The hospitality industry with regard to hotel businesses is one of the biggest employers in the world. The hotel industry in New Zealand has attained a high status and demands high work standards from the employees. Opportunities for employment are many in the hotel industry in Rotorua, although they require a high level of professionalism and potential for personal qualities in each field. New research by Williamson (2017) shows that there is a development boom of hotels which is underway in New Zealand, with the country being in the midst of the highest development activity levels in its history. In Rotorua, hotel development is booming with one hundred and thirty rooms currently being constructed while three hundred and thirty-four others have been proposed (Moriarty, 2010). The report will include recommendations on how a five-star hotel complex can be developed in Rotorua, New Zealand, with consideration to market demand and viability. The conclusion will show that there is a very high potential for hotel development in Rotorua which can be tapped through the analysis of market demand and viability.
The paper used Secondary sources of collecting information. The sources used in the paper include data from accredited websites, reviewed journals, online publications, previous researches, research databases, and books. According to mutual, secondary sources of data are information created by a person that did not participate in the event or did not experience first-hand information. The sources are easy to collect and for analyzing the data. Collection of the data using secondary sources saves time as compared to primary data sources.
Currently, the hospitality industry in Rotorua is growing significantly with high instances of economic activities taking place. As a result of recreational activities, lodging, food and tourism activities, the domain of the industry has presented a huge economic avenue for all types of opportunities. Particularly, in Roturua the demand for the hotel is significantly high with consideration of tourism activities and recreation services that are taking place in the town. The main customers of the hotels are domestic and international tourists. Other customers may include domestic and international students, businesspersons and politicians. Most of the customers need classy temporary accommodation rooms with entertainment facilities like casinos during their stay in the town. Furthermore, the accommodation rooms of these hotels vary in terms of social wealth classes as some rooms have higher prices than others. Furthermore, affordable and classy rooms have a higher demand than VIP rooms.
According to Hung, Shang, and Wang (2010), the high demand rate is linked to high prices which have led to the prices of the hotels going up. Currently, the Rotorua market has over two hundred hotels charging from $33 for accommodation services (Kerr & Lock 2010). The hotels still are low compared to the demand and therefore future growth of the industry is expected to be high. For instance, New Zealand is expected to generate over 80 percent hotel growth demand by 2025. Therefore, the marketing strategy for demand is building customer loyalty and differentiating products to have new features which further attract customers. For example, some hotels have invested high in innovative technologies by equipping their rooms with Wi-Fi, infrared doors and scanners.
Currently, there is a threat of new entrants resulting from the very strong international interest by main global hotel operators to expand their outlets in New Zealand, with the international chain of hotels dominating the hotel industry. Further research by Li (2018) shows that Scenic Circle, Quest, Heritage and Accor have recently added properties to their portfolios in New Zealand while Outrigger Hotels and Resorts has swiftly made its establishments in New Zealand.
The hotel has three properties in Taupo, Queenstown, and Christchurch which offer a substitute for customers thus increasing their bargaining power. In addition, AccorHotels have announced the development of a five-star Pullman hotel which is set to be opened in Rotorua in early 2019, in the former Zen Building on Arawa street after being awarded a hotel management contract by Chow Group Management (Verboz, Bucak & Atay, 2013).
Rivalry amongst operators of hotels in Rotorua has been strong in recent years, with the hotel operators intending to secure strategic positions and also extend their brand and network presence in the town. The presence of other established five-star hotel complexes in Rotorua including YHA Rotorua, Treetops Lodge & Estate, Regal Palms Resort and Peppers on the Point – Lake Rotorua increase rivalry in the industry.
Market demand for hotels and the tax climate has led to the construction of five-star hotel complexes in Rotorua which has increased the bargaining power of suppliers. In addition, suppliers have several hotels they can supply thus their bargaining power is high.
The increased number of visitors has increased the need for the five-star hotel complexes, with the backpacker hostels becoming increasingly popular in New Zealand. The hostels offer a form of substitution to five-star hotel complexes offering accommodation that is cost effective thus mounting strong competition to other hotel suites in the region.
The political environment existing in a country has a great impact on the business performance in the hotel industry around the world. In New Zealand, politics have affected the daily lives of citizens with businesses in the hotel industry coming up with various methods to cope with the situations of politics in the country. The hotel industry in Rotorua is highly dependent on international and local guests, with the New Zealand government adopting approaches determining the number of tourists visiting the country (Connell, Page & Bentley, 2009). New Zealand has over the years been attracting a high number of tourists which has been attributed to its stable political environment. The labor party which is ruling has adopted a political approach which has been attractive to international tourists (Scott, Gössling & deFreitas, 2008).
According to Bharwani and Mathews (2012) New Zealand’s economy is highly dependent on trade with its new and traditional trade partners including Japan, European Union, United States, South Korea, China, Australia, among others. Compared to other nationalities in the region, the manufacturing sector of New Zealand is relatively small, with its main economic focus primarily being on tourism and industries like the hotel industry. The government of New Zealand has over the years, in conjunction with the World Bank, carried out intense reforms of the economy with an aim of doing away with barriers getting in the way of foreign investments. The reforms have made a transformation to the country into a business-friendly country.
