Introduction
Hyatt Hotels Corporation began operations in 1957 through acquisition of the Hyatt house at the Los Angeles International Airport. The hotel chain has grown over the years to over 200 hotels, resorts and vacation spots. The hotel chain which was started in the United States has hotels and resorts in all continents of the world.
From the year 1957, the hotel chain has grown and diversified into many other groups such as Park Hyatt, Hyatt Regency, Hyatt Resorts and AmeriSuites.
The hotel chain has been one of the best performing hotel chains in the world and this is evidenced by the good results that the hotel chain returned in the last quarter of 2012. According to these results, the hotel chain had an EBITDA of $ 147 million for the fourth quarter of 2012 which was an increase of 2.8% compared to 2011.
The company’s net earnings for the period ended 2012 stood at $ 16 million which contributed to around $ 0.09 per share. These results were lower than those of 2011 when the hotel chain had a net income of $ 52 million contributing to $ 0.31 per share.
During the year 2012, the hotel chain was performing well but its performance was compromised by the poor performance of its segments. Moreover, the hotel chain acquired a lot of properties and hotels during this period contributing to increased costs and expenses.
For instance, the hotel chain acquired Hyatt Regency Birmingham at a cost of $ 43 million and other hotels at a cost of $ 87 million.
Analysis of Hyatt Kathmandu
Hyatt hotel chain has established hotels in different parts of the world and this include the establishment of the Hyatt Kathmandu. The hotel was opened in the year 2000 in a ceremony graced by top Hyatt and Nepalese government officials.
This establishment was significant for the hotel chain since the Kathmandu hotel is a 5-star facility that sits on a 37 acres of land in well landscaped rounds based on the traditional Nepalese architecture.
The hotel is located close to a UNESCO world heritage site and 4 km away from the airport while the Kathmandu city centre is 6 km away from the hotel (Stephen, 2007). The Hyatt hotel is also located 5 minutes away from the Boudhanath Stupa, a holy shrine which is a world heritage site.
The architecture of the hotel is breath taking and it has a great panoramic view of the surrounding mountains and areas around Kathmandu. The Hyatt Kathmandu hotel comprises of 280 rooms which are designed to suite the different needs of customers visiting the hotel (Orbaşlı, 2009).
All the rooms are well equipped with showers, room safe and mini bars. Moreover, the executive rooms are spacious and they have a meeting room and access to conference rooms which allow people to dine under excellent conditions such as concierge services.
Apart from the rooms, the Hyatt Kathmandu comprises of 4 state of the art restaurants and bars which offer different arrays of cuisines including international and local cuisine. The Lounge is a restaurant that offers high seasonal tea while the Rox restaurant offers European cuisine with Italian specialities.
This hotel offers wide arrays of services catering for different kinds of guests such as airport pickups, babysitting services, laundry and business services (Francis, 2008). As a result, the hotel is well suited for leisure and business travellers.
One of the impressive facilities at the hotel is the 950m2 of meeting room space that caters for the diverse needs of customers. The Oasis club in the hotel is a total fitness hub with amenities such a gym, a health and beauty spa, two outdoor swimming pools and a 1.6 km running track.
External Study of the Market
The tourism and hotel industry in Nepal experience challenges such as competition, political and tough economic environment. As result, we will have to prioritise on which choices are suited for the strategy that works for the organization.
In the case of tourism and hotel industry in Nepal we have to analyze factors that have a direct impact on the organizational strategy of Hyatt Kathmandu.
Some of the external factors include the political situation of Nepal whereby the country has witnessed a relative political stability and this has assisted in the growth of the country’s economy. As a result, the country’s GDP grew by around 4.63 in the year 2012.
The country is on a growth path and this will impact the tourism directly benefitting the hotel industry as hotels such as the Hyatt Kathmandu (Arjun, 2005).
The minimum wage in Nepal stands at NPR 4,600 equating to $ 53 which is low in global terms and thus this will lead to lower operating costs and higher employee retention numbers for the Hyatt Kathmandu.
Moreover, the industry is set to benefit from a 10 year tax break incentive offered by the government of Nepal and this will give Hyatt Kathmandu a chance of growing. More employees will be hired in the hotel industry as a result of economic growth.
