Shangri La

Introduction

Shangri-La is famous luxurious hotel chain, internationally known and world-wide expanded. Shangri-La is famous with its signature standard called ‘Shangri-La Hospitality’. First of all, it is meant to be a hospitality model based on traditional Asian hospitality: professionalism, quality, individual guest approach. Shangri-La was founded in 1971 and by this time it has gained reputation of one of the most luxurious hotel experiences ever. Shangri-La International deluxe hotel group is famous with its training and cultural programs, which are created with an only intention – to ensure that staff is qualified enough to deliver an exceptional service and create an exclusive atmosphere, tailor-made to fit each guest. Main intention of those programs is to standardize the delivery of its brands service – enhance skills and create strong service orientation. The focus is on guests, their individual and unique demands and personal preferences. Shangri-La’s core concerns are:

1. Shangri-La Hospitality from Caring People 2. Delighting Customers 3. Recovery to Gain Loyalty 4. Take Ownership

Our opinion is that Shangri-La is an interest and very right brand to consider, analyze and to learn from. The thing is that the hospitality industry constitutes an economic sector with the fastest growth worldwide. Nowadays hospitality is known as one of the most progressive and profitable industry, it’s actual and potential are unlimited. Beside it, hospitality is obviously one of the most competitive economic sectors. Hotel managers face challenges every day: shifts, targeting consumer segments, changes in demands, issues of liquidity, and many others. As known, the strongest survive. Same here: hospitality firms deal with all kind of problems they face day by day. To survive – they got to have a strategy. To be on top – they have to get a good strategy. Implementing appropriate strategic plans, tricks and unique philosophy, Shangri-La managed to be on top, to become one of the most longstanding hotel brands.

Company overview Shangri-La Hotels and Resorts is the world’s largest luxury hotel group based in Asia. This group constitutes an investment holding company which focus is establishment and operation of hotels together with real estate properties, hotel management companies and other related to hospitality services. For almost 40 years of operating, being strong and stable company, Shangri-La is proving its

worth. Shangri-La focuses both on business and leisure travelers what make this brand even more attractive. Nowadays the group has 52 deluxe hotels and resorts in Asia and Middle East and new development projects are running in Europe and North America. Shangri-La Hotels and Resorts group has several brands name, including ‘City Hotels’, ‘Resorts’, ‘Trader Hotels’, ‘Shangri-La Spa’, and even clubs – known as the Aberdeen Marina Club(Honk Kong) and Xili Golf and Country Club (Shenzhen).

Core product and Services Shangri-La Hotels and Resorts group provide various services, as was mentioned above, to be universal and be able to meet different kind of customer’s preferences and demands. For example, Shangri-La Hotels is targeting busy travelers such as businessmen or corporative workers. Shangri-La Resorts is a family place to relax and unwind. Normally this type of hospitality outlets is located in exotic destinations, full of vibrant cultural experiences, activities and gastronomical options. Traders Hotels is to target value conscious travelers, providing high quality accommodations and offering value for money. Mostly this kind of hotels is located in major business centers to make guest’s stay convenient and essential. Different kinds of hotels mentioned above were created with only intention - to provide more choices for the customers, to give them options, to make them feel unique and welcomed. Philosophy, Vision, Mission, Core Service Value and Guiding Principles These cultures are importance to the company success because it will produce workers who are competent and so, valuable to Shangri-La as a catalyst for their success. By implementing these cultures into their business operation Shangri-La is essentially practiced customer-oriented approach. Shangri-La has their own philosophy which classified that their hospitality from a caring family. This philosophy is about made the guests feel special by bringing the core values to life. Hence, customers feel more appreciated by Shangri-La and thus will create loyalty among them. Vision that has been chosen by Shangri-La is to be the first choice for their guests, colleagues, shareholders and business partners. Shangri-la committed to delight everyone not only their customer but people from all walk of life. By having a good relationship among these people then will let ShangriLa well-known and be the first choice while making a decision on hospitality service. In addition to that that is about Shangri La mission in the hospitality service where their wished to delight all customers or guests every time they use Shangri La services by creating engaging experiences straight from their heart. Then this explains that Shangri La workers well trained to deliver heartfelt services to their customers and keep their customers delighting from time to time.

