Sauterelle Strategic Report

Strategic Report

Best Western

Terica Walton / Carly Dintamen / Tara Tan / Hannah GuerinPUDM 4030 Strategic Management

CRN 3653 Jinsook Erin Cho

Creative Solutions

Terica Walton Carly Dintaman Tara Tan Hannah Guerin

Sauterelle

About Our Company 03

Our Client: Best Western 04

External / Internal Assessment 05

Potential Growth Strategies 10

Industry Analysis 12

Resource Based View 15

BCG Matrix 16

Strategy Proposal 17

Strategy Implementation 20

Conclusion 21

References / Resources 22

Table of Contents

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Vision To become the renowned experts in revitalizing the image of the hotel industry. Mission To offer professional, high end design services for the hotel industry at a fair cost. By establishing partner relationships with our clients and working closely with them, we realize, adapt to, and successfully visualize their individual needs and wants in order to better connect them with their customer. With our team’s versatile skills—including graphic, web, and interior design—our goal is to re-brand and refresh a hotel’s image through simplicity and cutting edge design while also respecting employees, customers, and the environment. Corporate Values We uphold the highest standards of corporate responsibility to the environment and everyone affected by our work by collaborating with our clients and making every part of the process transparent. We believe that sophisticated design should be accessible to everyone, and we vow to produce excellent work at a fair price with integrity. Our Competitive Advantage Ability to utilize and specialize in a wide spectrum of professional design skills in order to offer an affordable, high-end look. Services Provided Graphic Design (logos, advertising, stationery) Web design Interior Design Customer Service Consulting

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About Our Company

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Mission “The mission of Best Western International is to enhance brand equity and increase member value.” Client Industry Hotel, Hospitality & Tourism

Best Western is a well-known company with a great deal of history. However, as our client, Best Western seeks to revamp their total brand image to better reflect the market today. In particular, they want to drive up brand equity and drive the company back to being the forefront leaders of the hotel and hospitality service industry.

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Our Client

1. http://www.bestwestern.com

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External / Internal Analysis

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Strengths

S1. Franchise

S2. Internet Pressence

S3. Global Network

O1. Sustainable Technology

O2. Internet Infastructure

O3. Developing Countries

T1. Recession

T2. Hospitality Industry

T3. Third-Party Websites

W1. Advertising / Promotion

W2. Price

W3. Sustainability

Threats

Opportunities

WeaknessesBest Western

Internal External

Internal Analysis

Strengths

1. Franchise

Traditional business studies have proven that somewhere between 25 to 30 percent of new business fail in the first year, and up to 70 percent fail within their first five years. However, the failure rate for franchised businesses is less than 5 percent with a 99 percent membership renewal rate.

This attracts franchisees to become Best Western members and thus, encourages the quick and effective growth of the brand globally, through rather inexpensive means. A 99% renewal rate assures revenue stability from its collective pool of franchisee fees. This money can be directed to its holistic marketing efforts and also contribute to the businesses bottom line. 2. Internet Presence

On average, bestwestern.com has been booking $1 million in revenue per day for the hotel chain since January 2005.” Best Western launched its own travel blog named YouMustBeTrippin.com. Visitors are able to view and share content on destinations, things to do, travel tips, business travel and more.

YouMustBeTrippin.com shows that they have operational strengths in being innovative with new marketing strategies by leveraging and responding to technological and social trends.

3. Global Network

Based on distribution and number of locations, Best Western International is the largest hotel company operating under a single brand name with 4,000 independently owned and operated hotels [in 80 countries]. This brand reputation is a great advantage for Best Western operating in the travel industry because it becomes a trusted brand that travelers can easily become familiar with and come to rely on when booking in unfamiliar travel locations. Therefore, consumers have a sense of comfort and assurance of a certain standard and the hotels in the portfolio have a competitive edge over competitors with unfamiliar names.