The economy is expected to hire more employees and this projected will benefit the hotel industry. Moreover, the industry is set to benefit from a projected 4.9% growth leading to more revenues for the industry. By the year 2020, it is forecasted that tourist arrival numbers will grow to over a million visitors.
As a result, the Hyatt Kathmandu has an opportunity of implementing its service strategy on all guests expected at the hotel (Pawan, 2004).
Growth in the education sector in Nepal is set to receive a boost from the government since the sector is expected to get a boost in terms of funding. As a result, the Hyatt could utilise the education system to get people who are well trained and experienced to work in offering quality services at the hotel.
Technological hurdles affect the hotel industry in Nepal is a negative manner since electricity generation and distribution are still huge challenges in the country.
In terms of communication, internet and radio are still in the development stages, however investment in these sectors is set to grow and benefitting the hotel industry in Kathmandu (William, 2006). These technological challenges do not make it easy for hotels to provide superior services to their clients.
The Geographical location or Nepal makes it ideal for the hotel industry to thrive in this country. For instance, the great Himalaya Mountains are set in the country and thus this provides an ample time for investors to establish hotels.
Moreover, it gives an opportunity for investors to build hotels in the country since this provides an opportunity for service provision. For instance, the Hyatt Kathmandu offers mountain hiking services and this is quite a new frontier in the tourism (Nath, 2009).
The country environment is prudent to food production which the hotel industry relies heavily upon. The hotel industry benefits a lot from cheap produce that hotel visitors consume and geological locations such as Mount Everest in Nepal are points of attraction.
While the country’s legal system is a factor that could affect the tourism industry, we have to look into the actions of the government in boosting trade in the hotel industry. In the process of establishing business, the country poses no difficult challenge or bureaucracy in the establishment of enterprise (Barker, 2012).
The business community in Nepal is still young and as a result, it is easier to get fresh produce at a low cost. Furthermore, agriculture is the core activity that is undertaken in the country and the Hyatt hotel can procure fresh and cheap foodstuffs.
Furthermore, the Hyatt Kathmandu is backed the huge Hyatt group with a good global reputation and brand recognition. This factor will greatly assist the Kathmandu hotel to grow and attract more customers (Brown, 2006). Food production and supply are paramount to survival of the hotel industry service provision.
With the ability of plenty foods at affordable costs, hotels such as Hyatt Kathmandu have an opportunity of offering fine dining services in its boost of attracting new clientele (Karan, 2009). Most of the travellers and guests who go to holiday in Nepal are thrill seekers with sufficient funds to travel.
In the process of running a hotel it is important to look at customers and in this regard, Hyatt Kathmandu should consider what kind of clientele it should target for the purposes of ensuring the hotel maintains a consumer base (Bindloss, 2010).
Most visitors to Nepal have a huge purchasing power that Hyatt could tap in marketing its hotel. Competition is factor to consider in the process of undertaking business. Nepal is a tourism market that is highly competitive with a lot of investors investing in the hotel industry.
The Nepalese government incentive on tourism is set to increase competition in the coming years (Durga, 2008). As a result, hotels such as Hyatt Kathmandu have to come up with superior hotel services to counter this trend.
One of the biggest external factors that the Hyatt group has to consider in the process of implementing its policy is the policy of substitutes. The Hyatt Kathmandu belongs to a group of high class hotels and there are several hotels in the 4 star and below which also attract customers from different locations.
Apart from these hotels there are other hotels which offer bear and minimum services that attract bag pack travellers (Werner, 2003). These groups of hotels that offer alternative services create competition which Hyatt group has to contend with.
Since the hotel industry is set to grow in Nepal, there is a high chance of new hotels opening up in the region. Moreover, the governmental support for the tourism industry is supposed to increase hotel industry entrants.
The fluctuating Nepalese currency affects the hotel industry and this could pose a threat to earnings for the Hyatt Kathmandu (Gautam, 2008). The Hyatt Kathmandu is facing a lot of competition from different competitors and challenges in the Nepalese economy.
The Nepalese tourism industry is set to grow based on governmental support that the sector has received. New entrants could pose a challenge to Hyatt since they will have an upper hand of tax breaks and new service offerings.
