1.

 INTRODUCTION Strategy is a vital part for the success of a business. A company uses
strategy in order to achieve higher financial results, to enhance it’s competitive position and
to secure it’s competitive advantage against industry rivals. This paper will aim to analyze the
strategy of Shangri-La Hotels, an international deluxe hotel group, which has rapidly
expanded during the last decade with the use of a standard service model depended on the
accustomed Asian hospitality. COMPANY PROFILE Shangri-La Hotels and Resorts was
established in 1971 in Singapore and it’s founder was the Malaysian-Chinese Robert Kuok.
The ownership remained in the hands of Kuok until 1995, which is when the company went
public in the Hong Kong and Singapore Stock Exchange market. Nowadays, a small part of
Shangri-La resides in the Kuok’s business empire. Shangri-La group has it’s headquarters in
Hong-Kong and from there, 72 hotels are located throughout Middle East, and Asia Pacific,
with the size of room inventory exceeding 30,000. In order to be able to manage the
business, Shangri-La has divided it’s organizational design into five levels. (Thompson, pg.
C-288)
2. 5. 2 Each level has different tasks to perform, as well as a dollar amount to spend.
(Thompson, pg. C-296) The key executives that are responsible for the whole operation are
depicted in the table below and can also be found in the main site of the company. First
Level Divisional Managers Second Level Departmental Managers Third Level Sectional
Managers Fourth Level Front-Line Supervisors Fifth Level Front-Line Employees SHANGRI-
LA ORGANIZATIONAL STRUCTURE Mr. Rao, Madhu Vice Chairman Mr. Dogan, Greg
President and Chief Executive Officer Mr. Cottan, Michael Executive Vice President Mr.
DeCocinis, Mark Executive Vice President Mr. Sekercioglu, Cetin Executive Vice President
Mr. Paw, Chuen Kee Executive Vice President Mr. Rao, Anand Chief Information Officer Mr.
Zhu, Kent Group Director of Sales and Marketing Mr. McFadden, Lawrence Group Director
of Food and Beverage Ms. Cheah, Caroline Group Director of Rooms Mr. Lee, Harold Group
Director of Engineering Ms. Perkins, Shelley Group Director of Human Resources Mr. Chu,
Nelson Group Director of Planning & Design SHANGRI-LA KEYEXECUTIVES
3. 6. 3 COMPANY DIRECTION Shangri-La’s Vision and Mission The vision of Shangri-La is to
be ‘’the first choice for customers, employees, shareholders and business partners’’.
(Thompson, pg. C-296) In order to achieve this vision, Shangri-La aims to make every
customer have a remarkable experience by providing the highest standard value services.
The mission of Shangri-La is to have ‘’delighting customers each and every time’’.
(Thompson, pg. C-296) With a distinct and prudent vision and mission, the company is one
of the most reputable companies in Asia. Shangri-La’s Values The values of Shangri-La are
the following: Ensure leadership drives for results Make guest loyalty a key driver of our
business Enable decision-making at the guest contact point Be committed to the financial
success of our own unit and of our company Create an environment where our colleagues
may achieve their personal and career goals Demonstrate honesty, care and integrity in all
our relationships Ensure our policies and processes are guest and colleague-friendly
Remain deeply committed to our social responsibility by making a positive contribution to our
communities, environment, colleagues, guests and business partners (Thompson, pg. C-
296)
4. 7. 4 Shangri-La’s Major Goals From the establishment of Shangri-La Hotels, the organization
has achieved a plethora of major goals. Some of them are: 1970s  In 1979, in order to
handle three properties (Shangri-La's Rasa Sayang Resort and Spa, Penang- the Golden
Sands Resort, Penang, Malaysia- and The Fijian Yanuca Island, Fiji), Kuok Hotels is formed.
1980s  In 1982, Shangri-La International Hotel Management Ltd. is established.  In 1989
the First Traders hotel starts in Beijing. 1990s  In 1991 Shangri-La International Hotel
Management Ltd. acquires administration of all ownerships.  In 1993 Shangri-La Asia
Limited becomes a publicly traded and owned group.  In 1997 Shangri-La Asia Limited
purchases Shangri-La International Hotel Management Ltd. 2000s  In 2004 near Beijing,
 Shangri-La Academy commences.  In 2005 the First CHI called “The Spa”, opens in
Bangkok.
