Holiday Inn Analysis Essay
Holiday Inn Analysis
This report will contain information about Holiday Inn Valencia. With its 200 rooms one of the biggest hotels in Valencia. The hotel also possesses 6 different conference rooms which are available for different kinds of events. Currently the demand for events of communions and baptisms are dropping. This report has analysed the problem and will try to give advice on how to solve this. For this purpose a main question and sub questions were created. To answer these questions a quick scan was made, a SWOT analysis with consequently a confrontation matrix. Also Porter’s five forces were used and a price analysis was done amongst competition. Results of these analysis showed customers for events care most about the location of an event, the price and service.
Moreover, other guest experience was also considered an important factor. Also the analysis showed the biggest advantage for Holiday Inn Valencia in the event side of their business is the low price compared to quality. However, the hotel should not expect customers to host their event in Holiday Inn Valencia because of the brand name, according to the respondents this was considered as not important. Furthermore the market forecast seemed relatively positive even though the crisis is raging in Spain. This because of the nature of the events. From this report can be concluded that the prices of the hotel are good compared to competitors. The hotel itself has lots of strengths such as a good location and the strong umbrella company. Also a the market forecast for tourism in Spain, and Valencia is positive. It is recommended not to change the total price for the customer, for this is an important factor in their decision making process. However do change the amount of marketing efforts that are being put in to the events. Do not be afraid to put money and time in it, because this will eventually pay itself back.
Events can be a profitable side business for hotels. However for Holiday Inn Valencia some of these events are not meeting their potential. Why is this and what can be done to turn around this trend? In order to give an answer to these questions this report was made. This report contains information about the four star hotel Holiday Inn Valencia. It was commissioned by Avans School for International studies and performed by International Business and Management Studies student Luke Donkervoort. The Holiday Inn brand is part of Intercontinental Hotels Group and Holiday Inn Valencia is a franchise hotel under the supervision of Mr San Juan. Holiday Inn Valencia has, next to their 200 bedrooms, several different packages for events. These events can be adapted to the customers wishes ranging from big events up to 300 people to small events with few people. Currently the demand in the events of communions and baptisms are dropping.
These are religious events which are very popular in Spain. These events are hugely celebrated and it seems to be less affected by the crisis than other events. In order to increase the demand in these types of events, a research question was formed that will be answered with help from four sub questions. Due to a change in management during the work placement and the production of this report, it has become a report based on theory instead of practice. The new director will assign a marketing agency to report on the events starting next year. Due to this the original report had to be changed at a late period and the questionnaire could only contain 75 respondents. As mentioned before events can be a profitable side business for hotels.
Thus it is necessary to look at why the demand is dropping. First some insight information of the hotel is provided in order to give the reader a clear vision of what the hotel is about, this includes a quick scan and a problem statement. Furthermore the second chapter will consist of a SWOT scan which will include information about the internal operations and the environment of the company. This chapter will conclude with a Porter’s five forces model for the hotel. Afterwards, in chapter three, the focus is put on answering the research question with help from several sub questions. Some of these questions are being answered with help from representative respondents from a questionnaire that was conducted. Finally, an appendix can be found to which will be referred throughout the report.
Holiday Inn Valencia was founded in 2000 and its focus is put on the upper-middle class guests. The hotel currently employs over 55 persons from several nationalities ranging from British, to Romanian, however most of the staff is Spanish. The four star hotel has 200 rooms available, divided over 12 floors. On the top floor a gym, a tanning booth and sauna with great view over the city of Valencia can be found. Also an outdoor swimming pool is available on the top floor; however this is only opened in the summer. Moreover, at the zero-level floor of the hotel a garage can be found. (Holiday Inn, 2012) Also on the first floor of the hotel six conference rooms are used for conventions, business meetings and other events such as communions and weddings. The hotel offers several secondary products such as projectors, white screens and microphones whenever one of the conference rooms is booked. The possibility of overnight stays and the availability of the exclusive restaurant on the ground floor of the hotel are of big advantage for clients hosting events at the Holiday Inn Valencia.
The restaurant serves breakfast, lunch and dinner to all the guests of the hotel. In case the hotel is full there is also the option to turn two multipurpose conference rooms into other dining areas. This is especially convenient in case of big groups, who have also booked breakfast lunch or dinner. The Holiday Inn brand is part of the Intercontinental Hotel Group, which means that its mission and vision that are set for this group are also concerning the other seven brands of IHG, these include the Crowne Plaze, Holiday Inn Express, Staybridge Suites, InterContinental, Indigo and Candlewood Suites. The vision of IHG is “to become one of the worlds’ great companies”. (InterContinental Hotels Group, 2011) Their mission is to have “Great Hotels Guests Love”. The companies’ annual report of 2010 states: “We want people to feel good about what we do and how we do it.
