Global Marketing for Hospitality and Tourism

According to the author’s research, the basic summary of this report is that Accor is one of the leading hotel brands in the hospitality market with more than 4,000 hotels world wide. The Accor is the brand name for various hotels such as Sofitel, Novotel, Motel 6, Studio 6, Red Roof Inn, Ibis, Etap, and Formula1. For the expansion of the business in the global market, the Accor group of hotels are continuously concentrating for the expansion of the new properties in various emerging countries like China, India where the rate of tourism has been increasing at a tremendous rate and help to improve the economic structure of the country. The following report will outline the overall information about the company’s global brand, strategies, global competitors, its promotion strategies etc. The report also focuses on the total global operations of the company that how it’s doing the promotion of its brands in UK as well as in India. The Accor brand have to organise their strategy very carefully as they have huge competitors in the market. Accor brand have different segment market hotel like Budget, economical, midscale & upscale.

INTRODUCTION

Paris-based Accor is Europe’s leading hospitality group with almost 4,000 hotels in 85 countries around the world. In 1967 Gérard Pelisson and Paul Dubrule opened their first Novotel hotel on a roadside near Lille in northern France. Accor provides hotels in every range, from the five-star Sofitel chain to budget-priced Formule 1, Etap, and Ibis in Europe, Motel 6 and Red Roof Inns in the United States, and midrange Novotel and Mercure in Europe and the Asia/Pacific region. In addition to its hotel properties, Accor also provides its worldwide customer base with foodservices (restaurants and employee vouchers), casinos, and onboard railway services (sleeping berths and dining) (www.accor.com/history.html).The Accor group primarily operates a chain of hotels and also provides corporate service. The group has a global presence and has properties worldwide. The Accor brand manages 899 hotels in Europe (excluding France) with 53 Sofitel, 161 Novotel, 270 Mercure, 6 Suite hotels, 278 Ibis, 85 Etap Hotels, 44 Formule 1 with 39,000 employees. All hotels have a different rating according to their standard and services under Accor. Accor hotel has a rich history started its first hotel in 1967 and now managing more than 4000 hotels world wide with different brand names.

Sofitel: – Sofitel hotel operates world’s leading business in the upper scale market. The Sofitel hotels consist of 185 hotels worldwide with leading competitors for the 5 star rating hotels in the market.

Novotel: – The Novotel hotels comes under mid scale rating brand in the market with 398 hotels world wide and mostly business depends on the business travelers.

Mercure: – The Mercure hotel includes several other brands such as Libertel, Parthenon, Orbis hotels. The Mercure brand consists of 736 hotels worldwide.

Suite hotels: – Suite hotels were introduced in the year 1999 with a very new concept of attracting price conscious customers with better services. Currently, the Suite hotels consist of 30 properties with in France, Germany.

Ibis: – The Ibis hotels comprise of 720 properties world wide providing excellent services to their customers and most of the Ibis hotels are located in the centre of the city.

Redroof: – The Redroof consists of 344 properties with in the United States and have the economy rating image in the market in terms of excellence in services in the hospitality market.

Motel 6: – Motel 6 offers the best price of any national chain .In the year 1962, the Motel 6 were offering there accommodation at a very low price of $6 per night and now a days have a great image in the budget segment in the hospitality sector. The Motel 6 operates 862 hotels in the United states and Canada ( www. motel6.com)

Etap: – The Etap brand operates 331 hotels worldwide. Etap hotels are basically known for there economy accommodations (www.accor.com).

Accor focuses repeatedly on a specific vision for growth, and believes in sustainable, profitable growth through three pillars:

A geographically and structurally balanced business portfolio.

A disciplined, result oriented management of resources and assets.

A set of powerful aligned brands.

These pillars stood throughout Accor’s network expansion and continue to guide Accor’s growth.

