This paper describes Hamilton Island and hotels located in the region. An analysis of their financial performance is given, based on which two recommendations are proposed for a possible increase in revenue and business development. Finally, performance is compared to industry averages, and simulation results are critically evaluated.
Introduction
A hotel’s financial performance can provide valuable information, especially compared to the industry’s overall performance. If the trend is inferior to the national average, the hotel has not yet realized its potential, and the proper management decisions are needed to attract customers and develop infrastructure. On the one hand, positive indicators bring sustainable income; on the other hand, they limit the development potential. Service diversification, targeting, segmentation, and pricing policy serve as tools for regulating the development of the hotel business.
The Oceania region is exceptionally rich in various tourist attractions, and the vital point is the pristine wildlife. The climate is also conducive to year-round recreation, while the infrastructure here is more than decent, corresponding to the exoticism and cost of the destination. The latter is perhaps the only disadvantage along with the remoteness of this region, but in return, it creates a calm atmosphere for outdoor activities, as well as for any other types of it.
Brief Overview
Hamilton Island is the largest inhabited island in the Whitsunday archipelago in the Australian state of Queensland. Today, Hamilton Island is a popular holiday destination for tourists from all over the world. Every year at the end of August, Hamilton Island becomes a place of pilgrimage for yachters from all over Australia and New Zealand – the Hamilton Island Race Week Yacht Festival is held here. When the yachts dock at the famous Whitehaven Beach, a chic beach party begins, one of the many held on the island. Hamilton Island primarily attracts wilderness lovers and outdoor enthusiasts (Ball et al., 2018). From July to September, the giant owners of the ocean swim through the warm waters of the island – whales migrating south. These fantastic mammals can be seen during a special tour. Another natural attraction of these places is the famous Great Barrier Reef.
Tourism statistics clearly reflect the financial performance of the hotel company. Corporate orders, according to statistics, have been between 14 and 18 percent over the past five years. Since there are practically no office buildings on the island itself, mainly tourist buildings were opened there from its very foundation. In 1975, Hamilton Island was bought by Keith Williams and Brian Brith, who began building a harbor and resort complex a couple of years later. The resort was opened in 1984, but most of it burned down during a terrible fire a year later. It took almost 1.5 years to restore. The Whitsunday Holiday Apartments opened in 1986, and the Reefview Hotel opened in 1990. It was followed by the opening of the five-star Beach Club Hotel, Qualia Yacht Club, and Luxury Resort (Rastegar & Zarezadeh, 2020). Corporate orders are mainly related to conferences.
Hamilton Island Enterprises’ main competitors are Colonial Leisure Group, Marina Bay Sands, and Cinnamon Hotels and Resorts. Most of them were founded later than Hamilton Island Enterprises but have a higher turnover due to more residences and buildings (ZoomInfo, 2022). Some of them are located in regions relatively close to Australia: Singapore and Sri Lanka. In some cases, they win in the audience due to geographic accessibility, easier obtaining of tourist visas, and logistical issues. It is also worth noting that Hamilton is more focused on yachting and golf, while other resorts offer diversified products. At the same time, there is no such intense competition in the local market. The global competition enables diversified sports-related products as Hamilton is based on active recreation and closeness to nature. At the moment, there are no threats on the foreign market; since residential buildings are just beginning to appear on the island, everything else is occupied by a complex of hotels for different target audiences.
Corrective Actions
It is worth noting that the hotel’s room occupancy reaches 100 percent by its fifth year, while other sales continue in the form of liquor, food, and beverages. Such statistics with constant sales show a positive financial performance in the hotel’s activities, which operates at a high level of quality. Such occupancy indicates total payback, despite various external factors. As a result, adjustments in the main operating activities are not required, and the positive financial performance not only during the season allows increasing both short-term and long-term assets of the hotel. The main point in further development is the choice of the right strategy and alignment with the company’s vision, the implementation of compliance with the requirements of environmental and social responsibility, which will win not only financially, but also reputationally (Han, 2021). Two actions are proposed to improve financial performance.
