- Improve the tourism product mix :
The main focus is on the rapidly growing Eco and Adventure Tourism trends, this can be implemented by the following means
- Setting up packages with their sister hotel Cinnamon Lodge Habarana which has a very diverse offering from elephant watching to visiting place of historical value.
(Refer Appendix 1)
- Having categorizing the tours offered and setting up a standard and continuously maintain that standard
- Adopting a more eco friendly outlook whilst having the dynamic model of a luxury hotel
- Upgrade tourism offerings :
Cinnamon Grand in this context is can use the advantage of having its sister hotels situated in Benthota and Habarana whist taking the comforts of a world class hotel and mix it with the true ethnicity of a true Sri Lankan brand. The following can be adopted
- Making the tourists aware of the rich cultural heritage in Sri Lanka.
- Having excursions and guided tours to the specific locations
- Modernize industry organization and key institutions :
Cinnamon Grand as the market leader in the tourism sector should spear head the initiative calling for a industry led direction and control of the industry. This can be addressed in the following fashion
- Having an association of all the key figures in the industry and using it as a fourm to address the issues that are faced by the industry
- Stepping up with technology and providing a better service in the fashion of a panoramic view of the destination
- Setting up online booking systems as most of the tourists use it for their booking purposes (Refer Appendix 2)
- Having well trained staff as the staff members are the first point of contact for the tourists.
- Reform the policy environment :
Cinnamon Grand as an entity dose not have much of an effect in this section but it is now time for the industry as a whole to come together and cooperate with other factors of the tourism industry such as Aviation, Infrastructure development, Finance and Planning, Implementing Laws for the betterment of the whole industry. How ever it is recommended that Cinnamon Grand makes use of the information which is collected by the ministry of Tourism and use it to adopt and plane its future targets. (Refer Appendix 3)
By adopting these strategies in the aforesaid way Cinnamon Grand will be able to attract more visitors both local and foreign, and sustain its growth in the long run.
PESTLE ANALYSIS FOR TOURISM INDUSTRY
The business growth emerge through the external change triggers, viz Political, Economic, Socio-Cultural, Technological, Environmental and Legal factors. These factors control the business performance. For the survival of the business these factors have to be analysed and addressed in a timely manner by introducing new innovative ideas for identified opportunities.
Political Aspects
The political climate is a less predictable area of study. The trend should be monitored carefully. Because it is a key decision making factor would be that it implies the government administrative policy.
- The Nature of the Government
Sri Lanka has mixed economy system where major infrastructure facilities and regulations are devoted by the government. The private investment in the economy encouraged through the government policy on particular business.
- Government Policy on Business
The government has been making it endeavour to find ways to improve the travel and trade sector. The government established Sri Lanka Tourism Development Authority under Tourism Act, 2005 to fund development Activities Island wide.
Visitors arrivals from Asia, led by India have increased in past decades, in this sense, the Tourism Promotional Bureau is to promote the industry through religious place visits to the country. The opportunity is further widen by the India – Sri Lanka cricket matches during the July 08. (Refer Appendix 4)
This is an utilizable opportunity for Cinnamon Grand, since they are operating with the high market share of 33% room revenue. And the Cinnamon Grand’s future plan to introduce minimum room rate policy is definitely advantage for the company as it attracts price sensitive Asian region customers.
The political stability has a great impact on the performance. Any instability of the local politics will have a negative impact on Hotel business. Sri Lanka has instable political structure with multi party form government which causes difficulty in strong decision making and resulting in frequent change in policies, this vastly disturb the organizations’ stakeholders mainly investors and share holders.
CG is working with it parent in lobbying the various Trade Associations and government regarding means to control such situations and maintaining a cordial relationship with it stakeholders at all levels based on Trust & interest of the parties. (Annual Report (2007-2008) Asian Hotels and Properties PLC page 27)
- Security and safety Issues
The international community has a stronger view over the Sri Lanka to recommend their citizen, whether the country is a safe destination to visit. The prevailing civil war situation in the country makes an adverse impact on visitors. After the failed attempt at peace talks , the travel industry has attempted to counter endless stories about terrorism. Air port security seen as priority to ensure as it directly affect the number of tourist arrival. Another challenge is to protect travellers while they are sightseeing. On the other hand government anti-terror measures likely to increase inconvenience of some travel options that are available to the Hotel Industry.
Cinnamon Grand is situated in the high security zone how ever the stringent security measures also would make this a safe location to be in.
Economic Factor
These factors are important since the nature of the economy will directly influence the scope of a business.