2.. Brymer, Robert A. Hospitality and Tourism, 11th Edition. Kendall Hunt, 2003. 103.3. Best Western. Corporate Fact Sheet http://www.bestwestern.com/newsroom/factsheet_countrydetail.asp4. Best Western. Corporate Fact Sheet. http://www.bestwestern.com/newsroom/factsheet_countrydetail.asp Chinmaneevong, Chadamas. “Best Western to add 13 Thai Hotels,” Bangkok Post, October 10, 2009. http://www.bangkokpost.com/business/ n economics/25389/best-western-to-add-13-thai-hotels.

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Internal Analysis

Weaknesses

1. Advertising/Promotion

In 2008, Best Western increased its advertising and promotion expenses by $11.6 million, or 24% in order to increase profits in tough economy. However, their profits at the end of the year were a deficit of $1.7 million and Return on Investment was -2%.

Best Western’s current advertising and promotion may be ineffective and require re-evaluating. Their logo, for example, has not been updated in over 16 years.

2. Price

In Lancaster, Pennsylvania, Best Western’s price for a room with a king bed and high speed Internet access is $119.99. In the same town, Hilton Garden Inn’s price for a room with a king bed and high speed Internet access is $109.00.

Best Western’s prices are incongruent with its image. Lower-priced sub-brands of expensive, higher-class hotels are competing directly with Best Western. Because these brands have a more esteemed reputation, Best Western must either upgrade its image or lower its prices.

3. Sustainability

In their ranking of the hospitality industry, entitled Tomorrow’s Value Rating, London-based sustainability consultant Two Tomorrows ranked Best Western as the worst in sustainability management, with a score of 6 out of 100.

With an increased focus today on sustainability, Best Western’s failure in sustainable efforts is a huge weakness that affects the brand’s value.

5.. 2008 Best Western Annual Report http://www.bestwestern.com/aboutus/Annual_Reports/2008.pdf.6.nhttp://book.bestwestern.com/bestwestern/selectRoom.dohttp://hiltongardeninn1.hilton.com/en_US/gi/index.do?brand_id=HI&brand_directory=/en/hi/&xch=500552876,X1QH0XMOPTTFWCSGBIV2VCQ\7. Ahal, Matal. Best Corporate Citizens: Hotels. CNN.com. http://money.cnn.com/2009/10/02/news/companies/good_citizen_hotels.fortune/index.htm.

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External Analysis

Opportunities

1. Sustainable Technology

To help new hotels achieve a 30% energy savings over minimum code requirements, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) recently released its “Advanced Energy Design Guide for Highway Lodging.”

Sustainable technology in the hotel industry is a way to differentiate from other similar establishments, while maintaining low costs.

2. Internet Infastructure

Experts agree that, today, more than 70% of all travelers use the Internet to research and/or book hotels online.

The Internet can be seen as a cheaper and more efficient method of advertising for hotels. Also increases in technologically savvy customers enable hotels to hire less people and place the work (i.e. booking) on their customers while still maintaining a sense of convenience.

3. Developing Countries

In 2000 the developing countries accounted for around one-quarter of the world’s 700 million or so mobile phones. By the beginning of 2009 their share had grown to three-quarters of a total, which by then had risen to over 4 billion.

Opportunity to advertise in new markets both cheap and fast via mobile technology and online cellular capabilities. Increases the ability to reach new consumers and expand brand knowledge.

8.. Hotel Industry Adopts Solar to Save Energy http://www.environmentalleader.com/2009/06/23/hotel-industry-adopts-solar-to-save-energy/9. Hotel Revenue Management Meets the Recession4Hoteliers.com (Neil Salnero) Jan 9, 200910. ECONOMIST.com (Unknown Author) June 23, 2009 http://www.economist.com/specialreports/displayStory.cfm?story_id=14483896

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External Analysis

Threats

1. Recession

The U.S. Travel Association expects travel spending in the United States to decline by nearly 9 percent this year, to $705 billion, which includes domestic business, and leisure travel as well as spending by international visitors. Spending is expected to increase by 6 percent in 2010, but that does not make up for the large dip in 2009. People are redeeming more points in 2009 than they did in 2008 for free hotel stays. Industry wide, redemptions are running about 9% higher, according to New York University’s lodging school.

