is also difference celebrating ways but both countries enjoy this festival with great festive look.

CHAPTER THREE

COMMUNITY PROFILE OF THE WA MUNICIPALITY

Location and Size

The Upper West Region is located in the north-western part of Ghana and shares borders with the La Cote D’Ivoire to the north,-west, Burkina Faso to the north, Upper East to the East and the Northern Region to the south. The Wa Municipal Assembly was created out of the then Wa District in 2004 with legislative instrument (L1) 1800 in pursuant of the policy of decentralization started in 1988. The Assembly is empowered as the highest political and administrative body in the Municipality charged with the responsibility of facilitating the implementation of national policies. Under section 10 of the Local Government Act 1993 (Act 426), the Assembly exercises deliberative, legislative and executive functions in the District. By this act, the Assembly is responsible for the overall development of the Municipality. The Wa Municipality is therefore tone of the eleven administrative areas (District Assemblies) that make up the Upper West Region (UWR) of Ghana. The Municipality shares administrative boundaries with Nadowli District to the north, the Wa East District to the east and the Wa west district to the west. The Municipality lies between latitudes 9?50!N to 10?20!N and between longitudes 9?40! W and 10?15!W. It has an area of approximately 234.74 km2, about 6.4% of the area of Upper West Region. The implication of the location of the municipality for development is, enhancing bilateral trade and commerce with Franco phone countries. The Wa town has the potential to grow and be upgraded into both an industrial and commercial hub for the north-western corridor of Ghana. The Figure 1 (map) below shows the location of the Wa Municipality with some of the peri-urban communities that fall victim of the rapidly urbanizing process in the municipality.

Demography

The Upper West region is the youngest region in Ghana. In 2010, the population of the region stood at 702,110 with a growth rate of 1.9% per annum. According to the 2010 population and Housing census, the Wa Municipality has a total population of 107,214. Currently, the total population of the municipality stands at 127,284 (male: 61,826/female: 65,458) with an urbanized population of 71,051 (GSS, 2012) representing 66.3% compared to the national urbanized share of 50.9% and the regional urbanized share of 16.3%. This also implies the Wa Municipality alone accounts for a 62% share of the region’s urbanized population in the year 2010. The Municipality is also reported as having an urban population growth rate of 4% as compared to the national urban growth rate of 3.4% (Wa Municipal, 2012; GSS, 2005; GSS, 2012). The population structure of the Wa municipality revealed a preponderance of the youth over the aged and females (51%) over males (49%). The youth form 49% of the total population with a potential working population of 47% and 4% aged. This means a high dependency ratio since the economically active population is 47% compared to dependent population of 53%. The population density is 542 persons per square kilometers with its associated development implication in the areas of housing, education and health facilities, environmental sanitation, water supply, pressure on land and socio-economic infrastructure due to the rapidly urbanising township. This raises the issue of population management, specifically, housing, land use planning, streetism, conflict management, to secure the future of the municipality.

The gender implication of the above includes programming for women, mother and children to provide for peculiar health, educational and economic needs and strengthening institutions for effective governance and protection of the vulnerable and excluded and also ensure human rights especially for women. A second implication is that the youthfulness of the population requires the provision of social infrastructure especially schools, creches, day nursery, primary and junior secondary schools, healthcare services especially family planning, adolescent and reproductive health services. Thirdly, there is the need for skills development programmes that will provide the youth with employable skills to address current and future unemployment problems. These implications are linked to population management issues such as enhancing effective resource mobilization, human, financial and material resources for the provision of basic socio economic infrastructure and services in the educational and health sectors. There is also the need for capacity building and institutional strengthening for the staff of the municipal assembly and other sector departments and the need to embark upon vigorous population management programmes and employment creation for the youth. The existence of educational facilities universities, Polytechnics, long distance learning centers, vocational and technical institutions, availability of electricity, water, banking, telecommunication and transportation facilities employment opportunities and availability of agricultural fertile lands in the Wa town are responsible for the current rural exodus of populations into the city centre leading to the expansion of the urban centre towards the peri-urban communities in response to the influx of populations and developments.

Relief, Drainage and Topography

The Municipality lies in the Savannah high plains, which generally, is gently undulating with an average height between 160m and 300m above sea level. The gentle rolling nature of the landscape implies that the topography is no barrier to agriculture and other physical development. The low lying areas are found in the following localities; Charia, Zingu, Kperisi to the North and Piisi, Dapouha, Boli, Sing, Biihe and Busa to the South. These manifest in the form of valleys that collect and retain water during the rainy season and are therefore suitable for rice cultivation and livestock rearing. These low lying areas have further given rise to two main drainage systems, the Sing-Bakpong and its tributaries to the South and Billi and its tributaries to the North. The streams are seasonal and thus dry up during the long dry season thereby reducing available of water for agriculture, domestic, industrial and constructional uses. This implies the provision of dams, dugouts and rainwater harvesting in order to provide adequate water to meet the domestic and agricultural needs of the increasing population in the area.

