Tunde Lukacs 09b3 Marketing Economist International Business Academy Kolding, Denmark AuthorTunde Lukacs| SubjectAP Degree Thesis| Date to hand in10th of August| | Number of characters (incl. space)124. 998| LanguageEnglish| TitleAttracting new customers| SubtitleHow can the possible Nordic customers boost the income of the hotel? | SchoolInternational Business Academy, Kolding, Denmark| Study programmePA Degree in Marketing Economics| Project SupervisorIvan Hassingaard| Signature of the AuthorTunde LukacsCarl Plougs vej,122. 1. tv ___________________________________6000, Kolding, Denmark|
Table of contents Chapter 1 – Introduction6 1. 1The hospitality industry6 1. 2The hospitality industry in Tenerife7 1. 3Introduction of the company9 Chapter 2 – Problem proposal12 Chapter 3 Methodology15 Limitations16 Sub-conclusion16 Chapter 4 –What does the Quality Department involve at Sol Princesa Dacil? 17 1. The internal customer17 1. 1Organizational structure of Sol Princesa Dacil Hotel18 1. 2Organizational culture19 1. 3Anaysis of the survey made for the employees22 2. The hotel’s guests, clients24 2. 1Market segmentation and target marketing26 2. 2COM model for the Scandinavian market27 2. Sub-conclusion29 Chapter 5 – Theoretical background31 Internal analysis31 1. BCG matrix31 2. Porter’s generic strategy33 3. Value reference model (VRM)34 3. 1 Research and development:35 3. 2 Design:36 3. 3 Production:37 3. 4 Marketing and sales:37 3. 5 Services:38 3. 6 Distribution:40 3. 7Sub-conclusion43 External analyse44 1. Porter’s Diamond44 1. 1Factor conditions44 1. 2Home demand conditions45 1. 3Firm Strategy, Structure, and Rivalry46 1. 4Related and Supporting Industries46 2. Porter’s 5 forces46 2. 1Threat of new entrants- entry barrier47 2. 2Threat of substitutes48 2. 3Bargaining power of the buyers49 2. Bargaining power of the suppliers49 2. 5Rivalry50 2. 6Sub-conclusion51 3. SWOT analysis51 1. 1Strengths52 1. 2Weaknesses54 1. 3Opportunities55 1. 4Threats55 4. Service marketing mix – 7 P’s56 2. 1Characteristics of the service companies56 2. 2The service-profit chain57 2. 37 P’s58 2. 3. 1Product59 2. 3. 2Price59 2. 3. 3Place60 2. 3. 4Promotion60 2. 3. 5People62 2. 3. 6Process62 2. 3. 7Physical evidence63 2. 3. 8Sub-conclusion63 Chapter 6 – Change Management Process64 1. Kotter’s model64 1. 1Sub-conclusion66 Chapter 7 – Conclusion67 Chapter 8 – Bibliography69 Chapter 1 Introduction 1. 1 The hospitality industry
As I always was fascinated by the Latin culture and the Spanish language, I decided to make my internship in Spain. After looking for the most suitable business sector where I can imagine myself working in, I find the most challenging one the hospitality industry. Travel and tourism nowadays is a fundamental part of the world economy. It is the largest and fastest-growing sector, as more than 800 million people are travelling every year and the researches are showing further increase of the present percentage. Therefore travel and tourism is the world’s number one employer and represents more than 10% of global spending.
When talking about hospitality, it’s essentially to mention not only the huge range of hotels, resorts and restaurants, but also the country clubs, theme parks, entertainment centres, spas, casinos, travel agencies, car rentals, etc. The combination of these signifies the hospitality industry. Over the past 30 years the industry and the market changed rapidly and it continues to build up new needs. The globalization made it possible that people have a greater possibility to choose between different kinds of services and products. On the other hand he advanced technology contributed to the fact that business travellers, or travellers in general have more sophisticated and diverse demand. Because of the fact that there are so many amazing places to visit, and in platy of places there are a great variety of hotels, restaurant, etc. travellers can actually claim for a wide range of more personalized and specialized services, calling on many different kinds of talents. The hotel owners have to keep the step with the customers, and have to recognize and manage in time their present and future needs; otherwise they will just fallout from the competition.
Even if we are talking about a huge and fast growing sector, we have to mention, that the recession had a noticeable impact on the nation’s hotel industry. Like slow room service, fewer bathroom facilities, reduced hours in the clubs, restaurants etc. The evident problem is that in today’s marketplace hotels are focusing more on saving money, rather than delivering a high quality service. On the other hand we have to mention, that hotels had cut the costs, but they barely made some upgrades. In order to cut the costs, the managers chose to replace experienced and professional employees with inexperienced ones, so they could pay less for them.
The employees used to work in one area, they now might have to execute a variety of tasks, and managers are more careful with turning off the lights whenever possible or even close a floor when the occupancy is low. It seems that Tenerife might not have problems with the occupancy, as statistics are showing that more than 5,000,000 tourists are coming every year to the island of the everlasting sunshine, relaxation and happiness. This leads to a contribution of more than 60% to its GDP. 1. 2 The hospitality industry in Tenerife
Tenerife is the largest and most populous of the seven Canary Islands with 906,854 inhabitants, 43% of the total population of the Canary Islands. This leads to the fact that most of the people are working in the hospitality industry. They are living after the tourists, they are conscious about this, and therefore they behave respectful with them and beside of the opportunities given by the special characteristics of the island, they try to organize plenty of events and make lots of facilities what attract people and make them keep visiting the island year by year. For example Tenerife osts one of the world’s largest carnivals. The Carnival of Santa Cruz de Tenerife is attempting to become a World Heritage Site; is serviced by two airports, Tenerife North Airport and Tenerife South Airport; is the tourism and economic center of the archipelago; here there is the two 100% ecological park, the Loro Parque and Siam Park. The Loro Parque’s slogan is “100% for Parrots and Nature” what means that the whole income is going towards the protection of nature and environment. They even have more than 200 Antarctic penguins in the world’s biggest Penguin habitat.