Around the world, we aim to delight our guests, inspire our people, act responsibly and generate financial returns for our hotel owners and our investors.” (InterContinental Hotels Group, 2011) During the work placement an assignment was commissioned by Avans School for International Studies, this involves promoting and increasing the sales of events in Holiday Inn Valencia. The following scheme was made to demonstrate the different activities involved in the assignment. – Improve the design and content of the different marketing tools given by the headquarters: *Some brochures were outdated and had to be updated and also translated from Spanish into English to attract a broader spectrum of customers. *Helped the marketing manager in creating different banners and sites to promote different events. – Create a database and make a mailing list as a new way of spreading the brochures and the other updated marketing tools: * Made a database for the primary schools in Valencia, to spread the brochures of an event where the sales harshly fell in Holiday Inn: communions and baptisms. -A study of the competition in Valencia:
* The company has a competitive set, which is being followed on a daily basis via a website. * Estimated where the hotel stands by comparing prices regarding communions and baptisms (of the menus, the bar, service and the music) and adapted these prices to the prices of the competitive set. The main assignment in Holiday Inn Valencia is to increase the sales of events in the six conference rooms, some events are not meeting their potential and thus some marketing effort must be undertaken to try and increase these sales. To increase the total sales of events in the hotel, this report will focus on one part of the events that is very big in Valencia and in the rest of Spain; religious (Catholic) events, namely communions and baptisms. The hotel has different packages for different occasions such as, business meetings, birthday parties and also for these religious festivities.
The first step in achieving the answer to this research question is to look at the current marketing-tools for the packages of these baptisms and communions. At present the marketing-tool used for this activity is just one outdated brochure. This must be updated with new photographs and new text in order to attract more customers. Also the prices may need to be revised; new price offers make it easier to communicate a positive message to the target group. Before, when Holiday Inn Valencia was owned by IHG, every marketing tool was pre-prepared. On a yearly base the hotel received new banners, photos and other promotional material which Holiday Inn Valencia could use in their marketing activities. These are focused on big events such as Halloween, or St. Patricks Day and not on events that are more locally organized (such as Las Fallas, which is considered very important in Valencia). So for these special local events, promotion was difficult to make. Finally the promotion material that was going to be used in order to improve the sales had to be approved by the general manager of the hotel. But since the hotel is taken over by Mr. San Juan and officially is a franchise hotel, the marketing is easier.
The director can choose to hire own marketing agencies and has more freedom in promoting local festivities, while still receiving the pre-made banners and logo’s. The director has chosen for the opportunity to hire a marketing agency for the events for the next year. The next step must be to find a way to monitor the size of the potential market and maximize the reach of the new brochure. Since the target audience for communions are boys and girls from 9 to 11 years old, it is wise to find out where the majority spends most of their days. This is of course in primary schools. Thus setting up a database of primary schools in the area surrounding this hotel will be useful in reaching the target group. It could be discussed whether it is more helpful to market these events to the parents, since ultimately it is the parents who choose where the festivities take place.
However, taking the ‘nag-factor’ into consideration it can be concluded that it is easier to communicate the message to the children, who in their case will spread the message to their friends, family and finally their parents. With this database it is possible to create a mailing list in order to actually reach the customers. After setting up the database and creating the mailing list. Ultimately, the change in sales should be visible and this has to be checked and controlled*. But firstly, the different influences of the marketing tools on the current sales of the packages should be investigated, and if necessary how the currently used marketing tools can be improved.
Afterwards will be continued with baptisms. Baptisms are being celebrated huge in Spain and the costs are less important compared to other events. Holiday Inn Valencia has a competitive set of several other hotels in the area, who also offer comparable packages regarding these events. The promotional material that will be used for the communion will also contain information about the baptisms. It is believed that promotion via the primary schools in Valencia will provide enough word to mouth advertisement for the parents to choose Holiday Inn Valencia for the baptisms. *Due to a change in the company management these results will not be available, since it was not allowed to actually use the mailing list that was created.
As stated before, Holiday Inn has a problem with the sales of event packages, this leads to the following problem statement, which is backed up by one research questions and four sub-questions. Problem The sales of baptism and communions event packages in Holiday Inn Valencia are stagnating. Research question How is Holiday Inn Valencia able to improve its sales concerning baptism and communions related packages ? Sub-questions
– What is the customer opinion about hosting events in hotels ? – How big is the potential market?
– How are the marketing tools currently used influencing the current sales of the packages ? – How could the currently used marketing tools be improved in terms of design/price/range ?
