“The Next Generation of Services in the Luxury Hospitality Business”
LXFM 730 - MARKETING STRATEGIES FOR LUXURY BRANDS AND EXPERIENCES Professor Alessandro Cannata TEAM MEMBERS: Smalika Verma | Wendy Catherine Bonilla 1
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TA B L E O F C O N T E N T S
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Executive Summary Introduction to the Project Company Overview Brands under the Shangri-La Group
Historical Review Time-line Company Foundation: Political, Economic, Social, Technological, Art and Literature
Current Status Mission Vision SWOT Analysis
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Brand Identity: Kapferer’s Prism
Brand Equity:
Keller’s Pyramid
Brand Strategy
Unique Revelation Belief System Brand Rituals Distinctive Lexicon
Market Analysis
Market Overview Market size Grow Potential/Opportunities Competitive Landscape Key Success Factors
Target Consumer
Demographics Lifestyle and Psychographics Behavioural information Customer Segmentation
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Products and Value Proposition Goals and Objectives
Strategy Overview Unique selling proposition (USP)
Luxury Ingredients
Product Price Placement Purpose People Promotion
CONCLUSION BIBLIOGRAPHY
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Executive Summary Shangri-La Group of Hotels and Resorts is a luxury hospitality group headquartered in Hong Kong. Founded by a Malaysian Chinese business magnate and investor, Robert Kuok Hock Nien, Shangri-La has become one of the leading luxury companies in the Asia-Pacific. Its traditional Asian themed hotels and resorts have embraced and encapsulated the exceptional services for the discerning customers since 1971.
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Shangri-La’s emphasis on providing an ephemeral value for their customers goes back to its mission: delighting their guests every time by creating engaging experiences straight from our heart. Or as they fondly recite, hospitality with a heart! This project incorporates an analysis of the luxury travel and hospitality sector that has led to insights into the megatrends that are on their way to infiltrate the luxury market. It has come to fore that as Shangri-La offers an authentic package to the traveler’s palate, the growing demand for ‘experience more’ can be taken a step further onto the global map.
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Introduction to the Project
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The project aims to identify the course of the luxury hospitality group in the next 10 years, i.e. 2028. Within the next decade, the luxury hospitality sector is projected to see an array of improvements and introductions in terms of the lifestyle of its customers and the industry as a whole as well. With this project, we are aiming to understand Shangri-La’ goals towards building brand equity while at the same time reinforcing its brand loyalty with the existing customers and extending brand associations with the potential ones.
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Company Overview Shangri-La group of Hotels and Resorts is one of the leading luxury hospitality brands from the Asia Pacific region. The brand has expanded massively since its inception in 1971 when the first Shangri-La hotel opened in Singapore. Ever since then, a new hotel has been opened in an exotic location nearly every quarter. Shangri-La has over 112 properties
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and a room inventory upwards of 50,000 worldwide with major concentration in China. Today, the Shangri-La group brand architecture encompasses one corporate brand and four sub-brands, each catering to different sets of target customers and at different price points.
Shangri-La Hotels: A luxurious sanctuary for the discerning traveler
Shangri-La Resorts: Renew, relax and immerse in nature’s splendor
The high-end hotel brand offers five-star luxury properties with premier city addresses across Asia Pacific, North America, the Middle East, and Europe. The experience from a Shangri-La Hotel is characterized by excellent service, beautiful architecture and design, and the finest dining experiences. For example, Shangri-La Hotel Singapore is set amidst 15 acres of lush greenery with a distinctive waterfall that makes it stand out amongst other properties in the city. It also houses some award-winning gourmet restaurants The Line and Shang Palace, and Singapore’s first CHI Spa.
The resorts target travelers and families by offering relaxing and engaging vacations in exotic destinations all around the world. It focuses on providing guests a vibrant cultural experience, recreational and rejuvenation activities amidst the natural splendor of a tranquil, tropical retreat and the finest culinary delights that please the most discerning palates. For example, Shangri-La Villingili Resort & Spa in Male, Maldives offer guests a custom-made dining experience at an outdoor location, including a lunch on a luxury yacht out at sea, or a romantic dinner in the jungle. 9
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Traders Hotels: Always ready for the Smart Traveler
Kerry Hotels: A new level of Inspirational Possibilities
Traders target the pragmatic business traveler with a vibrant yet professional setting. Located in the business hubs of each city, these focus on providing perceptive guests with smart functionality for work, rest and play. Guests enjoy a blend of thoughtful simplicity and the warmth and sincerity of Asian hospitality. For example, the Traders Hotel Abu Dhabi, located in the Qaryat Al Beri complex, offers business travelers facilities such as 24-hour IT butlers, foreign exchange counters, and ticketing and travel counters.
