This paper analyzes the internal and external environment of Kimpton Hotels and Restaurants for the purpose of recommending the most effective and feasible way to enter the boutique hospitality industry of Hong Kong. The internal environment is assessed by analyzing the core strengths and major weaknesses of the company whereas external environment is evaluated through an analysis of potential opportunities and threats, competitive environment, market overview, and future industry trends which the company may face in the Hong Kong market. A number of strategies are recommended to the company in the light of these analyses.
Kimpton Hotels & Restaurants
Kimpton Hotels & Restaurants Group Inc. is the largest boutique hotels chain in the United States. It was established in 1981 by William Bill Kimpton. Kimpton Hotels & Restaurants is headquartered in San Francisco, California. It operates a large number of restaurants, hotels, and bars throughout the United States. Kimpton markets its different hospitality services under independent brand names. However, it has recently opened a couple of sub-brands under its own major brand. These sub-brands are: Hotel Monaco and Hotel Palomar. The corporate principles of the company are completely focused on customer satisfaction. Due to its deluxe and stylish restaurant concept, supreme customer services, and haven of comfort in boutique hotels, Kimpton Hotels & Restaurants is recognized as the most popular and luxurious boutique hotel chain in the country. The hotel has also achieved remarkable position among the best employers of the world. According to the Fortune Magazine, it is the 28th best place to work for in 2013. In addition to its own brands and sub-brands, the company also operates a large number of hotels and restaurants owned by other businessmen of the country (Kimpton Hotels, 2013).
Boutique Hospitality Initiative in Hong Kong
Kimpton Hotels & Restaurants aims to expand its business operations in Hong Kong by setting up boutique hotels under its own brand name. In order to effectively penetrate and establish its presence in this new market, Kimpton Hotels will have to carefully analyze the external environment which it will face in Hong Kong. The analysis of external environment can be done by assessing the opportunities, threats, competitive pressures, and future trends in the hospitality industry. The company will also have to analyze its own strengths and weaknesses in order to encounter the environmental threats and avail the potential opportunities from this market (Lancaster & Withey, 2007).
SWOT Analysis of Kimpton Hotels & Restaurants in Hong Kong
Kimpton Hotels & Restaurants is one of the most popular and successful boutique hotels chain in the United States. Therefore, the biggest benefit which it will get in Hong Kong is the already established brand image. With the help of its brand recognition and strong presence in the U.S. hospitality industry, Kimpton Hotels will not face any difficulty in building its brand image in Hong Kong or persuade its potential customers to avail its services. Secondly, Kimpton Hotels will able to establish a huge business setup in the new market due to its strong financial position and cash flows. Kimpton Hotels is recognized for its luxurious hotels and restaurants which are comparatively fewer in number in Hong Kong. Therefore, it will not take a long time to rank itself among the best boutique hotels in this market (Kotler & Armstrong, 2008).
The luxurious, stylish, and deluxe concept of restaurants and boutique hotels will also become a weakness for Kimpton Hotels when it will compete with the other industry participants like 3-Star and 4-Star hotels and restaurants. Due to its premium-priced services, Kimpton Hotels will have a very limited customer base in Hong Kong. It will not be able to target the middle and upper middle income groups of the society. Secondly, Kimpton Hotels is not specialized in Hong Kong style boutique hospitality. Therefore, it will take a considerable time to specialize in this field and be able to beat the competition in an effective and competitive way.
In its international expansion strategy in Hong Kong market, Kimpton Hotels will have various attractive opportunities to avail. First of all, it will have an advantage of fun-loving and modernized life style of Hong Kong citizens which perfectly matches its concept of doing luxurious business. Secondly, it can enter into joint ventures and partnerships with large scale hotels chains and potential investors from the target market in order to take supply chain advantage (Mu-hlbacher, Dahringer, & Leihs, 2006). Moreover, the hospitality industry of Hong Kong is becoming more and more attractive due to relaxed and favorable legal infrastructure. Kimpton Hotels can set up its business without any risk of negative governmental pressures or non-supportive behavior. The sound financial strength of Kimpton Hotels can greatly help it in marketing its business through all the major promotional and advertising mediums. It can run expensive campaigns on television, radio, magazines, newspapers, and social media to create awareness of its new boutique hotels among Hong Kong customers.
