English for Management - Business Plan for China Empress Hotel 1 May 2008

English for Management Business Plan: China Empress Hotel (Hong Kong)

1. 2. 3. 4.
5.

Executive Summary Product / Service Description Market Analysis Problems Strategy and Implementation Conclusion

6.

English for Management - Business Plan for China Empress Hotel 1 May 2008

Business plan: The China Empress Hotel

1. Executive Summary The China Empress Hotel is a 4-stars hotel conveniently located at Tsim Sha Tsui. The hotel was established 30 years ago and has favorable reputation. It is prominent for its China-themed decoration as well as its Cantonese cuisine. Apart from the distinguishing feature of its decoration, it is centrally located in the heart of Hong Kong business and tourist district in Kowloon, addressed in Granville Road, Tsim Sha Tsui. Its major customer are from Mainland China and the rest from other countries such as Japan, UK, USA, Germany and France. The hotel provides services including accommodation, food and beverage, additional guest services such as swimming pool, conference service and meeting rooms. There are three renowned restaurants and caf providing excellent catering service namely Starlight Coffee Shop, Golden Dragon and Royal Grill Room. The Golden Dragon features a holistic menu of high class Cantonese cuisine while the Starlight Coffee Shop serve guests with Western and Asian menus with daily mixed east and west buffet breakfasts and lunches. In order to take care of every single customer, the Royal grill serves conventional western grills as well as steaks and wine. This business plan offers an opportunity for the top management to review the hotels objectives and future strategic plans. Furthermore, it provides gradual plans for business improvement, sales target attainment, profitability maintenance. The plan will focus on 5 main sections i.e. the company, products and services, market analysis, problems and strategies, implementation and lastly financial plan. Financial overview
HK$ 120 M HK$ 100 M HK$ 80 M HK$ 60 M HK$ 40 M HK$ 20 M HK$ M FY 2005 FY 2007 Sales Gross Margin Net Profit

English for Management - Business Plan for China Empress Hotel 1 May 2008

1.1 Objectives a. To hit the sales target to HK$115 million by the last quarter of fiscal year 2008 b. To increase minimum 1/3 net profit than that of FY 2007 c. To maintain and strengthen the unique service of the hotel through promotion and staff training

1.2 Mission The mission statement of the hotel is service from the heart is popular and notable. However, Providing you with a Care-free stay, the slogan of the Guest Relations Department is comparatively less impressive which will require further promotion to gain recognition.

2. Product / Service Description

2.1 Competitive advantages There are several advantages of the hotel accomplished its upper hand in the industry. First of all, the 30year long history results in the hotels established reputation. It successfully built up brand awareness in the market and thus consumer has confident in the hotel. In addition, the professional and courteous services, outstanding chef, desirable and comfortable environment of the hotel provide guests a comfortable and delightful stay. Also, the hotel was honored with the outstanding hotel award in 2007.

2.2 Competitive disadvantages

However, the annual revenue of the hotel was affected by the unfavorable external factors. The competition within the market has become vigorous, evolution of the hotel service is required to beat the competitor and maintain the hotel standing. There are two obstacles the hotel is currently facing; first , disinterest of the hotel catering service and second, inadequate language ability and communication skills of staff. In order to tackle with the difficulties, we will carry out compulsory training scheme and introduce fusion style to the catering service to the hotel.

Market Analysis i. Industry Analysis

English for Management - Business Plan for China Empress Hotel 1 May 2008

Market Share According to the Annual Report 2007 issued by the Hong Kong Tourist Association, over 30 hotels are situated in Tsim Sha Tsui District, in which the Peninsula Hotel and the Sheraton Hotel get 25% and 21% of the market share in the area. While China Empress Hotel shares slightly less percentage of the market share than that of the Peninsula and the Sheraton, it still gets the third largest number of shares in the area. The remaining includes the well-known Gateway Hotel, Intercontinental Hotel, Hyatt Regency Hong Kong, and 20 more other hotels. ii. Target Market Analysis

Target Market Distribution - Nationality

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Mainland South Korea Japan Australia United Kingdom USA Others

Since the establishment of the Individual Visiting Scheme (IVS) on 28 July 2003, the number of mainland visitors increase dramatically each year. Till the end of Year 2007, China Visitors have contributed to more than a half of the China Empress Hotel room occupancy,

followed by the United Kingdom, Japan, Australia, South Korea, USA and other places like India and Middle East. Among the Mainland visitors, more than half of them are visiting Hong Kong under the Individual Visit Scheme, aiming at shopping (purchasing brand-name products), site-seeing and family visiting.