Accor also adjusted its strategy for moving into India in late 2002. While entering into the Indian market they decided to focus on the brands such as Ibis, Formule 1 and Etap brands in the markets through a joint venture. The basic rationale for introducing small brands into India was to see the response of the people in Indian market that whether they prefer budget hotels or they would like to go with big brands such as Sofitel, Novotel and then depending on these tests Accor determined to fully enter the Indian market (www.accorcompanyhistory.mht.com).

MAIN BODY

History of the chosen brand (Sofitel) Accor Group:-

The first Sofitel hotel was opened in France in 1964. In 1974 Sofitel did grand opening of their hotel in U.S.A. in Minneapolis, Minnesota. Till the year 1995 it included 100 hotels with, 12,500 employees throughout 40 countries worldwide. In 2002 it did major International expansion, Sofitel opens its doors in Europe (London, Marseille, Cologne) Africa (Marrakech) North America (Chicago, Washington, Montreal)South America (Quito) and Asia (Shanghai, Bangkok) (www.sofitel.com/gb/history.shtml). The company undertook extensive renovation work at several establishments, in 2006 including Los Angeles – the signature Sofitel hotel in the United States, and Polynesia – and continued expanding in Europe. Sofitel brand awareness of continually increasing 10 of its hotels made the Gold list of the prestigious Condé Nast Traveller magazine, and it was voted “Best Hotel Chain in Europe” by the readers of Business Traveller Magazine. Sofitel became an independent business unit last year (2008) within the Accor group and implemented its new luxury strategy on its network. With a network comprised of 161 hotels in 2008, Sofitel has received 23 awards since January. By the end of the year, 70 properties were brought in line with the brand’s new prestige image. In 2009 Sofitel launched its two sister brands, Sofitel Legend and So by Sofitel (www.sofitel.com/gb/history.shtml).

Rationale for selected country:

As Emerging Markets turn into the growth engines of the 21st century, slower growth at home has led investors and hotel companies to pursue aggressive expansion abroad as they look to capture new customers and grow winning global brands. At time when most companies are trading carefully, Accor Hospitality is showing confidence in the Indian market by its continued investments in Indian projects whereas freezing those in China until 2011. As “Jean-Michel Casse”, VP – India Operations for the group talked about its assured investments and developments in India. India market is unpredictable, yet there is a strong hope of demand increases this year because in 2010 the Commonwealth games are taking place in Indian in New Delhi. Accor hotels group is investing in India through a joint venture with Inter Globe Hotels, for Ibis hotel brand in India. The products developing in India are much more advanced than its existing European properties and the Accor group is putting best efforts in developing them. The short term target for the company is to have 30 hotels under its operations, under different brands by 2011. Accor has also successfully bid for two sites at Delhi International Airport Private Limited (DIAL) proposed hotel district development, for which market feasibility study is being carried out to identify the right brand positioning.

The company is opening Sofitel Mumbai (which is the main business hub of the country as well as house of the Bollywood or Indian film industry) Juhu Beach. This will be third property in the country, after Novotel Hyderabad Airport and Novotel Hyderabad. On the other hand, the group is also progressing with its budget brand Formule1. The group committed to open nine Formule1 developments in cities including one in Thiruvananthapuram (most tourist visited city in Kerala) and targeting to add 10 new deals each year for this brand as the business will grow. The first Formule1 brand will be operational by the second half of 2010 in Pune (the famous city for best engineering colleges), Bangalore (garden city of India) and Ahmedabad. Accor Hospitality also brought its mid scale Mercure brand to India.. (http://www.expresshospitality.com/20090630/market07.shtml)

On managing its properties in India, Accor has taken a decision to train managers for top positions from within to address the group’s stringent brand philosophy and strategy need in India, looking at future demand for manpower. Their different brands have different approach. They look at empowering skills to remove layers, for example, in Ibis and for Novotel, Mercure and Formule1, just cannot take anybody who doesn’t understand their brand structure. To inculcate that understanding, the group plan to conduct training for employees of the hotels so that they can be trained to manage properties as they expand, in future. The group has already planned for a training university Accor Academy, to be opened in 2010 and would be established with possible partnership along with an Indian hotel management institute. The group is taking this step to get more Indians for the management level by first getting them trained, positioning them in the European market and bring them back to manage properties in India. The Accor Academy will be established in Bengaluru, Hyderabad or Delhi, depending on the volume of employees (http://www.expresshospitality.com/20090630/market07.shtml)

According to the (Keegan1995) “global marketing is the process of focusing on the resources (people, management and physical assets) and the objectives of an organization on its global markets opportunities and threats. Today global marketing is essential not only for the realization of the full success potential of the business, but even more critically for the survival of the business”.

