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Digital Marketing: Tool to Increase Hotel Awareness
Digital marketing is the process by which products, services or brands are advertised through one or more forms of electronic media. Unlike the old-style of marketing, this process consists of methods and strategies that allow an organization to evaluate marketing schemes and understand the approaches that work and what is not in real time. Digital marketers carefully observe how long and how often prospective customers visit the site.
The internet is the avenue that is closely related to digital marketing. However, digital marketing also involves the use of electronic billboards, digital television, radio channels, and mobile apps. Digital Marketing is important because most consumers spent more than half of the day online and they often use social media as a source of social interaction, entertainment, news, and shopping (Sas.com, n.d.).
Digital Marketing has some advantages. To begin with, it is a global platform – a website allows the business to find new target markets across the globe and be able to trade with other people even without seeing them. Second, it tracks and measures results – through the use of online metric tools, determining the number of buyers and consumers who visit the online website is easy. Therefore, the result or the statistics that can be drawn from the metric tools can be a useful measure to determine whether the company is reaching its targets and objectives.
Finally, it creates openness and personalisation. Social marketing and networking can help a company to build good relationships with their customers. Furthermore, digital marketing could rapidly increase the social awareness of a particular brand could (nibusinessinfo.co.uk, 2016).
Digital Marketing has been the primary tool of all industries – including hotels in the hospitality industry. The industry saw positive growth in 2015. With the continued progress, hotels are expected to use technology to increase the awareness of the market. The rise of millennial travelers as the dominant consumers in hotels has a growing interest in the usage of mobile devices and applications to look for more personalized hotel guest services (Hospitality Net, 2015). Therefore, it is important that Mobile Search is present in hotels.
The trend in Digital Marketing is the Mobile search. Research studies have established that three out of five individuals use mobile devices to explore and look for information, and 80% of local hunts are converted to purchases. It is worth noting that hotels have a website which is optimized for mobile search to enhance mobile traffic and ensure a full-bodied content that can be shared on social media. Also, sites should contain directory listings, maps, and local citations to strengthen the hotel’s local presence.
Engaging the customer through the content requires exciting local attraction, activities, visuals, and trending topics. Through the use of digital marketing tools which determine the time spent on a visited web page, hotels can identify the type of contents that should be enhanced to encourage customers to visit the website again. By doing this, a potential customer could buy products or services offered by the hotels (Blog.milestoneinternet.com, 2015).
Understanding the behavior of travelers would help to develop the digital marketing strategy of the hotel. The industry should realize that people are more interested in a business that knows their needs, provides a personalized and relevant communication and that which provides tailored preferences depending on their necessities. Therefore, it is essential that the company or hotel should update the content of their website based on the needs of the potential customers or travelers. This will help to attract more clients; thus, it will lead to more profit for the company (Sas.com, n.d.).
Hotels in the hospitality Industry should remember that brands will not exist without consumers patronizing on it. For this reason, the purpose of digital marketing is to build and increase brand awareness especially in remote hotels. The goal of the digital content marketing is to establish the hotel’s brand as attractive, valuable and trusted. The reason why digital marketing requires fresh and innovative content is to make sure that the brand message will not be overlooked.
It is necessary because nowadays high competition is very intense in the hotel industry. The high competition in the hotel industry is healthy because many search engines give rewards to those businesses that update the content of their sites with a higher ranking while silently punishing the stagnant websites with low organic rankings.
With this in mind, hotels can improve their websites in three simple ways. First, hotels should identify the interest of the travel enthusiasts’ and potential customers. Second, provide information that is relevant to their needs. Finally, provide them clients with an edge that will have value to them.
Though hotels can use the digital content marketing to showcase the new services and products, honesty and accuracy about the brand should be the primary core value. Digital content marketing allows the hotel to come up with a creative explanation on how they can address the needs of their customers. The content in websites should also indicate how the industry is established and the popularity of the business in the marketplace (Parker, 2016).
Regression analysis is a mathematical way of sorting out which variable has the most impact. It answers the questions of which variable matter most and how these variables interact with each other (Gallo, 2015). Regression analysis is used when we want to predict a continuous dependent variable from independent variables. After the collection of data (variables), all information will be relayed using a chart (Abrams, 2007).
The fundamental and the most common predictive analysis used is the Linear Regression analysis. The formula defines the basic form in one dependent and one independent variable:
y = β0 + β1x
Where y is the estimated dependent, β0 is constant; β1 is the regression coefficients, and x is the independent variable.
Regression analysis is often used in the casual analysis, the forecast of effect, and the trend of the forecast. To begin with, the casual analysis is used to determine the effect of the dependent variable to the independent variable. Second, forecast effects help the company to recognize the weight of result to the dependent variable change if there will be a change in one or more independent variables. Finally, forecasting the trend helps to point out the approximations where a typical question could be the price of X months from now (Statistics Solutions, 2013).
On the contrary, when conducting a hypothesis test, one is likely to come across two types of possible errors namely; Type I and Type II errors. The risks of these errors are determined by the level of significance and the power of the test. Therefore, it is important to identify which type of mistakes has more severe consequences.Type I error occurs when the null hypothesis is correct, and it has been rejected.
The common mistake for this kind of error is when it is confused with statistical significance and practical significance. One should be cautious that a large sample size is more likely to detect a small difference. Hence, it is essential to consider practical importance when the sample size is large (Ma.utexas.edu, 2011). Conversely, when the null hypothesis is not correct, and it is not rejected it is often referred to as Type II error (Support.minitab.com, 2016).
Assumptions of Regression
Some statisticians believed that when a statistical process is not normally distributed, there is a mistake with the process, or the process itself is out of control. A chart can be used to determine when the process is non-normal so that statisticians can make corrections and return it to normality. Many procedures do not follow the normal distributions. Some of the examples include cycle time, customer waiting time, shrinkage et cetera (Isixsigma.com, 2016). In line with this, content validity is concerned with sample-population representativeness such as knowledge and skills (Yu, 2012).