Chapter 2: Swot analysis
This chapter contains information about the internal operations of Holiday Inn Valencia and its environment. These operations will be scanned and judged and consequently an internal scan will be the outcome. This internal scan will include information about the history of the company, a description of the company’s business, their main products, most important clients and main suppliers. However, it is not only the environment that is very important for a company, more important is the change in the environment. It is critical to analyse this environment first in order to find out how one can optimally serve its environment. The chapter will be concluded with the strengths, weaknesses, opportunities and threats of Holiday Inn Valencia. The companies’ business
The companies’ core product is overnight stays. Holiday Inn Valencia has 200 rooms available, rating from the luxurious ‘Presidential Suit’, to the convenient ‘Twin Rooms’. The hotel receives around 70,000 guests a year. Most of the annual €3.2 million profit is achieved in this area. Furthermore Holiday Inn Valencia gains a significant profit with its Food and Beverage revenues. The hotel also has multiple meeting rooms that are appropriate for both formal and informal use. For example, the rooms are suitable for guests to celebrate occasions such as weddings and birthday parties. customers also have the possibility to celebrate occasions such as weddings and birthday parties. The Mezzo-Mezzo restaurant is available for guests and non-guests. The bar is situated next to the restaurant providing the possibility for a relaxing drink. Recently the hotel has also opened a new ‘chill-out bar’ on the top-floor called ‘Zenit’. Target group
The target group for Holiday Inn Valencia is the upper middle class of society. With its four stars, multiple facilities, relative low prices and its position near one of the main attractions of the city: “Ciudad de las Artes y Ciencias” (city of arts and sciences) it attracts many customers in this segment. The hotel is also very close to the Túria parc, an old river bed that has transformed into a huge city park. Suppliers
Although Holiday Inn Valencia is not a production company, it does have its suppliers. The company has agreements with third party intermediaries (TPI’s) also known as online travelling agencies (OTA’s). These TPI/OTA’s provide the hotel with new guests, and in return a small commission is received. Examples of these OTA’s are Bookings.com and Expedia.com. Also suppliers of tools such as beds and food exist but these are irrelevant for this research. Structure
The general manager has franchised the hotel from the Holiday Inn brand. This means the franchisee is allowed to use the brand name of the franchisor ‘Intercontinental Hotels Group’. The company consists of seven departments: “Sales, Reservations, Reception/Front Office, Housekeeping, Food and Beverage, Maintenance and Accounts department.” With a total amount of around 55 employees. Every department has its own manager which all report to the general manager Mr. Juan Carlos San Juan. Company culture
Holiday Inn Valencia can be considered informal because most of the managers can be addressed to by their first names. Also, it is not hard to get in contact with a manager in case of any questions or ambiguities. However, everybody is expected to dress formal in order to come across representative towards the guests. The interaction between the different parts of the company is on a very regular basis and in an informal form. Every day all the managers of the different departments have a meeting. Once per month a meeting takes place.
Results of this meeting are being reported to the rest of the staff. Communication towards customers is very formal since a lot of customers are business travelers and this communication behaviour is expected of hotel staff. In this company culture standardization is not pursued since the company has no company clothing for all staff, staff is expected to bring its own clothes according to the dress code of the department. Differences are pursued between members of different departments, cleaning staff looks different then restaurant staff. Competitive advantage
Holiday Inn Valencia is trying to gain competitive advantage in various ways. First of all via the world wide standardization of its services received from IHG. One example of this is the ‘Priority Club Reward’, this is the world’s largest hotel loyalty scheme with over 48 million members, the hotel is keeping a short line with its precious regular customers.(Datamonitor a, 2010)However, competitors have also implemented similar programmes therefore this is not the only reason the hotel is gaining competitive advantage. The part in which Holiday Inn is trying to create the most competitive advantage is through its pricing strategy. With an aggressive low-cost pricing strategy the hotel tries to differentiate itself from the competition. However, this strategy is changing. Due to a management take-over of the company the focus is being put more on the quality of the hotel and this will take place in the following months. Service is also a very important factor in creating competitive advantage.
To stress how an important factor this is of the company, it is put on the website as the best strength the hotel has to offer. According to the Holiday Inn website : “For it is our people who make the real difference to our business, ensuring our customers receive great service and memorable experiences. Whether it is our hotel staff, who give guests a friendly welcome when they arrive, or our senior leaders, who make sure our hotels provide value to our guests and our hotel owners, the talented IHG team is always looking for a better way to do things and help make our hotels best
in class.” (Holiday Inn, 2012) Competitive landscape
Holiday Inn has a broad competitive landscape, currently 45 hotels are comparable to Holiday Inn Valencia, these are at least four star hotels with their target market at upper middle class or higher. These do not even include the indirect competition the company faces, the so-called private rental businesses whom have rooms, apartments and caravans for rent. Also the hostels and all the other accommodations available for overnight stays in Valencia can be considered competition. (Turisvalencia, 2012) Moreover, the hotel has made a competitive set of 8 hotels. Holiday Inn Valencia has been the market leader for a long time, however it has lost its first place to its competition. Since 2007 the hotel has not been on the first place anymore. Not in occupancy or average daily rate (total revenue per day/total number of rooms). However, Holiday Inn Valencia is better in ‘RevPar’ ( this is an abbreviation for hotel revenue divided by the number of rooms sold), compared to its competitors. Holiday Inn Valencia finished first in 2010 and second in 2011, over the first month of the first year the hotel is second again. It is said RevPar is the most important measurement in the hotel industry, since it measures the ability of the hotel to fill its rooms for the highest possible price when the demand fluctuates. However, from these numbers it cannot be concluded that Holiday Inn Valencia is the market leader anymore.
