Dusit International

Assignment I
ICTM 401 Strategic Management for Travel Industry
AV_MUIC

Amica Rangnoktai ID- 5080579

Sumandeep ThakralID- 5180657

Naval ThakralID- 5180658

Vethida Sithichaiudom ID-

5180832 Shivanshai Sethichaiyen ID-

5280510
Introduction

According to Professor Les Worrall, Wolverhampton Business School, strategic

analysis is “a theoretically informed understanding of the environment in which an
organisation is operating, together with an understanding of the organisation’s interaction with
its environment in order to improve organisational efficiency and effectiveness by increasing
the organisation’s capacity to deploy and redeploy its resources intelligently”

Our group agree to conduct a report of Dusit International which today has over 22
hotel properties located in Thailand and overseas with plans to open more in the future. Dusit
Thani International is one of the first five star Thai hotel groups with more than 60 years
experiences.In this report, we provide Dusit’s background information, Dusit’s brand,
financial performance and analysing Dusit Hotel in external and internal environment which
consist of the following:

 External environment
 General environment
 Industry environment
 Competitor environment
 Internal environment
 Resources
 Capabilities
 Core competencies
 Competitive Advantage
 Value chain analysis
 Outsourcing

Information and in-depth analysis will be provided below.

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Table of Contents

Introduction................................................................................................................................2
Table of Contents .......................................................................................................................3
Dusit’s Background ...................................................................................................................4
Dusit’s core values .....................................................................................................................5
Commitment ..............................................................................................................................6
Vision & Mission.......................................................................................................................7
Dusit’s Brand .............................................................................................................................8
Financial Performance .............................................................................................................13
Financial Position of the Company..........................................................................................14
History......................................................................................................................................17
Loyalty program.......................................................................................................................20
General Environment ...............................................................................................................24
External Environment Analysis ...............................................................................................56
1. Threats of new entrants to an industry..........................................................................61
Barriers to entry are, therefore, very important in determining the threat of new
entrants. An industry can have one or more barriers. The following are common examples
of successful barriers: ..........................................................................................................61
Industry Environment Analysis ...............................................................................................69
Competitors Environment........................................................................................................78
Resources .................................................................................................................................91
Capabilities ..............................................................................................................................99
Competitive Advantage .........................................................................................................108
Value Chain Analysis ............................................................................................................110
Outsourcing............................................................................................................................120
Company Analysis .................................................................................................................122
Are vision and missions clear and measurable? ....................................................................125
Recommendation ...............................................................................................................127
Conclusion .............................................................................................................................128
References..............................................................................................................................130

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Dusit’s Background

Dusit Thani was ranked number three among the top hotels in Thailand and number
15 among the top hotels in Asia. Dusit Thani International is one of the first five star Thai
hotel groups with more than 60 years experiences. Dusit Thani is located in one of Bangkok's
prime business, financial and entertainment center. The hotel was established by
ThanpuyingChanutPiyaoui in 1949. At first, she opened her first hotel that was named
‘Princess’ on Bangkok’s new road. Then during February 1970, she invests in a luxurious
city-center property named Dusit Thani meaning ‘Town in Heaven’. In addition, the company
tried to enriches customer’s unique experience by creating Thai culture and tradition. The
hospitality flow with Thai culture and culture was important in terms of creating brand and
the brand was expanded in strong growth. Dusit Thani tries to ensure that all needs and wants
of its guests would be fulfilled (Dusit Thani Bangkok, 2010). Moreover, Thai hospitality
together with a consistent quality of service and product while maximizing revenue and profit
for the company. It also strives to be internally known as one of the world’s best hotels. Dusit
Thani was able to achieve high popularity as it sets new standards for Bangkok’s hotel
industry. Furthermore, Dusit International comprises of five hotel brands: Dusit Thani Hotels
& Resorts, Dusit’s second generation dusitD2 hotels & resorts, Dusit Devarana hotels &
resorts, Dusit Princess Hotel & Resorts and Dusit Residence Serviced Apartment (Dusit
International, n.d.).

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Dusit’s core values

Expressing Dusit’s personality, identity and founding attributes and valid for all
brands, businesses, people, countries and cultures, our values are the benchmarks that define
our everyday actions and relations.it is our duty to understand and embrace them, transmit
them to our teams and above all to ensure that they are respected by everyone. Therefore, we
must set an example by bringing these values to life and endowing them with all their
strength. Dusit Thani four core values of Oon Nom (to be Modest), Jing Jai (Sincere), Sai Jai
(to Care) and KhaoRop (Respect) have been shared and expressed everyday by its employees
in Dusit brand hotels worldwide. Managers leverage these values to provide support for team
members as part of the Group’s on-going transformation and development. To illustrate, Dusit
Thani Dubai launched the ultimate Facebook competition to celebrate its Thai culture. They
will be show casting the very best in Thai Hospitality, taking lucky winners on a journey
through the Thai arts, foods and luxuries. Each competition, running every four weeks,
centres around the hotel’s four core beliefs that is to be modest, to be sincere, to care, and to
respect. Moreover, the first competition that is Oon Nom (to be Modest), launch on Monday
May 21st, and sees the winning couple sharing the ultimate brunch experience with friends.
Both couples will be picked up in one of the hotel’s luxury cars then they will be checked into
their individual Junior Suites while enjoying the hotels famous brunch combining the very
best of the hotel’s culinary delights and they can access to the hotels leisure facilities and a
late check-out (Dusit Thani Dubai, 2010).

