Options analysis

Analysis of Martin’s three options Option 1: Close the hotel for a year to allow mass renovation Option 2: Transforming all rooms into self-contained apartments Option 3: Forming a strategic alliance with a famous safari tour company

Close the hotel for a year to allow mass renovation Restraining forces - Missing all profits for one year - Very expensive - Potential loss of customer base, loyalty, reputation and competitive advantage (due to new brand name) - Actual workforce will miss their salary (?); no info is provided about types of contract (should the hotel pay its employees even if it’s closed for renovation? Could they keep the job without getting a salary for 1 year); if employees need to be paid, this would cause a strong cash flow problem Driving forces -Possibility to improve its competitive advantage by repositining the hotel as premier - The hotel had already reached its decline phase and needed rejuvenation - The new hotel would be much improved -The new hotel would need an improved workforce (training is needed) - Changing physical evidence, price and product would mean to change the hotel marketing mix and to create a new position within the market Option 1

Option 1 – Appendix 3 – Approach1 “Upskilling” the existing workforce -Less down-time -Motivational – increase employees’ loyalty -Less risk – as most employees would be Kenyan -Time consuming -Expensive as strong emphasis is given to training and development -Fewer applicants -No new ideas -Poor relation between employees and customers (as most of them would be Kenyan and they might not know other cultures/languages) -Employees might compete to get higher positions -As retention: most financial motivators might be used to keep the workforce -In general internal recruitment is less expensive than external recruitment

Option 1 – Appendix 3 – Approach 2 Building a new global workforce -New ideas -Wider range of experiences -Higher posssibilities to find ideal candidates -Possibility to create a more international internal environment (easier to create closer relations with customers) -Less expensive as little emphasis is given to training and development

Option 2 Transforming all rooms into self-contained apartments Driving forces - Increasing demand - Fewer competitors - First mover advantage (in case it is the first hotel to provide this service) - Good possibilities to increasse market share - Profit might be more stable due to less seasonal fluctations - Lower fixed and variable costs Restraining forces -It might be difficult to change target (this involves higher advertising/promotion expenditure) - Reducing workforce by 70% might make relations with local community difficult - The hotel should be closed for a long period to allow renovation - loss of profits - Could business travellers stay less than one week? If not, the hotel would lose some customers

Option 3 Forming a strategic alliance with a famous safari tour company Driving forcesRestraining forces -Customers might find this two- week package tour more convenient - KenSafar is a famous safari tour company > the hotel might improve its brand recognition - Promotion costs could be shared with Kensafar - KenSafar has a better understanding of local attractions > benefit for customers - KenSafar’s owner has many local networks and contacts and he knows market trends > easier communication and easier to respond to market trends - This would be an extra service > a new market opportunity in addition to existing ones -To make improvements the hotel should be closed > loss of profit + costs - The hotel has to pay a commission (20%) to Kensafar - A marketing audit is needed -Not all customers can afford a two-week holiday and might prefer staying only one week

Which option was best? Martin was unsure.... Market penetration Option 1 Product development Option 3 Market development Diversification Option 2 Product ExistingNew Existing New Markets The Ansoff Matrix

Market penetration Option 1 Product development Option 3 Market development Diversification Option 2 Product ExistingNew Existing New Markets Market penetration/Option1: -Low risk (? But the hotel will lose one-year profit...is this a low risk strategy?) - Change pricing strategy: more competitive prices - Lower profits (reduced prices to stay in the market) - Improve advertising to attract customers - Competition might increase (price wars) - This strategy could be easily imitated (low entry barriers) Diversification/Option 2: - High risk strategy - Difficult to achieve - Apartments should be diversified (different services/facilities) to provide a wider product portfolio and spread risks > to get a related diversification Product/development – Option3: -Medium-risk – more covenient - Wider customer base - Suitable for The Imperial as it has reached its decline stage (line 131)

Something in common... Common for all options: -Renovation is needed -Investment is needed -New marketing strategy/plan Common for option 1 and option 2: - Change/reduce workforce - workforce planning is needed