Analysing strategic planning of hyatt

In 1957 Hyatt was established by Jay Pritzker by purchasing the Hyatt House motel next to the Los Angeles International Airport. After few years, Pritzker family, developed into a North American management and hotel ownership company, which became a public company in 1962. In 1968, Hyatt International was formed and subsequently became a separate public company. Hyatt Corporation and Hyatt International Corporation were taken private by the Pritzker family business interests in 1979 and 1982, respectively. On December 31, 2004, substantially all of the hospitality assets owned by Pritzker family business interests, including Hyatt Corporation and Hyatt International Corporation, were consolidated under a single entity, now named Hyatt Hotels Corporation.

Hyatt is a global hospitality company with widely recognized, industry leading brands and a tradition of innovation developed over its more than fifty-year history. Hyatt manage, franchise, own and develop Hyatt branded hotels, resorts and residential and vacation ownership properties around the world. As of March 2010, Hyatt’s worldwide lodging portfolio consisted of 434 branded properties. Hyatt International manages luxury hotels in Asia Pacific, Europe, a, Middle East and Latin America, offering upscale travellers six distinct brands: Grand Hyatt, Park Hyatt, Hyatt Place, Hyatt Summerfield Suites, Hyatt Resorts, and Andaz. Hyatt often struggles to maintain its market share over its other competitors i.e. Hilton worldwide and Marriott international Inc. in some overseas markets, particularly Asian countries.

Hyatt International distinguishes itself in today’s competitive marketplace with brands that deliver experiences to match the lifestyles, attitudes, values and aspirations of its guests. The company’s properties share core values and they offer exceptional guest services, upscale amenities, popular restaurants and bars, and innovative and distinctive interior designs that incorporate local art and styles. As a privately held company, Hyatt is driven by these values rather than shareholder dictates, and has strategically been able to grow its luxury hotel brands based on its mission to operate the world’s finest collection of hotels.

Section 1.1 Reason for choosing Hyatt:

After searching the subject for assignment I find it interesting to study about the Hyatt Hotels Corporation. In order to know its strategies and management policy which has unable it to gain a lot of success worldwide in last few years.

Section 1.2 Aims and Objectives :

The main aim of the dissertation is to understand the strategic planning and to know its implementation through the case study.

Objectives:

1) To conduct the analysis of strategic planning.

2) To study the implementation of strategic planning.

Section 2: Literature Review

2.1 Marketing planning and principles:

It is important to understand what is meant by ‘marketing’. The following definitions of marketing have been provided by the authorities indicated:

‘The aim of marketing is to know and understand the customer so well that the product or service fits him and sell itself.’ Drucker (1974)

According to Philip Kotler: ‘Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.’

Therefore marketing means identifying and meeting human and social needs.

Marketing is meeting needs profitably, marketing means understanding what are the exact needs? Meeting those needs in best possible way, which will satisfy consumer and which will be profitable for business in money term as well as to lead the competition.

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In marketing exchange is the core concept, it is a process of getting a desire product from someone by offering something in return. In marketing for exchange, it needs at least two parties. Each party must have something which has value for other party. Each party must to be able for communication and delivery. Each party is free to accept or reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.

Traditionally the market was a physical place where buyers and sellers was meeting to buy and sell the goods (like grain markets, cloth markets etc.). In modern economics the concept of market is expanded. Manufacturers go to resource market (like raw material market, labour market, money market etc.) buy resources turn them in to goods and services and sell the finished products to intermediaries who sells them to consumers. Consumer sells there labour and receive money from which they buy the goods and services.

Marketing concept emerged in the mid 1950’s. Instead of product centred philosophy of ‘make-and-sell’ business shifted to consumer-centred philosophy of ‘sense-and-respond’. Marketing is not ‘Hunting’, marketing is ‘Gardening’. Marketing means producing right products for your customers, it’s not finding right customer for your product. A well-planned marketing is the key to achieve organisational goals of the company, being more effective than competitors in creating, delivering and communicating superior customer value to its chosen target market.

Strategic marketing planning

‘The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. It relies on developing a clear company mission, supporting objectives, a sound business portfolio and coordinated functional strategies.’ (Philip Kotler & Gary Armstrong, 1996)

A strategic marketing planning is essential for organisations to focus their approach towards mission and objectives. In marketing planning process, to meet the consumer needs efficiently following things are important:

1. Develop a mission statement: According to Philip Kotler and gary Armstrong, 1996, A mission statement is a ‘statement of the organization’s purpose – what it wants to accomplish in the larger environment.’