In addition to a number of potential opportunities, Kimpton Hotels will face certain threats in the new market. The biggest threat would be the top industry rivals in the hospitality industry like local and international boutique hotel and restaurant chains. These rivals already have an established brand image and strong presence in the Hong Kong market. Secondly, Hong Kong is going to be the first international target market for Kimpton Hotels. There is a potential risk that Kimpton Hotels will fail to closely analyze its external environment like hospitality industry trends, consumer preferences, competitors' strategies, economic pressures, legal and governmental infrastructure, and the like. Moreover, there is a big risk that Hong Kong customers refuse to accept the boutique hospitality concept which is based on purely American style. Therefore, Kimpton Hotels may have to totally redesign or mold its concept to match the Hong Kong culture (Mu-hlbacher, Dahringer, & Leihs, 2006).
Kimpton Hotels will compete with a large number of luxurious and boutique hotels in Hong Kong. These hotels have effectively captured the market by providing superior hospitality services to their local and international clients. The top level competitors for Kimpton Hotels include; JW Marriott Hotel, The Salisbury, Mandarin Oriental, Conrad Hong Kong, Hotel ICON, The Peninsula Hong Kong, Island Shangri-La, Olympic Terrace Suites, The Landmark Mandarin Oriental, Langham, Harbour Grand Kowloon, Royal Plaza Hotel, The Excelsior, InterContinental Grand Stanford, Kowloon Shangri-La, etc. Most of these competitors have invested in diverse businesses in Hong Kong, China, and international markets. In addition to these top level competitors, Kimpton Hotels will also have to compete with other 3-Star and 4-Star hotels which provide both luxury and economical services and have significantly lower charges than boutique hotels.
Overview of the Market:
The hospitality industry of Hong Kong is concentrated with a large number of hotels, restaurants, and bars. The industry is collectively dominated by local luxurious and boutique hotel chains and trendy restaurants. However, due to the increasing trend towards luxurious dining, deluxe eating experience, and modernized life style, the industry has created attractive opportunities for new investors to come and join this profitable business (Lamb, Hair, & McDaniel, 2012). There are very weak barriers to entry for international hotels and restaurant chains in the Hong Kong hospitality industry. The major market share of the industry is in the hands of contemporary hotels, cuisine chains, and fast food restaurants. However, due to their premium-pricing strategies, boutique hotels have failed to gain a high market share and large customer base.
One major advantage of boutique hotels over local non-trendy hotels and restaurants in the Hong Kong market is that they are more liked and appreciated by international customers who come to visit Hong Kong and wish to have luxurious living and dining during their stay. These customers are a big source of revenues for boutique hotels in Hong Kong.
Future Trends in Hong Kong Market:
The changing industry trends and customer preferences have made the hospitality companies to think out of the box and become more aggressive in their marketing approaches (Kotler & Armstrong, 2008). The hospitality industry of Hong Kong is being saturated with all types of fast food restaurants, cuisines, boutique hotels, and non-trendy restaurants. Now companies are diversifying their hospitality businesses in related and unrelated product and service lines. These diversifications enable them to provide all kinds of services which a potential customer may want or wish to have during his stay at the hotel; like outdoor playing areas, casinos, bars, clubs, special events, marriages, parties, fitness centers, security services, medical facilities, and various others.
Due to the increasing trend of consumers towards a more luxurious and modern life style, boutique hotels have now entered into a cold war with each other. They compete on the basis of customer services, pricing, extra facilities during and after the stay, membership benefits, etc. It is anticipated for the near future that boutique hospitality will further flourish in the Hong Kong market due to its ever-increasing demand and the…