Critical Analysis On Sheraton Melbourne Hotel Case Study
Question
Task: Consider the given Sheraton Melbourne Hotel case study and perform a critical analysis on overall development, management, yearly revenue, internal factors, company leadership, lost, profit and every other detail.
Answer
Executive Summary
This report considers the Sheraton Melbourne Hotel case study and analyzes the competition that "'Sheraton Melbourne Hotels"' experiences in the hospitality industry. Here, the report has provided with the PESTLE and the SWOT analysis considering the information provided in the Sheraton Melbourne Hotel case study. It has also provided a complete overlook of the '" Sheraton's"' market shares, business development strategies. The opportunities and threats are pointed here with most of the information. The management strategies of the company are all provided here with political and economic factors affecting the development of the company. Strengths and weaknesses are also provided.
1. Introduction
The report is based on the Sheraton Melbourne Hotel case study and analyzing the overall development, management, yearly revenue, internal factors, company leadership, lost, profit and every other detail of "Hotel Sheraton Melbourne" a part of the "Sheraton Hotels and Resorts" an international hotel chain owned by the very well known "Marriott" group. Here the project on Sheraton Melbourne Hotel case study will discuss the threats and opportunities that the Hotel group might be face or is facing. The hotel's business environment and its staff behavior towards their customers. Rise in its profit and all other that is related to the hotel and its betterment (Stylos, et al., 2018). The report will discuss its political, financial, economic development basis the Sheraton Melbourne Hotel case study. The report will also provide development strategy ideas to the company for increasing its sale.
2. Sustainable Advantage Competition in Hotel Sector
There are various competitions that hotel companies have to face daily. The economy and political affairs of a country significantly add to the competitions the hotel's faces (Walsh & Dodds, 2017). The availability of rooms and the amount of comfort the hotels provide in a minimal budget to its consumers are some of the most common the companies have to face. There is a constant fight between contemporary hotels, both big and medium-sized brands (Kim, et al., 2019). The situation is like when a 5-star hotel is competing with others; it faces competition with both 5-star and 3-star hotels.
3. Overview of the Hotel: “HOTEL SHERATON MELBOURNE”
According to the Sheraton Melbourne Hotel case study, the "Sheraton Melbourne Hotel" is a part of "Sheraton Hotels and Resorts" is a hotel chain which is owned by the very well knows "Marriott International" and had its first hotel in 1937 in "Springfield, Massachusetts". "Sheraton Hotels Melbourne" is located in the picturesque "Paris End" with one of the best experiences of staying in one of the best hotels in Paris, Melbourne. It provides its customer with every essential amenity. It has a pool, fitness center, beautiful lawn, spas and a beautiful terrace bar. It allows the conductance of various functions and meeting with every amenity that a person can require.
4. Business Environment Analysis of the Hotel
a. ‘PESTLE’ Analysis based on the Sheraton Melbourne Hotel case study
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Political |
The political stability in the country has decreased in recent times which have affected the hospitality industry in Melbourne. |
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Economic |
The GDP of "Melbourne" has increased by "1.9%" which has affected the "business climate", and has expanded their profit. |
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Social |
Culture, choice, and taste of the people are changing (Rather & Hollebeek, 2019). However, "'Sheraton"' has always been successful in meeting their customer's desires. |
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Technological |
"'Sheraton"' was one of the earliest adopters of "Windows 7" touch technology and drew a large number of customers, and has almost all the newest technologies. |
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Legal |
Various laws and may affect the hotels with "PARIS AGREEMENT (2016)" causing threat to their existing products. |
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Environmental |
A sudden rise in the temperature of Melbourne has greatly affected the environment, which added to the hotel's profit (Elias-Almeida, et al., 2016). It increases the number of customers in their spa. |
b. ‘Porter’s Five Force’
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Factors |
Likelihood |
Description |
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‘Rivalry Among Existing Competitors’ |
High |
