Environmental Analysis – SWOT
In this report, a one-year marketing plan has been developed for a new set up of budget hotel in Singapore named as “Bear Capsule Hotel.” The hotel will mainly try to attract youth and adult customers from Singapore. In this report, following points have been included. An environmental analysis for the budget hotel has been conducted using SWOT analysis. After that, marketing objectives of the budget hotel has been discussed along with target market selection and marketing mix strategy used by the company. The financial control procedure for the hotel has been developed and a refection has been provided on sales and expense forecast.
2.1 PESTLE Analysis:
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Factors |
Analysis |
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Political |
The hotels and the hospitality industry in Singapore have seen collaboration with the UK government. The country has free and stable democratic form of democratic government. Singapore also has free trade agreements with China and Taiwan (Ho 2014). Government has also invested, to increase the tourism activities in the country. |
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Economic |
Being a free market economy, the country is considered as a developing nation. Per capita income is highest in the ASEAN countries. The economic recession in 2009 had drastically affected the hospitality sector but the situation has changed in the recent time. |
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Socio-cultural |
Literacy rate of the country is very high and people abide by their families’ traditions and customs (Ho 2014). However, life styles and living standards around the world are changing and Singaporeans are trying to match the pace with them. The life style has changed largely and people are ready to spend money to get a luxurious life. |
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Technological |
Technological advancement like the internet has given the opportunity for better communication and marketing. Technological advancement has also improved the logistic and delivery options. Singaporeans are also advanced in technology and use various electronic appliances for communication purpose. |
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Legal |
The minimum wage rate has been increased by 15% that has automatically increased the expenditure of the hotels (Ab Talib et al. 2014). Keeping health issues into consideration, the government has focused on sustainability of food and strict control is made on the quality of food. |
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Environmental |
Singapore government is highly dedicated towards cleanliness of environment and has strict laws and policies on those who do not abide by the environmental and sustainability laws. |
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Factors |
Analysis |
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Bargaining power of buyers |
Moderate; Consumers opting for a budget hotel does not want to spend lot of money for their stay. The price is set accordingly and thus, the bargaining power is moderate. |
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Bargaining power of suppliers |
Moderate; the suppliers of materials for these hotels understand the business and supply things keeping the cost and the budget of the hotel. However, the costs may vary if the transportation cost for the suppliers vary. |
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Threats of new entrants |
High, since a huge budget is usually not required for setting up a budget hotel, new entrants might arrive in the Singapore market. The market also attracts others for conducting business. |
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Threat of substitute |
Low, people opt for these hotels because they do not have to spend large amount of money. So substituting these hotels do not occur often (Ab Talib et al. 2014). |
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Competitive rivalry |
High, Singapore is famous for budget hotels. Hey Bear Capsule has lots of competitive rivals like Tai Hoe Hotel, Hotel 81, Fragrance Hotel-Rose, Santa Grand Hotel Lai Chun Yuen and other (Heybear-hotel.com 2017). |
Based on the analysis of the environmental factors, the SWOT analysis of Hey Bear Capsule can be stated here:
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Factors |
Analysis |
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Strengths |
The hotel can get regular supply of materials such as furniture or electrical appliances for the hotel from the countries like China and Taiwan at a cheaper price. The technological advancement can help the hotel to carry out their communication or the marketing process easily. The Hotel can use the social media networks like Facebook and Twitter for their marketing purpose (Wu 2016). |
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Weaknesses |
It has been evident that the purchasing power of the people has increased. Depending on their lifestyles, people preferred other high budget hotels and not depending on the cheap budget hotels. The quality and the price that the hotel offer is not competitive enough and thus, people have other options to choose. |
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Opportunities |
The opportunity for the marketing and communication is huge. Using social media networks and the availability of many technological gadgets it has become easier for the hotel to carry out their business activities well (Wu 2016). The political and the legal factors are favorable enough for these kinds of hotel to expand their business activities and attract more consumers. |
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Threats |
The huge competitors in the market are a major threat for the hotel. The bargaining power of the consumers is also a threat. In addition to this, the changing life style of the people is a major threat for these types of hotels. The quality of food products that these hotels serve is also a threat for the environment sustainability. |
A new set up of budget hotel named “Bear Capsule Hotel” is going to be developed in Singapore. The major objective of this new budget hotel will be to attract youth and adult tourists between the age group of 16 to 30. According to Cheng (2014), the major marketing objective of the company bois to communicate unique set of services that hotel is going to offer its guests. Bear Capsule Hotel will try to direct the focus of the guests to its service quality and value for money as opposed to the bottom line costs related with their stay.
The marketing strategy of Bear Capsule Hotel will allow the management team to communicate about its brand values and develop an intense working relationship with suppliers and customers. Chernev (2014) stated that, it could help the management team to identify the requirements of the tourists in efficient manner. The budget hotel has set two major goals for themselves. They are such as continued differentiation and growth. Growth of the hotel will take place if the hotel targets new areas of business within local and national community of Singapore.
