Learning Outcomes Assessed

This coursework aims to assess the following learning outcomes:

1. Critically evaluate the contribution of strategic marketing to the overall

strategic management of organisations and the pursuit of sustainable

competitive advantage.

2. Apply the various strategic marketing frameworks and concepts to the

strategic planning process.

3. Exercise considered judgement in assigning priorities and determining

objectives in specific organisational situations.

4. Apply diagnostic and creative skills in the marketing planning,

implementation and control processes in a variety of different

organisational situations including the service sector and not-for-profit

organisations.

You are asked to develop a Marketing Plan for the Relaxation Hotel. The

Marketing Plan should cover a period of three to four years. This should be

presented in report format. The marketing audit part of the plan should be

concise and insightful. As a guideline it should not exceed 1500 words

(excluding headings, references and diagrams, but including any tables that

you may choose to use) and should conclude with a SWOT analysis, which

should briefly and succinctly summarise the strategically important issues for

the Relaxation Hotel. As a guideline, the remaining part of your marketing

plan should not exceed 2000 words.

You are expected to use material in the case study extensively and also be

aware of and take into account: –

1. Relevant information about contemporary events that may affect the

company from, for example, the quality newspapers

2. At a very limited level, issues and trends affecting the holiday, hotel

and restaurant industries. This should be available from similar

sources as (1) above. Note however, that the focus of this assignment

is on your interpretation of information – predominantly that in the

case study – and not on the information itself. There is plenty of

information in the case study and any research outside that should be

extremely limited – please do not invest much, if any, time in it!

The Relaxation Hotel

The Relaxation Hotel is located in Sussex a few miles South of the M25, close to

Gatwick Airport. It is a family owned business which was started in 1990 by the

Jacobs family and is located in twenty acres of grounds close to the main train line

from London to Brighton and within easy striking distance of the cross-channel tunnel

and ferries to France. Local attractions include the Chartham Park and Lingfield Park

Golf Courses. Alison Jacobs, who had financed the purchase of the hotel from her

earnings in the City in the 1980s, had represented England at golf and was the

Captain of the Ladies Team at Chartham Park Golf Club. A short distance away,

water sports, which tend to appeal to younger and more athletic people, are available

at Weirwood Reservoir. Crawley and Felbridge Lawn Tennis clubs are also nearby.

In addition, for the more mature visitor, there are several National Trust Properties

including Standen and Wakehurst Place.

The hotel has been developed over the last twenty years by investing profits in

expanding parts of the business. The original hotel consisted of some 60 bedrooms

which, whilst of a good standard, would be termed as business or tourist rather than

luxury accommodation. Following a boom in international business in the late 1990s

the hotel was expanded to accommodate an additional 20 suites, suitable for affluent

guests, or potentially families, and a further 20 bedrooms of the same standard as

the existing ones, making 100 in all. In addition, a small conference centre (the

Relaxation Conference Centre) was added and the hotel continued to concentrate on

the business rather than the tourist market, attracting companies from London,

particularly those that needed to accommodate conference attendees from overseas,

who could use Gatwick Airport. As technology had advanced, however, the

conference centre was beginning to look a bit “tired” and it was felt that it was

beginning to require a substantial makeover. Other facilities included the Relaxation

Bar and Bistro together with the Relaxation Restaurant that could accommodate and

cook for some 150 people: all of these had enjoyed good custom from the business

guests. In addition, the indoor swimming pool had proved to be an attraction for

these guests. The purchase of the hotel attracted some attention in the early 1990s

because of Alison’s background and even now its and Alison’s names are widely

recognised since Alison continues to have a high profile as a sportswoman and

remains involved in a number of national sporting organisations. As a consequence

of this, occasionally a guest with an interest in sporting activities of some kind seeks

out the hotel.

