I-J Hospitality sector covers 14 industries from hotels and restaurants to events, gambling and travel services. There are approximately 146. 000 leisure, travel and tourism businesses in Great Britain. Hospitality sector is one of the largest contributors to the I-J economy in terms of finance and employment. According to British Hospitality Association (BAH) the industry employs 2. Million (10%) workforce and provides Billion in wages and profits annually to local economies. However it also experience changes and challenges in economy, legislations and technologies, which make a big impact on this industry. . 1 Introduction to UK Hotel Sector Hotels have a long history and it goes way back, things were different at that time, but concept stayed almost the same, to provide shelter and food for a traveler. Today 34% of hospitality sector is hotel industry with approximately 50. 000 establishments. Industry turnover is around Been. Hotels can be classified into different types based on their operational criteria. Classification is based on location, type of property, services they provide, facilities they have. The segmentation is budget, mid-market, usury, casino, resort or resident. . 2 Introduction to SAVOY Hotel Savoy is one of the world’s most famous hotels. It is the first luxury hotel in Britain and since opening in 1889 it has become byword exceptional for quality and impeccable service. It was built by theatrical entrepreneur Richard Dolly Carte, brought to fame by hotelier Cesar Ritz and Exquisite French cook Augusta Scoffer. Savoy is all about character and glamour. Many famous people have checked in over the years, from Claude Monet and Winston Churchill to Frank Sinatra and Katharine Hepburn. Today’s Savoy is managed by Fairmont hotels group.
In 2007 hotel was closed first time nil 18 years for renovation and re-opened again in 2010. 4. Pestle, Soot and Competitive advantage 4. 1 Pestle analysis of SAVOY Pestle is type of analysis in which external factors are examined to plan organization’s long-term strategy. These factors include: Political, Economical, Socio- Cultural, Technological, Environmental and Legal environments. Some examples are: government stability and taxes, inflation and unemployment, demographics and education, change in technologies, weather and waste, employment law. Political –
Political environment is a key factor, as it affects not Just hotels but hospitality as whole. Government is currently working on simplifying Chinese and Russian visas and reducing tourism VAT, which would attract more people into the country. The Savoy is luxury hotel and room prices are not cheap, rates starts at IEEE per night. With reduced VAT and simplified visas more tourists’ would visit country, due to hotels supreme location hotel stands a good chance on attracting more guests. Economical – National macro-economic situation and events impacting the environment are major factors affecting the Savoy hotel.
For example, during the Olympic games and Queens Jubilee most of the rooms were occupied and booked fully for the whole period. However, the situation was completely different once the Olympic Games were over. Additional economic factors that affect Savoy may include slow economic growth, national taxation policies and seasonality. Socio-cultural – Nowadays it is all about healthy eating, great food is one of the factors that helped Savoy establish its brand. Changing people habits and developed taste for top quality food and service attracts lots of guests from all over the world.
Hotel is also in the great location, close to the popular west end theatres including the Savoy theatre, restaurants and shopping. Technological – Savoy is the first hotel in London who started using electricity, hot and cold running water and introduced elevators. Hotel is technologically orientated from early days. Today’s Savoy is no exception; it uses new age technology to provide top quality service. Savoy with Black Sun communications offers clientele personalized emails with food and drink, and quarterly newsletter. Every room has a state of art Vita RI audio system and Lowe minimalist design televisions.
Smart guestroom thermostats in all rooms and suites are designed to control lighting and room temperature and use natural ventilation to regulate the temperature inside the room. Environmental – The Savoy is a member of the Sustainable Restaurant Association – food and drink menus include seasonal, local, organic, free range and healthy options. Hotel has invested a lot in sustainable solutions to reduce carbon dioxide over the last decade. Energy consumptions have been reduced at least by 30% as well as 3,000 tones of CO per year.
