Goals of expansion strategy
The goal of Douglas Hall, which is currently in charge of creating an expansion strategy for Playa Dorada is to create a new expansion strategy in long term which may be by creating new facilities for people using tennis courts and increase the efficiency of the actual existing tennis courts by modifying or optimizing playing hours or pricing of the courts. Additional to this Hall needs to satisfy all parties existing at Playa Dorada, including the following departments:
-Research operations / low investment, easy to manage
-Marketing Sales / new tennis club house, lounge and shop
-Finance / cash flow and ROI
-Development / blending into nature and exotic architecture
-Create an expansion strategy quickly
-Satisfy all parties
Offered adjustments and solutions in the case
-Readjust pricing strategies
-Build new courts
Problem definition internal and external
-guest expect to double soon
-increasing demand of tennis activities – not being able to keep the upholding trend
-land limitation for additional courts
-primary: capacity fulfilment and pricing structure
-overcrowding can result in decrease of sales in houses
-satisfy all parties needs
The problem of Playa Dorada internally and externally are the facts that the demand for the tennis courts is growing steadily and intensively. The amount of guest wanting to use the available tennis courts is forecasted to double the next years. Therefore the existing tennis courts cannot keep up with the raising trend of using tennis facilities at the Playa Dorada beach resort, which can result in unsatisfied guests, because they cannot use the desired tennis facilities during their holidays. Being unsatisfied guests can want to change the resort for holiday in the following holiday seasons because Playa Dorada is overcrowded and desired activities cannot be done. In addition to this the tennis courts are mainly utilized by guests that are visiting the resort for the second and third time. Guest that are at Playa Dorada for the first time usually prefer to use the beach as a major tourist attraction rather then play tennis or golf at the resort.
Another issue that exists is the limitation for additional tennis courts. The demand for more tennis facilities could be stilled by building new tennis courts. The problem is that there is only space in order to build only four additional tennis courts which might only help in the short term of stilling the growing demand as forecasts are expecting continuous growth. The efficiency usage of the actual tennis courts is another problem as those usage seems not to be maximized in terms of capacity. The currently existing tennis courts are usually available around 8am in the morning and with the sun going down in the evening. Too many guests are the general issue.
Additionally the pricing structure might be resettled in order to still the demand for the available tennis courts. The existing high amount of guests and being overcrowded in some departments at Playa Dorada Inc. can result in a decrease of sales in Playa Dorada’s main profit activity, the sale of villas on the resort. Not dealing with the high demand of guests, and trying to satisfy all needs can result in huge losses and decrease of ROI for Playa Dorada as their villas need a huge investment to be build. This could cause a general existing issue for the whole Playa Dorada Inc. At least there exists the issue of satisfying all parties and departments inside Playa Dorada as long as they do not have the same expectations. All departments have different priorities and Hall needs to identify the most relevant ones and to find compromises for all parties included.
-families with kids
-income more than 125000$ a year
-9-10 days resort vacations
-customer play tennis during morning hours and late afternoon
-customers usually play one hour
-prefer clay courts
-prefer less humidity and good climate
The customers of Playa Dorada Inc are in general families with one or two kids with parents that have the average income of 125000$ and belong to higher positions in companies or organizations such as managers. In average those families spend about 9-10 days at the beach resort in spring or winter. According the tennis courts the customers usually prefer to play not more than one hour in the morning around 9-11 am or the late afternoon 4-6 pm which are the preferred and most desired playing hours. The grown up customers which are usually the parents within the families are the main clients for the courts, providing most profitability. Those customers prefer clay courts as they are not as hard as the rubber latex ones. Many clients like to refuse from the rubber latex courts as it might hurt their bones.