Weather

The climate of the Wa Municipality is characterized by long, windy and hot dry season followed by the short and stormy wet season. The dry season occurs between November and April. The north eastern trade winds from the Sahara desert precipitates the cold harmattan winds between November and February which brings with it coughs, cold and other respiratory diseases and also skin diseases. The hot season records high temperatures with a peak of between 40⁰C and 45⁰C in March and April causing dehydration and incidence of cerebral meningitis. The effect of climate change is becoming more manifest of late due to human activities in terms of bush burning, felling of trees, poor farming practices and infrastructural activities. The wet season lasts between April and October. The annual mean rainfall volume of between 840 mm and 1400 mm is sparsely and poorly distributed over the months. The rainfall pattern is erratic and punctuated by spells of long droughts and heavy downpours and floods. This affects humidity levels, soil moisture levels, crop growth and general agricultural productivity.

Land use

Notwithstanding the fact that the municipality is the commercial hub of the upper west region, agriculture remains main the economic activity. It remains the largest single contributor to the local economy and employs about 70% of the active population. The main staple crops grown are millet, sorghum, maize, rice, cowpea and groundnuts cultivated on subsistence basis. However, soybeans, groundnuts, Bambara beans are produced as cash crops. Economic trees within the municipality are sheanuts, dawadawa, mango, baobab and teak.

The vegetation cover of the area is guinea savanna woodland, which is made up of grasses and tree species such as Butylosternum Paradoxum (Shea tree), Parkia biglolosa (Dawadawa), Adansonia Digitata (baobab), Anarcadium occidentale (cashew), Acacia, Ebony, Neem and Mango among others. There is a marked change in the plant life of this vegetation zone during different seasons of the year. The vegetation in this area is thus open and dominated by short grasses. In the wet season, the area looks green and in the dry season, the grass dries and most of the trees shed their leaves and prone to bush fires. Human activities such as firewood harvesting, charcoal burning, farming, quarrying, construction etc. are all combined to modify the natural environment. The Municipality lies in the Savanna high plains, which generally, is undulating with an average height between 160 and 300 m above sea level and has two main drainage systems, Sing-Bakpong and its tributaries to the South and Billi and its tributaries to the North. The streams dry up during the long dry season thereby reducing available water for agriculture, domestic, industrial and construction users. Apart from the Wa central-the capital of the municipality, there are eight peri-urban towns within the municipality. However, the study would focus on the four fast urbanizing communities (Busa, Kpongo, Charia/Loho and Kperisi) located almost equidistance from the municipality.

Economy of the Wa Municipality

The structure of the economy of the municipality has not changed since 2009. It is still dominated by agriculture (about 70%), followed by commerce (about 9%) and industry (about 3%). Other key sectors of the economy are transport, tourism, communication and energy. Peoples’ sources of income for livelihood depend on the economic activities they undertake, the level of diversity and the technology or know-how used. Comparatively, the diversity of the economy of the municipality is very limited and dominated by agriculture, which is equally not diversified. Wa municipal falls within the Savannah Zone where poverty has been above the national average. Currently, nine (9) out of every ten is said to be poor. Average households incomes are very low and bread winners few. An analysis of household’s expenditure shows that about 80% of their income is spent on food and 20% on rent, education, health, utility charges and funerals. The high level of poverty is attributed to underdeveloped social overhead capital. Social overhead capital, which supplies services (power, transport, storage, communication, education) that are indispensable to modern industry are under developed. The under development of this capital base is a constraint or bottleneck to economic growth and development in the Municipality.

Agriculture

The agriculture sector provides more than 60% of the municipal population sources of jobs, livelihood and business. It is a sector crucial to the local economy, because it is currently the major provider of jobs. Despite its strategic role in fighting poverty, it is under modernized. Traditional technologies still dominates agriculture production, processing, storage and marketing. Programs are therefore required to enhance development of sustainable agriculture production systems e.g. irrigation systems, enhanced farmer education and training, enhanced technology transfer in agriculture production, storage and enhance corporate development for marketing. Agro-Industry is an immense potential waiting development. The investment potentials are many and varied.

Cereals flour: processing from Staple food crops like maize, millet and sorghum. About 5,581, 7,113and 5,180 MT of maize, millet and sorghum respectively are produced annually. About 70-80% of the production is processed at grinding mills where the possibility of food contamination is very high.

Pito Brewing: A local beverage (Pito) produced from sorghum (Guinea Corn) which enjoys a lot patronage in the municipality and the region faces the challenges of maintaining the quality/standards beyond a day, meeting preferred taste and alcohol level of consumers, packaging and traditional brewing process. Yet it is one of the major sources of livelihoods and income for women. Modernizing pito brewing has a potential of not only augmenting sorghum production but improving women income level.

Processing/Packaging: of dairy and meat products (cheese, yoghurt, sausages) for households, catering and hospitality industries: Cattle herds are about 6,696 while small ruminants’ population is about 8,457. Livestock production is still basically open range, while a growing hospitality and catering industry lack the necessary meat product.

Edible oil extraction: Shea butter, Groundnut and Cotton seed oil are extracted using traditional methods. About 6,696, 5,154, and 5,303 MT of sheanuts, groundnuts and cotton seed respectively are produced annually in the Municipality.