Target Market Segmentation

60.00% 50.00% Traders 40.00% 30.00% 20.00% 10.00% 0.00% Airline crews, 9.68% Others, 3.79% Traders Tourists Airline crews Others Traders, 27.53% Tourists Airline crews Others Tourists, 59.00%

For the ease of analysis, we have categorized our target market into 4 main categories:Traders Tourists Airline Crews Others (including local HK people)

Based on the figures collected from our Human Resources Department, customers in our hotel are mainly tourists, who in average stay in the hotel for around 4 to 6 days; while the second large group is businessmen normally staying for around 3 to 5 days. The remaining includes the airline crews and others such as local Hong Kong people, whose duration of staying in the hotel is around 1 to 2 days. iii. SWOT Analysis

English for Management - Business Plan for China Empress Hotel 1 May 2008

(A)

Strengths The China Empress Hotel has been well-known for its long history with fascinating traditional Chinese design and decoration, together with its high-accessible location, with great infrastructure like the Space Museum nearby. Regardless of the highly competitive business environment with over 20 hotels located in the same district, the hotel actually enjoys an economy of agglomeration in which customers relative cost in searching for a place to rest in lowers and the hotel in return could attract a greater market. Also, we have long-serving staffs who have been working in our hotel for more than 30 years. With their knowledge on the hotel-field as well as good understandings on the overall operation, they can motivate the inexperienced staff.

(B)

Weaknesses The hotel does not have a diversified range of facilities when compared to the competitors within the Tsim Sha Tsui District. Also, the hotel sector focuses very much on the service quality. Therefore, inadequate staff language ability and communication skills would definitely hinder the development of the hotel, resulting in the high turnover rate.

Opportunities In long-term, the Government has launched a series of policies, such as the Individual Visiting Scheme (IVS) to boost the tourism development. Also, newly-constructed infrastructures like Disneyland Hong Kong and the duty-free shopping environment has made the business environment more desirable, as all these provide a better environment to attract tourists. In short-term, the number of tourists will dramatically increase during the Olympics. Also, increase in RMB exchange rate has increased the purchasing power of the mainlanders, who is the major target audience of our hotel.

(D)

Threats One of the undesirable market conditions is the damaged reputation of shops. We have received complaints from customers that they were cheated in retail shops nearby. Even though reported case is still rare, the negative word-of-mouth would still weaken Hong Kong attractiveness. Furthermore, keen competition results in diseconomies of agglomeration, and our relative competitiveness will be lowered without improvement or innovation in aspects like service quality and variety of facilitates.

Problems For ease of reference, we have categorized the problems into internal and external problems i. Internal

Low Room Occupancy Rate Since year 2001, there is obvious decrease in the room occupancy rate in both the Taiwan and Hong Kong Hotel

Decrease Quality of Service Efficiency of front-desk and baggage handling staff is low, as well as the unhelpful and unfriendly

English for Management - Business Plan for China Empress Hotel 1 May 2008

services provided by the waiting staff. It is even reported that one of our staff kept the customers waiting outside the front-desk and he just went out and smoke. What is more, the average language ability of staffs who are newly-employed is unsatisfactory and some of them even have difficulties in communicating with foreign customers in English and Mandarin.

Unsatisfied Quality of Food and Beverage department It is reported that the customers are unsatisfied in the quality in the food and beverages department. 1. Golden Dragon: Set Lunch 2. Royal Grill Room: Menu Dinner 3. Starlight Coffee Shop: Beverage Especially in the quality of beverage, customers commented that the variety provided is not comprehensive when compared to the nearby Peninsula Hotel. Also, limited choice is available on room service menu only 13 types of dishes, 4 and 3 kinds of non-alcoholic and alcoholics drinks available respectively.

Old-Fashioned Decoration An unfavorable condition is that customers commented on our old-fashioned nature of the outlets. Some of them prefer modern decoration like western style decoration. This decreases the attractiveness of our hotel.

ii.

External Keen Competition Over 20 hotels and motels are situated in the same district and thus lower the comparative market share of our hotel. Even more, some of them (like the Sheraton and Marco-Polo Hotel) offer travel packages and discounts to customers who spend more that HK$10,000 per person in their hotel.

Dynamic Financial Environment Significant increase in RMB exchange rate weakens HK Dollars purchasing power. Therefore, the costs involved in operation, such as food purchasing increases. Also, the high inflation rate in Hong Kong general price decreases distracts tourists from the other places, like the Japanese and Korean, from visiting Hong Kong

Deceptive cases destroy Hong Kong Tourism reputation Several reported deceptive cases in shopping sites affects Hong Kong image as shoppingparadise. Instead of spending in Hong Kong, tourists tend to prefer visiting nearby places like Japan, in which the image is much better.