Shangri-La core service values are about respect people not only customers but colleagues, shareholders, business partners and so on. By practicing respects into behaviors of workers will automatically creating humility which will make them more concern on each other’s and build up courtesy and sincerity while give a hand to customers and people. There are several guiding principles that lead for Shangri-La’s success and it is such a secret recipe for them to create success for such a long time and become well known like today. The guiding principles that being the key features of the culture at Shangri-La are ensure leadership drives for results, guest loyalty is a key driver for their business, committed to the financial success of their own unit and of our company, create an environment where Shangri-La colleagues may achieve their personal career goals, enable decision-making at the guest contact point, demonstrate honesty, care and integrity in all relationships, ensure policies made and processes are guest and colleague friendly and the last is remain deeply committed tosocial responsibility by making a positive contribution to communities, environment, colleagues, guests and business partners. Shangri-La mission statement typically provide a brief overview of their business purpose on Care Programme structured which gives their workers all the skills needed to turn passion into a success. When this mission statement in line with the Care Programme organized, then it will make the programme as a platform in achieving the culture practiced at Shangri-La. For instance, care programme held by Shangri-La is about enhancing skills and cultures needed in Shangri-La is such as respect, humility, courtesy, helpfulness and sincerity that represent core service values of Shangri-La.

Philosophy “Shangri-La hospitality from caring people”

From the philosophy of the Shangri-La Hotel, it shows that they want provide warm services to their customers. Mostly, people will stay in hotel is due to they are away from their home from other state, or from overseas. Having this philosophy, so that the services provided will let the customer feel like being home but the feeling of a stranger in a strange land.

Vision Correctly formulated vision tells us about company’s wants and ambitions. “The first choice for customers, employees, shareholders and business partners” is quite good one in sense of company’s self- estimation. It is not a secret that every business depends on customers. Precise guests define

company’s destiny-both in financial and reputation sense. Our opinion is that Shangri-La has chosen a very correct vision and position since they have attract many guests and continue to do so now as well. to do and what they want to be. For the Shangri-La Hotel’s vision that stated above, shows that they want to be the first choice for their customers. As we know, every business is depending on customers. None of the business will survive without customers. When they able to attract more customers, it makes them to earn more in their business. Besides this, the reputation of the company will be increase as well, due to it able to provide excellent services to customers.

Employees mostly will stay in one company is due to the company has a good management, a lot benefit to them, provide them space for innovation, a good environment for them to achieve their career goal. This kind of environment will able to attract more talented, professional workers to work with them. Having good colleagues is a great advantage for a company. It’s able to make the company business grow.

When come to the shareholders, they play a big role in a company capital. A company issue shares, is due to they want to increase the company capital, so that they able to expand their business. To have business partners, it makes the company business grow as well.

Mission To be precise, company’s mission helps to achieve its vision. The mission of Shangri-La is “Delighting customers each and every time”. It means if Shangri-La delights its customers, they will obviously succeed in achieving their vision-they will attract more customers, making them coming back.

Mission is defined as a specific task that a company decided to do and also tell that why the company exists. By accomplish the mission will lead the company to achieve the company’s vision. As can see the mission of Shangri-La is to delight customers each and every time. Once they able to achieve this mission automatically will attract more customers. All those that discuss in the previous title, vision, will be achieved, once able to attract more customers.

Guiding principles

Shangri-La’s guiding principles don’t differ much from other hotels’ however to create those principles is much easier than following them and proving that it is not only words, they actually do have strong principles and follow it day by day. •

Ensure leadership drives for results

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Make customer loyalty a key driver of business

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Enable decision making at the customer contact point

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Be committed to the financial success of own unit and of company

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Create an environment where colleagues may achieve their personal and career goals.