Fruit juice/jam extraction: Yet another emerging business area with great growth potential is fruit juice extraction. Fruits of significant economic importance in the municipality include mango, cashew, shea, “zumbringa”.

Tourism

Tourism is one of the fast growing sectors in the Municipality of Wa and awaits a lot of investment. Apart from unique attractions (ranging from natural resources, culture and entertainment), a relative good basic infrastructure, transport and hospitality base promise the municipality a unique tourist destination. These potentials notwithstanding, lodging, food and beverages facilities, and support services are inadequate and substandard. Some of the notable tourists’ attractions include; the Wa-Naa Palace (a symbol of authority of one of the three epical authorities of traditional Wa), a flat roofed magnificent traditional building with rumble stripped walls; the Dzendzen Pool, George E. Ferguson Tomb (the first agent of the Governor of the Gold Coast Colony to reach Wa, May 4th 1894), Western Sudanese style built mosques e.g. the Centenarian Mosque at Nakori, Chegli crocodile pond, indigenous traditions, buildings and culture, dance and music.

Transport

The transport system in the Municipality is made up of road and very limited air transport. The road network is about 385km comprising 256km latitude roads and 129km, surfaced roads (trunk tarred roads). The Municipality has four (4) trunk road links to Kumasi and Tamale, Dorimon/Burkina Faso, Lawra-Hamile and Tumu/Leo. This is a strong advantage for enhanced trade and tourism. However, the conditions of these are bad and inhibit transport services between Wa and these locations. The absence of a by-pass road for traffic on direct route to neighbouring Burkina Faso, undeveloped arterial roads, poor drainage network, inadequate/substandard travelers and cargo lorry parks, limited pedestrian cross walks, absence of bus stop pavements do retard the progress of the transport sector. Wa Municipality has over 300 commercial/ private vehicles population and experience over 200 Vehicles passage day the services providers are dominantly private operators: GPRTU, Metro Mass transport, STC, OA, DKM, Diamond Winners, EMEKPA and Private alliance transport. Another most predominate means of transport is the use of motorcycle. This lessens traffic situations but however causes accidents in the town. It is incumbent that for the Municipality to tap the full benefits of all sectors, transportation requires a serious development intervention.

Housing /Real Estate development

As a regional capital the municipality performs political, administrative and commercial services which demand appropriate housing for households, offices/institutions and business. However, compound housing which usual accommodate six to12 households with poor municipal services still dominates the housing sector in the municipality. The housing challenge is aggravated by a floating students’ population which lack accommodation on campuses.

Commercial Hub of the Region

The Wa Municipality is currently the regional commercial/service centre with average trading/office facilities (infrastructure). It has over 800 SME in tourism, agro business/ processing, Commerce, metal fabrication, construction, banking & Finance. The presence of some market facilities (shops), do attract people from all corners of the region to trade in the municipality. A few Modern shopping facilities are also present to ease the congested shopping situation in the municipality. The relatively large number of SMEs opens up opportunities for Partnerships/Joint Ventures The industries in the Municipality are small scale and are categorized into Agro processing, wood, Textile, metal glass, leather & hide, clay/sand/stone, art & craft. There is a high level of agro-based industries in the Municipality. To finance these industries there are about 15 financial institutions (Banking and Non-banking) in the Municipality. This place the municipality in a better position to assist small and medium scale businesses to grow.

Light Industrial Area

The Local Authority, Wa Municipal Assembly, has acquired 20 acres of land for light industries. Utilities like electricity and water have been provided. This creates an impetus for a total transformation of the economy. The Municipal Assembly is seeking potential investors to do business with. Beside the Municipal Assembly is ready to front/assist any potential investor to access land for any investment in the municipality.

Banking and Financial Institutions

The municipality can boost of over 15 banking/non-banking institutions; ADB, SGSSB, Barclays, Stanbic, APEX Bank, GCB, NIB , 1st National bank, Lawra Area Rural Bank and Sonzelle Rural Bank. There also exist Five (5) non-banking financial institutions. There are Two Credit Unions Ghana Financial Services, Comforter, DKM, Line Paradise and Sinapi Aba. They provide the necessary financial services.

Infrastructure

Infrastructure comprises water systems, communication networks, electricity (power), health care facilities, roads, streets security system among others. The available infrastructure in the Municipality is averagely adequate to promote the growth of other sectors in the region. There is the availability of water systems, communication networks, electricity (power), health care facilities, roads, streets security system that will facilitate development in the municipality.

Key Interest Areas to do Business in the Wa Municipality

Expanding production and value addition in agriculture, industry, tourism and transport
Enhancing institutional competitiveness
Effective and efficient and communication system
Engaging diversified forms of partnerships
Developing and retaining the necessary human capital for hiring and self-employment
Facilitating access to financial and non-financial support service

Commercial Casino Industry has been occurring in United States over 75 years since Nevada legalizing it. When Chef Wolfgang initiated to out fine dining restaurant in commercial casino, this is the beginning of food and beverage revolution in industry in 1992. In 1995, American Gaming Association was created. MGM Mirage acquired Mandalay Resort Group, Harrah’s Entertainment Inc. and Caesar Entertainment in 2005 and the commercial casino industry started booming and other states started legalize opening casinos since then.

