Case Study
Entering new markets
Should a major four star branded hotel diversify and open an on-site culinar y School?
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The Project A four-star hotel in Bournemouth wished to establish whether it should diversify into a new market – a culinary school to provide cookery classes and demonstrations for guests, whilst also doubling up as a top training school for the chefs in its chain. The NCTA contracted a Bournemouth University consultant with extensive experience in hospitality and retail management to conduct research with the hotel and produce a report with recommendations as to the school’s viability. The case study provides useful conclusions for other hotels nationwide considering diversification.
The Background In early 2014, the National Coastal Tourism Academy undertook a business consultation with one of the town’s most successful four star hotels. It wished to explore new ways to diversify its business but required in-depth research to ascertain viability before making detailed plans and considering investment.
The Client The four-star property is prestigiously located on Bournemouth’s cliff top, within walking distance of the town centre. It offers premium services for business and leisure travellers. The hotel was considering opening a culinary school to run alongside its successful hotel business. It had two objectives: to provide a central training school within the UK for the chain’s chefs and to allow the hotel to offer new culinary packages for guests, tapping into the nation’s love affair with TV programmes like Masterchef, The Great British Bake Off and Come Dine with Me. With an existing building onsite, the hotel wanted to know if this could be transformed into a culinary school, and if so what the potential was for generating an additional income stream by offering guests premium packages at a high end culinary school. The NCTA agreed to work in partnership with the hotel and find an expert to research the project and scope out its potential. 1
Case Study : Entering new markets
The Action The NCTA recommended and sourced a senior Hospitality Lecturer from Bournemouth University as a consultant. The consultant made it clear from the outset that the research would produce an independent view and would state clearly if the project was not viable. The hotel was offered research in two phases; the NCTA would fund the exploratory first phase, the hotel then had the option to instruct further research at their cost if required. The consultant undertook a SWOT analysis to ascertain current trends, barriers and regulations for such schools.
Results The report concluded that there was potential for success particularly as there are gaps in Dorset for this type of product, but the school would need an additional hook to reach the high end market. A more detailed business plan was needed to allow the researcher to identify specific market segments and assess the projects’ true viability. Summary findings included: Existing cookery school providers use a number of different methods to make themselves unique, including awards schemes, affiliations with special interest food associations and links with chef personalities and celebrities. The market provides scope for investment and potential commercial exploitation, but is also very flexible and may not offer consistency. The market is largely unregulated and at the affordable end is relatively easy to enter. Investment in high end facilities and attracting a personality are the main barriers to accessing the premium end. 2
Case Study : Entering new markets
Conclusion
Phase 1 of the research found that culinary school diversification was a viable option for the hotel, but not in its proposed form. The report posed many new questions that had not been considered and the level of detail within the University’s research was thought to be extremely beneficial. The on-going discussions centred on either refurbishing the original proposed building (not recommended by the research) at a cost of £1m; or building a new purpose-built school that would meet the report’s recommendations, at a cost of £5m. These two routes were fed back for further discussion, and to shape the nature of the Phase 2 research. The research generated a large number of questions that had not been fully considered, not least the return on investment for the new venture. Ultimately a change of ownership of the proposed building during the life of the project led to new plans for the existing space, and the Phase 2 research was not undertaken. The hotel felt that using an independent expert consultant had provided a credible, academic focus to its business plans. A key finding of this project is the need to introduce academic thinking into a commercial environment. The research allowed the hotel to evaluate logically its proposition, the University added significant weight and credibility, simplifying and speeding up the decision-making process. In addition, the research offers a useful insight for any business considering diversification into the culinary school market, highlighting the key considerations and barriers that need to be addressed to secure the viability of such an investment. To read the full report contact: Jacky Thorne jacky.thorne@coastaltourismacademy.co.uk 01202 962 072
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