Strengths (Ranked from 1 strong to 6 less important)
-brand image well known for quality and in general
– brand awareness (2) -many activities in resort as tennis golf and so on (4)
-Good location tourist destination for holidays (3)
-steadily high increasing demand of facilities and high interest of clients for the Playa Dorada in the last few years (1)
-74% of guests well educated (6)
-clients with high income (5)
PD is already having a strong brand awareness among customers. The resort is known for being a luxurious place for well educated people with a higher then average income. PDs beach resort focuses on this people and creates a community for well educated and high income people. Many guests like the weather and the activities the resort offers and for this reason they buy accommodations or return to the resort in the following years. In addition to this the resort is located in Boca Raton, Florida where the weather is good during the winter season and American families can travel there quite fast without long flights to tropical and exotic places.
Therefore the demand for PDs beach resort is steadily growing what is another strength for the company as it provides temporary safety in visitors and allows to forecast that at least the amount of clients should not decrease in the short term. At least the high income of clients allows higher prices and provides clients which are more willing to spend money during their holiday period. Those clients arrived to spend their money in order to recover and have a nice time at the beach resort.
Weaknesses (Ranked from 1 strong to 8 less important)
-being unable to deal with increasing demand already (1)
-in summer courts are not fully used (4)
-no possibility to play at darkness (5)
-no courts available during most desired playing hours 9-11 am and 4-6 pm (3) -players playing more than one hour with the usage of discounts, blocking courts for others (6) -fees from maintenance costs of preferred clay courts (7) -fees from maintenance and services for housekeeping (8) -intensive advertising and promotion of tennis activities (2) The weaknesses the resort is facing are big disparities in the amount of clients during summer and winter periods as well as a lack of usage of the tennis courts during the summer period. Secondly the usage of the courts in the winter period is overcrowded what results in unsatisfied clients. The usage of courts is limited, playing in hours of darkness is not possible and the pricing structure for the plays is not actual to the existing demand.
Fees of maintaining the houses and clay courts are high.
Additionally the marketing strategy of advertising and promoting the tennis courts is not on time anymore as the courts do not have to be advertised anymore.
Opportunities (Ranked from 1 big to 6 low)
-popularity of tennis is growing in general as trend sports (5)
-tourism in Florida steadily growing (4)
-continuous increasing demand of PD and growing brand awareness at customers
(2) -increasing demand of guest and buyers (1)
-automatization of labour providing more efficiency, lower labour costs and higher margins (6)
-budget used for advertising tennis courts can be used more efficiently (3)
The opportunities of Pc are the fact that the whole tourism industry in Florida is steadily gaining popularity and is continuously growing. Additionally to this the demand of tennis courts is growing as tennis seems to be a trendy sport at this times. When PD will be able to fulfil the needs of customers according attractions in PD a good future for the profit of the organization can be existent. In addition to this margins can be increased by automized labour which can decrease labour costs. At least the budget of advertising the tennis court can be cancelled in order to use the money more efficient in another investment.
Threats (Threats ranked from 1 big to 8 low)
-overcrowding of facilities (2)
-being unable to satisfy clients (1)
-falling brand recognition (destruction of PD) and amount of clients (4)
-no sales of housing (3)
-no ROI (6)
-high disparity of guest between summer and winter time (5) -substitutes available outside the resort (8)
-continuous advertising might higher demand even more (7) Playa Dorada might have to face many dangerous threats in future, when not dealing with the issue of overcrowding at its sports facilities in the resort. Staying overcrowded and not satisfying customers needs like providing tennis courts might result in a falling brand awareness of PD and a loss in clients. This loss in clients would be highly dangerous because the sporting facilities are mainly used by returning clients to the resort. Clients that spend their first time at the resort prefer spending their free time at the beach rather than do active sports. Without satisfied returning clients sports facilities might be completely unused what would result a big decrease in ROI and increase cost for the whole organization.
In addition to this, spoiling its reputation of being a luxury and good place for people to spend their holidays in would result in a lower demand for clients that might buy housing at the PD beach resort. This would cause a giant loss in the company’s biggest profit department and the huge investment of building houses would not pay off. The existence of the whole PD resort would have been challenged. Another threat PD could face is a bigger disparity of clients during the winter and summer period. With a new investment in new tennis courts the demand in the high season might be filled but in the low season even more facilities might be unused and useless.