The international gaming industry is expanding. Many U.S. casino companies expanded or planned to expand to other countries such as Macao, Korea, Taiwan and Singapore. The international casino industry tends to have rapidly growth as gross gaming revenue in Macao has been more than gross gaming revenue in Las Vegas strip since 2006.

“Know your enemy and know yourself, and in a hundred battles you will never be defeated.” (Sun Tzu’s The Art of War Writings). This Chinese wisdom of warfare probably helps companies deploy a better strategy in many business situations. The MGM Mirage Inc. is the largest company in the Hotel and Casio industry by revenue in the U.S., but MGM financial statement showed that company bottom-line in debt. The company was facing bankruptcy code in the early 2010. In this project, the report had been organized and presented MGM Mirage Inc. or MGM Resorts International in 4W framework:

(1) Who are we? (Company profile, Hotel and Casino industry profile),

(2) Where are we? (Sophisticated tools in Management, Technology, Marketing, Financial and Accounting were used to analyze the company position with competitor in the industry.),

(3)What are problems? (SWOT analysis) and

(4) What are solutions?

Who are we? : Know yourself
MGM History
The Beginning of Las Vegas Race:
2005: MGM Merged Mandalay Bay Group.
MGM Profile in 2009
Organization Structure
Company Strategy

The MGM Mirage Inc. strategy is to generate sustainable, profitable growth by creating and maintaining competitive advantages and through the execution of our business plan, which is focused on: Owning, developing, operating and strategically investing in a strong portfolio of resorts; Operating our resorts in a manner that emphasizes the delivery of excellent customer service with the goal of maximizing revenue and profit; and Leveraging our strong brands and taking advantage of significant management experience and expertise. (Source: MGM Mirage 2010 Form 10-K)

Current Operation

As of 2009, the MGM Mirage reported that the company has completed control of 14 casino resorts and hold 50% of investment in 5 casino resorts. In addition, the MGM Mirage also owned 3 golf courses in Las Vegas, Mississippi and California.(Source: MGM Mirage 2010 Form 10-K)

Casio Resort ( Completely owned)

Nevada

MGM Grand Las Vegas

Mandalay Bay

The Mirage

Excalibur

Monte Carlo

Railroad Pass, Henderson

Gold Strike, Jean

Luxor

Bellagio

New York – New York

Circus Circus Las Vegas

Other

MGM Grand Detroit

Beau Rivage , Biloxi, Mississippi

Gold Strike Tunica ,Mississippi

Casio Resort ( hold 50% in stock)

Nevada

City Center

(Joint Venture with Dubai World)

Circus Circus Reno

Siler Legacy

Other

Borgata, Atlantic City, NJ

Gran Victoia , Elgin, IL

MGM Grand Macau, China

Industry Analysis

Industry Analysis process is an essential assessment tools for every company to deeply understand industry current trends and opportunities. In fact, company will gain a better position and achieve a competitive advantage when it truly understanding marketplace. In the complex marketplace, the U.S. government is categorized industry with 4-digits Standard Industrial Classification (SIC) system. In addition to SIC, the North American Industry Classification System (NAICS) is a new standard for the industry. The NAICS with 6-digits code contains more details than the SIC system. The purpose of SIC and NAICS are economy analysis.

The MGM Mirage Inc. has been classified with SIC into three major categories: Hotels and Motels (SIC 7011), Coin-Operated Amusement Devices (SIC 7993) and Amusement and Recreation Services, Not Elsewhere Classified (SIC 7999). In addition, the MGM Mirage inc. also has been classified with NAICS into two categories: All Other Amusement and Recreation Industries and Hotels (except Casino Hotels) (713990) and Motels (721110). To thoroughly understand MGM Mirage Inc. marketplace, the hotel industry and casino industry had been analyzed.

Hotels and Motels Industry (SIC 7011)

The U.S. government defined a company in Hotels and Motels Industry as

“Commercial establishments, known to the public as hotels, motor hotels, motels, or tourist courts, primarily engaged in providing lodging, or lodging and meals, for the general public. Hotels which are operated by membership organizations and open to the general public are included in this industry. Hotels operated by organizations for their members only are classified in Industry 7041. Apartment hotels are classified in Real Estate, Industry 6513; rooming and boarding houses are classified in Industry 7021; and sporting and recreational camps are classified in Industry 7032.”

Recession impacts hotel industry

In May 2010, Standard & Poor’s industry report stated the hotel industry is still in an unstable condition. The industry will require a longer period to recover from the 2008 recession. Currently, the industry is operating in a difficult situation. The hotel industry is facing drastic competition that forces hotel businesses to lower room rates, which in turn results in lower profit.