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Commitment

Dusit International has adopted a leadership position in the tourism industry by

announcing a sustainability action plan aimed at reducing its carbon footprint and increasing
its commitment to environmentally responsible practices. In addition, Dusit International is
proud to display its commitment to the environment by joining the internationally-recognized
Green Globe benchmarking, certification and performance improvement programme that was
developed specifically for the travel and tourism industry. Moreover, Dusit understands that
to be recognized as a leader the group has an important contribution to make to the
environment and a responsibility to demonstrate to others its commitment to a strong
corporate social responsibility platform. Dusit International has introduced the Green Globe
programme as an extension of its existing environmental policies. Also, Dusit is aware that by
addressing sustainability there is also a pragmatic purpose as well that is the incontrovertible
evidence that the environmental performance can improve the profitability, risk level and the
performance of an organization which in turn will ensure the group receive the long term
rewards for it’s planning. Furthermore, Dusit International will receive independent and
comprehensive evidence of its environmental commitment through the monitoring and
improvement reports it receives each year as part of the process towards achieving
certification by undertaking benchmarking under the Green Globe Company Standard.
According to the Octavio Gamarra, Senior Vice President, Dusit International “ We prepare
for the growth and development of the company it is imperative that we initate programmes
to reduce the carbon footprint and ensure the sustainibility of this expansion. Additionally,
with our commitment to Green Globe Certification, we can assure the partners, staff and
shareholders that we are building on our foundations to be well recognized as one of the
Asia’s leading hotel chains (Environmental sustainability, 2013).

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Vision & Mission

Vision

To deliver to the world an exceptional hospitality

experience that reflects the unique artistry and culture
of Thailand and delivers the standards of perfection,
innovation and excellence.

Mission
To make Dusit one of the most
hospitality world’s in valued
everyone preference
brands of its competitive and
segment. loyalty
across

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Dusit’s Brand

They targets customers from budget to luxury and focus in international and regional areas

Dusit Thani Bangkok: Almost 40 years, the famed Dusit Thani Hotel has been a 'social and
business' landmark in Bangkok. Its international standards delivered with distinctive Thai
artistry and graciousness personifies the earthly manifestation of its name which means in
Thai, a town in heaven. Dusit Thani's 517 rooms and executive suites are sumptuously
appointed with distinctive Thai inspirations and well-designed facilities. The Dusit Grand
Rooms offer 60 square meters with a separate bedroom, living area and larger bathroom, the
'Thai Heritage Suites' are each inspired by the characters and touches of ancient Thai cities.
Throughout the hotel you will find the 'gifts of heaven' whether it is a flower, fabric or a
smile, used to create an experience of heaven on earth.

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Dusit Princess Srinakarin offers a respite from urbane demands. Its 198 spacious guest rooms
and suites are finely furnished in contemporary Thai style, boast international standard
amenities and offer a welcome return at the end of each day. Our facilities help you unwind or
engage: A state-of-the-art Health Club with swimming pool, invigorating sauna and steam
bath ensure business travellers a great time; it's not all work and no play. Rejuvenate with
afternoon tea at Petit Four or take a long cool drink in the Lobby Lounge before a sumptuous
sushi meal at Miyuki Japanese Restaurant, rich Far-Eastern cuisine at the Chinese Restaurant
or an international buffet at Square One. Throughout this luxury hotel you will find the 'gifts
of heaven' whether it is a flower, fabric or a smile, used to create an experience of heaven on
earth.

DusitD2 baraqudaPattaya is located on Pattaya 2 Road in the heart of the “lively 24/7 city,”
The hotel is adjoining “the avenue” pattaya’s newest lifestyle shopping mall, with easy access
to the beach, entertainment districts, 3 main department stores, central festival Pattaya, royal
garden, mike shopping mall and the café scene. A bold experiment mixing the traditional with
the contemporary, dusitD2 baraqudaPattaya is an effervescent boutique hotel concept that
combines Thai flair with international standards creating a simply irresistible experience.

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Dusit Thani Pattaya is a five-star resort hotel that provides a unique blend of coastal leisure
and city activity in Chonburi, Thailand, on the Gulf of Siam. Guests staying at the hotel can
enjoy a secluded beach resort with a wealth of facilities and activities as well as easy access
to the many attractions Pattaya has to offer. These include a Jack Nicklaus-designed golf
course, several Pattaya beaches, and the fun Ripley's Believe It or Not Museum. Dusit Thani
Pattaya is only two hours' drive from Bangkok.

Dusit Thani HuaHin Hotel combines sumptuous comfort with wondrous classic traditional
style. An ornamental lake, lily pond and tropical gardens flank a magnificent swimming pool.
For guests desiring a self-contained resort the luxury hotel provides well-appointed guest
rooms, a range of dining and entertainment options, and a variety of sports and recreational
facilities including water sports, tennis and squash courts, fitness centre and a horse riding
track, plus the tranquil Devarana Spa, HuaHin for ultimate pampering. With its legendary
events and pampering service, the Dusit Thani HuaHin Hotel has been accorded a reputation
as the Thai beach resort of choice for Thai aristocracy.

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The Dusit Thani Laguna Phuket hotel is an idyllic retreat tucked away on the stunning island
of Phuket. The resort is a jewel in the crown of the Laguna resort development at Bang Tao
Bay, Phuket, Asia's first integrated resort development. Arriving at Dusit Thani Laguna
Phuket guests enter a sanctuary of tranquility shaded by native casuarinas and coconut palms.
Gentle sea breezes waft through the vaulted ceilings of the open-air lobby.Guests at any of the
hotels in the Laguna Phuket complex enjoy access to many facilities, including health and
fitness centres, spas, child care centres and the championship 18-hole Laguna Phuket golf
course. Nature at its best, combined with the Dusit Thani's exulted Thai service and
hospitality, add up to a unique holiday experience.

DusitD2 chiangmai hotel, Luxury Hotel in Chiang Mai experience of delight is carried across
every element from the contemporary menu of moxie restaurant to a drink over a perfectly
rendered cocktail from the mix bar or just chilling in the corporate lounge or around the
outdoor pool.

Dusit Island Resort Chiang Rai, Luxury Chiang Rai Hotel in Thailand. The hotel's decor and
furnishings also reflect the diversity of northern Thai styles. For special functions, guests can

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enjoy traditional dining on the floor while leaning against multi-colored triangular cushions.
The Mae Kok River provides a spectacular natural backdrop visible from all the guest rooms,
as well as from the rooftop restaurant, The Peak. Primarily a resort hotel, the Dusit Island
Resort is also fully equipped to host business meetings, seminars and a variety of social
functions. Whether traveling on business or for pleasure, no trip to northern Thailand would
be completed without a stay at Dusit Island Resort.

