Download - strama paperfinal
Far Eastern University
Institute of Accounts, Business and Finance
I. EXECUTIVE SUMMARY
With continues growth of the hotel industry in the Philippines, there are no doubt
at the growing demand of travel and tourism in the country. People awareness has
increased due to the campaign being done by the different channels of the industry,
specifically, the department of tourism, airlines and hotels.
Traders Hotel is located on Roxas Boulevard and overlooking picturesque Manila
Bay, Traders Hotel is the ideal place to see the best that Manila has offer. It is under
their main brand Shangri-La hotels that are very much known for the number of
prestigious hotels locally even internationally.
An assessment of the company’s external and internal environment reveals that
it still needs to pursue on continuous development of facilities and services, develop
good advertising campaign and powerful promotions, explore areas of concentration
and recruit faculty that will best help in developing the company. The rest of the paper
would explain the stated findings in detail. A presentation and discussion of the various
frameworks and tools of analysis were also included.
Strategic Management 1
Far Eastern University
Institute of Accounts, Business and Finance
II. INDUSTRY ANALYSIS
Economic Forces
Based on the preliminary results of the 2006 Census of Philippine Business and
Industry conducted nationwide, with 2006 as the reference year, the Philippines Gross
revenue earned in 2006 for hotels and restaurants sector reached Php93.5 billion.
Hotels, camping sites and other provisions of short-stay accommodation generated only
Php34.2 billion (36.6%). Cost for operating the industry summed up to 69.2 billion.
hotels, camping sites and other provisions of short-stay accommodation with almost
Php24.1 billion. Revenue-cost ratio, the revenue generated per P1 cost, amounted to
Php1.35. Among industries, hotels, camping sites and other provisions of short-stay
accommodation recorded the highest indicating Php1.42 revenue per P1 cost. Value
added was estimated at Php31.4 billion. Hotels, camping sites and other provisions of
short-stay accommodation had a total value added of Php14.9 or 47.4 percent.
Based on the preliminary results of the 2006 Census of Philippine Business and
Industry conducted nationwide, with 2006 as the reference year, the Philippines had a
total of 2,750 establishments with average total employment (ATE) of 20 and over
engaged in hotels and restaurants. Hotels, camping sites and other provisions of short-
stay accommodation recorded the remaining number of establishments with only 492.
On the regional level, National Capital Region (NCR) had the most number of
establishments with 1,328 (48.3%). CALABARZON (Region IV-A) placed second with
332 establishments while Central Luzon (Region III) followed with 8.8 percent of the
total. Autonomous Region in Muslim Mindanao (ARMM) had the least with only 4
establishments (0.1 %).
Strategic Management 2
Far Eastern University
Institute of Accounts, Business and Finance
Employees of hotels, camping sites and other provisions of short-stay
accommodation were the most productive in 2006 in terms of revenue employee with a
Php877 thousand per employment, 32.9 percent higher than the national average of
Php660 thousand. Value added per total employment, another measure of labor
productivity, was valued at an average of Php222 thousand per employee. Among
industries, hotels, camping sites and other provisions of short-stay accommodation had
the highest average of Php382 thousand. Gross additions to fixed assets in 2006
totaled to Php10.1 billion with hotels, camping sites and other provisions of short-stay
accommodation recording the highest amount of Php8.0 billion (79.7%).
Demand for the hotel sub-sector services particularly that of accommodations,
peak in the months of November, December and January. Foreign visitor arrivals are at
its highest in the last and first months of the year, accounting, on the average, for 18%
of the total. Peak season for balikbayan arrivals, on the other hand, is during the months
of November and December, accounting for 36% of the total.
International deployment of hotel and restaurant workers and professionals, on
the other hand, are subject to laws pertaining to the practice of their profession. Indeed,
most countries have policies preventing foreign professionals from practicing their
profession in the domestic market. In the last five years, hotel and restaurant related
workers and professional deployment averaged more than six thousand seven hundred
forty per year. An estimated 75% of all hotel and restaurant professionals deployed
during the period were cooks, waiters, bartenders and other related workers. Filipino
hotel and restaurant workers and professionals are known for their competence,
trainability, and ease in adapting to different environments and are, therefore, in
demand in the international market. Most hotel and restaurant related workers and
professionals during the five-year period were deployed to United Arab Emirates, Saudi
Arabia, Kuwait, Papua New Guinea, Singapore, Malaysia, and the United States.
Strategic Management 3
Far Eastern University
Institute of Accounts, Business and Finance
In terms of length of stay, however, guests stay longer in standard hotels than in
the higher-rated establishments. Standard hotel guests stay an average of 3.03 nights
compared to the 2.66 nights and 2.13 nights average stay in deluxe and first class
hotels, respectively. Hotel entry barriers, which include economies of scale,
infrastructure, and product differentiation, are significant particularly for those who will
venture in deluxe or first class operations.
While there are already quite a number of players in the market, the hotel
industry can be characterized by still a rigid competitive structure. Hotels sell more or
less the same service but differ in quality and style. The better and wider the service,
the higher the rates. No single hotel, however, monopolizes the market or has power
over the rates of rooms or of other services that are offered. Further differentiation is
reflected on the variety of restaurants and coffee shops that they have and on other
amenities that they offer – each catering to a specific need of clients.
Social, Cultural, Demographic and Environmental Forces
Friendly by nature, Filipinos have a special way of making strangers feel
welcome. Hospitality in the Philippines is both a tradition and an art. Moreover, among
Asians, Filipinos are the most fluent in written and spoken English. Since English is the
world’s universal business language, tourists and business travelers alike are always
pleasantly surprised at the absence of any language barrier in their dealings with
Filipino hotel and restaurant workers.
Opportunities for hoteliers also arise from the country’s strategic location. The
Philippines is situated in the center of Asia, home of the fastest-growing economies in
the world. The archipelago lies southeast of Hong Kong, northeast of Singapore and
almost directly north of Kota Kinabalu in Malaysia and Bali, Indonesia. Owing to its
accessibility and strategic location, the Philippines is a natural Mecca of commerce.