The inflation rate in the country is being increasing for the past period which in turn has made an adverse impact on cost of production, this lead to cost push inflation. The country marks 26.6% inflation in May 2008. Inflation is locally induced due to poor financial management and the rise in global fuel prices.
There is evidence that the tourism demand is also price- elastic. Increase in cost of production has a negative impact on pricing the hotel services specially for local customers, but however the premium price foreign visitors is not affected by country’s inflation.
Cost of energy affecting bottom line because it has a knock on effect on all other expense including electricity and mainly transport. Airways fare increased globally by the surge in oil prices, this affect travel and tourism industry world wide.
- Interest and its impact on Capital
Interest rates continued to remain high against the backdrop of high inflationary trends. This cause increase in interest expenses of the company borrowings which could reduce the proposed dividend .Also it reduce the chance of obtaining capital from prospective investors.
Cinnamon Grand mitigates the interest expense by agreeing a best term for its loan and through managing cash flows. The company’s low credit risk and the low gearing ratio still attract some potential investors. The company uses equity and retained earnings as the main sources of funds. The JHK PLC who has 83.8% of share on the business, they manage the company liquidity risk well.
- Infrastructure for business development
The government focus more on improving the infrastructure facilities of the rural areas and the ICTA project for improve the communication between globe and the country, which will have a positive bearing on the tourism.
In the airline industry 2nd phase development of BIA (Bandaranayke International Airport) will bring a railway line from Colombo to Katunayaka & a supper highway between these two ends. This will improve the mobility in domestic transport thereby a quick reach to Colombo City Hotel will possible.
A new tourism office with 24 hours service is opened at BIA. This further promotes hotels’ information as it readily available to visitors on the spot of entry. This could make a healthy competition and Cinnamon Grand can take its chance because it already well known among the premium customers.
- Exchange rate and the impact
A re-valued Sri Lanka Rupee, while helping to lower the cost of imports, resulted in export and other FOREX denominated revenue being lower in local terms.
Cinnamon Grand uses US Dollar based pricing, the strengthening of Sri Lankan rupee bring a significant exposure to the foreign currency risk.
Social & Cultural Environment
These are associated with the nature of the country and the life style of people.
- Typical Sri Lankan culture
The hospitality and the friendliness of the typical Sri Lankan have influenced the tourists to visit Sri Lanka more which in return is positive for the industry.
- Health issues in Asian Countries
The impact of health issues in Asian countries has also been a bigger concern for the tourists. Diseases like SARS and Bird flue affect the tourist arrivals to Asia in recent past. Tuberculosis in Sri Lanka has major concern by western tourist. A plane to reduce tuberculosis in this country is already started by the government.
The world has increasingly a high proportion of aging population due to awareness in health care and the decrease in birth rate. This lead to the interest of aging people important in the hospitality industry. But most of the Sri Lanka visitors are between the 29 to 39 years of age, so the industry have a strong view over this age group interests in packaging the hotel services.
Technological Environment
- Online Reservation facilities
The technological improvement in the IT sector has enabled the hotel industry players to provide more fluent service to its customers. The graph from annexure shows that more information gathering is done through internet.
The simple procedures of online booking systems have given the consumers a better service availability. Nowadays the online payment methods will be more popular than the other methods. The Cinnamon Grand maintained its own online booking system with latest web based technology.
The virtual tours through web sites have influenced the tourism industry in positive way which has increased the tourist arrivals of eastern countries. The technology used in virtual tours can be improved in future and tourists will be given more variations to choose from. The competition among the hotels will increase because of this.
- The Nature of investment available in Technology
There is a plenty of opportunity in MICE tourism (Meetings, Incentive Travel, Conference and Exhibitions). The MICE traveller in any event spends 4-5 times over average holiday maker. But this segment in Sri Lanka has fallen behind countries like Singapore, Malaysia and Hong Kong. The reason being that these countries entered into the hospitality industry with MICE by developing adequate infrastructure. Now there is an opportunity open for Sri Lanka that Chinese MICE planers are ready to work with Sri Lankan hospitality industry.
The Cinnamon Grand has endorsed a good position in MICE segment during last year they occupied 6.4% of total hotel room night occupancy.
Technology can used as a means to device luxury in hospitality décor, and even personalise the guest’s entire experience of a hotel and there by make mass customisation. The 21st century demand more technology development, a plethora of technological advances continue to increase this widen the opportunity. Hotel owners could gain a competitive advantage in using technology as a tool to take décor to the next level and enhance concierge services.
