Situational Analysis of Jumeirah Lakes Towers Hotels - Case Study Example

Situational Analysis of Jumeirah Lakes Towers Hotels Name Institution Executive Summary This report details out a critical analysis of the marketing strategies of Jumeirah Lakes Towers Hotels in Dubai. The report first describes a micro-environmental analysis which is highlighted by PESTLE Analysis. It shows that the environment is favourable for the operations of the company. Second, the report highlights organisational review, the mission and vision of the company and the financial and marketing performance. Third, the paper presents an overview of the corporate social responsibility of the company. It shows that Jumeirah Hotels have complied with the environmental, social, philanthropic and environmental regulations. From the report, the target market of the company is the high income earners and the competitors are Hilton Hotel Group and the Palm. From the SWOT Analysis carried out, it is evident that Jumeirah Lakes Towers Hotels enjoy strengths such as strategic location and diverse products and services. The weaknesses include high prices and lack of technological investment. Lastly, the paper also highlights the value proposition of the company and brand poisoning. There are some recommendations that have been provided in order to come up with effective marketing strategies. Contents Executive Summary 2 Contents 3 1 Introduction 4 2 Environmental Analysis 5 2.1 Political Factor (-0.1) 5 2.2 Economic Factors (0.9) 6 2.3 Social Factor (0.6) 7 2.4 Technological Factor (0.4) 7 2.4 Legal Factors (-0.4) 8 3 Overview of the Organisation 8 3.1 History 8 3.2 Mission and vision 9 3.3 Firm Performance 9 3.3.1 Financial Performance 9 3.3.2 Marketing Performance 10 3.4 Marketing Goals and Objectives 10 4 Corporate Social Responsibility 10 4.1 Economic 10 4.2 Legal 11 4.4 Ethical 11 4.5 Philanthropic 11 5 Target Market 12 6 Competitive Analysis 12 7 Swot Analysis 13 7.1 Strengths 13 7.2 Weaknesses 13 7.2.1 Converting weaknesses into strengths 13 7.3 Opportunity 14 7.4 Threats 14 7.4.1 Converting Threats into Opportunities 14 8 Evaluation of Value Proposition 14 9 Differentiation and Positioning 15 10 Conclusion 16 11 References 17 12 Appendices 19 12.1 SWOT Analysis 19 12.2 Pyramid of corporate Social Responsibility 20 1 Introduction This report covers the situational analysis and marketing audit of Jumeirah Lake Towers Hotels in Dubai. Jumeirah Lake Towers entails 80 towers that are built in the edge of artificial lakes including Almas West, Almast East, and JLT Lake among others. Initially, Jumeirah Lake Towers had three operating hotels namely Bonington Jumeirah Lake Towers, Armada Bluebay Hotel and Movenpick Jumeirah Lakes Towers (Jumeirah.com, 2011). There have been some new hotels established in Jumeirah Lake Towers such as Pullman Lakes Towers Hotel bringing the number of hotels in the area to four. The Jumeirah Lake Towers Free Zone was established in 2002 and since its establishment, hotels were instituted (Jumeirah, 2012). For instance, Armada Bluebay Hotel was established in 2014 while Bonington Hotel was started in 2009. Jumeirah Lake Towers Hotels are one of the fast growing Hotels in Dubai due to the demand for the products and services offered by them. The main reason why I chose Jumeirah Lake Towers Hotels is because of the success factor associated with them. In addition, these hotels have brought about economic significance to Dubai and UAE in general. This report will first provide the environmental analysis of Jumeirah Lake Towers in Dubai and the overview of the organisation. In addition, it will examine the corporate social responsibility as well as the promotional and marketing ethics issues of the company and will provide the organisational core target market of Jumeirah Lake Towers Hotels. The report will also identify the main competitors of Jumeirah Lake Towers Hotels and their characteristics and it will identify the success factors in the market. This will be done by providing SWOT Analysis of the company and how the company can change the threats into opportunities and weaknesses as strengths. Lastly, the report will include a critical analysis and evaluation of Jumeirah Lake Towers’ value proposition, brand positioning and brand association. The analysis will conclude with recommendations for the marketing strategies for the company in order to introduce important objectives in the future. 2 Environmental Analysis Environmental analysis concentrates on five factors that affect Jumeirah Lake Towers’ operations and success. They include political, social, technological, economic as well as legal factors. Environmental analysis is possible through PESTLE Analysis. These factors influence the market and the business operations in many ways thereby altering the way strategies are made. PESTLE Analysis is carried out with the aim of ascertaining business strategies for the future and assessing business environment. The analysis gives an outline of the situation in which Jumeirah Lake Towers Hotels might be in. 2.1 Political Factor (-0.1) The market of hotel business in Dubai is said to be developing fast. Restaurants and hotels in UAE are expected to comply with the country political requirements including national minimum wage regulations and Hygiene and Quality regulations that influence the quality of foods in restaurants (Jumeirah, 2012). The Jumeirah Lake Towers Hotels will be under these strict health regulations that may impacts its operations. In addition, Jumeirah Lake Towers Hotels are found in the free zone region that is under intense government intervention. The strict regulations will affect the operations of the company and may lead to some challenges. Therefore, the political factor affecting Jumeirah is assigned a rating of -0.1. 