During the last decade, the hotel and restaurant industry has flourished even as it
struggled to cope with difficult challenges. New hotels mushroomed in the capital while
Strategic Management 4
Far Eastern University
Institute of Accounts, Business and Finance
older hotels have done their best to spruce-up both their interiors and upgrade services.
Hotels are the most popular source of accommodation among foreign travelers. In the
past five years, more than 50% of foreign tourists used hotels for lodging purposes.
Indeed, global travel is expected to grow rapidly for at least the next 20 years.
Worldwide arrivals were expected to expand from 613 million in 1997 to an estimated
700 million in 2000, 1 billion by 2010 and 1.6 billion by 2020.
The Department of Tourism (DoT) recently organized a forum on zero waste
management for hotels and resorts, in coordination with the Global Alliance for
Incinerator Alternatives (GAIA) and Greenpeace International.
Hotel chains constitute a classic application of brand strategy. Brands are a quick
way for hotels and hotel chains to identify and differentiate themselves in the minds of
the customers. A brand symbolizes the essence of the customer’s perceptions of hotel
chains, its products, and services. The favorable or unfavorable attitudes and
perceptions formed by brand influence a customer’s hotel preference. Unfavorable
attitudes and perceptions formed by brand influence a customer’s hotel preference.
As foreign tourists are not very price sensitive, they are usually after the
amenities and service that they need during their hectic travel. Hotels that cater to the
tourist market compete mostly in the area of amenities and services. During specific
seasons of the year, hotels offer weekend and/or holiday packages (generally includes
discounted accommodations and meals). These packages are also offered to specific
market segments – wedding parties, honeymooners, and balikbayans.
Political, Governmental and Legal Forces
Government, industry association and trade union cooperation provides the
industry with a strong support system. The Philippine government actively promotes the
country through its numerous tourism programs.
Strategic Management 5
Far Eastern University
Institute of Accounts, Business and Finance
Government effort is complemented by the strong support of industry
associations and trade unions (i.e., Hotel and Restaurant Association of the Philippines
and the National Union of Workers in the Hotel Restaurant & Allied Industries), which
enable the hotel industry, among other things, to undertake programs and projects that
upgrade and professionalize the sector and to influence government regulatory
policies/laws/rules affecting the industry.
There are Laws that hinder or facilitate the hotel and restaurant industry include
Executive Order 219 the domestic and international civil aviation liberalization policy,
the Investment Priorities Plan (IPP) 2000, Intellectual Property Rights, and the Labor
Code provisions on the employment of foreign nationals. Provisions of EO 219 opened
the domestic airline industry market to competition, which resulted in the expansion of
airline seat capacity, reduced airfare and the elimination of the so-called “missionary
routes”. Combined, EO 219 led to a significant increase in tourism, thus expanding on of
the hotel and restaurant industry’s main market. The IPP 2000 offers fiscal incentives to
investors in, among others, the tourism industry (i.e., tourist accommodation facilities,
which refer to hotel, apartelle, tourist inns, pension house, and resorts, tourism estates,
tourist buses, and restoration of historical and cultural sites/properties). All franchise
agreements with foreign franchisors are registered with Intellectual Property Rights
office as well as licensing, technical assistance and services, technology transfer and
distribution agreements. Foreign franchisors in the Philippines, similar to other
industries, are subject to the restrictions on ownership, 40%. The laws on technology
transfer, however, guarantee franchisors in the Philippines royalties of 5% and a
maximum allowable term of technology transfer arrangements of ten years.
Finally, foreign national employment in the hotel and restaurant industry is
subject to the tripartite agreement signed in 1992 by the Department of Tourism,
Department of Labor and Employment and the Bureau of Immigration. The agreement
addresses the following issues regarding the employment of foreign nationals in the
hotel and restaurant industry: positions open to foreign nationals in the hotel and
Strategic Management 6
Far Eastern University
Institute of Accounts, Business and Finance
restaurant industry: positions open to foreign nationals, procedures in the issuance of
visa/permits, and disciplinary/penal provisions.
The presence of external support systems can enhance an industry’s competitive
advantage. Factor conditions (i.e., cost of capital, labor and raw materials), for example,
are affected through subsidies, policies toward the capital markets, policies toward
education, and the like. External support systems can also help stimulate local demand
conditions, establish local product standards or regulations and programs that mandate
or influence buyers’ needs.
The local hotel and restaurant industry external support systems include
government agencies, industry associations and trade unions. Government agencies
and various consultative bodies, which includes but is not limited to the Department of
Tourism, Department of Trade and Industry, Department of Labor and Employment, and
the Hotel and Restaurant Tripartite Consultative Body, Inc., work together to promote
the tourism and hotel and restaurant industries through specifically designed laws,
policies and programs that promote industry growth and industrial peace, safeguard
labor rights, provide training and seminars, and ensure consumer safety. Programs
specifically designed to attract more tourists and therefore expand the hotel and
restaurant industry’s market, for example, is the DOT’s Tourism Master Plan.
The Tourism Master Plan (TMP) is the framework and guide of the Department of
Tourism for the sustained development and expansion of the tourism industry of the
Philippines. Completed in 1991, it serves as the blueprint for tourism development in the
country until the year 2010. The Plan was prepared by the Hoff and Overgaard on
behalf of the World Tourism Organization (WTO), United Nations Development Program
(UNDP) and the DOT. Its aim is to position the Philippines as a leading tourist
destination in Asia.
Strategic Management 7
Far Eastern University
Institute of Accounts, Business and Finance
Industry associations, on the other hand, enable the hotel and restaurant sector,
among other things, to undertake programs and projects that upgrade and
professionalize the sector (i.e., training and seminars for employees and industry
promotion by sponsoring domestic and international exhibits) and to influence
government regulatory policies/laws/rules affecting the industry.