They have an impressive ice-world with real snow and a big iceberg. Neither of the two parks is not polluting the nature, as they are producing their own energy in the south of the island. On the other hand, in Tenerife there is a great diversity of hotel type as well to satisfy even the most sophisticated requirements. There are plenty of 4-5 star hotels where the wish of the guest comes true without even saying it with a loud voice. There are hotels specialized for sportsmen where they find facilities like fitness room, golf, huge swimming pools, basket ball and football court etc.
On the other hand, another important factor for visiting Tenerife is that the island has four climates what makes the island even more special. By living with the word of the famous and acknowledged American author and critic Paul Goodman: “The important thing about travel in foreign lands is that it breaks the speech habits and makes you blab less, and breaks the habitual space-feeling because of different village plans and different landscapes. ” Tenerife has everything what a tourist could need.
The south part is more dry and sunny, and as going to the northern part is noticeable the humid air, therefore a greater variety of plants. Tourists of course enjoy this, as the island is quite small, it is possible to be travelled in one day, in different kind of weather and enjoying the great variety of sights. The citizens are quite different from the European people. The people are friendlier and more helpful. They are not afraid of showing emotions, and they show such an optimistic behaviour by seeing them everywhere anytime singing, dancing and feeling good.
Of course, we could say “Who wouldn’t be happy in the place of the everlasting sunshine? ” As we see them in the television all happy dancing in the paradise of the palm trees, really who wouldn’t like to visit this place? These are the main reasons why Tenerife is visited by such a large number of tourists every year. After all these things we might really believe that Tenerife doesn’t really felt the economical downturn, but it’s not really the case. It was not really visible in receiving tourist, because they keep coming, but they were not willing to pay that amount of money what they usually had paid.
Consequently, the hotels and the whole hospitality industry had to make discounts in order to be a focus point for visitors. Because their costs remained the same, and their income went down, most of the hotels had to make some radical changes in order to remain in business. During these three hard years obviously they could not even talk about upgrades. Nowadays, when the economical decline is starting to get over, the hotels have to start improving their services really fast in a notable way, because the first ones who will manage to ameliorate their situation might win the competition. 1. Introduction of the company About the hotel chain The company what I choose to work at is the Sol Melia, S. A. a Spanish hotel chain which was founded by Gabriel Escarrer Julia in 1956 in Palma de Mallorca. Today the company is the world’s largest operator of holiday resorts and the 13th biggest hotel chain worldwide. Domestically the company is the market leader in both resort and urban hotels. Currently Sol Melia operates more than 300 hotels in 30 countries worldwide, employing over 35,000 people. In 1984 the company renamed itself Hoteles Sol, before establishing itself as the largest hotel chain in Spain.
Another alliance followed three years later as the company combined with the up market Melia chain to form Sol Melia. The company has recently sought to build partnerships with other companies in the leisure industry, opening hotels based on the Hard Rock Cafe concept in conjunction with then-parent The rank Group, and Flintstones -themed hotels with Warner-Bros. The company employs various commercial brands to offer their product, including Gran Melia, Melia Hotels & Resorts, ME by Melia, Innside, TRYP Hotels, Sol Hotels, Paradisus Resorts and Sol Melia Vacation Club.
The firm operates over 270 hotels as of August 2009, of which almost 150 are in Spain. Of the other 27 countries in which Sol Melia operates, the largest numbers of hotels are located in Cuba, Germany, Croatia, Brazil and Portugal. Their vision is to be a market leader in the responsible tourism, employability and profitability by incrementing the Values of the Brand. Sol Princesa Dacil First of all, I will start with a description of the hotel made of one of the hotel’s guest: “Enjoyed my stay here! ” “I stayed at the Sol Princesa last week and really enjoyed my stay.
I checked in on a Saturday night about 8pm and it was pretty quick with a very friendly receptionist. They said I had booked a superior room (I had not but didn’t tell them), and was given a room on the top floor with a lovely view of the sea. Room was large with twin-beds and a sofa, and air-conditioning. Don’t bother with the tv as the only English channel is Sky News. Bathroom was fine with bath and shower, and it was all clean. Breakfast the next morning was ok. Restaurant is a bit like a Cafeteria, but plenty of seats. Loads of cereals, cheese, ham, bread stuffs and fruit.
Also a hot section with eggs etc and an omlette station. Maybe a bit basic but you will not starve!!! Pool area was very pleasant. Plenty of sun-loungers to go round and a friendly pool-bar for those all important beverages in the sun. Location is ideal, minutes from the sea and all the bars and restaurants along the way. I would stay here again, maybe not for 2 weeks but certainly for 5-7 days. ” (JofromWales) This hotel was built in the year 1975 and renovated in 1999. It is located in Tenerife, Los Cristianos. It has 15 floors and a total of 364 rooms available.
It’s one of the highest hotels in all Tenerife; you can see its bottom from kilometers. It has two floors with standard rooms, ten floors of double standard room, which means a bigger room with lounge, and there is three floors of superior rooms, which means a more modern furnishing and decoration, a fully equipped bathroom, and of course, a wonderful view of the sea and of the city. Sol Princesa Dacil is a three star hotel of the Sol brand. Recently has become a Warner Bros. hotel, what means that offers entertainment for children with Flintstones themed activities.
It offers a friendly atmosphere for families going on holiday, but unfortunately it’s not that popular among families yet. Is located at about 150m from the beach, called Los Cristianos, and is surrounded by a garden of rich vegetation. In the year when it was built Tenerife Sur (South) was mostly terra and vegetation. There were only a few hotels and restaurant. This is the reason why a lot of customers are visiting this hotel for more than 25 years, and they saw and experienced how it was built up Tenerife to the place what it is now.