Dusit Princess Koh Chang has a total 96 guest rooms, villas and suites decorated with
contemporary Thai inspiration with private balconies overlooking garden or sea view and
modern amenities. They offer plenty of relaxation and rest await guest on the private beach
and free - form outdoor swimming pool. Or spend time at the spa and fitness centre. The Bay
Restaurant offers all-day dining and the Reef Bar serves refreshment and Tapas in a resort
ambience. The Starfish Lobby Bar serves drinks and snacks, a cozy and intimate place. Other
facilities and service include the Business Centre, along with tour and transportation
services.One meeting room divisible into 2 with a total area 288 square meter is available,
offering audio visual equipment and accessories, screen, LCD projectors, white boards and
flip charts.

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Financial Performance

The Company reports the performance of the consolidated financial statements for the
three-month and nine-month periods ended September 30, 2012compared with the same
periods of 2011. The performance of the Company for the nine-month period ended
September30, 2012 was the same as the 3rd quarter 2012: compared with the same period of
2011,the Company had total revenues of Baht 2,956.60 million, increased by Baht
350.68million, or 13.46%. Net loss was Baht 10.56 million, whereas the same period of
2011had net profit of Baht 95.19 million, resulted from net loss of DTMD for the nine-month
period ended September 30, 2011 and 2012 were Baht 12.68 million and Baht 107.61million,
respectively. Excluding net loss of DTMD, the Company had net profit for the nine-month
period ended September 30, 2012 of Baht 97.05 million, decreased from the same period of
2011 by Baht 10.82 million, or 10.03%.The significant performance information for the nine-
month period ended September 30, 2012 compared to the same period of 2011 summarized as
follows:

Revenue from sales and services

For the nine-month period 2012, the Company had revenue from sales and services increased
from the same period of 2011 by Baht 350.68 million, or 13.46%. The major increased
resulted from the increase revenues as follows:

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-Hotels under the Company and subsidiaries had revenues increased by Baht306.64 million;
from Dusit Thani group hotels by Baht 127.51 million and Dusit Princessgroup hotels by
Baht 25.21 million, while DTMD had revenues of Baht 153.92 million.

-Hotels under DTCPF had revenues increased by Baht 46.12 million.

Gross profit (loss)

For the nine-month period 2012, the Company had gross profit, excludingDTMD of Baht
714.38 million, increased from the same period of 2011 by Baht 105.67million, or 17.36%.
After included gross loss of DTMD of Baht 68.98 million, theCompany’s gross profit was
Baht 645.40 million, increased from the same period of 2011by Baht 36.69 million, or 6.03%.

Operation profit (loss)

For the nine-month period 2012, excluding DTMD, the Company had operationprofit of Baht
17.27 million, increased from the same period of last year by Baht 28.35million, increased up
to 255.83%. However, after included operation loss of DTMD ofBaht 189.74 million, net
operation loss was Baht 172.47 million.

Net profit (loss) and net profit (loss) attributed to the Company

For the nine-month period 2012, the Company had net loss of Baht 120.02million. The main
reason loss resulted from the operation loss of DTMD of Baht 189.74million, and increased
of financial expenses of DTMD of Baht 35.66 million. Afterattributed net loss to non-
controlling interest, net loss of the Company was Baht 10.56million.

However, excluding net loss of DTMD, the net profit of the Company for thenine-month
period 2012 was Baht 97.05 million, decreased from the same period of 2011by Baht 10.82
million, or 10.03%. The major expenses increased resulted from theCompany’s financial
expense and administration expenses, since the number ofemployees and foreign - executives
increased in order to expand the Company’s businessin future.

Financial Position of the Company

The significant consolidated statement of financial position of the Company andsubsidiaries

as of September 30, 2012 compared with the balance as of December 31,2011:

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Total assets:were Baht 8,198.76 million, decreased by Baht 142.59 million, which resulted
from majority factors as follows:

 Current assets decreased by Baht 286.87 million, major decreased were from
decreased in cash and cash equivalent of Baht 92.75 million (resulted repayment of
short term loans to financial institutions), trade and other receivables-net decreased by
Baht 192.03 million (resulted from receiving premises and equipment which
previously paid deposit for asset acquisition of DTMD), decreased in short-term loan
to related party of Baht 6.00 million and decreased in deposit at bank with collateral
by Baht 31.86 million (according the condition specified in sale and purchase
agreement of Maldives project), whereas inventories increased by Baht 6.08 million
and prepaid rental of land and buildings increased by Baht 13.89 million.

 Non-current assets increased by Baht 144.28 million. The major reasons resulted from
the increased of property, premises and equipment-net by Baht 193.65 million, from
DTMD’s assets and increased of available-for-sale investments by Baht 52.80 million
(increased in fair value or market value). However, prepaid rental of land and
buildings exceeding one year-net decreased by Baht 93.52 million because of
amortization according to the lease period and investment properties-net decreased by
Baht 8.42 million because of deprecation.

Total liabilities were Baht 3,752.64 million, decreased by Baht 15.95 million, major
consisted of the following:

 Current liabilities decreased by Baht 265.17 million: main decreased resulted from
decreased in trade and other payables by Baht 228.85 million (resulted payment of
accrued expenses and payable – asset acquisition of DTMD’s asset, and liabilities
under rental guaranteed to DTCPF decreased by Baht 49.82 million. However,
accrued income tax increased by Baht 7.68 million.

 Non-current liabilities increased by Baht 249.22 million: long-term loans increased

by Baht 255.12 million and retirement benefit obligation by Baht 11.74 million
(according to the calculation by Actuarial), but deferred rental revenue from DTCPF

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 decreased by Baht 19.02 million resulted from the realized as revenue during the
period.

Shareholders’ equity was Baht 4,446.12 million, decreased by Baht 126.64million, major
resulted from dividend payment of 2011 to ordinary shareholders of85,000,000 shares at Baht
0.50 per share, totalling Baht 42.50 million, net loss fromoperation of the Company of Baht
10.56 million, exchange differences on the translationof financial information of subsidiaries
of Baht 29.35 million, net loss of non-controllinginterest of Baht 93.67 million and unrealized
gain of available-for-sale investments (from market value) by Baht 49.44 million.As at
September 30, 2012, the debt to equity ratio was 0.84:1, if excluding deferred rental revenue
of Baht 717.99 million; debt to equity ratio wouldbe 0.68:1 andbook value of Baht 45.47 per
share.