Linear regressions require at least two variables of metric scale. The rule of regression analysis is that it has to have at least twenty cases per independent variables in the analysis. Regression has four assumptions. First, it should be linear such that there should be a relationship between the dependent and independent variables. The use of scatter plot can be used to test this assumption. Second, all variables have to be multivariate normal as required in the regression analysis.
This assumption can be tested through the utilization of a fitted normal curve or a Q-Q plot and a histogram. Third, the analysis agrees that multicollinearity is not in the data. It happens when no dependence occurs among independent variables. Finally, auto correlation is expected to be less in the data of regression analysis. The auto correlation exists when there is no reliance on the residuals (Statistics Solutions, 2016).
The following will provide different formula with the corresponding variance of returns:
Beta value is a measure of how strong one stock responds to the systematic instability of the whole market. 1 Beta occurs when the stock reacts to the uncertainty of the market with the market on average.
On the other hand, correlation coefficient should be between -1 and 1. Where -1 means that the market and the stock move in the opposite directions. On the other hand, 0 means that the market and the stock do not have a relationship with the movement. Lastly, 1 implies that the market moves along with the stock.
Both will tell the strength of the linear relationship between Xi and Yi. However, they always provide distinct information. The correlation provides a restricted measure that can be understood independently of the scale of the two variables. On the other hand, Beta gives a useful quantity construed as the predicted change in the expected value of Yi for a particular value of Xi (Stats.stackexchange.com, 2012)
The R-squared is a measure used to identify how to close the data to the fitted regression line. R-squared is always between 0 and 100%. It is defined as the variable response variation’s percentage explained in a linear model.
The zero percent (0%) happen when there is none of the variability of the response data is around its mean. On the other hand, the 100% pertains when all its variability of the response data is around its mean. However, there is a question often asked on what should be the good value for R-squared or how big does R-squared is required for the regression model to be valid and reliable. It would be advisable to look at adjusted R-squared rather than R-squared (People.duke.edu, n.d.).
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Based on the result of the data from SPSS, R-squared is .145 or 14.5%. The adjusted R-squared is .139 or 13.9%, is just almost the same percentage of the R-squared pertaining to the mean square of regression which is 13.352. Since the R-squared is relatively low; the model proposed is not possible or fitted based on the data provided.
Moreover, the probability of examining the observed results when the question is valid from the null hypothesis is called the calculated probability or the P-value. The P is defined as rejecting the null hypothesis when it is true (Statsdirect.com, 2016). The one-sided P-value is only used when an unexpected direction from a significant change makes no relevance to the study. To connect with the hypothesis, the P-value is used to specify a probability which is adopted to calculate after a particular study, and the level of significance pertains to a pre-chosen likelihood.
The increase of hotel awareness in relation to the data presented varies on the result of each of every variable in the calculation. The Pearson correlation of Y2_spc_brecal shows a positive 1.000 correlation. Moreover, the Pearson Correlation of X2_spc_person shows a positive .381 correlation. These values indicate that the variables in the data move in tandem since both are positive. As one variable increases, other variable increases, and vice versa. The table below shows the correlations between the variables.
The model summary of the result emphasized that R-squared is .145, or a 14.5%, and the adjusted R-squared is .139 or 13.9%. The result indicates that the model is not fitted because R-squared and adjusted R-squared are both low. The Standard Error of the Estimate is an estimate whether the prediction is accurate or not. In regression line, when the standard error of the estimate is small, the prediction tends to be accurate. Based on the result, it shows that the Standard Error of the Estimate is .737 or 73.7% which is obviously high. It means that the prediction is not accurate.
Marketing Hypotheses Analysis
There are several hypothesis that can be drawn in marketing but the most common and essential hypothesis is that digital advertising can directly enhance brand recall and recognition. The two (brand recall and brand recognition) are an entirely different thing. Though, there would be no brand recall without brand recognition. Remembering and recognizing a brand plays a critical role in attracting more buyers to stay firm in the brand of a certain product and buy them continually.
There are ways to study if a purchaser will select a product because of brand recall or brand recognition. For an instance, a brand recognition may occur when a customer watches movies or televisions where the advertisement of a product is placed. When a buyer knows the presence of a product through the online ads, the internet, or television, he/she will be aware of the product and subconsciously her/his brain will look for that brand and instantly decide to buy the product. Hence, digital marketing helps increase the recognition of a particular product/brand.
Another hypothesis could be brand recall can be improved through personalization in digital marketing. In a simple definition, personalization is the delivery of messages or experiences to a consumer based on the info about a particular person. Some terms that could describe digital personalization are data management platform (DMP). It is a database that saves consumer info which can be shared with other media like the website, email channel, applications and dynamic creative optimization (DCO), the technology that is utilized to modify sending messages from DMP data (Diamond, 2015).
There is two new development in digital personalization. The first pertains to the customers. It is said that consumers have changed as well as their demands. A brand gathers customer’s data with the conjecture that the info will be applied to add worth or value to a consumer’s experience. The anticipation of pertinent and personalized brand collaborations will progress as businesses keep on making more investments human capital and customer-focused technology.
The second development is the technology needed for integrating personalization in digital marketing stratagems which are more accessible to product trademarks. Currently, marketers have the tools to gather info wherein they can precisely reach the clients and prospects. It helps increase the effectivity and efficiency of their campaigns through digital marketing (Diamond, 2015).
In relation to the hotel industry, the hypotheses discussed are relevant in a sense that customers always rely based on the experience of other people. For example, if a traveler wants to stay in a particular place, he/she will browse the internet to see the different hotels and its reviews. He/she will read the experiences of the other people who stayed in the hotel. If the rating of a hotel is high or has excellent reviews, the probability of a potential customer to stay in that hotel is very high. Also, recognition and recall of a hotel’s name are crucial in the preferences of the client to stay in a hotel.