That’s why a lot of elderly people adore this place, they know more about this hotel than most of the employees, and they are proud to say it every time they book for the next year. For a lot of people this hotel became the place for celebrating anniversaries, birthdays or just celebrating the life. Among these things the hotel is facing serious problems for which if they won’t get solutions they might be in grave situation. Chapter 2 In the Problem Proposal I am going to identify the hotel’s main problem areas to be able to find solutions by making relevant analysis.
Problem proposal 2009-2010 were strong years for most of the countries. And even now, in 2011 we can still feel the impact of the inflation. Inflation means a rise in the general level of prices of goods and services. Everything became more expensive, and there is significant erosion in the purchasing power of money. The money suffered a loss in its value. People don’t want to spend the money simply because they don’t trust in the economy, and they don’t know what tomorrow brings. This is the reason why most of touristic places are facing difficulties.
In Tenerife there are a lot of hotels, the competition is really high, so if any hotel cannot keep up with the others, it will simply fallout from the competition. I am doing my internship in a hotel called Sol Princesa Dacil in Spain, Tenerife. Tenerife is the place where tourists are far more than citizens, and most people here are leaving after the tourists. Even if the hotel is fully booked for all summer, we can see that the inflation has a huge impact on the people’s behavior. Everybody wants the same quality for the same amount of money as it was years before and they do not want to take in consideration, that the prices or everything were rising continuously. On the other hand, taking in consideration that this hotel is an older and a huge one, it would be needed to make some important changes like changing the beds, the shower, the chairs, etc. , but at the time the hotel don’t have the right financial budget to change all these things in every room. The hotel has two significant problems. During the economical downturn the hotel lost a lot of money and now to be able to make upgrades is needed to target more people. It is mainly visited by customers from United Kingdom, Spain, Italy, Russia, Poland and Norway.
It would be a reasonable idea if would target a larger market to increase revenue and this way to be able to get out successfully from the crisis. The best market to target it would be the Scandinavian market, as it has a lot of potential. The Scandinavian people are travelling a lot to sunny countries from the rain and cold. With a good marketing plan and promotion I strongly believe that it could attract them. The other important factor the hotel has to face is that there are a lot of employees who are working for this company for more than 25 years.
They get used to do things in the way they learned years ago, and they do everything the same even in these times, when the world in the last 15 years changed drastically. Even if they are not working properly, and more than half of the employees from the kitchen and restaurant should have been dismissed because of this thing, the management of the hotel cannot do anything, because they would have to pay a great amount of money for each laid-off employee. So definitely, to fire somebody is not a solution. But still, the problem exists and there are a lot of conflicts between older and younger people.
This leads to misunderstandings and inefficiency in the work. In my project I would like to find out the reason of their behavior and to try to find a solution to change their attitude. So, my problem proposal would be: “What changes should Sol Princesa Dacil Hotel do in order to ameliorate its services and increase its revenue after the hard time of the recession? ” To ameliorate the service the management has to change some of its employee’s attitude; to target the Scandinavian market; and to think about an innovative solution which help them gain a competitive advantage in front of its competitors.
In my main thesis I will try to get an answer and a solution for all these problems by analyzing deeply the company, the competitors, the market and the customers. Preface During my 3rd semester in the International Business Academy I was hardly looking for a suitable company, where I will be able to use my knowledge gained from the International Business Academy, and where they can teach me practical things in order to be able to deliver them the quality job they need. I chose to work in the Quality and Public Relations department in the Sol Princesa Dacil Hotel in Tenerife, Spain.
I chose this type of business in this area, because I enjoyed the Marketing Management lessons in Denmark. I understood that every organization is depending on their customers; therefore I choose to analyze the hotel’s services, the competitors, and the hotel industry in Tenerife to be able to find solutions for the hotel to remain competitive in the future as well. The target audience of this report will be my supervisor, and I hope that he is going to like this project, and will see the same possibilities in ameliorating the hotel’s service as I see.
I know , that Sol Melia is a successful company in the countries where it is already in, but I am interested in to find out what opportunities has in Tenerife in the future and what changes shall made in order to fulfill the clients necessities now and in the future. As most of the hotels, like Sol Princesa Dacil as well, had passed over some really hard years without or making only few improvements in the quality of their services and facilities.
Now, when the economical situation is getting better, they have to focus strongly on ameliorating the things that were passed up, in order to not lose their customers. I aimed to find solutions to improve the hotel’s services in the most cost efficient way, because even if the recession has almost passed first the hotel has to cover its loss and only then can spend more money. Chapter 3 Methodology In order to be able to give a relevant and well-defined conclusion for the problem of the Sol Princesa Dacil Hotel, and to answer the project’s main question I have to make some analyzes and make research.
The report starts with an introduction about the hotel and hospitality industry in general and specified with the hotel industry in Tenerife, continues with the problem proposal and then goes on with a short introduction of the Sol Melia and Sol Princesa Dacil Hotel. I will continue by analyzing the internal part of the company: its organizational structure and I will look deeply into its target group and try to find solutions in targeting new markets and the middle-aged and younger generation as well.
I will look into the value chain to see the company’s main focus areas, strengths and weaknesses in its activities, in order to find out if they are able to succeed in a market, or if they have the required resources in order to remain competitive. Then I will study the external environment: Porter’s 5 forces and the SWOT analysis to see which position has the hotel in front of its competitors. By analyzing the competitor’s core competences I will be able to see if I can find some suitable things for Sol Princesa Dacil Hotel which might be implemented in its organization which would lead to an ameliorated quality service. Afterwards I am going to analyze a marketing research made by me about the opinion of the employees about the hotel, and what they suggest for improvement. Then, I will use the 7 P’s to evaluate their marketing strategy with reference to the marketing research made to be able to see what and how should they change in their strategy in order to gain a competitive advantage. Limitations Unfortunately I won’t be able to analyze the company’s financial situation, as Sol Melia doesn’t give out information about this.
