Introduction
Hotel Industry is in the limelight due to new industry trends. The latest industry trends have changed the hotel industry. The change has created an impact on strategic decision making and customer perception. Switzerland’s hotel industry has contributed to Switzerland’s economy. It has been a tourist attraction for many years. However, the industry contains stiff competition. The study revolves around Switzerland’s hotel industry. Different strategic analysis tools such as Porter five forces, SWOT analysis, and VIRO analysis will be conducted to derive the business and competitive insights.
Hotel Admiral has been selected for this strategic analysis. It exists in the Canton of Ticino, which is full of lakes and alpine peaks. The organisation expects an immense range of customers at this beautiful place (Ckanani, 2018). However, efficient markets and customer strategies are required to enhance the attraction and positioning. Interestingly, these strategic decisions are based on these strategic analysis tools.
Macro-Environmental Analysis
· Political
Switzerland is a politically stable country, which allows tourists from all over the world. It depicts a parliamentary system. The political system has been organised or organised. Three levels of political systems are federal, Cantonal, and Communal. It has been revealed that the political support lifted the hotel industry. A political party includes the industry development in the manifesto. Communal is a vital branch of the political system, which controls different villages.
· Economical
Switzerland’s economy is stable and robust. This modern economy indicates one of the highest gross domestic products (GDP). Switzerland holds $678.9 billion GDP, and it is 1.09% of the world (Trading Economics, 2017) Service and industry sectors are the primary sources of the GDP. The government has successfully managed or maintained the inflation rate in the country.
Interestingly, it is recorded at 0.53% (Statista, 2018). The unemployment rate is also quite low compared to other countries. The employment rate of the country is 3.1% (Swiss Info (SWI), 2018). Due to stable economic conditions, the company has become the favourite destination for the investor. The high-income level has increased the buying power of people, and it went in favour of the industry sector.
· Social
Switzerland is one of the best places to live. People in this region are highly educated. This country ranked 2nd regarding the quality of life. Interestingly, cultural diversity exists. German, French, Italian, and Roman people are part of the culture. 2.1 million People in this country are foreigners (The Local, 2017). The literacy rate is almost 99%. Switzerland has been considered one of the best places to bear in the world. People like to travel and the best accommodation.
· Technological
Switzerland depends on other countries regarding natural resources. People are Tech-Savvy, and even in the hotel industry. They like to integrate with technology. For Instance, the hotel industry is using technology in the service department to bring efficiency and differentiation. Biotechnology, computer science, and microtechnology are critical areas of research.
· Legal
The legal structure of this country is flexible. For Instance, it has been considered a tax haven. However, it created effective corruption measures. It is open to foreign investment. New and existing companies have to integrate with the legal structure of the country to be relevant and sustainable, especially in the hotel industry.
· Environmental
Switzerland has contributed to the reduction of the ecological impact (Swiss Info, 2018). The environmental performance index puts this country among the top 5 states. Companies, from manufacturing to the hotel, have enabled the recycling process to keep the environment safe. Due to immense biodiversity, the impact on the environment is favourable.
Issues Relevant to the Company
The Microanalysis of the region has helped to obtain some key issues. The management of the admiral hotel must consider these issues in the strategic planning process. For Instance, the macro analysis indicates cultural diversity, as many people came from different part of the world. Now, it seems tough for Hotel Admiral management to integrate with several cultural values. Sometimes, customers have to accept the particular cultural tone in a hotel, which is beyond expectations. Also, due to the rise of tourism in the country, the small size of the hotel creates barriers. The marketing and brand structure is not up to the mark, as it is not according to people’s expectations (Künzle, 2012).
Canton of Ticino is a competitive region, which contains the number of hotels for natives and foreigners. Pestle depicts the technology and the size of the industry. Investors usually avoid investing in medium-sized organisations due to limited strategic benefits. The income level of people is high. It has increased the bargaining power of buyers in the industry. It seems an issue for the company. Despite containing the differentiated services, people want bigger sizes. The political and economic conditions of the region create threats for the company. For Instance, new arrivals can come up with high capital investments. Customer conversion is a big issue for the company in the competitive landscape. Apart from it, the environmental impact is one of the prominent concerns. The firm has to invest in different environmental strategies instead of improving services. It can restrain the company from business expansion. Also, these investments can increase the cost of operations and reduce the profit margin.