These solutions include replacement of heating and cooling systems with high efficiency ones and installation of the intelligent energy building controls. Combined heat and power plant reduces hotel’s reliance on the energy grid by approximately 50%. The Savoy team continues to actively promote responsible practices throughout the hotel to preserve natural resources, waste management programmer of recycling, reusing and reducing has helped the hotel to achieve its target of diverting 100% of all the waste from landfill. Hotel works in partnership with Auk’s largest food waste contractor PDP Group.
Estimated equivalent of energy generated, provides sufficient amount to power 20% of guest rooms. Legal- Legal factors similar to political ones and they include any changes in the UK Jurisdiction that affect the industry in direct and indirect ways. There are many visa restrictions in countries like Russia, Australia and China. International visitors and these countries play important role in this industry. 4. 2 Soot analysis of Savoy Soot is Situation analysis in which internal strengths and weaknesses of an organization, and external opportunities and threats faced by it are closely examined to chart a strategy(vasoconstriction. Mom) Strengths Well known brand Strong management Unique personalized service Location Savoy has a long history, in all these years many people well known to the world have checked in, and helped hotel to build good reputation. Hotel is environment focused and has won countless awards for going green. It is deeply involved in saving the environment using sustainable technologies. Savoy is known for top quality service; hotel provides personal butler and even babysitting services. Let’s not forget location, its situated stone throw from shopping, bars and restaurants.
Hotel has a unique Edwardian art deco style and even after the renovation there still is a feel of its old glamour and history. Weakness Highly priced Not diversified Weak financial position Prices at the hotel start from IEEE per night up to EIA,OHO for most luxury suite. During recession people started to spend much less and it cost the Savoy over Million loss in first year after re-opening. Many now choose cheaper hotels, the Savoy mainly targets luxury traveler, that narrows its market segmentation greatly.
Opportunity Differentiation from rivalry Growing market Deals and offers Uniqueness and differentiation separates hotel from the rest of the competition. Brand is known for high standards, environment friendly technologies, top food laity and service. Even though business is going through hard time, expanding hospitality industry gives an opportunity to attract more guests. Deals and offers on accommodation is now very popular amongst travelers, there is an opportunity for hotel to increase room sales.
Threats High competition Economic slowdown Lower cost competitors Competition is fierce, and there is many five star hotels in central London, who offer similar services, and some for slightly cheaper price. Economic slowdown is a big threat to hotel as it has loans to repay and cannot to do so because of current tuition; it also risks breaching the loan terms in 2014 if situation will not improve. Savoy competition is now not only luxury hotels, but mid-market as well, due to lack of disposable cash people choose cheaper options. 4. Competitive advantage and competitive strategies for Savoy Competitive advantage is the favorable position an organization seeks in order to be more profitable than its competitors by lowering prices or providing greater services. Michael Porter (1998) introduced theory of competitive advantage based on five forces: Competition Buyers Suppliers New entrants Substitute products In order to have competitive advantage business need to adopt one of the Porters three generic strategies. Advantage can be achieved through cost leadership, narrowing targeted market or differentiation.
The Savoy is pursuing differentiation strategy. It was the first luxury hotel in Britain providing running hot and cold water, electricity and elevators, that was top technologies at the time that no other hotels have used. Now it also offers services like personal butler, babysitting, pick-up and drop- off at the airport, personal shopping, top quality food and drink. Hotel also has location advantage it’s situated in the heart of London on the edge of the river Thames; close to west end theatres, restaurants and bars that is very popular amongst travelers. 5.
Conclusion and Recommendations Hospitality is very fast growing industry, providing food, drink and accommodation to a traveler. It is one of the biggest contributors to the I-J economy financially and by employability. 34% of the hospitality industry is hotel sector. Hotels are variously classified. Pestle, Soot and competitive advantage frameworks have been applied to a luxury five star hotel Savoy, to examine how external environments affect hotel, learn TTS strengths and weaknesses and competitive strategy. Each of these frameworks is vital to the organization in order to plan profitable strategy.