Table 3. Hypothesis and Its Correlation
Hypothesis 1: Digital Advertising can directly enhance brand recall and recognition
Based on the SPSS result there is a significant correlation between digital advertising and brand recall of because its regression result which is .416 is above 0.05 level.
Hypothesis 2: Engagement in digital marketing with interactive media programming and value content can increase brand recognition and brand recall.
Hypothesis 3:Positive and neutral value added UGC is valuable in affecting brand recall in digital marketing.
Hypothesis 4: Brand recall can be improved through personalization in digital marketing
Hypothesis 4: Brand recall can be improved through personalization in digital marketing
Hypothesis 5:Brand awareness can be increased by influence in digital marketing
Hypothesis 6: Digital advertising can increase brand recall.
Hypothesis 7: Digital personalization can increase brand recall.
Hypothesis 8: Digital influence can increase brand recall. Hypothesis 9: Digital user-generated-content can increase brand recall
Hypothesis 10: Digital engagement can increase brand recall.
It is evident that Digital Marketing and Social media are having a substantial impact on how customers behave. With the use of technology, hotels can take advantage of the growing online spending and Smartphone technologies. Through the use of social media and mobile marketing strategies, hotels can increase the awareness of brands in the hospitality industry since prospective customers spend most of the time using different social media tools.
Travel enthusiasts and other potential customers will be provided with direct reservations using the booking software hotels continue to embrace the idea of digital marketing.Through the use of regression analysis, hotels in the hospitality industry would be able to determine the behaviors of the travelers. Moreover, this will allow hotels to identify how they can provide full-bodied information to engage customers and lead them through finalizing their purchase.
The Hospitality Industry: Strategy for Global Meetings and Events
The hospitality industry is competitive today. Factors such as globalization and the internet are increasing the demand for hospitality services. Organizations in the hospitality industry are implementing various strategies to attract customers and gain a competitive advantage. Olympia London is a conference center, exhibition center, and event space. The company has shown drastic financial improvement in the last three years.
The financial crisis affected the economy of United Kingdom. Many companies performance was negatively affected by Olympia. Olympia has experienced hard financial times since 2008, but it has started showing an improvement. Olympia must continue improving financially and generate huge amounts of profits. It must continue to be financial sufficient. Olympia is facing stiff competition from other exhibition and conference centers in London and around the world. Olympia was established 130 years ago.
It is one of the oldest exhibition centers in London. It has a lot of experience, but competition poses a great threat to the company. Olympia must make use of its years of experience and competencies to gain an edge in the market. Being one of the oldest companies, it must start looking at the bigger picture and start targeting new markets. To gain a competitive edge, the company will now employ the concept of strategic management. Strategic management focuses on establishing a game plan for winning the market.
Strategic management ensures that a company outwits the competition, and attracts new customers to increases market share. The company must come up with an effective strategy that inspires and informs the actions of the management team and mobilizes employees. The strategic plan comes up with the long-term direction of London Olympia and indicates how the company will gain a competitive edge to become the leading organization in the next five years.
Olympia London strategic plan vision is to be industry champions and continue providing clients with extraordinary moments through innovation. The vision statement indicates the plans of the company in the next five years. The vision statement indicates that the company plans to be the pace setter in the industry ( Shahmehr & Safari 2014). It is focused on improving customer experience to become the leading company and bring in new ideas in the hospitality industry.
The mission statement is to pursue new opportunities that reward the stakeholders. The company will be driven by its core values, and it will be committed creating an extraordinary experience to guest, clients, employees and community. The mission statement includes the various stakeholders of the company. It indicates that the company will focus on improving the welfare of the employees and the community. It brings the social responsibility aspect of the organization. Additionally, it indicates the commitment of the company to provide customers with good customer care services.
Olympia London encourages innovation through teamwork. The company will encourage the generation of new ideas that will not only benefit the company but the hospitality industry as well.
The company plans to become the pride of London. The company strives to be the best and contribute to the development of London through economic benefits.
Olympia London holds stakeholders accountable for actions. Integrity is a core value, and all stakeholders are expected to uphold integrity in all activities.
Olympia provides customers with similar quality products. The company services are consistency, and all focused towards creating extraordinary experiences.
The company understands the importance of local community. The company will give back to the community by participating in various community development programs. Additionally, it is committed to sustainable development hence it is at the forefront of environmental protection.
3.0 Strategic Direction
Strategic direction indicates the position that the company plans to be in the next five years. When developing strategic plans, it is important to come up with a solid strategic direction in order to identify the right strategic options to achieve the goals of the plan.
In the next five years, Olympia should be financially sufficient. Olympia financial performance brings out certain concerns. The company made losses from the year 2006 to the year 2012. In the duration of six years, the company registered huge profits after tax. The company needs to understand the factors that caused poor financials. Additionally, it is important to understand the reasons the company took a long time to recover.
One of the factors that have caused poor company financial performance is economic conditions in the UK. Rise in in interest rates, and inflation rates have caused the cost of living to be very high in the United Kingdom. The high cost of living discourages people from choosing London as the destination to hold meetings and conferences. The hospitality industry has experienced a reduction in demand for conference services in the United Kingdom.
Low sales caused the company to perform poorly. The company internal processes contribute to poor financial. The company is largely financed through loans. The company has a high gearing ratio of 19 indicating that a large part of the company assets are financed through debt. Relying on debt puts the company in a risky position. The company is affected by changes in interest rates.
High interest rates increased the expenses of the businesses reducing profits that the company would have otherwise enjoyed if it had used different sources of finance. The company is now recovering, and it has shown a drastic change in financial performance. For instance, the profits of the company drastically increased from 1,822,000 in 2013 to 45,383,000 in 2014. The changes indicate that the company is in the right financial direction.
