Trisha Mae M.

Magante BSHM-2E October 14, 2022

PESTEL ANALYSIS OF SHANGRI-LA HOTELS AND RESORTS

Shangri-La Hotels and Resorts are five-star luxury hotels located in the most prestigious
cities around the world. It began in 1971 and was founded in Singapore. Shangri-La’s
hospitality is described as “treating a stranger as one of our own”. However, due to the
emergence of COVID-19 that resulted in lockdowns, the hospitality industry is one of the most
affected, and the opportunity to have a luxurious experience in Shangri-La became difficult.
Below are the different factors that affect Shangri-La in the present.

 Political Factors that affect Shangri-La

Last 2019, The Easter Terrorism Attack that killed more than 250 people happened in
Shangri-La Hotel Colombo. The reason for the closing of the business for seven weeks includes
the extensive damage in their high-end facility. The event caused a great loss to Shangri-La
Hotel but due to their sympathies and continued support to the victims who lost their loved
ones and who suffered injuries, the company eventually got the chance to operate their
business again. If the company didn’t do anything to compensate the victims or carry the heavy
burden, they will not get the full support of the local authorities and community. We cannot
predict what will happen in our business especially if it is a human-caused disaster. So Shangri-
La hotel should be careful at all times and should provide a backup solution for the worst-case
scenarios.

 Economic Factors that affect Shangri-La

Since Shangri-La Hotels and Resorts belong to the tourism and hospitality industry which
is one of the most affected by the pandemic, different operating details of the business have
been greatly affected negatively. Shangri-La Hotels and Resorts released a report of net loss of
US$460.2 million for the year 2020. In March 2020, the occupancy rate in the hotel dropped to
below 30 percent. This is due to the economic recession where business sees lower consumer
spending because of COVID- 19 restrictions and decreased sales for the business. This
economic decline not only results in a decrease in revenue but increases the unemployment
that directly and indirectly works for ShangriLa. Revenue from investment properties, on the
other hand, remained resilient and provided ShangriLa with a more consistent source of
income. Because there were fewer residential units to be handed over, revenue from property
development for sale decreased. This gives hope to the company that in no time, they will
slowly bounce back from the big loss they acquired in the economic recession.
 Social Factors that affect Shangri-La
As we all know, the world's population is continuing to increase and people's life spans
are longer than in the past, all because of the medical technology that we have right now.
Customers who consume their products and services have a higher expectation of better
quality such as for living and traveling. People are now more expecting to consume products
and services that could give them a good experience both on traveling and accommodation.
The changes in customers’ expectations and demand continue to grow and Shangri-La are now
adopting and developing a new different experience for their guests. Shangri-La hotels
addressing this issue and still continuously improving their products and services are the
reason why their companies are still growing to this day.

 Technological Factors that affect Shangri-La

Because of the technology, they can easily access their clients through their websites,
They can also identify what the customers prefer by the enhancement of the guest experience
with the eservices utilizing the WeChat Platform. Shangri-La wishes to improve consumer
convenience and overall stay experience through social media engagement on WeChat, a
Chinese multi-purpose chat, social networking, and mobile payment. Shangri-La Hotel's goal is
to provide visitors with a consistent digital experience from search to booking to
check-in/check-out to payment. Although WeChat enables Shangri-La e-direct channel, hotel
management may access a wide variety of platform resources and connect with a larger
network of WeChat users in China and across the world.

 Environmental Factors affecting Shangri-La

Hotel Shangri-La must reduce its environmental impact by ensuring that its day-to-day
operations promote and implement responsible environmental practices, as well as constantly
strive to improve and optimize its energy efficiency, and water use, properly manage the
company’s overall carbon footprint and waste, and restore natural habitats. Reducing the
temperature at which laundry is washed has a significant impact on energy consumption. Their
low-temperature laundry program was implemented in 58 hotel laundry rooms in 2017. In the
same year, six hotels in Mainland China participated in regional carbon emission trading
scheme trial projects. Therefore, Shangri-La must constantly analyze and adjust the
environment in which it operates to maintain a competitive advantage in the market.
 Legal Factors that affect Shangri-La
Shangri-La hotel has been involved in many controversies that concern legal action.
Although they have been facing such difficulties in their company, they are still able to surpass
all of it. Just like what happened in 2009 when Shangri-La hotel was sued by an American
millionaire Bass Anne Hendricks for the loss of her diamond ring during her stay in the hotel.
With the help of the authorities and the hotel's security team who fully cooperated with the
police investigation, they found out that all the accusations were false. Due to this, Shangri-La
hotel reinforced a staff awareness programme that indicates all staff is part of the security and
they are responsible for looking after their guests’ safety and security. Shangri-La hotels could
face heavy criticism from the people and their customers if they were proven guilty of all the
accusations. Especially that safety and security are the company's top priority for their guests.
If the Shangri-La hotel's company didn't handle this situation very well it could cause a crisis to
their company. Thus, Shangri-La hotels should tighten their safety and security inside or
outside their hotel premises.

SWOT ANALYSIS OF SHANGRI-LA HOTELS AND RESORTS

STRENGTH WEAKNESS
 Represents Asian culture.  Its fame and brand awareness is restricted
 Asia’s leading luxury hotel group. to Asia.
 70+ hotels under 4 brands across the  Limited focus on business travellers.
globe.
 The Business hotels are known to be the
best in their category.
 Good reputation and customer loyalty.
 Aspirational brand.

OPPORTUNITY THREATS
 Other international brands are building  Asia is shifting to the mid-market segment.
mid-market hotels in this region. Shangri-
La due to its history in this region is the
most reputed luxury hotel brand.
 Tourism is a growing industry globally,
entry into new markets seems like the
next step for them.
 CONCLUSION AND RECOMMENDATIONS

Conducting the PESTEL Analysis of Shangri-La Hotels and Resorts made us realize that it
deserves its recognition in Asia as well as from other parts of the world. All the external factors
they face were all solved smoothly. With that, we believe that with consistent hard work and
dedication, Shangri-La will continue to grow no matter what aspects come through. Now
Shangri-La Hotels And Resorts Achieving Service Leadership has kept the consumers’ demands
and requirements and supplied healthier alternatives to their consumers. Shangri-La Hotels
And Resorts Achieving Service Leadership is a worldwide company which is broadened its high
numbers of strengths. Due to the strong brand name equity, the Shangri-La Hotels And Resorts
Achieving Service Leadership has built-in previous years of offering quality products and
amazing services and is constantly pressing the business to stay strong and hold a good
position and track record in the market.