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History

1948
 The group's origin dates back to 1948 when Honorary Chairperson,
ThanpuyingChanutPiyaoui, opened her first hotel, the “Princess” in Bangkok. This
successful venture represented a major breakthrough for Thailand’s Hospitality
Industry creating and evolving what is today the nation’s leading hotel company.

1970

 Dusit Thani opened in February 1970 and from the beginning it achieved widespread
popularity, setting new standards for hospitality. Since then, despite there was an
increased in competition and unprecedented scale of new hotel construction, Dusit
Thani has remained at the forefront of Thailand’s quality hotels.

1987

 In 1987, Dusit recognized tourist trends towards resort style accomodations and
acquired a hotel which was renovated to become the first resort property, Dusit Thani
Pattaya, followed by another beach resort in Phuket – Dusit Thani Laguna Phuket.

1989

 In 1989, the prestigious Dusit Resort and Polo Club opened in HuaHin (now renamed
Dusit Thani HuaHin).

1991

 In 1991, Royal Princess Chiang Mai was opened in Chiang Mai, capital of the north,
followed by a second northern hotel in Chiang Rai – Dusit Island Resort Chiang Rai
opened the same year.

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1995

 In 1995, Dusit International acquired the Hotel Nikko Manila by purchasing shares in
the holding company, Philippine Hoteliers Inc. (PHI), from Japan Airlines
Development Company Limited and JAL Trading Inc. The Hotel Nikko Manila came
under the management of Dusit Thani Hotels & Resorts, and was renamed the Dusit
Hotel Nikko, Manila. In order to meet the high Dusit standards, the Manila hotel also
underwent a major renovation program and became Dusit Thani Manila in April 2008.

2001

 In early 2001, Dusit Thani Dubai opened, adding a vital important new market, the
Middle East, to the Dusit portfolio. The majority of Dusit Thani Dubai staff and
employees were recruited from Thailand itself, thus ensuring a perfect transfer of the
warmth and charm of traditional Thai hospitality.

2005

 In 2005, Dusit set up the Middle East Regional Office also in Dubai, covering the
Gulf Cooperation Council member countries.

2006

 In November 2006, Dusit Thani Hotels & Resorts added a brand extension – the Dusit
Lifestyle Collection with dusitD2 hotels & resorts. DusitD2 is the second generation
brand of Dusit Thani Hotels & Resorts, representing a new concept in balance between
tradition and trend, with international high standards and warm hospitality that is
distinctly Thai. The first property in the dusitD2 collection opened in November 2006
in the historical city of Chiang Mai. DusitD2 Chiang Mai is a Dynamic, Desirable and
Delightful blend of serenity, individuality and modernity that is authentically Thai.

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2007

 In 2007, Dusit entered into a joint venture agreement with Bird Hospitality Services
(BHS), a wholly owned subsidiary of Bird Group – one of India’s largest hospitality
technology companies, to bring the collection of Dusit International property brands
to India in 2012.
 In January 2007, the Dusit sub-brand extension, the company introduced Dusit
Residence Serviced Apartments, a combination of the advantages of an exclusive
residence with five-star service levels that balance the need between residential
privacy and hotel-like convenience and excellence. Pearl Coast Premier Hotel
Apartments, Dubai, United Arab Emirates was opened followed by Dusit Residence
Dubai Marina, United Arab Emirates in 2008

2009

 The second dusitD2 hotel- dusitD2 baraqudaPattaya was officially launched in

February 2009. There are currently 7 Dusit Princess Hotels & Resorts in Thailand.
The first Dusit Princess outside Thailand, Dusit Princess City Centre, and Dubai
opened in December 2009.
 In 2009 Dusit Thani College initiated a programme with Lyceum of the Philippines
University. Lyceum of the Philippines University commenced the first Dusit Thani
College – LPU programme in June 2009 with over 4,000 enrollments. Additionally,
Dusit Thani College opened its new campus in Pattaya in 2011.

2012

 The first hotel, Dusit Devarana New Delhi is expected open in 2012, followed by the
first dusitD2 hotel outside Thailand- Dusit D2 New Delhi (2013), Dusit Devarana
Jaipur (2013), Dusit Devarana Rishikesh (2014), and Dusit Thani Goa (2014). In
addition to Dusit’s rapid expansion plan, Dusit International also announces the first
step in China- Dusit Thani Hainan and Dusit Devarana Hainan stated to open in 2013,
as well as other projects in the pipeline, including Dusit Thani Abu Dhabi (2012),
Dusit D2 Pasadena, California, USA (2013), Dusit Thani Dilmunia Bahrain (2013),
and Dusit Thani Jeddah (2014).

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Loyalty program

o Dusit Gold Card Program

 With Dusit Gold Card, the guests are immediately recognized as one of our
most valued guests, always entitled to our Dusit Gold privileges and benefits.
The guest will receive priority room reservations, special room rates, VIP
recognition, and welcome drink, complimentary fresh fruit, express check-out,
savings on laundry and restaurants, and guaranteed late check – out until 2 pm.
In addition, whenever the guest travel for business or leisure, their Dusit Gold
Card will ensure their privileges and benefits at Dusit International Hotels &
Resorts. Our collection of hotels & resorts will ensure the delivery of an
experience that enlivens the individual spirit no matter what the journey.

