Red Carnation Hotels: Luxury Hotel Chain With Award-Winning Customer Service

About Red Carnation Hotels

Red Carnation Hotels are an award winning family owned hotel chains that are situated in a large number of countries. They are one of the most popular hotel chains in that area, along with a very beautiful history and tradition attached to it. It is a collection of around 17 luxury hotels that are located in the best places in the world. It has been in the business since a long time and is very popular for providing luxury services to its clients at affordable prices. It was awarded the Human Resources Team of the Year at the Hotel Cateys 2015. As per the Sunday Times Best Companies to Work for 2015 it was awarded the second best place to work. Not only economically, this company is also famous for its community work worldwide.

The luxury hotel business is booming in the Chinese country owning it to its huge business operations.  There has been a steady increase in the economy that has helped in improving the business of these hotels, owning to a lot of business travellers, and government officials who stays in this luxury paradise. A lot of hotel chains from around the world are entering the Chinese market to tap in the perks of the developing economy. This has led to the growth of the Chinese hotel market.

The global hotel industry is experiencing a very strong growth over the years, owning it to its strong customer reach and growing demand. Till 2017, the industry is expected to reach $550 billion US dollars, and that has been huge growth from $457million in 2011.Over the coming five years till 2022, the industry is expected to double own to its improved economic conditions and improvement in the spending power of the customers.  It has a share in both the domestic and international tourism zone. The key success factors that is hugely responsible for the growth of the hotel industry globally are –

Word of mouth recommendations also plays an important role in the success of these hotels.

Several mergers are happening between different hotel chains owing to their increase in business.

There are various sub segments in the hotel chain industry that basically consists of chain and franchised operators that owns resorts and hotel with or without accommodations and meals.

The Global macro hotels industry is affected by many factors. It is important for the Red Carnation Hotels to be aware of these factors before moving up with the expansion plans. It is important that the hotel chain adopts a plan that gives it a competitive advantage over potential competitors. These factors include government, culture of the customer, legal factors and many others. A detail analysis of the same is presented below.

Luxury Hotel Industry in China

The several political factors that affect the global hotel industry are labourers, regulatory method, attitude of the government, supply of proper manpower. It is important that the government supports the development of the hotel chains. It is important for the government to be stable because the government will also earn from the tourism industry.

Environmental factors that affect the growth of the hotel industry are impact on the environment due to the construction of these hotel chains at crowded areas. People are concerned about their nature a lot and the development of these chains changes the natural scenery. Social economic factors will include changes in the value of the people, changes in lifestyle, demographic changes, and changes in the religious and ethnic outlook of the people and all that will affect the growth of this particular industry.

The various technological factors will include changes in the uses of the technology with the introduction of new and approved services. With globalization and the arrival of ecommerce it is very important for the organisations to be active on the web for visibility. People now prefer using the internet to book hotels for their use. All these technological changes have affected the global industry. The systematic enlargement in the industry is mainly because of the introduction of advanced systems like the Enterprise Resource Planning (ERP).

Economic factors include – current rate of taxation, rate of inflation, the position of the balance of trade and the level of unemployment along with the changes in the rate of interest and also the availability of finances. If there is a downtrend in the economy it will portray low spending capacity of the customers, and that will affect the hotel industry. People will find spending for this luxury hotels very difficult.

The legal factors that affect the hotel industry will include changes in the environmental and legal laws, like changes in the number of working hours of the staff. Other factors include the licensing agreements with various government bodies, international trade and custom legislation etc. Thus we see that the Red Carnation hotels, needs to keep a watch of the following macro factors before finalising their expansion plan (Köseoglu, et al., 2016)

In the hotel industry, the customers play the major role. He has the power to switch between two hotels, if he doesn’t like the first one. Thus customer satisfaction plays an important role for this industry. It is important to have trained and skilled man power that can serve to the customers. Proper quality service should be provided, because there are so many competitors. The overall infrastructure, the variety of facilities provided also plays an important part. Proper management of the human resource is also important. The hotel industry is a human resource driven industry hence management of the same plays a very important part (Dickson, et al., 2016).