In addition to catering for guests staying at the hotel, the restaurant had also enjoyed

considerable custom from the local residents in the surrounding villages, where it

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enjoyed a good reputation. The restaurant opened only in the evening, relying on the

bistro to cater for the needs of hotel guests at lunchtime. Historically, it has served

traditional English food, using high quality ingredients sourced from long-standing

suppliers. Because of this, it has been popular with businessmen, although there

was some doubt as to whether the overseas visitors to the conferences that stayed at

the hotel were as appreciative of the type of food offered. It has always worked to

two sittings an evening, starting at six o’clock and nine o’clock. The Hotel was aware

that serving times could be important because guests often had to catch trains or

planes, but there had been occasional complaints about timings of the service that it

had put down to problems with temporary staff. The question of speed and

standards of service had also arisen in the Bistro, possibly due to differing customer

expectations there, and the family felt that this needed to be addressed. Generally,

however, the permanent staff were reliable and enjoyed a good relationship with the

guests, often discussing local attractions and activities with them.

Following the credit crunch, the level of business guests declined significantly and

the hotel suffered from a low occupancy rate in its rooms (See Appendix I). It

decided, therefore, to focus more on the tourist and holiday market with a reduced

emphasis on business guests. This approach, which had involved a reduction in

prices, had proved moderately successful, attracting both UK and overseas visitors.

The latter found the proximity to Gatwick, Heathrow and Stansted airports

convenient. The Jacobs family now believes, and anecdotal evidence from other

hotels in the area confirms, that as the economic climate improved, business guests

had been making more use of hotels in the UK generally and particularly those with

easy access to London and the airports. They had noticed a particular “bounce” in

the number of business guests in 2013, following the London Olympics (see

Appendix IV). In addition, both the tourist and leisure markets as a whole picked up

and the Jacobs had seen a slight upturn in the room occupancy by these groups.

However, as the pound has grown stronger against virtually all the other major

currencies, particularly the Euro and the US Dollar (See Appendix II), the family has

noticed that overseas visitors are becoming more reluctant to visit the UK, finding it

ever more expensive to do so.

The family now feels that it is important to invest in the business and possibly change

direction in order both to protect its existing level of business from further losses due

to adverse exchange rate movements and also to grow it for the future. It feels that

following similar strategies to other hotels in the area does not offer sufficient scope

for growth and that it has to establish some point or points of differentiation. It has,

therefore, invited you, as a Marketing Consultant, to advise on its medium term

strategic plan, which the family intend to finance by borrowing from their bank.

The bank is only prepared to lend money against one major project, which is likely to

involve additional investment in marketing as well as, possibly, infrastructure, to grow

the business in the short term and has indicated that it will only do so on the strength

of a sound business plan and visibly increasing cashflow. However, it has indicated

that, if that project is successful, it would consider providing additional finance to

support a further project in the medium term. The family is keen, therefore, for you to

advise on ways in which it might increase its level of business and so improve its

cash flow.

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You have gathered some information from Mintel and other sources and this is

shown in the Appendices. The family has asked that you do not invest money in

further research at this time, indicating that it is perfectly happy to validate any

reasonable assumptions that you make before it embarks on implementing the

strategy that you recommend. Such assumptions will, of course, be based on your

knowledge gained, as an intelligent consumer, from the quality press, TV and

Internet News.

The UK Hotel Industry

The UK Hotel Industry has always charged high prices to the business or corporate

sector. However, as can be seen from Appendix 1, this source of income was

severely affected by the Economic Downturn. Whilst it has always been competitive,

it has been hard to establish any significant differentiation and bookings have often

relied on the location of the hotel and availability of rooms. However, some hotels

have been successful in building up relationships with businesses by offering a high

level of service and reliability and have added value with, for example, shuttle buses

to airports and concierge services. In a similar way, some have opted to work with

tour operators to offer a complete package including flights, accommodation and

holiday activities for holidaymakers. Many of the tour operators target specialist

holidays such as honeymoon packages or activity holidays (See Appendix III). More

recently, hotels have come to rely on websites such as laterooms.com for additional

business, albeit at lower rates than their normal ones.