Firstly, since room occupancy has already reached its maximum, the company should focus on accompanying guest activities. The region is already famous for its yachting festivals, beach parties, and golf courses. The natural nature, filled with the region, makes it possible to meet the needs of a wide range of audiences. Relatively recently, conditions for family and children’s recreation and services of professional babysitters appeared on the island. When analyzing segmentation, the hotel can diversify services by targeting those audience segments that are currently covered less than others. These include the elderly and the offer of health services in nature, away from the bustle of the city. In addition, at the moment, corporate orders are limited to various conferences and make up a tiny percentage of revenue. It is possible to correct this fact by creating conditions for business conferences and co-working spaces with advanced technology and the best working conditions. Given the pandemic trend in which the number of remote workers has increased, this innovation will be relevant (Espitia et al., 2022). The combination of the possibility of comfortable rest and work activities will attract a large audience not only on their nominal vacations.
Secondly, sports diversification of the conditions and services provided by the hotel is possible. At this stage, the company offers various beach sports, fitness and yoga, golf, and yacht competitions. It is possible to add to this list other summer outdoor sports that are popular in outdoor activities in the world: football, basketball, baseball, tennis, and ping-pong (Ristova, 2020). The creation of infrastructure will require certain financial investments and expenses; however, it will be able to attract customers from all over the world as a diversified opportunity to combine helpful rest with a pleasant one. When implementing horizontal diversification of services, it is essential to maintain a range of rankings in the pricing policy, leaving the opportunity to relax on a budget and provide luxury services.
Hotel Performance Comparison
Table 1. Hamilton Island Hotel comparison with industry (STR, 2019).
Simulation
In this simulation, repair costs, customer reviews, and weekly advertising were considered. Since this hotel’s target and non-target audiences are located all over the world, the main direction of marketing is the Internet. Therefore, even being represented on many sites, such as Booking.com or Trivago, in this direction, it is needed to constantly look for new opportunities to create the most attractive offer. If the costs of the above innovations are included in the simulation, the financial performance of the first three years will be significantly lower due to the initial costs. However, by the fifth year, it is possible to improve the dynamics, which will contribute not only to filling the rooms but to the entire hotel complex on the island. Given the information that the current simulation and Table 1 above results are pretty positive, with the new simulation, it is possible to consider more expensive options for the development of the hotel.
Conclusion
The simulation results showed excellent financial performance of the hotel, which shows unprecedented statistics with 100% room occupancy. However, according to data from the Queensland region, the price per room can still be increased to the average in the market. Considering the possible development of the hotel with tools for segmentation, targeting, and diversification of sports services, the management can first raise the prices for rooms by 10-15%, also remaining below the market price. As a result, the foundation will be laid for further sustainable growth and the development of competitiveness.
References
Ball, D., Bryant, S. L., & Mau, R. (2018). The interplay between tourism and conservation on islands. Australian Island Arks: Conservation, Management and Opportunities, 165.
Espitia, A., Mattoo, A., Rocha, N., Ruta, M., & Winkler, D. (2022). Pandemic trade: COVID‐19, remote work and global value chains. The World Economy, 45(2), 561-589.
Han, H. (2021). Consumer behavior and environmental sustainability in tourism and hospitality: A review of theories, concepts, and latest research.Journal of Sustainable Tourism, 29(7), 1021-1042.
Rastegar, R., & Zarezadeh, Z. Z. (2020). The case of community-based tourism. The Routledge Handbook of Community Based Tourism Management: Concepts, Issues & Implications, 285.
Ristova, C. (2020). Sports event tourism-an evolving business opportunity for the hotel industry. Activities in Physical Education and Sport, 10(1-2), 6-9.
STR. (2019). Australian Accommodation Monitor Summary.
ZoomInfo. (2022). Hamilton Island. Web.