Hospitality industry is one of the fastest and evolving sectors in the present times; it is a broad group of business which provides services to customers. Hospitality falls within the purview of Service industry and encompasses services such as lodging, food, transportation, leisure, Spa and wellness and many more (Walker & Walker, 2016). Apart from Hotels, Hostels have also become an important part of the Hospitality industry and in the recent times it is picking up strongly and becoming increasingly popular amongst youngsters who prefer experience more than anything (Nagy & Carr, 2017).
The inception of Hostelling can be traced back from early 1909-1934 in Germany when an elementary school teacher staying in the industrial centre of Germany was alarmed at the impact of industrial revolution on the student’s health and welfare. He thus created “wandering school” on weekends for the student which later took the shape of “Youth Hostel” (Papadogiannis, 2016). Further development in the Hostelling culture happened through most of the parts of Europe such as Switzerland, Poland, Netherlands, Norway, Denmark, British Isles, Ireland, France and Belgium. At present there are more than 4000 hostels spread in more than 80 countries worldwide (Ravenhill, 2016).
Smart Move on is an extremely innovative idea which combines two of the things most desired by travellers- Bed & Bike. The Unique selling proposition of Smart move on is provision of shared accommodation, breakfast, 24 Hour bike service and organized trips with a guide to the best places in London. It definitely is a very novice concept which has great potential for further development and an opportunity for travellers to experience London and meet some of the people with different cultures, ethnic background and race.
The underlying purpose of the assignment here is to develop the new brand using the development method for creating the brand. The report will also focus on the feasibility of the new business and its reasons for sustainability in the ever evolving hospitality industry. Towards the end, the report will highlight the potential factors which might limit the development of Smart Move On
In the simplest terms development plan can be understood as a document which entails the overall strategy of the developing team/ founders for the proper planning and sustainable development of the proposed idea. The development plan helps in meeting the objectives systematically step by step (Leigh & Blakely, 2016).
The business idea here is to leverage the growing culture of Hostels in the west by millennial (18-35 Years) by providing value for money services to the travellers or experience seeking people. Smart move on is a unique infusion of Bed and Bikes for the people who are interest in travel along with a guided tour of London’s main attraction. Providing accommodation with breakfast at value for money is good for pocket friendly consumers and cycling would help the travellers in ditching the traffic and also help them in staying fit. Smart move on is targeting the millennial who have more affinity towards environmental sustainability thus with this strategy of co-creation the company is looking to establish the brand in the London market. The company is also aiming at Cost leadership by providing the cheapest price on rent and bikes.
SWOT analysis is a micro environmental analysis which helps the organization to identify its strength and weakness which are internal to the organization and identify weakness and threats which are external to the organization (Theaker, 2017). SWOT analysis of Smart move on will help the company in leveraging on the strength, reduce the weakness, take advantage of the opportunity and create proactive strategies for the futuristic and probabilistic threats.
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Strength · Cost leadership (Lowest prices for rent and Bikes) · Effort towards environmental sustainability. · Offering of incredible social experience · Value for money services. · Focus on providing experience. · Provision of shared experiences. · Cycling can help in ditching traffic and congestion · Fun on wheels |
Weakness · Maintenance of Bikes will have a cost attached to it which the company will have to bear on a regular basis. · Company will have to bear road tax as the bikes will be parked on roads. |
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Opportunity · Using bikes for driving revenue into the system during the time of low occupancy. · Greater awareness of the Hostel brand due to the logo on the Bikes. · Investment by London in increasing facilities for cyclist. · Growing craze of travellers in the European market. · Growth in interest of Millennial towards experience |
Threat · Easily imitable business model. · Brexit might have adverse impact on the tourist due to increase in cost (Watt, 2018). · Requirement of Visa to travel. · Growth and expansion of Airbnb model(Guttentag, 2015) · Anti-social behaviour might impact the opinion of tourists about London. |
Brand development is the strategical process of creating and strengthening the brand. It is highly important to develop the brand strategy and identify the attributes of the brand to build high resonance with the consumers. A cohesive brand development strategy is a reflection of consumer needs, emotions and competitive environment (Armstrong, Kotler, Harker & Brennan, 2015). Smart move On has the following brand attributes which give an identity to the unique business model which is formed by infusion of beds and Bikes:
Consistency in Services-Consistency in brand helps in gaining trust of the consumers and is a reflection of the brand values of the company (Chao & Jo, 2015). Consistency in the brand will help Smart move on in creating strong credibility and recognition, which in turn will help the brand to intensify the trust and build a strong relationship based on the element of trust and loyalty. Another big advantage of consistency in brand element helps in doing away with confusion in marketing and advertising campaigns on different platforms. Smart move on name and the attractive logo defines the consistency of the brand.