The industry is facing an increased amount of bureaucracy with the ban on smoking

in public areas and increasing concerns about binge-drinking. This comes, of

course, on top of the existing costs of complying with Health and Safety Legislation.

These costs affect profits and make it important to maintain a high level of room

occupancy.

As the Credit Crunch took hold, budget hotel chains such a Travelodge and Ibis

gained in popularity. Whilst they offer little in the way of service other than the most

basic of facilities, they do offer the benefit of being cheap. They have seen their level

of business maintained as the economy recovered as they have retained the

customer bases that they built up in 2009-2010. There is a Travelodge very close to

Gatwick Airport.

Despite the inroads made by the budget hotels, anecdotal evidence suggests that the

Business Market for the non-budget hotel sector, in which the Relaxation Hotel would

be classified, grew by some 6% in volume terms between 2011 and 2013. However,

it is unlikely to return to the halcyon days of the late 1990s and early 2000s firstly

because businesses have become more cost conscious and, secondly, because

technology like video-conferencing has reduced, and continues to reduce, the need

for travelling for business purposes.

The Restaurant Industry in Sussex

Following a dip in overall revenue during the economic downturn, the restaurant

sector has recovered and the trend continues upwards. Informal research in the

local area in Sussex suggest that consumer spending on sit-down meals is

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recovering with a market growth rate of some 1.5-2% quarter on quarter since the

beginning of 2011. Consumers are increasingly demanding to new styles of food and

drink from different parts of the world (e.g. French, Italian, Portuguese, Indian,

Japanese, Thai, Malaysian and Middle Eastern) and restaurants serving these styles

are continually springing up. Eating out has been a growing part of the lifestyle of

young cash-rich, time-poor professionals for some time. However, the affluent “grey

market”, born in the 1940s and 1950s and free of mortgage costs and the

responsibilities of bringing up its children, has become an increasingly important part

of the market in all parts of the Western World, particularly as the disposable income

of young professional has been negatively affected by the higher cost of living,

including mortgage costs.

Other influences have included an increasing awareness of health issues and a

consequent trend towards healthy eating. Additionally, an increasing number of pubs

in Sussex have come to rely on serving food, mainly traditional dishes, to their local

customers.

Competitors

The competitors for the Hotel can be considered in a number of ways. There are

local competitors for both the restaurant and the hotel. The local area provides an

extremely wide range of restaurants ranging from Burger Bars through medium

priced restaurants offering virtually every style of food, through to restaurants able to

offer both a similar and higher standard of food to that offered by the hotel. In

addition, further afield in Brighton and London, a vast range of food is available.

Whilst the hotel obviously faces competition from Brighton, London and elsewhere,

the competition locally is somewhat easier to quantify. A typical competitor would be

the Selsdon Park Hotel, some six miles to the North of the M25 and so some thirteen

miles from the Relaxation. This is somewhat larger than the Relaxation and boasts

its own golf course. Closer to home, hotels such as the Gatwick Hilton provide

strong local competition.

Important Note: This case study has been compiled from a mixture of factual and

fictional sources. The text above has been adapted for the purposes of the case

study and may not represent an accurate reflection of the current situation in the

hotel industry. However, for the purposes of the assignment and the exam, you

should consider that it is accurate.

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APPENDIX I – THE EFFECT OF THE ECONOMIC DOWNTURN ON THE

UK HOTEL INDUSTRY

UK hotel industry feels effects of global economic downturn

26 March 2009: The UK hotel industry did not escape the effects of the global

economic downturn in 2008 and another difficult year lies ahead in 2009, although a

number of international events and the decline in the value of Sterling may soften the

impact, according to Hotel Britain 2009, PKF’s definitive guide to the performance

and prospects of the UK hotel industry.

The report reviews the performance of 548 hotels representing over 88,000 rooms

across both London and the regions.