The five-star Kerry Hotels was first launched in Shanghai and Beijing in 2011. It targets the traveler who is looking for an inspirational, luxurious and lively experience. Each Kerry hotel is defined by a spirited style and a careful attentiveness that bestows a sense of individuality to all guests. It also stands out with its enthusiastic and intuitive service. For example, Kerry Hotel Hong Kong is situated at the heart of Hung Horn Bay, Kowloon’s vibrant waterfront. It prides itself on housing the largest hotel meeting, event and catering facilities in the city, having more than 60% of rooms with Victoria harbor views and offering seamless connection to the rest of Hong Kong.
Hotel Jen: The important things done well, leaving boring behind
Aberdeen Marina Club
Launched in 2014, Hotel Jen is a fast-growing vibrant midrange value hotel with a playful twist and friendly service in key locations across Asia. It focuses on offering unexpected, fun adventures, homegrown, spontaneous experiences, unpublished insights and unconventional perspectives to young urban adventurers, while delivering quality, comfort and value. For example, Hotel Jen Orchard Gateway in Singapore offers many intriguing experiences, including three stunning infinity rooftop pools overlooking the city skyline, indulgent massages in pool cabanas, and three sky gardens for pure rejuvenation.
Founded in 1984, the Aberdeen Marina Club is a unique private community where members and their families enjoy superb facilities, outstanding restaurants and an impeccable level of service. The club’s fully equipped marina provides professional services and facilities for yacht owners or anyone else wishing to take to open waters. It also operates seven restaurants and ten banqueting venues with a huge range of sporting and family oriented facilities, including an ice-skating rink, Adventure Zone and a Bowling Alley. 11
Xili Golf and Country Club
Consistently ranked as one of the best-maintained golf courses located in the scenic countryside of the Nam Shan area in Shenzhen, China, The Xili Golf and Country Club was founded in 1995. It incorporates elements of natural beauty, and offers a challenging and rewarding golf experience against a magnificent backdrop. The clubhouse is distinctly Southern Californian style terracotta architecture providing a warm ambience with facilities and service that are typically found only at the finest private clubs. Members have a special place to relax, dine and entertain their guests.
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Historical Review
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Timeline 1971
Shangri-La Hotel, Singapore opens under the management of Western Intl. Hotels
1982
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1989
Shangri-La International Hotel Management Ltd. is founded
First Traders hotels opens in Beijing
1993
1997
Shangri-La Asia Limited goes public
Golden Circle guest loyalty program is introduced
2003
2005
Shangri-La enters India with Shangri-La Eros Hotel, New Delhi
Shangri-La enters Australia with Shangri-La Hotel, Sydney Shangri-La enters the Middle East market with Shangri-La Hotel Dubai
2010
2009
Golden Circle Loyalty Program introduces Golden Circle Awards Shangri-La enters the European market with Shangri-La Hotel, Paris
Shangri-La enters North America with Shangri-La Hotel, Vancouver Shangri-la Hotel, Tokyo, opens the first Shangri-La Hotel in Japan
2012
2011
Traders Hotel, Brisbane opens Shangri-La assumes management in August.
Introduction of Kerry Hotels brand with the opening of Kerry Hotel Pudong, Shanghai
2014
2017
Shangri-La group partners with the Taj Group for Warmer Welcomes programme.
Re-branded Hotel Jen Brisbane in October
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Hong Kong in the 1970s: Hong Kong in the 1970s went through many changes that shaped its future, led for most of the decade by its longest-serving and reform-minded Governor, Murray MacLehose. Economically, it reinvented itself from a manufacturing base into a financial centre. Also, the market began leaning toward corporations and franchises. Politically, they started to talk again about the Second Convention of Perking in the early 70s. MacLehose was visiting Beijing to discuss about Hong Kong future with PRC leaders.
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P.E.S.T.A.L Political: MacLechose was the longest serving governor that improved public services, environment, housing, welfare, education and infrastructure of Hong Kong. He eliminated corruption in public bodies, police force, and business corporations which made Hong Kong one of the least corrupt cities during the 1990s. Economical: Increased of land prices and also the opening up of global trade with China. Factories were re-located to the mainland for a cheaper labour .Singapore and Taiwan were going through similar developments, the competitiveness of manufacturing similar products led to protectionism to shelter local companies, resulting less demand for Hong Kong goods.