I can find information about Sol Melia’s financial situation, but individually for this specific hotel there is no concrete notification. This is the main reason why I choose to work mainly with the hotels present resources, and to try to improve them in the most cost efficient way. This way the conclusion won’t be affected by the company’s financial situation, which might be quite good or really bad. The other thing what I am not going to analyze is the macro environmental factor of Tenerife, because it doesn’t have any impact on my final conclusion.
I will only mention some characteristics of Tenerife when targeting a new target group for the Sol Princesa Dacil Hotel. Sub-conclusion As an intern I was totally involved in the company’s organization, I had the opportunity to talk with people from different departments; and with the managers, as I was charged to manage to worked alone two weeks, because my department manager was on holiday; I experienced which problems has to face Sol Princesa Dacil day by day.
Therefore I strongly believe that after finishing with the company internal and external analysis I will be able to see clearly what changes should make the hotel to improve the service provided and with my current knowledge about the people and about how are practically going the things at the hotel, I will be able to find suitable solutions and to implement them in the organization by using the frame of the Elements for the Successful Change. Chapter 4 What does the Quality Department involve at Sol Princesa Dacil Hotel?
The functions of the Quality Department at Sol Princesa Dacil Hotel are differentiated in two main areas, the Internal and External customer. The internal customer is all that concerns the operation of each department and staff that makes it up. They are carefully checked daily, if each department is meeting the standards indicated by the Sol brand, especially in regard to the Department of Food and Beverages and service in general. By external customer is comprehended the hotel guests. The hotel stuff members take care of their wellbeing, and they ensure that the care, and attention paid on each client is correctly made. . The internal customer “Quality service comes from quality people! ” By: Robert H. Kent The Quality Management Principles is the document, which introduces the eight principles on which the quality management system standards of the ISO 9000:2000 and ISO 9000:2008 series are based. The aim of these principles is to serve as a framework for the companies to lead their organization towards enhanced performance. The 2nd and 3rd principle states that every organization’s success depends on its employee’s involvement.
Every company in order to be flourishing has to recognize that people at all level are crucial and if they feel themselves important, they can reach really high profit for the company. More and more companies are starting to focus more and more on its employees, as they recognize the importance and benefit they get from it. Therefore every organization starts to change it’s organizational structure and to get a well defined and strong organizational culture with values based on the customer satisfaction and after on the profit gained. 2. Organizational structure of Sol Princesa Dacil Hotel “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results. ” By Andrew Carnegie The achievement of a company meeting the goals of its organizational culture depends on having an efficient set up and clearly settled connection between organizational structure and culture. The relationship between organizational structure and culture is hard to define, but the two can’t be divided.
Therefore, the organizational structure is reflecting the organizational culture. Obviously, there cannot be an effective organizational culture without a strong organizational structure which allows efficient work and effort. On the other hand a weak culture is expected to have an inefficient and less successful organizational structure. The organizational structure of Sol Princesa Dacil Hotel is a devolved or decentralized structure, in other words it is relatively flat. What this means is that power is devolved ‘down the line’ and people at the lower end of the scale of power can make decisions about what happens within the hotel.
A decentralized organizational structure has lots of advantages which help big companies to achieve efficiency by the easiest and cheapest way possible, by the employees. By giving the right to the employees of solving smaller problems, the senior managers can focus on the most crucial decisions. On the other hand, decision making empowers and consequently motivates the staff and increases their output, it gives people a better understanding of their work environment, including the colleagues and the customers and increases their knowledge and experience.
Therefore, responses to challenges and changes are much faster in a decentralized organizational structure and empowerment brings more responsibilities and brighter changes of accepting them and carrying them out more successfully. Of course, the risk is higher in this type of organization, but without risk there is no success. Anyway, I think we all might agree that the final output every time worth’s the smaller failures. And failures can occur day by day, as employees from the lower level of the organization might not understand the guest’s mother tongue or might arise misunderstandings because of the cultural difference etc.
Sub-conclusion The most important core competence of the company is in its organization structure that they aimed to be equal, to listen to each other. Creating a team, talking, telling the ideas and use it is the most important in the company of Sol Melia. The information and the duty still run from the top to down which is a characterization of the centralized structure but everyone has the right to tell their own ideas, so I can say that the organization structure is characterized by the centralized structure, but with strong decentralized aspects.
The core competence of the company is its weakest part as well. There are old employees, who are working at the hotel since the hotel was built. Those are thinking that they have more rights than the others and they behave like this. Is notable mainly in the Food& Beverages Department (Kitchen+Restaurant). In these departments there are a lot of conflicts between employees, and they a lot of times have a bad mood when talking with customers. They have to change attitude, as the customer relationship nowadays is the most important attribute what a company needs in order to succeed. 2. Organizational culture “Every age, every culture, every custom and tradition has its own character, its own weakness and its own strength, its beauties and cruelties. ” Hermann Hesse The culture of a company is given by the members who form the organization. The more nationalities are in an organization the more divers is the organization. Currently Sol Princesa Dacil employs more than 100 people with staff from over 10 different countries. The company fully respects equal rights and balance in its contracting of male and female staff and 10% of its workforce is made up of immigrants from Latin America.
Sol Melia thinks, that the more divers is its organization the more benefits receive by the share of experience and knowledge. Every culture has its own weakness and strength how said the German-Swiss poet, novelist and painter. Every culture can give to another person an experience. There is a saying that you can learn from everybody. There will always be some characteristics of a culture which helps the organization towards improvement. The main thing what count for the company in employing a person is his/hers personal and human qualities and abilities.
It’s of great importance for Sol Melia is to be transmitted to the customer the passion for service, which always was the key to their business success. Sol Princesa Dacil is a family hotel, therefore it is of utmost importance in this type of business where there are children involved that the employees of the hotel act with responsibility. They are playing a quite important role as the parents are always sensible when their children are involved. The most appropriate and most characteristic type for this kind of organizational culture is the “Clan culture”.