Finally, trade unions in the hotel and restaurant industry, among other things,
safeguard the rights and welfare of industry workers and professionals. They work
closely with government and industry participants in improving working conditions and
employee performance (i.e., recommending additional training and or certification) and
in defending employee rights.
Technological Forces
Most local hotels are quick to respond to changes in technology. To date, most
have computerized bookings, reservations, room service, and accounting systems.
Pressure on hotel prices comes from the drive “for value for money”. Increased
operating efficiency obtained through the computerization has helped to reduce costly
waste in the supply chain. However, higher labor, raw materials, and utility costs
continue to push operating costs up.
Philippine hotels, though quite late in technology adoption, own a mix of
information technologies that appear to slant towards improving guest service. The
intrinsic characteristics of technology seem to be the main factor in the decision to adopt
technology while IT illiteracy and the prohibitive cost are the main reasons for non-
adoption. The research likewise affirmed that ownership structure and firm size
positively affect adoption behavior. The results manifest organizational rationalism and
recognize the power of social and cultural forces to shape IT adoption behavior.
Possible implications were raised regarding strategies that address IT literacy and cost,
and enhancing absorptive capacity of small hotels.
Strategic Management 8
Far Eastern University
Institute of Accounts, Business and Finance
Hospitality - specific studies on adoption of IT are widely varied. There are five
areas of IT adoption in hotels. These are (1) reservation system, (2) property
management systems, (3) ancillary systems that include electronic door-lock system,
energy management system, in-room entertainment systems, internet access,
telephone and call accounting system, (4) catering information systems composed of
recipe-costing system, stock-control system, conference and banqueting system,
electronic POS, and (5) back-office system comprised of accounting systems, payroll
system, human resource system, sales and marketing system.
There are various reasons why hotels adopt information technology. IT offers
advantages in terms of providing service quality, improved administrative processes and
competitive edge in cost or differentiation.
Wifi technology affects a lot on hotels in the Philippines nowadays. Guest is
seeking for Wifi installed rooms that is already equipped on their hotel amenities.
Guests nowadays would prefer to stay in hotels that can offer more than the
usual amenities. Even wired internet access, traditional voice services and cable
television are not enough.
Here are some technological systems that greatly affect the hotel industry in the
Philippines:
Wireless Fidelity - It provides your guests with Internet access using wireless
technology in the rooms and in any other common area. We will even provide computer
units for your business center for guests who do not have laptops.
Voice over internet protocol - It allows your guests to make cheaper International calls
using Internet Protocol technology. We will integrate the service into your PABX to allow
calls to be made from existing handsets provided in the rooms.
Strategic Management 9
Far Eastern University
Institute of Accounts, Business and Finance
Internet Protocol Television - It gives your guests true digital viewing pleasure and a
selection of movies to watch on-demand. The content will be delivered over our network
and will be viewed on the television sets provided in the rooms.
Closed Circuit Television
1. IP-based surveillance and alarm systems
2. Wired and Wireless options
3. Digital Recording for easy search and playback
4. Capable of remote monitoring
Hotel Management System
1. Windows-based and LAN-ready
2. Package includes standard and optional modules:
1. Front Desk
2. Reservations
3. Point of Sales
4. Call Logging
Strategic Management 10
Far Eastern University
Institute of Accounts, Business and Finance
III. INTERNAL ASSESSMENT
a. Company Vision and Mission
Vision
To be the first choice for guests, colleagues, shareholders and
business partners.
Mission Statement
We envision a community of responsible and educated citizens who
are environmentally conscious, practice social responsibility in their daily lives
and inspire others to do the same.
We commit to operating in an economically, socially and
environmentally responsible manner whilst balancing the interests of diverse
stakeholders.
We strive to be a leader in corporate citizenship and sustainable
development, caring for our employees and customers, seeking to enrich the
quality of life for the communities in which we do business, and serving as
good stewards of society and the environment.
Strategic Management 11
Far Eastern University
Institute of Accounts, Business and Finance
b. Company Corporate Social Responsibility
Environment
Our daily operations ensure that we mitigate the impact of climate
change, uphold biodiversity in conservation/habitat restoration, adopt the best
practices in preventing ozone depletion, and continually strive to improve
water-use management, waste-disposal management and indoor air quality.
Health & Safety
We are committed to protecting our customers, employees,
stakeholders and the greater public by providing a safe and healthy
environment based on international standards.
Strategic Management 12
Far Eastern University
Institute of Accounts, Business and Finance
Employees
Our colleagues are our number-one asset, and our source of
inspiration for the greater communities with which we work.
Stakeholder Relations
We value our stakeholders and always engage them with clarity,
honesty, and respect.
Strategic Management 13
Far Eastern University
Institute of Accounts, Business and Finance
Supply Chain
We require that our business partners ensure the highest standards in
environmental, hygiene and labor practices.
Embrace
We believe that caring for others today allows them to care for
themselves and others tomorrow. ‘Embrace’ aims to build, strengthen and
sustain local communities through various and specific education and health
projects.
Strategic Management 14
Far Eastern University
Institute of Accounts, Business and Finance
Sanctuary
Each of our resorts provides a natural habitat for flourishing
biodiversity. The 'sanctuary' is Shangri-La’s project for ensuring the highest
standards in marine and terrestrial habitat restoration and environmental
conservation.