5. 8. 5 EXTERNAL ANALYSIS Macro environment-PEST Analysis In order to maintain the
competitive advantage, a company must constantly examine it’s macro environment and
adjust to it. PEST analysis can provide the necessary information for a company to adjust it’s
operations and achieve sustainability of competitive advantage. Subsequently there is a
small PEST analysis of Shangri-La Hotels for China along with an evaluation of other factors
of macro environment. Political-Legal Environment Each government applies different
political policies and procedures as well as different regulations and laws, in order to manage
their state (labor laws, tax policy, a strong court system etc.). Whether they belong in the
hospitality industry or in the food industry, companies have the responsibility either to comply
with or adapt to these policies and regulations in order to have healthy and stable operations
in the country. For example, in Europe, according to company law of European Commission,
the companies of Member States should provide equal rights and protection to all of their
shareholders. (European Commission-Company law, 2012) Economic Environment General
economic factors affect industries and companies at a local, national or international level.
Some of the important factors are: unemployment rates, economic growth, exchange rates,
inflation rates and compensation. There is an impending economic crisis estimated to start at
6. 9. 6 2008, which will influence all industries. In hotel industry, the average hotel room price is
calculated to drop at 14%. According to studies, room cost will be 13% less in Europe, 14%
less in the U.S., 16% less in Asia and 21% less in Latin America. (Qfinance, 2009) Socio-
Cultural Environment Socio-cultural factors include social values, attitudes and lifestyles that
vary from country to country, change over time and have an impact in industries. For
example in hospitality industry, hotels must respect their employees’ different religions
(Christianity, Islam, Judaism etc.). Technological Environment Since industrial revolution,
technology is playing an important role to all industries. Technological innovations are
introduced almost e. This fact puts a lot of pressure in companies, especially those of hotel
industry, since they want to have state-of-the-art facilities in order to satisfy their clients’
desires. Some major technological changes in hotels, over the last years, are free 14% 13%
14% 16% 21% Projected Room Prices for 2008 Average Global Price Europe U.S. Asia Latin
America
7. 10. 7 wireless internet access, electronic room locks, online booking and advanced security
systems. (Hospitality Risk Solutions, 2012) Other factors Environmental factors
Environmental and ecological factors can affect industries directly or indirectly. In hospitality
industry (especially for hotels), there are several environmental issues that must be attended
when a company decides to build new facilities or change the existing structures. Some of
the major matters are: water shortages, following the LEED (Leadership in Environment and
Energy Design) standards and other environmental protection laws, as well as paying
attention in climate change and energy costs. Demographic factors Demographic factors
(size, growth rate and age distribution of population) can create large implications to
industries. In hotel industry, the size of the population plays a major part in strategic
decisions. It’s not a coincidence that Hilton Hotels declared an expansion of 100 hotels in
China by 2014, since China is the world’s most populous country (19.11% of world
population). (Bloomberg, 2011) Industry Environment Porter’s Five Forces Analysis One of
the leading and extensively used tools for diagnosing the competitive conditions in a
company’s industry is the five-forces model by Michael E. Porter. (Thompson, pg.102)
Shangri-La can include Porter’s
8. 11. 8 five-forces model in their strategy in order to keep their competitive advantage in hotel
industry. A general diagram of the model is presented below: Source: Note desk,
http://notesdesk.com/notes/strategy/porters-five-forces-model-porters-model/ (accessed
November 2, 2012) Threat of Industry’s Rivals Companies that belong in hospitality industry
operate and compete in a worldwide range. Thus, the existing rivals can be domestic or
international. Three main competitors of Shangri-La Hotels and Resorts can be considered
 to be the InterContinental Hotel Group (IHG), Marriott Chain and Hilton Hotels & Resorts. On
one hand, we have IHG, which is the most aspiring player in the Chinese market and Marriott
chain with strong brands like Ritz-Carlton, Renaissance Hotels and other. On the other hand,
we have Hilton Hotels & Resorts, which has one of the most recognized standings in hotel
industry and offers high quality services.
9. 12. 9 Product diversity is considered low in hotel industry, since everyone is capable of
offering the same quality. To sum up, the threat of existing rivals is considered high in hotel
industry. Threat of New Entrants In 2006, China had become the fourth largest economy in
the world, as well as one of the most attractive destinations. As a consequence, major
opportunities for hotel development were introduced and with Beijing as Olympics’ host for
2008, first-class hotels started to arise all over Shanghai, Beijing and other Chinese cities.