Every employee needs to act rapidly as the external environment, the guests are requesting it. Sol Melia’s greatest principle about its employees is their consideration that every worker has to be satisfied to be able to deliver a high quality job. The quality department has to take care of everything that concerns the wellbeing of the staff and their motivation. Is responsible to create and maintain an internal environment, where employees can become involved in order to reach the organization’s goals.
The Sol brand put a great emphasize on the needs of the employees and they always try to find out their needs and to satisfy their requirements to get productiveness and positive attitude. To be able to define the employee’s satisfaction level they carry out every year a Workplace Climate survey in corporate offices and in the different business areas which permits the company to estimate the employee satisfaction by studying their opinions and suggestions on their working environment. After the survey the Quality Manager has to develop a new strategy and solutions to improve the least satisfactory result.
The so called Action Plan’s aim is to maintain the employees’ satisfaction level high, and by this “ensuring that the company retains its leadership position in the industry and demonstrates the efforts it makes to retain talent”. In this hard period of the recession, the people are continuously preoccupied for the day of tomorrow, and they feel stressed. The main problem is that more and more people are losing their job, even if the inflation has almost passed in Tenerife; the companies have to reduce some costs in order to be able to improve their services which were neglected.
The management knows that people at all level are the fundament of an organization and their full involvement is a great benefit for the company. Therefore, they take actions which leads to gain trust and give motivation, like the company selects the employee of the month, they announce it on the board of staff, announce the birthdays of employees, they congratulate them on their day; every month they put on the board small motivating texts or stories. The employees are motivated by being listened.
For this reason, Sol Melia introduced in each hotel the so called “Sol Break”, which is about bringing together one or two employee of each department once a month to gather ideas and suggestions in order to improve the operation of each department. Their suggestions are written down and they try to implement some ideas in the organization. The best idea is always awarded with two free days. It might sound, that Sol Melia tries to give the best resources and encouragement for its employees in order to make them 100% involved in the hotel’s “problems”.
After working there and after being an active part of the Sol Princesa Dacil group I can assure everybody that this fact is true. BUT, one of the hotel’s big problems is that it has a lot of employees working there since the hotel has been built up. They don’t really want to change nothing in the mechanism of the daily work even known that the word and the expectations of the clients and of the Sol Melia has changed. Mainly these people are working in the Food and Beverage Departments. For this reason there is a visible conflict between older and younger generation working in the same department.
The management’s biggest problem is that they cannot fire people, because the legislation in Spain says that every company has to pay to its fired employee depending from the years working at the same company. “If you lay off someone, you pay 45 days of indemnization for each year that the employee worked for you. Note that if you fire someone with sufficient cause, then there is no indemnization payment necessary. In either case, though, you must pay something called a finiquito, which mainly covers any vacation that the employee has not yet taken. The hotel therefore cannot permit to fire anybody because of the simple fact of being “old-fashioned”. The hotel’s biggest challenge is to make those employees understand that they all have to work together and to make them feel motivated and understand the need for change. In the following, after defining a significantly week point of the company, I am going to analyze the survey made by me for the purpose of having an insight of the employees perception about handling the changing environment.
I suppose that after analyzing deeply the survey I might figure out the main reason why some employees have a negative discernment about changes. I also want to believe that after filling out the survey the people will start thinking more about the benefits of the changes and will make people realize the importance of the slow, but necessary improvements. Afterwards based on the learned models and theories I will try to make a plan which by implementing it in the organizational structure might help solve the problem of the employees who deter the development of the organization. . 3 Anaysis of the survey made for the employees Primary research There are several primary research methods. First method what I used as well is the Observation method. This method provides many insights and there is a great possibility to find out some important aspects what for some reasons could be occulted by the interviewed people when answering the surveys. On the other hand it can leave questions unanswered. The other method what I used to find out what are the reasons of the conflicts between the employees in some departments is the survey.
The advantage of the survey is that addresses specific research issues as the researcher designs the survey to fit to the cause. The purpose of the research With the primary research the company can define what are the reasons why there are so many conflicts between employees in the department of Food & Beverages. It is very important for the company to know the source of the conflict to be able to solve it. Analyses of the data I have chosen to make qualitative research, as that form is relevant for the purpose of the survey.
The qualitative research seeks the “why” through analysing unstructured information. The purpose of the qualitative research is to achieve an insight into people’s attitudes, behaviours, value systems, motivation or culture. First of all I am going to analyse the results of the qualitative research. From the first three questions we can see the most important information about the analyzed persons. It was mostly completed by males between 26-40 and above. 30 % of them are Canarians, 5 % Spanish and 65% other nationalities. It was a quite big surprise for me to find out the followings.
There were 26 people questioned and from them 23 employee is more than satisfied with their job and they are proud to work at a Sol Melia hotel. After these questions there is a visible difference between the answer of the international employee and local, Canarian employee. I found out important things what should be solved immediately in order to avoid more conflicts and to increase efficiency between this big department which can be divided into three part: Kitchen, Restaurant and Bar. I find out, that the local people have a bad perception about the international people.
The older generation believes that they have more rights than others and some of them; mainly the younger ones feel threatened by the international employee, as they are more experienced and know more languages. The international people by feeling that the local people don’t like them, they feel less than the others and they are afraid of saying what they think. At the end of the survey where the people were asked to write down suggestions for improving the work environment the older local ones mainly were saying that they like the way it is now.
The younger ones, but still locals said that it would be better if they could all work as a team and not competing with each other. The international ones know that their contract is going to finish, therefore they see it better to adapt to the others. Sub-conclusion The purpose of the survey was to find out the source of the conflict between employees in the Food & Beverage Department. From the survey I could find out that there were 2 main groups, the local elderly people and the international younger people (the internationals are between 26-40 age).
The cause of the conflict is mainly cause by cultural differences. The Canarian people’s uncertainty avoidance is really high therefore for them is difficult to deal with changes. On the other hand the other problem is that their education is not that high, therefore they feel threatened by the international people, and their reaction is attacking them by making them feel that they are not “home”. On the other hand the international people are not too preoccupied by the conflicts as they know that they don’t have to stay too long at the company so till then they can adapt to the others.
