Informative Essay on Global Marketing
After this the nature and impact of global macro environmental variables will be explored.
Company history Fairmont Hotels and Resorts (Fairmont) is the largest of the brands in the Fairmont Raffles Hotels International group and by combing three distinct brands: the Raffles, Swissotel and Fairmont portfolios and has become a truly global hotel company with 91 hotels worldwide. More than 65 hotels of Fairmont in Canada, United States, Europe, Asia, Middle East and Africa, and Mexio, Carribean and Bermuda, sit between the upper scale and luxury travel market.
They also have one of the largest collections of storied properties in the world with well known addresses in the portfolio including The Savoy in London, the Fairmont Banff Springs, and New York’s The Plaza. The average age of the guest is 47, down about 8 years in the last decade. Fairmont hotels target diverse market segments, for example Fairmont’s clientele has been split almost evenly between group (above 45%) and transient business (around 55%), and almost evenly between leisure and usiness travellers.
However, their core customer is the luxury mid-aged traveller. Fairmont hotels are one-of-a-kind properties where sophisticated travellers can discover culturally rich experiences that are authentic to the destination. Situated in some of the most exclusive and pristine areas in the world, Fairmont is committed to responsible tourism and is an industry leader in sustainable hotel management with its award-winning Green Partnership program. What are global macro environmental variables?
As Doole and Lowe (2008) state: “The environments in which international companies must operate is typically characterised by uncertainty and change – factors which, taken together, increase the element of risk for international marketing managers”. As many authors argue the global macro environmental factors are something beyond the companies influence, and must be treated as non-controllable variables.
The five major global macro environmental factors, as denoted by Lancaster et al. (2002), Kotler et al. 2005) and Reid and Bojanic (2010) among the other authors, marketing managers often examine and which affect all organisation are: demographic, economic, political/legal, socio-cultural and technological factors. However, Lancaster et al. (2002) suggest if businesses are able to identify and react to these factors quickly enough they would be able to be part of changes occurring and take market leading position instead of being forced into market followers position or worst case being unable to prosper and survive as an international business in the global competition.
Yet the macro environmental variables as suggested by mainstream theorists (Lancaster et al. 2002, Kotler et al. 2005, Doole and Lowe 2008, Kotabe and Helsen 2008, Palmer 2008, Reid and Bojanic 2010) needs to be managed through marketing planning process; threats must be minimised and opportunities maximised. For Fairmont, as an international hotel the issue to keep in mind is that hospitality industry is in a “fast moving environment” as well as their product they sell is perishable when considering changes in marketing strategy or tactics.
Thus they face more complex and changing environments where they operate and compete than other industries. In order to survive and prosper, the essential is to take account of, and adapt to, fast changing environmental conditions. To see and take advantage of marketing opportunities while at the same time anticipating any threats to their business. By indentifying environmental trends soon enough, management should be able, at least in part, to anticipate where such trends are leading and what future conditions are likely to result from such changes. (Lancaster et al. 2002, Palmer 2008).
Explain how changes in the socio-cultural environment affect marketing decisions The UK population will rebalance by 2015 – families will be the most prevalent group, and the retired will have increased in number fastest. One-person households are set to increase fastest into 2015, following the trend witnessed into 2010. Emerging markets where social exposure and status are important along with the rising income and relatively wealthy middle class. Mainly affect young people who have an above average need for social acceptance, and international travellers, who are exposed to multicultural values.
Fairmont target market age group younger than used to be …. Embracing social media is a key way to reach customers. “We could never have predicted the explosion of social media,” Laboy said. And yes, “you can have meaningful customer engagement via Twitter. ” Hoteliers need to consider mobile tagging as a way to offer promotions to customers, he said. •Ethical challenges and the Green movement On one hand provides opportunities to connect to customers and employees. On the other hand Western consumers choosing brands look for reassurance that the product has been produced in what they see as a socially responsible manner.
On the basis of ensuring products and ingredients came from authentic source of supply which did not leave to the destruction of the environment and that they are free from child slavery and that the people that make them are able to earn a proper living wage. Consumers globally are becoming better informed through better education and faster and more effective communication. Now firms are increasingly expected to ensure that their behavior is ethical and in the interests of the global community which makes up their market.
However, international marketing executives operating across cultures will find themselves facing moral and ethical dilemmas on a daily basis on a wide range of issues.Some of those currently receiving particular attention are bribery and corruption, counterfeiting and piracy. Explain how changes in the economic environments affect marketing decisions The international hotel industry has shown signs of recovery in the first half of 2010 according to the bi-annual hotel survey conducted by Hogg Robinson Group (HRG).
HRG’s interim survey is based on a combination of industry intelligence, actual room nights booked and rates paid by its UK clients during January to June 2010 compared to the same period in 2009. Globally, the hotel industry has shown signs of recovery in the first half of 2010 when compared to the same period in 2009. Although the survey reveals a fragmented global picture, the hotel market in Europe and the US appears to be stabilising, as rates are either flat or only marginally down. The emerging market economies of India and China have shown strong upturns in growth over the last six months.