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Demonstrate honesty, care and integrity in all relationships

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Ensure policies and processes are customer and employee friendly

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Be environmentally conscientious and provide safety and security for customers and colleagues

Company Analysis SWOT analysis In our opinion, Shangri-La’s strengths are definitely leadership and management skills. It is generally known that having a strong team, managing company in a right way is already half way to success. Another strength is that till year 2006 Shangri-La has won more than 120 awards. Those awards point out that Shangri-La has already built up its reputation in hotel industry and reputation will benefit the company now and after, and differentiate from its competitors if they will continue following their strong principles, their mission and vision. And this good reputation becomes one of the strengths that able to compete with their competitor. Besides this, Shangri-La strategically located their hotels and resorts in the world famous city, tourism destination, and world’s most exotic destinations. This gives them great advantage to attract more customers. Best MICE Facilities and Service Hotel, Travel Weekly, this is one of the awards won by Shangri-La. This proved that they provide excellent services to their customer. Strengths are not the only thing that Shangri-La has, they also good in holding opportunities. They start their business in those growing market like in Beijing. The hotel that expanding in North America, that at the heart of the city and near to downtown offices, shopping mall, restaurants, theatres, convention centre, and world famous Stanly Park. Spa is one of the culture that getting famous in Malaysia. So that, they come out the Shangri-La’s Rasa Sayang Resort and Spa in Penang, Malaysia, to let the customer to enjoy the spa. Compare with other hotel which at the same level, others may have a cheaper price compare with Shangri-La. But this will not become the threats to Shangri-La. This is due to their reputation and awards winning that promise customers will have the best services and the best facilities provided.

Past and Current Strategies

Shangri-La began operations in Asia with their focus in the 1980s and 1990s on rapidly expanding in the Asian market. In the early 2000s, Shangri-La began expanding beyond its core Asian markets into such countries as Dubai and Oman and in recent years expansion has extended to into Europe, Australia and North America.

Shangri-La Hotels and Resorts (Shangri-La) was a leading player in the luxury hotel industry with a signature standard of “Shangri-La Hospitality”, a service model based on traditional Asian hospitality. They have a stated mission to “delight customers each and every time” and provide its customers an unforgettable experience by blending local cultures, exotic art, and lively ambience. There past strategy focused in the Asian market focused on building its brand based on this service model. However their current strategy is not only focused on expanding into Asia, but into the western world and adapting this hospitality service model to each country’s local requirements.

Shangri-La remains focused on developing local talent to world class expectations and ensuring that each global employee delivered service “The Shangri-La Way” and retaining them by creating transparent, well-defined career paths.

PEST Political Singapore government has always been in favour of the tourism sector. In fact, Singapore Tourism Board (STB) launched a $90million BOOST (building on opportunities to strengthen tourism) for the tourism sector). The initiative help pushed the industry through tough times by assisting MICE (Meetings, Incentives, Conventions, Exhibition) companies to alleviate their business costs (Singapore Tourism Board, 2009). Not too long ago, the Singapore government cooperated with Indonesia to develop cruise ship tourism as Singapore is enjoying a cruise tourism boom (The Jakarta Post, 2011). This collaboration boosts economic bilateral ties and tourism. Previously, the Singapore government also backed entrepreneur Ong Beng Seng’s bid to hold the F1 grand prix in Singapore. In fact, the government announced that they

would fund up to 60% of the estimated $150million cost through Singapore Tourism Board (The Straits Times, 2007). With such encouragement from the government, Shangri-La has not much to fear, especially in a politically stable country such as Singapore. In such a well-governed country, there has never been demonstrations of displeasure or anything interruption of businesses. With peace and prosperity, not only Shangri-La, but the industry will enjoy the fruits of the growth in tourism supported by the government. Economical As the number of visitors to Singapore increased by 20.2% in year 2010, revenue of the hotel room lettings saw an increase in 21.8% as well (Singapore Tourism Board, 2010). According to the Business Expectancy Survey, 39% of hoteliers expect growth in business by end March 2011. In fact, the employment rate for the industry is expected to increase by 19% (Sing Stats, 2010). With such evident growth in the tourism industry, the hotel industry will inevitably experience progressive growth in years to come. Furthermore, The Business Times (2010) stated that “Singapore’s hotel industry is among the two best performers in Asia Pacific”. The incredible recovery was driven by major events such as the Formula One Singapore Grand Prix which kicked off in the third quarter of 2007, attracting racing fans from all over the world. Other international events such as the inaugural Youth Olympic Games and Asia-Pacific Economic Cooperation Meetings (APEC) also drew visitors from worldwide for both business and leisure. In addition, with Singapore being a well-established hub for various sectors such as the finance and medicine, business travel in Asia has seen an increase by 20% compared to 2009 (Channel News Asia, 2010). With a rebound in Asian business travel, hotel occupancy in July hit a high of 90% an increase of 10.2% from 2009 and hotel room revenue grew 37.2% (The Business Times, 2010). Being the “Best Business Hotel in the World, Asia-Pacific and Singapore” as awarded by Business Traveller (Shangri-La, 2010), the surge in business travels is definitely advantageous to Shangri-La. Shangri-La, being a 5-star hotel is classified under the luxury scale. As deduced from table 4 (appendix B), luxury hotels have seen 9.8% increase in average occupancy rate from 2009 and the revenue per room saw an increase in 21.3%. However, in the midst of international turmoil, Mr Cheng, the Chairman of Singapore Tourism Board highlighted that the signs of a global economic slowdown are evident. It will likely have an impact on the growth of economies across Asia and Singapore has to brace herself for the rough times ahead (Singapore Tourism Board, 2011). Socio-cultural