Even if the international people will leave, the management still has to solve the problem, because these people will leave, but there will come new ones and is better if they can find a solution to the problem as soon as possible. 2. The hotel’s guests, clients “The customers decide what’s important. Your job is to listen and respond. ” Avram Miler, Technology Consultant Having a successful business does not happen by accident or blind luck. Accomplishment is the result of the continual hard work applied to a structured system with dedication and passion- like it says the slogan of Sol Melia: “Service with Taste, Simplicity and Efficiency”.
Enthusiasm, amiability, energy, a positive attitude, commitment, dedication, flexibility, empathy – are all adjectives which describe the Sol Melia character. The hotel chain chooses its employees regarding to this attributes with what they have to handle customers in every situation. Here under customers are understood important clients like online travel agencies, travel agencies, tour operators and airlines. In the 21st century every organization recognized that the success of a company depend on the relationship between employees and customers.
Therefore is very important the way how a company approaches a new customer and what first impression gives. In this case as Sol Melia is a leader hotel chain not only in Europe but also in America and Asia, the customers have an expectation from it and every hotel has to fulfill it. In the past, 25-30 years ago, when the South of Tenerife mainly was terra surrounded by ocean, Sol Princesa Dacil was one of the first hotels built. Since then there are a lot of customers coming year by year watching how is raised up from nothing “Tenerife”.
These customers are visiting the hotel more than once every year celebrating here their anniversaries, their birthdays or other important family events. Who would believe that this as well is a quite big problem of the hotel? The problem is that the hotel’s pasts young customers now they are a part of the elder generation. This might lead to a huge problem in the future for the hotel. The problem arises from the fact that Sol Princesa Dacil Hotel till 2007 was a usual 3 star hotel.
After 2007 it became a Flintstone themed family hotel with the aim of entertaining the children while the parents can enjoy the sunshine and the beach. The main problem with this was that it came the economical downturn and after buying all the necessary equipments for a high quality and varied entertainment program the hotel could not afford to make a suitable advertisement for it. Therefore till now is still known as a normal hotel, which mainly is visited by the elderly people. It wouldn’t be any problem if the hotel would have been targeted elderly people.
The problem is that every service and the equipment are made for mainly families with children, or children accompanied by grandparents. The solution for the problem would be if the company would spend money on advertisement to target more families in a larger market but meanwhile to keep its old customers as well. 3. 4 Market segmentation and target marketing The hotel is mainly visited by people from Spain, United Kingdom, Germany, Italy, Norway, Poland and Russia. In order to get the hotel a higher market share has to attract and to target more people. In order to find the erfect target market, the company has to take into consideration many details. In the case of finding the most suitable target country, the most important factor to think about is the average income. To find the most advantageous market, the company has to count with this first and that with other factors like the culture, which has a lot to say in case of dealing with somebody. A country with average higher earning is a considerable choice, because it means that there are potentials who can afford paying for travelling abroad in a quite expensive place, as Tenerife is.
On the other hand the target group regarding the question of age is between 30-60 years old, mainly families with small children. When people achieved something in life, have a stable financial background and do not have to worry that much about tomorrow. Knowing the cultural aspects of United Kingdom, the hotel could target the Scandinavian market because the cultural differences are quite similar of these countries. Scandinavia is a big market enough that if once the hotel can get into the peoples conception it might earn even more money than now from United Kingdom.
Dealing with customers at an international level, it is the very basic to get to know the differences between the cultures. Cultural conflicts can occur within the organization, from the very beginning and it might ruin a long term relationship with tour operators, or even physical people. Cooperation could depend on how the two parties behave. Conflicts are dangerous not just in the beginning of the cooperation agreement process but within the organization as well. Organizational conflict can harm the success of the company, therefore is essential to understand the other party’s cultural background, observe it and of course value it.
This not means that the Spanish people have to It is not enough to understand it, if different cultures work together the appearance and the behavior what counts. If ones the employees understand it, it can lead to bigger success. To target a market in an effective way Princesa Dacil has to identify the cultural differences and to be easier is better if they can relate it to another similar culture. In order to do this I will analyze the Scandinavian people by using the Cultural Orientation model. 3. 5 COM model for the Scandinavian market The COM model presents a framework for exploring and mapping the components f a culture at any level and provides a common language which help to analyze cultural phenomena and cross-cultural encounters. The first dimension is about how individuals relate the environment to the people. Scandinavia is a control-oriented culture which means that things can be organized and future can be planned in order to attain goals and objectives. The environment can be changed to fit human requirements. If a problem shows up is solved immediately without any hesitation. The Scandinavian people have a modern thinking about life, they don’t believe in destiny: „Life is what you make of it! This point is really important for the hotel, because it says a lot about what are the expectations of the Scandinavian people. They plan everything really well; they don’t let anything in the “hand” of the destiny. They expect that if occurs any problem to be solved as soon as possible. This is a point where the Spanish people should focus, because they tend to be calms in solving urgent problems. The second dimension is about time. Scandinavia is a single focused culture where people place a high value on doing one task at a time, a time frame for each item.
It belongs to fixed time culture; they see time as the driver of activities. They see punctuality as a key ingredient in a business context. Time is a sleaze into fixed increments, like seconds, minutes and hours, and is scheduled in great detail. In a culture like of the Scandinavian people everything expected to begin in time, wasting time is considered unethical. The next dimension is the action which focuses on the view of actions with people and ideas that tends to be expected in a given cultural environment. We can distinguish to orientations: doing respectively being.
Scandinavia is a doing oriented culture which means that accords status to people on the basis of their performance and achievement. In this culture the respect for superiors are given by how affective is his or her job and how adequate is their knowledge. For example here the students don’t have to give a title for their teachers; it’s enough calling them on their surname. The communication dimension recognizes the different formats for expression and information exchange. We can map the cultural differences by four elements: high context-low context, direct-indirect, expressive, instrumental and formal-informal.