2.2 Economic Factors (0.9) Economic growth or recession affects business operations. Before, Dubai’s economy was dependent on oil, fishing and gold (Dubai, 2015). But now it has transformed and is dependent on tourism and commerce. Despite the 2008 recession that affected the global economy, the average consumer hotel spending in Dubai has increased dramatically (Dubai, 2015). Consumers and tourism are still searching for the convenience of eating out and thus the Jumeirah Lake Towers Hotels will have the potential to grow in the country. Jumeirah Lake Towers Hotels are defined by high quality food and beverages, social amenities, meeting and events facilities, fitness centres and contemporary, modern and elegantly established environment (Jumeirah.com, 2011). These hotels are classified as five star hotels and therefore, they are higher in price and quality as compared to smaller hotels. Dubai economy is growing at a fast rate and people are changing their tastes, preferences and lifestyle. Many people in Dubai and tourists prefer high status lifestyle and show love for luxurious products and services. This is advantageous to Jumeirah Lake Towers Hotels as they are able to gain customer’s brand loyalty. The sales at Jumeirah Lake Towers Hotels are affected by the customers’ expenditure and income level. Dubai has a large number of people living luxurious lives and therefore this works in favour of the company (Dubai, 2015). The ability of people to afford expensive products and services has led to increase in the demand of luxurious lifestyle. This has increased the sales and revenue of Jumeirah Lake Towers Hotels. Generally, as a result of economic development in Dubai, the purchasing power of customer has increased which has worked in favour of hotel industry. Based on this, the rating of economic factor is 0.9. 2.3 Social Factor (0.6) Social factors have significantly affected Jumeirah Lake Towers Hotels in relation to the changing of demographics on the basis of the customers it targets (Alderman, 2010). The changes in customer’s preferences, tastes and need for high quality and healthy products coupled with changing lifestyle has fastened the pace of organisational change in the company in relation to meeting these terms (Alderman, 2010). Also, the increased globalisation has led to group of customers demanding faster response to their wants and needs which has created competitive business. Therefore, Jumeriah Lake Towers Hotel should direct their meeting plan to cater for the needs of people who require healthy and high quality products and services (Jumeirah.com, 2015). Based on the discussion above, the rating for social factor is 0.6. 2.4 Technological Factor (0.4) Technology is one of the major factors that have produced organisational change in hotel industry (Denicola, 2005). Over the years, there have been new technological developments which are designed according to improved engineering standards. Many companies have opted to adopt this changing technology with an aim of increasing productivity (Denicola, 2005). However, rapid advancement of technology means complex machines and equipment which increases competition. Jumeirah Lake Towers Hotels are faced with pressure of adapting to the changing technology for the betterment of its operations. Technological advancement has generally led to organisational change. In addition, this technological advancement has stiffened the competition of the company making it difficult to grow to a greater extend (Denicola, 2005). At the same time, technology has improved the operations of the hotels. The general rating of this factor is 0.4. 2.4 Legal Factors (-0.4) Legal factors are a huge concern in relation to regulatory environment and changes in safety standards. Australian government imposes regulations and laws to hotels and restaurants such as Work and Safety Act and Health standards for Foods (Denicola, 2005). The country has developed a national system for the validity of quality of foods for consumer and environmental safety. This means that there are intense legal and government regulations. The legal factor is rated -0.4. The calculation for environmental analysis is -0.1+0.9+0.6+0.4-0.4 =1.4/2= 0.7 > 0.45 From PESTEL index scale, UAE is considered a favourable environment for Jumeirah Lake Towers Hotels. 