Despite the rising standard of living worldwide, people are not falling short of wealth. According to Synovate, one of the world’s largest research firms, affluent customers across Asia-Pacific have huge spending power in both good and bad times (Business Review, 2010). As Asia-Pacific basks in prosperity, middle classes drove the tourism sector up by double digits in the region (The Straits Times, 2011). Singapore’s tourism and travel sector has been ranked 10th out of 139 economies by a Economic World Forum report (Ng, 2011). As Asian consumers are more educated, they have grown to be more demanding. As a result of the internet, customers expect constant access to goods and services and immediate response from companies that sell them (Economist Intelligence Unit, 2010). According to The Business Times (2009), a study has found that people who earns income above average has higher expectations when it comes to service excellence. Shangri-La, being an upmarket 5-star hotel has the ability and experience to cater to this market segment and provides the clientele with service over and beyond the rest.

Technological The use of information technology in the hotel industry has grown tremendously in the past 20 years and it has become clear that information technology is now a critical competitive weapon in the industry.

With the development of the internet, it provided hoteliers the opportunity to reach customers directly and allowing transactions to be carried out immediately with the customer. This has potentially eliminated intermediaries such as travel agents, thus reducing the cost of distribution via commissions as travellers increasingly making their own travel arrangements using various Web-based services.

Of the top 50 hotel companies in the world, over 90% of the hotel chains have a company Web site, with nearly 80% of these providing reservation facilities to allow direct booking (Hotelmule, 2010). The resulting cost reductions are estimated to be substantial.

Competencies The key element of strategy implemented by Shangri-La Hotel in gaining competitive advantage over its rivals is by offering services that are superior value worth paying more for. Shangri-la uses its signature

standard of “Shangri-La Hospitality” in achieving an edge or competitive advantage over rivals in attracting buyers and coping with competitive forces. A company’s competitive strategy deals exclusively with the specific of management’s game plan for competing successfully, its specific effort to please customers, its offensive and defensive moves to counter maneuvers of rivals, its responses to whatever market conditions prevail at the moment, its initiatives to strengthen its market position, and its approach to securing a competitive advantage vis-àvis rivals. There are five types of generic competitive strategies that can be adopted by organizations to suit their strategic vision, mission and objectives. In the case of Shangri-La Hotel, they are adopting the generic competitive strategy of focused differentiation strategy targeting a narrow market segment or market niche. Shangri-La Hotel as a leading player in the luxury hotel industry adopt a focused strategy keyed to differentiation aims at securing a competitive advantage with its signature standard of “Shangri-La Hospitality” a service model based on traditional Asian hospitality. Fulfilling the needs of a narrow and well-defined group of buyers. The market niche of Shangri-La Hotel is the group of buyers with high level of income and buyer who prefer luxury services and standards. Shangri-La Hotel is a rapidly expanding international deluxe hotel rooms with 50 hotels across southeast Asia, Europe and North America and Bridle, and still expanding their market towards China. Shangri-La’s international strategy in fitting specific market conditions and buyers preferences is thinkglobal, act-global approaches. In expanding, its market worldwide which includes Asia, Europe and North America, Shangri-La still maintains it “Shangri-La Hospitality” during the expansion of their business. All of their hotels are luxury service hotel with distinctive Asian standards of hospitality and service.