However, Olympia must ensure that in the future it is financial sufficient and it is not susceptible to change in the economy and environment. The company will identify new sources of finance. In the next five years, the debt of the company should be lower. The company will now focus on suing equity to finance products. The company can raise more equity issue shares in the stock market. It can become a publicly traded company to increase equity. This way the company will not rely on debt as it will raise a huge amount of capital that can finance long-term investments.
Olympia will be a leader in the convention industry in London in next five years. Olympia can make use of SWOT analysis to gain a competitive edge in the market. Based on SWOT analysis; the company strengths include space, location, and strong brand (Anton, 2015). To top it up, the company has years of experience. It has operated in London for 130 years making it the most experienced exhibition centers. The company designs make use of historical architecture making it an attractive site for clients. London is a city that appreciates culture and history.
Art and culture are an important part of life. Olympia needs to market itself as a company that supports culture and art in London. It must inform customers how the business is a representation of London ways of life. As a result the company will appeal the population and encourage people to use the facilities. The company must take advantage of the opportunities that the market is offering. It must take advantage of the rise in demand for conference centers. The organization can expand its services to ensure that consumers can easily get a conference center.
When businesses are planning events, they are forced to make bookings ahead of time to ensure that the venue is secured. Olympia can increase its capacity to ensure that business can get location even on short notice. Increasing the capacity will reduce the chance of the place being booked to capacity and the organization will always have space to accommodate many conferences and exhibitions (Antràs & Chor 2013).
The company must deal with weaknesses to improve performance. The company must address the change in leadership. The company must ensure that the change in leadership does not interfere with the performance of the company. The change should be managed by involving various stakeholders and communicating the goals of the change to them to ensure that they embrace the change.
Lastly, Olympia must minimize the impacts of threats. The company must ensure that it has put the right security measures. It should start conducting comprehensive background checks of employees. Additionally, it should strengthen security by increasing surveillance system, training employees on security threats, and continue working together with local law enforcements.
In five years, Olympia should offer improved customer services. In the hospitality industry, customer experience is determined by the quality of services offered. Olympia can make use of various models to improve customer services. The company will use the events came model to improve customer experience. So far the company has used various eventscape variables to improve customer services the company has established spacious conference halls, it provides ample parking space, and considers people with disability.
The company must continue to implement new variable to improve customer service sin the next five years. Adapting new and improved technologies will play a great role in enhancing customer experience. There is an increase in demand for digitalized exhibition centers. Young people want to visit an exhibition center that is digitalized. The company must start taking a holistic and comprehensive view of the customer service journey.
Olympia will now start being involved in all experiences of customer beside events. It will be more involved in the travel plans of customers to look for ways to reduce psychological and cognitive costs. The company will also be involved in accommodation and catering of customers. Olympia will have to develop restaurants and increase accommodation facilities to ensure that it can provide customers with a holistic experience.
Olympia should have brought numerous economic benefits to United Kingdom economy. Improvement in customer service and financial capabilities will attract customers from all over the world. Holding international events will bring people from outside the United Kingdom. The people will demand for services in the hospitality industry such as catering, accommodation and entertainment services.
Olympia will create jobs and also create new jobs in the hospitality industries. The retail industry will gain from the new customers, and it will create new jobs opportunities. Olympia improvements will contribute to lowering the high rate of unemployment. The company will increase social responsibility activities. Currently, the company is involved in sustainable development. It encourages the use of public transport to save on energy.
Additionally, the company encourages employees to save water and electricity usage in the company. The company must increase social activities. It can start supporting artist from less fortunate families to enhance exhibition centers (Jennings 2014). It will open up exhibition centers to young and upcoming artists and allow them to sue the centers at a low cost.
4.0 Strategic Option
Strategic option indicates the game plan that the company will choose in oder to gain a competitive advantage. Olympia London will make use of combination of Porters generic strategies and Ansoff growth matrix to achieve objectives. The first strategy is cost leadership. Based on Porters five forces model, cost leadership will be an effective strategy. It will minimize the threat of new entrants.
By lowering prices, Olympia will deter potential entrants from entering the market. New entrants will not be able to provide quality services at the low prices. Additionally, lower prices will give the company a competitive advantage. The companies will offer better price compared to competitors attracting many customers. The low price will defend the company from threat of substitution.
Olympia should focus on lowering service prices. The company can manage to lower its prices through partnering with suppliers. Partnering with suppliers will enable the company to get supplier at low cost hence it lower services prices to attract consumers.
The second generic strategy that the company will use is differentiation. Olympia will focus on adding certain values to its services to differentiate services from competitors. The company will differentiate its products by giving services a technological advancement touch. The company will adapt new technological system that will enable the company to continually adapt new technologies.
Additionally, the company can differentiate services by providing combination of services in one destination. It will develop free space and build restaurants and accommodation services to ensure that customers can use the same facility to get all service that they need. Differentiation will improve the performance of the company (Hill et al. 2014). It will lower the threat of substitution by ensuring that customers enjoy the attributes leading to customer loyalty.
Customer loyalty will reduce the threat of new entrants. Unique service attributes will enhance brand loyalty and customers will be willing to purchase the service even at higher prices reducing the threat of competition.
The third strategic option the company will use market penetration. Market penetration focuses on improving existing market. Olympia must increase its market share in the United Kingdom. Olympia intends to attract young consumers in the United Kingdom. The young population is increasing around the world hence it is very important to target the young clientele.
The young people have been brought up in era of technology (Mok et al. 2013). They are looking for flexible businesses that have embraced technologies. The company must start embracing the increasing demand for the new technologies. It must adopt interactive technologies.