2. Set goals: The goal of an organization derives from the mission of the company. It explains in short the agenda of the company for next five years.

3. Set objectives: It explains what needs to be done under goal in following years. The objectives are mentioned priority wise.

4. Identify strategies and tactics: This helps us to know how to attain the objectives describe how to attain the objectives through its goals. This statement separates actions that the management wants to execute during anytime in the year.

5. Implementation of marketing mix.

6. Investment of money and resources.

7. Co-ordination of all organisational departments.

Marketing strategy primarily focuses on optimising profit and return on investment, not just maximising sale. Strategy covers long-term intentions, objectives and targets and planning focus on short-term action programmes followed to achieve the strategy.

Marketing strategy is focusing on expanding the use of existing products in existing markets. It is concerned with meeting the objectives of an organisation or some part of it.

Marketing planning is concerned with detail of implementing the agreed strategy. It covers the resources needed and the means to be used to implement strategy.

In marketing planning of an organisation, the goal of organisation must be clear. I have developed Figure 1.1 to show the steps that are followed when developing a marketing plan. This leads to a development of a marketing strategy which requires the help of good market audit, analysis and marketing mix. This is implemented by monitoring, controlling and evaluation to ensure that the organisation achieves its optimum goal and targets.

Goal /

Target

Implementation

Vision

Market Audit:Analyse current position and opportunities

Market research:

Gain information on market

Marketing Mix: Pursued customer to buy the product

Objectives

Mission

Marketing strategy

Market analysis

Market segmentation

Qualitative

Analysis

Consumer analysis/test

Quantitative Analysis

Place

Price

Product

Promotion

Monitoring

Controlling

Evaluation

Strategy formation

Figure 1.1 The Steps in the development of a Marketing plan

2.2 Techniques and tools

There are several tool and techniques which can be used for forming strategy for an organization. These tools are as follows:

1. Ansoff Matrix

2. SWOT analysis

3. Portar’s five forces.

2.2.A. Ansoff Matrix:

This is a tool which can be use to produce strategies of an establishment. This gives an idea to expand current business by forming new strategies. This matrix can be use as a guide to choose a plan of action for the present performance. The matrix has four levels, as below:

CURRENT PRODUCTS NEW PRODUCTS

MARKET

PENETRATION

PRODUCT

DEVELOPEMENT

MARKET

DEVELOPMENT

DIVERSIFICATION

CURRENT MARKET

NEW MARKET

Figure 1.2 Ansoff matrix

Source: Stone P. (2001) make marketing work for you: boost your profits with proven marketing techniques‎

Market Penetration: It relates to expanding current share in the current market to enhance the growth.

Market extension: It means taking present products in new market that means increasing sales in new market.

Product development: Product development means creating new products or amending previous product in current market

Diversification: This can be related to product or market or unrelated to both.

Above mentioned factors can be used while planning a strategy of an organization

2.2. B. SWOT analysis:

It is a strategy planning tool which analyses the strength, weakness, opportunities and threat involved in particular business or project. It identifies the factors which can be encouraging or discouraging for the business, those factors can be internal as well as external. Those factors are:

INTERNAL

FACTORS

WEAKNESSES

Slow internal decisions

Minimum recourses

High cost base

Limited for specific segment

Take time for transportation

Deficiency of experts

Location of the market

STRENGTHS

Brand image

Skilled workforce

Good systems

Monopoly of the brand

Strong customer loyalty

Improvement in the product

Location of the market

MARKETING

STRATEGY

OPPORTUNITIES

Booming Economy

Good design product

Credit facilities

Government policy change

New technology

Developing market

No strong competition

THREATS

Industry reputation

Global competition

Hostile legislation

Product limitation

New competition

Price war

Declare taxation to product

EXTERNAL

FACTORS

Figure 1.3: SWOT Analysis Table

Strength: The establishment’s strengths are its potentials and wealth.

Weakness: The lack of the some strength is considered as weakness.

Opportunity: The environmental analysis may lead to some opportunities which will be helpful for the organization to make profit.

Threats: Sometime few changes in the external environment can lead to the threats for the organization.