These are some macro analysis factors, and the several insights depict any possible issues for Hotel Admiral. In the competitive hotel industry, the management has to identify these issues early to make effective strategies on time.
Industry Analysis
Analysing the competition is imperative. The industry analysis tells the power of buyers, supporters, threats of substitutes and entrants, and competitive rivalry. Hotel Admiral management has to navigate these competitive insights to make the better competitive plan.
Porter’s Five Forces
· Power of Buyers
The buying power of buyers is high due to the availability of several substitutes. People, especially travellers, intend to search for high quality, differentiated, and cheaper accommodation. In the Canton of Ticino, customers can find many hotels or hospitality organisations, which speak the Italian language. The purpose of the hotel operation in this region is to make Canton of Ticino different from whole Switzerland. Thus, substitutes for customers are some Italian hotels in this region. Instead of entering the Hotel Admiral, people prefer Italian hotels because they are cheaper and highly differentiated.
Thus, if the hotel management wants to increase customer traffic, it has to adopt these trends. Brand loyalty and satisfaction are several elements, which increase the bargaining power as well. If an Italian hotel in Canton of Ticino is out of services, it seems sturdy for the management to satisfy regarding available options or facilities. The buying power is also high due to the low switching cost. If hotel admiral customer does not pay a particular recently, it can move to the other hotel. Thus, to retain customers and make them loyal and satisfied, the management needs an adequate brand or service positioning (Magretta, 2015).
· Power of Suppliers
The power of supplier seems moderate. For Instance, the Canton of Ticino region contains many hotels. These hotels depend on the supplier’s strategy, which is a complement to the company’s profitability. Suppliers in this region usually adopt many shapes such as real estate, builders, property owners, and developers.
Interestingly, the company may find these suppliers in the area to expand the business and reshape the structure. However, the use of technology in the service process is mandatory. It makes the supplier force quite strong. High quality and differentiated technological equipment are in the limelight to improve the service process and enable security for customers or tourists in the Canton of Ticino. It is a need of every hotel in this region. Therefore, the supplier’s power is quite high. Overall, it looks moderate, as the material can be acquired from many others, as it depends on the relationship and deals with builders, designers, and architects.
· Threat of Substitutes
The risk of substitutes is quite high in this region. People, especially travellers, prefer several available options to save money. For Instance, when a customer comes to the Canton of Ticino to stay, he may prefer camping to save the cost and enjoy the majestic views. Customers may come up with a limited budget, and camping is the best option for them to keep the money. It is a significant threat to the company, as this trend is increasing in both the hospitality and tourism industry. Another option for guests or travellers is RV. It seems like a small room, built on a vehicle. Living in the RV is cheaper than staying at Hotel Admiral and many others. Also, Canton of Ticino is full of population. Natives have managed to live with some limited resources. People come to live with their families and friends from different places or regions. Thus, the threat of substitutes is quite high due to available options for people (The Local Switzer, 2018).
· The threat of New Entrants
The risk of new entrants is moderate due to different factors. For Instance, companies may have to invest millions to establish a hotel in Canton of Ticino. Due to high capital investments in this region, firms may be restrained from doing business in the area. However, if the firm is financially capable of doing business, it can become a threat for Hotel Admiral.
On the other hand, the risk of new entrants may arise due to the growth of the travel industry and modern industry trends. It has been revealed that the Canton of Ticino is the best place to buy a hotel. Thus, multinational hotel chains may buy the well-established hotel in this region, and it increases this threat. Moderate force is also a threat to the hotel admiral because companies know this potential market regarding customer traffic, profitability, and sales.
· Competitive Rivalry
The competitive rivalry in the Canton of Ticino is high. Hotel Dell’Angelo, Hotel De La Paix Lugano, Suitenhotel Parco Paradiso, and Hotel De La Paix Lugano are big competitors of the hotel Admiral. The competitive rivalry is high due to the size of the organisation, service quality and standards, differentiation, and competitive pricing. It has been observed that hotel management wants to streamline the luxury tough in the services. Living in differentiated apartments has become the social status symbol for visitors or customers. Another major factor that exists in the competitive landscape of the Canton of Ticino is the location. It has become a critical competitive factor. Streamlining the majestic views from the hotel shapes the buying decision of the company.
