The hotel and Tourism Industry is on the rise with increasing revenues. On seeing the healthy figures in the annual report of Shangri-La Hotels, I was curious to know about their strategies in the competitive industry. The report aims to find out the marketing strategies and whether they can sustain their position with the same tactics. The current position of Shangri-La Hotels in the Global Market is strong. It has been covered using PESTLE Analysis and Porter’s five forces. It includes the external factors affecting business and how Shangri-La Hotels will deal with them.
Shangri-La Hotels is a Hong Kong-based International Hotel chain. It is counted in one of the world's most prominent hotel chains. There are over 100 hotels owned by Shangri-La Hotels. It operates in Asia Pacific, Middle East, Europe, North America, Africa and Oceania. It positions itself in the brand segment of classic premium. It owns 5 brands as per the annual report of 2018.The expansion plans
In 2018, the number of Hotel rooms was 2,295. The number is expected to increase by approximately 5% net. Now it is moving ahead. It would invest in partnership with Tencent for smart hotels. It would use advanced cloud techniques and artificial intelligence methods to switch to the latest smart technological development. It was also planning to set up 5 new resort and hotel properties in India in 2019.
2.1 Shangri-La Hotels: PESTLE Analysis
a .Political factors
The major political factors that could affect the growth of Shangri-La Hotels are political stability of the respective countries, International relations of a country with other countries, hotel industry regulations, competition policy of the company, business policy and incentives, government spending and tax policies, disturbance due to terrorist activities, etc.
These factors can affect the hotel business in various ways. People from different countries may not travel to a country facing the threat of terrorism or an unstable government. Major changes in the business policies by the government of a country may result in broken business tie-ups.
B) .Economic factors
The economic factors that can affect the business of Shangri-La Hotels are interest rates, exchange rates, patterns of consumer spending, consumer income, inflation, recession, taxes, demand/supply, etc. The examples of strong economic factors that affected the businesses widely are the Great Depression of 1930, the Global recession of 2008, the stock market crash in China, the Euro zone crisis, the Icelandic financial crisis, etc. All such economic disturbances increase the rate of foreign currencies. This creates a problem for foreign travelers.
The social factors are demographic factors (age, income, sex, family, education, occupation, etc), consumer preferences, changes in lifestyle, religion and beliefs, health consciousness, emigration and immigration rates, etc. The social factors show a positive sign of growth in the long run.
The common technological factors that affect the business environment are 3D Technology, internet connectivity, wireless network, automation, digitalization, cybersecurity, etc.
We are in the era of Technology. Internet of things is one of the major technological factors that has provided ease and comfort to the customers of the hotel industry. There are sensors at every step with luxuries planted in hotels. Digitalization has also brought a big change. The consumers have got online using smart phones. They are capable of making bookings and payments online. The communication has got digital which is more creative and easier.
E) .Legal Factors
Legal factors are the factors generated because of law on a national or international level. If there are any laws, a company can never go against it. The legal environment of some countries like China is stringent. The freedom to do business and the ease of doing business helps all the industries including the hotel & tourism industry. For example, the rank of India in ease of doing business in 2017 was 100th and in 2018, it is 77th. It means the legal environment of India is supportive.
The examples of environmental factors helping in pestle analysis are our climate, weather, natural calamities, pollution, renewable, and nonrenewable energy sources and goods, environment-related laws, etc.
These factors also have a huge impact on the productivity of people. A country with frequent environmental disturbances is not promising for business. On the contrary, there are exceptions like Japan. Heavy rains can cause flooding of resorts. Natural calamities disturb normal life and people avoid traveling to such places.
2.2 Porter’s Five Forces
The study of these five forces helps in developing the strategies and tactics to prevent losses. It happens by identifying the problems and examining them. Analyzing a problem is the first step to solve it. The five forces are the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, the threat from substitute products and rivalry among the existing players.
A) .Threats of new entrants
Shangri-La Hotels is the growing hotel international chain. It is aware of the importance of renovation and therefore many hotels are undergoing it. The hotel chain maintains a robust growth record.
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