Therefore it would be questionable if the investment would pay back for the new courts. Without building this new courts in the resort the high demand might shift to other tennis courts outside the beach resort. Clients might be desperate to play tennis and not getting any courts and change to another provider outside the resort that is less problematic. Once the clients have gone and will be satisfied, the possibility that they will come back is rather small. Therefore the loss of clients might be very expensive for the tennis courts department.
-build lights at existing courts to provide playing at night
-avoid discounts at pricing to not encourage people to play longer
-higher prices as demand is very high in order to increase profit and ROI and lower the amount of clients
-higher prices during rush hours of tennis courts
-stop with advertising the tennis courts, advertise other sports facilities as golf
In the short term Hall needs to increase the efficiency of the already existing tennis courts. This might happen with the building of lighting at the tennis courts so that some clients that want to play tennis might play it in the hours of darkness. Installing lights is an investment but it does not take much time compared to building new courts and is rather small.
In addition to this all discount strategies have to be cancelled as PD does not want clients to play more than one hour but to increase profits and ROI of the tennis courts already existing. Another issue is that the more clients can play during one day the satisfied the mass will be. In opposite the prices for renting the court for a second hour might be slightly higher. This will make clients not even think about playing another hour just because it is cheaper. Furthermore clients will still be satisfied as they already have played on the courts this special day. If necessary it is possible to advice them to play for a normal price at hours where the courts will not be fully used.
Another increase in pricing should be made during rush hours of playing at the tennis courts with the reason that this times (9-11 am and 4-6 pm) are the most popular among clients. Clients that really consists on playing at those hours will be more willing to pay.
Finally the advertising for the tennis courts has to stop because the courts are already facing a too high amount of customers in the high season. The marketing strategy may be modified to advertise the courts at low season by for example providing different tournaments or events at the tennis courts (further information see long term strategy).
– tournaments and events in low season (tennis courts might be used differently)
– build two new tennis courts to answer the demand – you can explain your potential clients that you are reacting to their expectations it might show them that investing in PD beach resort is reasonable
– find another facility in the beach resort which needs to be promoted or use the money from advertising for other investments as new tennis courts in new regions
– if still needed after all the actions because of very high demand, build new courts at another locations of the park
– if locations might be far away you can provide transport services (golf cars) in order to bring your clients to the new tennis courts
As shortly described in the short term strategy, in the low season more clients can be attracted to the usage of the tennis courts by providing different tournaments or events on the ground of the tennis courts such as different games for kids or tennis tournaments.
The advertisement of the tennis courts itself has to stop and to be modified in order to not attract too many clients as their expectations cannot be fully satisfied. Advertising should promote another sports activity in the resort that might need more clients or at least promote the events or tennis at the tennis courts in the low season in order to attract customers when they are needed.
In addition to this techniques two more tennis courts have to be build in the area that is already provided in order to cover the forecasted raise of clients in the next years. The building of more tennis courts right now is not necessary as it is hard to forecast how pricing, advertising and lightning at the courts described in the short term strategies will influence the demand for tennis courts in the long term. The building of two new tennis courts can be used as a marketing strategy in order to show clients that PD is solving the issue of too many clients at the tennis courts that will create a feeling of safety in potential customers of houses showing them that this is the right place to invest in houses.
If there still will be relevant increasing of clients at the tennis courts, new clay courts might have to be build in another location of the PD beach resort.
In order to make the new courts attractive to the clients as they might be far away from the current tennis courts, PD might provide a transport service for clients to drive them to the new tennis courts with for example with small electrical vehicles as golf cars. The transport services might be cheap to not distract clients and just cover the cost of installing the vehicles and maintenance. If the demand for this transport services will be unexpected high it might be turned into a profit activity and expanded through the whole resort.