Host Hotels and Resorts Business Plan
0-ORGANIZATION PROFILE 04 3. 0- STRATEGY AND COMPETITIVE POSITION 05 4. 0-COMPETITIVE STRATEGY ------------------------------------------------06 5. 0: SUMMARIZE FINANCIAL PERFORMANCE---------------------------08 6. 0- ANALYZE TRENDS----------------------------------------------------------08 7. Based on analyzing the Host Hotels & Resorts resources, capabilities , evaluating the external environment,the risks, market barriers and competition Host Hotels & Resorts, Inc. , should expand into the Venezuela market. 1-Introduction This report is a plan for Host Hotels & Resorts to expand into the Venezuelan market. This paper will summarize the main points of Host Hotels & Resorts background, analyze their strategy and competitive position. By investigating trends in the industry, Applying Five Forces Model and evaluating external environments it will also disclose the risks that are obtainable by it's economic, political and cultural environments in which the hotel operates. By 1957, Marriott opened his first hotel in Arlington, Virginia.
The company was created in 1993 when Marriott Corporation split into Marriott International and Host Marriott Corp (Host Hotels & Resorts Inc. The key executives of Host Hotels & Resorts are Richard Marriott, Chairman. James Risoleo, President, and Chief Executive Officer, Elizabeth Abdoo- Executive Vice President. 0- Strategy and Competitive Position of the Organization The company undertakes an intense and critical analysis of brands existing in important markets that have high potentials of growth in revenue with resistance to entry of new brands. They have placed the organization in a good position, earning it accolades and ratings as the most admired company. Host Hotel and Resorts has many strengths and weaknesses in their organization some of the multiple strengths which include strong financial power, extensive networks, a diversified portfolio, skilled and qualified staff and low cost of operation because of recycling and energy saving technology (Bluhm, 2018).
In addition, it has its share of weaknesses. These include slow decision making because of too many consultations and a target market of high class clients only which limits the market size. To create and develop a competitive advantage in the global market, the organization must pump in more funds into creating systems that conserve and recycle resources and reduce operating costs of the business. In this case, its market demographic is to mainly target a group of people that can afford luxurious hotels and lodging which are well secured and properly managed. Also, the company has a strong balance sheet which is normally formulated by experts who are well versed in this sector ("Host Hotels Is Set to Grow - GuruFocus.
com", 2018). The properly formulated balance sheet allows the company to balance its expenditure and its income thus providing a comparative advantage. Through the formulated balance sheet, the multi-billion Company can come up with reasonable prices that are attractive to its customers and unnecessary and rapid fluctuations of hotel prices are mostly avoided thus being preferred by most people. In conclusion, it is evident that Host Hotel and Resort has so far grown into a profit-making firm due to the strategic organization that makes it have a competitive advantage and its proper use of the porter five models in service delivery. Through this it can target a classy society which can afford its services, thus being one of the reasons for its successful growth.
This illustrates the need for the management of Host Hotels & Resorts to put into consideration the threat of new entrants, substitutes, and suppliers while marketing its products and services in the Venezuelan market. FIGURE 1: Porter’s Value Chain Model Human Resource Management Technology Development Firm Infrastructure Procurement Inbound logistics Operations Outbound Logistics Marketing Sales Services Generic Strategies Generic strategies are the ways through which a firm can compete. There are four primary forms of competitive advantage firm can have: differentiation strategy, market penetration, cost focus, and integrated differentiation. Focus strategy is essential for the organization because it would enable it to focus on product and quality service to a limited group of clients. This is relevant because the firm aims at reaching out to a target segment of one of the major cities in Venezuela (Caracas).
Through the integrated cost leadership-differentiation strategy, the company will rely on different strategies. This way, it will be able to adapt quickly and learn new technologies. It will draw a lot of customers from Caracas to purchase the Host Hotels & Resorts’ prodcuts and seek relevant services. After, reviewing the chart, the average debt to equity was 0. 5647 ("Host Hotels & Resorts Debt to Equity Ratio (Quarterly) (HST)," n. d. Revenue and Profits HST Annual Income Statement- See Figure 3 and 4 As you can see from the figure shown, in 2017, Host Hotels and Resorts currently stands at $564M. After deducting all the operating expenses, interest and taxes from revenue. 86% for the period of five years. In 2018, As you can see from the profit margin ratio chart is at 18.
80% and the gross margin is 39. 30% ("Host Hotels & Resorts Debt to Equity Ratio (Quarterly) (HST)," n. d. The organization competes on the nature of the quality of services and products offered to its clients. This is consolidated intimately with the costs charged for the same goods and services. The number of employees determines the size of the company. Huge companies have a ton of employees while a company with few employees will be considered as a small company. The quantity of clients also determines the measure of how substantial an organization is. To compete favorably in the industry companies, must invest heavily in technology. The companies also should diversify their products and services to cater for the constantly growing customer base. The organization competes based on the quality of services and products offered to its customers.