Ecological Environment
- Eco-Friendly Culture in developed countries
Most of the countries are now focusing on the ecological friendly culture and they value ecological friendly environment. This has an impact on the industry since tourists nowadays stress more on environmental factors. Hotels which encourage ecological friendly culture such as good garbage collection policy and greenery surroundings have more competitive advantage than others when it comes to the selection of a hotel for a vacation.
- Sri Lanka rated as an Ozone friendly country
Sri Lanka has been awarded the ozone friendliest country in the world and this has improved the market potential for the industry, reducing the decrease in market growth. This award is recognized throughout the world and the perception of the tourists about Sri Lanka has improved because of winning this award. If Sri Lanka can sustain this environment friendliness in future it will be a huge advantage for the tourism industry.
Legal Environment
Government impose laws through Prevention of Terrorism Act such as restricting the visiting hours of sacred places and introduce complex procedures to get permission to enter such places due to the prevailing ethnic war in the country. This will make tourists hesitant to visit such places and the impact can reduce the period of stay in the island. Hotels will be affected by this and the demand for hotels will be lesser.
The Prevention of Abusive Alcohol Act restrict the operation time of Bars and clubs. It also laid rules to protect exposure to smoking in public places; under this a special arrangement to smokers in hotel and bar is recognised.
SWOT ANALYSIS FOR CINNAMON GRAND
Strengths
- Location of Cinnamon Grand Hotel in Colombo
Located in the middle of the business district, the Cinnamon Grand Hotel is placed just a short walking distance from the city centre and main shopping areas. Being just 35 km away from Bandaranaike International Airport, the Cinnamon Grand has been Sri Lanka's premier venue for the business and leisure traveller. And for many tourists who are after a 12hour flight from Europe or other far away destinations, it has been found very convenient as you can reach the hotel within an hour from Colombo International airport.
- The recognition of the hotel (Brand awareness)
Cinnamon Grand at present is the largest five star city hotel in Sri Lanka and has become the most sought-after five star hotel in Colombo, obtaining better ratings than some of the prestigious international hotel chains in Colombo.
Its strong brand name is due to high global rankings and expansion of brand name through food promotions. It has also won two prestigious Presidential Tourism Awards, being adjudged the Best City Five Star Hotel as well as its restaurant Lagoon winning the award for Best Restaurant.
(Refer Appendix VI)
- Having a high market share
“Cinnamon Grand has achieved the highest market share of 33% with the highest market penetration in the city at 116%. The food and Beverage division also performed extremely well with a 30% market share in share in sales amongst the City Hotels.”
Asian Hotels and Properties PLC. Annual Report 2007 - 2008
Winning against renowned international hotel chains, Cinnamon Grand is renowned not only for being the market leader in setting benchmarks and standards, but also in revolutionizing the very definition of hospitality in Sri Lanka with innovative features, products and services that conform to its theme of indulgence.
Available at: [accessed 23 June 2008]
- Been the first five star city hotel under the John Keells Holdings
Cinnamon Grand, once part of the Oberoi chain but now rebranded and much improved, belongs to the exclusive Cinnamon properties owned by the John Keells group. This has been the first five star city hotel under the John Keells umbrella which happens to be Sri Lanka's largest business group and a leading investor in the country's economy. Currently John Keels is the market leader in this industry with a market share of 9.1 %.
(Refer Appendix VII)
- The experienced staff of the hotel
The management team of Cinnamon Grand gets trained and guided by John Keells Holdings while gaining new experiences and Knowledge in hotel and tourism trade making them an invaluable asset to the hotel. The superior training standards have also won the Cinnamon Grand a coveted trophy for the ‘Telephone Operator of the Year 2007’ competition organized by the Lions Club of Colombo.
(Refer Appendix VIII)
Weaknesses
- The distance to popular Cultural Sites
Cinnamon Grand might not be the first choice for tourists who are interested in visiting places of cultural relevance because of its location in the heart of the Colombo city centre. Even though the services of the hotel is at a very high level, tourists who come mainly to visit historical sites do not have the tendency to stay at such a metropolitan area. This in result has been a factor to reduce the tourist arrival to Cinnamon Grand among the tourists who visit Sri Lanka mainly for sightseeing.
- Series of name changes of the hotel
The hotel was formally known as “Colombo Plaza” was re- launched under the new brand “Cinnamon Hotels and Resorts” owned by its parent the John Keells Holdings in November 2005. This series of name changes of the hotel, caused confusion among customers as they were not aware of the concept.
Opportunities
As per the past records the tourist arrivals to the country follows a similar trend in each month. The hotel can use this trend to get the maximum consumer proportion in the months of huge tourist attraction by using promotional campaigns and special offerings centered on those months.