c. Brand Structure
Strategic Management 15
Far Eastern University
Institute of Accounts, Business and Finance
Corporate Officers and Directors
Mr. Rao, Madhu
Vice Chairman
Mr. Dogan, Greg
President and Chief
Executive Officer
Mr. Zhu, Kent
Group Director of Sales
and Marketing
Mr. Offe, Jean Michel
Group Director of Food
and Beverage
Ms. Cheah, Caroline
Group Director of
Rooms
Mr. Sekercioglu,
Cetin
Vice President
Mr. Nessmann,
Lothar
Vice President
Mr. Bormes, Robert
Vice President
Mr. Cottan, Michael
Vice President
Mr. Haechler,
Bernhard
Vice President
Mr. Douin, Thierry
Vice President
Mr. Flecker, Wolf-
Dieter
Vice President and
Executive Director
Mr. Gearing, Darren
Vice President
Mr. Paw, Sunny
Vice President
Ms. Pang, Barbara
Vice President - Sales
and Marketing
Ms. Angeles, Peggy
Vice President - Sales
and Marketing
Ms. Chen, Sarah
Vice President - Sales
and Marketing
Mr. Frost, Austin
Vice President - Sales
and Marketing
Mr. Windle, Brian
Vice President - Sales
and Marketing
Strategic Management 16
Far Eastern University
Institute of Accounts, Business and Finance
Ms. Cheng, Charlene
Vice President - Sales
and Marketing
Mr. Liu, David
Vice President - Sales
and Marketing
Mr. Inns, Brendan
Vice President - Brand
Communications
Mr. Rao, Anand
Chief Information
Officer
Mr. Leung, Vincent
Vice President -
Finance
Mr. Sachdev, Navjyot
Vice President -
Finance
Mr. Yuen, Andree
Vice President -
Finance
Mr. Sen Gupta,
Parikshit
Vice President -
Finance
Ms. Ng, June
Group Director of
Human Resources
Mr. Lui, Ben
Group Director of
Projects
Mr. Leung, Peter
Director of Projects
Mr. Chu, Nelson
Group Director of
Planning and Design
Mr. Lee, Harold
Group Director of
Engineering
Ms. Wong, Carrie
Director of Contracts
and Quantity Surveying
Strategic Management 17
Far Eastern University
Institute of Accounts, Business and Finance
e. Organizational Chart
Strategic Management 18
Chairman of the Board Vice Chairman
Chief Executive Officer
Chief Information
Officer
Chief Operating Officer
Company Secretary
Executive Director
Group Director of Engineering
Group Director of Planning and
Design
Group Director of Projects
Group Director of Rooms
Group Director, Food & Beverage
Group Director, Human
Resources
Group Director, Sales &
Marketing
Vice President Brand Communications
Vice President Finance
Far Eastern University
Institute of Accounts, Business and Finance
f. Hotel rooms and Offerings
Guests of Traders Hotel Manila will not only enjoy a range of facilities but
also an exceptional level of service that Shangri-La is renowned for. It is this
combination of factors that makes the hotel an ideal choice when compared to
other Manila Philippines hotels.
Hotel Lobby
Strategic Management 19
Far Eastern University
Institute of Accounts, Business and Finance
Superior Room
Superior City View Rooms offer contemporary décor, comfort, and a full array of
amenities that make your stay productive and peaceful.
All superior rooms have full-length windows that offer a view of vibrant Roxas
Boulevard.
Complimentary broadband Internet access, in-room safe, satellite TV, coffee/tea making
facilities, and a comfortable working chair and writing desk are standard in all Superior
Rooms.
The room dimension is 36 sqm/387 sqft.
Strategic Management 20
Far Eastern University
Institute of Accounts, Business and Finance
Deluxe Room
Guests may choose between sea view rooms which are overlooking Manila Bay and
the yacht club or city view rooms that offer the view of Roxas Boulevard’s spanning
Manila’s cityscape.
Each Deluxe Room is warmly decorated with comfortable chairs and writing desk with
ample supply of stationery.
Dual line telephones (with dataport connection), complimentary broadband Internet
Strategic Management 21
Far Eastern University
Institute of Accounts, Business and Finance
Deluxe Suite Room
Each Deluxe Suite contains a spacious and comfortable parlour separate from the
bedroom, along with a walk-in-closet.
Bathrooms include separate shower and bathtub areas, with a rainforest showerhead.
Dual Internet access, in-room safe, flat screen television set and DVD/CD player and
elegant writing desks.line telephones (with data port connection), complimentary
broadband
Strategic Management 22
Far Eastern University
Institute of Accounts, Business and Finance
Deluxe Suite Parlor
Lobby Lounge
The Lobby Lounge is ideal for cocktails and listening to live entertainment.
Genuine Japanese cuisine is served at Kikufuji Restaurant.
Strategic Management 23
Far Eastern University
Institute of Accounts, Business and Finance
Latitude
The hotel's Latitude restaurant offers international cuisine and a la carte menus
that originate from the five different countries found in the same latitude as Traders
which is 14.35 ° N 121° E. These countries are Philippines, Guatemala, Mexico, South
Africa and Thailand, U. S. steaks are also offered.
Swimming Pool
Strategic Management 24
Far Eastern University
Institute of Accounts, Business and Finance
Embassy Ballroom
The Embassy Ballroom can hold up to 500 guests. Seven other function rooms,
audio-visual-equipment and wireless internet access are also made available upon
request.
Embassy Ballroom- Conference Set-up
Strategic Management 25
Far Eastern University
Institute of Accounts, Business and Finance
Ambassador Sala
Health Club
Strategic Management 26
Far Eastern University
Institute of Accounts, Business and Finance
Club Rooms
Club Rooms are 36 sqm, located on the 17th to 19th floors. They are fitted with a king
size bed or 2 single beds. Bathrooms have a bathtub with an overhead shower. Guests
have the extra Traders Club benefits and facilities: All-day non-alcoholic beverage
service, daily breakfast, afternoon tea, and sunset cocktails at the Traders Club Lounge.
Broadband internet access, Dual line telephones (with dataport connection), in-room
safe, 29 inch interactive satellite TV, coffee/tea making facilities and comfortable writing
desks are standard in all Club Traders Rooms.