Key drivers for the global marketing:-

Market needs: – According to Keegan (1995) this is the factor that generally focuses the company to operate globally by seeing overall marketing needs like what customer demands. Every human has its own preferences and due to which demand for everyone differs. Company before going globally should first target the market needs as to see what kind of product will be useful to the customer. According to the selected company (Sofitel) and the chosen country (India) should introduce the product which is affordable to everyone in the market so as to capture the good market share. For this company should first target that what kind of customers it is going to provide the services. Market needs in context to hospitality industry means that what kind of facilities the hotel is providing. Accor group of hotels have different brands operating under it. So every brand has its own target market and different strategies. Generally, customer demands when they travel a good comfortable place to stay, quality food and leisure activities or facilities. So the hotel should first analyse its target market, that what kind of customers, it is going to provide its facilities and services. Doing analyses on the market needs helps the company to compete globally with its other competitors. Some basic segment needs can be met with a global approach in selected product markets. The advertising campaign for a global product may be a good appeal for a company to introduce its product all over the world and also meeting the market needs (Keegan 1995).

Technology: – It is a universal, uniform, consistent factor across national and cultural boundaries. If a company knows how to manage the technology in one country it becomes easier for the company to manage globally. There are no cultural boundaries limiting the application of technology. Once, technology develops it becomes available everywhere in the world. For the chosen company for this report it is necessary to develop its technology accordingly by considering both the markets UK as well as India. It should do so, to make its product familiar everywhere (Jobber, 2001 & Anderson, 1994).

Cost: – The pressure for globalisation is intense as new products involve major investments and long period of development. Uniformity can drive down research, engineering, design and production cost across business functions. The large cost incurred on new products and risk of product development may be recovered in the global market place as no single market is enough to support investment of the size.

Quality: – The quality of the product reflects the intended function and performance of the product in the market. Quality of the product which a global company offers to the market is the main driver which forces the company to operate globally. If, the response of the product quality is good in one country, than company may seek to open or become global by providing the same level of product quality to other global markets, so as to sustain in the global market. As Sofitel, which in high category is the most preferred brand of the Accor group of hotels for the customers, is due to its product similarity and quality which it provides to the guest (Hennesey1995 & Keegan 1995).

Brand’s Global Competitors:

As Sofitel hotel comes under upscale star category so the competitors of this brand in hospitality industry are mainly Grand Hyatt (Hyatt group), Taj hotels, the Oberois, Radisson, Crown plaza, Shangri-la. Due to such high range of competitors Sofitel is providing good services to its guests so as to get good revenue from its customers. In order to compete in the market it is opening its 5 new hotels in India (Ahmedabad, Mumbai, Jaipur Pink City, and New Delhi). Keeping in mind the current scenario of business environment that is recession the hotel should also keep an eye on its price .Due to recession, customers now seek quality service at low price(e.g.: Holiday Inn brand has been relaunched with upgrading its services and this is done in time of recession so that it gets attraction from the customers to get good business) so in order to get in stand with their competitors it should introduce some good price to the market and try to provide good level of services as it is already providing but at a affordable rate. Sofitel believes it is essential to contribute to their development and well-being, which includes employment and training, contributing to health, local purchasing and, in general, any measure that contributes to local social and economic development. The quality of their local roots also depends on the ability to protect the natural environment. So the employees look for new ways every day to use less water and less energy, to reduce waste.