A Shangri-La Hotel distinction feature from other hotels is its signature standard in their Asian traditional hospitality services provide for their customers. The service model of “Shangri-La Hospitality” has a stated mission which is to “delight customers each and every time.” Its mission statement makes a clear picture of how they are focusing and prioritize its hospitality service to care and delight their customer in exchange for their loyalty. The core element of their distinctive service is to “offer customers an unforgettable experience by blending local cultures, exotic art, and lively ambience. Besides that, Shangri-La’s service model of “Shangri-La Hospitality” was built around five core principles which are respect, humility, courtesy, helpfulness, and sincerity. This five core principles are implemented across all their geographic and cultural markets.

In management perspective, Shangri-La used a five level organization design. In this practice, they divide its employees into five tiers which consist of Level 1(divisional managers), Level 2 (departmental manager), Level 3 (sectional managers), Level 4 (front-line supervisors) and Level 5 (front-line employees). Each of these tiers has their own separate guidelines, discretion and dollar amount that they could use. In order to maintain it signature standard in providing excellence service, Shangri-La has its own Training and the Shangri-La Academy. It is first open in 2004 in China. It is their efforts in standardizing the delivery of its brand promise throughout its network of hotels worldwide. The Shangri-La Academy is equipped with full training facilities and varied from five-week to tree-month training programs.

1. Corporate Culture and Personnel Shangri-la has a strong corporate culture that revolves around the customer-based approach. This constitutes a firm competency because this greatly contributes to the Shangri-la’s achievement of a top position in the Hong Kong hospitality industry. By valuing its human resources, the company was able to ensure the value of contributions of organization members considering that the industry is highly reliant upon human resources. Training of employees not only ensures efficiency in service delivery but also maintain the loyalty of its employees through career development programs. 2. Operations Shangri-la operates on a target achievement basis. The company sets its short and long-term targets for completion. It then practices discipline and experience-based foresight in evaluating its level of performance and task completion. This gives the firm control towards the success of operations. 3. Marketing Shangri-la has been able to influence successfully a positive market perception of the company through consumer responsiveness. Through its market-based approach, the company is able to meet exactly the needs of the target consumers as well as add to service value. Positive reviews from regulatory bodies and independent survey companies also reinforce the positive reputation of Shangri-la in Hong Kong. It was also able to tap into all revenue-generating marketing channels, particularly online sales to support its internationalization. 4. Capability Analysis Shangri-la has developed a number of essential and unique resources as well as essential and core competencies. The company has been able to achieve competitive advantage by developing a positive reputation in the market relative to its competitors together with the establishment of a stable consumer base. Competitive advantage also accrues to the company by developing its organizational

values, particularly its customer-based and context-based operations. To remain competitive, the company relies upon its unique resources such as cohesiveness of its working units and satisfied employees while using its core competencies in maximizing service or brand value and employing target-based approach to ensure the achievement of business objectives. Essential Resources 1. Reputation

Unique Resources

1. Organizational Cohesiveness

2. Customer Base

2. Satisfied Employees

Essential Competencies Core Competencies 1. Customer-Based Values

1. Value Maximization

2. Context-Based Values

2. Target-Based Values

5. Financial Plan

As mentioned earlier, Shangri-la has been able to take control of its finances through disciplined disbursement, targeting approach, and performance evaluation. This is expressed through the achievement of the company of increase in both its current and non-current assets between 2005 and 2006. The company’s capital reserves and equity earnings also increased due to the ability of the firm to draw investments by relying upon its positive reputation. Although, Shangri-la also incurred increased liabilities by obtaining loans, assets less liabilities resulted to a positive amount. This means that even with increased liabilities, its assets remains bigger than its liabilities. This further implies the viability of the company since it has the assets to cover its liabilities. In the next three years, it is expected that the Shangri-la should be able to accomplish its projects and operate its new hotels as well as well meet its liabilities. During the third year, the company should be able to concentrate on profitability after the full operations of its new hotels and the payment of all its obligations. Based on the firm’s consolidated income statement covering the financial periods 2005 and 2006, the company has been able to increase its revenue generation and costs. However, since the increase in revenue is greater than the increase in costs, the company earned higher profit allocated to dividend payments and operating profit. This supports the continuing profitability of the company. In the next three years, especially during the third year when the new hotels are able to operate fully, the company should increase its profitability by at least thirty percent. During the second and third years, the operating profit of the company together with external funding should support the further expansion and development of Shangri-la hotels.