Relevancy-Relevancy in a brand is a direct result of meeting the expectations of the customers. Smart move on is highly relevant as it is targeting millennial smartly, through the usage of social media promotions and giving them a chance to explore the city on wheels and preserve the natural ecosystem and ditch the growing traffic in London(Keller, 2016). The unique business model is threat to the tour and travel companies and hotels which have huge cost implication for the customers, on the other hand Smart move on is a value for money brand which relates strongly with the growing experience loving travellers.
Credibility-Credibility of a brand is defined as delivering what is expected from the brand. Credibility is extremely important as it helps in acquiring new customers and also to retain the existing customers. Credibility is a strong factor which helps the company in staying competitive, increasing revenue and sales, positive brand building and reputation. Thus, delivering what is stated to the consumers will help in creating strong brand credibility.
Attractiveness- A strong brand inspires and captivates the interest of the consumers who are drawn by the promises and the value company delivers and meet the expectation of the customers, every single time.
Originality- Smart move on is a unique and noble concept which has positive impact on the environment and provides a differentiated experience to the travellers by making them explore the city on a bike. Highly differentiation in the service is the fundamental base of Smart move on.
Brand Positioning- The positioning statement for Smart move on is –PUTTING PEOPLE TOGETHER WITH HEIGHTENED EXPERIENCE. The correct brand positioning will help Smart move on in getting the right customers who believe in the value offering of the company and strongly relate to its brand values.
Feasibility analysis (FA) is conducted to assess the strength and weakness of a proposed product/service and present directions of activities which will help in improving the product/service and achieve desired results (Zhou, 2017). The feasibility of the business idea Smart move on can be conducted by understanding various factors pivotal to the business.
Estimating cost is a very important step towards the development plan of the business idea, some of the cost implication for the business model of Smart move on are:
It can be thus easily computed that the investment will pay back in 6 months even if the rented figures are 20% of the projected estimation.
Market feasibility is important because it helps to estimate the probability that the product and its strategy will succeed in the market. This include plethora of factors such as consumer needs, perceptions, demand positioning and competition (Clarke & Heywood, 2016).
The hostel sector of hospitality industry is seeing huge surge in the last decade. People are being focussed on experience rather than staying in a hotel. Across the globe there are almost 4000 hostels recording over a value of 33 million overnights in over 80 countries. A hostel is a budget friendly accommodation which focuses on a shared social experience. The key drivers of the Hostel sector which enunciate the feasibility of the business idea are:
All the above mentioned people who are a part of target audience of Smart move on care about the experience they receive. Smart move on with its unique selling proposition which combines bed with bikes will become an instant hit with the growing millennial generation. Plethora of tourist attraction at London will further help the company to grow (Refer Appendix). The average ticket size of tour in London stands somewhere at £25-£70, whereas Smart move on price are as much as 50% cheaper that the existing prices. This is a huge add on the pocket friendly consumers who are looking for a shared experience.
Another thing which fuels the market sustainability is the investment by the London authorities in more facilities for cycles, which implies more business expansion opportunities for Smart move on.