Since, from the opening of the first Sofitel in France in 1964, team members have been driven by a pioneering spirit of conquest. A key to their success, this attitude has over the years shaped the brand’s culture, which is the cement that binds their team members while respecting difference in their ages, cultures and positions within the organization (www.sofitel.com/gb/history.html).

Cultural issues which may affect the company’s operation:

Language differences: – this is problem concerning towards the different languages spoken in different countries. So, company operating globally should take care and respect the languages of different countries. The trade names, brands slogans, sales presentation material and advertising content used by companies in their domestic market may have to be changed when used in other foreign market. A slogan or advertising material which is effective in one language may mean offensive in other language. Companies while advertising or marketing their brand should see that translation is accurate and must convey similar meaning (Kotler and Armstrong (2004).

Cultural differences: – as stated by Chee and Harris (1993) dimensions of culture (e.g. – religion, beliefs and attitudes, education) also play important role in the communication process. Cultures also affect the likes and dislikes of the customers, their attitudes towards things and preferences for particular product and services. Keeping in mind the Indian market, company needs to take care of the cultural values and should know cultural likes and dislikes in order to get success in the future as company is going to introduce new products and properties in the market.

Economic differences: – economic condition also affects the communication process. Literacy level and the degree of urbanization have a significant influence on communication. The discretionary income of individuals and families directly affect their attitudes towards products. Necessities in one country can be luxurious in other country (Kotler and Armstrong (2004).

Pricing for the brand and its strategies:

One of the major elements of the marketing mix is price. As stated by Anderson (1994), “Pricing is an important strategic issue because it is related to product positioning”. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion. But according to Jobber (2001) price is a vital part of whole marketing process. It may also be a factor in determining the sales of the product. Every company should fix it price according to the demand of the product, high price may result in less demand in highly competitive market. If company wants to sell the product at higher price, then it should add more value to its existing product as to compete in the market with other similar products. Before deciding the price, company should set a target of what it actually wants to achieve in the marketplace. Setting the price which is affordable to everyone can help the company to increase the sales of the product and also helps to capture a large market share.

While there is no single definition to determine pricing, the following is a general sequence that might be followed for developing the pricing of a new product as Sofitel is deciding to open its more hotels in India.

Develop marketing strategy – perform marketing analysis to ensure that what kind of customers they are going to target and positioning of the older products so as to see what was the response of customers towards it and also to set the price according the target market which help in increasing demand.

Make marketing mix decisions – define the product through advertising so that the customers are known about the upcoming product in the market as Indian customers are very easily attracted towards new products by seeing its more and more advertising, distribution of the product in the target market by marketing professionals in that area, and by adopting several promotional techniques such as using media (television, newspapers, magazines and broachers(www.hospitalitybusiness.com & Jobber(2001).

Estimate the demand curve – understand how quantity demanded varies with price. Because there is a relationship between price and quantity demanded, it is important to understand the impact of pricing on sales by estimating the demand curve for the product. As during this time in the UK market recession has affected very badly so hotel group should reduce the price of its rooms but shouldn’t cut down the level of service it is providing currently to its customers. Where as Indian economy is increasing at good rate so it can increase its price little bit by increasing some added facilities to its products. If in future the company sees increase in demand then it can increase the price accordingly.

Calculate cost -as discussed by Hennesy (1995) include fixed and variable costs associated with the product. If the firm has decided to launch the product, there likely is at least a basic understanding of the costs involved otherwise, there might be no profit to be made. The production cost of the product sets the lower limit of what the firm might charge, and determines the profit margin at higher prices. The total unit cost of a producing a product is composed of the variable cost of producing each additional unit and fixed costs that are incurred regardless of the quantity produced. The pricing policy should consider both types of costs.

Understand environmental factors – evaluate competitor actions to compete in the market and should see that what strategies are used by others competitors in the market in order to get good business, understand legal constraints towards the environment, to save it and to become environment friendly. Pricing must take into account the competitive and legal environment in which the company operates, Anderson (1994). From a competitive standpoint, the firm must consider the implications of its pricing on the pricing decisions of competitors. For example, setting the price too low may risk a price war that may not be in the best interest of either side. Setting the price too high may attract a large number of competitors who want to share in the profits.