Global Hotel Industry Growth

It is also necessary that the business owners do proper research before entering a market. Proper research of the area, the taste of the people over there, the prospects of the growth of the overall business, the availability of the resources all play an important role in the growth of the business of the hotel industry. Rivalry among the competitors in the hotel industry is wide spread that has led to increment in changing the factors continuously make sure that there is always something new to offer to the customers. Extreme rivalry is a threat to the profitability of the business. In case of Red Carnation Hotels since they want to enter a new country proper research must be done to make sure that the expansion is profitable. But by far the hotel chain is doing very well. It has been facilitated with so many awards for its outstanding performance and the quality of service that it provides to its customers. Hence it has very little to fear from its customers, given its huge popularity and growth prospects (Chaney, et al., 2016).

Internal analysis of the Red Carnation Hotels includes various factors like the company’s resources, opportunities, threats and capabilities and opportunities.

Value chain analysis presents the flow of goods and services from the point of its initiation to its final customer. In case of Red Carnation Hotels, they have a very strong team of human resource management that manages their work and also have a huge supply of man power. The business is majorly affected by the quality of the services that the people provide along with better work opportunities to its employers. It has been regarded as the second best place to work by an approved international organisation. This proves its sanity in providing quality services. It has around 17 luxury hotels in and around the globe and provides quality service through them since its advent in 1950 (Boxkurt & Altundas, 2017).

Strengths

The major of the hotel chain includes good quality services, hotels that are located in exotic locations and high brand value. It has a reach to a wider customer base given it has been in the business since so long. It is also very famous for its charitable work (Moreno-Izquierdo, et al., 2016).

Weakness

The major weakness includes lack of newer technologies that makes it little less viable then its customers. The prices are very high so sometime it is not affordable by the people.

Success Factors in the Hotel Industry

Opportunities

There are a lot of global opportunities that include expansion and development. With it string management and human resource team, the company is going places. It has been facilitated with so many awards and that has helped in building its brand value.

Threats

The threats includes rise in other competitors and also entry in these kind of industry is not very much guarded. There is also a hidden threat of fall in the economy which may affect the purchasing power of the individuals.

	China	France	Nigeria	Thailand
Country	Ecommerce is the main factor; The rate of GDP is increasing rapidly. There are high advances in technology and the spending power of the customers has also improved.	Sixth largest economy , with hiuge consumer purchasing power. GDP per capita is 36854.97 USD.	Middle class mixed economy.  Emerging market for the hotel industry and various kind of thread	Growing economy , preferred by tourists form around the world. It is one of the newly industrialized economy in the world.
Choices	Large number of hotels present	Growing market for luxury hotels	Very few luxury hotels present	Emerging market ,as toursim is increasing.
Concentration	55.6% of total population	10.86% of the total population	23.5% of the total population	23.7% of the total population
Culture	Collective society with long term orientation	Collectivist society with medium term orientation	Collectivist society with short term orientation	Collectivist society with long term orientation

The Chinese economy is one of the developing economies in the world. It has emerged as one of the largest economy for the development of hotel chains in the world. Over the last two decades various hotels like the Hyatt, Starwood, Hilton, Marriot and four seasons have developed over the years in the Chinese country. With the success of these multinational hotels it has led to development of new hotels like the MGM Resorts International and Caesars Entertainment Inc. to incorporate new expansion strategies for their hotels and restaurants (Dong, et al., 2016). The outlook for Chinese tourism is very bright. It is the fourth most popular tourist destination in the world as per the World Tourism Organization, with 133 million visitors. By 2020, the number of international tourists is expected to increase to around 137 million.  The growth of the luxury hotel began since 1980 and has developed since then. There has been huge development in the Chinese economy that has led to huge market for the entry of new hotels. Thus China is the best option for expansion by the Red Carnation Hotels. Among all the options they carter to the needs of the organisation and also the consumer spending power is huge so the company can go for China for the needed level of expansion. There is a huge probability that the strong economic performance in the Chinese market will help offset the draught in the U.S. economy (Yusof, et al., 2017).

There are various methods of entering the market, the most common being the entry through the way of licence and franchise. That is the best method to enter the hotel industry. The other ways to enter the economy are joint venture and wholly owned subsidiary. There are various ways to entering through the franchise. There are huge demands for the hotel industry in the Chinese economy, in case of entering through the franchise way there are less legal obligations. Thus the Red Carnation Hotels will benefit from the same (Andreu, et al., 2017).