This involves the operation costs for deploying the proposed business idea. It takes into consideration various other cost apart from the fixed cost which will become a part of the variable cost. In case of Smart move on the following factors have to be considered:
Storage of the Bicycle-It is very important to not only secure the safety of the bikes, but also to ensure that they are protected from weather change, pests and rodents and are kept clean at all times. The company is planning to adopt the specialist method of Barclays to use in its cycle storage.
Maintenance of Bicycle-Bikes have a lot of wear and tear losses, thus it is very important to ascertain the cost incurred in those wear and tear and to also analyse what is the best method to ensure the timely maintenance of the bikes. The option to choose between here is either to create an internal team or to hire an outside contractor for the maintenance services. Over the initial few years, the company will build a team of bike enthusiasts who will ensure the maintenance of the bikes.
Insurance- Bikes are a very risky asset and susceptible to being lost very easily, if proper care is not been taken, also the cost of theft is always there. In order to not put the burden of theft on the consumers, the company will insure every bike with one of the largest banks of London to get rid of the tension of bike theft.
Security- Bikes require security as they have high affinity of being stolen, at the very same time, more the security less with be the financial premium for insurance on the bicycle. The team at Smart move on is working on giving employment to 3-4 people to safeguard the bikes and help the company in keeping them safe.
Considering all the feasibility factors, such as financial, market and operation, Smart move on has a very good chance to stand out in the market as the business model and its attributes are highly feasible for the steadiness in the business.
The long term objective of any business idea is to ensure keeping the business momentum to grow and ensure sustainability in the longer run, in terms of revenue, market capitalization, and growth in customer segments and also market expansion. The business idea here of Smart move on is more sustainable than ever. The rise in trend and the shift in demographics of travellers are giving an impetus to the business idea (Clinton & Whisnant, 2018)
Travellers are focussing more on experience in the present day ecosystem; they want to see or visit the city by staying in the natural habitat and visit the city like a normal resident of that place. Smart move on helps them in quenching their thirst for the experience by giving them a guided tour of city on the bikes, along with value for money bed and breakfast to complete their journey cycle.
There will be a rise in the size of such travellers in the future because of globalization and the desire of people to experience the city in one of the most amazing manner. Smart move on does not provide with great value for money services to such travellers but it also gives them a chance to meet people they would never meet in their lives. This would help in development of positive synergy which is good for the sustainability of the brand ensuring its success.
Bikes are good for the environment, and the millennial are the most concerned class of people regarding the environment. Thus the bike ride facility of Smart move on will not help the brand in becoming its USP; at the very same time it would also draw the attention of the environmental conscious people towards the noble concept of the company to preserve the natural ecosystem of the environment.
There are no two doubts that every business sees fluctuation in the business cycle resulting is peaks and lows for it. In order to help Smart move on March forward towards the goal of business sustainability, the company has decided to give the bikes on rent when the hostel sale is at its low. The hostel sale can drop due to number of reasons such as increased regulation on the tourist movement, threat of a terror activity and many such reasons. In order to ensure that the company is still able to recover its cost in such times of uncertainty, it has come up with alternate revenue stream to support its business operations.
Thus, Smart move on has all the ingredients to ensure business sustainability in its business model.
Growth of Airbnb- Airbnb is one of the biggest disruptions to the hotels and the hostel culture. The US MNC is an online marketplace which provides hospitality services to people to rent, lease, short term lodging, apartment, holiday homes to travellers. The business is listed in over 191 countries and provides services in 81K cities are one of the biggest threat or limitation for the growth of Smart Move On (Hindle, Martin & Nash, 2015).
High advertising costs- Targeting to one of the technologically advanced generation of the present times, the millennial is not that easy. These groups of people are always moving and on the go, thus it requires huge investment and creation of strategies to tap them on the go. High cost towards social media marketing and advertising is one of the biggest cost centres for the organization, at the very same time the cost incurred will be round the clock. Thus cost towards advertising is one of the biggest limitations for the company (Brochado, Rita & Gameiro, 2015).
