Shangri-La Pest Analysis

Singapore government has always been in favour of the tourism sector. In fact, Singapore Tourism Board (STB) launched a $90million BOOST (building on opportunities to strengthen tourism) for the tourism sector). The initiative help pushed the industry through tough times by assisting MICE (Meetings, Incentives, Conventions, Exhibition) companies to alleviate their business costs (Singapore Tourism Board, 2009). Not too long ago, the Singapore government cooperated with Indonesia to develop cruise ship tourism as Singapore is enjoying a cruise tourism boom (The Jakarta Post, 2011).

This collaboration boosts economic bilateral ties and tourism. Previously, the Singapore government also backed entrepreneur Ong Beng Seng’s bid to hold the F1 grand prix in Singapore. In fact, the government announced that they would fund up to 60% of the estimated $150million cost through Singapore Tourism Board (The Straits Times, 2007). With such encouragement from the government, Shangri-La has not much to fear, especially in a politically stable country such as Singapore.

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In such a well-governed country, there has never been demonstrations of displeasure or anything interruption of businesses. With peace and prosperity, not only Shangri-La, but the industry will enjoy the fruits of the growth in tourism supported by the government. Economical As the number of visitors to Singapore increased by 20. 2% in year 2010, revenue of the hotel room lettings saw an increase in 21. 8% as well (Singapore Tourism Board, 2010). According to the Business Expectancy Survey, 39% of hoteliers expect growth in business by end March 2011.

In fact, the employment rate for the industry is expected to increase by 19% (Sing Stats, 2010). With such evident growth in the tourism industry, the hotel industry will inevitably experience progressive growth in years to come. Furthermore, The Business Times (2010) stated that “Singapore’s hotel industry is among the two best performers in Asia Pacific”. The incredible recovery was driven by major events such as the Formula One Singapore Grand Prix which kicked off in the third quarter of 2007, attracting racing fans from all over the world.

Other international events such as the inaugural Youth Olympic Games and Asia-Pacific Economic Cooperation Meetings (APEC) also drew visitors from worldwide for both business and leisure. In addition, with Singapore being a well-established hub for various sectors such as the finance and medicine, business travel in Asia has seen an increase by 20% compared to 2009 (Channel News Asia, 2010). With a rebound in Asian business travel, hotel occupancy in July hit a high of 90% an increase of 10. 2% from 2009 and hotel room revenue grew 37. 2% (The Business Times, 2010).

Being the “Best Business Hotel in the World, Asia-Pacific and Singapore” as awarded by Business Traveller (Shangri-La, 2010), the surge in business travels is definitely advantageous to Shangri-La. Shangri-La, being a 5-star hotel is classified under the luxury scale. As deduced from table 4 (appendix B), luxury hotels have seen 9. 8% increase in average occupancy rate from 2009 and the revenue per room saw an increase in 21. 3%. However, in the midst of international turmoil, Mr Cheng, the Chairman of Singapore Tourism Board highlighted that the signs of a global economic slowdown are evident.

It will likely have an impact on the growth of economies across Asia and Singapore has to brace herself for the rough times ahead (Singapore Tourism Board, 2011). Socio-cultural Despite the rising standard of living worldwide, people are not falling short of wealth. According to Synovate, one of the world’s largest research firms, affluent customers across Asia-Pacific have huge spending power in both good and bad times (Business Review, 2010). As Asia-Pacific basks in prosperity, middle classes drove the tourism sector up by double digits in the region (The Straits Times, 2011).

Singapore’s tourism and travel sector has been ranked 10th out of 139 economies by a Economic World Forum report (Ng, 2011). As Asian consumers are more educated, they have grown to be more demanding. As a result of the internet, customers expect constant access to goods and services and immediate response from companies that sell them (Economist Intelligence Unit, 2010). According to The Business Times (2009), a study has found that people who earns income above average has higher expectations when it comes to service excellence.

Shangri-La, being n upmarket 5-star hotel has the ability and experience to cater to this market segment and provides the clientele with service over and beyond the rest. Technological The use of information technology in the hotel industry has grown tremendously in the past 20 years and it has become clear that information technology is now a critical competitive weapon in the industry. With the development of the internet, it provided hoteliers the opportunity to reach customers directly and allowing transactions to be carried out immediately with the customer.

This has potentially eliminated intermediaries such as travel agents, thus reducing the cost of distribution via commissions as travellers increasingly making their own travel arrangements using various Web-based services. Of the top 50 hotel companies in the world, over 90% of the hotel chains have a company Web site, with nearly 80% of these providing reservation facilities to allow direct booking (Hotelmule, 2010). The resulting cost reductions are estimated to be substantial.