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Four Seasons: SWOT analysis

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Four Seasons: SWOT analysis

Procedure
This essay paper was created by primarily by accessing journals and papers on the hotel industry as a whole, and the Four Seasons Hotel in particular through the online database: ProQuest. Other information was also research from the Company’s Web site at www.fourseasons.com, and from Yahoo! Finance Web site at http://finance.yahoo.com. Afterwards, the information gathered were evaluated and analysed to come up with the strengths and weaknesses of the hotel chain, the opportunities and threats it faces within its environment, and the key success factors (KSFs) it considers critical.

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Findings
Before I discuss the internal strengths and weakness, the opportunities and threats, and the KSFs of the Four Seasons Hotel, I first discuss what the Four Seasons Hotel is.
The Hotel is under the Four Seasons Hotels, Inc which is engage in the management of, and investment in, hotels, resorts, and residential projects (http://finance.yahoo.com). Company is classified under the Services Sector and specifically operating within the Lodging Industry. Its head office is located in Ontario, Canada. The Four Seasons Hotels, Inc. was founded in 1960, and by the end of 2006, it has “74 hotels and resort properties containing approximately 18,090 guest rooms in North America, the Caribbean, Europe, Asia, Australia, the Middle East, and South America” (http://finance.yahoo.com). The target markets of the hotel are several groups including business travelers, corporate and incentive groups, and leisure travelers.

Strengths
Exemplary Performance. The Four Seasons Hotels have always prided itself of providing the hospitality experiences of exceptional quality. A proof of this was the Diamond Award five of its hotels received from the American Automobile Association or AAA in 2007 (www.fourseasons.com). And in line with the company’s mission to provide a total hospitality experience of exceptional quality, five of its restaurants also received a Diamond Award from the AAA this year (www.fourseasons.com). This is only few of the awards the hotel chain has received from several authorities on the hospitality industry. These awards[1] go a long way in promoting the hotel as one of the best places to stay whether one is traveling for business or for pleasure.

Operating Principles. The hotel chain does business within a very rigid set of operating principles and ethics. The Company “create properties of enduring value using superior design and finishes, and support them with a deeply instilled ethic of personal service”; and “In all our interactions with our guests, customers, business associates and colleagues, we seek to deal with others as we would have them deal with us”  (www.fourseasons.com). Operating within these principles ensure that the Company doesn’t compromise its customers’ value for money, and the quality of its services. This is one of the reasons why Four Seasons Hotels have been able to provide the highest standards of hospitality throughout all of its hotels. Operating within these principles also ensure guests that they will receive exceptional experience with any of the Company’s hotels anywhere in the world anytime. Read about volume and rate' are classified under which area of consideration

Distinguishing Edge. The hotel’s Web site says that “The Four Seasons distinguishing edge is service – service evolved over three decades of exclusive focus on luxury hospitality. No other hotel company can offer you a global network so well attuned to the needs of the luxury traveler.” This continuing focus on service differentiates the Company from its competitors. Specifically the Company positions itself as “Four Seasons for Business”, “Making life on the road more comfortable”, “Helping you work more productively”, “Four Seasons For Leisure”, “Offering most desirable vacations”, and “Making your family welcome.”

Concern for People. Clearly, the quality of any hotel’s people is important. At Four Seasons Hotel, the importance of its employees is recognised: “Our greatest asset, and the key to our success, is our people” (www.fourseasons.com). After all, its employees are its façade to its target market: these people interact with customers every moment. Any flaw in the delivery of the service will surely impact its operations.

At Four Seasons Hotel the recognition that its people are important is more than just a lip service. It was recognised by Fortune Magazine for ten consecutive years as one of the magazine’s ““100 Best Companies to Work For,” ranking 53rd. It is also considered an “All Star” company by the magazine as it is one of only 18 organizations that have been on the list every year since it launched in 1998” (www.fourseasons.com).

Weaknesses
High Rate. With the increasing popularity of travel specifically leisure travel, the relatively expensive prices of the Four Seasons Hotels are outside the capability of several markets. This effectively means that the Four Seasons Hotel is pricing itself out from several profitable segments of the market. The prices of the hotel’s rooms make it vulnerable to the movements of the economic well-being of the countries it is operating in. It has been observed that if a country is in an economic slump, the occupancy rates of luxury hotels generally go down: companies’ travel and representation budgets are lower in these times.

Limited Rooms. There are instances wherein the Four Seasons Hotels need to turn away customers because it can’t accommodate anymore. Not only this means lost sales, but it also means that the Company risks losing some customers to competitors completely. By turning away customers, the Company is effectively giving its competitors the chance to show those customers that perhaps it can do better then the Four Seasons Hotels, and if those competitors succeed, then the customers might end up staying with them the rest of their life on the road. The Company might want to consider alternatives to resolve this issue. Some of these alternatives are shown in the discussion for the Company’s opportunities.

Opportunities
Relatively Dismal Real Estate Market in Some Areas. This means that the hotel can acquire prime location spots at a relatively good price. This, in the long run, will allow the company to build more hotels, and to solve its persistent problem on limited capacities in some of the markets it serve.