Therefore it can be concluded that Holiday Inn Valencia has transformed from market leader to market challenger. According to Datamonitor the hotel and motel industry in Spain grew by 1.9 % in 2010 to a value of $19.2 billion, furthermore it is forecasted that in 2015 the market will have a value of $22.4 billion. This means an increase of 16.7% since 2010. About the market rivalry Datamonitor states that even though the recent recovery of the market, rivalry is boosted. This is due to the fact the market has strong international players, looking to make up for losses made in other markets. (Datamonitor a, 2010) The competition can be either a threat, or an opportunity for Holiday Inn Valencia. It is a threat since the competition in this area is so fierce. Thanks to these developments, Holiday Inn Valencia cannot ask the optimal price for their profits, instead the hotel has to keep looking at the whole spectrum of the competition and revise their prices were needed. At this moment Holiday Inn Valencia offers one of the cheapest prices of their competitive set. However the new general manager decided to start increasing prices. (Trivago.nl, 2012) Strenghts
See appendix 1 for the SWOT scan for Holiday Inn Valencia in a figure. The brand Holiday Inn and its umbrella company: The Holiday Inn brand attracts lots of customers. The brand is known all over the world and has a good reputation regarding its quality. Furthermore, any hotel has the support and the resources of IHG which is the biggest hotel company in the world. This leads to the benefit of standardization and creates a faster and cheaper working organisation. The priority club: This makes the important regular customers return even more. With this system points can be collected and with these points free nights become available, complimentary upgrades to better rooms are given and other treatments that regular guests do not receive.
Own software programmes, such as: ‘ Holidex’: Holidex was one of the major reasons that the Holiday Inn brand became such a success. The at the time biggest civilian computer network in the world, it was introduced in 1965, linked all the Holiday Inn hotels via a software program. This enabled the guests of the hotels to book other hotels without long distance phone calls. At this day it is still used, thanks to this programme reservations enter almost automatically via the internet. Other own software programmes used by the hotel are HCM and Opera. Online courses exist so that every employee can master the skills needed to operate these software programmes. (Trails.com, 2012) Attractiveness for (business) events: The hotel is particularly attractive for international business consumers. Companies can choose to host their events in this hotel, in this way all important employees (usually from all over the world) can come together and use the facilities that the Holiday Inn has to offer. This makes for an easy way of facilitating events. Holiday Inn App: Holiday Inn Valencia is a franchise company, this comes with benefits and advantages. One example for this is the mobile app created by the headquarters. This app is targeted mostly at the business guests the hotels receives.
The app makes the booking process for the customer much easier. The guest has to download an app once, and with this app the customer is now able to book whenever, wherever, however. (Holiday Inn Mobile, 2012) Best flexible rate: The company makes use of a best flexible rate. This witholdss the best rate possible for the rooms can be booked on the website of Holiday Inn Valencia itself. These prices are also being updated regularly which also contributes to the consumer receiving a low price for the reservation. Location: The location is close to one of the biggest attractions in the city; ‘the city of arts and sciences.’ It is also next to the ‘Turia’ parc which is an old river bed that has been turned into a huge city park. With public transport the beach can be reach in less than 10 minutes for €1.50. Weaknesses
Originally not built as a hotel: Rooms are not practically divided. For example two of the conference rooms have a big pillar in the middle, this makes it impossible to put these two together and make a bigger conference room. Though this is technically possible thanks to shifting walls. Also, rooms where elevator shafts start have big pillars in the middle. Moreover, some rooms are put in corners, this makes them smaller than others. The website: Compared to competitors the website is old-fashioned and also the information given is inconclusive and outdated.
The problem is that the website cannot be changed per Holiday Inn establishment. Holiday Inn has a standard format in which the website for every hotel is built. Each hotel then puts its information it wants to spread on that page via a software programme. This means helping the customer to create a positive image is very hard for Holiday Inn Valencia. After all Holiday Inn Valencia is not only competing with competition from other companies, but as well with other Holiday Inn hotels of other cities. Finally all of this is concerning since the website forms the guests’ first opinion, making the intangible, tangible. (link to the website: www.holidayinn.com/valencia ) Opportunities
Rising global travel volumes: According to Richard Solomons, the CEO of IHG, a major trend in travelling is that the capacity of especially air travels get bigger, and thus traveling becomes more affordable. (InterContinental Hotels Group, 2011) Internet: In the current booking environment, consumers choose a country and a city to go to and then compare hotels. Consequently websites such as trivago.com where hotels can be compared by one click on the button are increasingly popular. Also the search engines plays a big part in the final decision making process of the potential guest. The consumers buying behaviour can be called dissonance reducing.
Thus if Holiday Inn Valencia keeps its website up to date and if the hotel is able to redirect a lot of potential guests to their company, more customers will proceed to book a night in the hotel. Convenience suits the customer. Changing consumer behaviour: Changing consumer behavior should be regarded as very important. If this consumer behaviour changes in a negative way, the effects will be dangerous for the company. In this case however, changing consumer behaviour can be seen as an opportunity since the change is forecasted to be positive for the entire market for hotels and motels in Europe and in Spain. According to Datamonitor, the market of Spain will increase with 16.7% to a value of $ 22.4 billion. And the European market is forecasted to grow even more, with 31.5% to a value of $ 221.5 billion. Backward integration: A growing amount of customers is considering price, next to quality of the hotel and its positioning, to be an important factor when choosing a hotel. Thus expanding the activities by means of backward integration may be profitable in this economic situation. This could for example be instead of using TPI’s for almost all the bookings, increase the level of guests who book directly with the hotel itself.