Determine pricing – using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts (Jobber, 2001).For new products, the pricing objective often is either to maximize profit margin or to maximize quantity (market share). To meet these objectives, there are two main strategies which company can use.

Skimming price attempts to “skim the cream” off the top of the market by setting a high price and selling to those customers who are less price sensitive. Skimming is a strategy used to pursue the objective of profit margin maximization. As in regard to Sofitel hotels they can charge high price in Indian market at present because the economy is developing at a good rate by which people have now started to prefer good quality of products and services by not keeping in mind the price which they have to pay for their product. And also keeping in mind the Common wealth games which are going to take place in 2010 in New Delhi, company can increase its price for the product as many tourist and different people will be visiting the country to enjoy the games so it’s nice time to do a good business, and that too by charging products at some high price, also keeping an eye on the competitors in the market or near by area.

Penetration pricing as stated by Dobson and Anderson (1994) this strategy aims to achieve highest possible sales volume by fixing the price aimed to achieve the target sales. This is done so that sales level is high and enough for the achievement of sales in production and distribution of the product thus leading to high level of long term profits.

The pricing objective depends on many factors including production cost, existence of economies of scale, product differentiation, rate of product diffusion, the firm’s resources, and the product’s anticipated price elasticity of demand (Kotler & Armstrong (2004).

Marketing Strategy:

According to Fill (2004) before the product is developed, the marketing strategy is formulated, including target market selection and product positioning. As stated by Keegan (1995) marketing strategy determines the choice of target market segment, positioning, marketing mix, and allocation of resources. Marketing strategy is a powerful process that gives an organization a competitive advantage in the marketplace. A marketing strategy also serves as the foundation of a marketing plan.

In 2005, Sofitel focused on customer relaxation and wellness, variety of food service offering country by country and introducing the employee training programs for excellence service and reception quality (www.sofitel.com/gb/history.html). As part of Accor’s new business model announced in October, the company is repositioning its Sofitel brand to stand for luxury, while simultaneously launching two sub-brands (Sofitel Legend and So by Sofitel) and a sister brand (Pullman Hotels and Resorts), all with the goal of increasing average room rates and meeting more fragmented demand from a growing international clientele. The brand already is working to redefine itself, focusing specifically on implementing new luxury service standards through significant investment in staff training. To help solidify Sofitel’s new identity, the brand has a new logo (the link, which means that human relations are at the heart of luxury), and a new advertising campaign is set to launch in June. Overall, Accor for its brand has invested some €35 million for marketing the new Sofitel and its sub- and sister-brands (Ref: – http://www.hotelsmag.com/article).

Relationship marketing strategies:

Relationship marketing strategies helps to motivate their employees to maintain a good relationship with there customers for the repeat business. To retain customers, the company have to offers various best deals, package discounts, complimentary gifts. Various loyalty and incentive programs have been organized by the Accor group of hotels to motivate distribution channels.

Loyalty Cards & Loyalty programs

The Accor hospitality group facilitates their customer with various loyalty cards such as Mouvango loyalty cards. In 2007, the Accor Mouvango loyalty card generated 320,000 room nights in Accor hotels, compared with 250,000 in 2006, an increase of 28% (http: //www. accor.com).

In 2007, Accor loyalty programs were further enhanced:

New discounts were offered to holders of the Accor Favorite Guest card.

Holders of the Accor Favorite Guest and Accor American Express cards can now earn points.

Corporate Payment Cards

Accor hotels have done partnership with American Express to create corporate payment cards: –

The Corporate Card: – The corporate cards are created by Accor group which enables their cardholder’s customer to pay for their expenses direct to their card and enjoy various beneficial reductions in the payment of their bills.

