Executive Summary
The hospitality industry in Singapore is developing at a much faster rate however it is facing different kinds of challenges. This report analyses the internal and external environment of AMARA hotels. It was found in this analysis that the strength of the company lies in it’s quality and luxury services that they provide at competitive pricing. It also has weaknesses like the lesser big brand name when compared to its rivals. They have opportunities outside Asian in countries like Australia while the threat is of global economic downfall. The political, social, technological and legal environment is positive for the business but environment and economy-related concerns could be a problem for the company. The strategic directions that this company has chosen for its future are Luxury business, Quality services, Pricing, and Staff management. Accommodation and bar & pool services come in the star product while Food & Beverages and Meeting & events are cash cow products. In this report there is also illustration of the strategies made by the company and its evaluation on the basis of SAF framework. In this regards some of the strategies that are used by the company are Digital Marketing strategies, Product differentiation, and Duetto’s open-pricing application. A recommendation in the report suggests that company needs to adopt data-driven automated marketing and Skill development initiatives that can help the company in managing its sustainability-related challenges.
Contents
INTRODUCTION
Strategic management in today’s time has become one of the greatest assets using which companies can ensure their sustainability in the long run. There are larger numbers of firms that are crossing borders so as to ensure that they will have a bigger resource. The strategies that need to be designed by the company on the basis of the resources they have and the demands in the market. Analyzing the strategic direction of the company is critical for understanding what specific changes they need to do in their firm so as to achieve the benefits of the opportunities available in the market (Uyar and Bilgin, 2011). Performance analysis by the company needs to be done with the help of KPIs. It is also essential for the management to do suitability, acceptability, and feasibility of the strategies made by them.
AMARA hotels are one of the best performing hotels in Singapore. It is a part of the Amara Holding Limited. Apart from Singapore, they have their operations in China and Thailand. This company is dedicated to providing one of the best options for relaxing and provides luxury facilities in which their approach provides luxury hospitality. Their strategy is to provide a fulfilling experience and meaningful moments that are cherished throughout their lifetime. Their strategy remains to make their business in such a manner that they are able to make better operations than their rivals. Their strategy remains to have three distinct concepts where each property is grounded in a sense of place. They offer intimate and unique settings for their clients to explore, unwind or do their business. They have designed their strategies in such a manner that they are developing properties so as to improve the luxury facility at the workplace. The financial situation of the company is very good. Alone the Hotel of the Amara group contributed to 79% of the total Group’s FY2018 revenue which is around S$82.7 million which is higher than the financial performance of the last year by around 21% when it was S$68.3 million (Amara Holding Limited, 2018). The general state of the industry suggests that Singapore is attracting larger amount of finances as Singapore is developing itself as one of the biggest tourist destinations in South East Asia. It is showing growth. The major competitors of the company include Accor International, Ascott International, Capella Hotels & Resorts, Choice hotels international, Fairmont Raffles Hotels International, etc.
In this report, there is an illustration of the internal and external environment of Amara Hotels. The strategic position of the organization on the basis of KPI has been provided. It also suggests that the strategic direction of this company. In the later section of the report, suitability, acceptability and feasibility analysis of their strategies have been done.
Environment faced by the company
For understanding the internal environment, utilizing SWOT analysis can be very much essential.
Strength
The strength of the company is the quality that they are providing in their products and services.
Its strength also lies in the luxury services that they are providing which is better than most of the Hotels.
Strong financial performance within Singapore has given the company a huge financial base in the country (Amara Holding Limited, 2019).
Weaknesses
They are not a very big brand name when compared with their international rivals such as Fairmont Raffles Hotels International.
They do not have large numbers of units in Singapore and outside (Falk, 2016).
They do not have the tag of the 5-star hotels which is critical for improving the firm’s position in the market.
Opportunities
They also have opportunities outside the Asian region along with the developing nations such as India. In countries like Australia, they have the opportunity to expand their business for higher revenue sales.
They also have opportunities of making strategic partnerships with the firms all across the globe and with the help of partners from all across the globe they can easily be able to make the opportunities fulfilled (Ashrafi, et al. 2013).