The data from Smith Travel Research (STR) Inc. indicated that on average the hotel industry has lost its Revenue Per Available Room (RevPAR) since 2008. The 2008 recession has also brought the hotel occupancy rate down from 60% to 55%. In addition, average daily roommate also dropped significantly 8.8% in 2009. Moreover, room demand dropped 6% in 2009. In contrast, the supply of rooms rose 3.2% in 2009 (refer to figure1). While the U.S. government is making their way out from 2008 recession, S&P’s forecasted that the hotel industry will not return to the same pre-recession level for the next eight to ten years.

Real GDP helps the hotel industry in predicting room demand

In the hotel industry, a high accuracy in room demand elasticity estimation provides CEO with essential information for a long term planning and deploying strategies. In 2009, the research by Dr. Hanson from Global Hospitality Group – Hospitality Lawyers shows approximately a 1-to-1 relationship that holds between the U.S. Real GDP and room demand until the 2001 economic crisis. The real Gross Domestic Product (GDP) is the total output of goods and services produced in a country and adjusted for priced change. The demand is more elastic when the greater the proportion of income spent on the good. After the 2001 recession, the demand retract and continue to grow in a slower pace when compare with the real GDP. The GDP is increasing 4 times faster than the room demand does. The 5 factors that researcher believes that might have an influence GDP and room demand relationship are: Long-term deterioration in consumer confidence, Higher consumer saving rate, consumers trying to recover lost investment, new pattern of behavior and proposed levels of tax increase affecting disposable income. Moreover, in the 2008 recession, the researcher also believes that the recession might create an additional snap back for room demand.

U.S. Business and group travel

The hotel industry profitability can be influenced by a demand from business travel. According to a member survey, the Association of Corporate Travel Executives (ACTE) reports hotel expense represents, on average, 40% of all business travel expense. In addition, American Express stated that airfare will increase from 2% to 10% in 2011, and hotel rates will increase 1% to 10% (Paurowski, 2010). The survey also indicated that 35% of its member strongly considered optimizing hotel expense in 2011 and 50% of its member expressed concern regard increasing in expenses. Passenger Name Record (PNR) in Computer Reservation System (CRS) showed that cooperate travelers have shifted booking methods from Travel Management Companies (TMCs) to Online Travel Agency (OTA). In fact, 30% of its members stated that online hotel rates offered are lower than negotiated rates. The complementary items that are preferred by the majority corporate travelers are: complementary cocktails, free WiFi-internet access and comfort. In conclusion, the demand for business and group travel will likely be for cheaper rooms at lower rates with free complementary. (Michael Boult, 2010).

Domestic and international travelers

Shifts in airline schedules and passenger booking have a direct impact on hotel occupancy. According to the data from Air Transport Association (ATA) 2010 annual report, the static in figure 3 shows that domestic capacity had a declining trend since 2000, and the data also showed that passenger enplaned has dropped significantly from 743 million passengers in 2008 to 703 million in 2009 reflecting a 5.3% decrease of airline industry capacity. In fact, profit margin in the airline industry has been on the negative side. Airliners cut back routes and canceled destinations.

For international travelers, The U.S. Department of Commerce (DOC) and Office of Travel and Tourism Industries (OTTI) expect the industry growth in 2010 and gradual increase to approximately 6-9% through 2015. Five countries, excluding Canada and Mexico, that rank highest in number of visitors to the U.S. in 2010 by volume are: China (40%), Brazil (35%), Korea (35%), Hong Kong (27%), New Zealand (24%) and Australia (19%). A weakening in U.S. currency helps the hotel industry by stimulating the demand from international travelers.

Medical tourism -a little hope for the hotel industry

In the economic downturn, hotel industry needs a stimulant plan to boot-up its occupancy rate. In 2009, Reuters Health section provided some interesting facts about medical tourism in the U.S. The report indicated that U.S. health providers have lost 650,000 patients to hospital oversea such as Thailand, India, and Singapore. In addition, the health providers are predicted to lose as much as $67.7 billion in revenue in 2010. Oscar Goodman, Mayor of Las Vegas, foresee the opportunity for the hotel industry in Las Vegas. Mayor encourages a local business to support the idea of medial tourism. The medical tourism will be an alternative business in the area, the national public radio reported.

Casio Industry

Casinos are the largest revenue generator in the gambling industry. The industry provided approximately 350,000 jobs in the U.S. market. The American Gaming Association and the National Indian Gaming Association (NIGA) are the main organizations in the U.S. casino industry. The AGA encourages its members and their employee to be aligned with updated law and regulations. Moreover, AGA is a realizable source for a gaming industry providing gaming history, educational program, and statistic data on the Casino industry. In addition, the NIGA under the Indian Gaming Regulatory Act has provided Native Americans opportunities to legally run casinos.

U.S. casino trends

The casino industry has been hard-hit by the recession. According to the United States department of labor, the Mass Layoff statistics (MLS) program showed that the hotel-casino industry eliminated 13,000 jobs in 2008 (Labor, 2010). The revenue trend in the casino industry has been on a downturn for the last two consecutive years. The S&P expected a slow recovery from the casino industry.