The low context dimension is also a characterization of the Scandinavian culture. A low context refers to the idea that words are the most significant careers of meaning. The words are used is their literal meaning. They try to avoid ambiguity. Scandinavia is part of the cultures that values direct communication. They say things how they are. These countries are characterized by instrumental culture. For this culture communication is problem centered and rational. They keep emotions hidden as much as possible even under stress. The displays of emotion are perceived as a lack of professionalism.
Informal cultures values more egalitarian organizations with smaller differences in status and power. Individuals from informal cultures tend to be uncomfortable with power differences, want to be more direct when communicating, and try to establish a friendly atmosphere. Cultures can be categorized by their physical space, for example the distance between individuals’ conversations. Scandinavians want to keep their private sphere. They are boundaries between doing business and the private life. The information is shared on a need- to-know basis.
People do not like to be disturbed in a private conversation and permission is required to enter another ones private space. Scandinavia is equality oriented culture, because as mention above at the informal culture, they prefer reduction of hierarchy. They encourage individual autonomy and responsibility. The sixth dimension is about individualism. The individualism- collectivism and particularism-universalism emphasize different orientation toward identity. Scandinavia is a high individualistic culture with score like: Denmark 74, Finland 68 Norway 72 Sweden 64.
The Scandinavians are very proud of their capabilities and not accept the help from others because they believe they do it the best way. They tend to think more about themselves when making a decision. Universalistic cultures can discover everything what is true and good. Here the rules are applied for everybody. For example no matter if a relative did something wrong he has to punish. Scandinavia is characterized by a cooperative culture instead of competitive, because they do not let anybody to stand out from the crowd and they do not permit to be a big financial difference between the people.
Here there are no rich or poor people. They help the weak. In a cooperative culture personal time and time spend with the family are valuable. In the ninth part we have to take in consideration the cultural structure of Scandinavia. We included the structure in flexibility-oriented culture because people of these cultures are more tolerant with unknown situations, people and ideas. Conflict and personal risk are considered natural rather than treating. Formal relationships are less precisely defined and organizational forms that hold conflict and competition are preferred. . 6 Sub-conclusion After analyzing the culture of Scandinavia we can see that the differences with Spain are relatively high and significant. The Spanish employees have to deal with some considerably important differences which are of great importance if they know otherwise there will be conflicts between the employees and customers. The most significant and important differences from the hotel’s point of view is the communication, the time and the physical space. Spanish people think that is impolite to tell the people something what they don’t really want to hear.
From here might rise misunderstandings. For example a Scandinavian customer asks about new towels and at the moment in the hotel the housekeepers are too occupied, the Spanish people might find it easier if they just occult the truth and tell the customer that the problem will be solved in a few minutes. Because of the high-context communication already arise another problem, the time. In a few minutes, when the customer expects to receive the new towels and he/she don’t gets it, she/he will go back and ask again, as the Scandinavian people are really punctual.
Secondly, the Spanish people are more impulsive and are characterized by emotion driven. They like to touch the other one’s hand or shoulder during the communication. Scandinavian people have a better defined physical sphere. On the other hand, the Iron Rule of International Communication says that “In international business, the visitor is expected to observe the local customs”. But in the first one is written that “In international business, the seller is expected to adapt to the buyer”.
In conclusion, both parts have to know about the other’s culture and because the hotel hosts the customer it’s more recommended paying attention on these differences, because in the opposite case it may lose customer, and with customer will lose money as well. In the following I am going to go deeply into the company’s internal and external analyze in order to find out if the organization has the right abilities and resources to target the Scandinavian market. I will analyze the value chain to identify the company’s core competence, than the Porter’s 5 forces to identify the industry’s structure, and finally I will make a SWOT analyze.
After these analyzes I will be able to see what changes has to make the company in order to be more attractive for the Scandinavian people and mainly for the families. At the end I will finish the marketing theories by analyzing the hotel’s 7 P and by making there a marketing strategy which helps getting more customers. Chapter 5 Theoretical background Internal analysis 1. BCG matrix It is based on the product life cycle theory, which is used to verify the portfolio of a company. It has two dimensions: Business growth rate and market share. The bigger the market share is the better is for the company.
To the BCG matrix belong four elements: The stars, the cash cows, the dogs and the last are the question marks. The stars, as the name says, reach the sky within the business, generates a huge amount of money, but of course it uses a large amount of cash too, while the cash cows, the profit is high, but the growth is slow. The dog’s part refers to the low growth and low market share, while at the question mark the growth is high in a low market share. As the hotel is a really old one and there were only few upgrades and renovations the hotel during the economical downturn it was in the BCG Dog stage.
That means that the company is in a low growth market and has low market share. These stage typically is equal with the verb “break even”, as generates barely enough cash to maintain the business’s market share. During the recession the company lost money like every European country, but from this year they are going to renovate the facade of the building and make several changes in order to improve the hotel’s image. They will still stay in the Dog stage, but I think they get far enough money to survive. In the Dog stage the expensive turn-around plans do ot help to get in another stage, but with smaller investments can get near to the Cash Cow. 2. Porter’s generic strategy A firm positions itself by leveraging its strengths. Michael Porter has argued that a firm’s strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. Cost leadership strategy: The low cost leadership has the competitive advantage of producing at the lowest possible cost. Cost advantage’ is the focus. This is the biggest value in the value chain. Focus or Niche strategy: Competitive advantage is generated specifically for the niche. A niche strategy is often used by smaller firms. A company could use either a cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. Differentiation: Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage.