Even though the threat of new entrants is high, it is nothing Shangri-La can’t manage, as we
will see later. Threat of Substitute Products Substitute products have the power to affect an
industry’s attractiveness. Since hotel industry is one of the most expanding industries in the
world, customers have a variety of alternative choices when it comes to resorts. Whether the
hotel brands are national or international, customers can choose based on their needs and
demands. Power of Buyer Customer is an important factor for every industry. In hotel
industry, the buyer plays a predominant role, since he makes the decision of where to go.
The usual demand in the industry is more quality of service at minor cost. Companies can
either adjust their strategies to fulfill customer’s expectations or try to influence their
decisions. All in all, buyer power is obviously high for companies in hotel industry.
10. 13. 10 Power of Supplier Supplier power is considered to be low in hotel industry, since
companies have plenty of alternatives when it comes to stock their provisions. The most
desirable approach, for a company that wants to make profit, is to seek supply at a low price
and convert it to high-value service. Even though the power of supplier is considered low in
hotel industry, it still remains an important factor to which companies should pay attention.
Driving Forces Shangri-La’s changes within the industry are impacted by:  Growth
opportunities into new markets (globalization)  Essential information to satisfy the
demanding customer  Technological incorporation to enhance operational efficiency Key
Success Factors According to Catherine Capozzi, some key success factors for succeeding
in hotel industry are considered to be:  Provision of high customer service with a
knowledgeable and capable staff, as well as high quality service in order to achieve
customer loyalty  Successful advertising of offerings and packages in order to target
specific groups of customers  Having an effective cost-control system so as to manage the
price rates according to high and low seasons
11. 14. 11  Trying to achieve product differentiation by offering customers a unique experience
than any other hotel company Strategic Group Map High Price- Quality Low Few localities
Geographic Coverage Many localities (Note: The size of the circles represents more or less
the companies’ amount of revenues compared to each other.) By observing the above
strategic group map, Hilton is currently offering the most expensive services than the other
three competitors in a wide geographic range. In addition, it is obvious that Hilton is ahead of
Shangri-La, though not by much. As depicted Shangri-La falls short only on the matter of
localities but in the Chinese market, where it mainly focuses is in the lead considering
geographic domain. Finally, IHG and Marriott Chain offer lower Hilton Hotels & Resorts
Shangri-La Asia Ltd. IHG Marriott Chain
12. 15. 12 quality services but also lower prices (hence more attractive to some specific
customer groups) than the other two competitors and by uniting several well- known brands
there is healthy competition considering geographic coverage. Competitor’s Next Moves
With the Olympics’ 2008 hosted in Beijing right around the corner, it’s no wonder what the
competitors’ next movements will be. Both domestic and overseas rivals may have already
created plans of a number of hotels, all over China. Since local hotels don’t have strong
brand names, they won’t be able to compete against hotels like Hilton, Marriott or IHG. Thus,
 another movement may very well be the formation of alliances between local hotels with the
international brands. INTERNAL ANALYSIS Company Strategy From the five generic
competitive strategies, Shangri-La is operating the focused differentiation strategy. This
approach allows a firm to concentrate “on a narrow buyer segment and outcompeting rivals
with a product offering that meets the specific tastes and requirements of niche members
better than the product offerings of rivals.” (Thompson, pg.184) By interpreting the above
theory at Shangri-La’s operations, we observe that the company focuses only on well-off
customers and tries to promote Asian culture at a higher quality level, than the local
competitors. The successful execution of focused differentiation strategy depends on having
a buyer segment that is searching for exceptional product elements as well as the
13. 16. 13 company’s capability to distinguish from rivals. By focusing on China, where the
market is on the rise (especially in shipping) and strengthening it’s brand name over the
years, Shangri-La has effectively implemented focused differentiation strategy. Furthermore,
the company’s competitive attack is to pursue continuous product improvement in order to
attract sales and market share from less innovative rivals. By exploiting it’s strong capital,
Shangri-La is continuously upgrading the facilities with the latest technological developments
so that it can maintain customer’s interest. To sum up, if the company succeeds in
maintaining these accomplishments, it may very well achieve sustainable competitive
advantage at least for a few years. Core and Distinctive Competence Successful strategies
require differentiation from competitors rather than following them. The final goal of creating
and executing strategies for a company is to reach sustainable competitive advantage. A
distinctive competitive advantage is when the products or services differentiate the firm from
it’s competitors. (Thompson, pg.81) The company has to shape its assets and capabilities
based on their significance and compare them with those of the competitors. This procedure
will qualify the firm to detect its advantages and disadvantages, which if manipulated wisely
they could gain sustainable competitive advantage. Based on the theoretical part, Shangri-
La has fostered several crucial and exceptional resources, as well as core and important
competencies. Shangri-La’s distinctive competitive advantage can be considered the
development of favorable reputation in the market (higher than it’s
14. 17. 14 competitors) and the formation of a system that focuses on boosting the company’s
human resources. In order to sustain competitiveness the company depends on cohesive
operations among it’s different operating sections and on higher self-confidence between the
employees, accomplished with training in the firm’s academy which results in an increased
job satisfaction of the employees. The core competency can be the enlargement of service
value to the customer and the employment of a target based approach to attain the goals.