According to Robert Barnard, Hotel Consultancy Services

Partner at PKF Accountants & business advisers, UK hotels

face a challenging year in 2009 due to the deepening economic

downturn. However, exceptional growth in the market over the

last five years does give the industry a strong starting point and

international events, new concepts and further investments may

soften the impact.

Robert said, “There is no doubt that there are challenges

ahead, but while this 2009 edition of Hotel Britain is the

gloomiest yet, there are important positives to remember.

“The UK is hosting a number of international sporting events in 2009 such as

The Ashes and the ICC World Twenty20 and these may boost UK visitor

numbers.

“Equally, Sterling has dropped to record lows against the Euro and the US

Dollar and this should encourage visitors from both Europe and North

America who, in the last few years, have avoided the UK due to the strength

of Sterling.

“The North American visitor market to the UK may also be buoyed on two

fronts by the appointment of new USA President Barack Obama: firstly,

because we are no longer in an election year when most Americans tend not

to travel; and secondly, by aiding consumer confidence which may encourage

people to travel.

“Finally, while the luxury sector is slowing, the budget end of the spectrum is

still reporting positive results and both Premier Inn and Travelodge have

aggressive development plans for 2009.”

2008 Hotel Performance

UK hotels saw rooms yield fall from £74.33 in 2007 to £74.10 in 2008.

Occupancy was also down – it dropped 2.5% to 73.9% – but in contrast, the

Average Achieved Room Rate (AARR) increased by 2.3% to £100.33 across

the UK as a whole.

In London, AARR increased year on year by 3.8% to £140.56 and this pushed

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rooms yield up by 2.0% to £112.74. Occupancy was down by 1.7% to 80.2%.

Hotels in the regions reported negative growth with rooms yield down 2.4%

on 2007 to £53.55. Occupancy also fell, down 2.9% to 70.5%, but AARR

managed a small increase of 0.5% to £75.99.

While regional UK overall did not have as strong a year as 2007, there were

two cities which bucked this trend: York and Liverpool. Provisional figures

indicate that European Capital of Culture in 2008, Liverpool, received a record

number of visitors in the year. The city had the highest occupancy growth of

the 23 regional cities in 2008, jumping 6.0% year on year to 77.9%.

York had an equally impressive year and posted one of the highest

occupancy levels in 2008, up 3.2% to 80.8%, higher than London hotel

occupancy levels.

Hotel Britain 2009 costs £300 via PKF’s website at

www.pkf.co.uk/hotelbritain

Source: www.pkf.co.uk

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UK Hotel Industry Slips Another 3 Percent

Sharon Miller

March 2010

According to a new survey done by BDRC, a market research agency, the golden age of business travel

in the UK is finally over. The company said that the size of the UK domestic hotel market for business

travelers fell last year by 3 percent to 56 million “room nights.”

The 2010 Hotel Guest Survey showed that business travelers have cut, on average, four nights off their

stays compared to the same time last year. This survey also found that just under 50 percent of

business travelers say that their companies have asked them to change their behaviors to reduce costs.

This, of course, led to a 27 percent cut in the length of stays and a further 22 percent of people staying

at cheaper hotels.

The survey also found out that companies are now cracking down on travel as a whole. Three out of

four companies now operate a hotel policy in order to save money. A quarter of the survey’s

respondents say that this new policy is being strictly enforced. The market research agency said that 44

percent of its respondents reported an increase in enforcement in the last 12 months. This was either

through limits on room rates, which made up 31 percent, or restrictions of choice hotels, which made up

29 percent.

Of course, the survey did find out that 53 percent of travelers still choose their own hotel. The survey

also showed that business travelers were becoming increasingly price savvy, with 19 percent using

price comparison sites to get the best deal. This is all good news for businesses that have members of

their team traveling, but bad news for hotels, as it brings an end to the golden age of business travel.