Technological: Clothing industry expanded with higher technology and exported to other places such as Europe and North America. The Cross-Harbour Tunnel, the first underwater tunnel in Hong Kong, opened in 1972. For the first time in the region’s history, people could travel between Hong Kong and Kowloon without taking ferries. As a result, small electrical boats like sampans were gradually eliminated. Kai Tak Airport was expanded in the first half of the 1970s to handle Boeing 747s, despite of the limited land space and proximity to nearby hills. Art and Literature: Arts film played by Bruce Lee were sensational. Cornered for some times by Western and Mandarin films in 1971. Cantonese films were much revived a lot in the 70s, with the great success of The Private Eyes directed by Muchael Hui. Literature was introduced in the 70s by Ye Xi a writer that helped to the introduction of modern literary convention.
Social: The Hong Kong government started with 6 years of free compulsory education for school aged children and extended in nine years. MacLechose provided social welfare protection: Jobseekers’ Allowance, Elderly Allowance, Disability Allowance etc. Renovated the healthcare system and construction of Queen Elizabeth Hospital, Queen Mary Hospital, Princess Margaret Hospital and Prince of Wales Hospital. And Hong Kong adopted Chinese along with English as an official language. 17
Current Status Today, Hong Kong-based Shangri-La Hotels and Resorts is Asia Pacific’s leading luxury hotel group. They are also regarded as one of the world’s finest hotel ownership and management companies. They began trading on Hong Kong and Singapore Stock Exchange in 1993. Owning over 112 hotels and resorts throughout Asia Pacific, North America, the Middle East and Europe, the Shangri-La group has a room inventory of over 40,000. Shangri-La group are hotels, real estate, commodity trading, beverages, logistics, shipping, edible oil refining and plantations. They also have a membership and Loyalty Programme Golden Circle.
Along with Taj Hotels Palaces Resorts Safaris, Shangri-La introduced “Warmer Welcomes” in 64 destinations, 101 hotels. Mission Statement: Shangri-La’s mission is to delight their guests every time by creating engaging experiences straight from our heart.
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Vision Statement: Shangri-La’s vision is to be the first choice for guests, colleagues, shareholders and business partners. Being able to cater to their needs one after the other builds brand equity.
S
Well established leader in hospitality Fine tuned management
True to Asian culture approach
Employee oriented structure 89% localities
Overlook short-term financial implications for long-term gains
Pursuit of luxury status avoiding discounts on tariff
W Limited brand awareness in the Asian subcontinent
Major focus in business & leisure travelers
Do not appeal for younger generation who tend to focus on experience
Collaboration with social media influencers
Possible shrinkage of luxury hospitality market
Renovations to suit current trends profitability Olympics in Tokyo 2020
Economic downturn of executive travelling since meetings can now be done virtually
Act on harmonizing the touristic potential of exotic properties
Marking more spots on the map
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Growing competition from other hospitality groups such as: Hilton, Marriott, Mandarin.
Currency fluctuations and dynamic global interest rates
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Brand Identity KAPFERER’S PRISM
PHYSIQUE
Luxury Hospitality Authentic Asian Exotic Locations State-of-the-art suites and apartment
RELATIONSHIP
Loyalty & Respect Mutual Growth Pride without arrogance
REFLECTION
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HNWI Business Travelers Utopian style luxury Cultural Appreciation Rejuvenation
PERSONALITY Welcoming Unique Serene Immersive Functional
CULTURE
Ancient traditional style Modern approach Customer Satisfaction
SELF-PROJECTION Work-play balance Self-belongingness Peaceful
Brand Equity RESONANCE Loyalty - Asia Pacific Low resonance - West Belongingness Engagement via services
KELLER’S PYRAMID
JUDGEMENTS Luxurious Opulent Guest worthy Value for money PERFORMANCE Luxury amenities Personalized Services Anticipating needs
RESONANCE JUDGEMENTS PERFORMANCE
FEELINGS IMAGERY
FEELINGS Social Status Homely Humility Work-play balance IMAGERY Focus on traditions Immersive experience Suited to certain ages
SALIENCE SALIENCE Business Hotels Exotic Locations Leisure Travel Consistent Services
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Brand Strategy
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UNIQUE REVELATION
BELIEF SYSTEM
Hospitality with a Heart! - Shangri-La’s employees believe in offering the best of their services to their guests. The company’s management believes in treating their employees the way they expect their employees to treat their guests. It is an aesthetic flow of emotion.
People at Shangri-La believe in pride without arrogance. They take pride in their ability to provide the best-in-class services and experiences to their guests. They are aware that customer loyalty is a key driver of the brand. ShangriLa also believes in scope for personal growth and being able to provide it for themselves and their employees as well as their guests at every stage of brand building.
BRAND RITUAL
DISTINCTIVE LEXICON
Chi or qi, according to traditional Chinese philosophy, is a universal force that governs well being and personality. Shangri-La’s ritual of the Chi involves an immersive experience with the five elements of wood, metal, water, fire, earth. Ancient traditions of wholesome rejuvenation are carefully selected to provide a luxurious therapy for personal vitality.