Changing demographics: The population of Europe is ageing. This is a positive change for the hotel and motel industry, since due to the ageing population more people will retire from their work. These people on average have more to spend then the younger population, since retired people have no family to take care of anymore and mostly have their mortgage paid off. This means disposable income is higher, which leads to an increased expenditure on holidays. Furthermore retired visit hotels more often out of season, while other people are working. This will lead to a higher occupancy, average daily rate and RevPar. Threats
Economic uncertainty: Due to the economic crisis lots of customers have less to spend. One of the first things customers will cut back on is holidays, also less business travelers will visit Valencia, since there is going to be less business to do. Regarding the conference rooms, the latest meeting trends reveal that event planners due to the crisis, are looking for meetings that are shorter and smaller, the incentive programme is being filled with business content, meeting venues have to be environmental friendly, and there will be a shift to venues that actively promote themselves as conference venues. (Brost, 2012) Competition:The market that Holiday Inn Valencia is operating can be seen as a red ocean. Lots of competitors are present making lots of promotions and putting pressure to the prices of the overnight stays, and the secondary activities of the hotel.
Alternative meeting ways: Technology is rapidly advancing. According to Carlson Wagonlit, there is an increasing use of virtual meetings and “hybrid” events. For these types of meetings are more environmental- and cost friendly. (Carlson Wagonlit, 2012) Though presently a face to face meeting is considered better than a meeting via alternative ways, such as Skype, as budgets get smaller, and return on investment becomes more important and technology keeps on increasing these alternative ways may become a serious threat for Holiday Inn Valencia in the near future.
| Strengths| Weaknesses|
Opportunities| 1: Brand name / changing consumer behaviour| 2: The website / internet| Threats| 3: The priority club / economic uncertainty| 4: Originally not built as hotel / heavy competition|
1: Changing consumer behaviour is best to be taken advantage of with the brand name of Holiday Inn Valencia. Consumers are becoming more price sensitive and are looking for cheap holidays. This caused a price war between the hotels and resulted in a decline in competition. Especially the small hotels have suffered from this development. Holiday Inn Valencia is backed up by the biggest hotel chain in the world, so plenty resources in case of emergency are available.
2: The opportunity of the internet should be tackled with the website. Currently this is a weakness because the website is outdated and compared to the competition not user friendly enough. However, if this weakness is turned into a strength huge benefits will be made. 3: The strength of the priority club can be used in times of economic uncertainty to ensure repeat customers will keep on visiting the hotel. It is an extra incentive for the customers. 4: The fact that the hotel was originally not built as a hotel is to be called a weakness. But the fact that other hotels have similar qualities, but with the benefits of architectural pre-knowledge of the building is even worse. If a customer who would like to host an event and goes to see the conference rooms of Holiday Inn Valencia (with pillars) and that of the competition (without pillars) it is clear that the hotel has to persuade the competition in another way. Porter’s five forces
Appendix 2 provides a scheme of the Porter’s five forces that are described here. Threat of new entrants
Low, this market has high entry barriers ; there are a lot of big international brands in this market and the capital required to start a four star hotel are huge. Threat of substitute products Medium, other forms of overnight stays, and for events other locations where events can be hosted. The switching costs for guests are very low however the guests inclination to this form of substitution can be seen as very low. Bargaining power of suppliers
Low, lots of suppliers (TPI’s and OTA’s) are present in the market, this means that one supplier does not have dominancy over Holiday Inn Valencia. The TPI’s and the OTA’s have the advantage that the volume of guests provided to the hotel is large. However, these suppliers are facing the threat of backward integration. Bargaining power of customers
Low, the hotel receives around 70,000 guests per year. This means that one single guest does not have the leverage of volume. However ,brand identity is relatively little, this increases bargaining power of customers, also the customers are price sensitive. But it can be concluded that the bargaining power of one customer is moderate. Competitive rivalry within an industry
High, 45 hotels within a 20 km radius of this hotel. Also exit barriers for franchisees are relatively low, but for the wholly owned hotels in the market very high. Also the industry is expected to grow, this increases rivalry. Finally, brand identity is low and the diversity of different hotels is very big. This all leads to a high competitive rivalry.
How big is the target market?
To get a relative, accurate image of the target market for communions and baptisms for Holiday Inn Valencia it is necessary to first take a look at the potential market. Followed by the available market and the qualified available market. (NetMBA, 2010) Firstly, it is necessary to define the consumer for these events. These are young religious boys or girls from between 9 and 11 years old who live in the region of Valencia. According to the INE institute (Instituto Nacional de Estadística), the national institute of statistics the ‘Comunidad Valenciana’ counts 146,816 children between the age of 9 and 11 in the agglomeration of Valencia which in total beholds 2,578,197 persons (see appendix 3 and 4). (INE, 2012) Of these persons about 1 third (36%) is actively practicing the catholic religion. This means 146,816 x 36% = 52,854(CNA, 2007) Furthermore, the income of the target market should be taken into consideration to acquire what is called ‘the available market’. After a discussion with the company mentor it was decided to target the people with the 40% top incomes of society. This would mean people earning more than €2,000.- per month.
