Analysis of the Four Season's Hotel and its business strategy in the luxury hotel Industry

7659 Words Apr 6th, 2003 31 Pages
INTRODUCTION

Methodology of Report

The following report was derived from the primary use of secondary sources, in addition to telephone contact with hotel representatives. Secondary sources included research from the Internet, industry books, company marketing communications, trade and general business newspapers and magazines, among others. Through all the sources, relevant data and information was extracted into the report's appendices. After individual analysis and group discussion, the following report was devised. The mandate of this report is to provide a macro examination of the luxury hotel industry and specifically the future outlook of Four Seasons Hotel and Resorts, Inc.

Company History and Background

The vision for Four
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Growing at an annual rate of approximately 2-3%, the industry is divided into four tiers, consisting of budget/economy, mid-scale, first-class and luxury. Though there are countless hotels around the globe, the major players in the industry are the 10-12 parent companies that operate a chain of hotels, often with brands that are spread across the four tiers. In addition to international players, each tier also contains an abundance of smaller hotels that competes in its respective tier .

Within the luxury tier, many of the players do not actually own the hotels themselves, but instead manage the operation of the business, similar to that of FSH. In the luxury segment, competition for acquiring new management agreements becomes very high as hotel owners make their choices based on the quality and value of a company's management service and most importantly, its brand name. Moreover, guests who choose to stay in luxury hotels are commonly not very price sensitive, and thus it is essential that a hotel distinguish itself amongst its competition by providing value added services as well as maintaining an untarnished, reputable brand name and image.

To remain profitable, hotels must operate with around 65-70% capacity . Due to seasonality, political and economic events, some hotels are finding it difficult to maintain profitable occupancy levels and have started to provide services along multiple levels within the industry's

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