Market Research Proposal for Starwood Hotels

Market Research Proposal for Starwood Hotels

Abstract

Starwood Hotels, a premier hotelier for affluent families and small business congregations, has many properties in various countries. Each of its properties manages its client database, consisting data on guests’ names, addresses, dates of their first and most recent visits, the number of people in their last booking, and even amount spent during their visits. However, the hotel’s management feels that there is very little penetration into the British Columbia market, causing worry that they may be losing that specific market to their competitors. This research proposal aims at giving the management a clear way for carrying out research to provide information about British Columbia’s economy, the hospitality industry’s performance in the province, available or projected opportunities, and the threats competitors pose.

Introduction

The management team of Starwood Hotels strives to be increasingly proactive, especially regarding beating their competition and fostering loyalty with their customers. The company prefers to compete in the corporate and tour operator markets, which book more than fifty double occupancy rooms for each of their properties, every day. The hotel also needs to secure its share of demand for corporate meeting space bookings, for about fifty to a hundred people, over one to three day periods. Penetration into new market segments can ensure that Starwood facilities (guest suites and meeting rooms) will always operate above their required break-even capacity of sixty-five percent.

Problem Statement and Research Objectives

Keen observation and investigation have revealed that the British Columbia interior, especially the Okanagan Valley, is one of the fastest growing regions. Starwood however, only has one hotel in that region. There is, therefore, the need to evaluate whether an opportunity to expand in this region exists and if it does, the type of property that can be set up to meet the demands and needs of this particular market segment. Research is required to determine whether the market size is sufficient, to justify investing in a new Starwood property in the Okanagan Valley. Information on the specific location where the property should be developed (on the lakeshore, at a mountain resort, etc.) is also required in this research.

Our research Objectives therefore include

RO1: To find out if an opportunity for expansion exists in British Columbia. The research will seek to conduct a feasibility study for setting up a new property in the region.

RO2: To determine what type of property would be suitable to set up in the region. The research shall involve a study of the different types of properties that can be built in the region, and determine which of them has the highest chances of profits and success.

RO3: To find out what market demands exist in the British Columbian market. The research to be conducted will look into what is already available on offer at the existing properties in British Columbia, to determine what is lacking, fulfilling existing customer demands.

RO4: To ascertain whether the size of the available market is adequate to warrant setting up of a new property. The research will determine the exact size of the British Columbian market, and find out whether it is large enough for a new venture, to increases chances of making a profit.

RO5: To find out the suitable location for setting up a new Starwood venture. The market research will also seek to identify the most suitable and strategic position to put up the new property, considering ease of access, population distribution, etc.

RO6: To determine the cost of erecting a new property in British Columbia. The research shall carry out a study to approximate the total set up prices for a new project.

Industry Analysis and PEST Indicators

As every business is affected by political, economic, social and technological factors, various factors affect Starwood. The environment in which a firm conducts its business comprises of the external and internal environment. The internal environment of a business refers to customers within (the employees of the organization), the internal policies, the vision, and mission of the firm. The external environment, however, an extensive category, divided into microenvironment and macro environment (Ho, 2014). The microenvironment refers to factors such as customers, suppliers, distributors, and competitors, while macro-environment includes the major political, economic, social and technological factors that face a business venture. Environmental and legal forces that affect business have also been recently added to the PEST indicators by business experts, resulting in PESTEL analysis.

Political factors that will affect setting up of a new Starwood property will include political stability of the region, taxation laws, entry mode regulations, trade regulations, entry requirements, and tariffs. These factors affect the hospitality industry in many ways and shall influence the success of the new venture. Research, therefore, must focus on these political factors. Economic factors, having a direct impact on a business’s capital usage and the purchasing ability of customers, include inflation rates, currency exchange rate, literacy levels, financial institutions’ efficiency, infrastructure, interest rates and stability of the currency. For instance, inflation will lead to higher wage requirements for employees, therefore raising business costs. A survey of these economic factors, for British Columbia, shall be done, for determination of the expected costs. Social factors that affect Starwood Hotels in any location of business include the age distribution of the location’s inhabitants, level of education of the community, their attitude towards the hospitality business, and the gender roles of the community members. This information will be studied in this research, for proper market preparation. Some technological factors will influence the decision of setting up new Starwood branches. Technology influences globalization reduces costs and leads to innovation. A study should be done in the research to see what technology will be required, and how it can benefit consumers together with the hotel’s management.

Environmental factors that affect hospitality and tourism industry include existing environmental protection laws, laws regarding waste disposal, and energy regulations. The research will seek to identify available options for proper wastes disposal and the costs involved. Legal factors shall also be determined in the proposed study. Legal factors affecting business will affect demand for its services and the costs involved. Legal factors will include the prevailing health and safety laws in British Columbia, competition laws, and employment laws. These have to be considered to determine whether the new venture shall be profitable.

Situational Analysis in the Research

A SWOT analysis has to be carried out before any new venture can be undertaken in the projected British Columbia region. Strengths the hotel already enjoys, such as financial resources and staff should be considered to determine how they can be used to minimise the cost of setting up a new property. Weaknesses such as existing competition in the new market and the risks that come with new market positions have to be listed (Piercy, Giles, 1989). Opportunities that will accompany the putting up of a new property shall be studied in the research. Development opportunities and low taxes in the region can be very attractive while considering the proposition of a new property. Threats such as the possibility of losses and tax increases will have to be considered to ascertain the profitability margin of the new branch.

Research Design and Project Timeline

The stipulated research shall be carried out by performing an investigation on existing competitors in the Okanagan region, such as The Water Mark Beach Resort, Sun Beach Motel, and Falcon Motel. Questionnaires shall be prepared, on information regarding what the residents of the region require and their needs, what is offered in the existing hotels, prices of various suites at the hotels in the neighborhood and general attitude towards a new hotel. These will be issued to community members to provide the required information. The target population for these research questionnaires shall be young businesspeople, travelers and people involved in tourism. Information on the available facilities and prices will also be investigated, from the websites and pamphlets of the existing hotels and leisure properties in the region.

These ways of data collection are fast, and minimal time shall be required to compile a report. A period of one month should be enough to collect all this data and the handed out questionnaires. A report will then be compiled on the research carried out, and a decision may then be arrived at. If the data collection kicks off on the first day of January, it should be complete by the 30^th day. Compilation and report generation should then be done, and a report of findings given by the 5^th of February.

References

http://www.writeawriting.com/business/pest-analysis/

http://www.writeawriting.com/business/swot-analysis/

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European         academic research, 2(5), 6478-6492.

Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning, 7(5/6), 5-7.