Strategic Management 27
Far Eastern University
Institute of Accounts, Business and Finance
Other Facilities:
Restaurants
Spa
Massage
Steam room and Jacuzzi
Children’s pool
Outdoor jogging track
Cruise (near ferry terminal)
Airport Transfer
Baby Sitting / Child Care
Business Centre
Car Rental Service
Complimentary Shoeshine
Service
Conference Facilities
Delicatessen
Express Check-in and
Check-out
Facilities for the Physically
Challenged
Foreign Exchange Counter
Hair / Beauty Salon
In-Room Dining
Laundry & Valet Service
Non-smoking Room
Parking Facilities
Photo Processing Service
Postal / Courier Service
Taxi & Limousine Service
Travel Agency / Tour Desk
Strategic Management 28
Far Eastern University
Institute of Accounts, Business and Finance
g. Internal Factor Evaluation (IFE) Matrix
KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE
Internal strengths1. Exceptional Level of Service .30 4 .802. High standard Facilities .25 4 .803. Superb Sea View .10 3 .304. Wide range of exclusive
privileges.15 3 .45
Internal Weaknesses1. Brand Awareness .10 2 .202. Customer loyalty .10 1 .10
TOTAL 1.00 2.65
Internal Factor Evaluation Analysis:
Internal Factor Evaluation (IFE) Matrix determines the strengths and weaknesses
of Traders Hotel. The High standard Facilities weighted most important strength of the
company. Having the score of 2.65, the company is responding in an above average
way to existing strengths and weaknesses in the industry.
Strategic Management 29
Far Eastern University
Institute of Accounts, Business and Finance
IV. EXTERNAL ASSESSMENT
a. Market Position
b. Market Competitors
Manila Hotel
The Manila Hotel is a 500-room, five star hotel in Manila, Philippines, located in
the heart of the Manila Bay area. The Manila Hotel is the oldest premiere hotel in the
Philippines, built in 1909 to rival Malacañang Palace, where the Philippine president
now lives, and opened in 1912. It was built on 3.5 hectares (376,736.9 sq ft) of land
along Roxas Boulevard. It was the residence of General Douglas MacArthur from 1935
to 1941.
The main lobby was designed for sitting as well as for making grand entrances.
Measuring 125 feet (38 m) long by 25 feet (7.6 m) wide, the lobby is lined with white
Doric columns. The floor is Philippine marble, the chandeliers are made of brass, crystal
and seashells, the furniture is carved out of Philippine
Strategic Management 30
Far Eastern University
Institute of Accounts, Business and Finance
mahogany which is used throughout the hotel.
The rooms provide exceptional views of the city, especially the gardens of Rizal
Park and Intramuros. Manila Hotel is the first hotel in the Philippines to
offer HBO among other television network systems for all rooms. All rooms make use of
the Ving Card electronic card system for maximum security. The 570 fully renovated
rooms that reflect the hotel’s storied past blend with the conveniences of a modern
luxury hotel. Other amenities include traditional decor with elegant
furnishings, individually controlled central air conditioning, remote-control TV with cable
channels, mini bars, separate bath and toilet with extension phone, and secure in-room
safes.
The three-bedroom MacArthur suite rents for $650 a night. The penthouse, the
most expensive suite (with a private swimming pool) on the 18th floor, has a view of the
Bay, of Rizal Park and the 16th-century ruins of the Spanish walled city of Intramuros,
opposite the hotel. Like the Presidential Suite, which costs $900 a night, the $1,200-a-
night penthouse is decorated with rare paintings, Asian antiques and Filipino crafts. The
MacArthur, Presidential and Penthouse Suites provide 24-hour butler service.
The hotel's guest facilities and other services include limousine and luxury car
rental, a helipad on the roof deck, airport transfer and transport assistance, medical and
dental clinic, a business center with Internet access, 24-hour full menu room service, a
delicatessen, a barber shop and beauty salon, a florist, laundry service, a post office, an
in-house shopping mall, and arrangement of sightseeing tours. The Bay Club, Manila
Hotel's sports and health club, features a jacuzzi, two tennis courts, and one squash
court. Guests also have access to a gym, a sauna, swimming pool with a wet bar, a
game room, and an indoor golf
simulator. Other health club services include a whirlpool, wet sauna, steam box, martial
arts, swimming, massages, and tennis lessons.
Strategic Management 31
New EntrantsCarlson Hotels –
Manila BayHotel H2o – Manila
Bay
Far Eastern University
Institute of Accounts, Business and Finance
Sofitel
Sofitel Philippine Plaza is a unique luxury hotel in Manila with a resort setting
next to the largest convention center and close to theaters, museums, government
offices and the Mall of Asia. 5-star accommodation includes 609 rooms and suites
boastingof balconies and spectacular views of Manila Bay sunsets. Flagship restaurant
Spiral is the dining favorite in the metro, Sunset Bar has nightly cultural shows,
7Pecados features live bands and LeBar offers bistro-lounge-patisserie service.
Lagoon swimming pool, tropical gardens in 12-acres with aqua golf, mini golf,
tennis and petanque courts and jogging trail. LeSpa at Sofitel and SoFit center open 24
hours. Playground and indoor Kids Club for superb recreation and sports activities.
c. Porter’s Model
Strategic Management 32
Far Eastern University
Institute of Accounts, Business and Finance
d. External Factor Evaluation (EFE) Matrix
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED
OPPORTUNITIES
1. Increase in income .35 3 1.05
Strategic Management 33
Far Eastern University
Institute of Accounts, Business and Finance
2. Internet Users .20 4 .8
3. Economic Crisis 16 4 .6
THREATS
4.Fluctuations in international and domestic
tourist arrivals
.10 4 .4
5. Population below poverty line .07 3 .21
6.Growth of existing competitors .13 4 .52
TOTAL 1.0 3.58
Legend:
Weight: 0.0- not important
1.0- important
Rating: 4 – major strength
3 – minor strength
2 – minor weakness
1 – major weakness
External Factor Evaluation Analysis:
The External Factor Evaluation Matrix is used for the assessment of the
current business conditions to visualize and prioritize the opportunities and threats
affecting Traders Hotel. The weight gives the value of the factors while rating indicates
how effective Traders Hotel’s current strategies respond to these factors. Weights are
industry-specific while ratings are company specific.
Strategic Management 34
Far Eastern University
Institute of Accounts, Business and Finance
The most critical and important among the factors listed is the increase in
income. This factor was a weight of .35. the hotel got a weighted score of 3.58 which
indicates that it is responding very effectively to the existing external opportunities and
threats.