The Shangri-La “S”: the company’s most distinctive lexicon is its logo. It represents Asian mountains with their reflections on a lake. It is a symbol of tranquillity and balance. The color used for the logo - pale yellow ochre is also distinctive to Shangri-La. All the hotels and resorts under this group are preceded by the prefix, Shangri-La.
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Market Analysis
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Market Overview Luxury hotels provide comfortable stay to tourist and travelers along with services such as spa, swimming pool and fitness center. Global travel industry gross bookings reached $1.6 trillion in 2017, making it one of the largest and fastest growing sectors in the world. Factoring in indirect economic contributions, travel and tourism now accounts for a staggering 10.2 percent of global GDP. The largest geographic markets by consumption in the hospitality sector are Asia and the Americas. Asia was the largest region in the hospitality market in 2016, accounting for nearly 38% market share. The Americas was the second largest region accounting for 37% market share.
According to a new report published by Allied Market Research titled “The Luxury Hotel Market� was valued at $15.5 billion in 2015 and is projected to reach $20.4 billion by 2022, growing at a compound annual growth rate of 4% from 2016 to 2022. The business hotels segment accounted for around 42% of the total market revenue in 2015. Business hotels segment is expected to rule the market throughout the analysis period owing to the huge consumer base, which includes business travelers, tour groups and small conference groups. 25
Market Size While strong post-recession gains appear to be cooling off, the hotel sector is projected to sustain strong 5% or 6% growth throughout 2018, setting up the industry to hit a record-breaking $170 billion in gross bookings. Some industry analysts, consider the prolonged strength of the hotel sector to be a cause for concern, because historically, hotel performance has proven to be cyclic, with long runs of growth often followed by intense downturns and the last down cycle was in 2010, particularly cycles generally occur every 10 years. However, despite pockets of uncertainty, those bullish on future hotel performance seem to outnumber industry detractors.
with a rise in private accommodation rentals, aiming to keep their properties full, must offer attractive rates. These local market conditions are weakening growth, and in order to cope with the oversupply issue, some hoteliers are resorting to cutbacks around service, maintenance, and even lobbying with city officials for property tax reform.
However, positive signals continue to be from the broader hotel industry, and local markets may continue to face significant hurdles in 2018. In New York and Chicago, for example, hotels are struggling to drive up room rates in a market flooded with new supply. In fact, since 2008, the number of hotels in New York City has grown 55% to 634 properties and 115,000 rooms. Those already competing
Global hotel industry retail value from 2010 to 2018 (in billion U.S. dollars) 26
Luxury travel rides the “experience more� trend
Global consumers are spending on all experiences, including luxury travels and spas, is set to rise to US$8 trillion by 2030. Additional US$ 2 trillion is the projected optimum expenditure on luxury travel. When it comes to the quality of these experiences, it is no longer just about the price. Nowadays, luxury brands are looking at the experience of time, space, authenticity, community and individuality. These are all changing the perception of what is now considered luxury. Even though consumers needs vary from person to person, and differences in culture and income among other things, there is a fundamental need for experience that brings happiness and wellbeing, products that speak to them specifically and a desire for authenticity.
World Consumer Expenditure on Experiences 2016/2030 Source: Euromonitor
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World travel figures boosts sales of luxury goods Travel and tourism keeps remaining on track, outperforming the global economy, with both arrivals and inbound receipts growing by 4% in 2017. By 2022, 1.6 billion arrivals are expected, with an average of USD1,028 spent per trip. Travelling continues to be a status symbol, especially among luxury consumers increasingly looking for experiences. During 2017 categories such as luxury leather goods, luxury timepieces and luxury portable consumer electronic posted the best performance amongst sales from wealthy tourists. However, luxury shopping continues to be a major driver for wealthy tourists, many key shopping destinations recorded poor tourism flows in 2017. This was mainly a result of fluctuating exchange rates, security issues and uncertainties facing the travel industry. Actually, this has had a negative impact on tourist shopping, especially in markets like the US and France
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Looking at the growing High Net Worth Individuals’ population from 2015 to the projection for 2030, it can be seen tht USA will see the maximum growth from 13 million HNWIs to 17.8 million HNWIs in 2030.