This is incorporated closely with the prices charged for the same goods and services. The company offering the best quality at the lowest price register success stories. A company is classified as a large company if it has huge investments in terms of capital and the resources invested in. the number of employees working in the institution is also a determinant of the size of the institution. There are several significant threats of new entrants such as; the low economy of scale due to centralized production, poorly differentiated products, and low initial capital required for investment, low consumer switching costs and technology. Intensity of Rivalry The hotel industry in position faces much rivalry posed by other industries such as tourism industry, nutrition and deities industry and the restaurants.
The rivalry is the way in which the hotels compete strategically and economically to gain more profits in the market. The power of suppliers thus influences competition and profitability in the industry. Suppliers in the hotel industry have high power because the suppliers are less than buyers, lack of differentiated products, low charges for suppliers switching and high dependence of buyers on supplies. Some of the most common goods provided in this industry are foods, drinks, and accommodation. The industry is becoming more competitive since competitors tend to provide goods which are to those of their competitors. Consumers will then have to choose from a variety depending on the quality of the products and the prices. In this environment, the laws and regulations of the country should be analyzed to the best.
High negotiations with the country’s lawyers must be engaged for explanations of the laws governing the country in terms of the type of product the industry will need to offer to the country citizens. Secondly, the technological environment should be well-defined. The level of technology in the respective country the hotel industry needs to expand services is also a point to consider in analyzing the external environment. This enables the hotel to gain ideas of the products which will be profitable to the hotel industry. This is essential as it is likely to enable the company in question to device a competitive way of staying ahead of its rivals. 0- Conduct a PESTEL Analysis This analysis explains the environment to which the industry is operating and the impacts it brings to the hotel industry on its daily operations.
The ‘P’ stands for political factors that influence the performance and operation of a firm such as the stability of politics in the market, policies regarding foreign aid trade, taxation policies and the laws regarding the production of labor. The industry should obey such policies and restrictions and adjust their marketing strategies and policies to fit in the environment. In relation to the Venezuela market, the PESTEL analysis has the following impacts. Such factors have a great impact on the performance of the hotel industry ‘T’ represents technological factors which can have an impact on the firm’s performance such as the level of technology of hotel products produced in that country. Improved technology influences the way the industry produces goods, the way it distributes the products and the means and modes of communication in the market.
Technological factors shade light on the digital advancements the country has made and whether they favor the organization. ‘E’ stands for environmental factors within or surrounding the industry which affects the performance of a firm. These are substantial because there are few raw materials, high population target, ethnicity and the footprint targets set by the government which may face sellers in the market due to the demand from consumers. The organization’s activity of locally sourcing cheap raw materials is the candidate for relocation into Venezuela This is because the raw materials are readily available in and cheap in the country. The challenge of marketing in coordination with the global standards would arise because of the new unique market. 0- Assess Global Value Chain The globalization of product supply chains, competition based on the quality of goods and consolidated retail power are some of the key factors that are likely to enable any organizations to effectively enhance their various operations in foreign markets.
When equipped with adequate technological tools, such organizations are highly likely to experience liberalize international trade through increased foreign investments. As such, the company in question should be willing and in a capable position to exercise expansive supply chain within Venezuela as a key technique aimed at enhancing the flexibility of sourcing high volumes of goods and services at very minimal prices. As such the societal way of life of the people in a given environment often tend to highly influence business operations of an organization. To ensure that the organization in question is able to stay ahead in the market, it is essential that is able to adequately adapt to the existing cultural standings so as to ensure that it is able to stay ahead of its competitors with regard to ensuring that it meets the needs of the available consumers (Dlabay, 2010).
For background and guidance, consult (International Cultural Differences) and read about the impact of culture on best-practice production and operations management. Some of the most common cultural changes that are likely to affect the way business operations are run include; demographics, advertising techniques, changing demographics, and/or internal environment. For the company in question to adequately ensure that it can venture into any untapped markets, the marketing team should ensure that it is able to adopt local strategies as opposed to incorporating old ones from the company’s headquarters. This is because the political temperatures of the country are cool and this means the security in the country is good. The government of the country is currently on a mission to encourage both local and international investors to invest in the country.
To do this, it has lowered the taxes that new organizations have to pay in the first five years of their operation. This is an offer that the organization can take and make the most of it in the next five years. In addition to the tax reduction policy, the country’s legal environment has also proven to be investment friendly. This will not only increase the number of sources of income for the organization but will also increase the market share and the customer base in the country. The organization has also, over time, created a business culture that allows it to employ the best-skilled staff and take them through an institutional training to enable them to work under the organization’s international standards, offering the best quality in the industry.
It is able to do this in Venezuela because of its strong financial power. The organization will also have to employ a large percentage of the locals in order to inspire confidence in the public. The organization structure also must be clearly defined from the highest rank to the lowest so as to enhance a smooth running and operation of the organization. , & Back, K. J. Integrated resort: A review of research and directions for future study. International Journal of Hospitality Management, 69, 94-101. Bluhm, M. CGMA. Porter’s Five Forces of Competitive Position Analysis. [online] Available at: https://www. cgma. org/resources/tools/essential-tools/porters-five-forces. May 2018]. Dlabay, L. R. International business. Mason, Ohio: South-Western. Retrieved May 9, 2018, from https://finance. yahoo. com/news/host-hotels-resorts-upgraded-improving-202411952.
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