However, the hotel targets families with children thus the fact that women are working should also be taken into consideration. Spain has a female employment rate of 53%, this means that more than half of all the women work. In appendix 5 an overview of the income can be found. (OECD, 2011) This leads to the following calculation of 52,854 x 40% which makes 21,142 and 21,142 x 53% makes 11,205 children. This means the available market for Holiday Inn Valencia totals 11,205 children between the age of 10 and 14. This number will also be considered as the target market, for Holiday Inn Valencia wishes to receive as many events as possible. Concluding, the target market for Holiday Inn Valencia are children between the age of 9 and 11. These children have to practice the Catholic religion and have to come from a family with two breadwinners that makes at least €2000.- per person a month, and thus are included in the top 40 % of the income distribution in Spain. This totals an amount of 11,205 children. What is the customer opinion about hosting events in hotels?
In order to answer some of the research questions, it is critical to include the customers opinion. Therefore, a questionnaire has been made and this answered by 75 people with different backgrounds, ranging from Spain, Holland, Germany to ‘other countries in the world’. As mentioned in the introduction, in order to get a better picture of the customers opinion more respondents are required but due to a lack of time the image the 75 respondents provided was sufficient. The first part of the questionnaire was mentioned to get a general view on the profile of the respondent and involved questions about income, gender nationality. It also included questions about their opinion on different aspects of hosting events in hotels such as price, availability of animation and much more.
The questionnaire can be found in appendix 6. From Holiday Inn Valencia’s point of view the main strengths of hosting events in this hotel are for example the fact that guests can sleep where the meeting takes place. This means it will save an organisation money on arranging transport from the meeting room to an hotel and thus is a very contributing factor to the fact the hotel welcomes a lot of business consumers. However for leisure consumers this is not always the most important factor. It can be for foreigners who would like to host an event abroad such as a wedding, but Holiday Inn Valencia welcomes more domestic consumers than consumers from other countries.
The opportunity for the organisation is more the fact that location and price are very important to consumers. According to the survey 69% of the respondents found location an important to very important factor and for the factor of price it was also 69% of the respondents who perceived that factor as important or even very important. Holiday Inn Valencia is according to the price study that was performed (the excel file of the price study can be found in appendix 7) one of the cheapest in the events, this is an opportunity for the hotel. Also the fact that the respondents considered location to be an important factor is positive for the hotel. It is situated in the biggest city of the surrounding area and is located next to one of the major eye catchers of Valencia (the city of arts and sciences) and near the beach. Moreover, the biggest threat for an organisation in the current economy is the economic crisis that terrorizes the world.
This is also the case with the event side of Holiday Inn Valencia, 63% of the respondents mentioned the recession to influence their opinion about hosting events. And on the question how did it precisely influence their opinion, most of the respondents answered to be “more aware of their expenditures” and would “choose cheaper locations such as small café’s or bar’s for their events.”
Some interviewees even stopped hosting events at all. Factors considered less important were brand name and a swimming pool at hand. Respectively 48% and 83% of the respondents who consider these factors from 1 to 3 on a scale of 1 to 5. Thus the hotel should not consider these aspects of the hotel to be a big advantage in the fight for customers that would like to host events. However, even with brand name not being an decisive factor, 77% of the respondents were familiar with the Holiday Inn brand. Concluding, the customers opinion about hosting events in hotels is overall positive. Potential customers care a great deal about aspects of events such as service, other guest experience and location. This can be positive for Holiday Inn Valencia.
Potential customers care less about aspects such as reputation of brand name or the swimming pool. This means the hotel should not rest and expect customers to come to host their events in the hotel just because of their name. The most important result from the survey for Holiday Inn Valencia is the fact that the respondents consider price the most influential factor. This is positive because in the price study that was done, the hotel was amongst the cheapest of their direct competitors. How are the marketing tools currently used influencing the current sales of the packages? Currently, only few marketing tools for the events are being used. The most important part in the marketing for Holiday Inn Valencia is a brochure for the different kind of events that are being offered and was made in PowerPoint. Besides this brochure also some pre-made banners and posters are available and are given to the hotel by the umbrella company, IHG.
These however do not include small and/or local popular festivities and events. For example ‘Las Fallas’, which in Valencia is a well-known event in the area of Valencia and is celebrated for weeks by thousands of people, but there are no marketing tools given by the headquarters for this festival. Currently the revenue of the events is €15.751 for the year 2012 up to and including May. This is incredibly low for the hotel and it supports the belief of improving the events, and the communication of the events. According to the reservation and commercial manager, their budgeted income on events for this year has been adjusted to €52.775. It can be seen the hotel is not reaching its initial goals. It should be possible to reach the target number of revenue for this year, however this will be very hard. Especially since the new director has put the focus on other aspects of the hotel.