o Dusit Executive Club

 Dusit Executive Club Program (DEC) is designed for our valuable members
who are the secretaries and reservation makers for Thai-based commercial
firms, embassies and government offices to enjoy exclusive privileges and
rewards at all participating Dusit Thani, DusitD2 and Dusit Princess Hotels &
Resorts throughout Thailand. All bookings at the company’s applicable
corporate rates will enable the guests to earn Dusit Stars which can later be
redeemed for a wide range of rewards. Whenever the guest become a member
then can enjoy
 Dining from a selection of world gastronomy – starting from 300 Dusit
Stars
 Reward yourself with a complimentary night stay – starting from 1200
Dusit Stars
 Relax, refresh and rejuvenate yourself with Devarana Spa- starting
from 2,300 Dusit Stars, d’spa- starting from 1,200 Dusit Stars and
Namm Spa – starting from500 Dusit Stars
 Earning a Dusit Star for every THB 100 spent on room only at your
company’s applicable rate.
 Receive a special 10% discount for the room booking via Dusit Best
Rate for your friends and family, 10% discount at participating

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 restaurants, 10% discount on Dusit products at Dusit Shop throughout
the year.
 Wishing you a Happy Birthday with THB 500 Dining Voucher and a
complimentary one- pound birthday cake serving at the participating
restaurants.

o Dusit Wine & Dine

 Thai Resident Membership – With the Dusit Wine & Dine (Thailand)
membership, the guest will be entilted to exclusive dining benefits at all
restaurants and bars across participating Dusit Thani, DusitD2 and Dusit
Princess Hotels & Resorts. In addition, the guest will also enjoy a special
room rates, 15% discount on a la carte spa treatments at Devarana Spa located
in Bangkok, HuaHin, Pattaya, Chiang Mai and Manila.

 Manila Membership – With the Dusit Wine & Dine (Manila) membership will
be treated as a VIP member to be able to enjoy food, beverage and
accommodation benefits and discounts at participating hotels & resorts not
only in Manila but also in Thailand; such as Dusit Thani, DusitD2 and Dusit
Princess Hotels & Resorts. In addition, the guest can enjoy discounts at the
Devarana Spa – Dusit own branded and signature Spa for the ultimate
pampering, relaxation and rejuvenation experience.

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o Airline Frequent Flyer

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External Environment

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General Environment

External environment is the influence that would affect the business functions,
abilities, objectives of the business and its strategies. The external factors or the influences
are uncontrollable by the businesses. The market is always changing possibly because of the
following reasons:

 Customers develop new needs and wants

 New competitors enter a market
 New technologies mean that new and innovative products can be made
 A world or countrywide event happens
 Government introduces new legislation

The external or general environment can be divided into seven segments:

I. Demographic Segment
II. Economic Segment
III. Socio-cultural Segment
IV. Technological Segment
V. Global Segment
VI. Physical Segment
VII. Political/Legal Segment

As a business, we would need to know what is going on around us so we can adapt

and be able to compete with others. The changing of the environment could be opportunities
or threat for the business. Sometimes the changes can be both opportunities and threats at the
same time.

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 I. Demographic Segment

Demographic segmentation is amongst the most popular bases for segmenting

customer groups. For Dusit Thani International, demographic segments consists of dividing
the market into groups based on variables such as gender, age, purpose of their trip,
nationality, monthly income and education level that will be further discuss in this report.

In addition, the record of Dusit Thani Huahin Hotel, it could be seen that more number
of males are visiting the hotel than the female. The statistics shows that 65% of male visited
the hotel and only 35% of female visited the hotel. The guest age falls between 31-40 years.
The guest of Dusit Thani indicated that purpose of their trip is for travel and leisure purposes.
Unlike business travellers, leisure travellers tend to spend more time in the hotel due to
varieties of activities offered by the hotel with standard service quality. For example, Dusit
Thani offer fitness center and spa service and they ensure that they run smoothly. Moreover,
Dusit Thani tends to target customers of Middle East as they have a high spending power and
they also target group of customers from Asia and Europe. However, based on the survey that
was conducted at Dusit Thani Huahin, the largest group of customers is Japanese, followed by
the Europeans, Korea and British. In order for Dusit Thani to expand the market and build a
good relationship with the local tour operator and airlines, Dusit Thani has recently opened
the sales offices in Dubai (Dusit Thani Dubai, n.d.). Surprisingly, the majority of the income
group of Dusit Thani HuaHin was those who had income of 100,000 Baht per month. It is
expected that most of the customers of this hotel to be educated or schooled as they were
coming from a higher income group. Therefore, it is likely that they had gone through
tertiary education. However, guests of Dusit Thani are mostly those that have completed a
bachelor degree and with a high spending power (Sivilai, n.d.).

Opportunities

1. Leisure travellers tend to spend plenty of their time in the hotel to relax and involve in
some recreational activities as some guest do not like going out and they prefer to
spend their time at the hotel itself due to the varieties of activities offered by the hotel.
The staffs of Dusit Thani can also recommend guest on the interesting activities so as
to make their stay more pleasant at the hotel. Therefore, the hotel should provide

25
 interesting activities with fine service quality. For example, the hotel can earn more
revenue through restaurants, bars, spas and other outlet in the hotel. Moreover, Dusit
Thani Pattaya can organize a one-day trip to KohLaan Island so they can negotiate
with the tour companies and share profits as well. This would also make guest more
pleasing as they are given the opportunity to explore a wonderful little island in the
Gulf of Thailand.

2. Dusit Thani’s target customers or group of high income, therefore, the company can
ensure that customer have a high spending power and are wealthy. These groups of
customers tend to spend more on new services that are offered even though that might
be unnecessary for some other people staying at the hotel. Therefore, this gives the
hotel a very big opportunity to provide more products and services in the hotel than
just rooms and restaurant. Also, this provides hotels with an opportunity to earn more
revenue.

Threats

1. Customers of Dusit Thani are of high education level and of high income group
therefore these group of customers tend to have high expectations of the service and
that it should meet up to their expectation and if it don’t meet up to their satisfaction it
can lead to negative word of mouth which can affect the hotel reputation. As a result,
Dusit Thani must ensure that all the products and services that are provided to
customer must reach up to their expectations and that they are fully satisfied with the
services that was provided to them.

II. Economic Segment

To be able to thrive in today’s competition the company must be able to study and
adjust to today’s economy. Efficiency in monitoring and adapting to economic factors and
changes is one of the main determinants of company’s success in today’s world. Companies
like Dusit group who is on the stride of expanding their business in other countries will have
to analyse the economy of their origin country as well as globally to assess accurate
feasibility of their vision and mission in the future.