The hotel is facing huge competition among its contemporary rival hotels in terms of providing better services (Mohsin, et al., 2019). However, the fixed costs are high, causing them to lower their price when the demand decrease. Thus, the competition is high. |
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‘Threat of New Entrants’ |
Low |
The ‘capital requirements’ of "'Sheraton"' within the industry is in extensive number, and their product differentiation is reliable makes make it difficult for new entrants to set up. |
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‘Threat of Substitute’ |
Low |
Very few substitutes are present, and all that is present is very expensive and high quality, and "' Sheraton"' operates sell at a low price (NYOKABI, 2019). Thus, the threat of substitutes is shallow. |
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‘Bargaining Power of Suppliers’ |
Medium |
"'Sheraton"' operates in an industry where it is an "important consumer" for its suppliers, and their profits are directly connected to the suppliers, thus making bargaining power low (Karam, 2018). |
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‘Bargaining power of Buyers’ |
High |
Buyers love experimenting with everything, and thus "'Sheraton"' should improve the qualities of its products to attract more buyers. Therefore, the bargaining power of buyer's is high. |
c. ‘SWOT’ Analysis based on the Sheraton Melbourne Hotel case study
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‘Strengths’ |
‘Weaknesses’ |
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• "'Sheraton"' has a robust free cash flow which provides the company to expand its new projects. • It has trained and skilled staffs in their workforce which contributes significantly to the development and working of the company. |
• If "'Sheraton"' keeps raising capital to invest, the way it is investing now, then it can affect the company's growth. • The budget planning of the hotel is not stable, and their current asset suggests that they can use their money in a better way to increase its territory. |
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‘Opportunities’ |
‘Threats’ |
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• Possibility in implementing appropriate "technology standards" and "government free trade" policy has provided the hotel to operate new projects. • The investment of the company as stated in the Sheraton Melbourne Hotel case study in the online platform has brought large sale channel for "'Sheraton"‘, increasing its reach over a larger population. |
• Change in its online platform can cause a threat to their existing infrastructure and supply chain. • The "PARIS AGREEMENT (2016)" which had cause change in new environment regulations poses a significant threat to their existing categories of the product (Vicedo-Cabrera, et al., 2018). |
d. Opportunities and Threats Identification
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Factors |
Priority |
Description |
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Online Platform (Opportunities) |
High |
"'Sheraton"' has been able to reach a large population through an online platform, thus increasing its sales. |
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Technology (Opportunities) |
Medium |
The adoption of new technology will help the company to increase its customers, for people like staying in constant touch with the latest technologies. |
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“PARIS AGREEMENT” (Threat) |
High |
It caused a significant change in the environmental regulation causing the company to change its product qualities |
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Shortage of Skilled Workforce (Threat) |
Low |
It will affect their serving quality, causing a drop in their fame and profit. |
5. Management Solution: ‘Porter’s Generic Strategies’
a. ‘Cost Leadership’
Cost leadership for the present Sheraton Melbourne Hotel case study should be maintained adequately to increase "' Sheraton's"' profit, cause its workforce maintenance cost is quite high. It will increase its market share, helping it to reach a higher profit margin. The cost leadership leads to the broad availability of capital resources that can be used for growth, and a low cost for business can improve business sustainability and reduce competition.
b. ‘Differentiation’
The location of the “Sheraton Melbourne hotel” as outlined in the Sheraton Melbourne Hotel case study adds greatly to its favor. The picturesque location attracts thousands of customers which make it better and more preferable compared to its contemporary competitors. The boutique rooms and products that it offers makes a perfect display of the Paris culture and taste at a reasonable price (Semuel, et al., 2017). Whereas most of the hotels believe in providing the best to today's world, ''Sheraton"' believes in providing the best of its culture, and this makes it quite different. They have a large and highly efficient workforce who believes in delivering the best to their customers.