Hotel Admiral has worked on it and optimises multiple perspectives, including lakes and angles of alpine mountains from different rooms. Also, in extreme seasons, hotel admiral and many other hospitality firms try to make the difference by setting competitive prices. The competitive factor that revolves around these competitors is availability. These firms are available on e-Booking and many other booking apps. Thus, customers can compare prices and availability of hotels on these apps (Trip Advisor, 2018).
Company’s Current Competitive Environment
The current competitive environment is in the limelight due to the visibility of significant hospitality players. Firms are shaping different strategies in the Canton of Ticino. The fantastic tourist infrastructure has helped companies to explore regions for natives and internal travellers. Michael Porter’s Concepts of Strategic Positioning framework or activity can be used to analyse the competitive position of the company.
Michael Porter’s Concepts of Strategic Positioning
The strategic positioning framework helps to derive the competitive advantage of the firm over other competitors. Hotel Admiral has adopted different traits, which has contributed to getting an edge in the competitive landscape.
Competitive Positioning
Strategic Positioning Factors
Strategic positioning is a process of deriving the company’s position in the competitive market. This firm has adopted the integrated cost leadership and differentiation strategy to make the hotel services different from others. In this competitive landscape, the company wants to keep the cost low as compared to other hotels in this region. The low-cost structure of the company or hotel has helped the management to come up with lower prices for customers. On the other hand, the company has differentiated its services in different ways. Trend integration has become one of the significant strengths of the company, which makes services unique.
For Instance, technology and local experience have helped to shape the service and set new standards. As shown in the competitive positioning map, Hotel Admiral offers high-quality services at low prices, and of course, technology has played a vital role in this regard. Suitenhotel Parco Paradiso, one of the major competitors, retained the high quality of the services. However, Admiral made all rooms, tech savvy to demonstrate the uniqueness. The strategic positioning has been justified by the Admiral management through shaping the hotel design for Millennials. In the Canton of Ticino, Hotel De La Paix Lugano is way behind Hotel Admiral due to lack of hotel design for Millennials. Thus, design, pricing, location, technology, and cost justify the cost leadership and differentiation strategy, and it streamlines the strategic positioning as well.
Core Competencies & Capabilities
SWOT Analysis
Three main competitors
- Suitenhotel Parco Paradiso
- Hotel Dell’Angelo
- Hotel De La Paix Lugano
· Strengths
The biggest strength of this hotel is the high brand image. It has been revealed that the management has developed the admiral way by shaping some fundamental service norms for employees. The purpose is to provide the best customer services in a unique culture. The company has a presence in different regions such as Lugano, Dubai, Munich, Vienna, Beograd, and Geneva. Local communities know the brand presence in the different areas, and it has helped to sustain the brand image effectively. Also, the firm is financially stable, which open ways to expand the building or hotel line in the region. The focus on innovation is also a significant strength of the company, and it facilitates the differentiation process in the competitive market. In the Canton of Ticino, it is recognised as one of the prominent competitive brands. Now, the brand reputation is quite visible in the whole of Switzerland.
· Weakness
It is a fact that the company is focusing on expansion. Business expansion is an excellent strategy to increase market share and profit margins. However, the business expansion has become excessive. The firm sometimes fails to provide standard services to employees. Internally, the management and employees have shifted their focus, and it may hurt the company regarding brand loyalty and customer satisfaction.
Moreover, the major weakness of the company is the targeting. As mentioned above, the Hotel Admiral has designed the hotel to meet the needs of Millennials. It seems a significant weakness because the firm is ignoring different customer segments in the market. Comparatively, Suitenhotel Parco Paradiso contains a broad range of services for different customer segments. Also, the firm lacks advertising and promotions on various media channels. It is struggling to streamline the strategic positioning and attraction. The management of the Hotel Admiral must identify these weaknesses and make appropriate strategies.
· Opportunities
Global growth is a great opportunity. However, it is a big challenge for the company to idealise the location and target customers. Millennials are to be divided into several segments to differentiate the services and improve the services process. Business expansion through merger or acquisition is an excellent opportunity for the company. The location provides several expansion options. Based on financial capability, the administration can hit different places. Attracting visitors and making them loyal customers is possible through workable marketing plans. The company must streamline its integrated communication plan. The firm can improve brand equity in the competitive hospitality industry (Sarsby, 2016).