The primary target market of the budget hotel named “Bear Capsule Hotel” will be the youth and adult tourists between the age group of 16 to 30. Wilden (2015) stated that the hotel is also going to target the professional visitors of Singapore from various industries, where annual corporate contract can be developed. These industries are such as travel trade, automotive and IT industry. In addition, the management team of Bear Capsule Hotel will also target local organizations and firms so that they use conference facilities, room nights for visiting executives for daily basis. They can also use long stay service for their professional guests as well (Foxal 2014).
Porter’s Five Forces Analysis
The marketing communication mix that the company is going to use for the next one year is mentioned below in the table:
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Development websites |
The management of Bear Capsule Hotel has decided to develop an appropriate website to increase online sale of the company. The management team has also decided to provide attractive offers and discounts to their customers, when they purchase any holiday packaged from their websites. The company has decided to give 30% discount for booking within the first 3 months of opening of the website, 20% for the next 3 months, 10% for the next 3 and 5% for the rest of the year (Frow 2014). |
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Advertisement on magazines |
The management team of the hotel has decided to give advertisement in various magazines of Singapore for the next 1 year. The hotel has decided to develop 6 months contracts with “Singapore Business Review” and “CLEO Singapore”(Heybear-hotel.com, 2017). |
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Sales promotion |
The hotel has decided to organize a grand promotion event to address customers that they have entered the city for their service. 5 Charity events will be organized by the hotel for free to show their capability of service and hosting to all the local companies. According to Hollensen (2015), the management has decided to provide free service to four lucky customers within the first month of grand opening (1 lucky customer per week will be selected based on lottery). They will be provided 1 night and 2 days service and foods free. All these strategies are part of their grand promotion. |
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Online and social media marketing |
Social media marketing is another major marketing strategy that the company is going to use. The company will use Facebook and Twitter to develop intense relationship with their customers. |
Creating Annual Budget
Annual budgets help in providing various strategies to be applied to the hotel during financial crisis and hence help the hotel to be part of excellence in the market as in Taiwan. Kotler (2015) commented that as the hotel is a budget hotel trying to set up in Singapore, annual budget reports must be created for capturing expenses of project and revenues anticipated for 12 months. All operational aspects must be covered by the annual report and occupancy rates estimated for sales person.
Building Operation Tracking Model
Vargo (2015) stated that mechanisms would be built for capturing easily and tracking revenues as well as expenses. Worksheets incorporated for operational aspects of the hotel must be done by building sophisticated worksheets and costs itemized with high detailing.
Comparing Actual Against Budgeting
Each operational area will be will be compared against budgeting and identifying areas of expectations to be exceeded with inconsistencies. Financial status will also be maintained for comparison and hence devise strategies to incorporate a balance between the actual cost and the anticipated budget (Kowalkowski 2015).
Creating And Using Reports
Managers and CEO of Heybear capsule will be provided with the reports containing detailed explanation finance and expense of the hotel. As per Mullin (2014), operational areas will be maintained and looked into the matter through thorough revision of the reports that will ensure that proper audit logs are maintained and profit maximization occurs for the firm.
Adjusting External Variables
According to Strauss (2016), external variables like fuel cost rising creating an impact on the revenue as well as operating expenses and hence leading to profitability will be adjusted that will be maintained within a hard copy spreadsheet addressing issues and identifying areas of cost reduction.
Using Financial Formulation For Success
Accounting principles fundamentally will be used for top performers and hence each dollar will be analyzed for issues identified potentially making necessary adjustments efficiently. The management that will ensure that difference of loss will hire property manager and profit for any property will be identified and assessed for Heybear Capsule Hotel (Nahavandi 2016).
The sales and expense forecasting will be preceded by various governing factors within the hotel that comprises of objectives and goals of the hotel. Limitations of the environment are assumed to have at least average estimated demand. Heybear hotel will have advanced booking system, contracts of sales, segmentation in market and management of yield. According to Payne (2013), determination of variables is done through identification of various models specified of approximately 40 numbers. Seasonality of series will be evaluated with average arrivals and night stays for each month annually. The Heybear hotel criteria will be maintained through multiplying factors with their normalization value that is anticipated to be approximately 3777-4195 = -418 and for night to be 7455-7233 = +222 respectively.
Marketing Objectives
The anticipated sales of the hotel is approximately 43.68% for rooms valuing US$9006, US$ 9809 for food and beverage, US$ 53 for laundry, US$ 38 for business centre, US$ 38 for telephone, US$ 70 for transportation, US$ 267 for massage, US$ 1203 for a club or pub and US$ 121 for other incomes including gains (Shapiro 2013). The expenses to be forecasted is 47.57% for the food and beverages, 0.26 and 0.18 % for business development, 5.6 % for the operation and other sources and rest 46.39% for other like transportation, facilities maintenance and employee salary.
8. Conclusion
In this report a marketing plan for the Bear Capsule Hotel had been developed. From the internal analysis, it had been found that, Singapore has developed free trade agreement with China and Taiwan. It can be beneficial for the company as they can purchase materials from these countries at low cost. In addition, it has been found that the company has used different types of marketing mix strategies that include Facebook and Twitter usage as social media marketing, website development and advertisement on magazines.
References
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