Best Western should remind their consumers to redeem their membership points to keep their rooms booked and have their customers remain loyal through the recession.

2. Other Sections of Hospitality

With the recent recession people are looking for more accommodations and activities to enjoy on their vacation, instead of hotels they are looking at cruise ships and all-inclusive resorts. –“It is no secret that lines have been discounting heavily That has helped maintain occupancy levels of nearly 104 percent this year — parents and children sharing a cabin push the number above 100 — which is in line with the historical average.”

Consumers are looking to save every dime on family vacations, Best Western could cash in on this by providing multiple room discounts.

3. Third-Party Websites

Some people are cutting hotel accommodations all together. They are using websites like couchsurfing.com to link up with host at are lending out a free couch to crash on which eliminates hotels in the traveling experience. Stateside, SixSuitcaseTravel.com helps 6-pack families find hotel rooms, travel and activities. The site features more than 2,500 hotels and suites in more than 1,100 cities, including small towns and rural areas.

Consumers aren’t making hasty, over-night decisions anymore. They are exercising sophistication and savvy when it comes to travel planning, Best Western could exercise this by implementing a robust website that provides a wide variety of information and ease for its customers in order to compete with such sites.

11..http://www.iconoculture.com/SMART/Content/View.aspx?docname=co_2009COLeisureTravel_10769812. http://www.nytimes.com/2009/10/13/business/13travel.html?scp=1&sq=Hotel%20Industry&st=csehttp://www.iconoculture.com/SMA13. http://travel.nytimes.com/2009/08/19/realestate/commercial/19hotel.html?scp=11&sq=hotel%20industry&st=tcse

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Potential Growth Strategies

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S - O

Corporate citizenship through sustainable energy use.

Align the company with sustainable products/services and promote this as a new platform.

Advertising iniatives for sustainable efforts.

Diversifying product portfolio.

W - T

W - O

S - T

Strengths

Opp

ortu

nitie

sTh

reat

s

Weaknesses

Best Western

Potential Growth Strategies

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S - O

Corporate citizenship through sustainable energy use.

Align the company with sustainable products/services and promote this as a new platform.

Advertising iniatives for sustainable efforts.

Diversifying product portfolio.

W - T

W - O

S - T

Strengths

Opp

ortu

nitie

sTh

reat

s

Weaknesses

Best Western

Self-Powered Wireless key card SwitchMicrofiber Towels

Organic Sheets / BeddingOrganic Toiletries (toothpaste, shampoo, etc.)

S-OEmploy the franchise network to internally promote the use of sustainable technology throughout Best Western’s global franchises, citing benefits of significant cost reductions in energy savings. Meanwhile, fully utilize the existing Internet framework, as a global marketing communications means, to advertise this campaign and effort. Thus, consequently boosting Best Western’s corporate citizenship reputation and brand image. (S1, S2, O1, O1)

W-OAlign the company with sustainable products/services and promote this as a new platform in order to create differentiation amongst competitors. New sustainable practices and products can potentially decrease variable operational prices, while creating a sense of value equality that was lacking in the current high room rates. Sustainable practices could also be implemented in the advertising techniques but heavily pushing online and paperless methods. (W1, W2, W3, O1, O2)

S-TTake advantage of the current recession by expanding their business portfolio; the company should look into opening things such as an all-inclusive resort or spa. Because Best Western has a strong presence in the global community they would be able to get more capital lenders for this ventures. (S1, S3, T1, T2)

W-TStart a new advertising campaign that revamps Best Western’s image in the public mind. Focus especially on exemplifying the hotel’s newer, upscale branches that are comparable—if not better— to sub-brands of higher-priced hotels such as Hilton Garden Inn. Also increase Best Western’s sustainability efforts and weave this into the new campaign. (W1, W2, W3, T2, T3)

Industry Analysis

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Rivalry

Subsitute Products

New Comepititors

Sub-brands

Resort / Cruise / Spa

Buyer Decrease

Franchiscees

Limited Speciality Suppliers

Multi-Competitors

Diversification

Consumer PowerSupplier Power

Porter’s 5 Factors

Industry Analysis

RivalryThere is a large amount of comparable hotels in the industry and Best Western seems to be placed at the bottom in terms of revenue. However, there isn’t a large amount of diversification amongst competitors. The advantage that Best Western has over its competitors is its worldwide distribution, and that each hotel has its own unique local appeal.