They also have opportunities to expand in the five-star market where they will be able to attract people that love higher quality products and services.
Threats
Threats are getting bigger in the market in terms of the fact that the global tourism market is facing challenges from the economic slowdown.
Threats are also increasing in terms of the fact that competition within the industry is very high and with lots of investments in Singapore, this threat is going on the further higher side.
The sustainability-related issues are getting bigger and bigger every day. This is because there is resource scarcity and in this environment, it is critical for the management to make sure that they have a resource plan that can enhance the company’s performance (Melissen, 2013).
In order to understand the external environment, the use of PESTLE analysis can be highly beneficial.
Political: The political environment in Singapore is better where the government is promoting new kinds of investments. This is done by the company with the help of a reduction in the taxes and also by easing the corporate challenges such as infrastructure development initiatives. There is a stable political environment within Singapore that is providing support to the Hotels that aims to add more numbers of units for their performance (Hertzfeld, 2018).
Economic: The economic environment of Singapore is excellent however in the last two years due to the international economic slowdown there had been a decrease in the performance of the economic environment of Singapore as well. This will have an impact on the investments within the country and investors will make further investments. It is one of the tax heavens in the south Asian regions which makes it easier for the companies to make easier investments.
Social: Society of Singapore is changing and this change is promoting people to go out for luxury services. But it is also the fact that the global community is restricting its expenditures seeking the challenges in the global economy which is playing a negative role in the growth in the market. There is also a constant increase in unemployment in the Asian region and this is having impact on the numbers of potential customers as it is going to lower down the social expenditure capacity of the people.
Technology: Since the Singapore government has made plans for enhancing the network infrastructure within the country hence hotel AMARA also needs to ensure that they are ready for capitalizing on the technology opportunities available within the nation (Verma, Stock and McCarthy, 2012). This company also needs to do investments in the IoT infrastructure that will be able to meet the plans of the government in this regard. The use of a data-based strategic management approach is critical for Amara as it will allow the company to have an understanding of the demands in the market and will help in reducing the challenges faced by the company in its operations management approach.
Legal: Government has made the legalization for business easier and by complying with all these laws, AMARA can reduce the risk of legal charges. However, customer experience related laws have also been made strict hence the company will have to follow it so as to avoid any kind of legal compliances.
Environment: Natural resource scarcity is increasing and in this regards it has become critical for the management to ensure that they are utilizing the environment-related concerns in an appropriate manner and make use of resources such as water in a sustainable manner.
Strategic position in the industry
AMARA restaurants are performing well in the industry but at the same time, there is tough competition within the industry. This type of competition is calling for analyzing the strategic position of the company in the industry. There has been a high performing organization that has been able to manage the operations at the optimum levels. They have positioned themselves as a hotel that is providing high-quality services to the customers (Chung and Parker, 2010). This company is the second-best in the industry when it comes to the management of operations. This company has developed a strategic position for itself in terms of the vision that this company has made for itself i.e. for new generation of travelers from all across the globe, they want to provide luxury services that are more than beautiful locations, impeccable services, seamless connectivity, and indulgent experiences. In terms of customer experience management they are providing their clients with individually tailored experiences that inspire and enrich.
In order to analyze this, there must be a use of key performance indicators.
Revenue
On the basis of the revenue, it can be said that this company has performed well when it comes to financial performance. Amara has generated revenue of S$82.7 million (Amara Holding Limited, 2019). This is higher than most of their rivals especially when it comes to the luxury segment. For instance, Capella Hotels & Resorts have generated a revenue of $4.9 million.
Customer Satisfaction
In terms of customer satisfaction also this company has performed appropriately. They have been able to beat most of their competitors such as Accor International and Fairmont Raffles Hotels International (Pirani and Arafat, 2014).
Market Penetration index
This hotel also has performed well when it comes to the market penetration index however it has been slow when compared with its competitors such as Capella Hotels & Resorts, Choice hotels international and Ascott Internationals (Lee, 2012).
AMARA’s strategic direction
This hotel has been performing well in the industry which is reflected by the Key performance indicators. This has been possible due to the strategies that are used by the firms so as to enhance the overall efficiency of the organization and gain a competitive advantage over the rivals.