The resources are simply not available in order to put the required marketing effort to reach the budgeted income for events. For next year the new director is planning to hire a marketing agency and put the focus on increasing the events. How could the currently used marketing tools be improved in terms of design/price/range? As mentioned before the current marketing tools that are being used for the events are not up to date anymore. It consists of one brochure made with PowerPoint that included the prices of the menus described. The brochure has been made two years ago and does not include critical information such as the new logo of Holiday Inn and information about what the hotel additionally has to offer for consumers who like to host their event in Holiday Inn Valencia. For example animation for children, an hourly drink rate and the possibility of arranging the music. After concluding these flaws in the previous brochures, action was undertaken and the new information was included and translated into Spanish.
The latest, up to date, photographs were searched and added to the brochure. This changes were undertaken to try spread a more positive message with the brochure. The goal of this brochure is to provide information to the potential customer. Which will lead to convincing the potential consumer of hosting their events in Holiday Inn Valencia instead of other conference halls or hotels with conference rooms in Valencia. This means the brochure has to look attractive and inviting. This was done by changing the format of the brochure, photos of the conference rooms and some close-up pictures of food were added. The outdated brochure for the communions and baptisms can be found in appendix 8. Also the new brochure can be found in appendix 9.
At Holiday Inn Valencia the decision makers were unsatisfied with the amount of sales in communions and baptisms. This report was made in order to increase this type of events. Firstly, a problem statement was made. It stated the problem was the sales of the baptism and communion event packages in Holiday Inn Valencia are stagnating. Then it was attempted to solve this problem with the research question, how is Holiday Inn Valencia able to improve its sales concerning baptism and communions related packages? Also sub questions were formed and answered to support the answer to this research question. In order to get an answer to these sub questions, a questionnaire was made that was answered by 75 respondents from different backgrounds. This created a broad view on the customers opinion about the events in Holiday Inn Valencia. Finally, the most important finding was customers consider price together with location the most important factors.
Moreover, the marketing tools were examined and concluded can be the marketing tools are ineffective and are not being used efficient enough. From headquarters the hotel receives some marketing tools but these are proven to be not applicable to the Spanish market. Also can be concluded that with these marketing tools the target revenue of the events for 2012 are not going to be made. Therefore it is advised to change the marketing tools and pin point the target market more specific to increase sales. Concluding, concerning the main question of this report : How is Holiday Inn Valencia able to improve its sales concerning baptism and communions related packages ? The answer to this question can be split into four aspects. The price aspect, the product aspect, the promotion aspect and the place aspect. It is clear that Holiday Inn Valencia is able to improve its sales concerning the events of baptisms and communions. The target market is big, this means the place is good for the product.
Therefore it is safe to put some energy and effort (money) in the marketing of the events, this will eventually pay out. To do this the marketing tools have been updated, however this is not all. The responsible managers should keep on searching for ways to promote the events and to keep the tools up-to-date. Furthermore, the prices of the packages are currently perfect. The price to quality ratio is very good. Holiday Inn Valencia is considered a market challenger and since customers are price sensitive and the competition is fierce, changing prices either increasing or decreasing them, is not advisable. Furthermore can be concluded the market forecasts are positive, and the hotel has to increase marketing efforts in order to increase its sales and ultimately reposes market leadership.
Brost, K. (2012, 01 27). 4 Key Meeting Trends for 2012 from American Express. Opgeroepen op 02 21, 2012, van www.hospitality.cvent.com: http://hospitality.cvent.com/blog/advice-for-winning-group-business/american-express-meetings-and-events-survey-identifies-4-key-meeting-trends-for-2012
Carlson Wagonlit. (2012). Travel management priorities 2012. Opgeroepen op 02 23, 2012, van www.carlsonwagonlit.com: http://www.carlsonwagonlit.com/export/sites/cwt/en/global/tmi/cwt-perspectives/travel-management-priorities/pdf/meetings-and-events.pdf CNA. (2007, August 21). Catholic news agency. Opgeroepen op May 23, 2012, van Spain: 36 percent claim to be practicing