Las Vegas, Nevada

As of 2009, the American Gaming Association reported that Las Vegas with $5.55 billion in revenue was a dominant U.S. market. According to Las Vegas Convention and Visitors Authority (LVCVA), the statistic in figure 5 showed a 2.4% increase in the number of visitors from 2009. The Las Vegas Strip gaming revenue was increased by 4.3%, but the downtown area gaming revenue was decreased by -7.3% from 2009. In 2009, the 14% unemployment rate in the state Nevada plummeted the economic trail. On a carryover impact from the economic crisis in 2008, the number of attendees at conventions, and a number of scheduled conventions and number of meetings held remained on the decline with decreases of -1.1% and -6.7% respectively. According to the Las Vegas Visitor Profile, Market Segment reported by LVCVA (2009) that 76% of Casino guests were most likely to be traveling in a party of two and average stay in Las Vegas is 4 nights. Casino guests on LVCVA survey stated that 87% of visitors called the hotel-casino directly to book their accommodation.

In 2010, S&P’s industry report estimated casino revenue on the Strip to be 35%-45% of total revenues, and the revenue from hotel rooms was 20-30% of the total revenue. A total enplaned and deplaned air passenger continued to decline. The number of air travelers accounts for 42% of all visitors. (LVCVA visitor profile: ir visitor version). The S&P’s report indicated strong growth from Las Vegas.

Atlantic City, New Jersey

The Atlantic City is a second large of the U.S. casino marketplace. The static in figure 4 shows that casinos in the area have been losing revenue -5.7%, -7.6% and 13.2% in three consecutive years. According to S&P, casinos in Atlantic City are facing heavily competition from New York and Pennsylvania.

Macau, China: New Era of Asia Gold rush

Macau is a special administrative region of China. The CIA – The World Factbook reported that, in 2006, Macau’s gaming revenue surpassed that of the Las Vegas strip, and gaming-related taxes accounted for more than 70% of total government revenue. The Macau market attracted many casino operators from Las Vegas to come and establish a new home-based outside the U.S.

In 2010, the profit in Macau market increased 9.7% in revenue from its loss in 2009. The gaming industry in Macau was expected to rise, but, S&P reported a concern about the room surplus of 40% in 2011 and 2012. In the long-term, S&P still believes that the Macau gaming industry will generate a significant profit for China.

Singapore: A hidden dragon

Singapore is the one of the most strategic locations in South-East Asia. According to Economy Watch and World Bank, Singapore is considered to be a very attractive country for new business. Sources in the Wall Street Journal on October 7, 2010 reported that the Marina Bay Sands project is a 8-billion dollar casino in Singapore, known to be the cleanest city in the world. The casino includes three 50-story structure with approximately 2,500 rooms; a casino, retail stores, dining and 800,000 square feet entertainment complex. The S&P 2010 industry report predicted that the top five markets for Singapore casinos are: Indonesia, China, Australia, India and Malaysia. In addition, the Marina Bay Sands should have no effect on Macau market because the hotel presents a more family-orientated appeal.

Legal and Regulation
Internet/Online gambling

Online gambling is illegal in the U.S. as of November, 2010. Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2266) was introduced to congress in May 2009 by Frank, Barney (Rep). The bill is aimed to Unlawful Internet Gambling Enforcement Act of 2006, which prohibits internet gambling operators from receiving money related to any online gambling that violates State or Federal law (Frank, 2010). Online gambling is also on a serious debate among AGA members regarding a safety and government regulation. The concerns regarding an online gambling are a security technology such as firewall to protect million online users.

Summary Key Fact from Industry Analysis

Room demand dropped because economic recession.

Occupancy rate dropped because dropped in demand and increasing room surplus.

Real GDP could be used as atool for the hotel industry to future demand.

Business Travel booking trends changed from Travel agency to online travel agency.

China is a number one inbound visitor by volume from oversea.

Medical tourism could be an alternative route for simulating demand.

Gaming on Las Vegas Strip continues generating profit.

Atlantic City market for casino is not pleasant after loss in profit of 3 consecutive years.

Macau is growing and generated more revenue than Las Vegas Strip.

Singapore could be a new growing casino market in South-East Asia.

Legalize an online gambling is an ongoing process.

Casino Market: Oligopoly Market Competition

In 2009, the casinos industry had revenue in total of $US 21.8 billion. To determine an economic competitive type of market in the industry, the company uses a four-firm concentration ratio as the indicator. The ratio is the percentage of total industry sales made by the four largest firms (Fig. 4). The four-firm ratio for the casinos industry is approximately 70%, which had created an oligopoly form of market competition. In oligopoly, one firm decision can have a direct influence on demand, price, and profit of competitor in the industry.

Figure 5: Companies in the casino industry by revenue

Furthermore, external assessment of the industry is a critical process for management in decision making. The Porter’s Five-Forces Model, competitive analysis tool, has been utilized for in-depth industry analysis. The model analysis is provided five perspectives in assessing the industry: Rivalry among competing firms, Potential entry of new competitor, Potential development of substitute products, Bargaining power of suppliers, and Bargaining power of consumers.