· Threats
The threat of substitutes are always visible for Hotel Admiral. Hotel Admiral can observe many customers or travellers, who prefer alternatives like RVs, Camping, and residents. International firms are coming to this region to establish large hotels or acquiring existing local firms. The current competitive environment is also a significant threat to the company. Firms may offer low prices of rooms to keep their profit margins high. Canton of Ticino is also vulnerable to possible terrorist attacks, and the whole world is quite aware of this potential threat. Thus, the company must be aware of these threats to sustaining the business in the long run.
TOWS Analysis
VRIO Analysis
VRIO Results
The Hotel Admiral indicates some vital resources and capabilities in an intense rivalry. The firm is in an excellent position to gain a competitive advantage. However, the firm must develop it if it wants to get a sustainable competitive advantage in the presence of other competitors. For Instance, if the company sustains its high brand image due to high-quality services and standards, it can gain a sustainable competitive advantage. Brand image and differentiation are rare in the industry. The business expansion is valuable for the company, but it is not unique in the hotel industry. Other firms are also expanding their business to grab the immense range of customers effectively. Service quality in the Canton of Ticino is valuable for all hotels.
Interestingly, it is not rare. Every hospitality firm has its own culture, and accordingly, they shape the service standards. These service standards are to be changed by time to align with new trends. Thus, portrays the sustainable competitive advantage. Cultural integration can create value for external stakeholders. It seems harsh for any company, especially in the hospitality industry, to align operations with the local culture. The hotel admiral is capable of localisation and it’s perfect, rare and well organised. The sustainable edge through cultural integration is apparent. Trend integration is valuable, but it is not rare. Hotel management is aware of a new customer or market trends. The most important thing is to become the first hospitality organisation when embracing the new trends. Like other competitors, it is a great opportunity to get temporary benefits and an advantage over other firms. With time, the firm must increase resources and capabilities to increase the chances of a competitive edge. All resources and capabilities must be utilised effectively for customers (Maurer, 2017).
Summary of Key Findings
Hotel Admiral is situated in Canton of Ticino. It is a potential region with full of majestic views in southern Switzerland. Macro analysis indicates the region is quite stable and suitable for doing business. The industry analysis depicts the stiff competition due to the high power of buyers and intense competitive rivalry. The strategic positioning map is a basic framework, which demonstrates the firm’s strategic position. Hotel Admiral is on top due to quality services, differentiation, and low-cost operations. SWOT has mentioned some weaknesses and threats. Thus, based on these weaknesses and threats, some strategies by using strengths and opportunities are illustrated. A comprehensive VIRO analysis is conducted, which streamlined some resources and capabilities and the impact on the competitive advantage.
Conclusion
In the end, it is to conclude that Hotel Admiral is a prominent part of the hotel community in Canton of Ticino. In this complete business assessment, the current business situation, including internal and external factors, has been elaborated. Hotel Admiral management is quite capable of considering all derived insights into the strategic planning process. Change is essential in this industry, as it can support the cultural integration m trend integration, and business growth and expansion.
References
Ckanani, 2018. 12 Beautiful Places to Visit in Ticino, Switzerland’s Italian Side. [Online] [Accessed 5 December 2018].
Künzle, A., 2012. Small hotels struggling for survival. [Online] [Accessed 5 December 2018].
Magretta, J., 2015. Porter’s Five Forces: Understand competitive forces and stay ahead of the competition. 1st ed. Boston, Massachusetts: Harvard Business Review Press.
Maurer, C., 2017. Swiss Tourism: The Future Lies in Quality, Not Quantity. [Online] [Accessed 5 December 2018].
Sarsby, A., 2016. Swot Analysis. 1st ed. Morrisville, North Carolina: Lulu.com.
Statista, 2018. Switzerland: Inflation rate from 2012 to 2022 (compared to previous year). [Online] [Accessed 5 December 2018].
Swiss Info (SWI), 2018. Number of unemployed in Switzerland drops by 4%. [Online] [Accessed 5 December 2018].
Swiss Info, 2018. Switzerland: ‘could do better’ on environmental footprint. [Online] [Accessed 5 December 2018].
The Local Switzer, 2018. Why you should visit Switzerland’s Italian-speaking region of Ticino this year. [Online] [Accessed 5 December 2018].
The Local, 2017. There are now 2.1 million foreigners in Switzerland. [Online] [Accessed 5 December 2018].
Trading Economics, 2017. Switzerland GDP. [Online] [Accessed 5 December 2018].
Trip Advisor, 2018. Canton of Ticino Hotels and Places to Stay. [Online] Accessed 5 December 2018].
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