Catholics: http://www.catholicnewsagency.com/news/spain_36_percent_claim_to_be_practicing_catholics/ Datamonitor a. (2010, 05 20). Hotel and Motel industry of Spain. Opgeroepen op 02 30, 2012, van www.datamonitor.com: http://360.datamonitor.com.ezproxy.avans.nl/Product?pid=0821544E-CFCF-49B9-9807-AB730EB7E4E0 Holiday Inn. (2012). Holiday Inn Valencia. Opgeroepen op 02 08, 2012, van www.holidayinn.com: http://www.holidayinn.com/hotels/us/en/valencia/vlcpa/hoteldetail Holiday Inn. (2012). holidayinn.com. Opgeroepen op 28 02, 2012, van best flexible rate:
http://www.holidayinn.com/hotels/us/en/global/offers/bestflex?siclientId=2493&IOGtrID=6.7654&sitrackingid=234172014&sicreative=7651257048 Holiday Inn Mobile. (2012). Holiday Inn Mobile. Opgeroepen op 03 1, 2012, van www.holidayinn.com: http://www.holidayinn.com/hotels/gb/en/global/support/mobile INE. (2012). Instituto Nacional de Estadistica. Opgeroepen op May 25, 2012, van Short-term population projections 2011-2021: http://www.ine.es/jaxi/tabla.do InterContinental Hotels Group. (2011). Annual report 2010. Opgeroepen op 02 10, 2012, van www.ihgplc.com:
http://www.ihgplc.com/files/reports/ar2010/docs/ihg_annual_report_2010.pdf InterContinental Hotels Group. (2011). IHG Annual Report and financial statements. Opgeroepen op 02 20, 2012, van www.ihgplc.com: http://www.ihgplc.com/files/reports/ar2010/docs/ihg_annual_report_2010.pdf NetMBA. (2010). www.netmba.com. Opgeroepen op May 18, 2012, van Market definition: http://www.netmba.com/marketing/market/definition/ OECD. (2011, August 31). OED iLibrary. Opgeroepen op 5 22, 2012, van Employment rate of women: http://www.oecd-ilibrary.org/employment/employment-rate-of-women_20752342-table5 Trails.com. (2012). History of the Holiday Inn Hotel. Opgeroepen op 02 23, 2012, van trails.com:
Appendix 1 Swot Analysis
Appendix 2 Porters five forces
Appendix 3 total children from 9 to 11
Appendix 4 Total inhabitants ValenciaCopyright INE 2012|
Census 2001Population figures by autonomous community and province| Units:?|
Source: National Statistics Institute|
Appendix 5 Overview income SpainPaseo de la Castellana, 183 – 28071 – Madrid – España Teléfono: (+34) 91 583 91 00 – Contacta:| | 2010| |
| People| Percentage of total|
Up to 499 euros| 1092243| 2%|
From 500 to 999 euros| 6043522| 13%|
From 1,000 to 1,499 euros| 8847792| 19%|
From 1,500 to 1,999 euros| 8997701| 20%|
From 2,000 to 2,499 euros| 6651525| 15%|
From 2,500 to 2,999 euros| 4993678| 11%|
From 3,000 to 4,999 euros| 6979785| 15%|
More than 5,000 euros| 1769334| 4%|
Appendix 6 Questionnaire
This questionnaire was made by Luke Donkervoort, student from Avans School for International Studies and currently doing an internship at Holiday Inn Valencia. The subject of this questionnaire is events in hotels. (think of all events such as birthday parties, wedding parties, communions, baptisms etc.) The results of this questionnaire will be used only for purposes of this report. It consists out of … questions and will take you proximately 5 minutes to complete. Thank you for your time. * What is your gender? M / F
* What is your nationality? Dutch / Spanish / German / Italian / other countries Europe / other countries rest of the world. * What is your age? 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80 or more * What is your average income?
Up to €499 €500 to €999 €1000 to €1499 €1500 to €1999 €2000 to €2499 €2500 to €2999 €3000 to €4999 more than €5000 * Do you have children? Yes/no
* Are you familiar with the Holiday Inn brand? Yes/no
* Have you ever experienced an event that took place in an hotel? (Can also be another hotel than Holiday Inn) Yes/no * Was this experience positive or negative? Positive / negative * When hosting an event, would you consider a hotel to be a suitable place to do this? Yes/no * If no, why not?
* To what extent are the following criteria important when choosing a hotel to host an event? | Not important at all| Unimportant| Neutral|
Important| Very important| Location| 1| 2| 3| 4| 5|
Other guest experiences| 1| 2| 3| 4| 5|
Price of drinks| 1| 2| 3| 4| 5|
Total price of the event| 1| 2| 3| 4| 5|
Availability of entertainment| 1| 2| 3| 4| 5|
Special promotions| 1| 2| 3| 4| 5|
Reputation of brand name| 1| 2| 3| 4| 5|
Amount of stars| 1| 2| 3| 4| 5|
Availability of pre-made event packages (With fixed amount and varieties of beverages and food)| 1| 2| 3| 4| 5| Air-conditioning| 1| 2| 3| 4| 5|
Natural sun light in the conference rooms| 1| 2| 3| 4| 5| Service| 1| 2| 3| 4| 5|
Possibility to enjoy an overnight stay| 1| 2| 3| 4| 5| Swimming pool | 1| 2| 3| 4| 5|
Availability of special menus for children| 1| 2| 3| 4| 5| Something else?
…| | | | | |
* Has the recession influenced your opinion about hosting events ? Yes/no * If yes, how has your opinion changed?
* How much money would you spend on hosting an event such as a baptism or a communion? 250 to 500 / 500 to 750 / 750 to 1000/ 1000 or more
Appendix 7 Price study
Weddings| | | | |
Kolom1| Silken| Beatriz| Tryp Oceanic| Melia|
Prices of the menu’s| de 63 a 84| de 75 a 90| de 63,9 a 88,9| de 44,50 a 69,50| Price of drinks per person| de 12.96 a 16.20| 13.50 + 6.50| de 16,50 a 24,75| de 14,50 a 24| Price of entertainment| de 604.8 a 720| 450-995| 570| 580/682| | | | | |
Communions and baptisms| | | |
Prices of the menu’s| 38-50| de 52.50 a 63| de 30 a 35| de 41 a 69| Price of drinks per person| de 12.96 a 16.20| 13.50 + 6.50| 7| 3,7,10 p.