This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The hotel is classified in the differentiation strategy, as it belongs to a quite big brand name, to Sol Melia. Is true, that the hotel is a cheap one among the Sol Melia hotels, but is because is a 3 star, old hotel. The differentiation characterizes the most as even if its cheap, it has the same basic service (cleaning, entertainment, customer relationship…. ) quality as a 5 star hotel of Sol Melia. 3. Value reference model (VRM)
Michael Porter in 1985 introduced in his book ‘The Competitive Advantage’ the concept of the Value Chain. He suggested that activities within the organization has add value to the service and products that the organization produces, and all these activities should be run at optimum level in order to be able the organization to obtain any competitive advantage. If they are running competently the value obtained should exceed the costs of running them. The value chain provides a better understanding of the activities through which Sol Princesa Dacil develops a competitive advantage.
The Value Chain Group developed a dictionary for value chain management which contains one unified reference framework which represents the process domain of product development, customer relations and supply networks for mainly services. The model was called Value Reference Model (VRM). The most important factors of the model are: the research and development, the design, the production, the marketing and sales and the distribution channels. With the help of these elements I will be able to analyze the core value of the company which will guide to the success of the company. 3. Research and development: Understanding the customers’ needs by making researches continuously is essentially in the hotel industry. Every organization is depending of its customers, therefore is very important to be up-to-date. The world is changing continuously. The globalization made possible the journeys between the countries. The people are more open minded which leads to the fact that the expectations are far more than they were years before. Sol Princesa Dacil has to face the fact that it is an old building; therefore to compensate the look has to provide better services for its clients.
The first step to doing this is to be informed about the most important cultural aspect of a country. I think in the hotel industry is something crucial to know the cultural characteristics. It’s not an advantage anymore, is something vital. I strongly believe that one of the Sol Princesa Dacil Hotel’s core competences is that they are experts by handling different cultures in different situations. As we are talking about an international hotel chain, the hotel employs a lot of skilled people with different nationalities (Begian, Dutch, German, Portugal, Russian, Polish, Italian etc. nd a lot of employees are from Latin America) and they also accept a lot of foreign students from all over the world as trainees in their organization (Europe, Africa, America). They believe that they can learn from every culture and when the situation requires it to use it with success. The employees of the hotel which are more in contact with the customers, like the new stuff from the Reception and Entertainment Department they receive an introduction about how they have to manage to talk with the customers in different situation, so every customer feel that he/she is the most important person from the hotel.
People from different culture do not express themselves the same. A good employee has to read between the lines to be able to help the customer. People from different culture do not express themselves the same. A good employee has to read between the lines to be able to help the customer. The company’s main source for monitoring customer satisfaction is the Tripadvisor’s webpage. Every customer is requested to write their suggestions and comments. The webpage is visited really often by the Quality Manager of the company, as her main aim is the customer satisfaction.
She always replies as soon as possible and if required to keep or to get a new customers, she always offers compensation if there are customers complaining. On the other hand, another important thing which must be analyzed and monitored is the main competitors. A company in order to be successful always has to know the intentions of the competitor, and before the competitor’s movement, the hotel already has to know what they will respond. It is the greatest importance to know the competitor’s core competences as well and if possible to copy it in a suitable way for the organization.
In the Porter’s 5 Forces I am going to identify the company’s main competitors and their strengths and weaknesses. By doing this I will be able to see if there is anything what can be personalized to the hotel’s present resources to enhance customer satisfaction. 3. 2 Design: In case of design, I could mention the company’s brochure and webpage for clients and another one for the employees. The hotel’s brochure is designed to arouse happiness, childhood and freedom. There are used vivid colors to be inspired by the Sol Hoteles logo: “Vive la vida” what means to Live the Life.
The excessive use of the colors blue and red symbolize the ocean, the freedom, the relaxation on the other hand the red symbolize the sunshine and passion given by the Latin temperament. On the picture there are a lot of children as we are talking about a family hotel. All happy and enjoying the Flintstone themed activities. The hotel’s webpage communicates the same idea as the brochure. A perfect holiday, where parents can relax by taking the meanwhile the children are entertained by carefully selected stuff members.
There is another webpage for the use of the employees in order to be informed about the latest news about Sol Melia, or if something significant happened within the hotel industry which might have an impact on the hotel. The webpage is designed to be simple with concise and clear text to be reachable for all employees. In the webpage are also instructions and advices about doing the daily tasks in a “Smart & Simple” way. The webpage is available exclusively for the employees of the hotel.
This is another core competence of the hotel, that the employees are really important for them, and their satisfaction is of the greatest interest for the whole management. That’s why they developed the webpage which helps the communication between employee and management from the head of the company. 3. 3 Production: In case of the hotel industry the production of the company is the service that they can provide to the customers. In this case the company offers accommodation, meals and entertains the guests during the whole day with different games and activities taking in consideration the guest’s age.
In a few words, the hotel takes care of the well-being of its clients and takes responsibility for the whole stay of the customer, so the guests just have to lay back and enjoy their holiday. 3. 4 Marketing and sales: To gain success in the period of the recession the company made up a new marketing plan. They chose to creating special offers in order to increase market share. This was a positive as they made up some special packages with a reduced price in order to gain more potential customers, those who cannot afford to spend high amounts of money for accommodation.
The package included only bad and breakfast, but there were a lot of people interested in the offer. On the other hand, this way they also could sign some important contracts with travel agencies, because they gave them a cheaper price. In order to reduce costs after Eastern when the English people don’t really travel, and as they are the hotel’s main customers, the hotel chose to close whole floors so they don’t have to pay more cleaning ladies. On the other hand, the company came up with the idea, that every customer who books the tickets from their webpage to get an upgrade in their accommodation.
For example, people who booked a standard room will get a double room, or even a superior room. Another great idea was the implementation of the loyalty card, the so called “MAS card” what could be used by every customer who asks it. This card has benefits like the free late check out, the priority in buying drinks or snack in the bar, receiving vine and fruits on the date of the arrival at the hotel and getting points for every night spent at the hotel which can be used for free nights at any Sol Melia hotel. This card helped the company a lot, because it made a lot of customers coming back more than once a year.
This strategy helped the company throughout the economical downturn with a good result, which is visible from the fact that they didn’t had to dismiss nobody, but to hire up new people; they could make renovations like p