3 Overview of the Organisation 3.1 History Jemeirah Lake Towers have four major hotels; Bonington Jumeirah Lake Towers, Armada Bluebay Hotel, Movenpick Jumeirah Lakes Towers and Pullman Lakes Towers Hotel. Armada Bluebay Hotel was established in 2014 while Bonington Hotel was started in 2009 (Jumeirah.com, 2011). On the other hand, Pullman Lakes Towers Hotel was started in 2015. These hotels offer quality foods and beverages, social facilities and accommodation services among others. Jumeirah Lakes Towers is government owned and the executive Chairman is Ahmed Sultan Bin Sulayem and the president of the Jumeirah hotels is Stefan Leser. 3.2 Mission and vision The mission of Jumeirah Lake Towers Hotels is to meet and exceed the expectations of the customers, to strive in the hospitality industry and develop and grow the welfare of their people (Jumeirah.com, 2011). The hotels have been working towards this mission as they have grown to be one of the well0known hotels in UAE. The vision of the hotels is to deliver high quality and luxury products and services to the customers and be competent in satisfying the customers (Jumeirah.com, 2011). The hotels are well known for the luxury products and services and have provided comfort and luxury to the target customers. 3.3 Firm Performance 3.3.1 Financial Performance The 2014 financial figures illustrate a positive year-to-year growth for Jumeirah Lakes Towers Hotels (Staff Writer, 2015). In 2014, Jumeirah hotels have had an increase in hotel occupancy to 80%. The Jumeriah Hotels had a revenue growth of 5.2% in 2014 which was a decline from 8% the previous year. The revenue per available room was AED1708. 2015 proved to be a good year for the hotels with an increase in occupancy level of 85% and revenue per available room (RevPAR) at AED2018 (Staff Writer, 2015). The growth in revenue is expected to increase in the coming years due to the favourable economy and an increase number of tourists in the country. 3.3.2 Marketing Performance Jumeirah uses different marketing strategies such as internet advertising, social media promotion, media advertising and direct marketing among others (Jumeirah, 2012). These have enabled them to grow tremendously over the recent year given that they were established less than ten years ago. As seen from its financial performance, the hotels have increased their sales and revenues due to its marketing strategies. 3.4 Marketing Goals and Objectives Marketing goals and objectives of Jumeirah Lake Towers Hotels are to offer high quality products and services to the customers (Jumeirah, 2012). In addition, they aim at differentiating themselves from the competitors by being the most sought out hotels in the country (Jumeirah, 2012). This is possible by creating valuable, non-imitable, non-substitutable and rare resources and capabilities. This will enable them create a stronger brand image and customer loyalty. In addition, it will reduce the amount of capital invested in marketing and promotion. 4 Corporate Social Responsibility One of the objectives of Jumeirah Lake Towers Hotels is to ensure that they carry out corporate social responsibilities towards the community, customers, employees, environment and the economy. There are four concepts that are covered by the pyramid of corporate social responsibility; economic, legal, ethical and philanthropic. 4.1 Economic Over the years, Jumeirah Lake Towers Hotels are known to make profit. In making profit, the company add value to the economy (Jumeirah Portfolio, 2008). Adding value serve the interest of direct stakeholders. These hotels also use their profits to pay employees and at the same time reward the investors. Because of its secure future, the Company earns dividends, employees continue to receive salaries and customers continue to buy its products and services (Jumeirah Portfolio, 2008). From these, they satisfy their economic responsibilities. 4.2 Legal All companies are expected to accomplish their legal responsibilities and adhere to legal laws. Jumeirah Lake Towers Hotels adhere to thier tax requirements and code of practise and sells products and services that meet the consumer rights and responsibility law (Jumeirah Portfolio, 2008). In addition, the company obey legal responsibilities ranging from environmental law to securities regulations and labour laws. 4.4 Ethical Jumeirah Lake Towers Hotels have integrated ethical responsibility towards their employees, customers and the environment. The company is known for its contribution for increased customer satisfaction and speed of customer service and enhanced customer experience (Jumeirah, 2012). They adhere to the environmental policies and health and safety codes in carrying out their operations in a manner that would protect its employees and customers from any danger. 4.5 Philanthropic Jumeirah Lake Towers Hotels has initiated charity events to support people in need. The charity supports kids who are orphans, ill or with special needs (Jumeirah, 2012). The revenue gotten from the charity events goes to the charity associations. The hotels also offer extra foods to families who cannot afford food and have so far raised millions to support education and health services. 