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Growth Potential and Opportunities Millennials consistently value experiences over material goods. As middle-class income brackets grow internationally, global travel is becoming accessible to millions more people and business. It’s already happening with tourism, and where there’s leisure travel According to a recent Hipmunk survey, 72% of millennials reported that they travelled more in 2016 than in years prior. Additionally, 55% of millennials say they extend business trips into a little extra leisure time. They’re also seeking career paths that make traveling more likely:
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38% of millennials travel for business, compared to just 23% and 8% for Gen Xers and boomers respectively. The relationship between leisure and business travel has never been closer. Millennials are going to seek a course of “instagrammable moments” but they will also seek more engagement from businesses. This means that businesses need to go farther than the experience. We also encourage “solo” travel. Guests are happy to travel on their own, experience wonderful food, settings and meaningful experiences - particularly women.
The market for luxury hotel has grown significantly in the past few years due to the rise in the number of business travelers globally. Change in customer preference and upgrading services provided by hoteliers further boost the demand for luxury stays.
The global luxury hotel market is driven by the rise in travel and tourism industry, increase in preference for leisure travel and improved standard of living. However, the premium rate charged by such hotels restrains market growth.
Competitive Landscape
Brand Recognition
Customer Experience
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Key Success Factors Key Success Factors (LUXURY HOSPITALITY) Locations Quality Services Uniqueness/Opulence Global Outlook Personalization Promotion
STRENGTHS
SHANGRI-LA
Strong presence in Asia, traditional style, experienced employees, emphasis on customer, loyal business clients & travelers, meaningful ads
MARRIOTT INTERNATIONAL
Global presence, multiple styles, high quality services, customer satisfaction
MANDARIN ORIENTAL
Presence in many countries, celebrity endorsements, high emphasis on customer delight
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COMPETITIVE ADVANTAGES SHANGRI-LA
Locations, quality services, personalization, uniqueness/opulence
MARRIOTT INTERNATIONAL Global outlook, locations, quality services, opulence, promotion
MANDARIN ORIENTAL
DIFFERENTIAL COMPETITIVE ADVANTAGES SHANGRI-LA Uniqueness Personalization
MARRIOTT INTERNATIONAL Global Outlook Promotion
Locations, opulence, quality services, promotion
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Future Trends Ethical Living: Responsible luxury consumption is gaining ground, especially among younger generations. Discerning consumers are seeking out responsibly sourced, manufactured and distributed personal accessories, and are increasingly demanding transparency and consistency in this regard. Experience More: 2017 brought further dramatic changes in the global consumer landscape, as consumers have reassessed their priorities and increasingly asked themselves what they truly value in luxury goods. Preferences are shifting from ownership and acquiring new things to having more meaningful experiences, and from high quantity to high quality and overall value.
Connected Consumers: As the world becomes hyper-connected, it is no surprise to see internet retailing as the fastest growing channel within luxury goods. Connectivity is further manifesting itself in the luxury goods space with several smart features, such as smart watches and homewares. Healthy Living: The health and wellness trend has infiltrated almost all industries, and personal accessories is no exception. As health and fitness become status symbols, consumers are increasingly seeking the latest sports-inspired fashion accessories.
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Target Customer
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Demographics PRIMARY Mid-life people, at over 40 years of age High spending power - $100,000+ Peak of their careers, received inheritances or made money on real estate Education: Well educated with/out Master’s Degree
SECONDARY Millennials, age 28+ Their work requires extensive global travel Corporate and/or freelance work Self-built business professionals Income: $70,000+ Education: Well educated College with Bachelor’s Degree *Both consumers are from Metropolitan/Cosmopolitan cities - tier 1 and tier 2.
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Lifestyle and Psycho-graphics Midlife people have less interest in “things�. Designer labels are not the turn-on like they were a few years ago. Seeking a better work-life balance, and are choosing to slow down, change direction or fulfil lifelong dreams. They have a healthier and active life, they are more committed to sports such as running, biking and triathlon. They enjoy exotic vacations, exploration and finding new experiences
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Millennials are into clubbing, cruises, exotic vacations, instagramming everything, exploration and finding new experiences. They are willing to pay more for products and services that come from companies committed to positive social and environmental impact. They have an intense emphasis on health and fitness in sense of gym, cross-fit, boxing, yoga and other new fitness classes.
Behavioral Information Mid-lifers have smart-phones by now and they have adopted tablets instead of traditional computing. They use apps such as Facebook, Instagram and Twitter. They are sophisticated and feel confident about themselves. They do not trust putting their credit card online and the rather to go to the store instead of shopping online. They like to keep business cards flyers or any other information about hotels, restaurants and locals.
Targeting Millennials and/or Gen Z’s, the power of the internet can be clearly noticed. Use of well known social media platforms like instagram, snapchat, facebook, twitter. They use apps to buy wearables and products. They look up everything on Google and reviews referring to restaurants for locals are very important in their decision whether going or not. They prefer everything to be paperless.
