Burj Al Arab Strategic Plan Essay
Burj Al Arab Strategic Plan
The following report aims making a strategic plan for the real-time company. The chosen company is The Jumeirah Group and the selected hotel is Burj Al Arab, which is the only seven star hotel in the whole world. The report presents a brief synopsis of the Hospitality industry in Dubai and briefly introduces the profile of Burj Al Arab. The company conducts an internal and external analysis with the help of SWOT analysis and Porter’s Five Force Analysis to examine the current state of the environment and plan against future threats and opportunities. The report identifies the major competitors of Burj Al Arab.
It then uses the above information to formulate strategies which would enable the company to maintain their profit levels and enhance their market share in a time of the economic crisis. It also designs an implementation plan that would identify the activities to be implemented by the company to achieve their desired strategic objectives. The report recommends that the company should avoid offering price discounts or adopt any strategy that would affect the market positioning of the company. Nevertheless, they should work towards offering more value for money to their customers and look for new ways to attract them.
The following report aims making a strategic plan for the real-time company. The chosen company is The Jumeirah Group and the selected hotel is Burj Al Arab, which is the only seven star hotel in the whole world. The report conducts an analysis to understand the current trends in the internal and external environment of the company. It uses strategic tools to understand the positioning of the company in the Dubai market. It then formulates strategies which would enable the company to emerge successful in the current market environment. It also recommends activities to be initiated for the implementation of the strategic plan.
Dubai Hospitality Industry
Dubai has experienced tremendous growth in various sectors since it started diversifying their activities and building up their infrastructure. The emirate gradually gained the reputation of being the business hub of the Middle East region. The emirate also experienced a heavy influx of tourists as the Government worked hard to promote the plus points of the place. The increasing growth rate of the Dubai tourism industry had a direct impact on the Dubai hospitality industry. The investment efforts of the government were internationally recognized with the launch of the Burj Al Arab, the first seven star hotel in the world. The below graph shows how the hotel room occupancy levels had increased between 2000-2006. In 2008, the hotel attracted more than 7 million hotel guests .
Source: DTCM Statistics, 2006
However, the global financial crisis affected many of the sectors in the Dubai economy resulting in a reducing growth rates in these sectors. These negative trends were also relevant in the Dubai hospitality industry which got majorly affected by the global financial crisis due to the decline in the number of tourists travelling to the country. “The hotel revenues in Dubai fell by more than 40% in May 2009 as compared to the figures during the same period in 2008. This was mainly because fewer people throughout the world were considering traveling due to the impact of the global financial crisis (Walid, 2009). The hotel occupancies in Dubai fell by more than 14.5% in May 2009 as compared to the figures during the same period in 2008 (Walid, 2009).
Burj Al Arab
“Burj Al Arab belongs to the Jumeirah Group. The legendry hotel has a symbolic value attached to it which has gained international attention and put them in awe of Dubai’s innovative capabilities. The hotel is one of the most photographed structures in the world. The hotel is shaped like a billowing sail and has the height of approximately 321 meters. The hotel stands illuminated during night times and is simply individual, inspired and impressive. This all-suite hotel reflects the very finest that the world has to offer. The hotel’s highlights include chauffeur driven Rolls Royce, discreet in-suite check-in, private reception desk on every floor and a brigade of highly trained butlers. These services and many more assure customers of the ultimate in personal service throughout their stay” .
The profiles of the target customers for Burj Al Arab are as follows: Tourists who belong to the high income group and are willing to spend a premium amount for luxury, personalized service and comfort. Their main purpose is to enjoy leisure activities and/or shopping. Business professionals who value professional high-tech environments that enable them to keep in touch with the rest of the world while travelling. Families who value living spaces offering excellent views with high class service, relaxation and entertainment. Tour groups that value luxurious lifestyles and indulge in various types of activities and are willing to pay a premium for it.
Customer Value Proposition
The customer value proposition of Burj Al Arab is:
“Offers high class customer service coupled excellent view, luxurious lifestyle, comfort, entertainment and relaxation to their customers. Offers 202 spacious duplex suites ranging from 170 to 780 square metres
Six award-winning signature restaurants
Facility of world class conference and banqueting venues
In-suite check-in & check-out
Butler service around the clock
Helicopter transfers and scenic tours
Majlis Al Bahar exclusive private beach
Unlimited access to Wild Wadi Waterpark
Yacht charter services” 
SWOT Analysis is a strategic tool that enables business planners to study the performance of the company and analyze its market position.
Popular brand image throughout the world
Over dependence on Dubai Government
Expand into other countries of the world
Declining growth rates in the tourism industry
Support and patronage of Dubai Government
Charges very high prices which limits them to a narrow target market
Expand within the Middle East region
Low demand due to the effect of the global financial crisis on the UAE market
Invest in related services like sightseeing services, restaurants, etc.
Spread of the swine flu
Trained and customer focused staff
Threat of a terrorist attack in Middle East region
Only seven star hotel in the world
Personalized service coupled with luxury and comfort
Porter’s Five Force Analysis
This section presents the Porter’s Five Force analysis which is a strategic tool that the management utilizes to examine the power and weaknesses of each force operating in the external environment of the company.
Threat of new entrants
The hotel and its conception was the idea of the Dubai Government who launched it through its conglomerate Dubai Holding. Therefore, the hotel enjoys the support and patronage of the Dubai Government. Moreover, the Government also exercises control over the type and brand of hotels entering the Dubai market. Furthermore, entry into the UAE market with a similar concept would require the competing company to make huge investments in terms of location, view and promotion of the brand image. Therefore, there exists a high entry barrier for new companies which reduce the threat of new entrants to the company.