Strategic Management 35
Far Eastern University
Institute of Accounts, Business and Finance
e. Competitive Profile Matrix
TRADERS
HOTEL
MANILA HOTEL HOTEL SOFITEL
CRITICAL
SUCCESS
FACTORS
WEIGHT RATING SCORE RATING SCORE RATING SCORE
Promotion and Advertising
.19 3 .57 4 .76 4 .76
Service Quality .27 4 1.08 4 1.08 4 1.08
Price Competitiveness
.22 4 .88 3 .66 3 .66
Customer Loyalty
.14 2 .28 4 .56 3 .42
Financial Position
.10 3 .30 4 .4 3 .30
Market Share .08 2 .16 4 .32 3 .24
TOTAL 1.0 3.27 3.78 3.48
Legend:
Weight: 0.0- not important
1.0- important
Rating: 4 – major strength 2 – minor weakness
1 – major weakness 3 – minor strength
Strategic Management 36
Far Eastern University
Institute of Accounts, Business and Finance
Using Competitive Profile Matrix (CPM), we have identified Traders Hotel’s
major competitors and particular strengths and weaknesses. Manila Hotel, Hotel Sofitel
and Traders Hotel gained 3.78, 3.46 and 3.27 respectively.
V. STRATEGY FORMULATION
a. BCG Matrix
Market Share
BCG ANALYSIS
Strategic Management 37
High
Low
Market Growth
Far Eastern University
Institute of Accounts, Business and Finance
Based on the table illustrated, Manila Hotel is placed in STAR because it is
defined by having high market share in a growing market. Stars are leaders in the
business but still needs a lot of support for promotion and placement. Under
QUESTION MARK, we placed Traders Hotel because it has growing market but have
low market share. Hotel Sofitel is placed in CASH COW, because of its position of high
market share in a mature market. Lastly, Sogo Hotel is placed in DOG because of its
low growth market and has low market share.
b. SPACE Matrix
STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
FS and IS = +6 (best) and +1 (worst) CA and ES = -1 (best) and -6 (worst)
INTERNAL STRATEGIC POSITION
FINANCIAL STRENGTHS (FS) RATING
Working Capital +5
Liquidity +4
Profitability +5
Budgeting +5
Raise short term capital +4
TOTAL +23
FS average (+23/5) +4.6
Strategic Management 38
Far Eastern University
Institute of Accounts, Business and Finance
COMPETITIVE ADVANTAGE (CA) RATING
Market share -3
Product quality -2
Technological know how -3
Customer loyalty -2
Product life cycle -3
TOTAL -13
CA average(-13/5) -2.6
EXTERNAL STRATEGIC POSITION
Strategic Management 39
Far Eastern University
Institute of Accounts, Business and Finance
ENVIRONMENT STABILITY (ES) RATING
Technological changes -3
Price range of competing products -2
Risk involved in business -3
Competitive pressure -3
Price elasticity demand -2
TOTAL -13
ES average (-13/5) -2.6
INDUSTRIAL STRENGTHS (IS) RATING
Growth potential +5
Profit potential +5
Technological know how +4
Resource Utilization +4
Financial stability +5
TOTAL +23
Strategic Management 40
6
5
4
3
2
1
-6
-5
-4
-3
-2
-1
654321-6 -5 -4 -3 -2 -1
IS4.6
FS 4.6
ES -2.6
(2, 2)
CA - 2.6
Traders Hotel
Far Eastern University
Institute of Accounts, Business and Finance
IS average (23/5) +4.6
Basis/Sources: Environment strength, Financial strength, Industry strength, Industry Analysis,
Questionnaire, Company profile.
SPACE MATRIX Analysis
In the Strategic Position and Action Evaluation (SPACE) Matrix of Traders hotel,
it shows that the company’s position in the market is Aggressive. This means that the
Strategic Management 41
Quadrant 1Quadrant 2
Quadrant 3Quadrant 4
Weak competitiveposition
Strong competitiveposition
Far Eastern University
Institute of Accounts, Business and Finance
company has to use its internal strength to develop market penetration and product
development strategies.
In market penetration financial strength is a dominating factor in the industry. The best
way to achieve this is by gaining competitors' customers. In terms of product
development service are innovated for the ever changing demand of customer. The
company should improve their service to increase sales.
c. Grand strategy Matrix
GSM analysis
Strategic Management 42
Rapid market growth
Slow market growth
Far Eastern University
Institute of Accounts, Business and Finance
Based on the Grand Strategy Matrix, Traders Hotel is positioned in Quandrant 4.
It has a strong competitive position but are in a slow-growth industry.
D. Internal-External Matrix
IE analysis:
Strategic Management 43
Far Eastern University
Institute of Accounts, Business and Finance
Having analyzed the IE Matrix of the company, we have seen that Traders Hotel
falls under the first region or division which is cells I, II or IV can be described as grow
and build.
e. SWOT Analysis
STRENGTHS
Exceptional level of service
High standard facilities
Superb bay view
Wide range of exclusive
privileges
Company image
Competitive price
Value and affordability
Customer service
Facility maintenance
WEAKNESSES
Brand awareness
Customer loyalty
Few advertisements
OPPRTUNITIES
Increase income
Internet users
Economic crisis
THREATS
Fluctuations in international and
domestic
Population below poverty line
Growth of existing competitors
Strategic Management 44
Far Eastern University
Institute of Accounts, Business and Finance
SWOT EXPLANATION
STRENGTH
Exceptional level of service
- Being a 4 star hotel in the country, Traders Hotel’s quality of service
will definitely be an assurance. Adding up is that being of it’s a
subsidiary of chain of hotels of Shangri-La hotels worldwide. Word
class service is a must for Traders Hotel.
High Standard Facilities
- Having a world class service of Traders Hotel, high standard facilities
will definitely be an edge to its leading competitors. First class
furniture, appliances, etc. are expected and available in the said hotel.