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Mid-Life Globetrotter Name: Leanor Sarmiento Age: 49 Cohort: Generation X Place of residence: Miami Own a business/ Real State Leisure: Travel, fitness, food Segmentation Highlights: Money Machine Financially Free Balanced time Luxury Explorer Superstar
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Millennial Traveler Name: Mariano di Vaio
Age: 28 Cohort: Generation Y Place of residence: Italy Corporate job Leisure: Traveling, shopping Segmentation Highlights: High Flyer Financially Independent Busy Bee Luxury Tourist Understated
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Product and Value Proposition Augmentation of the multi-sensorial and experiential aspects of Shangri-La Hotels & Resorts in the Occident.
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Goals and Objectives Shangri-La Hotels and Resorts has always aimed to achieve their unique Asian style hospitality while at the same time incorporating the exoticness of the location they are situated in. Bringing Shangri-La to New York is a great step towards maximization of the company’s brand equity, thereby reinforcing brand associations, enhancing brand loyalty, deepening brand density and increasing brand awareness:
Shangri-La’s step into the Occident has the following goals and objectives for the next decade: • Harmonizing the exotic potential of urban cities
• Augmenting intangible values of brand equity by maximizing brand awareness and loyalty
• Reinforcing brand associations with domestic as well as international travellers
• Ensuring direct bookings through Shangri-La’s website and mobile application
• Achieving a global outlook and simultaneously maintaining culture
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Strategy Overview
New York City is the most popular city destination for international travellers in the US. The city has so much to offer in terms of attractions, entertainment, shopping and dining, which makes it such a well-known leisure destination. New York City has attracted numerous luxury and boutique hotel developments over the historical period and the city will continue to see new luxury hotels open to accommodate the expected growing number of luxury travellers around the world. The increasing number of High Net Worth Individuals in the next decade and the demand for “experience more� has substantiated development in the Americas.
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Shangri-La Manhattan will be the first ever Shangri-La hotel in the US. After having ventured into North America via Vancouver and Toronto in Canada, the next decade will see openings of the Asian themed luxury hotels in metropolitan cities. The hotel is located in the very heart of Manhattan, on the Upper East Side. The hotel is a step further in enhancing the brand purpose such as uniqueness. With the growing demand for business hotels that offer leisure on the side, Shangri-la is the one of the best possible combinations to introduce in the city that never sleeps. The hotel will also welcome the urban population of New York City residents who are looking for exotic experiences.
Unique Selling Proposition
Shangri-La Manhattan offers a comprehensive package of a business hotel, coupled with recreational activities, health and wellness programs, experimental culinary delights and a few moments of solace in one of the world’s busiest cities.
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Luxury Ingredients
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There are six ingredients that can be used for brand building process in the luxury sector. They are Product, Price, Placement, Promotion, People and Purpose.
A holistic combination of the above leads to reinforcement of brand loyalties, enhancing brand associations, increasing brand awareness, and deepening brand density, thereby achieving goals toward building brand equity.
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Product Shangri-La Manhattan’s services as a luxury ingredient will be harmonious with the exoticness of NYC as a city, maximizing the brand’s awareness, reinforcing associations and increasing Shangri-La’s loyalty with its customers. Whenever a brand gains popularity and acceptance from its target customers in its core business, the next obvious step for the brand is to charter a new course by venturing into different product lines, segments, and markets. By leveraging its deep experience in the travel and hospitality industry and its winning formula in providing impeccable service and hospitality from the heart, Shangri-La will able to effectively offer unparalleled experiences to its club members. Shangri-La Manhattan has the potential to be the next success story of classic brand management: appealing to people through the entire brand experience and philosophy. Shangri-La Manhattan will offer an array of suites at differing price points and level of amenities. The suites will have large windows, ambient lighting, plush furnishings and bespoke artefacts. The bathrooms will feature a modern yet sophisticated look with organic products, toiletries and towels. The guests will be provided complementary Chi spa sessions and Tai-Chi classes. In the hospitality sector, the product/service is a medium towards fulfilling the brand’s purpose, i.e. Uniqueness. 48
Shangri-La Manhattan - Courtyard Suite
Shangri-La Manhattan - Skyline Suite
Product Highlights Shangri-La Manhattan’s suites will employ seamless digital accessibility in terms of suites access via mobile device and voice recognition inbuilt in the suite, powered by Amazon Alexa® that will assist guests in all ways such as calling for room service, ordering food, etc. Room service will be provided by service robots developed by Carnegie Mellon University’s Robotic Lab. Other services include care for pets and experimental culinary delights