The fourth strategy is market development. Olympia must start identifying new markets to increase customer base. The company must start embracing diversity and move into new markets. Branding and marketing will be an effective way of acquiring new markets. The company should start using various marketing campaign such as social media to advertise services around the world.
Additionally, the company can start using the adaptation strategy. For instance, if it wants to attract consumers from the Middle East, it can start developing conference centers that meet the cultural needs of these communities. For instance, it can ensure that the people are provided with a place of prayer close to the conference halls.
5.0 Strategic Goals
5.1 Improve Customer Services
The main goal of the plan is to improve customer services. Customer service is heart at of the hospitality industry. Companies that have managed to attain large market share achieve this through providing quality customer services. Olympia aims at exceeding the expectations of the customer when it comes to the services it will provide. To improve customer service, the company will have to focus on support activities of value chain.
The company must start developing human resource to improve customer services. Employee development and training has a positive impact on customer services (Rogers & Davidson 2015). Providing employees with the right skills and information will lead to improved customer services.
5.2 Become Financially Sufficient
Financial performance of a company is important to stakeholders. Companies that perform well attract investors hence they have the ability to invest in long-term activities. Olympia must address various financial issue it is facing to become financially sufficient in the next five years. Olympia should address debt issues. The company should now start focusing on paying its current debts from the return for investments. The company should lower debts. It should start using new financing options such as issuing shares, capitalist ventures and retained profits to finance activities.
5.3 Increase Economic Benefits
Olympia should continue developing the economy of United Kingdom. In the next five years, Olympia plans to have created 1000 jobs directly and indirectly. Olympia plans to expand its services. As a result, it will be hiring new employees every year to meet. The company plans to establish a graduate recruitment program that will hire 100 employees every year. By 2022, the company should have hired 500 new employees (Bowie and Buttle 2013). The company will create job opportunities in other industries. By expanding services, it will attract new customers increasing demand for accommodation, travel, and restaurants (Bowie and Buttle 2013). Increased business activities will create new jobs and provide young people with new opportunities to start new businesses.
5.4 Increase Social Responsibility
Olympia aims to be involved in development of welfare of the community. Olympia plans to establish an artist support program. Olympia wil emphasize on supporting children from less fortunate families. It will support education and assist them to develop careers. Additionally, the program will provide exhibition centers for young and upcoming people at low costs to enable them to showcase their talents.
6.0 Resource Allocation
The implementing plan mandates Olympia to ensure that it has the right resources. Resources that are required to meet the objectives of the plan include assets, human resource, and finances. The company must ensure that it has the right personnel to achieve the goals of the company. Additionally, it must have adequate finance to finance various company projects directed towards the achievement of the goals.
The main projects that the plan develops are developing the free space, employee training and development and digitalizing exhibition centers. Developing the free space will require a large amount of capital. The company can work together with real estate develops to come up with the right development plan for the areas.
Real estate developers can get the company investors who will be involved in developing the area by building restaurants and accommodation places (Bowie and Buttle 2013). The company can also focus on using capital to build new conference centers and exhibition centers. The company will outsource information and technology services to save on cost of digitalizing exhibition centers.
7.0 Risk Management
Business risks are unacceptable for any organization. Risks limit the ability of a company to meet its short-term and long-term goals. It is important to identify various risks and come up with ways of minimizing the risks
7.1 Financial Risks
1. Liquidity Risks
A company that is in a good liquidity position has adequate current asset to cater of its short-term liabilities. Olympia is a good liquidity position based on quick and current ratio. New short term investment directed towards meeting the five years strategic plan poses liquidity risks to the company. The company expects creditors will increase liquidity risks. Olympia must ensure that it increase liquid asset to ensure that current asset at all particular time are higher than current liabilities
7.2 Cyber Security Risks
Investing in new technologies will expose the business to cyber security threats. New technologies create loophole for hackers to attack the system. Cyber security attacks lead to loss of company information. Confidential company information can be exposed to competitors. Moreover, Olympia can face legal issues if personal customer information is exposed. Olympia should ensure that it has protected system from cybersecurity attacks. The IT Department should closely monitor system, and in case it identifies suspicious activities; it should take measure to protect the system.
7.3 Implementation TimeTable
Person In charge
Development of Free Space Building Conference centers, exhibition centers and restaurants
2 years. it should commence immediately investor provide funds
Chief Financial Officer, Operations Manager, and Chief Executive Officer
Training and Development Employees
After every 6 Months starting November 2017
Human resource manager and Training and Development manager
Introducing interactive technology Digitalizing Conference and Exhibition Centers
8.0 Monitoring and Control
Monitoring and controlling are import aspects of implementation. Through monitoring and control, Olympia is able to evaluate the progress of achieving goals and come up with corrective measures. The company will establish a customer service feedback system to evaluate customer satisfaction. The feedback system will be used to monitor how changes the company is making are influencing the performance of the company.
The company will assess financial performance in 2020. The company will evaluate its financial performance in the next three years. It will check if it has increased profits and lower expenses. Additionally, the company will evaluate its liquidity and gearing performance. It will check if it is in a good liquidity position. Additionally, the company will assess if the debt ratios have reduced and the company is not heavily relying on debt to finance projects.
The company will conduct and survey to asses if it has acquired new markets and clients. The survey will focus on evaluating market penetration and development. The company will use the survey to determine the new markets that it has acquired.
London Olympia is operating in a competitive market hence it must come up with ways to become a leader in the convention industry. The company intends to be financially sufficient, improve customer service, and increases social responsibility in the next five years. The company will achieve these goals by embracing various strategic options. The company will focus on cost leadership, differentiation, market penetration and market development. The company is likely to face liquidity and technological risks. The company will monitor the plan through customer feedback system and conducting a survey.
