Extraordinary Journey by David Holliday (2018), Ivey│Publishing W18670. This case study discusses market analysis for tour operators specialized in luxury safari tours in Africa, and how the opportunities and challenges identified from the market analyses help Elizabeth Gordon evaluate and select strategic investment options and decisions.
The case: Extraordinary Journey by David Holliday (2018), Ivey│Publishing W18670. This case study discusses market analysis for tour operators specialized in luxury safari tours in Africa, and how the opportunities and challenges identified from the market analyses help Elizabeth Gordon evaluate and select strategic investment options and decisions. This case offers a real-world perspective on the complexity and nuanced travel market analysis for sustainable strategy and management.
The following are the guidelines for this case study:
Your written analysis of a case should generally contain five sections:
1. Executive Summary
2. Brief overview of key case facts
3. Identification of the case problem or central issue
4. Discussion of 2-3 alternative solutions to resolve the problem
5. Selection of the preferred solution and explanation of how it solves the
problem
The body of your case analysis should be no longer than 4.5 pages, double-spaced.
Allow yourself an average of one page per section (2-5 above) and a half page for the executive summary.
Requirements: 4.5 pages
Sample Case Write Up – For your reference only The Warsaw Marriott Case Study Executive Summary Stan Bruns, the general manager of the Warsaw Marriott hotel, saw the threat of new competitors entering the Warsaw hotel market and needed to restructure the hotel’s business strategy to sustain its competitive advantages. Bruns recognized that the new entrants were not planning to cater to extended-stay guests. The Warsaw Marriott had held a stronghold in the city’s luxury hotel market for the past three years and generated great results with business travelers. He had three options: 1) restructure his business strategy to cater to extended-stay guests, retain current skilled employees, and scale down food and beverage operations; 2) make limited changes in those areas exhibiting a decline in performance; and 3) focus on pricing strategy and rely on its established reputation. The best strategy for Bruns and the Marriott is option 2 because it relies on current performance results to improve the Marriott’s competitive edge. Key Facts Overview Since WWII Poland’s tourism industry has had a rocky past. Its Communist system overlooked the benefits of a tourism industry and instead focused on industrial expansion. The Solidarity Coalition, which replaced Poland’s Communist Government after social unrest and massive strikes, focused on a market economy and implemented new democratic and economic reforms. This led to an increase of eight million additional travelers and the emergence of a new type of visitor: the business traveler. The Warsaw Marriott: In 1987, the Marriott entered into a joint venture to convert the Warsaw tower into a 521-room luxury hotel. Marriott was to design the interior and manage the hotel
while its partner Ilbau handled the construction. It offered 484 standard luxury rooms, 34 business suites, two presidential suites, one presidential suite, 11 food and beverage outlets, two business centers, a fitness center, an indoor swimming pool, a ballroom, three conference rooms, a 164-car parking garage, a gift shop, and three main restaurants. Fifteen of the 41 floors were leased out to businesses. The property was conveniently located across the street from a main train station and offered a shuttle bus to Warsaw’s Okecie Airport. The Marriott’s Competitive Advantages: The Marriott’s most important advantage was its brand name. It had over 700 hotels worldwide and was highly regarded. The company placed advertisements in international newspapers as well as business and travel magazines to build awareness of its new addition. Customers could make reservations through any major airline, through the Marriott’s toll-free reservation offices, or through any Marriott property. Fifty percent of the Warsaw Marriott’s customers were in its “Honored Guest Program” which provided additional incentive for brand loyalty. It became a popular place for locals to work; the hotel offered above average wages and an extensive employee training program. Meeting rooms were equipped with hi-tech video and sound systems and simultaneous translation services. Marriott also rented satellite space for guests to make international calls directly from their rooms. Its restaurants were frequented not only by travelers but by locals as well. Case Issue After Bruns learned that two new hotels, the Sobieski and the Bristol, were entering the Warsaw luxury hotel market, he was concerned about keeping Marriott’s competitive edge. Because of Marriott’s extensive training program, Marriott’s employees were poached by other hotels and offered higher wages. Bruns was not only concerned about the new hotel entrants, but also the
city’s overcrowded restaurant market. Many new high-end restaurants were opening in the Old Town section and guests were venturing out of the hotel more frequently. Moreover, because Marriott’s restaurants imported a large percentage of its food, the associated import taxes were passed along to the customer, making its restaurants more expensive than local restaurants. Bruns needed to determine the best business strategy for the Warsaw Marriott property. The Marriott was considered the only “deluxe” high rise hotel in Warsaw’s hotel directory (Exhibit 5) and there was no indication as to the categories in which the new hotels entrants would fall. Would the new hotel and restaurant entrants undermine Marriott’s profits and competitive edge? Potential Courses of Action Three possible solutions could be considered for handling the competitive pressure. There are analyzed as follows. 1. Restructure Business Strategy: Bruns was considering converting an entire floor into larger, extended-stay apartments. The new hotel entrants, the Bristol and the Sobieski, did not plan on catering to this market. The conversion could offer a profitable niche for Marriott. If business travelers remained the Marriott’s key demographic, then their demand should be met first and foremost. Many business travelers preferred extended stay accommodations and therefore this conversion could secure Marriott’s competitive advantage. Marriott’s food and beverage operations profit margin had been declining for the past two years (Exhibit 15). With the rise of restaurants opening up and guests eating out in Old Town Warsaw, another strategy was to scale down Marriott’s food and beverage outlets entirely to better utilize the space. To mitigate the turnover rate of skilled labor, it was also necessary to raise their wages, to incentivize them to stay with Marriott and prevent them from transitioning to a competitor.
2. Make Limited Changes in Areas Exhibiting Decline in Performance: This strategy would involve making only changes that were absolutely necessary at the time. The food and beverage operations profits had been declining (Exhibit 15) so it was prudent to look to other options to better utilize the space. The new hotels had not yet entered the market, so their effect on the Marriott’s profits was unknown. Fifty percent of their customers were registered in the Honored Guest Program, so they were less likely to stay at another hotel. In addition, the new entrants were in different market segments. The Sobieski did not have the same brand recognition as they only had two properties—both in Austria. It also did not offer air-conditioning or a sprinkler system. The Bristol was planned to be run by the Trusthouse Forte, a widely known hotel brand in UK. It would house less rooms (208 rooms) and charge more per room than the Marriott. The Marriott could have viewed the loss of a portion of their skilled labor as an opportunity to keep payroll expenses low by hiring promising new university graduates. Marriott made a name for itself in Warsaw, and there would have likely been sufficient new skilled labor for hire. 3. Focus on Pricing Strategy: Bruns could simply not have made any changes prior to the new entrants opening their hotels and instead adjust Marriott’s pricing upon market changes. The Warsaw Marriott was a landmark in its own right and had the option to act only in defense. With far more hotel rooms than the Sobieski and the Bristol, it could accommodate more guests and offer more discounts to business travel groups. Preferred Course of Action: 2. Make Limited Changes By making changes only when necessary, Bruns would have been able to better accommodate his guests. He had specific projects in mind (build extended-stay rooms, reevaluate price strategy, keep skilled employees) but they were not priority items at that time. He should have delayed his
response to the new entrants as they have not yet opened. However, the food and beverage operations did need to change. It had been declining steadily for the past two years. Bruns should have researched new projects to find one that had a better cost-benefit ratio than the current operation. For the projects he had in mind, he could edit the customer evaluation form (Exhibit 12) to ask the customer questions that would help guide his executive decisions regarding how many, if any, extended rooms were in demand, price strategy, and employee services.
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