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Price Shangri-La will use pricing as a luxury ingredient to determine its exclusivity to its customers. This approach to pricing will result in resonance with uniqueness, Shangri-La’s brand purpose along with maximizing the intangible values of brand awareness on an international level, resulting in customer’s associating the brand with one-of-a-kind place to be. While the suites follow dynamic pricing, other services will be available to non-guests at a fixed price. This resonates with the ability to provide extraordinary offering to NYC residents who may not stay at Shangri-La Manhattan, however will explore the benefits of the restaurant, bar, the salon-spa and pool, etc. This will also ensure they remember Shangri-La and the next time, they are on a vacation to an exotic location, for example Bali, they would want to stay at a Shangri-La. Shangri-La Manhattan is situated in the heart of New York city and surrounded by a multitude of competitive luxury hotels viz. Marriott, InterContinental, Mandarin Oriental, Mark, etc. The suites at Shangri-La Manhattan will be priced
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at the competitive level, with the strategy being that of ultra pricing. Room tariff inclusive of services such as Chi, complementary breakfast, happy hours, personalized insuite bar, etc. will be ranging between $750 to $1200 per night. Pricing is coherent with the projected increase of 17.8 million in number of High Net Worth Individuals by 2030 and their willingness to spend on experiences. With the growing popularity of crypto-currencies, Shangri-La Manhattan also offers the option of customers paying in Bitcoin and Litecoin. For Shangri-La Manhattan, pricing will be based on Kapferer’s Anti-Law number 12: luxury sets the price, not the other way around. This is conducive to following an ultra pricing model. It can also be seen as the Veblen effect where the suites at Shangri-La become more desirable when priced higher than presumed, which ideally is Kapferer’s Anti-Law number 11. This leads to building of brand equity through source of sublime and multi-sensorial experience.
Placement
Purpose
Placement is an integral part of Shangri-La in USA. While other high-end luxury hotels may be available on platforms such as Bookings.com or Expedia, in order to maintain exclusivity and uniqueness, customers will be encouraged to use ShangriLa Manhattan’s website to book a suite. This is in correlation with highly controlled availability that is essential to the brand’s equity. Because Shangri-La comes with an upper-crust reputation with presence in the Upper East Side neighbourhood of Manhattan in New York City, it is reinforcing brand associations with the city’s residents, international travellers and other potential customers who are looking for sophisticated, high-quality services.
Shangri-La Manhattan’s overarching idea is to bring Shangrila, the highest of utopian luxuries to one of the busiest cities in the US. The number of HNWI will increase multifold by 2030 making it a highly lucrative strategy to enhance the brand’s loyalty, increase awareness on an international front and reinforce associations with existing as well as potential customers. The purpose of ShangriLa as a company as well as individual hotels and resorts is to achieve uniqueness and keep the wheel rolling. A brand that chooses to horizontally extend its brand portfolio should focus on uniqueness rather than excellence, and that is the goal Shangri-La Manhattan and other potential hotels in the future aim to achieve. The ulterior goal is to provide a hedonistic ecperience to the guests.
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People For the luxury hospitality industry, people are one of the largest assets. Shangri-La is no different. The employees are treated the same way they are expected to treat the hotel guests. It is essential to consider the profound belief that Shangri-La has in terms of treating consumer as kin, not king. This implies that people inside the organization as well as outside are an important component of Shangri-La’s luxury mix. People outside the organization consists of residing guests, non-guests and luxury travel influencers. Shangri-La always get word of mouth publicity and promotion by luxury
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travel influencers such as Jack Morris and Lauren Bullen. They operate Instagram accounts by the name of @doyoutravel and @gypsealust respectively. For Shangri-La Hotels and Resorts, People is an important component of the luxury mix. People inside the organization help build the brand’s equity through maximization of awareness as well as developing associations with guests. People outside the company, through word of mouth and social media publicity, also contribute to Shangri-La’s awareness, enhance brand loyalty and reinforce associations in the minds of existing as well as future potential customers.
Promotion Considering the growing luxury market in the United States of America, Shangri-La Manhattan aims to reassure customers of its excellence, educate new and potential customers of the excellence and augment the intangible value, better known as brand equity. In the next decade, it has been observed that online bookings of hotel rooms is projected to grow strongly. Vacations are slowly become digitized and customers love having access with a single touch of their finger. Modern technology allows consumers to compare and book hotels more efficiently. In response to the growing digital-savvy consumers: the millennials who would be joining the mid-life cohort in the next 10 years, Shangri-La will be largely investing in and improving both online and mobile digital platforms, including mobile applications. It will adopt multiple methods to continue to attract direct bookings. These include improved online and mobile booking experiences as well as marketing and promotional efforts. In order to maintain the highest level of exclusivity, Shangri-La Manhattan’s suites can be booked only via the website and the mobile application. Customers can also book via direct call to the hotel. The approach behind maintaining the exclusivity is reassuring Shangri-La clients that the hotel sticks to the level of uniqueness it promises.