Competitive Strength Assessment A company’s competitive strength results identify it’s
strengths and weaknesses compared to rivals and shows directly what kind of
offensive/defensive action should be implemented. As the above table illustrates, Shangri-La
is pretty much close to two main and well-known competitors. There is no company that can
be perfect in everything. In some areas Shangri-La excels over it’s rivals and in other is
inferior compared to them. Key Success Factors Importance Weight Strength Rating
Weigthed Score Strength Rating Weigthed Score Strength Rating Weigthed Score High
quality service 0,20 9 1,80 8 1,60 10 2,00 Capable staff 0,30 10 3,00 9 2,70 9 2,70
Successful advertising 0,05 5 0,25 6 0,30 10 0,50 Effective cost-control system 0,35 8 2,80 7
2,45 9 3,15 Product differentiation 0,10 8 0,80 3 0,30 5 0,50 Sum of importance weigths 1,00
Overall weighted competitive strength rating 8,65 7,35 8,85 Shangri-La Hotels and Resorts
IHG Hilton Hotels & Resorts COMPETITIVE STRENGTH ASSESSMENT (Rating scale: 1=
very weak; 10=very strong)
15. 18. 15 Value Chain Shangri-La’s primary activities in the value chain depend on human
resource management and firm infrastructure. More analytically:  The company hires and
trains qualified employees in order to cultivate local capable people into world-class
personnel. With its cultural training programs (see Appendix) Shangri-La confirms that each
employee in the world is skilled to deliver services “the Shangri-La Way” (Thompson, pg. C-
 298)  The reservation system of Shangri-La is always up-to-date in every hotel. In addition
the general managers are proficient in solving possible problems at different parts of the
operations. (Administrative, accounting, legal, etc.) At Shangri-La the employees seek to be
“natural hosts”, “making guests feel valued and special by being graceful, dependable,
enchanting and warm.” (Shangri-La.com, 2012)
16. 19. 16 Financial Analysis (Source of data: Thompson pg. C-292 accessed November 18,
2012) The above table represents Shangri-La’s total revenues, expenses and net income
from 2002 until 2006, as well as the changes in percentage. The Asian economic crisis in
1997-98 didn’t affect significantly the operations of Shangri-La. The reason was that the
company mainly focused on the Chinese market, where the crisis left it relatively intact.
Though the company experienced a decrease of 0.1% in revenues, it had an increase of
14.6% in it’s net income mainly because there was a greater decline in the company’s overall
expenses to the point of 18.7%. After that small recession the company recorded impressive
growth with revenues increased by 67% among 2002-2006, while the net income increased
by 56% on 2004 before stabilizing at 33% in 2005 and 2006. (For the analytical tables of
income statements and balance sheet of 2002-2006 see Appendix I) Year 2002 2003 2004
2005 2006 Revenues 600,50$ 540,40$ 725,50$ 842,00$ 1.002,90$ % change -0,10 34,25
16,06 19,11 Selling/general/administrative expenses 80,10$ 77,40$ 90,50$ 114,30$ 121,30$
% change -3,37 16,93 26,30 6,12 Operating expenses 477,80$ 404,40$ 582,80$ 653,60$
729,60$ % change -15,36 44,11 12,15 11,63 Net income 63,40$ 72,70$ 113,50$ 151,00$
202,20$ % change 14,67 56,12 33,04 33,91 Summary of Annual Income Statements, 2002-
2006 (in USD millions)
17. 20. 17 SWOT Analysis Strengths Weaknesses  Well-known established brand image and
company reputation.  Well defined and executed business strategy.  High revenue growth
over past few years + a strong capital.  High service standards.  Up-to-date luxurious
facilities.  Ignoring medium and low level customers.  Losing market share to rivals (out of
Asia).  Higher unit costs compared to rivals.  Losing well-trained staff. Opportunities
Threats  Entering European and North America’s market.  Exploiting the Olympics’ 2008
by increasing presence in China.  Enhance image and become a world-famous hotel
brand.  Fierce competition in the industry (especially now with the Olympics’).  Lots of
substitutes for customers to choose.  Increase in the cost of labor.  Travelling restrictions.