Luxury business
In order to achieve this strategic direction by the company, Amara is applying the product development strategy. They have been continuously upgrading their infrastructure and innovating their products and services so as to ensure that they are moving towards luxury business. In order to pursue this strategy, AMARA is purchasing its products from all parts of the world and they are using international standard processes so as to ensure that customer satisfaction is on the higher side (Poldrugovac, Tekavcic, and Jankovic, 2016).
Quality services
AMARA’S management understands the only way to succeed in the existing competition is by enhancing the quality of services they are providing. In this regards critical role is played by the quality tools they are using such as lean management (Sigala, Christou and Gretzel, 2012).
Pricing
In the luxury segment also they are using the competitive pricing strategy. Following this strategy, the company has been able to face challenges due to competition. In order to pursue this strategy, the company has taken all the cost cut measures that are not in the major operations and most of them are done on the back-end (Bhati, et al 2013).
Staff management
In order to gain staff management in an appropriate manner, the company needs to boost the skills that are present in the internal employees. Staff management has to be done according to HR planning by the company.
Following the strategic direction the strategies that have been made by the company are as follows:
Market development: They are adding large numbers of services and products to their major product segment which ensures that they will be able to develop the market in an appropriate manner. They are also developing their market on the basis of the quality of the services they are providing. The resort services have been used by the company to ensure that they have a plan for international travelers that are coming to Singapore (Xuchao, Priyadarsini, and Eang, 2010). Market development has also been done by the company by doing marketing. This marketing is done by the company in a similar manner so as to ensure that they are able to capture the new markets at a faster speed. Till now this strategy by the company has been effectively utilized by the company in nations like Thailand and China.
Diversification: They have large numbers of products and services available with them and they are also diversifying their services in terms of prices that they are offering and the luxury standards they are providing. Following this strategy company has also added new types of services such as pool and other luxury services like Spa in their overall hotel packages. Each of their packages has different segments.
Market Penetration: They will be able to penetrate into different markets with the help of the quality services they are providing and the type of services being provided by the company. Utilizing these services they have been able to make sure that they are doing market penetration at a much faster rate. Penetrating market is not an easy job especially in the modern-day competitive environment and due to this, they are adding resource capabilities to their resource base that helps them in ensuring that market penetration is done at higher speed (Hargreaves, 2015).
Product development: They have invested a lot of their money on aspects like innovation and research. In order to ensure that product development is as per the demand of the market, this company is working on the skill development of their workforce. This has allowed the company to gain its competitive advantage over the rivals. In different countries, they are using different product development strategy and it is done on the basis of the culture that is present in that country.
In order to understand the product standard for the company, it is critical for the management to analyze that which product of the company is achieving higher growth in the market and the products that have higher market share.
Accommodation: The accommodation of the company comes as a star product that has helped the company in achieving higher market growth but it has not enabled the company to have a higher relative market share.
Meeting & events: This hotel also provides meeting and events services. This comes in the low growth and higher relative market share and is considered as the cash cow. Their competitors have better been able to achieve through this service (Altarawmneh and Al-Kilani, 2010).
Gym, pool & spa: This hotel also provides additional services such as Gym, pool & spa. These services add value to the other main services of the company especially when it is added in the package with other products. This service comes in the star section as it is able to achieve a higher growth rate and higher relative market share.
Food & Beverages: It is critical for the management of the AMARA to understand that the food and beverage market is getting bigger and in the hotel industry this food and beverage services add value to the overall business. This needs to be of higher quality. In this company, this service of the firm is placed at the cash cow level where there is a need for improvement so that it can reach higher levels in the market growth segment.