Value and Affordability
- One of the competitive advantages of Traders Hotel is letting their
customers experience unique comfort and outstanding services with
reasonable price.
Facility Maintenance
- An efficient and effective management knows the value of facility
maintenance for long run business operations. Hotel rooms as well as
hotel facilities are well maintained by regular inspection as a monthly
ritual.
Strategic Management 45
Far Eastern University
Institute of Accounts, Business and Finance
Customer Service
- Traders Hotel’s long existence, the hotel proved a lot. For these long
years of operations and good company image, it is more than safe to
say that the hotel sustains good relationship and cater excellent
services to their customers.
Company Image
- The hotel’s good image has been maintained and continuously
improving.
Superb Bay View
- An overlook of Manila Bay’s during sunrise and sunset will definitely
blow your eyes away. Having this, Traders Hotel consider this as one
of their competitive advantages. By this way, the hotel does not only
promote the hotel itself but as well as the country’s natural beauty.
Wide ranges of exclusive privileges
- Traders Hotel’s treatment to its customers is like treating a family.
Saving only the best is the only focus of the hotel. Giving exclusive
prinilages to its loyal customers as well as to other customers is an
edge for the hotel.
Competitive Price
- Being a 4 star hotel with reasonable price, truly, Traders Hotel is an
assurance. The price dictates the qualitty of a product or service. But
to Traders Hotel, the excellent quality of service is paralleled with a
reasonable price that is not too much or overpriced compared to its
competitors.
Strategic Management 46
Far Eastern University
Institute of Accounts, Business and Finance
WEAKNESSES
Brand Awareness
- Being a subsidiary of Shangri-La chain of hotels, low brand image of
Traders Hotel is developed. People tend to know other 5 and 4 stars
hotels but not or not so much of Traders Hotel.
Customer Loyalty
- For a hotel industry, customer loyalty is hard to gain. People wanted to
try different hotels to see which the best is. Lack of advertisements and
exposure to the public of Traders Hotel is one of its weaknesses.
Intensive Advertisements
- The hotel may have already established itself and made it popular and
known for others, but still, advertisements will make their status better
for they cannot be complaisant with its status. Continuous changes in
the industry should be coped up by the hotel and one of this is through
intensive advertisements.
OPPORTUNITIES
Increase Income
- A person’s capacity of spending is based on the income. The buying
power of people tends to increase and vice versa. This is an
opportunity for the hotel in marketing the excellent services as well as
the facilities so that people may be enticed to go with Traders Hotel.
Strategic Management 47
Far Eastern University
Institute of Accounts, Business and Finance
Internet Users
- In our fast faced environment, people prefer the convenience offered
by the internet. With just a snap, we can buy food, clothes and even
book a flight. This becomes an opportunity by exposing the hotel to the
internet users as a medium of advertisement.
Economic Crisis
- Economic crisis does not only mean negative. Experiencing this,
people are smarter in spending their money. So instead of having
purchase a 5 star or 4 star hotel room which is more expensive one,
there is a tendency of shifting to a 4 star hotel room, which offers
almost the same service.
THREATS
Fluctuations in the international and domestic arrivals
- Total dependency on foreign tourists can be risky, as there are wide
fluctuations in the international tourism. Domestic tourism needs to be
given equal importance and measures should be taken to promote it.
Population below poverty line
- The increasing and significant number of our population that is
included below poverty line is very much threatening.
Growth of existing competitors
- The continuous growth of existing competitors in the industry will
tighten the competition and may cause the hotel develop further the
operations to maintain its status.
f. Quantitative Strategic Planning Matrix (QSPM)
STRATEGIC ALTERNATIVES
CRITICAL SUCCESS MARKET MARKET
Strategic Management 48
Far Eastern University
Institute of Accounts, Business and Finance
FACTORS PENETRATION DEVELOPMENT
KEY SUCCESS FACTORS WEIGHT AS TAS AS TAS
OPPORTUNITIES
Increase in income .35 3 1.05 4 1.40
Internet Users .20 4 .8 4 .8
Economic Crisis .16 3 .48 3 .48
THREATS
Fluctuations in international
and domestic tourist arrivals
.10 3 .30 2 .60
Population below poverty
line
.07 3 .2 2 .14
Growth of existing
competitors
.13 4 .52 4 .52
STRENGTHS
Exceptional Level of Service .30 4 1.20 4 1.20
High standard Facilities .25 4 1 4 1
Superb Sea View .10 2 .20 1 .10
Wide range of exclusive privileges
.15 3 .45 2 .30
WEAKNESSES
Brand Awareness .10 3 .30 3 .30
Customer loyalty .10 3 .30 3 .30
TOTAL 2.00 12.35 7.14
QSPM Analysis
Based on the above matrix, the total attractiveness score of market penetration
and market development is 12.35 and 7.14 respectively. The highest TAS is market
Strategic Management 49
Far Eastern University
Institute of Accounts, Business and Finance
penetration that would mean it is the most attractive strategy among market penetration
and market development
Market penetration strategy seeks to increase market share for present products
or services in present markets through greater marketing efforts. This includes
increasing the number of salespersons, increasing advertising expenditures, offering
extensive sales promotion items, or increasing publicity efforts.
Market development strategy involves introducing present products or services
into new geographic areas.
VI. STRATEGY RECOMMENDATION
RECOMMENDED BUSINESS ORGANIZATION STRATEGIES
In order to maintain and improve TRADERS HOTEL market share and
competitive advantage, the following business strategies are suggested for the
Strategic Management 50
Far Eastern University
Institute of Accounts, Business and Finance
company to remain competitive in their industry.
1. CONTINUOUS DEVELOPMENT OF FACILITIES AND SERVICES
The hotel may have well appointed accommodations and first of its class amenities and
facilities but it should continuously develop its services to deliver customer’s need. One
way to fulfill the promise of unique stay experience i s by showcasing modern first-class
amenities and facilities that that will make and keep the customers happy and satisfied.