SWOT analysis gives the information about the resources which can be used in competitive environment in which the organization is functioning. Hence it is very useful in strategy formulation

2.2.C. Porter’s five forces:

Porter five forces are used for analysing the industry and for formulating a strategy. If SWOT analysis is used together then it is very beneficial for an organization

Industry competition

Rivalry among existing firms

Bargaining power of supplier

Bargaining power of Buyers

Threats of substitute products or service

Thetas of

new

entrants

Figure 1.4: Porter’s five forces SOURCE

Bargaining power of supplier:

The power of supplier tends to be high during when:

There are large numbers of suppliers in the market.

Where there is a scarcity of particular item.

Bargaining power of customers:

The bargaining power of customer helps organization to know the capacity of customers to put pressure on volumes and margins.Mostly the consumer will bargain when:

When they buy in large quantity.

The products are of very high cost

The customer can make those products.

Threat of new entrance:

The other companies can entre industry more easily if the competition in industry is more. In such times new comers can change the market surrounding.

Threat from substitute :

The threat from substitute can occur when the similar type of product is available in the market with comparatively low price as well as same standards. This can attract large market share.

Competitive Rivalry between Existing Players:

If there is more competition in the current companies then automatically pressure goes on pricing and so the profitability. Porter M (2008)

2.3 Stakeholders:

The stakeholder is ‘any group or individual who can affect or is affected by the achievement of the organization’s objective’ (Freeman 1984).The most common way of classifying stakeholder is to consider a group of people with noticeable relationship with corporation. The diagram below shows the stakeholders map of very large organization. (Friedman & Miles 2006)

Firms

Owners

Financial Community

Activist groups

Customers

Customer advocate groups

Unions

Employees

Trade associations

Competitors

Suppliers

Government

Political Groups

Figure 1.5 : Stakeholders [Freeman (1984)]

2.4. Strategic option

To develop a marketing strategy there can be many ways which can be adopted by the company to face the present financial situation. When the market is changing then the growth opportunities increases. To know those opportunities proper marketing strategy is important. Even when the economic situation is not good but still if proper marketing strategy is made then it is helpful to run the organization effectively.

Hyatt is considering the number of options for the strategy which can be more developed, approved and determined.

Section 3 : Research Method

Research may be simply defined as the systematic search for knowledge and this has two key elements. The first and most obvious element is the search for knowledge and the second is the purpose of that search for knowledge.

The knowledge generated must be captured so it can be made accessible to others. Research must be capable of being reported in enough detail so that a specific study is replicable and hence publicly verifiable.

Secondary data analysis can be literally defined as “second-hand” analysis. It is the analysis of data or information that was either gathered by someone else (e.g., researchers, institutions, other NGOs, etc.) or for some other purpose than the one currently being considered, or often a combination of the two (Cnossen 1997).

As with the literature, secondary data can play a variety of roles in a research project, from being the whole basis of the research to being a vital or incidental point of comparison. Some advantages and disadvantages of using secondary data are listed below.

A considerable amount of leisure and tourism data is collected on a regular basis at considerable cost, particularly by government agencies, often the immediate policy requirements of the data are quite limited – for example to announce a global figure on tourism numbers or numbers of participants in sport. In a sector where research funds are limited, it would seem unwire for the research community to waste such resources by failing to extract all possible research potential from them. This requires careful consideration of ways in which available data might be used, and often calls.

Advantages

Disadvantages

Timing – data may be instantly available.

Cost – cost of collecting new data avoided.

Experience- the trial and error experience of those who collected the original data can be exploited.

Scale – secondary data may be based on larger samples than would otherwise be possible.

Serendipity – inductive process of data analysis may yield serendipitous findings, which may not have arisen with primary, purpose-designed data collection.

Design – secondary data has been designed for another purpose, so may not be ideal for current project.

Analysis limitation – if access to the raw data for re-analysis is not possible, oppourtunities for analysis/manipulation of the data of the current project may be limited.

Section 4 : Data Presentation

Hyatt.jpg

Mission and vision statements

Mission and vision statements plays important roles in any organization, which shows the way for company to make future plan in order achieve their vision and mission.

The vision gives a path to management and employees to work. It also shows the companies aim for next ten years. Vision is made by keeping the aims in the mind and where exactly they want to be in the future.

Mission statement explains the characteristics and standards of an organization, which help the employees to know the standards of the company hence accordingly they can improve their performance. It also gives an idea about the quality benchmark of an establishment.