The average income in the country affects the performance of the hotel industry in the country with further research by Lim, Chang & McAleer (2009) indicating the average household income in New Zealand to be $ 67,028. The aspect indicates that the economy of the Rotorua is good and that people in the region possess the purchasing power to purchase the available services and products thus offering an opportunity for the establishment of a five-star hotel complex in the town. The inflation rate in the country which stands at 0.70% was considered to be among the world’s lowest rates of inflation (Robinson, Fallon, Cameron & Crotts, 2016). The New Zealand dollar has maintained its strength against the leading currencies globally. For example, the New Zealand dollar is exchanged for US$ 1.2652 (Schiff & Becken, 2011). The hotel industry highly thrives in a local currency which is strong since it mostly handles foreign currencies. In addition, the country has the lowest unemployment rates as compared to other countries in the region.
Various five-star hotel complexes in Rotorua are popular with both international and local visitors to the city. The opinions of customers about the hotel services and products offered to affect the image of the businesses. A main social factor affecting the performance of five-star hotel complexes in Rotorua is the trends which are upcoming in the lifestyles of consumers. The old tradition of hotels cooking any food they wanted, selling it to customers and getting away with that has been changed by the consciousness of people with the food they eat. Therefore, hotels have invented measures of dealing with dynamic consumers’ tastes and preferences. As compared to other surrounding countries, New Zealand is mainly an urban country, with seventy-two percent of the people living in towns. The presence of the high population in Rotorua offers a five-star hotel complex additional customer to whom it sells its services and products thus reducing over-reliance on tourists.
Furthermore, New Zealand has the youngest population among all nations which are industrialized, with 20% of the total population in the country being 24 years old or younger. However, by 2050, the country’s population is projected to increase from the current 4.5 to 5.3 million people (Robinson et al., 2016). In addition, the median age in the country is also expected to range between thirty-six to forty-three years. Therefore, five-star hotel complexes have to readjust their strategic plans to ensure that the demographic changes have been accommodated. Moreover, the increase in population in India, China and Brazil also affect the hotel industry in New Zealand since they are among the world’s emerging markets.
The amount that customers are willing to pay for services and products in the hotel industry in Rotorua has affected the adoption of technology which facilitates the storage of relevant information about customers. A demand for customers to make bookings via the internet has presented the need for automation of services by hotels in the country. Therefore, hotels have to invest significant finances to come up with automated booking and room services. In addition, the need for affordable energy has made it necessary for five-star hotel complexes in Rotorua to invest more funds. Technology adoption in five-star hotel complexes in New Zealand is a major factor which the organizational managers must consider since there is involvement of large sums of money.
The five-star hotel will be developed at the slopes of Mount Ngongotaha near Rotorua town. The main factor that makes the location considerable it is accessible due to good road transport systems and minimum traffic count. Other strengths that make the location ideal for generating high-profit margins include the presence of Mario culture; the destination is accessible and closes Fanon Street, high number of tourists, low competition and presence of special features like geothermal activities. Mount Ngongotaha is close to the Fenton Street that is associated with various attractions as it links the central business district to the mountain and to Lake Rotorua.
The location is well equipped with good infrastructures like transports and network system that are effective hence enabling economically efficient tourism as both domestic and international tourism is likely to move from one destination to another and later on camp on the hotel. Mountain Ngongotaha is also a prime natural future for Mario cultural activities. The cultural attractions on the mountain and along state five highland include rainbow springs, swoop, Gondola and Luge have been attracting tourism significantly (Shelford, 2018). The competition levels in the location are very low. Furthermore, there is no accommodation near the mountain, as investors believe the cultural activities are not the main reason why tourists come to visit Rotorua. Furthermore, tourism development in Rotorua has concentration around natural attractions especially around the central business district and the lake while many hotels with great accommodations are situated along Fenton Street. Geothermal activities have also been a key tourist attraction in the area. The development of these geothermal activities have resulted in a high demand for tourists.
However, the location also possesses some weaknesses including a low number of tourists, ineffective council permitting process, low community support, low labor supplies and high costs of operating the hotel. The number of tourists in the area is significantly low because the majority of tourists prefer spending time in lakes and geothermal activities which are distant from the location. Furthermore, the community support is very low as a few activities are carried out near the mountain while the majority of people prefer taking their activities to the town. The location is surrounded by many hotels, the labor supply is very low as some hotels have already retained their professional staff by offering good reward packages to them. The distribution channel is also complex in the area and therefore costs of operating the hotel in the place are very high.