2. DEVELOP GOOD ADVERTISING CAMPAIGN AND POWERFUL
PROMOTIONAL STRATEGIES
Advertising is very important for it is the means of communicating the products and
services offered by the hotel to influence and persuade people to make
accommodations.
The hotel should be aggressive and place TV ads, print ads and internet ads. They can
be cost efficient and take advantage of the internet and its ability to pass out
information.
3. EXPLORE AREAS OF CONCENTRATION
The hospitality industry contains many segments, each with their own special needs.
The hospitality industry includes lodging, foodservice and transportation. Trader’s hotel
management may focus on lodging, but that still includes such diverse segments as
hotels, beds and breakfasts, resorts, vacation ownership, gaming and spas.
Strategic Management 51
Far Eastern University
Institute of Accounts, Business and Finance
4. RECRUIT FACULTY
Hotel managers must be skilled in environmental management, revenue (or yield)
management, leading people, investments and technology. Attend conferences such as
the International Council on Hotel, Restaurant and Institutional Management (CHRIE)
where you can meet dedicated hotel management faculty members and get
recommendations. Recruit people with a diversity of backgrounds.
Strategic Management 52
Far Eastern University
Institute of Accounts, Business and Finance
VII. STRATEGY IMPLEMENTATION
Our recommended action plan is to put greater emphasis on the advertising and
promotions of the hotel by having ads on the magazines, newspapers, leaflets/flyers,
viral marketing, and website interaction with customers through Facebook, Blogs,
Multiply and Friendster. By having greater marketing efforts the hotel will be popular and
it will add information to the public. It will attract more foreign and local customers that
will do business or have a reservation with the hotel. Through advertising more
customers are knowledgeable and can be attracted to have corporate meetings and
forums, events like weddings and birthdays and tourist and locals who are looking for a
vacation and relaxation.
In addition to our recommendation, we would like the company to provide the
registered customers with SPA, Discount Card, Covered Swimming Pool, and Sports
Area, so that guest will not go out and seek for other places or business that offers such
services. Also, to set special offers for special occasions like Valentine’s Day,
Christmas, and Summer Vacations.
Magazines the stronger the readers affiliation with the magazine as a brand, the
higher the level of endorsement that the advertising receives from the magazines
personality. The Magazine good for the hotel to set ads is the Good Housekeeping and
Seventeen Magazine.
Good Housekeeping advertising rate for 1month full page colored is Php.
391,185.00 and Seventeen Magazine for 1 month full page colred is Php. 134,000.00
with the total of Php. 525, 185.00.
Newspaper is another way of advertising the hotel in the public and we choose
Manila Bulletin as the broadsheet that we will put the ads. 3 col. x 5 cms
Strategic Management 53
Far Eastern University
Institute of Accounts, Business and Finance
= 5,292.00 (weekdays) ; 6,216.00 (sundays) it will be post for 2 months in the
newspaper. The total for 2 months weekdays Php. 211, 680.00 and for 2 months on
Sundays Php. 49,728.00 and the over-all total is Php. 261,400.00
Leaflets/Flyers will be distributed to major malls in manila like SM North Edsa,
Trinoma, Glorietta, SM Mall of Asia and SM Mega mall. The No. of Leaflets is 100,00
(20,000 leaflets per malls) and the price per leaflets is Php. 2.50 and the total cost for
leaflets is Php. 250,00.00
Viral Marketing is the kind of technique that uses pre-existing social networks to
produce increases in brand awareness or to achieve other marketing objectives (such
as product sales) through self-replicating viral processes. It can be word-of-mouth
delivered or enhanced by the network effects of the Internet. This strategy is one of the
most effective means of advertisement that will give consumers glimpse and also full
information about the company. But with using this maybe some informations being
spread by people are false or has negative impact to the public, so be very careful of
using this as one of the advertisement.
Additional recommended plan:
Discount Card
One way of penetrating the market for a Hotel is to offer discount cards to any
client. This would help the hotel to attract and retain customers who have at least
patronized their services. Especially satisfied customers because those persons would
likely want to have the same experience that they had during their stay at the hotel,
plus, the fact that the hotel will offer them a lower rate than before would be a great help
to have loyal customers. Not to mention that this can create a ripple effect to the
society.
Spa
Strategic Management 54
Far Eastern University
Institute of Accounts, Business and Finance
Another great service that a hotel can offer to their patrons would be a spa.
Relaxation is one of the main purposes that a person stays in a hotel, and a spa can
help the hotel give the most relaxing service to their clients. Having this kind of services
offered inside the premises of the hotel would add to the comfort and security of the
customers and would increase the satisfaction of the patrons.
Covered Swimming Pool
Having a swimming pool inside the hotel premises is a great deal for customers
because some customers, especially young individuals and those that would bring
along children would be delighted to have a swimming pool to indulge themselves with
plus, without the hassle of leaving the hotel premises for convenience, safety and
security, and pleasure.
Sports Area
Another facility that a hotel can offer to its clients is a sports area, usually it can
be composed of a basketball court, full or half, tennis and badminton courts. This can
help the hotel attract and retain customers because sport area is great for the health
and a great venue for people to meet new friends. It can serve as the place for the
clients to unwind after a long day or to keep a healthy lifestyle without any burden of
leaving the hotel grounds. This can add up to the satisfaction that the hotel would want
to give to their patrons.
Financial Implication
Strategic Management 55
Far Eastern University
Institute of Accounts, Business and Finance
The total expenses for the advertisement of the hotel is Php. 1,035,585.00 which will
increase the expense of the firm by 10% - 30% but will possibly increase sale after the
advertisement for also about 20% - 30%.
VIII. CONCLUSION
We therefore conclude that the strategy to be implemented on the hotel is the
Market Penetration, seeking increased market share for present products or services in
present markets through greater marketing offers. It includes increasing the number of
sales persons, increasing advertising expenditures, offering extensive sales promotion
items, or increasing publicity efforts. By increasing primarily in advertising and
promotion, the hotel can provide more information to the public about their products and
services offered.
Strategic Management 56