- Arrival of more business and city bound travelers.
The tourist arrival to Sri Lanka at present is mainly from countries like India and China. The focus of them is more towards the business perspectives and they are willing to be more city bound. As the Cinnamon Grand is conveniently located in the heart of the Colombo city centre it will be of direct interest for tourists arriving for business purposes.
Threats
- The security situation in Sri Lanka
Civil war and terrorism have seriously disrupted the tourism industry of the country. There has been a steady decline in the tourist arrivals in Sri Lanka due to deteriorating security situation of the country because of continuing fighting between the Sri Lankan government forces and the Liberation Tigers Eelam (LTTE) throughout the north and east.
- Travel advisories issued by countries because of the unstable political situation and the civil war
Travel advisories issued by countries because of the unstable political situation in Sri Lanka whose citizens’ make up the target market has drastically reduced the number of tourist arrivals.
(Refer Appendix IX)
- Arrival of many environmental friendly hotels
The current trend of tourist industry focuses more on eco tourism and adventure tourism. "Eco tourism" is defined as tourism with an awareness and responsibility towards natural resources. As Cinnamon Grand is located in the heart of Colombo’s business, shopping and entertainment centre it has found it hard to compete when it comes to eco and adventure tourism.
- Having a wide range of competitor hotels around Colombo
Having a wide range of luxury 5 star hotels with similar facilities around Colombo has resulted in reduction of the competitive advantage, Cinnamon Grand sustained a few years earlier. Cinnamon Grand is facing severe competition to capture and maintain a higher proportion of the same segment.
CONCLUSION
As per the analysis carried out on the Hotel industry and on Cinnamon Grand , it is evident that the future business prospect for these kinds of luxury hotels will be not rewarding if the 20-30 year ethnic war prevails in the country.
In our research we identified that the Tourism Cluster has stemmed some strategies to increase the spending per tourist in Sri Lanka and we have elaborated on these facts and have come up with the best possible methods to adopt these strategies.
New recommendations have been made to bring the hotel to a more competitive position by attracting local customers thus reducing the impact on the lesser arrival of foreign tourists to Sri Lanka. These procedures can be followed to increase profit margins of cinnamon grand and make it more competitive in the hotel industry which is steadily approaching its maturity stage, where the competition among the firms will be reasonably strong in the near future.
Drawing together our findings in relation to the objectives of the study, we arrived at the above conclusions by the analysis we conducted on SWOT and PESTEL. In this report it is identified the ways in which Cinnamon Grand could reach success moving away from all barriers and compose “Cinnamon Grand” as a world renowned prestigious brand name!
RECOMMENDATIONS
Possible new strategies which can be implemented by Cinnamon grand Colombo
Located in the middle of the business district, the Cinnamon Grand Hotel is placed just a short walking distance from the city centre and main shopping areas due to this the location it self has a big advantage because the hotel mainly associates with the business community.
Cinnamon grand which is attached with the slogan “HOW MAY WE INDULDGE YOU” has taken many steps to prove this…but there are so much more steps to be taken to improve the quality, standard and services.
Proposed Strategies
The green concept provides a practical bridge between science and development of more eco-friendly products that match or out perform the market leaders. By introducing the concept to cinnamon grand the hotel can incur enormous potential benefits through seeking greener and more effective solutions to a wide range of problems facing the hotel. With the cost of products increasing day by day, Implementation of this concept will help the hotel to cut its cost by a large amount.
- low budget packages for weddings and family packages
This mainly focuses on the local customer base. Due to the prevailing security situation in the country tourist arrivals are decreasing. So, to improve the income of the hotel cinnamon grand has to focus on local customers. Introducing budget packages for weddings and families would help to solve this crisis.
- agreements with small and medium hotels around the country
Agreements with small and medium hotel chains will help both small scale and the large scale parties in different ways. Cinnamon grand will be able to diversify their hotel franchises to different parts of the country. The small and medium hotel chains would be able to work with a world renowned hotel chain “cinnamon grand”.
APPENDICES
Appendix I
The Eco and Adventure tourism offerings at Cinnamon lodge Habarana
Nature Trails
Butterfly Watching
Cultural
Appendix II
Source
Appindix III
Appindix IV
Appindix V
SOURCE-
Appendix VI
Available at: [Online] [Accessed 22 June 2008]
Appendix VII
Available at: [Online] [Accessed 8 October 2007]
Appendix VIII
Appendix IX
WARNINGS AND RECOMMENDATIONS
Sri Lanka
(IDW10)
OFFICIAL WARNING: Foreign Affairs and International Trade Canada advises against non-essential travel to Sri Lanka unless you have critical business or family reasons to do so. Travellers should be aware that incidents of violence can occur without notice throughout the entire country and is not restricted to the north and east of Sri Lanka.