Porter’s Five-Forces Model Analysis
Rivalry among existing competitors:

MGM : Rivalry among existing competitors : HIGH

Same-size competitors

High exit barrier

Indifferent in product and service among competitors

Table x: Threat of existing competitors

The competitive atmosphere in hotel industry is high. There are a lot of competitors in industry. Furthermore, it seems that competitors compete in same dimension because in commercial casino industry, customers are not much diverse. Therefore, players in this industry found it hard to target different customers with different needs

– There are a lot of competitors with equal power and size.

– Exit barrier in commercial casino industry is high because a company invests huge amount of money, especially, building cost. Even a company wants to exit from the industry, sometimes it force to stay in because exit costs are high.

– Product and service in commercial casino industry are identical. Moreover, there is no switching cost for buyers. Thus, competitor might cut price to attract buyers.

– Fixed costs are high. In order to compete in hotel industry, a casino manager adopts revenue management. The process allows buyers to stay in same type of room in different price. Even a hotel’s products and service are not rapidly become outdated but competitive atmosphere in commercial casino industry is hot, therefore, companies cannot make high profit from this industry.

Threat of new entrants:

The threat of new entrants for hotel and motels industry is low. The industry has significant barriers to entry which include:

MGM : Threat of new entrants : LOW

Supply-side economies of scale

Demand-side benefits of scale

Customers switching costs

Capital requirements

Restrictive government policy

Position advantages independent of size

Unequal access to distribution channels

Table x: Threat of new entrants

Supply-side economies of scale: In commercial casino industry these economies hardly appear. Even a company built more rooms or more recreations in its casino, these economies will not appear. Moreover, the company has to carry more cost, more maintenance cost and more employees cost.

Demand-side benefits of scale (network effects): These benefits occur when the numbers of buyer patronize the company. However, these benefits might not occur in commercial casino industry. In commercial casino industry, a company will find advantages in location, facilities and characteristics of personal working in direct contract with customers. Therefore, having a lot of customers patronize a company will not provide huge demand-side benefits of scale.

Customers switching costs: In commercial casino industry, when customers purchase service from a casino, it is one time use. Therefore, there is no switching cost.

Capital requirements: In order to enter commercial casino industry, a company needs to finance huge budget and the industry return is not attractive. Thus this industry has high barrier.

Position advantages independent of size: These advantages are not depends on a company’s size, incumbents can have competitive advantages that not available to competitors. These advantages in commercial casino industry can stem from locations, brand identities and service.

Unequal access to distribution channels: It is not hard to establish or find distribution channels in commercial casino industry. A company could use agents or let customer books rooms via its websites.

Restrictive government policy: There might be some restriction related to commercial industry such in some area government do not allow a company to build a building that higher than 2 floors or in some countries, a company has to has citizens hold more than half of a company’s shares to operate in that country. In U.S., commercial casino industry is the most regulated and monitored industry.

The threat of substitutes:

MGM : Threat of substitutes : HIGH

Competitor

Table x: Threat of substitutes

There are some substitutes for commercial casino such as hostels, apartments or houses. Customers can stay in hostel, apartment or houses and go to gaming or using recreation facilities at casinos. If buyers concern convenience, they might prefer casino. Because they will have maids clean their room and casinos always locate in a convenience location. If buyers concerns price, they might stay in hostel. However, if buyers concern privacy, they might prefer house.

– There is no cost of switching to substitute. Buyers can change to substitutes anytime if they would like.

Hostels, apartments and house can be substitutes for casinos. They perform similar products and service to casinos, if you concern only hospitality part. However, there are some differences which made substitutes have huge different from hotels. Buyers have to determine trade-off between hotels and substitutes.

In this industry, the threat of substitutes is not high because substitutes have too many differences in facilities and service from casinos. Thus, industry’s profitability is not suffered from substitutes.

The power of suppliers:

If suppliers have power over a company, suppliers might set its price higher, limit quality of service and shift its cost to other parties. In commercial casino industry, a company uses wide range of different suppliers such as supplier for construction, supplier for food and beverages and supplier for hotel equipment. There is almost no monopoly in hotel suppliers. Moreover, only a few supplies that have switching cost such as securities equipment and suppliers did not differentiate their products. The company has to differentiate itself by choosing good location, providing well-maintenance facilities and providing supreme service. Furthermore, the company can easily find substitute suppliers. Therefore, the power of suppliers in commercial casino industry is low.

The power of buyers:

MGM : The Power of Buyer :

Table x: The power of buyer

– There are various customers in commercial casino industry. However, there are some buyers that have ability to negotiate such as group tour.

– Products and service in commercial casino industry are not much different. If customers find that a hotel that they always stay in is full, they have to stay in other hotel. They have to purchase products and service in some hotel anyway.

– Buyers have no switch cost. If buyers want to change from a hotel to a hotel, they can just check-in to another hotel without any switching cost.

– Buyers cannot produce industry’s product if buyers found that a hotel is too profitable. Buyers can switch to other hotels but they cannot produce it by their selves.

– In commercial casino industry, buyers do not stick with brands. Buyers might concerns about quality of product and service. If they find another casino that cheaper but quality and facility are same, they will switch to another casino. In sum, in commercial casino industry, buyers are relatively price sensitive.

