Shangri-La Hotels Case Analysis

Case analysis for Shangri-la Hotels. Business Policy Text from Senior Level Business Policy/Strategy Class:

Shangri-La Hotel – Strategic Analysis

Introduction

Shangri-La Hotels and Resorts have emerged as one of the most appreciable brands in the international hotel industry. The Company has garnered its reputation based on its commitment to provide a world class service. Even though the hotel was running successfully during the 1990s it had not evolved any core values or long-term strategic planning. This has led to the implementation of "Shangri-La 2000" strategic plan. Subsequent to the adoption of this strategic initiative there have been a number of changes that have been brought about in the functioning of the hotel. This paper details the competitive strategies of the hotel, management approaches and the role of employee training and culture in the success of the hotel chain. The paper also discusses the core competencies and financial and operational performance which contributed to the success of the hotel. The paper also makes a few recommendations for ensuring a sustained success for Shangri-La hotel.

Shangri-La Hotels and Resorts – an Overview

Shangri-La Hotels and Resorts are renowned hotel management companies operating prominently in the Middle East. The hotel is considered as a status symbol for upper class people reflecting the privilege and honorable status in the society. The hotel provides facility of services which is suitable for both business travelers as well as for people traveling for leisure and on vacation. The first of Shangri-La hotels was found in Singapore in the year 1971 and now this Hong Kong based hotel chain has grown as one of the largest hotel management companies getting a number of awards and accolades. The hotel chain operates more than 49 high class hotels and resorts in key cities of Asia and the Middle East.

The first venture of the hotel chain was established in Singapore by the Kuok Group which is a multinational conglomerate managed by Westin until the year 1983. The name of the chain was changed to Shangri-La International Hotel Management Limited in the year 1983. In the year 1989, the Company established a sister concern Traders Hotels in Beijing with the objective of meeting the demand from the business travelers at affordable prices. Shangri-La Asia bought the hotel chain in 1997, at which time the group was called Shangri-La Hotels & Resorts.

The hotel chain is owned by Shangri-La Asia Limited, a Hong Kong based company. Shangri-La hotels and resorts is the subsidiary of Shangri-La Asia Limited and the shares of Shangri-La are listed in the Hong Kong Stock Exchange. The Kuok Group continues to hold the controlling interest in Shangri-La Asia Limited

Vision and Mission of Shangri-La

Shangri-La wishes to be "the first choice for customers, employees, shareholders and business partners". In order to achieve this, the Company has determined to "delight the customers each and every time". The objectives of Shangri-La is "expanding the Shangri-La brand globally and exploring opportunities to operate hotels gateway cities and key resorts around the world under management, equity participation and ownership".

Key Elements of Shangri-La Hotels Competitive Strategy

"The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation." (Mindtools) Since there will be a number of suppliers available to supply a customer like Shangri-La the supplier power against the Company can be considered weak. Shangri-La managed the situation by controlling the quality of the supplies. Buyer power is predominant in the case of hotel industry in general as the customers demand for more quality of service at lesser cost. Therefore the buyer power acts strongly on Shangri-La and the Company made adjustments to its strategies to meet the increased expectations of the customers. Competitive rivalry is also high in the case of hotel industry with the number of hotel chains offering competitive services at higher quality levels. The marketing strategy of Shangri-La has taken this aspect into account. The customers have a number of alternative choices of quality hotels, motels and other types of accommodations. Therefore the threat of substitution is high in the industry. Shangri-La hotel adopted the strategy of improvement in the quality of service which enhanced its reputation and retained the customer base. Threat of new entry is also high in the hotel industry, as the industry constitutes one of the fastest growing industries across the world. Even though there is a slump in the industry