Violent attacks, resulting in numerous deaths and casualties, have been occurring with increasing frequency in 2008. Victims have included military personnel, government officials and civilians. Bombings have taken place in a variety of cities, including Colombo. On June 6, 2008, two explosions involving civilian buses occurred in Katubedda, a suburb of Colombo, and Kandy. At least 20 people were killed and several more were injured. In the days surrounding Sri Lanka's Independence Day, on February 4, 2008, explosions took place at several different locations across the country including the Colombo Fort Railway Station, the Colombo zoo, and on the route between Anuradhupura and Janakapura. Canadians are advised to avoid using public transport if travelling in Sri Lanka.
Canadians in Sri Lanka should avoid any travel on public buses or trains as these have recently been targets of attacks. They should maintain a high level of personal security awareness at all times, monitor local news reports, and follow the advice of local authorities.
Conflict between the Liberation Tigers of Tamil Eelam (LTTE) and the Sri Lanka Army has lead to a number of violent attacks throughout the country. Since 2006 there have been an increasing number of violent and often fatal incidents in the south, including several incidents in Colombo. A state of emergency is in effect throughout the country. As a result, there is a heightened security force presence, including checkpoints, throughout the country. Travellers are advised to carry personal identification at all times and comply with government and security force instructions.
Available at:
[Online] [Accessed 22 June 2008]
Travel Warning
United States Department of State
Bureau of Consular Affairs
Washington, DC 20520
This information is current as of today, Tue Jun 24 2008 22:36:58 GMT+0530 (Sri Lanka Standard Time).
SRI LANKA
June 13, 2008
This Travel Warning provides updated security information and alerts American citizens traveling to or living in Sri Lanka about the continuing danger of terrorist attacks throughout the country. This supersedes the Travel Warning for Sri Lanka dated February 8, 2008.
The Department of State urges American citizens to evaluate carefully the risks of travel to Sri Lanka and specifically warns Americans against travel to northern and eastern areas of Sri Lanka. Since early January 2008, fighting between the Sri Lankan military, paramilitary groups and the Liberation Tigers of Tamil Eelam (LTTE) has increased, and bomb explosions in densely populated areas have killed dozens of civilians, including in some areas frequented by foreign tourists. Although there is no specific indication that American citizens or institutions have been targeted, there is a heightened risk of American citizens becoming victims of violence just by being in the wrong place at the wrong time. American citizens who decide to travel to Sri Lanka despite this Travel Warning should be aware of their personal surroundings and follow prudent security practices. Americans should avoid large crowds and public gatherings and should particularly avoid political rallies, military bases, and government and military vehicle convoys, which are frequent targets of LTTE attacks. Americans are also strongly advised against using public transportation in Sri Lanka, as civilian buses and trains have increasingly been the targets of terrorist bomb attacks in recent months. U.S. Government personnel are currently prohibited from using these modes of transportation.
Available at: [Online] [Accessed 22 June 2008]
References
-
Asia Rooms – Asia Hotels: Sri Lanka Hotels: Colombo Hotels: Cinnamon Grand hotel Colombo. [Online] (Updated 22 June 2008).
Available at: [accessed 24 June 2008]
-
Colombohotels.lk…your local connection – Accommodation: Colombo Cinnamon Grand: general info. [Online].
Available at: [accessed 23 June 2008]
- Red Dot Tours - The Sri Lanka specialists. Sri Lanka Hotels: Cinnamon Grand Hotel, Colombo. [Online].
Available at: [accessed 24 June 2008]
-
Abayasingha, D., 2007. New Tourism Authority gives industry renewed hope. The Bottom Line. [Online] [Internet] 17 October.
Available at: [accessed 23 June 2008]
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A novel experience at Cinnamon Grand. Daily News. [Online]. [Internet]. 20 June 2008.
Available at: [accessed 3 June 2008]
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Voyage.gc.ca – Essential Information for Canadians Abroad. Travel Report Sri Lanka. [Online] (Updated 9 June 2008).
Available at: [accessed 24 June 2008]
-
U.S. Department of State - Bureau of Consular Affairs. Travel Warning: Sri Lanka.
Available at: [Online]. [accessed 24 June 2008]
-
Ministry of Tourism statistical data [accessed 24 June 2008]
Bibliography
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Travel Lanka- Monthly Tourist guide. 13th Anniversary ed. Colombo 10: Pace Publishers.
Theory And Practice Of Business
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