Core competencies and challenges company faces Formulating strategies focuses on matching the resources and capabilities of a firm to the opportunities arising from the external environment. The ultimate aim of evolving and implementing strategies for a firm is to attain sustainable competitive advantages. Therefore a resource based view suggests that a firm has to use its available resources and capabilities for garnering distinctive competitive advantages which enables the firm to add value for the firm. Value can be defined as what customers assign to a product based on its attributes. A competitive advantage can become a distinctive one when it allows the firm to differentiate its products. Although all the resources and capabilities are important to an industry, the firm has to identify the important ones based on the factors that make them useful for the firm to become successful. The firm has to organize its resources and capabilities based on their relative importance and compare them with those of the competitors. This process will enable the firm to identify its strengths and weaknesses which can be manipulated intelligently to achieve sustainable competitive advantages. Based on this theoretical approach Shangri-La has developed various essential and unique resources as well as essential and core competencies. Developing a positive reputation in the market much higher than that of its competitors and the establishment of a solid customer base can be considered as the distinctive competitive advantage of the Company. In order to remain competitive the company relies on its unique resources such as cohesiveness in its operations among different operating segments and higher morale and motivation among the employees through the training which leads to higher level of job satisfaction to the employees. The core competencies include the maximization of brand value or service value to the customer and employing target based approach to achieve the business objectives.

Company’s financial and operational Strategy and strategy implementation Financial and operating performance plusses and minuses Financial and Operational Performance Shangri-La has a well managed financial system which takes care of the operations of the Company to be carried out efficiently. Because of the efficient financial management practiced in Shangri-La the investors had the motivation to invest more in the shares of the Company. The large investments are used by the Company for new projects and expansion of existing projects to add more value to the shareholders. The new facilities provide added competitive strength to the hotel.

Challenges Shangri-La face in expanding into Eastern China

Shangri-La issues that presented challenges in expanding into Eastern China when the company was expanding its presence in China –a country where front-line employees were not used to exercising decision-making authority; newcomers in Chinese Hotel market were poaching Shangri-La’s staff and driving up wages in historically low-wage markets. They provided training program and give opportunities to competitors. In others, local Chinese managers with fixed cultural issues were unwilling to delegate and give up their perceived authority. The current policies and operating procedures are not sufficient in addressing these challenges. In order to provide distinctive Asian standards of hospitality and services, when guests travel constantly, they are not easily impressed by hotels and have no patience for pretentious or poor service. However, if the service and comfort issues are handled well, guests start to really appreciate on Asian unique design. In China, they were very good in performing their duties based on the restricted guidelines. So, Shangri-La should confine the policies on resigning and mix their employers with other races in order to gain knowledge of other cultures. Other employees benefits should be consider not just based on salaries. Marketing Position in China Shangri-La had to face stiff competition in China due to the open market economy and liberal economic policies of the Government which enabled a number of new entrants to the market. The availability of more hotels has increased the bargaining power of the customers and the suppliers also increased their bargaining power making the operation of Shangri-La difficult. Another disadvantage faced by Shangri-La is that most of its facilities are deluxe ones having more tariff than the competitors. Since most of the travelers are business travelers they prefer to stay in budget hotels rather than deluxe rooms.

Challenges associated with Shangri-La’s expansion into Europe, Australia, and North The challenges associated with Shangri-La’s expansion into west countries were expanding into high wage economies in Europe and North America and also short supply of trained hotel staff. Translation of new hotels in new market for signature Shangri-La quality and service standards is important. The first impression on guest experience is essence of Shangri-La. So, they will not consider the option in charging more for rooms for new high-wage markets since pricing is dictated by market. Compare to China; rate for wages are low and also surplus of labor, consider as advantage for them but difficulties faced on retaining their trained employees because competitors tend to offer more salaries compare to Shangri-La. The policies and operating procedures are not sufficient in addressing these challenges. They should expose their employees on long-term effect and show appreciation. For example, recognized their performance. How big a threat does the expansion of other hotels chains into China pose for Shangri-La Hotels