The Corporate American Business Cards: – The Corporate American Cards allows member’s companies to benefit from an annual retroactive reduction on expenditure at Accor properties. (http: //www.accorhotels.com).

The Six foundations of Accor’s strategy:

Stepping up the transformation process

A growth and innovation dynamic

Powerful, complementary, recognised brands

Unique skills to support the brands

People, the company’s most important asset.

Growth that creates opportunities for everyone.

(http://www.accor.com/en/group.html)

Brand Advertising:-

According to Hennessy (1995) “brand can be defined as an identifying symbol, words, or mark that distinguishes a product or company from its competitors”. Usually brands are registered (trademarked) with a regulatory authority and so cannot be used freely by other parties. For many products and companies, branding is an essential part of marketing. But on the other hand, as stated by Jobber (2001) “it’s all about getting noticed”. A quality, well thought through brand concept is essential for making your product different from others in the market, doing publicity of the product under the brand and using effective promotion techniques to make the product known to the customers.

Promotion: According to Walters and Toyne (1993) promotion is the most visible and probably the most controversial marketing activity undertaken by the firm. Basically, the company involved in foreign marketing generally faces two main steps for promotion. Firstly, the company has to develop a customized or modified promotion strategy for each foreign market to take into account differences in some things such as product offerings, brands distribution activities and sales goal. Secondly, the promotion strategy may also have to be adjusted because of local differences in socio cultural, educational and economic attributes of the targeted buyers. The main purpose of promotion for a company is to inform, educate persuade and timed response from a particular market or market segment.

Brand Promotion in India:-

Use of vehicle: – in this the brand is promoted by putting the location of the website on the personal vehicle and business vehicle. It is very effective when it comes to the promotion of a new launched product of the brand. This is considered as the most appropriate method for promotion because when at any times if people are struck in traffic how many people will see the advertising of the brand and website of the company at one time and also does not require much high cost to advertise by this method(Fill 2004).

Use word of mouth: – Word of mouth is one of the very effective promotion strategies. The main reason is because it passes on a message of trust. When someone has already used your product and services they passed a favorable word to someone else it is great because the recipient of the information is already listening to someone they trust. In India this things matters a lot for a brand to get familiar in the public and customers are also attracted towards your product when they listen the goodwill of the product from others mouth (http://marketing.about.com).

Promoting through public transportation:- in this , the brand can be promoted by putting logos , posters , broachers in the public transport means such as in India it can be done by pasting adds of the brand in metro(Delhi) , in Mumbai it can be done through Mumbai local trains and taxis. This helps in making the brand known to the general public easy and in a faster way. As lots people travel daily for their workplace through local transport so it’s become easy to advertise the brand. And also everyday if people are seeing the same advertisement everyday they tend to buy or use the product once.

Brands global promotion techniques:

Global Promotion Strategies as stated by Kotler and Armstrong (2004) deal with the way a business advertises when it expands to a global market and sells to a consumer base in a different country and culture. Global promotion strategies deal with delivery of marketing concept that does not always translate into the language of the target consumer nation. If global promotion strategies are done poorly by a business it could kill any chances of gaining market share in a target nation economy. Here are some global promotion strategies.

Use the right translator: This global promotion strategy will include designing marketing and communications materials that are written in the native language of the foreign country or of the target consumer culture. This is an obvious strategy however one must use the right translator to do this. According to this report the Sofitel should promote its brand in (Hindi language) which is known as native language of India. Remember that translators only translate into a target language. So, company should select the translator who is having good knowledge of the language so that the brand is promoted through right message in the foreign country and the customers should also understand it. Unless a translator’s target language (what the communication is getting translated to) is also that person’s native language, it is highly unlikely that company will get the proper translation for their marketing materials (http://www.marketwire.com& Fill (2004).

Be culturally sensitive: – as said by Anderson (1995) this is obvious for each brand to do a cultural study of targeted market in which they are going to provide the services. For the chosen brand Sofitel it’s necessary to study the culture and ethics of Indian customers so that the brand is able to provide the