Opportunities include gender structure as many women venturing into the labor markets have less time to cook at home. Therefore, the organization has an opportunity of increased domestic employees and labor opportunities. In addition, a rise in globalization has resulted to more domestic and international travelers and tourists visiting the region particularly from emerging economies. Furthermore, the region has a demand of high quality food due to health concerns (WanHassan & Awang, 2009).Threats
Potential threats facing the development of a five-star hotel complex in Rotorua include stiff competition from rival hotels which are being developed in the region, for example, the backpacker hostels. Additionally, there are security issues being faced as the hotel location is far from town. Political unrest and climate change may decrease number of tourists visiting the region.
The analysis of the results and findings from market demand, c-pest and location are clear that the development of a five-star hotel complex in Rotorua is a good idea. In terms of location, Rotorua town is geographically positioned between different tourist attractions and therefore the development of a five-star hotel complex hotel in the area will accommodate many tourists. Furthermore, with careful consideration of the distance between the tourist sites and the potential hotel location, the distance is considered “a walking distance” meaning domestic tourists can walk to the hotel easily. In addition, the closeness of the hotel to the town makes the customers shop easily for other personal essentials that are not offered in the hotel.
In terms of demand, the competition in the market is significantly low as the demand for available resources is high. Different customers prefer different hotels according to their standards. Therefore, development of the five-star hotel complex will attract customers with a high gross income hence the company will be in a position for generating high profits. Furthermore, the distribution channels are friendly and promising for future expansion of revenues. If the five-star hotel complex ventures into the market it is recommendable for it to use innovative and product differentiation strategies as they will gain a higher market share within a short duration. The five-star hotel complex should also consider benchmarking with the successful existing hotels within Rotorua so that it can learn more about the environment the hotel is venturing into and the means of sustaining competition forces.
Conclusion
Government policies which have been adopted to increase the number of tourists visiting the country are advantageous for the development of hotels in the region. In addition, the moderate competition, high income of customers and a high number of tourists flooding the region make Rotorua a potentially viable market for a five-star hotel complex development. The rise in demand of accommodation rooms is associated with the rise in demand for more construction of five-star hotels. Many International tourists who visit Mount Ngongotaha have high income and therefore consider classy five-star hotels with entertainment facilities like casinos and spas. The competition level in the industry is very low in Mount Ngongotaha as compared to Fanon Street where a majority of big hotels are situated. Despite few market entry restrictions, the five-star hotel complex idea is ideal, as the proposed location is conducive for carrying out cultural activities. The best strategy for venturing into the market is through product differentiation and innovation. Product differentiation introduces new products in the hotel industry that are unique and which satisfy customer needs. Innovation leads to the launching of advanced and new services and products in the market that attracts more customers.
References
Bharwani, S., & Mathews, D. (2012). Risk identification and analysis in the hospitality industry. Worldwide Hospitality And Tourism Themes, 4(5), 410-427. doi: 10.1108/17554211211277851
Connell, J., Page, S. J., & Bentley, T. (2009). Towards sustainable tourism planning in New Zealand: Monitoring local government planning under the Resource Management Act. Tourism Management, 30(6), 867-877.
Dowling, R.K., 2011. Geotourism’s global growth. Geoheritage, 3(1), pp.1-13.
Hung, W.T., Shang, J.K. and Wang, F.C., 2010. Pricing determinants in the hotel industry: Quantile regression analysis. International Journal of Hospitality Management, 29(3), pp.378-384.
Kerr, S. and Lock, K., 2010. Improving lake water quality through a nutrient trading system: the case of New Zealand’s Lake Rotorua. Tax Reform in Open Economies: International and Country Perspectives, pp.241-264
Li, H. (2018). An exploratory study of the preferred qualities of managerial hospitality candidates in New Zealand’s four and five-star hotels (Doctoral dissertation, Auckland University of Technology).
Lim, C., Chang, C., & McAleer, M. (2009). Forecasting h(m)otel guest nights in New Zealand. International journal of hospitality management, 28(2), 228-235.
Moriarty, J. P. (2010). Have structural issues placed New Zealand’s hospitality industry beyond price?. Tourism Economics, 16(3), 695-713.
Robinson, P., Fallon, P., Cameron, H., & Crotts, J. C. (Eds.). (2016). Operations management in the travel industry. CABI.
Schiff, A., & Becken, S. (2011). Demand elasticity estimates for New Zealand tourism. Tourism Management, 32(3), 564-575.
Scott, D., Gössling, S., & de Freitas, C. R. (2008). Preferred climates for tourism: case studies from Canada, New Zealand and Sweden. Climate Research, 38(1), 61-73.
Shelford. (2018). Mystical Mount Ngongotaha Walks. Retrieved from https://www.rotorua-travel-secrets.com/mount-ngongotaha-walks.html
VERBOZ, S., BUCAK, T., & ATAY, L. (2013). Product Differentiation in International Accommodation Establishments: The Case of Accor Hotels. Consortium Journal of Hospitality & Tourism, 18(2).
Williamson, D., 2017. In search of consensus: A history of employment relations in the New Zealand hotel sector–1955 to 2000 (Doctoral dissertation, Auckland University of Technology).
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download