1. PESTEL Analysis
The politics influence business operations. Civil wars in a country discourage establishment of businesses whereas a good political climate boosts business operations encouraging investments. London Olympia is influenced by the political climate in the United Kingdom. One of the political aspects that will influence the activities of Olympia is Brexit.
The exit of United Kingdom from EU will have various business implications on Olympia. Olympia will now stop enjoying the benefits of businesses operating in the EU. Previously, the EU community was operating as one trading bloc hence businesses benefited from increase in market (Peng 2015).
Analysts estimate that the exit will lead to a rise in travel cost. The United Kingdom will have to come up with policies on travel and immigration. As a result, the cost of travel is likely to increase. The increase in travel cost reduces demand for facilities in the United Kingdom.
A stable United Kingdom Government supports the business operation of Olympia. A stable government provides Olympia with a good environment to conduct businesses. People are willing to use Olympia because it is located in secure and stable country. The stability of the government contributes to increase in demand for conference and exhibition services in the United Kingdom.
There are various economic factors that influence the business environment. One of the factors that influence Olympia is high cost of living in London. Cost of living in the United Kingdom has increased. Though the United Kingdom is a developed country, it has a considerable percentage of people who are poor due to the high cost of living.
The high cost of living means that there is inflation hence there is a general rise in commodities (Ackermann & Audretsch 2013). The hospitality industry is experiencing the rise in cost hence services are offered at high costs. Olympia London targets corporate clients. Corporate clients consider prices when choosing venues to conduct businesses.
The high cost of living has increased hotel rates in London forcing corporate clients to choose other destinations that offer lower rates. The high cost of living is impacting negatively on Olympia causing it to lose customers to other companies that can offer similar services at a lower cost.
The rise in interest rate in the United Kingdom is impacting on London Olympia. London Olympia mainly finances its activities through loans. A rise in interest rates is forcing the business to pay high interest rates. The high interest rates impacts on the purchasing power of the consumers.
The increase in cost of borrowing discourages borrowing lowering money supply (Ackermann & Audretsch 2013). As a result, there are minimal business activities lowering demand for products and services. The rise in interest contributes to a reduction in demand for exhibition and conference services in the country.
The preferences and needs of consumers keep changing with time. Olympia London must understand the needs of consumers to provide the services that are being demanded (Cohen 2014). In the United Kingdom, the young population is looking for digitalized exhibition and conference centers. London Olympia must provide young people with digitalized services to continue being relevant in the market. The population supplies Olympia with labor services. Olympia provides numerous job opportunities for the local population directly and indirectly. Olympia operates in a less diverse population hence mots of employees are white.
Technology has influenced the hospitality industry. New and emerging technologies have opened geographical boundaries. Through the internet, people are able to learn about other countries and products and services they can get. Opening up of geographical borders creates a good opportunity for Olympia. Today, consumers around the world know about Olympia.
Olympia is able to get consumers from the globe. Olympia is embracing new technologies to improve customer services. New technologies improve conference halls and make it easy for business to hold meetings. Olympia must continue to embrace new technologies to attract young consumers.
Sustainable development has become an important part of every business. The world is working towards minimizing population to lower the rate of global warming. Olympia is committed to sustainability development. The company works with the public transport system to encourage people to use public transport to save energy. The company is green company. It has adapted various go green strategies such as ensuring lights are off in conferences that are not in use.
Olympia is subjected to international and United Kingdom laws. The company is subjected to hospitality standards regulations. It must ensure that it meets the hospitality standards in the United Kingdom. Additionally, it is expected to meet taxation responsibility. Olympia London holds international event hence it is subject international trade laws. Olympia is expected to comply with various local and international laws.
2. SWOT Analysis
London Olympia has been in the market for over 100 years. Olympia is one of the oldest establishments in London. Years of experience give the company a comparative advantage the company has already established itself in the market. It understands the dynamics of conferences and exhibition market in the United Kingdom. It has held various events from which it has managed to come up with ways to improve customer services.
Consumers are looking for conference and exhibition service that offers spacious conference halls. Consumers want the conference center to be part of the travel experience. Olympia has great advantages over other exhibition center regarding space (Olympia London 2017). It owns 14 acres of plot, and 4 acres have not been developed. The availability of large plot allows the company to develop conference centers that are spacious and meet the requirements of consumers. Additionally, the company has free plot that it can use to expand business activities.
Olympia is located in West Kensington. It is located near overground railway station that makes it easier for people to access the place through public transport. It is at the center of the public transport system in London (Devney 2015). Consumers can access the place from different points using the transport system.
Being located in London is a major strategy of the organization. London is a town that is rich in history and culture. Culture and art are important way of life in London. Consumer exhibition services are required in London. London is served by five main airports. It becomes a good destination to hold international conferences (Cameron 2014). Access to five major airports makes it easier to receive delegates from around the world without any delays at the airport making London a suitable location for conferences.
Olympia is situated near restaurants, bars and accommodation places. Olympia is well connected to other hospitality services that clients demand. Clients will choose Olympia because of its closeness to other services that they will require to use.
Olympia has hosted various famous international conferences putting it in the limelight. Fashion industry thrives in the United Kingdom, and it was a major milestone for the company to hold miss world competition. Holding international events markets the company and improves the brand of the company (Davis et al. 2013). As a result, corporates clients are willing to hold conferences in Olympia.
Poor Financial Performance
Since 2008, Olympia has shown slow financial progress. The company made losses between 2008 and 2011. The poor financial performance was caused by reduction in sales. Poor financial performance limits the ability of the business to make huge investments. It fails to get the right capital to make long-term investment. However, the company financial performance is improving, and it is important to come up with strategies to support financially sufficiency.
Lack of Cultural Diversity
Olympia operates in less diverse culture. The company must start marketing itself as a global conference and exhibition center. It must prove that it is culturally diverse to attract clients from across the globe. Being less diverse limits the ability of the company to capture the global market.