Source: www.self-catering-break.com

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APPENDIX II – EXCHANGE RATES

The current exchange rates of the £ against major currencies at September

2014 are as follows: –

€/£ 1.26 euros to the pound sterling

$/£ 1.66 US dollars to the pound sterling

Economic forecasts are, as often happens, conflicting. However, the

consensus appears to be that the US dollar will recover (standing at 1.53 to

the pound in February 2015) and that the Euro will continue to decline.

FIGURE 15: Sterling exchange rates, 2010-2014

Sept

2011

Sept

2012

Sept

2013

Sept

2014

% change

2011-14

Units/Pound

euro € 1.15 1.24 1.18 1.26 9.57

US Dollar $ 1.56 1.62 1.61 1.66 6.41

Australian Dollar 1.53 1.55 1.69 1.77 15.69

Canadian Dollar 1.55 1.58 1.64 1.80 16.13

Thai Bhat 47.8 49.98 49.87 53.09 11.07

South African Rand 12.09 13.37 15.51 17.74 46.73

Indian Rupee 74.79 87.68 99.4 100.43 34.28

UAE Dirham 5.76 5.95 5.90 6.10 5.90

Japanese Yen 119.87 127.18 159.9 173.21 44.50

● A positive percentage change indicates that the currency is weaker against

the £

● Any strength of the pound (ie a weakness in the overseas country’s

currency) is a major issue for inbound tourists particularly as Britain is

already considered an expensive place to visit.

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APPENDIX III

EXTRACTS FROM MINTEL REPORT – ACTIVITY HOLIDAYS – 2010

Report Introduction

This report provides an overview of trends in activity holidays, investigating the core market

factors, strengths and weaknesses, consumer dynamics, and likely future developments.

The recession put a stop to five years of growth in activity holidays, with an estimated 16%

fall in activity breaks during 2009.

There are signs that activity holidays are no longer just the preserve of young adrenaline

junkies, but are becoming more ‘mainstream’, attracting more women, more over-50s and

more

Market in Brief

Upward activity curve flattens

• Activity Holidays have been on a strong upwards curve for the past decade, with a

series of Mintel surveys showing ‘lifetime’ market penetration of 30% at the end of the

1990s, 35% by the middle of the noughties and 43% at the beginning of 2008.

However, during the recession, that growth has reached a plateau.

• Overseas Activity Holidays grew by an estimated 22% between 2004 and 2008, but

fell by 16% in 2009. ‘Once in a lifetime’ special adventures and second/third tier

breaks have been particularly hit. However, many operators report recovering sales in

early 2010 and expect this trend to continue.

• The domestic activity market grew by an estimated 11% from 2004-09 with growth

continuing in the recession. Adventure operators have introduced more UK-based

products over the past 12 months, and one leading cycling specialist reports domestic

growth of 30%.

…to Activity Holidays Taken – Activity penetration reaches plateau

Star trekkers

• Activity Holidays currently account for around 12% of the overall travel market in

terms of volume. The total Activity Holidays market was worth an estimated £4.7

billion in 2009 (excluding overseas transport).

• Walking/trekking is the most popular form of Activity Holidays, accounting for almost

four in ten activity trips. This has been the fastest growing activity type over the past

two years and a quarter of the adult population have been on a walking holiday at

some point in their lives. Watersports account for around one fifth of activity trips;

snowsports one in eight and cycling one in twenty.

“Some of our customers are regular walkers, cyclists or skiers looking for comfort alongside

their favourite activity, but many wouldn’t really define themselves by the activity – they are

looking for an engaging varied holiday which perhaps stretches them a little and lets them do

something different from the norm.”

–Activity tour operator

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APPENDIX IV

ARTICLE FROM BIG HOSPITALITY – AUGUST 2013

Reproduced by permission of BigHospitality.co.uk. © William Reed Business Media Ltd 2013.

Olympic ‘bounce’ giving UK hotels a

welcome boost

Please see this link. We have permission to distribute it in print form if necessary, but not to

reproduce it online.

http://www.bighospitality.co.uk/Business/Olympic-bounce-giving-UK-hotels-a-welcome-boost

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