Macro Factors Affecting the Global Hotel Industry

Advantages of franchise – It provides benefits to the small independent business with the support of the big companies. It helps in providing the needed experience to new business organisations by working closely with the big companies. The business is not tied to one of the specific domestic market. Also since the Chinese population is huge, hence there will be no problem of supply of manpower. Thus there will be huge benefits to the company by entering the Chinese market (Mariani, et al., 2016).

Some challenges of franchise are – There are disadvantages as companies may not work independently. Also the franchises have to pay a lot of commission to the big organisations hence these are few shortcomings of these kind of business form.

While entering the overseas market, the companies need to consider few factors like nature, climate, taste, culture etc. Standardisation is important to save the overall costs. The marketing mix consists of 4Ps Product, Place, promotion and Price.

Product

It covers the aspect of developing the required goods and services. China is a country of a lot of customs; the hotel industry is driven by the demands of the consumer. Hence the organisation needs to consider the same and develop their services accordingly.

Price

It relates to the overall pricing model. Since the tourism industry is developing and most of the people belong to the upper middle class, the people there can afford the high prices of these luxury hotels. Most of the Chinese household focuses on branding and preferences.

Place

It refers to the overall distribution channel of the goods and the services. There has been huge development in the online hotel and restaurant with the advent of the economy. Cities like Beijing and Shanghai are the business hubs and are best suited for development of such hotels and restaurants. Other cities such as Chongqing, Chengdu and Changsha have rapid rise in middle class population and led to increase in brand awareness and consumption. This has led to huge demand in the customer growth.

Promotion

Promotion is one of the most important key for the success of any business. Word of mouth publicity has played an important role in the growth of such luxury hotels.

Conclusion

To sum up, we can say that there is a huge demand for the luxury hotels due to the growing disposable income of the people, and has helped in creating of jobs. The power of consumer expenditure has increased and that has helped a lot in the growth of the business worldwide. The red carnation hotels have a lot of strength and opportunities associated with it. Thus expansion can be carried forward keeping in mind the most important points that are stated above (Wan, et al., 2017).

Andreu, R., Claver, E. & Quer, D., 2017. Foreign market entry mode choice of hotel companies:Determining Factors. International Journal of Hospitality Management, Volume 62, pp. 111-119.

Boxkurt, O. & Altundas, Y., 2017. Swot Analysis for Determining the Tourism Potentials of Certain Regions. Akçakoca. Siyaset, Ekonomi ve Yönetim Ara?t?rmalar? Dergisi, Volume 5(1).

Chaney, P., Fealy, K., Pettijohn, J. & C., P., 2016. What Are Consumers Saying About Your Business? A Primer on Monitoring Tools. Journal of Marketing Perspectives, p. 70.

Dickson, B., Landry, P., Shen, M. & Yan, J., 2016. Public goods and regime support in urban China.. The China Quarterly, Volume 228, pp. 859-880.

Dong, J., Wang, Q. & Deng, C., 2016. How to move China toward a green-energy economy: from a sector perspective. Sustainability, Volume 8(4), p. 337.

Köseoglu, M., Ross, G. & Okumus, 2016. CompetitveIntelligence Practise in Hotels. International Journal of Hospitality Management, Volume 53, pp. 161-172.

Mariani, M., Buhalis, D., Czakon, W. & Vitouladiti, O., 2016. Toursim Management Marketing and Development. Performance,Strategies and Sustainability.

Moreno-Izquierdo, L., Ramón-Rodríguez, A. & Perles-Ribes, J., 2016. Pricing Strategies of the European Low-Cost Carriers Explained Using Porter’s Five Forces Model. Tourism Economics, Volume 22(2), pp. 293-310.

Wan, Y., Chan, S. & Huang, H., 2017. Environmental awareness, initiatives and performance in the hotel industry of Macau. Toursim Review, Volume 72(1), pp. 87-103.

Yusof, Y., Awang, Z., Jusoff, K. & Ibrahim, Y., 2017. The influence of green practices by non-green hotels on customer satisfaction and loyalty in hotel and tourism industry. International Journal of Green Economics, Volume 11(1), pp. 1-14.