New CompetitorsAs high-end hotels loose revenues to the slowing economy, the strategy of sub-branding themselves has become popular, and with the backing of a quality brand-name and more resources creates these emerging chains creates strong competition for the existing industry.

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Cambria Suites (Choice)

Hotel Indigo (InterContinental)

aloft (W Hotels/Starwood)

Industry Analysis

Substitute ProductsToday there are more outlets for leisure people aren’t just satisfied with hotel accommodations, they are looking for more, an all-inclusive resort, spa, or cruse ship. To add to this with the current recession more people are looking to cut spending money on hospitality all together, instead many people are either staying at friends/relatives homes or having a “staycation.”

Supplier PowerSince Best Western’s strategy involves using more sustainable technology the company is not in a position of power with their suppliers, this is due to the limited amount of suppliers for the specific products the company is looking to acquire. For example Best Western is looking to purchase a new wireless Key Card Reader that automates hotel room energy conservation by disabling HVAC, lighting and electrical loads in unoccupied rooms, but since this technology is recent there are only two companies that provide it, which are EnOcean and ILLUMRA which gives them all the power in the consumer supplier relationship.

Consumer PowerDue to the current economic fall, buyers are few which makes them highly powerful and this heavily includes the franchisees. In terms of quantity purchases, the hotel industry depends on peek seasons (short-time periods) in order to gain the majority of its revenues. However, the business-travel consumer associated with economy lodging may be the exception to this rule because in general business is conducted year-round.

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Resource Based View (VRIO)

S1: Successful franchised business structure V – Allows for a cost-effective way to quick and effective global expansion growth. R – Many hotel brands are able to set up franchised business structures. I – Inexpensive for another to imitate this structure, however, brand reputation and recognition matter. O – Best Western has a 99% franchise renewal rate.

S2: Expansive integrated marketing communications – Strong Internet framework set up V – Allows an increase in revenue stemming from the e-commerce market. R – World Wide Web endeavors are very accessible and easy to implement. I – World Wide Web endeavors are very cheap to implement. O – Best Western exploit their e-commerce abilities, however, have not taken full advantage of their e-marketing potential.

S3: Brand Recognition: Worldwide presence and largest hotel chain V – From brand recognition, customers would be drawn to their services, and thus, increase their revenues. R – There are other hotel brands have this resource, however, few that compete within Best Western’s specific target market. I – It would be expensive for a new brand to imitate this because they would have a build a strong reputation and trust network. O – Best Western maintains good relationships with their global network of members by well-balancing their franchisor control and franchisee independence to lead each franchise.

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VRIO Analysis

Best Western

Resources & Capabilities

Successful franchised business structure

Competitive Parity

Normal

Normal

Above Normal

Competitive Parity

SustainedCompetitive Advantage

YES

YES

YES YES YES YES

YES/NO

NO NO

NO NO

YES

Expansive integrated marketing communications - Strong Internet

framework set up

Brand Recognition: Worldwide presence and largest hotel chain

INTE

RNA

LST

REN

GTH

S

Valuable? Rare?Costly to Imitate?

Exploited by Organization?