Mission of Hyatt

According to the annual report of Hyatt Hotel Corporations (2009) they set the mission is “to provide authentic hospitality by making a difference in the lives of the people we touch every day.”

It shows the standard of an organization and with this mission statement, they can motivate their staff to give executive service to the customers with which company can earn profits and goodwill as well.

Goals of Hyatt

Increasing the engagement of their associates;

Increasing the guest service and meeting planner satisfaction levels in their property;

Increasing their share of revenue in their market; and

Maximizing operating profits and margins for their property.

Further expand our presence by increasing the number of hotels in our portfolio; and

Actively manage our capital base to drive preference for our brands.

With this goals company can grow in this recession period in the competitive industry.

Environmental Objectives:

Hyatt puts more attention on environ mental factors in order to help to reduce global warming. The company’s commitment towards environment is :

At Hyatt, they’re committed to making a positive and lasting impact in every community in which they operate. They do this by demonstrating a strong commitment to preserving their natural environment through Hyatt Earth, by giving back to the local community through Hyatt Community, and with the volunteer services of their associates through Hyatt’s Family of Responsible and Caring Employees

Ethical Objectives:

Hyatt’s follows its ethical values in each department .Those values are as follows:

Hyatt is completely responsible for their employees. The ethical responsibility towards them is to give proper training to them irrelative of their race, sex and origin.

Through Hyatt’s ethical values employees has right to overcome the customer who are highly problematic.

Cultural Objectives:

The Hyatt’s cultural objective is to give authentic hospitality service and strives to make a difference in the life of guests.

Business Objectives:

The main business objective is to appear as a leading hospitality company by making the profit to enhance the business. For this, it also concentrates on satisfaction of their employees and also achieves social responsibility.

In all circumstances Hyatt tries to complete these objective, hence though the current financial market conditions are not good still it has not been affected.

Marketing Environment:

The changes in marketing environment of Hyatt can occur in following areas:

Economic forces:

The marketing strategy largely depends on internal as well as external economic forces. The internal economic forces will depend on the growth and the profit of the organization and external economic forces will depend on the overall market situation. If the economical environment is not suitable then to improve the same management should evaluate their strategies in order to gain success.

Socio political changes:

This can affect the organization largely. This can affect the costing as well. This includes the changes in social and political environment which can lead to some changes in rules and regulation by the government, which in return can affect the organization.

Natural environment:

It involves natural resources that are needed by marketers or which can affect the marketing environment of establishment. The natural environment can affect hotel industry in drastic ways. It includes natural calamities like shortage of raw materials, earthquakes, floods, and other. In such situation a hotel should implicate the strategies which will attract more customers and should gives offers which will convince the more guest.

TIMETABLE FOR IMPLEMENTING STRATEGY:

Following is the timetable for implementing a strategy for developing a new branch of Hyatt.

PLAN

TIME

RESOURCES

Building new property for hotel.

2 Years

Capital, Labor, machineries

Completing hotel interiors

1 Year

Funds, Skilled personnel

Establishing new teams and tasks for the establishing infrastructure.

6 months

Recruiters, employees at work

Training and preparing employees.

1 Year

Employees and trainers

Legal works

3 months

Detail Information

Marketing of the property

6 Months

Skilled staff

Booking opening

1 week

Internet, Advertisements

Hotel opening.

The above is a time table for implementation of strategy according to different time period when the each process will take place. It is an explanation of the plan in short manner.

Dissemination Process:

This process is done before the project development which can be done to get a acceptance from everyone i.e. people from all departments, management and the customers. Before starting a restaurant in one of the Hyatt’s property, many considerations had to be made. After those considerations, company had to do dissemination on cost cutting. For this dissemination activity is carried out in three steps .Those steps are as follows:

Research activities: It includes the research from starting a new project till giving salaries to the employees. Before starting the project, the research on production cost is also done.

Technical assistance activities : It is used to identify the technology which helps in increasing the efficiency and effectiveness.

Demonstration activities : These all researches are showed to top-management of the company. After analysing the facts by them, the feedback is given. And after that a project is carried ahead.

This dissemination policy helps an organization to know the following information before starting the project:

Gives rough idea about the funds required for the project

The requirement of staff and their training needs can be analysed.

Gives scope for the promotion of the project.