18. 21. 18 Strengths Shangri-La has a well-established brand image and a respectable
reputation in the market. In addition, the company’s business strategy increased sales and
profits beyond expectations, though the firm had already a strong capital. Moreover, Shangri-
La offers high service standards with advanced state-of-the-art accommodations.
Weaknesses By offering services at high prices, Shangri-La loses a great number of
customers, who cannot afford the services. Additionally, Shangri-La has a much higher unit
cost than other hotel companies in Asia. Furthermore, the company isn’t so renowned
outside Asia, hence losing it’s market share from the overseas rivals. Finally, the firm can
lose skillful employees that may very well go to the competitors, thus creating even more
complications. Opportunities Since Shangri-La has focuses mainly on Asia, an opportunity
can be the expansion to European and North America’s market. Adding to that the company
may very well increase it’s presence in Asia and China, and take advantage of the upcoming
Olympics’ in Beijing. To conclude with, the company can boost it’s worldwide reputation and
become a recognized hotel all around the world. Threats The fierce competition in hotel
industry is augmented in Asia with Olympics’ 2008 hosted in Beijing, which can be proved a
disastrous threat for
19. 22. 19 Shangri-La Hotels. In addition there are already plenty of substitutions of hotels and
resorts globally. Furthermore, the expansion to other continents will bring an increase in the
labor costs of the company, hence introducing the need for more profits. Finally, possible
restrictions in travelling may be a threat since some states (where Shangri-La operates) may
choose to close their borders. Front-Burner Issues and Corrective Actions Front-Burner
 Issues Although Shangri-La is one of the most successful companies in hotel industry, it still
has some front-burner issues that need immediate attention for the key executives correct
them or better yet transform them into strengths. More specifically, the three main issues that
need to be steered clear of by the executives, are the following:  The expansion in high
wage economies like North America and Europe.  The expansion in China, where front-line
employees aren’t so capable in decision-making.  New entrants in the Chinese market are
snatching Shangri-La’s employees and are offering high wages in a low-wage market. The
above front-burner issues are the most important because if Shangri-La pays attention to
them, it can eliminate some of the weaknesses
20. 23. 20 and neutralize or lessen the impact of threats. More analytically, since Shangri-La
wants to satisfy the increased demand of luxury hotels, it develops in other countries where
the operation and human resource expenses will be higher compared to what the company
is used to. Considering the expansion in China, general managers of Shangri-La have
discovered a lack of taking the right decision at the right time in the front-line staff. The
decision-making skill is of great importance and if it’s not improved, it will create
complications in the long run. Finally, Shangri-La has invested a lot in employee
development. Since this tactic has paid-off for Shangri-La, newcomers are trying to hire the
company’s skillful employees, so that they can have quick and successful results. Alternative
Courses of Action In order for Shangri-La Hotels to resolve the above matters, numerous
courses of action should be presented and separately examined for each front-burner issue
individually. Alternative courses of action for the problem of expanding in high wage
economies could be:  To expand in markets that lack luxury hotels.  To develop in
wealthy markets, where people can afford higher prices. To begin with, expanding in a new
market is difficult if there hasn’t been conducted any research. Nowadays, with the help of
the Internet it’s much easier to get informed about other markets and take advantage of
possible opportunities. One important factor for growing companies is the wages of the
21. 24. 21 country that they intend to establish. Wages of a few countries are presented in the
table below. One alternative action that the company can follow is to expand in markets,
where deluxe hotels are absent. This tactic will give Shangri-La the advantage of the first
mover. There are plenty geographic areas, which the company can explore and possibly
gain from. Another alternative action can be the development in affluent markets. There are
several countries, where high wages doesn’t matter simply because the country is at a
prosperous period. Moving further, alternative courses of action for decision-making issues
are:  The use of well-established training programs.  The enhancement of employee self-
assurance. Because the employees in China aren’t accustomed to make quick and accurate
choices, Shangri-La is facing a major problem since it is increasing
22. 25. 22 it’s presence in China and is in need of front-line employees. This may result in losing
the opportunity to gain and promote the company’s brand name early enough for the
Olympic Games. A course of action that can correct this issue is to use effective training
programs that will present short-term solutions considering the company’s staff, as well as
improving the skills of new employees in the long run. A second corrective action will be to
increase employees’ self-confidence. Giving them recognition for an accomplishment or
putting the general managers to guide and assist the front-line employees with a major
issue, are some ways to minimize stress. Moreover, they will feel confident and relieved
knowing that they can depend on someone if needed. The final front-burner issue that needs
corrective actions is the loss of well-trained employees from new competitors. Alternative
courses of action for this matter could be:  Making the employee feel more familiar with the
company.  Presenting opportunities with new career paths. First of all, retention is a big
problem for every company. Nowadays, it becomes harder and harder to find loyal
employees. Even more, some competitors are willing to do anything in order to find out the
secrets of other firms. This includes offering contracts to employees from other companies
just to learn their system (though this is a violation of company’s rights if there is evidence).