26
 There are several economic factors that can affect business growth and productivity.
These are the few important factors that businesses need to evaluate carefully to be able to
create strategies to achieve their goals.

 Economy of origin country (Thailand)

o Interest rates
o Inflation
o Exchange rate
o Gross Domestic Product
o Trade deficit
 Global economy forecast
 Opportunities and threat assessment

Economy of Thailand

Many important factors have assisted Thailand in their growth. Technological

advancement in Thai industries has made productivity more effective (Thai Economy, 2012).
Thailand also possesses excellent diversity of natural recourses compared to other Asian
countries. Large expansions of fertile land and well-conditioned area for agricultural growth
made them one of the main food exporters in Asia which contributes to their economy.

Thailand is also known for other products such as lower cost computer parts, textile,
plastic and processed food. Thailand is one of the world largest producers of canned tunas
pineapple, and durian fruit. Thailand’s economic strength is also supported by alliance with
the members of the Association of Southeast Asian Nations (ASEAN). (Thai economy, 2012)

However there is one industry that Thailand depends heavily upon, that is the tourism
industry. In the first half analysis of 2012 the performance of the tourism industry in Thailand
has been solid with total arrivals of 10,496,789 travellers in just the first 6 months of last
year. There is a substantial increase of up to 7.6 % compared to last year’s growth over the
same period in 2011. The Tourism Authority of Thailand stated that 52.2% of the travellers
were from china, Russia and Japan. Thailand gained revenue of 734.59 billion Baht on
tourism alone in just the first 6 months of 2012 despite suffering a flood crisis in 2011.
(Global Times, 2012)

27
 At the end of 2012, Thailand has a record of approximately 22 million visitors, which
generated a staggering 900 billion Thai Baht not including local tourism which amounts up to
500 billion Baht revenue (MCOT news, n.d.).

Interest rate

One of the determinants of customer’s behaviour in terms of purchases is the central

bank’s interest rate percentage. Thai Central Bank has decided to stabilized the interest rates
in Thailand causing steady inflation and customer’s behaviour in reluctant to spend.
Thailand’s interest rate is at a stable 2.75 % set by the Thai Monetary Policy Committee.
Thailand’s average interest rate from 2006 to 2013 is 2.48 % (Trading economics, 2013)

Monetary policy committee of Thailand cut down interest rate and stabilized it at
2.75% as of last year, as a reactive response to the global down turn of economy by
controlling the country’s money supply through interest rates(Bangkok-post, 2012). This
reduction in interest rate can cause the general public to spend. This intern will cause a flow
of money in the economy. This helped cushioned the country against the global economy
downturn as it helped strengthen exports and domestic private sectors. “The MPC will,
however, continue to closely monitor financial stability risks that may arise from persistently
high credit growth, rising household debt, and volatile capital flows.” Said,
Mr.PaiboonKittisrikangwan, Secretary of the Monetary Policy Committee (Bank of Thailand,
2013).

28
Inflation

The decision to reduce the interest rates per annum in 2012 has the potential to cause
increase in credit growth, which lead to an increase in inflation rate during 2012. Inflation in
economic theory is the increase in price of general goods. This means everything including
tourism products will see a subsequent increase in price. When interest rates was newly cut in
2012 the general public had a stronger financial status and the new 300 baht minimum salary
according to law also increased their apatite to spend. Since demand increased causing a
deficit in commodity prices leading to higher price of general goods to bring the market back
to equilibrium. This led to an unexpected increase in inflation rate. The consumer price index
had increased by 3.63% from December 2011. Compared to a 2.74% increase in November.
However, the monetary authority predicts the inflation to cool down to 2.8% in 2013. Global
oil price is projected to drop from US$110 to US$105 per barrel; therefore 2013 headline
inflation is forecast at 2.8 percent while core inflation is projected at 1.7 per cent (MCOT
online news, n.d.).

Inflation rate as of 13th January is 3.6%, which is quite high. The ministry of
commerce predicts price gains of 2.8% to 3.4 % this year. However the core inflation
calculated by the monetary authority is 1.78% in December and average of 2.09% last year.
The central bank has set the price ceiling of 3% increase to push price below this level.
“WatchareeWimuktayon, permanent secretary for commerce, said on Wednesday that the 300
baht daily minimum wage nationwide policy, which took effect from Jan 1, would have only
a minimal impact on inflation.” (Bangkok-post, 2013) With such inflation in Thailand there is

29
also a possibility of decrease in demand for tourism because of the public’s desire to save
money both inbound and outbound.

Exchange rate

One of the main factors that can affect the demand for Thai products or exports and
the demand for Thai tourism is the exchange rate of Thailand. Price is one of the main
influences in attracting tourist. According to the Bank of Thailand 1 dollar is now 30. 28
Baht, which is significant, decrease in strength of the US dollar and an increase in strength of
Thai baht. This means in perception to other countries against their currency Thai products
are now more expensive this includes tourism in Thailand.

Gross Domestic Product

Thailand’s GDP average growth rate from 1997 until present time is 1.0 % expansion
rate. In the third quarter of year 2012 alone has expanded 1.20%. Last year’s GDP expansion
reached an all-time high of 11.3% in March 2012. This was an astounding recovery from the
2011 flood crisis which dragged their GDP down to an all-time low of -10.8% in December
of 2011. Thailand is heavily dependent on export demand, which accounts up to two thirds of
their Gross domestic product. Thailand is now one of the East Asia’s best performers.