Olympia London was put on sale in 2015. The owners estimated the value of the company was 300 million euros. When the company started showing financial improvements, the sale was put on hold. This year Olympia London was sold to Deutsche Finance International and Yoo Capital at 296. Changes in ownership can affect the stability of the company. With the new owners, various changes are likely to be instituted in the organization. Changes in status quo can impact on the morale of the employees if it is not well handled.
Increase in demand for Conference Centers
The travel industry has grown in the last few years. Today, businesses are looking for places to hold meetings away from the workplace increasing the demand for travel and conference centers. Additionally, most companies have exploited international markets. Global companies look for a central meeting place where all business partners and stakeholders can meet. Thus, there is a rise in demand for conference centers. London Olympia should take advantage of the rise in demand for conference centers. It can expand to accommodate more customers.
New and Emerging Technologies
One of the trends in the hospitality and tourism is the availability of new technologies. New technologies are offering companies with an opportunity to become efficient and offer quality services.
The rise in terrorist activities in Europe has reduced tourist activities (Hall 2013). Terrorist attacks discourage people from traveling. Olympia must provide customers with secure place to hold meetings. The company has invested in security. It has surveillance system. Additionally, customers are inspected before being allowed to get into the building. When it is holding international events, Olympia works with police officers to ensure that the location is secure.
Olympia faces stiff competition from Kensington Exhibition Centre, Central Hall Westminster and Barbican Exhibition Facilities. According to Shone (2015), most conferencing organizations are well known in London and also enjoy strong brand. Olympia must come up with unique services to attract consumers and become leading company in the competitive industry. Competition is a big threat to the performance of the company. Increased competition is causing the company to lose market share to organizations that have rebranded to attract more customers.
Olympia must focus on strengths and competencies to identify ways that it can gain a competitive advantage. Olympia already has an advantage of location and space hence it can use these comparative advantages to attract customers and gain a large market share in the United Kingdom.
3. Five Forces Analysis
Threat of Substitution
The threat of substitution measures the rate at which consumers can change from one product to another (Sadler 2016). The conference and exhibition centers offer similar services. Consumers can move from one service center to another without incurring high costs. The threat of substitution is high in this industry. As a result, London Olympia must provide quality services to enhance customer loyalty. They should exceed expectation of customers in delivery of services to ensure that customers are willing to use the services (Rahimi 2017).
Olympia London faces stiff competition from companies in London and international companies. The hospitality industry is very competitive with every company trying to capture a large market share. Competition has contributed to poor financial performance. Other conference companies such as Barbican are rebranding to attract new customers (Dinnie 2015). As a result, Olympia is losing its customers to other companies that are coming up with new services that meet the new customer preferences. Olympia must come up with new strategies. It must understand the consumer needs changes come up with new services such digitalized exhibition centers to attract new customers.
Threat of New Entrants
According to Rogers (2013), developing a conference and exhibition center requires a huge amount of capital. The threat of new entrants is small since new entrants require large capital base. Additionally, London Olympia has been in the market for over 130 years. It has the advantage of experience over new entrants. The brand is well known, and the company understands the market (Simerson 2016). As a result, new entrants cannot compete with Olympia which is more experienced and has a large capital base.
Suppliers determine the type of services and products that a business requires. A business must choose suppliers carefully to ensure that they provide the business with quality materials. Olympia has moderate supplier power. There are many suppliers in the industry hence Olympia has a variety of options to choose from. As a result, suppliers strive to provide the best services in order to maintain close business relationship with Olympia. Additionally, Olympia is a large organization hence it purchases services in large quantities. Suppliers will work towards working with Olympia.
Buyer power is high in the tourism industry. Conference and exhibition center offer similar services hence consumers can choose from any of service providers. Providing quality customer service is critical. Olympia has already developed various customer services to provide it with competitive advantage (Horner & Swarbrooke 2016). It has ample parking spaces and is ensuring that its premises are internet enabled.
4. Financial Analysis
From the financial report, Olympia has a rough time dealing with financial performance. The income statement clearly indicates that the company suffered huge losses since 2006 to 2012. The financial performance of the company began improving in 2013. In 2013, the company recorded profits after tax of 1.822 million and this increased in 2014 to 45.383 million. The company financial performance improved in 2015 and recorded profits of 53,0007,000.
The company is in the right direction when it comes to financial positions. The balance sheet indicates that Olympia is in a good liquidity position. The current assets can cater for its current liabilities based on the positive working capital. To summarize financial information and get a clear picture of the financial position of the company it is important to look at various financial ratio.
Return on Total Assets
The return on total assets is a profitability ratio. The ratio is used to measure how the assets of a business are contributing to the profits of the company (Bradshaw, 2015). Total assets include the current and fixed assets. Currents assets are easily turned into cash and include inventory, cash at hand, debtors, and cash at bank. The fixed assets include the equipment and buildings that the company owns.
The return on total assets checks if the current and fixed assets are generating profits. The return on total asset is 21.2. Olympia return on assets is low. Olympia is not utilizing total asset towards generating profits. The total assets are being underutilized, and the company has the capability to use assets into more use to increase company profits
Return on Capital
Olympia returns on capital 37.5. The return of on capital is moderate. Olympia has the capability to get a high return on capital compared to other companies, the return on capital is relatively high, and this makes it an attractive companies for investors. Investors can get a high return on capital invested in the company.
Pre-tax profit margins indicate the profits that accompany generates before taxation. Olympia pre-tax margin is 4606. A positive pre-tax profit margin indicates that the company revenues are totally catering for the expenses of the company and yet the company is making profits. The high pre-tax indicates that Olympia sales and revenues are higher than its expenses hence it is a good financial position.