The big threat on expansion of other hotels is well known western hotels started to pop up all over China. For example Regent, Ritz-Carlton, Hyatt, Sheraton and others. Employees are one of the most important resources in order to maximize growth. As we all know, China was known as low rate of wage compare to other countries. The challenges are the shortage availability of professional or skills employees and also the difficulties to retain the employees from other competitors, in order for them to stay with Shangri-La Hotels. So, if there is no professional involvement in decision making in representing Shangri-La, it may be impossible to maintain services to satisfied guests. In order to avoid this situation, they should overcome wage issues and offered more services compared to competitors. (For instance, wellness experience coupled with cultural activities that give one an insight to the unique heritage of Asian) Recommendations

Competitive advantage enables a firm to outperform rivals on profitability. Innovation and responsiveness to change are the bases on which competitive advantages can be developed. Competitive advantages to remain sustainable should meet the criteria of being unique, difficult to replicate, superior to competition, sustainable and applicable to multiple situations. In order to sustain its growth and profitability Shangri-La should open more budget hotels exclusively for business travelers offering the same level of quality in the service. The Company can offer additional facilities of promotional stays and discount offers based on an alliance with the airline companies, linking the stay in Shangri-La with frequent flying in certain airlines.

Shangri-La should look into developing a customer loyalty program to build on customer patronage. While this will not help with the staffing issues it will help to further differentiate their hotel from the fierce threat of competing hotel firms, in both the Asian and Western markets, and lower the bargaining power of buyers as they will want to take advantage of free hotel stays, spa packages, etc.

Rival Sellers – Fierce Competitive Force

Market manoeuvring for customer patronage between competing hotels is the strongest competitive force. Hotel companies face pressures with competing for market share, attract and retain customers, earn good profits, and maintain competitive advantage.

Many large international hotel groups are entering the Chinese market reducing Shangri-La’s market share. With the use of the internet customers have the ability to search for the best price and the quality they would like in a hotel. The internet makes it easy and not expensive for customers to switch between rival hotels and it is getting easier for hotels to steal customers.

In conclusion, the overall competitive pressures within the hotel industry contain many substitutes for customers to choose from, more information available to customers regarding competing hotels, new hotel chains entering the market trying to capitalize on China’s growing economy, increased demand for talented labour, and pressure for customer patronage. Maintaining competitive advantage and differentiating the hotel chain from the competition will help reduce these competitive forces.

Since recently Shangri-La Hotels and Resorts does not facing any problem, it proved that the management of Shangri-La is well planned. Shangri-La should stick with their current management, and have change while it necessary. By having partnership with other companies to rise up some event will help to attract more customers.

Conclusion Shangri-La Hotels and Resorts is one the large and well known hotel in the world. It consists of a big organization that plays many functions. A well planned operation management is needed to enable the organization to run effectively and efficiently. A well planned operation management approach includes getting accurate and reliable forecasting results develop a well-designed service systems, effective capacity planning, facility layout planning, location planning and quality control. Shangri-La Hotel uses these approaches to operate their hotel. This will allow them to have smoothly operated work system and help them in gaining competitive advantages as a well manage organization will gain employee’s involvement and satisfaction. In the mean time, it will also gain customers trust, loyalty and satisfaction. Besides that, a well systematize operation will help the organization in reducing cost and improving productivity. All these factors will determine how well the organization will turn out to be and plays an important part in ensuring organization success.

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2.

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* Singapore Tourism Board (2007). Blending of local initiatives and foreign talents to meet manpower needs. News and Events. Retrieved from: http://app.tourismcareers.sg/main/AboutUs/NewsEvents/tabid/92/Default.aspx *

Singapore Tourism Board (2008). People, the new ‘location’ for the hotel industry.

*

Singapore Tourism Board (2011). Chairman’s Message.

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Singapore Tourism Board (2010). Key Statistical Information, Visitor Arrivals & Hotel Statistics.

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The Straits Times (2007). Benefit trumps cost in government decision to fund Singapore GP. Retrieved from: http://www.asiaone.com/Motoring/News/Story/A1Story20070625-15904.html

Table from: Singapore tourism board (2010). “Fact Sheet: Tourism Performance from Jan-Dec 2010”.

1. Thompson, Arthur A., A. J. Strickland, and John Gamble. Crafting and Executing Strategy: the Quest for Competitive Advantage : Concepts and Cases. 17th ed. Boston: McGraw-Hill/Irwin, 2010. Print.