MONITORING:

Once the new strategy is implemented in the organization, then monitoring is very important. The management should regularly take interest in management. The strategy always operates with formulated procedures. Hence it should be regularly monitored to check whether all procedures are properly followed. The operations should always run smoothly as sometime it can affect the reputation of an organization. The continuous monitoring can be done with PCDA cycle. For the success of organization long term monitoring is a good option. It can also be done by the feedback from the customers.

The auditing is done constantly at operational levels to check whether all procedure all followed or not, to check the quality of the service, which intern helps in keeping the customers satisfied.

EVALUATION OF NEW STRATEGY:

The evaluation of the strategy can be done by monitoring. The following points should be considered while evaluating the strategy.

Satisfaction of the customers.

Number of units sold.

Requirement of the market.

Products standards and quality

Feedback from the suppliers and dealers.

After sales procedures

Promotion of the new products.

If the strategy is evaluated on above mentioned basis, then it helps the organization to know if the company is not right track or not. The evaluation result also helps in motivating the employees.

Steak Holders

Below mentioned are the stakeholders of Hyatt:

Guests / Customers

Investors

Employees

Communities

Suppliers

Government and regulators

Non government organization(NGO)

Stakeholders participation:

Hyatt strongly believes that the stakeholders participation in developing management strategy is utmost important. If all stakeholders participate together then it helps to maximise the outcome in order to make sustainable project design. Hence Hyatt makes sure that they conduct regular meetings with their stakeholders in order to keep them up to date. Following points are taken into consideration in order to initiate proper participation of stakeholders:

Employees: Hyatt listens to and communicates with staff constantly. The main focus is given on collecting feedback from employees through Staff Question Time sessions and through annual Viewpoint survey. Apart from the feedbacks, organization arranges training and development programmes through which an employee will be thorough with organizations goal and aim which will help to get exact contribution from the staff.

Guests/Customers: The guests are the biggest asset of the hotel. They indirectly participate by promoting the hotel by word of mouth if the hotel provides them a good service. Hence the hotel staffs communicate with their customers on everyday basis which helps them to know their changing needs. Also feedback request mails are sent to random guests by the Managing Director of the hotel to know their expectations.

Investors: Hyatt actively engages investors in an annual structured programme of presentations and meetings to understand their views on strategy. Also, Hyatt provides them with updates and issue briefings when appropriate during the year. They also communicate with shareholders through the Annual General Meeting, Investor Relations website.

Communities: Most of the time hotel tries to their neighbour hotels and companies, which in turn builds up good relation. This type is also comes under an external stakeholders which participate indirectly.

Suppliers: Hyatt holds regular meetings with their suppliers, processors and manufacturers. They also bring them together to share experiences at the Producer Clubs, and seek their feedback through the annual Viewpoint survey. Hyatt also provide training and capability building for suppliers where appropriate.

Government and Regulation: Hyatt connects with governments, parliamentarians, regulators and officials on a range of issues affecting the business and communities. These include planning processes and consultations on new regulations including healthy eating and alcohol. Hyatt works hard to ensure that responses to government consultations are aligned with our CR policies and practices.

Non government organisation: Engaging with NGOs helps them better to understand current and emerging issues related to the business. Hyatt met many NGOs to discuss issues including climate change, bio fuels, ethical trading and animal welfare. They also contribute to research and surveys, and respond to requests for information from NGOs as fully and promptly as they can. Hyatt asked NGOs to share their thoughts about Hyatt to help them to improve the performance.

Section 5 : Conclusion:

This assessment is very helpful for me to know the marketing concept in detail, mainly the principles, planning process, tools and techniques, marketing strategies and marketing mix. And developing the strategy and tools and techniques for a well known organisation is the best learning experience. It is helpful to know how industries and mangers think, how they forecast? How they plan? How they lead market? This assessment is truly a great experience for me to learn marketing concepts in detail.

The overall aim of this report was to “Study a strategic planning at Hyatt Hotels Corporation” In order to attend all aspects of overall aim, initially I did some literature review of strategic planning, tools and techniques use in strategic planning and then it evaluates the facts with Hyatt Hotels Corporations.

Although this report has been carried out sincerely and to the best of my ability, there are still some limitation to it.

This research explored my theory knowledge of research and marketing. But as I said it was difficult to do the research in depth, due to time barrier.