Strategy and Implementation Summary

English for Management - Business Plan for China Empress Hotel 1 May 2008

Occupancy rate is driven by referrals and repeat business, repeat business depend on consistently high quality service, staff, beauteous decoration and excellent room service menu. The marketing strategy is subject to change upon a report on the operations of the China Empress hotel. Marketing Strategy Our target markets would be those guests from Mainland China and those guests from the other places, like Japan, UK, USA, Germany and France. Also, we will target on those new visitors to Hong Kong. Our marketing strategies are divided into the internal and external strategy. For the internal strategy, we needs to achieve several goals: first, to higher the efficiency in the guest relation department; second, to increase the occupancy rate; third, to improve the food and beverages services and lastly, to improve the quality of staff. For the external one, we needs to due with the problem of keen competition and dynamic financial environment. The marketing budget will not exceed 6% of our gross annual sales and we will carry out the internal strategies (first-half year) before the external strategies.

Product Strategy (Internal)

China Empress hotel will be positioned as a new and unique atmosphere hotel with different new facilities, like sauna room, spa, indoor swimming pool and game room. Service packages will be set up for different guests. For example, in the service package, we will provide extra discount in Duty-free shops; different type of one-day tour; free shuttle bus service and free octopus as souvenirs for our guests. Apart from that, a large range of referral services (i.e. restaurant recommendations, shopping, area attractions) will be made available and tailored to the needs of the particular guest. Menu re-construction will be carry out by hiring famous international chef to design new recipe. Moreover, internal renovation will be implement by carrying out interior design campaign to get the most favorable design, so as to modernize the decorations and keep the traditional Chinese features. Intensive language training course that taught by native speakers will be arranged for all staff in a compulsory basis. In addition, the subsidies on job-related courses will be increase by 40%, up to $5000 per staff per year. In order to increase morale of staff, we will organize different social activities regularly, for example, sports competition, BBQ and Christmas Party, etc. Of course, we will also impose the bonus scheme for staff that worked over one year in the hotel, so as to lower the turnover rate.

Placement Strategy (External)

Online reservations are available for all guests over the world, which allow 24 hours accessibility. A front office

English for Management - Business Plan for China Empress Hotel 1 May 2008

staff member will be maintained throughout the night so guests are able to get answers to any question or service when they need it. This flexibility is especially attractive to the business traveler. Clients will be able to contact the China Empress hotel by telephone, fax, and e-mail.

Pricing Strategy (External)

Due to keen competition, rooms per night fees have been developed. The fee schedule takes into account seasonal rates that are common in the area. For businesses and other large group functions, pricing can be discounted depending upon the number of rooms reserved. For example, 5% off will be offered to single travel (5-20 people in a trip) and 15% off will be offered to group travel (over 20 people in a trips). Furthermore, as the exchange rate of RMB is rising, we have to find other suppliers of the necessary goods (towels, toothbrush, glass, etc) in places other than China, such as Thailand and Vietnam, so as to cut the operational cost. By this way, we can have a margin to offer a lower price to our guests

Promotion Strategy (External)

Promotion strategies will vary depending on the target market segments. Advertising and promotion are the common method used to highlight the uniqueness of our services. They are utilized primarily to attract new guests and serves to create awareness and name recognition, which is important for word-of-mouth referrals. Besides, we can invite some celebrities as our spokesperson so as to build distinctive service image for our guests. Nevertheless, direct marketing, publicity and membership program is being proposed. Marketing Plan -New Business Segment A direct marketing package consisting of the hotel information, letter of introduction, and reply card will be sent to a list of potential guests. -Publicity and Public Relations -We will promote the Quality-of-Service scheme hosted by government and hold the food festival as a means of networking in the community. It would be a way to building goodwill and increasing awareness in the community. Schedule and Budget Objectives have been established for China Empress hotel so that actual performance can be measured.

HK$ 120 fiscal year 2008, China Empress hotel should: Thus, at the last quarter ofM HK$ 100 M
1. Achieved the sales target of HK$115 million HK$ 80 M

2. Attained a higher net profit when comparing with that of FY 2007(at least 1/3 more) 3. Attained a higher occupancy rate Sales Forecast HK$ 40 M

HK$ 60 M HK$ 20 M

Sales Gross Margin Net Profit

HK$ M

FY 2006

FY 2007

FY 2008

English for Management - Business Plan for China Empress Hotel 1 May 2008