c. ‘Cost Focus’
Cost Focus is one of the essential strategies to be followed by any company to increase and reach the top of the list. Cost focus means "minimizing its cost with the focused market" (Süklüm, 2017). However, the intensified competition has made it difficult for Sheraton to sustain the market leadership position. The organization planned to increase their service area broad and consists of all classes. "Sheraton" charges at a reasonable price among other standard hotels by lowering their production cost, and increasing the "supply chain efficiency". However, "Sheraton" often gives discounts and coupons, which helps it to achieve sales targets and handle the "competitive pressure" by its closest competition in the market.
d. ‘Differentiation Focus’
It is an advantageous approach in which a company attempts to outperform "its rivals" by offering a product that has a "higher" price, at a lower cost to the consumers (Kaliappen, et al., 2019). "Sheraton uses the "price penetration strategy", which helps the company to win market shares based on 'discounted" pricing.
6. Conclusion
Many hotels in the present are facing problems and '"Sheraton Melbourne Hotels"' should take advantage of it and come up with strategies and ideas to remove the problems that are imposing threats on the company. Improvement of its "Internet strategy, online distribution, and E-Marketing" as it has been a great solution for expanding its market and territory in various countries. But as identified from the given Sheraton Melbourne Hotel case study, "'Sheraton"' should never compromise with its unique "cultural" taste that customers can find in their every product, rooms, etc. And it should continue maintaining its workforce which is equally responsible for providing its customers some of the best facilities. It should take good care of the "PARIS AGREEMENT (2016)" and find a solution so that it doesn't affect the existing infrastructures of the company. Good maintenance of the business environment and an increase in the number of rooms is all that it needs to be on the top.
7. Bibliography
Elias-Almeida, A., Miranda, F. J. & Almeida, P., 2016. Customer delight: perception of hotel spa consumers. European Journal of Tourism, Hospitality and Recreation, 7(1), pp. 13-20.
Kaliappen, N., Chuah, F., Gorondutse, A. H. & Moktar, S. N. A., 2019. Hybrid competitive strategy, strategic capability and performance. Sheraton Melbourne Hotel case study Journal of Business and Retail Management Research, 13(4).
Karam, M. G., 2018. The impact of strategic planning on crisis management styles in the 5-star hotels. Journal of Hotel Business Manage, Volume 7, p. 171.
Kim, J. J., Lee, Y. & Han, H., 2019. Exploring competitive hotel selection attributes among guests: An importance-performance analysis. Journal of Travel & Tourism Marketing, 36(9), pp. 998-1011.
Mohsin, A., Rodrigues, H. & Brochado, A., 2019. Shine bright like a star: Hotel performance and guests’ expectations based on star ratings. International Journal of Hospitality Management, Volume 83, pp. 103-114.
NYOKABI, J., 2019. Cost Leadership Strategy, Firm Structure And Performance Of Star Rated Hotels. JOURNAL OF RESEARCH IN MANAGEMENT, 2(3).
Rather, R. A. & Hollebeek, L. D., 2019. Exploring and validating social identification and social exchange-based drivers of hospitality customer loyalty. International Journal of Contemporary Hospitality Management.
Semuel, H., Siagian, H. & Octavia, S., 2017. The effect of leadership and innovation on differentiation strategy and company performance. Procedia-Social and Behavioral Sciences, Volume 237, pp. 1152-1159.
Stylos, N. et al., 2018. Exergy as an indicator for enhancing evaluation of environmental management performance in the hospitality industry. Sheraton Melbourne Hotel case study Journal of cleaner production, Volume 198, pp. 1503-1514.
Süklüm, N., 2017. The importance of quality costs in terms of creating competitive advantage in hotel enterprises.
Vicedo-Cabrera, A. M. et al., 2018. Temperature-related mortality impacts under and beyond Paris Agreement climate change scenarios. Climatic change, 150(3-4), pp. 391-402.
Walsh, P. R. & Dodds, R., 2017. Measuring the choice of environmental sustainability strategies in creating a competitive advantage. Business Strategy and the Environment, 26(5), pp. 672-687.