5 Target Market Jumeirah Lake Towers Hotels are considered luxurious destination for both tourists and local people. Therefore, the people who can afford it are high income earners. The target market for Jumeirah Lake Tower Hotels is the high income group (Jumeirah Portfolio, 2008). They include professional people who travel to Dubai for business purposes and tourists who come to Dubai to have fun especially in holiday season. Due to the availability of social facilities such as conference centres, professional business people prefer to stay in these hotels for convenience and luxury. Dubai is known to having many millionaires who enjoy luxury life (Dubai Economy, 2009). Jumeirah Lake Towers Hotels cater for these people as price is not a consideration for them. Due to the increasing purchasing power of people in recent years, the hotels have also catered for middle class people who enjoy luxury products and services. 6 Competitive Analysis Jumeirah Lakes Towers Hotels have a number of major competitors in the hotel industry. The biggest competitors include the Hilton Hotel Group and the Palm (Jumeirah, 2012). The Palm and Hilton Hotel Group have been in operation for a longer period of time as compared to Jumeirah Lake Towers Hotels. Palm Hotel was established in 2008 and has reached an average of 87% occupancy in 2014 which has continued to growth over the last years. What differentiate the Jumeirah Lakes Towers Hotels from its competitors is its focus on providing luxurious and high quality products and services (Jumeirah, 2012). However, the competitors have established their presence in different countries. The Palm has internationalized into countries such as UK, Australia and China. This has given them a competitive edge over Jumeirah Hotels. 7 Swot Analysis The possible strengths, weaknesses, opportunities and threats associated with Jumeirah Lake Towers Hotels are discussed below. 7.1 Strengths Jumeirah Lake Towers Hotels are known for offering of diverse menu of Dubai and foreign food dishes that are of high quality and is loved by the customers. Diversity of their menu differentiates them from the competitors (Jumeirah, 2012). The hotels are found in a strategic place near the Jumeirah Lake Towers where tourists and locals enjoy visiting the view and are accessible easily. Their accessibility and convenience has expanded their market and has raised their profits and returns. The company has good quality of its products and services that attracts customers and this has strengthened their customer loyalty and brand. This has enabled them own a larger market share compared to some competitors. 7.2 Weaknesses Jumeirah Lake Towers Hotels lack the innovative services and products. The hotels have not invested enough resources and time in coming up with innovative and unique products that can give them a competitive edge. Compared to some competitors, Jumeirah Lake Towers Hotels offer their products and services at relatively high prices. Compared to some of their major competitors, their brand name is still new to customers since they have been in operation for few years. Most competitors have been in operations for many years giving them a competitive edge. 7.2.1 Converting weaknesses into strengths To many customers who are focussed on quality and not price, the high pricing strategy adapted by Jumeirah Lake Towers Hotels illustrates the concept of premium quality products and services since high prices is associated with high level of comfort and luxury. In addition, the hotels should invest more on technological developments in order to introduce new and unique ideas to their operations. 7.3 Opportunity The hotels have an opportunity to improve its quality through technological advancement in order to attract more customers. Advancement in technology in the hotel industry in Dubai will offer an opportunity for improvement. There is a chance to offer healthier foods to people. This is attributed to the changing lifestyle and preferences to healthy eating (Krane, 2009). 7.4 Threats There are many larger restaurants and hotels that the company compete with whose brands are well established. Fluctuation of exchange rate can affect the hotels and the economic slowdown that has been experienced in UAE in recent years can have a negative impact on their financial performance. 7.4.1 Converting Threats into Opportunities In order to avoid the economic recession in UAE, the company can decide to internationalize in foreign markets where the economy is promising (Dubai Economy, 2009). In addition, to beat the intense competition, the company should create resources, capabilities and competencies that are rare, non-imitable, non-substitutable and valuable (Wang and Ahmed, 2007). 8 Evaluation of Value Proposition Jumeirah Lake Towers Hotels’ value proposition is to offer diverse and high quality products and services to the customers. The hotels use differentiation strategy in order boost its competitive advantage (Jumeirah, 2012). The company has established itself as one of the well-known hotels in UAE. They have been able to do this by differentiating themselves by spending large amount of capital in advertising and promotion to create a unique image of the brand. In addition, they have provided different products that are unique. 