Business Plan For Royal Suites - Hotel Business Essay.

Hotel Background: Royal Suites

The main purpose of this report is to structure and create a business plan which provides a solution to an opportunity that the entrepreneur has identified. The business venture selected pertains to the hotel business as the entrepreneur wishes to potentially enter the hospitality industry with an intent of creating value for the final customer.

Sydney is the most happening city in Australia which has a bit of everything to offer including the likes of culture, glorious beaches, or wineries galore (Theculturetrip, 2022). Sydney is the most visited city in Australia as the metropolitan city effortlessly blends the busting city life along with the laid-back beaches that the city has to offer. Royal Suites is an up-and-coming property which will be located on the heart of Bondi Beach. The spectacular eye pleasing beach is a National Surfing Reserve and a great place for beginners who are just starting to learn (Sydney.com, 2022).

The entrepreneur wishes to set up his first venture as a sole proprietorship business. This is because of the ample professional experience he has working for this sector and his educational background which involves him pursuing a Diploma course in Hospitality and Business Administration. The entrepreneur wishes to operate as the single owner of the business with total operational control over decision making. The legal hassle with setting up the sole proprietorship business is also quite minimalistic which is arguably the most important reason for pursuing this business structure.

The hotel industry tends to cater to a wide variety of audience. Furthermore, every hotel guests have their own set of expectations, needs and preferences. These form an important consideration which must be taken into account for proving quality services. Since Royal Suites is a typical beach resort, the hotel is looking to target tourists, vacationers and the business class. These customers should belong to the upper middle class income group and above. If the target market were to personified down to a single person, the target market would mostly comprise of adult individuals who are beach lovers belonging to the age group in between 25 years and 40 years of age who are looking for real value in exchange of the money they invest into our services. The intended target market is mostly concerned with provision of value which is gauged by the bank for their buck that the hotel is willing to provide. They seek an experience more than just an overnight stay.

Business Structure

As discussed above, one of the most important needs of customers that go unmet in the hotel business is provision of real value. The average middle class income segment seeks an experience and wants the hotel to go above and beyond for satisfying their expectations and need. One of the ways in which the hotel intends on providing value is to keep tariffs as competitive as possible adhering to a value-based pricing strategy (Hospitalityinsights.ehl.edu, 2022). The Covid-19 pandemic has accelerated the use of technology as most businesses are adopting smarter technologies. The same can be said about Royal Suites who are willing to provide ‘smart’ rooms to its customers. Room will be integrated with IoT technology which will allow guests to access or customise the lights, air conditioner, curtains, and heating form a centralised location with the help of a tablet. These devises will also be synchronized with hotel services that can allow guests to place orders digitally which will be catered to by room service. The use of IoT technology also helps the hotel to step up their sustainability of operations because it allows less dependence upon energy. The Covid19 aftermath have resulted in the target market to become increasingly aware and concerned about concepts relating to sustainability and are willing to spend more with brands that are eco-friendly (Revfine.com, 2022).

 The unique value proposition for the business would be the smart home features which the hotel would include in its rooms using the IoT technology and ensuring that the guests have superior experience. The hotel anticipates that with the help of such a technology, it will be able to generate competitive advantage in the market.

Royal Suites is a beach hotel looking to provide hospitality services to its customers. The product and service offerings of the hotel have been summarised briefly as follows:

1. Provision of smart rooms to guests which comes with a complementary buffet breakfast.
2. A bar cum restaurant which will be open 24 hours a day to serve guests throughout.
3. Organising of conferences, meetings, events, destination weddings and other extra curriculars.
4. Arranging for different Bondi Beach excursions for guests.
5. Pick-up and Drop services for guests from Airport and other popular hotspot locations.
6. Arranging city tours and guides for international travellers who are willing to explore the city.

The business model for the hotel would be to provide the best quality of services to the customers and effective transform the hotel room experience with IoT. The customers would be able to enjoy voice commands, swift services, and better security with such a system. Further, the hotel would be aiming to ensuring that the cost of operations is kept low so that the same does not impact the price charged from the customers in too much proportion.

Australia has seen a significant decline in Covid19 cases after a stricter series of lockdowns. As a result, the country has now eased out restrictions and travel has resumed. Investing in the hospitality and hotel industry in the country during the present context will help investors to take advantage of recovery in the immediate and long-term future. It is also worth mentioning that the Government has helped the industry through unprecedented support schemes. Australia also boasts the tourism appeal where Sydney is one of Australia’s most visited nations. If industry statistics are to believe, the industry is expected to grow at a compound annual growth rate of 5.6% through 2022-2026 as the road to recovery is imminent (Ibisworld.com, 2022).

The competitiveness in the industry can be gauged by evaluating the five elements of Michael Porter’s Five Force Framework. These are discussed as follows:

1. Competitive Rivalry: The competitive rivalry within the industry is quite high. Customers have access to filer through hotels online according to their own needs and preferences. Furthermore, the market is quite saturated with several key players.
2. Bargaining Power of Suppliers: Suppliers do not pose any substantial threat to the hotel industry. Switching costs for hotels is quite low as there are several suppliers in the market which can help in grabbing cheaper prices for supplies.
3. Bargaining Power of Customers: The bargaining power of customers can be considered as high. This is because of the different number of options they have to choose from. Moreover, switching costs for customers are quite low resulting in higher bargaining power.
4. Threat of New Entrants: The threat of new entrants is low for this industry. This is because of the capital investment which is required to set up a new venture. Furthermore, with the Covid-19 pandemic adversely affecting the investment climate, new entrants pose less of a threat to existing hoteliers.
5. Threat of Substitutes: The threat of substitutes can be considered as medium. Although there are several other options for guests to choose from which include hostels, Airbnb’s and homestays; the clientele of proper hotels mostly does not experiment with such alternatives (Hotelintel.co, 2022).

The market sizes for the Australian Hospitality industry took a sharp fall during the pandemic period. The recovery rate of the tourism would greatly help the hospitality industry and it is expected that the revenue generated would be around 6.6 million by the end of 2022, 76% per cent of 2019 levels. 

References

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Hotelintel.co, 2022. Four Reasons to Invest in the Australian Hotel Sector. [online] Hotelintel.co. Available at: <https://hotelintel.co/four-reasons-to-invest-in-the-australian-hotel-sector/> [Accessed 27 March 2022].

Ibisworld.com, 2022. IBISWorld - Industry Market Research, Reports, and Statistics. [online] Ibisworld.com. Available at: <https://www.ibisworld.com/au/industry/hotels-resorts/1811/> [Accessed 27 March 2022].

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Revfine.com, 2022. 7 Ways to Transform a Hotel Room Into a Smart Room | Revfine.com. [online] Revfine.com. Available at: <https://www.revfine.com/smart-room/> [Accessed 27 March 2022].

Sydney.com, 2022. Sydney Beaches. [online] Sydney.com. Available at: <https://www.sydney.com/things-to-do/beach-lifestyle/sydney-beaches> [Accessed 27 March 2022].

Theculturetrip, 2022. [online] Theculturetrip. Available at: <https://theculturetrip.com/pacific/australia/articles/which-australian-city-should-you-visit/> [Accessed 27 March 2022].