According to world fact book Thailand was ranked number 197 in real GDP growth
rate but ranked 25th in the world for GDP purchasing power parity with an average of $602.2
billion (World fact book, 2013). At first Bank of Thailand or BoT forecasted a growth in GDP
by 5.7% but has revised and re-forecasted at 4.6%. "The impact of global demand

30
weakness on exports has become more evident. Manufacturing exports have been the hardest
hit, especially for electronic products and electrical appliances where foreign orders started to
decline. Additionally, agricultural exports are likely to remain contracted, partly due to rice
exports, which suffered from high rice prices driven up by the rice mortgage scheme," Said,
PaiboonKittisrikangwan, BoT Deputy Governor. (MCOT online news, 2013)

Trade Deficit

Thailand’s balance of trade showed significant improvement as of August last year in

2012 Thailand was found with a trade deficit of 1541 USD at the end of the year Thailand
accomplished a trade surplus of 627.10 USD Million in November of 2012. Bank of Thailand
reports the balance of trade in Thailand. The balance of trade as reported by the central bank
has an average of 231.27 USD Million from 1991 until 2012, the highest ever achieved was
in February 2009 which was 3537 USD Million and all time low was in 1996 during the
economic crisis was 1997 USD Million. Thailand’s GDP; other than tourism heavily on the
exports which amount up to two thirds of their Gross Domestic Product. Thailand exports are
mainly: rice, shrimps as well as high-technology products like integrated circuits and parts,
gypsum, electrical appliances, and vehicles. The imports of Thailand are mainly, vehicles,
chemicals, electronics Machinery and parts, crude oil and fuels, iron and steel are the main
imports. Its main trading partners are: European Union, The United States, Japan and China.
The significant improvement in Thailand’s balance of trade could mean an improvement in
political unrest in Thailand and can draw customers in from foreign countries.

31
Global economy

For companies with potential global proportions it is important to assess the global market
forecast. By analysing the world economically it gives Dusit Thani a better understanding of
potential threats and opportunity windows.

 The effect of the global economy melt down in 2008-2009 is still showing its effect
on countries as global growth dropped 3 percent in 2012, which shows that there is
about 0.5 percent point reduction in the long term trend, which is a slow trend and is
likely to continue.

 Developed economies are still healing from the 2008-2009 crisis while the developing
economies unlike in 2010- 2011 they did not pick up the slack and are less likely to do
so in 2013.

 The USA “fiscal cliff”, the Chinese transition and reforms in the Euro area will
continue to affect the economy worldwide.

 Global economic outlook predicts that the world economy will grow by just 1.3
percent in 2013 compared to a 1.2 percent growth in 2012. This is due to the euro area
that is expected to return to a slow growth of 0.2 percent after -0.6 percent dip in
2012. U.S. Growth is expected to fall from 2.1 to 0.8 percent due to the fiscal cliff.

32
  Outlook expects the advanced countries to reduce large output gaps which are the
difference between current output and the capacity the economies can produce. There
has been a decrease in demand because of the effect from the crisis in 2008. The
development will allow the United States to grow by 2.3 percent in average in in
2013-2018 and then drop to 2.0 percent in 2019-2025. Japan is expected to have a
slower growth of 1.1 percent and 0.9 percent respectively.

 Slowing down of economical growth in the developed economy is expected in the

next couple of years. Likewise with the developing and emerging economies, which
are expected to drop from 5.5 percent to 4.7 percent in 2013. China’s economy will
also drop from 7.8 to 6.9 percent and India 5.5 to 4.7 percent. The growth forecast for
2019-2025 for developing economies are 3.3 percent

 The outlook has projected a global economy slowdown in 2025. This could be the
result of countries like China, India and Brazil changing their economical structure as
they start to mature. This will bring down economical growth despite the recovery
expected in advance economies in the coming years (Global Economy outlook, 2013).

Opportunities

1. An increase in interest rates will result in decrease in purchasing power, as they

need to save money many Thai tourists might choose to stay inbound other than
travel abroad. This opens a door of opportunity for domestic Dusit Thani branch
to set sales and attract customers.
2. Constant increase in Thai GDP means a stronger country this might cause a
perception of recovery from flood which will draw in more foreign customers.

Threats

1. Increase in possible staff turnover can be a problem for Dusit Thani. Due to
economic downturns, there will be increase in interest rates and inflation.
2. Inflation causes price of raw materials to rise. This will increase cost price for
Dusit Thani purchases of expenses. Hence it is a risk towards a lower profitability
and higher internal and external cost.

33
 3. Economies have been better, but sudden unrests in Red or Yellow shirts can spell
problems for Dusit Thani.
4. Thai exchange rate has strengthened consistently against US dollars and generally.
This might create hesitations in conversion of exchange rate because they will
now receive lesser of Thai baht than usual. This might pose a problem for Dusit
Thani International as it can lead to a potential loss of profit from money
exchange.
5. Problems struck industries in Thailand as inflation has increased since last year.
With increase in inflation rate products become more expensive, that includes the
services of Dusit Thani Hotels. Inbound tourism will be reluctant to choose a 5
star hotel such as Dusit Thani. This can lead to loss of opportunities and potential
customers.
6. There is still a flood alert in Thailand as the Damp is not completely clear. Flood
has the potential to cause businesses to loose opportunity and profits.

III. Socio-cultural Segment

The socio-cultural segment is concerned with a society’s attitudes and cultural values.
Humans essentially create their own cultural and social environment. The practices and
traditions for survival are passed from one generation to the next generation. As the world is
now globalized, humans these days are able to adapt to different culture. Culture is the key
factor that influences the Thai tourism industry. Thailand is a country of distinct region and is
separated not only geographically but also historically and culturally and that is a situation
that offers a variety of challenges and opportunities. In addition, Thailand has become known
as the “Land of Smiles,” and it is well known by international tourist that the Thai people
very frequently smile, even if they are not always sure why they are smiling. Nevertheless,
this is a cultural practice that affects and benefits the Thai tourism industry (Walsh, 2011).
Also, tourist can create more benefits to the destination, as when more tourists comes in, this
help the hotel to generate more revenue and more job opportunities are created for the local
people thus improving the standard living of the people. Moreover, since 19th century there
was a change in the role of women. As now women are more educated as they have higher
level of education and they started to gain more rights to participate in the political, social and
economic situations. In the past, women used to stay and work at home but now due to

34
the industrial revolution more women worked outside home and getting high positions in
their careers including in the hospitality field (Lambert, 2012).

The tourism industry came to the force when Thailand was changing from a resource
based to a labour based economy, an adjustment which was well suited for tourism
development. Moreover, the high standard of service offered in Dusit Thani has remained
consistently impressive. Thai hotels are known for their reasonable prices and top quality
service. The staffs at Dusit Thani are known for their pleasant, friendly and gentle character.
As a result of a good managerial skills have assisted in the maintenance of high quality
service in order to meet up with the customer satisfactions.