Creating brand image and brand awareness- Hospitality has become a vast business and so has the hostel, the unique differentiation in offering of the hostels give them a unique value proposition in comparison to the hotels. Having said that, huge efforts have to be made in building the brand Smart move on, people generally prefer staying at places which has good reviews and assurance from their peers that the place delivers what it promises. Smart move on has to ensure that it create a strong brand awareness by the usage of social media strategy, traditional advertising and strong service elements enriched with experience attributes to acquire and retain the customers. The cost incurred in the present day business environment to retain a customer is much higher than to acquire a new customer. However, both the cases put limiting condition for a small business like Smart move on to stay competitive in the hospitality industry.
Conclusion
Hostels have become extremely popular in the present day, although their existence can be traced back from the early 1900s in Germany. Smart move on is a unique business proposition offering the infusion of beds and bikes to provide guided tours to the travellers in the city of London. Smart move on is a noble concept towards environmental sustainability, as bikes do away with the problem of increasing problem and at the same time help in ditching the high traffic in the city. Smart move on is a great place to stay for travellers who are looking for experience, fun and exploring the city on bikes more than anything. Smart move on is a value for money service which is targeted towards the millennial and travellers who highly value social interactions. Smart move on is a perfect place for the people who are tired of monotony, agglomeration and confusion of the public transport, Smart move on is a perfect solution for them. The positioning statement of Smart move on is Putting people together and giving them heightened experience through its value for money based services.
References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Brochado, A., Rita, P. and Gameiro, C., 2015. Exploring backpackers’ perceptions of the hostel service quality. International Journal of Contemporary Hospitality Management, 27(8), pp.1839-1855
Chao, P. and Jo, M.S., 2015. The impact of brand, attribute strength and country-of-origin on product evaluation: A web survey. In Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 186-191). Springer, Cham.
Clarke, A. and Heywood, A., 2016. Feasibility study of the prospect of developing a viable housing model for those entitled only to access the shared accommodation rate. Cambridge Centre for Housing and Planning Research.
Clinton, L. and Whisnant, R., 2018. Business Model Innovations for Sustainability. In Managing Sustainable Business (pp. 467-507). Springer, Dordrecht.
Duarte, F., 2016. Disassembling Bike-Sharing Systems: Surveillance, Advertising, and the Social Inequalities of a Global Technological Assemblage. Journal of Urban Technology, 23(2), pp.103-115.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Hindle, N., Martin, A. and Nash, R., 2015. Tourism development and the backpacker market in Highland Scotland. Tourism and Hospitality Research, 15(3), pp.178-192.
Keller, K.L., 2016. Reflections on customer-based brand equity: perspectives, progress, and priorities. AMS review, 6(1-2), pp.1-16.
Leigh, N.G. and Blakely, E.J., 2016. Planning local economic development: Theory and practice. Sage Publications.
Nagy, G. and Carr, N., 2017. Comfort and the tourism accommodation sector: A central, yet under-studied issue. International Journal of Hospitality Management.
Papadogiannis, N., 2016. ‘Keeping with Contemporary Times’: Social Tourism and West German Youth Hostel Organizations, 1950s–80s. Journal of Contemporary History, 51(3), pp.660-687.
Ravenhill, M., 2016. The culture of homelessness. Routledge.
Theaker, A., 2017. What is public relations?. In The Public Relations Strategic Toolkit (pp. 17-27). Routledge.
Walker, J.R. and Walker, J.T., 2016. Introduction to hospitality management. Prentice Hall.
Watt, P., 2018. “This pain of moving, moving, moving:” evictions, displacement and logics of expulsion in London. L’Année sociologique, 68(1), pp.67-100.
Zhou, Y., 2017. Feasibility about Establishment of Hostel at Tourism Destination.
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