Technological challenges such as the lack of steady electricity in Nepal is a threat that affects the operations of Hyatt Kathmandu. Moreover, communication challenges and availability of hotels and resorts in the low segment are some of the threats that Hyatt Kathmandu could face.
However, the Hyatt group and other hotels have an opportunity of growth due to several external factors in the hotel industry. The Hyatt group has a huge presence in different locations in the world and as a result, the Hyatt Kathmandu is going to leverage its experience to implement its service strategy.
Moreover, the Hyatt group has centralized systems which could be used in booking, payments and organizational management (Stanley, 2004). This will enable the Hyatt group to implement its service based strategy globally easily.
The education sector in Nepal has received an investment from the government and as a result, hospitality schools in Nepal will churn out graduates who could work in the hotel industry (Agarwal, 2006).
This gives an opportunity for human resources to recruit better personnel in the process of offering quality services to its customers. The Hyatt Kathmandu has an opportunity of hiring employees at a low cost and leverage on this advantage against new entrants in the industry.
Moreover, the growth of the tourism industry in Nepal offers a chance to Hyatt Kathmandu to grow its business since it has been in the business for a period of more than a decade (Brown, S., Lamming, R. & Bessant, J, 2012).
Implementation of Strategies
The Hyatt Kathmandu is a world class 5-star hotel and the growth of tourism in the Nepalese market will create competition for the hotel. As a result, the hotel has to come up with a differentiation strategy that will make the hotel become competitive in the hotel industry in the country.
Since the Hyatt Kathmandu belongs to a group of hotels which offer excellent services across the globe. The Hyatt Kathmandu will adopt a service oriented strategy in association with a market retention and growth strategy.
The Nepalese hotel industry is set to benefit from growth in the tourism sector and thus, the Hyatt hotel is going to face stiff competition from new entrants and other existing hotels (Reid, R. & Bojanic, D, 2009). The hotel industry is one of the foremost service industries in the world.
As a result, many hotels participate in offering services based on cost, location and product offering. The Hyatt Kathmandu is best placed to make use of its superior services to compete in the hotel industry in Nepal.
The strategic use of quality services as a differentiation tool for Hyatt Kathmandu is a wise move for the hotel since it is in competition with other five star hotels in the region (Pizam, A. & Holcomb, J, 2008).
The Hyatt hotel in Kathmandu offers superior services through dining, transportation, business, leisure and relaxation in its facilities. Nepal is a country with beautiful scenery and thus the visitors want to enjoy the scenery without hassle.
As a result, the Hyatt hotel has designed itself to offer premium services to its guests that ensure total enjoyment of these services. This is unlike other hotels in the region which offer normal services and charge less for the services they offer (Hoque, 2013).
Hyatt Kathmandu’s strategy is informed by the need to retain its customers while at the same time grow its customer base when tourist arrivals increase in the region.
The Hyatt Kathmandu has designed and implemented a service oriented solution though the use of different strategies as outlined below:
- Dining Services: The hotel has offered a myriad of services such as good cuisine which considers international, local, healthy and European foods in its different restaurants. Consequently, the hotel also offers 24 hours dinning services and thus guests are assured of good food at all times.
- Business services: The Hyatt Kathmandu offers a variety of business services such as the availability of a business center served by secretaries. Additionally, the hotel offers assistance in organizing meetings and conferences.
- Transportation services: The hotel offers transportation services for different guests based on requests. For instance, the hotel offers airport pickups and a complimentary shuttle service to and back from the city six times a day (Barker, 2012). The hotel also boasts of a huge parking facility for guests and staff which allows for ease of transportation.
- Leisure and relaxation services: The Hyatt Kathmandu offers a lot of services that are tailored to make the guests feel relaxed. Such as services include a health and fitness centre which allows for visitors to keep fit and healthy. Moreover, within the health and fitness, there is a spa where visitors get a classy touch of Ayurvedic massages, skin and feet treatments (Ford, R., Sturman, M., Cherrill, D. & Craig, H, 2011). In terms of fitness, the hotel offers mountain biking, jungle safaris and trekking while at the same time there is a tennis court for guests to enjoy sports. In some instances, mountain flights and sports such as water rafting can be easily arranged based on request.