 Moreover, employees tend to leave because they feel that they don’t have a future in the
company.
23. 26. 23 Shangri-La can avoid the above complications simply by making it’s employees feel
more comfortable with the company. By accomplishing this, employees will find it difficult to
resign from the company and as an addition they will take pleasure working for the firm.
Another alternative course of action is to present new career paths by exploiting the first front
burner issue, the expansion in new markets. With this development employees will feel that
they have the opportunity to promote themselves in the company and as a result they will try
even harder in their everyday duties. DECISION CRITERIA In order to choose which
corrective action to follow there are some decision criteria that must be identified. Decision
criteria are very important to understand because it will determine what course of action is
best to implement. More analytically, the decision criteria for choosing the action to face the
issue of developing in high wage economies depend on:  Becoming first mover and
enhancing company’s position: By being the first company to develop deluxe hotels in a
foreign country, Shangri-La is guaranteed to succeed and gain revenues but more
importantly to enhance it’s brand name and position in the hotel industry.  Changing
mentality and operations: The development in wealthy markets can show Shangri-La a
different way to operate it’s
24. 27. 24 company as well as a new mentality, which may affect the company’s vision and
mission. Moving further, the decision criteria for dealing with the decision-making problem
depend on:  Easy implementation: The creation of successful training programs takes little
time and a minor portion of money, since Shangri-La has it’s own training academy, where
employees can learn how to develop their decision-making ability.  Boost employee morale
and minimization of stress: By giving recognition and guidance in difficult times to the front
line staff, general managers can achieve the improvement of the employees’ self- confidence
and the diminishment of stress. Finally, the decision criteria for facing the issue of employee
retention depend on:  Familiarization of employees: By making the employees feel more
familiar with the company; their self-confidence is increasing, hence making them more
skillful and loyal to the workplace.  Improve profitability: The creation of new jobs by
expanding in other countries may not increase employee adaptation that much but it will
bring more profit to Shangri-La compared to the previous mentioned action.
25. 28. 25 RECOMMENDATIONS Based on the recognition of the front-burner issues and the
evaluation of the corrective actions, as well as the discussion of the decision criteria for each
action, my opinion is that Shangri-La Hotels need to follow the tactics mentioned below in
order to diminish the front-burner issues with the minimum possible cost. Concerning the
issue of expanding in high wages countries, Shangri-La has to follow the first action plan that
is to develop in a country that is lacking luxury hotels. The exploration of these markets may
lead to great prospects for Shangri-La. This may result in a great advantage for the company
since it will be the first luxury hotel to establish in that market, hence furthering it’s brand
name. On the issue of decision-making, it is preferable for Shangri-La to implement the plan
of creating training programs in the academy. It needs only a portion of the capital to make
them and it will be easy to adjust in the academy’s schedule. Lastly, considering the matter
of employee retention, Shangri-La has to follow the first action plan that is to make it’s staff
more familiar with the company. The augmentation of employees’ adjustment to the
company will enhance their quality service and make them feel more comfortable and
satisfied with their job. As a result, since the staff-to-guest ratio is high at Shangri-La
customers will experience a combination of first-class hospitality with superior quality
services.