From analysis given above, buyers in commercial casino industry have high power and seem to be price sensitive. They can press companies to lower their price and can ask for more quality and service.

Financial and Accounting Analysis

The financial information was published annually to external and internal users.

MGM Mirage Inc. financial statements had been analyzed using financial ratio analysis and information in management discussion. The median number of industry ratio in 2009 is used in this report. By the nature of hotel business, MGM contains a high fix-cost in normal business operation and profits are driven by tourism and business travel demand. MGM requires a large capital to run its hotels and casinos. In 2010, MGM is in process of development a City Center, a capital intensive driven project. The delayed of City Center project has enormous impact on MGM financial statement.

Liquidity and Financial Position
Credit Risk: Facing Bankruptcy

As of December 31, 2009, MGM is in a weak financial position because of its indebtedness.

MGM with credit rating of CCC+ operated the business with 39% on the long-term debt. The management team declared unpleasant statement about the $1.1 billion senior credit facility debt which might be defaulted on maturity date in 2010. The management suggests that MGM must extent the payback period by negotiating with their creditors. Also, management has predicted that future revenue from operation and tax refunds would help reducing MGM debt. The current and quick ratio indicated that MGM has had insufficient fund to operate its casino since 2005. With the ratio less than 1 and below the industry average in both current ratio and quick ratio, MGM has been operated on the line of bankruptcy if the company defaults on its debt.

Revenue base and mix

MGM primary source of revenue came from Las Vegas Strip. As December 31, 2009, the majority of MGM revenue came from three sources: casino (44%), hotel room (23%), and food & beverage (23%).

Casino revenue dropped 12% from 2008 and it had been on decline trends since 2007. In 2009 MGM financial statement, revenue from casino had been divided into three sub-categories: Table games (36% of total casino revenue), Slots (60% of total casino revenue), and Other revenue. The table game revenue decreased 11%, even though there is 33% increases in demand for baccarat.

Sustainability of revenues and earning

MGM profitability ratios are negative in 2010 and 2009 for some ratios. ROA in both 2009 and 2010 are negative. We can break ROA to net profit margin multiply total assets turnover to deepen our analyzing. Assets turnover ratio shows MGM’s ability to use assets generate revenues. MGM’s assets turnover ratio decreases from 2007 to 2009. Even this ratio does not decrease much during 3 year period, it made ROA go down. The main factor that has impact on ROA is net profit margin. The MGM has very low net profit margin since 2008. MGM’s bad signal shows since 2008. After its net profit margin ratio plunge to -11.86% in 2008 and -21.61% in 2009 which a major factor lowing ROA. From analyzing ROA, we can see that MGM has a problem with maintaining its profit margin. MGM’s revenues in 2008 are not much different from 2007, however, MGM cannot control operating expenses, operating expenses in 2007 exceeds revenues. In 2009 MGM revenues decreases by 17%, further, MGM’s ability to control its operating expense decreased. MGM’s operating expenses in 2009 is 114.65% from revenues. The major increase in operating expenses in 2008 and 2009 is property transactions. MGM’s ability to fulfill its short term obligation is getting better in 2009. Both quick and current ratios go up. The reason both quick and current ratios increase because in 2009 MGM carries more cash. However, MGM debt management ratios worsen. Long term debt to equity ratio increases from 2007 to 2009 results increase in total debt to equity ratio. These ratio shows MGM has larger portion of debt compare to equity. Even MGM carries more long term debt recently; MGM has interest coverage ratio high enough to pay back its interest. But this ratio trend increase in recent year.

Hotel operating statistics
Strengths
Strengths – Various portfolios of products and services:

MGM mainly operates casino resorts which include gabling, hotel, restaurant, entertainment and retail. The main operation is in Las Vegas, Nevada, the world famous gambling and entertainment center. Properties in Las Vegas include CityCenter (50% owned), Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, Monte Carlo and Circus Circus LasVegas. MGM operates outside Las Vegas includes casinos in Michigan, Mississippi, New Jersey and Illinois. Not only operate in U.S. but MGM also own 50% MGM Grand Macau ownership. Because each MGM’s casino offers different theme, amenities such as restaurants, spas, private gaming and swimming pool facilities ;and difference pricing to target each customer segment, MGM enjoy competitive advantages over competitors. Moreover, MGM is continuously reinvesting in its business to keep this competitive advantage.

Strengths-Strong Brand Recognition:

MGM operates in tourism and leisure sectors which are gaming, hospitality and entertainment in two continental. MGM offers different casino for different segment, therefore, casinos brand that are operated by MGM are recognized by people all around the world. Moreover, Forbes Travel Guide bestowed AAA five-diamond awards to Bellagio and MGM Grand in 2010.

Strengths-Location:

MGM has properties in the top destination for traveler to go for gaming and entertainment. MGM has 10 casinos in Las Vegas, the world largest gaming and entertainment center and has MGM Grand Macau in Macau, the world second largest gaming and entertainment center. The reason behind this selection, these two places are the major tourism destination not only for gaming activities but also

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