Expansion by Buy-Out. In the past, the Four Seasons Hotel had expanded by buying out its competitors. Any opportunity that presents the same option to the Company needs to be considered. Buying an existing hotel is relatively simpler than starting a new one. But, of course, the Company needs to take into consideration the overall performance of the hotel it is considering to acquire.

Expansion by Merger. Another way for the Company to increase it market presence is to merge with another hotel chain. However, this is much more complex than buying a hotel so this opportunity needs to be studied in-depth.

Threats
Chance of New Hotels Entering the Marketplace. The hospitality industry is a very profitable one, and with the growing popularity of travel coupled with the presence of low-cost airlines, it is continually expanding. As such, more and more entities want to enter the market. Of course, the more competitors there are in the marketplace, the ore intense the competition will be.

Suppliers (Specifically Employee Unions). Also this is not much a threat for the Four Seasons Hotel, if I consider that its employees are one of its suppliers, and then they might become a threat eventually. In several industries, like the airline industries, some companies became bankrupt because of their employees. If the employees’ union demands for unreasonable terms, and forces the Hotel into an agreement, then it might result to a financial difficulty for the company. It might need to forego expansion plans to finance the unreasonable demands of the union.

Customers. Clearly, in the hospitality industry the customer is the king. These groups of customers might demand better rates. When this happens, the Fur Seasons Hotels might find itself in a business dilemma, sometimes it might be wise to spend money to retain customers.

Substitute Products or Services. There is a growing segment in the market; this segment is increasingly cost conscious. With the emergence of this segment came the increasing popularity of budget accommodations such as pension houses. These pension houses and other budget places are increasingly improving their service.

Rivalry or Intensity of Competition Among Existing Firms in the Industry. The intense rivalry of the Four Seasons Hotels and its competitors might result to aggressive recruitment of new customers, and the aggressive retention of existing ones. This might is very costly.

Key Success Factors
Several of the factors that “must go right in order to ensure the organization’s survival and success” (Turban, Leidner, McLean, & Wetherbe 2006, p. 727) are discussed below. These factors are called key success factors.

Occupancy Rate. The success of any company competing in the hospitality industry is almost always measured by its occupancy rate. Occupancy rate is the ratio, at a given time, between rooms occupied and the number of rooms available for occupancy which excludes rooms under repair. The higher this ratio is the more successful a hotel is. For Four Seasons Hotel, this is very important because any room not occupied in any given time is lost sales.

Customer Satisfaction. Filling the hotel up to capacity is not only the issue. The performance of the hotel based on its occupancy rate must go hand in hand with its customer satisfaction. An above industry average occupancy rate is not a good success indicator if, in general, the Company’s customers are dissatisfied with the hotel’s service. To be successful, Four Seasons Hotel must maintain high customer satisfaction together with an excellent occupancy rate.

Employee Turnover Rate. In recognition of the importance of people in its delivery of exemplary service to its customers, the Four Seasons Hotels must maintain employee turnover rate to the minimum. Employee turnover is the rate of employees, whether staff of managerial, leaving the hotel for employment opportunities elsewhere – either with a competitor or with another company in another industry. Aside from the fact that hiring and training an employee costs money, and takes time, it is not good for the Company’s image as a luxury hotel if it can not take care of its employees.

Conclusion
From my findings, it is clear why the Four Seasons Hotel is consistently considered as one of the world’s best hotels. It has been able to effectively counter threats by intensifying its strengths and minimising its weaknesses. Also, it was able to capitalised on opportunities by utilising its strengths. Furthermore, based on my findings, I can say that in the coming years it will not be surprising to see Four Seasons Hotels in the list of the world’s best hotels.

With this comes the fulfillment of the Four Seasons Hotel’s goal of “perfecting the travel experience through continuous innovation and the highest standards of hospitality. From elegant surroundings of the finest quality, to caring, highly personalised 24-hour service, Four Seasons embodies a true home away from home for those who know and appreciate the best. The deeply instilled Four Seasons culture is personified in its employees – people who share a single focus and are inspired to offer great service” (www.fourseasons.com).

References
http://finance.yahoo.com. ‘Four Seasons Hotels Inc. (FS): Profile’, Retrieved on April 18, 2007, from http://finance.yahoo.com/q/pr?s=FS.

www.fourseasons.com. ‘Awards and Accolades’, Retrieved on April 18, 2007, from http://www.fourseasons.com/about_us/awards_and_accolades.html.

www.fourseasons.com. ‘Our Goals, Our Beliefs, Our Principles’, Retrieved on April 18, 2007, from http://www.fourseasons.com/about_us/company_information.html.

www.fourseasons.com. ‘Welcome to Four Seasons’, Retrieved on April 18, 2007, from http://www.fourseasons.com/about_us/welcome.html.

[1] A complete list of awards the Company received this year and last year is available at http://www.fourseasons.com/about_us/awards_and_accolades.html.

Four Seasons: SWOT analysis essay

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