Threat of substitutes
The only substitutes for the company’s products and services are the five star hotels that aim at matching the same level of experience and customer service. This is mainly in terms of the service offered to their suite customers. These hotels aim at attracting customers by offering highly customer focused service and charging a much lower price as compared to Burj Al Arab. Many customers get attracted towards these substitutes as they offer value for money and personalized services. Examples of such hotels are Emirates Palace, Atlantis etc. These hotels also have the advantage of offering an excellent view. Therefore, the company faces a high threat from these new entrants and should work towards communicating their Unique Selling Proposition to their customers which would make them stand out against their recent competitors.
Bargaining power of suppliers
The suppliers in the hospitality industry do not have a high bargaining power as there exist a large number of companies supplying the same kinds of products and services. Moreover, the companies are financially less powerful than the top hotels in the UAE market. Furthermore, these companies also aim at getting associated with these top brands of hotels as that would enhance to their brand image. These factors prevent the suppliers from exercising any control over the existing companies in the industry thereby reducing their bargaining power in front of the hotels.
Bargaining power of customers
The customers have the choice of selection between a wide variety of hotels in the Dubai market. Moreover, high income individuals are usually demanding in nature and have specific demands and expectations from companies. This makes it essential for companies in the industry to study customer preferences and demands and work towards fulfilling them. In fact successful companies aim at understanding customer demand even before the customer knows about the need himself. The customers in this industry enjoy a high bargaining power and have the capability to influence changes. Therefore, the luxury hotels in the market give high priority to the customer and constantly work towards pleasing them.
Competitive rivalry within the industry
There exists a strong competitive rivalry between the companies in the hospitality industry. The major competitors of Burj Al Arab are Atlantis Palm Jumeirah, Emirates Tower Hotel, The Fairmont Dubai, Al Qasr Madinat Jumeirah, The Address Downtown Burj Dubai and Grand Hyatt Dubai. These hotels have excellent locations and work towards offering world class service to their customers with the aim of gaining a customer loyalty and a higher market share. Burj Al Arab should work towards establishing a unique place or position in the market and in the eyes of the customers in order to stand out from the competition. The company should also be alert against any new competitors entering the market. The forces operating in the environment are favorable for the company. However, the company should focus on adopting strategies that would enable them to better deal with their competitors.
The major competitors of Burj Al Arab are as follows:
“Atlantis Palm Jumeirah – The hotel has the strengths of excellent view, architecture and splendid service. The hotel comprises of 1,373 guest rooms and there are a separate 166 suites. The rooms are designed with oceanic and Arabic influence” . “Emirates Tower Hotel – Jumeirah Emirates Towers is a city lifestyle destination beyond compare. Set in the heart of Dubai alongside Sheikh Zayed Road, a few minutes walk from the Dubai Metro Station and just a short drive away from pristine beaches, this established landmark encompasses a fully integrated five star business hotel with high octane luxury setting the scene with 400 spacious rooms and suites, paired with creative meeting and business facilities” .
“The Address Downtown Burj Dubai – Located in the happening heart of Downtown Burj Dubai, the hotel has the world’s tallest tower, Burj Dubai and the stunning Dubai Fountain on its doorstep and is flanked by Dubai Mall, the world’s largest shopping and entertainment centre. The Address Downtown Burj Dubai reveals a new art in offering service and comfort, where every guest’s stay is treated as an individual experience. A combination of outstanding facilities and superlative attention to detail makes it the premier lifestyle destination for international travellers. Standing an impressive 63 storeys high and featuring 196 lavish rooms and 626 serviced residences, The Address offers an extensive range of gourmet experiences, modern meeting and event venues, a signature Spa, a fully equipped Fitness Centre, chilled pools and indulgent amenities and services” .
Strategies to be adopted to survive the crisis
The company should adopt the following strategies to maintain their profitability and market share in the Dubai market: Pricing Strategy – Burj Al Arab should revise their pricing strategy by including more products and services in their packages. This is because the hotel cannot reduce their prices as it might have a negative impact on the brand image of the company. The company should work towards offering more value for money to their customers as this would act as an incentive to people in times of economic crisis. For example, the hotel can include spa services in the room rates for a limited period of time. Promotion Strategy – Burj Al Arab should modify their promotion strategy whereby they should offer product bundle promotions to their customers. The company should avoid offering price promotions as this could negatively affect the image of the company. The company can offer promotions based on the usage of their services whereby more usage will result in more benefits.
For example, the company can offer free lunch to customers who are staying for a minimum of three nights at the hotel. Innovative products and services – Burj Al Arab should work towards offering innovative products and services to their customers as this would add value to the current product and service portfolio offered by the hotel. This would attract customers towards the hotel and enhance their preference with the hotel in comparison with the other new hotels that have recently come up. For example, if the hotel starts offering the services of dermatologists then some customers might be likely to choose Burj Al Arab over Atlantis or other competitors. Target new customer segments – Burj Al Arab should work towards targeting new customer segments from different parts of the world. This can be done by targeting people from countries where the economic impact of the global financial crisis has not been much.
They should work towards targeting business executives and high net worth individuals. This would enable the hotel to get access to a new set of customers which would enable them to maintain their level of profitability and their market share in the time of crisis. The hotel should work towards maintaining their level of profitability and market shares in comparison to peak profitability levels in 2007. Promote new services – Burj Al Arab should also work towards promoting their other services like conference rooms, business halls, etc. The hotel should liaise with exhibition and event organizers who usually travel in groups. This would also give the hotel the opportunity to access the customer base of these companies. The company would therefore be able to expand their operations, enhance their profitability and increase their market share by targeting exhibitors and business officials who would utilize the other services offered by the hotel.