Competitive Implications

EconomicImplications

BCG Matrix

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BCG Matrix

Divisions:1. Best Western2. Best Western Premier

Relative Market Share PositionHigh

High

Low

Low

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BCG Matrix

Divisions:1. Best Western2. Best Western Premier

Relative Market Share PositionHigh

High

Low

Low

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2

Strategic Proposal

Chosen Strategy The strategy that we propose is that of a communication and advertisement strategy that will cultivate Best Western hotels as good corporate citizens. To do so, we propose the adoption of Green sustainable, and eco-friendly procedures on the hotel frontline. This includes energy use, hotel amenity supplies and progressing towards LEED-certified buildings.

Long Term Objective

All future Best Western Hotels will be LEED certified.

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(Advertisement Examples)

Sleep well...you (and your earth) are in good hands

Best Western is proud to announce its certification by Energy Star.

Still Best Western, only better

Wake up refreshed...in the comfort of resilience

Best Western is proud to announce its partnership with Amenity Services, providing custom environmentally friendly products, from bed sheets to body wash


Rest Easy...our foundations are built on responsibility

Best Western is proud to announce its first LEED certified hotel

(the first of many)


Atlanta, GA

Strategic Proposal

New LogoIn congruence with a new sustainable image, a logo modification is a necessary element in the communication and advertising strategy for Best Western. Sustainbility evokes a sense of simplicity and modernity, so by streamlining the existing logo down to its most recognizable feature, the crown, the company will maintain its existing consumer recognition, while still updating its image.

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Best Western Hotels

Strategic Proposal

Sustainable Products / Suppliers

Amenity Services provides an exclusive collection of environmentally friendly hospitality amenities and acts a direct source for eco-friendly products, which include coffee, toiletries, furniture, and appliances.

Energy Star is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy helping us all save money and protect the environment through energy efficient products and practices.

Americans, with the help of ENERGY STAR, saved enough energy in 2008 alone to avoid greenhouse gas emissions equivalent to those from 29 million cars — all while saving $19 billion on their utility bills.

LEED provides a suite of standards for environmentally sustainable construction. The hallmark of LEED is that it is an open and transparent process where the technical criteria proposed by the LEED committees are publicly reviewed for approval by the more than 10,000 membership organizations.

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Strategic Implementation

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(Implementation Timeline)

We suggest the implementation of two simultaneous communication strategies, one that runs internally through the company and to all its members, and the other externally that targets the target market.

The internal communication targeted towards franchise holders/ members would include advice handbooks on going becoming a more eco-sustainable hotel, an update of the Best Western franchise hotel criteria, member conferences to convey the benefits and potential cost-savings, amongst many other small implementations.

The external communication will serve the entire brand name perception in the eyes of business and leisure travelers. This will mainly be conducted through an advertising strategy running a course of 3 advertisements that reflect on sustainable energy use, our choice of eco-suppliers, and the drive for LEED certified hotels.

Implentation Map

Regional conferencesevery 4 months

20% Implentation atFranchise

LEED Advertisements

Partnerships with environ-mental organizations for

corporate giving programs

Advertising/ Marketing-for Amenity Services and Energy Star appliances

Update Best WesternManual

3 Months 6 Months 1 Year 5 Years

Update Best WesternWebsite

3 Years

Update Best WesternLogo and Signage

Internal

External

Conclusion

The communication and advertising strategies suggested by our team are geared toward presenting the Best Western name, their services, and their hotels as a pioneer in eco-concious practice for affordable hotels. Our strategic suggestions aim to increase brand equity by creating differentiation from Best Western’s competitors and establishing new product/supplier relationships. Overall the strategies given are a reflection of Best Western’s current internal possibilities and the external opportunities of today’s industry and market.

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References/Resources

Amenity Services, http://www.amenityservices.com/products_greenroom.php

Best Western, http://www.bestwetern.com/

CNN, http://www.cnn.com/

Energy Harvesting Journal, http://www.energyharvestingjournal.com/

Energy Star,http://www.energystar.gov/

Hunt Textiles, http:www.hunttextiles.com/products/

Lodging Hospitality, http://www.lhononline.com/

The Company Store, http://www.thecompnaystore.com/

The Economist, http://www.theeconomist.com/

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Documents

Sauterelle Strategic Report