Year-on-year economic growth in Q2 2010 was 7. 9% and 10. 3% in India and China respectively and the resurgence in economic activity has helped to prop up room rates. Growth in both economies will begin to ease over the next year as central banks begin to raise interest rates to address inflationary pressures. In contrast though, the Middle East region recorded the highest rate decrease, with double digit falls in the UAE, Bahrain, Qatar and Oman. Many western economies are coming to terms with the budget cuts necessary to reduce sovereign debt levels which will inevitably soften room rate growth.
Dynamic emerging economies have less need to take fiscal austerity measures in the current climate and we expect growth to be higher as a result. However, the survey shows that emerging economies have not, as of yet, fully recovered from the effects of the global economic downturn. In the UK, growth prospects are buoyed by a weak sterling which continues to support tourism and leisure travel. In addition, the ongoing recovery of the banking and finance sector will contribute to corporate demand for rooms.
There are, however, significant downside risks to growth in the market emerging from future cuts in public spending Belfast and Beijing both suffer from an oversupply of hotels, the latter having experienced massive investment in recent years from major players keen to build a presence in this emerging market. Bangalore, a city reliant on business travel associated with the IT industry and call centres, is a classic example of a market ‘popping’ as it has seen rates fall as a result of a drop in demand due to the global recession coupled with significant new hotel openings which have led to a current oversupply of rooms.
Services apartments have grown in popularity and some of the IT industry has relocated to other areas in India. The 5 star market achieved a marginal increase of 1%. Whilst there has undoubtedly been a trend for corporates to turn to the 4 and even 3 star sectors in the current climate, hoteliers in this sector have held out for rates at the expense of lower occupancy levels, conscious that any significant rate reduction has an adverse effect on service levels as costs are brought in line, resulting in damage to a hotel’s reputation for quality and standards.
Reflecting the need for cost reduction, clients are downgrading between the star ratings as well as continually reviewing their programmes and renegotiating rates where possible. In the 3 and 4 star markets average rates have decreased as suppliers strive to maintain their share of the corporate market. We continue to believe that budget options are not always the cheapest option when the add-on costs are taken into account. Mintel The UK officially exited recession in the fourth quarter of 2009. GDP rose 0. 4%, subsequently increasing 0. % in the first quarter of 2010 then 1. 1% in the second quarter. While fears of a ‘double dip’ recession have eased somewhat, consumer confidence has remained weak as Britain has entered an ‘age of austerity’.
Economic growth in Europe remains weak relative to other regions; Euro zone GDP grew year/on/year by 0. 6% in Q1 2010, compared to growth on 1. 2% in Japan and 2. 7% in the US over the same period (Hogg Robinson Group 2010). Global hotel sales are expected to increase 30-40% in 2011, according to hotel investment services company Jones Lang LaSalle Hotels. 009 was characterised by frozen liquidity, stalled transactions and drops in hotel performance and values globally, this year signalled a dramatic improvement, with more opportunities for buyers. The number of hotel sales is forecast to continue to rise substantially in 2011, reaching a value of $28 billion (? 18 billion) to $30 billion (? 19. 3 billion). ASPAC has seen strong growth this year. However, overbuilding in Abu Dhabi and Dubai are dragging down levels in the Middle East and Africa. Every region except ASPAC saw a rise in September, but a dip in October. ASPAC remained strong in October.
ASPAC is one of White’s bright spots. She sees that market growing by 10-12% in 2011. Other areas showing strong growth this year are Sao Paulo, Mexico City and Rio de Janeiro. She sees occupancy will increase by 3-5 %, ADR by 4-5% and overall RevPAR by 6-9%. Looking at specific RevPARs, ASPAC will increase 10-14%; Europe, 7-9%; the Americas, 6-9%; and the Middle East and Asia, 3-6%. VAT Emerging markets Fairmont regional growth is driven by Middle East markets such as the UAE, Egypt and increasingly Saudi Arabia, as well as growing numbers of Gulf travelers that stay at its properties in the United States, Europe and Asia.
The Middle East, despite being impacted by the global downturn, still shows resilience over the past year with revenue dropping less than other regions, industry figures showed. Saudi Arabia has a large critical mass, huge influx of travelers, the built in demand drivers, and it helps us support our partnerships with our shareholders. It is the world’s top oil exporter, is developing its tourism sector to lower dependence on oil and hosts an estimated 10 million Muslim pilgrims every year. The 14 planned hotels will be all under the Fairmont brand.
Fairmont is likely to also add hotels in Qatar, the world’s top exporter of liquefied natural gas, whose economy is booming and hosting World Cup in 12 years time…(Walid 2010) Explain how changes in the political/legal environments affect marketing decisions Identify the major trends in the firm’s technological environments Broadband penetration continues to increase, even amongst the groups already most likely to have access. 200 mph train from London to Frankfurt arriving in 2013 + opening new markets bringing closer international trade… In a world moving more and more towards globalization, hotel organizations ill need to communicate more quickly, operate more productively, offer their employees greater opportunity and deliver their customers enhanced benefits.
Those companies that address these issues today will be better prepared for the global marketplace of tomorrow. Conclusion Fairmont competes in the strongly competitive hotel and lodging industry, focusing on the first class and luxury segments of the markets. Fairmont is impacted by change in the overall travel, tourism and hospitality industries as well as broader macro-environmental trends.