The current ratio is a good measure of the liquidity of a business. It compares current asset to current liabilities to indicate the ability of the business to cater for its short-term liabilities. The current ratio of Olympia stands 1.39. The low current ratio indicates that the company has currently invested in long-term activities. It is a good liquid position since current asset can cater current liabilities. Additionally, the current asset has been focused on achieving long-term goals.
The quick ratio subtracts inventory in current asset. Inventory is not as liquid as other assets. It takes time to turn inventory into cash. Olympia has the same current and quick ratio. This indicates that Olympia is not holding high amounts of inventory. Its current liabilities are liquid, and the company can easily cater for current liabilities.
Total Debt Ratio
Total debt ratio shows the amount of debt that used to finance company assets. London Olympics has a high total debt ratio of 77. The high debt ratio indicates that most of the company assets have been financed through debt. This increases the risk of the business.
Equity gearing ratio indicates the proportion of capital from debt and shareholders’ equity. London Olympia has a high equity gearing ratio of 129. The company is financed through debt. The gearing and total debt assets indicate that the company relies on debt to finance its activities. The company is at high risk since a rise in interest rate will greatly increase the interest that the company will pay back.
5. Value Chain
The value chain focuses on how a business can make use of business activities to gain a competitive edge in the market. The value chain separates business activities into two the primary activities and the supporting activities. The primary activities directly influence the creation of a product. The secondary activities increase the effectiveness and efficiency of a company.
Understanding the value chain is useful in establishing areas that Olympia London can improve to enhance efficiency and effectiveness. Slack (2015) points out that some of the primary activities that convention center can improve on to gain competitive advantages include conference halls and exhibition centers.
Conference halls must be spacious and located in quite a place to provide business with a good environment to conduct business. Olympia has spacious conference halls, but if it plans to increase customers, it must increase its conference centers to ensure that it can accommodate many customers at the same time.
The company has the advantage of availability of free space. It can build large conference centers that can hold international events. The company can further digitalize exhibition centers. Improving exhibition centers will attract artist from all over the world. It will create a great opportunity for Olympia to host fashion companies.
The supporting activities that the company can improve include human resource. The company must improve the skills of the employees to improve customer services. The human resource can be improved through training and development. Additionally, the company must embrace diversity.
It will start hiring employees from diverse background in order to attract consumers from around the world. The second support activity that the London Olympia focuses on is technology. Olympia should invest of new technologies to ensure that it meets the new technological demands in the industry.
6. Corporate Social Responsibility
Corporate social responsibility is a god way for business to increase competitive advantage. Consumers are conscious about various factors of a business. Consumers are demanding for businesses that are socially responsible. A business operates in the environment. It benefits from general population. Businesses have a responsibility of taking care of the environment that they operate and benefit from.
Companies are not only supposed about the short-term but also about the long-term of the activities of the internal organization and the environment. Sustainable development is the development that meets current needs without destroying future generation’s ability to meet their needs (Swayne, Duncan, & Ginter 2015). Sustainable development treats the world as a system that connects space and time. Actions in one part of the world have an impact on another country.
Decisions made today affects tomorrow and actions of an organization have an impact on the whole world thus sustainable development has become a critical strategy for all companies (Williamson, Jenkins, & Cooke 2013). Businesses should aim to have minimal effects on the global and local environment, economy, and community Olympia London meets the triple bottom line by offering environmentally friendly products, incorporating sustainability strategies, and showing commitment to environmental principles when conducting business operations (Ferrell & Fraedrich 2014).
Corporate social responsibility will be an important strategy in gaining a competitive advantage. Olympia will have to start engaging in new activities that improve the welfare of society. The company will use social activities to market the company. Additionally, participating in community welfare programs creates a positive image hence the company will attract more customers.
7. Events Scape Model
Events scape model focuses on tangible elements that influence the environment of an event influencing the emotional, and experiences of the stakeholders. Event scope model focuses on looking at the tangible elements that can improve the experience of the attendees, employees, and stakeholders (Newlands 2013). The variables that an event can make use are external variables, internal variables, human variables, layout and design variables and event specific design elements. Olympia has so far made use of scope model to improve experience of clients.
The company makes use of exterior design to create a good first impression. It has established spacious conference centers that are well arranged. The company considers the comfort of the clients and ensures that the chairs available are comfortable and customers can seat for hours without discomfort (Robinson & Picard, 2016). Olympia has further improved parking spaces. The company has ample parking space to reduce congestion.
The company security is on point. It has surveillance system, and various security officers are located at different locations of the building. Being at the heart of the transport system ensures that customers can easily access location using public transport. The combination of the eternal events cape variables improves the customer experience. Olympia London makes use event-specific designs to further attract customers.
Event specific designs consider the theme of customers when preparing conference centers. Consumers will have different themes, and when they hold their meetings in a place that is specifically designed to meet the theme, it increases customer satisfaction. Eventscape model provides Olympia with an opportunity to provide consumers with unique event experience (Robinson & Picard, 2016).
The company must focus on looking for new ways to increase customer satisfaction. Olympia must ensure that the objectives of events are met. The company will focus on embracing new technologies to enhance customer satisfaction. The company can introduce new interactive technologies.
Table and Chart Analysis
Porter’s Strategies and Five Forces
Differentiation StrategyProvide one stop destinationDigitalize exhibition centers
Cost LeadershipLook for lower supplier to lower costIncrease customers and use economies of scale to lower price
Threat of Substitution
Increase customer loyalty
Low price prevent threat of substitution
Threat of new Entrants
Customer loyalty will discourage new entrants
Low prices prevent new entrants
Increase brand loyalty and make product preferable compared to competitors
Ahead of competitors by lowering prices
Company will limit the alternatives of buyers
Company will offer buyers lower prices
Differentiation will ensure services are still demanded even at high prices hence company can pass supplier price increase to buyers
Company rely on supplier to lower price hence supplier will have more power over business
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