- Miscellaneous services: The Hyatt offers services such as baby sitting services and valet who are the call of the guests when they go shopping at the lobby of the hotel. Consequently, the hotel also has multilingual staffs that are capable of serving guests from different locations of the world (Mok, C., Sparks, B. & Kadampully, J, 2013). For business guests, the hotel also offers laundry services and thus, the guests have a lot of time to visit interesting locations all over Nepal.
In the process of implementation of the services oriented strategy it is important for the Hyatt Kathmandu to have highly trained employees. Training and hiring employees in offering these services is important and it helps in the implementation of these strategies.
Consequently, the Hyatt Kathmandu should ensure that the hotel remains in top notch status and this is by renovating the amenities within the hotel such as the health and fitness centre.
The implementation of a service oriented strategy for the purposes of penetrating and retaining customers should also look into customer reviews (World Bank, 2010).
The Hyatt group is synonymous with offering quality services in all locations they operate hotels and as a result, the hotel chain should make sure experiences should be shared among all hotel chains.
The Hyatt Kathmandu was able to achieve the goal of offering quality services since they had invested a lot in construction and maintenance of a world class 5-star hotel.
In addition, the Hyatt Kathmandu hires a lot of employees at a good cost as compared to other hotels since the wages in Nepal are minimal compared to other developed countries (Ioannides, D. & Debbage, K, 2007).
The Hyatt Kathmandu decided to move to Nepal as a move of expanding its market share since other markets had saturated such as the American, European and Latin countries.
In the process of implementation, the Hyatt Kathmandu had to analyse the risks of implementing their service strategy. For instance, the hotel chain has to spend a lot time and money in hiring experienced employees and it leads to the challenge of huge running costs.
Moreover, the entry of new hotels in the industry will also contribute to poaching of employees and competition for the best talent.
The other important risks that might have affected the implementation of the strategy are intense competition from other 5-star establishments with superior products or services (Jayawardena, 2007).
Organizational culture is characterised as a risk since the Hyatt Kathmandu has to change its working culture to suit the local environment in Nepal. This could be a challenge since Hyatt is American who are known for competitiveness and assertion compared to the conservative Nepalese culture.
Evaluation
Due to the growing tourism industry in Nepal and the need for niche hotels in the country, the Hyatt group has decided to come with 5-star service oriented hotel. The Hyatt Kathmandu lives to the billing of a world class hotel and it is set to benefit from different from the growth in the hotel industry in Nepal.
The Hyatt group has been involved in opening hotels which are service oriented and tailored for middle and luxury markets. The Hyatt Kathmandu has made use of the experience it has had in the hotel industry in service provision in different locations globally (Barrows, C. & Powers, T, 2008).
Nepal has invested a lot in education and many hospitality schools will churn out competent employees who are to work for the Hyatt Kathmandu. Thus, Hyatt Kathmandu will have an ability of hiring experienced and well trained employees at cost friendly costs since wage regime in Nepal is low compared to other countries.
The Hyatt group is an international brand with huge financial base and good leaderships systems which will enable the implementation of this service strategy (Laws, E., Faulkner, B. & Moscardo, G, 2009). However, it will lead to higher costs since hiring numerous staffs and maintaining quality services is costly.
The growth of the Nepalese economy in the future will see the implementation of service delivery since new visitors will be interested in spending time is world class hotels such as Hyatt Kathmandu.
In the pursuit of completing its beautiful design and other factors, the Hyatt is well known for its superior services to consumers (Mowforth, M. & Munt, I, 2008). Therefore, the Hyatt Kathmandu will compliment its beautiful design and location to attract more customers as tourist arrivals in Nepal peak.
Conclusion
This essay tackled the issue of identification of a critical strategic choice for the Hyatt Kathmandu in terms of penetrating and retaining customer numbers. The Nepalese market has been on the growth path and this might prove challenging for Hyatt Kathmandu to retain and grow its customer numbers.
As a result, the hotel chain decided to implement the service quality as a strategy of growing and maintaining its customer base. This strategy focuses of provision of quality services while at the same time overcoming challenges and threats that might prevent the implementation of this strategy.
For instance, the hotel might make use of its world class amenities to leverage its service provision and maintain market competitiveness. This chosen strategy will work to the advantage of Hyatt Kathmandu and the hotel chain will not only attract new visitors but retain old customers.
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