Question MarkAccommodation
Star
Gym, pool & spa
Dogs
Meeting & events
Cash cow
Food & Beverages
High
Market
Growth
Low Low High
Relative market share
Critical evaluation of the strategy of AMARA hotels
There are different types of challenges faced by the AMARA hotels in Singapore and due to this, they have been able to gain a competitive advantage over the rivals. Some of the strategies used by the company as the evaluation of the strategies on the basis of its suitability, acceptability, and feasibility are as follows:
Digital Marketing strategies: This company understands the fact that marketing is a critical aspect based on which a company like AMARA will be able to make sure that they are able to have a better understanding of the market and also ensure that the company will not fail in the market. In this also the company is focusing on the skill development initiatives and also utilization of digital media resources. The use of social media and other technologies will help the firm to gain a competitive advantage over the rivals. In terms of feasibility analysis it can be said that it is feasible for the company to have applied digital marketing strategies (Sun, 2011). This is feasible as the customer segment of this company is highly attached to the technology and they will be able to implement the technology in an appropriate manner. It is also suitable as the nature of the market is changing and people chose these luxury services on the basis of the pictures and videos they see on the platforms such as social media which allow them to select best products as per their demand. Since the cost of digital marketing is on the lower side hence it is easier for the companies to persuade their stakeholders. It also has the capacity to give higher returns on investments hence it will be acceptable to everyone.
Product differentiation: They are gaining a competitive advantage over the rivals on the basis of the type of products they are launching in the market and the difference it has from the products of the other hotels. They are also differentiating themselves on the basis of the quality they are serving to their clients or customers and the luxury that they provide to the international tourists. Adding cultural aspects to their packages allows the company to be more successful in the market. It is a suitable strategy as in the competition that is present in the industry the way an organization differentiates itself from others plays a critical role in their success. It will allow the company to gain better strategic opportunities in the market. It is also a feasible strategy because the cost of adding the products or services in the available products or services will not be much costly however this company has enough financial resources to fund their innovation and purchase (Mirza, 2011). This strategy is also acceptable to the stakeholders because it will help the company in gaining higher sales and at the same time it will ensure that they remain ahead of their rivals.
Duetto’s open-pricing application: This Company has utilized a higher amount of technologies in different operational areas such as intelligent reporting, cloud-based solutions to the decision making and strategic planning process. This is also a suitable strategy as in today’s time a company needs to have data driver approach towards operations management. This is because it allows the companies to ensure that they do not lose their market share due to any fault from the side of the employees. It is also feasible because the strategic partnership with the Duetto will allow them to manage and maintain the technology. It is also acceptable because it will ensure that the company does not make vague decisions that might create challenges for them. Since the employees of the company are also highly trained hence they will not face challenges in adopting this technology.
Recommendation
In the time of the competition that is going on in the market and the change in the business environment has promoted the firm to understand the challenges that they might face in the skill development and they might also face challenges related to finding skilled employees. In this regards recommendation that can be given to the firm are:
Data-driven automated marketing: It is critical that the company understands the thin line of ethics and ensures that they use data-driven approach towards their marketing. This can also be understood in terms of the fact that a data-driven automated system will allow the company to target its customers personally. This is necessary for gaining competitive advantage over the rivals. This technology is also effective in finding the challenges in the market and at the same time removing the constraints created by human errors. Stakeholders will also approve this technology as it brings efficiency in the work process (Penner, Adams and Rutes, 2013).
Skill development initiatives: Since labor-related problems will also be going to haunt the company in the future hence it will be essential for the company to develop strategic human resource plans for their future. It was necessary for the company to make sure that they have a plan for enhancing the skills of the individuals. In this regards international training module needs to follow and employees need to have diverse skills which will allow managers to make sure that they do not face challenges such as labor shortage (Penner, Adams and Rutes, 2013). This will also be acceptable by all the stakeholders as it will improve the chances of the company to improve its overall strategies made by the company due to the skilled and multi-talented employees they have.
Conclusion
From the above-based report, it can be concluded that AMARA hotels and resorts provide one of the best services in the Singapore market but the competition that is faced by the AMARA hotels. The strength of the company includes quality and luxury services that they provide to their customers. Their weakness lies in the lesser big brand name when compared with their rivals. They have opportunities outside the Asian market and they are facing threats like economic crumbled within the world market. The external environment is also not so good in today’s time however it will provide opportunities to the company. Luxury business, Quality services, Pricing, and Staff management are the strategic direction where the hotel AMARA will be moving. In this also they are making strategies such as digital Marketing strategies, Product differentiation and Duetto’s open-pricing application which also qualifies SAF criteria.
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