26. 29. 26 IMPLEMENTATION PLANS In order to implement the recommended plans, Shangri-
La must make careful strategic moves so that it may succeed. For the first action plan,
Shangri-La has to make an appropriate global research, which will present the geographic
regions that haven’t been exploited. After that the company should search for the country’s
 wage rates, as well as the travel rates and if they are satisfactory, Shangri-La should start
considering the expansion in that country. For the second action plan, the only thing that
general managers have to do is to present their training programs for decision-making to the
academy and discuss the time that they will take place. To conclude, for the third corrective
action, since Shangri-La operates different training programs in the Academy, it can
separate the newcomers into small groups. Through these groups the trainees will
collaborate with and trust each other on their everyday training, hence creating a familiar
environment. After they graduate from Shangri-La Academy, the top managers can assign
the employees of the same group into the same workplace, thus enhancing even more their
loyalty towards the company. CONCLUSION All in all, Shangri-La Hotels is one of the
leading and upward luxury companies in the Asia-Pacific region. With it’s sufficient capital,
state-of-the- art facilities and an advanced management system it won’t be long before it
becomes one of the most successful hotel companies in the world. Word Length: 4567
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30. 33. 30 APPENDIX I Analytical Annual Income Statements 2002-2006
31. 34. 31 Balance Sheet 2002-2006
32. 35. 32 APPENDIX II Hotel Industry Life Cycle Source: Journal of Retail and Leisure Property,
http://www.palgrave- journals.com/rlp/journal/v6/n1/full/5100049a.html, accessed November
17, 2012 As depicted in the above table, it takes roughly 1 to 3 years in order to develop a
hotel asset and a typical investor would keep it for about 25 years. The development risk
refers to the economic danger that an entrepreneurship is exposed upon entering the
market. Full service and luxury hotels are, by nature, complicated hotels to develop, when
compared to other hotel assets. Such properties require more time to develop, involve
complicated space planning and design, are high capital demanding and face high market
expectations in terms of the physical product offering. As far as the operating risk is
concerned, it’s the ability of the asset (and its management) to produce satisfactory levels of
cash flow in order to
33. 36. 33 generate a certain level of financial returns so that the investment is justifiable.
Owners are considerably exposed to the operating risk in hotel industry. Any fluctuation in
the operating performance of a hotel asset will have a substantial impact over the net
operating income available to its owner. A severe economic recession, for example, could
potentially force the business into bankruptcy and result in a lender’s intervening, hence
pulling the owner out of business. Noticeably, the uplift is equally positively rewarding. In
conclusion, the obsolescence/exit risk impacts the ability of the hotel owner to exit the
investment. Also, it is difficult to measure the future value of the hotel asset. Obsolescence is
generally classified into internal and external obsolescence. Internal obsolescence occurs
when a hotel doesn’t operate the way it did when it was initially launched. On the other hand,
external obsolescence is the cost in income and value resulting from external factors.
Various economic, demographic, environmental, political and socio-cultural factors may
impact the economic practicability of a hotel which may not be repairable.
34. 37. 34 APPENDIX III Occupancy and Rates Statistics
35. 38. 35
36. 39. 36 APPENDIX IV The Shangri-La Care Shangri-La Care is a culture training program
that was launched in 1996 to certify that every employee delivers service “the Shangri-La
Way”. As we can see from the above table, Shangri-La has launched four culture programs.
Care module 1 focused on the company’s five core values: respect, humility, courtesy,
helpfulness and sincerity. Care module 2 focused on retention and guest loyalty. Care
module 3 explains the importance of recovery when a mistake was made and it’s five steps:
listen, apologize, fix the problem, go the extra mile and follow up. Finally, care module 4
which addresses the need of employees to take responsibility for customer satisfaction.

https://www.marketing91.com/marketing-mix-of-shangri-la-hotels-and-resorts/

Shangri-la Hotels and Resorts have adopted several key marketing

strategies to increase its brand visibility in the market. It has launched a new
campaign In Our Nature, emphasizing the essence of its brand that hospitality
is from the heart. As it is associated with hospitality sector its ad campaign
has to earn kudos and accolades from the advertising world, hospitality sector
and consumer market. The ad was launched in several mediums like in-flight,
television, newspaper, magazines, billboards, and hoardings.
Shangri-la Hotels and Resorts have realized their responsibility towards
nature and have offered luxurious settings without compromising on natural
resources. The brand ensures its employees respect local traditions,
conserves biodiversity restores natural habitats and manages energy, water,
and waste. It works towards eco-friendly activities. Most of its hotels are
certified under ISO 14001environmental Management Systems.