Shangri-La Manhattan’s website with the magnificent New York City skyline.
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Mobile App
In age of hyper technological involvement, it is imperative to allow mobile accessibility. Through the Shangri-La mobile application, the guests can view hotels, suite availability, amenities and pricing. They can also access their Golden Circle member account and track their points from previous stays and redeem them. The aim is to keep up with advancing technology while at the same time, enhancing the brand’s awareness and increasing Shangri-La’s associations with the tech-savvy customers.
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Condé Nast Traveler
Shangri-La Manhattan in collaboration with Shangri-La hotels in Dubai, Mumbai, Shanghai and Amsterdam are organizing the ShangriLa International Festival of Gastronomy in 2028. It will a five day event in the five cities in the last week of October. Shangri-La Manhattan’s event will be presided over by celebrity Chef Daniel Boulud. The event in Amsterdam will be presided over by celebrity Chef Heston Blumenthal. The event will be sponsored by Condé Nast Traveler. The event will be organized to increase awareness, reinforce brand associations and reinstate the brand’s purpose: uniqueness. 56
Molecular Gastronomy Shangri-La Manhattan will have its own restaurant based on Molecular Gastronomy. It is a sub-discipline of food science that seeks to investigate the physical and chemical transformations of ingredients that occur in cooking. Its program includes three areas, as cooking was recognized to have three components, which are social, artistic and technical. Molecular cuisine is a modern style of cooking, and takes advantage of many technical innovations from the scientific disciplines.
Heston Marc Blumenthal is a British celebrity chef. He invented recipes for triple-cooked chips and soft-centered Scotch eggs. He advocates scientific understanding in cooking, for which he has been awarded honorary degrees from Reading, Bristol and London universities and made a Fellow of the Royal Society of Chemistry. He is a pioneer of multisensory cooking, food pairing and flavor encapsulation. He has described his ideas in books, newspaper columns and a TV series. Chef Heston’s team will be designing, managing and operating the restaurant at Shangri-La Manhattan. This will be one of the most profound steps towards a high level of awareness in New York City and allow customers to relate to Shangri-La on a hedonistic level for the unique culinary experience. 57
Advertisement Promotion will also be done at public places which are relevant to travellers. The airports in New York City both domestic as well as international will have subtle advisements.
Promotion at the airport is planned near the Baggage Claim area in order to be in the line of sight of tourists and travellers who are still thinking of booking a place or have booked somewhere else but may reconsider. Advertisements will be about the extravagant services available at ShangriLa Manhattan such as the indigenous Chi spa. This is create awareness as well as develop new associations with the brand.
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Conclusion Shangri-La Hotels and Resorts have established themselves in the global luxury hospitality industry since 1971 and have been amongst the top players with its unique characteristics encapsulated by Asian hospitality. The hotels offer accommodations for business and leisure travellers. They are committed to providing guests with unique services that gives them a competitive advantage over their competitors.
Continuing with the distinctive services, comfort and style, Shangri-La Hotels have been successfully entering new locations every year, and the next step will be venturing in the United States of America. Bringing the paradise to New York, a Shangri-La hotel in the heart of Manhattan’s most elegant neighbourhood, Upper East Side, a block away from Central Park and in the proximity of luxury boutiques like Cartier, Gucci, Hermes, Prada, Chanel, and so on. The luxury suites will have a breathtaking view of the City skyline and Central Park. With the introduction of Shangri-La Manhattan, the company is also bringing back the International Festival of Gastronomy,
presided over by Michelin-starred Chefs, who with their remarkable talents and techniques, will elevate the guests’ dining experience through culinary artistry and excellence. The event will be sponsored by Condé Nast Traveler and will be held in 5 cities around the world, viz. New York, Amsterdam, Mumbai, Shanghai and Dubai. These 5 cities will be the newest additions to Shangri-La’s international luxury portfolio. Shangri-La Hotels and Resorts entering in the United States, will allow the brand to compete with existing luxury hotels, highlighting their uniqueness and Asian standards of hospitality, expanding the brand’s global portfolio and continuing to meet and exceed customers’ needs. This American venture will result in maximizing Shangri-La’s awareness and loyalty amongst the existing as well as upcoming customers. It will also bring in harmonious associations within the luxury hospitality industry and allow the brand to access its untapped potential in order to remain conducive to its purpose of uniqueness.
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LXFM 730 - MARKETING STRATEGIES FOR LUXURY BRANDS AND EXPERIENCES Professor Alessandro Cannata TEAM MEMBERS: Smalika Verma | Wendy Catherine Bonilla
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