9 Differentiation and Positioning Although Jumeriah Lake Towers Hotels are faced with stiff competition, they have established a strong brand association with regard to high quality and luxurious products and services (Jumeirah, 2012). Jumeriah Lake Towers Hotels have been positioned as the most luxurious hotels in Dubai offering quality for the money spent. While some of the competitors cater for average and high level of income groups, Jumeriah Lake Towers Hotels are more focussed on offering premium products and services that cater for high earners. Since the companies founded upon the provision of the best quality products and services, it ensures that all the products and services it offers are of the highest quality that satisfies the customers. Their products and services are appreciated and can be afforded by high income earners because they consider luxury as more important than price. Resources and capabilities are assets that provide competitive advantage (Oliver, 2000). Having core capabilities enable a company beat the competitors and thrives in the long run. In order for an organisation to strive, it must have resources and capabilities that are rare, valuable, imitable and non-substitute. In terms of capability and resource framework, Jumeirah Lake Towers Hotels have a very strong and capable financial resource. With their strong financial records, they can go forward and create markets on a large scale in different regions, they can use their funds to build infrastructure, expand market as well as train its staff (Mathews, 2003). 10 Conclusion The PESTLE Analysis has indicated that the micro-environment is suitable for the operation of Jumeirah Lakes Towers Hotels. Although the company is faced with intense competition from Hilton and the Palm, it uses a differentiation marketing strategies that has enabled them to expand their brand and customer’s loyalty. The company has a strong financial performance and a relatively weak marketing performance that can be improved in many ways. The company should invest more on marketing and promotion in order to create awareness about their products and services. This will expand their market and therefore increase sales and revenues. In addition, Jumeirah Hotels should invest more in technology in order to improve their facilities and products that can differentiate them from the competitors and boost their competitive advantage. As mentioned earlier, what differentiate the competitors from Jumeirah Group and what has enabled the competitors increase market share is internationalization. The competitors have established their operations outside UAE to different countries that appreciate their products and services. Therefore, in order to increase their market share and eventually expand their operations, Jumeirah Lakes Towers Hotels should take their operations in foreign countries that have favourable environmental factors such as economic factors, demographic factors, political factors and legal regulations. This will enable them fulfil their mission and vision and will increase their sales and revenues. 11 References Alderman L. (2010). Dubai Faces Environmental Problems After Growth. The New York Times Denicola, C. (2005). Dubai’s Political and Economic Development: An Oasis in the Desert. Williamstrorn, Massachusetts: Williams College Dubai. (2015). 22 Interesting Facts about Dubai that are Larger than Life. Retrieved 1st July 2016, from Urban Cocktail: http://grabhouse.com/urbancocktail/interesting-facts-about-dubai-that-are-larger-than-life/ Dubai Economy. (2009). Retrieved 1st July 2016, 2016, from Dubai.ae: http://www.dubai.ae/en/aboutdubai/pages/DubaiEconomy.aspx Jumeirah. (2012). Jumeirah Group Announces New marketing and Public Relations Appointments, Retrieved from http://www.jumeirah.com/en/jumeirah-group/press-centre/press-releases/press-releases-for-2012/jumeirah-group-announces-new-marketing-and-public-relations-appointments/ Jumeirah Portfolio (2008). Jumeirah. Archived from the original on 2008-01-17. Retrieved 2008-01-21. Jumeirah.com- (2011). All about Rory - accessed 2011-08-11, Jumeirah Group of Hotels Krane. (2009). Jim City of Gold: Dubai and the Dream of Capitalism, page 103, St. Martin's Press (September 15, 2009) Mathews, J. (2003). “Strategizing by firms in the presence of markets for resources”, Industrial and Corporate Change, pp. 1157-1193. Oliver, R.W. (2000). ‘Real Time Strategy: Sustainable Competitive Advantage?’, Journal of Business Strategy, vol. 21, issue 6, 7-9. Staff Writer. (2015). Jumeirah Group Reports Decline in Revenue Growth to 5.2%, Arabian Business.com Wang C. and P.K. Ahmed, (2007). ‘Dynamic capabilities: a review and research agenda’, International Journal of Management Reviews, vol. 9, no. 1,pp. 31–52. 12 Appendices 12.1 SWOT Analysis SWOT Analysis Strengths They have a unique and diverse menu and products They offer high quality products and services They are located in a strategic and convenient location Weaknesses High prices for their products compared to the competitors Hotels lack the innovative services and products Their brand is still new in the market Opportunities They have the opportunity to improve the quality and invest in technology There is a chance to offer healthier foods to people Threats Intense competition from hotels such as Hilton and the Palm Fluctuation of exchange rate and the economic slowdown can affect the hotels 12.2 Pyramid of corporate Social Responsibility Read More