Furthermore, the behaviour of human being also changed because of the innovation of
technology that causes technology addiction. Service providers should be proactive and
reactive change agent in order to be able to meet up with the customer’s needs, demands and
preferences as it is often change by the influence of current world’s trends. Therefore, if the
service provider could not follow the customer’s trend then they can end up losing customer
to elsewhere. For example, there is a change in the tourist behaviour now as they are more
environmental friendly and “Going Green” is a big thing. Therefore, all these types of
tourism, such as eco-tourism, sustainable tourism have become very popular at the moment
(Green Tourism, n.d.). As a result, the service providers need to keep up with the trend and
meet up to customer satisfaction. Also, Information communication technology (ICT) also
influences the Thai tourism industry. Communications will continue to develop and the
evolution of more mobile and more effective communication is likely further to accelerate in
the future. Service in the international tourism industry has improved to such an extent that
people these days expect not to have to wait for anything. Therefore, these technologies such
as communications and information are a major factor that influences tourism industry
competitiveness. Likewise, globalization is also a drive in changing socio-cultural segment
(Heerwagen, 2010). Globalization has been by the increased access of information across the
globe through internet. As a result business nowadays can sell their products and services
across various other countries.

Opportunities

1. The new generation is now enthusiastic and open-minded. People have faster access
and understanding of the new information. This provides their young employees to
share opinions, ideas, experiences, skills and knowledge etc. As a result, this provides

35
 benefits not only to the company in the long run but also to the employees as they
have the chance to put forward their own ideas and thoughts and the companies can
take their ideas into consideration and come up with the best decision.
2. This also provides opportunities for the hotel business to hire employees from
different background and cultures as it gives the company an opportunity to gather more
useful ability, skills, knowledge which will surely help each and every employee in the
business to improve and it is not just about setting up business in a foreign country.

Threats

1. The same way that tourism can encourage preservation of social-cultural authenticity
of host communities, tourist may also erode traditional values by introducing foreign
elements which are in conflict with the cultural, historical, and religious heritage of
the community.
2. There might be a conflict between male and female as men always think that they
work better and are smarter than the women. Also, women should not be promoted to
work in higher position as they don’t have enough power as the men’s do and
therefore this result in conflicts between the two genders.

IV. Technological Segment

Social Media enables hotels to form relationships with customers because it opens the
door for hotels to have a one-on-one relationship with travellers. The hotel can get regular
feedback on how the customers feel about the hotel, their experiences when they stayed at the
hotel, their reaction to the hotel’s customer service, marketing strategies and so on.
Furthermore, Social media also impacts the way customers view the hotels. Large number of
travellers read reviews online before they decide to book a hotel. In this way, hotels can
benefit from these online reviews by addressing the needs/concerns of their customers. When
the hotel responds to the reviews of the travellers, and tries to take care of the needs of the
people, the hotel will be perceived as being genuinely caring and constantly improving
themselves. This turns the negative situation into a positive one. Lastly, Social media is an
excellent way to create awareness among potential customers, because it allows hotels to
interact with customers on a personal basis using face media. However, even though face
media is a great marketing tool, it needs to be used correctly.

36
Most common uses of social media for hotels

 Information experts: Hotels try to be the “go to” place for everything that is related to
travelling. They put the spotlight and importance on things and places that are near
where their hotels are located, and connect social media to all their employees and
train them to be knowledgeable so they can assist in telling guests what they can do
and where they can go when they are in town.
 Discounts: Hotels give discounts using social media on almost everything ranging
from special packages to hotel amenities.
 Contests, sweepstakes and Giveaways: Hotels are coming up with contests,
sweepstakes and giveaways by giving out dream vacations or free stays to the ones
that write their experiences to the hotels, or sometimes the customers are picked at
random.
 Gaining/maintain business: The hotels monitor the social media space that deals with
complaints, address it and fix it. They also promote special events on the social media
sites as well as thank guests for their visit to the hotel, to make them feel valuable.
 Social travel sites: Hotels visits travel sites such as Trip Advisor etc. to keep track of
customer reviews and give feedback on negative reviews. Hotels always aim to be at
the top ranking on all these sites, especially in the cities where they are located in. Eg:
Being the top hotel in Phuket.
 Lead generation: Hotels also use sites like LinkedIn, Xing and Konnects to connect to
business clients. (Social Media Solutions, 2011)

How Should Social Media be used

Social media is an outstanding tool that can be used to positively promote the hotel to the
target audience. This is because it allows customers to be actively involved. The list of tools
needed to increase the hotel’s popularity and reviews are as follows:

1. Create a Facebook page and be sure to continuously add special promotions, positive
reviews, achievements and so on.
2. Actively involve the hotel in a twitter account and show participation by following
others.

37
 3. Seek out and interact with desired customers to make them aware and attract them to
stay at the hotel.
4. Use sites such as Flickr and YouTube to promote the hotel, by uploading pictures and
videos for the audience to see. (Social Media Solutions, 2011)

Mobile Application

An effective way to make customers’ lives easier is the use of mobile applications.
This is a new innovation to respond to the increasing needs of people. According to the
Tourism Authority of Thailand (TAT), Hotel Circle Asia as well as Nokia Thailand, they have
agreed to release the mobile applications to boost the tourism market. All the smartphones
available such as IPhone, Blackberry, and Android etc. will support all mobile applications
created. Every application created will have a specific purpose, where one app will support
medical tourism to a destination to promote medical treatments and health care providers
(Thailand Medical Tourism, n.d.). Moreover, apps such as Marriott Mobile apps allow
customers to search for online travel agencies in Thailand and book hotel rooms in big hotels
such as Marriott and Ritz Carlton. This makes it extremely convenient for smartphone users
and hotels can use this to boost their sales and revenue while giving satisfactory services to
potential customers.

Opportunities
As the hotel industry continues to grow and progress more every year, hotels has
seen the impact social media can have on their business. Using the social media in a
wrong way can lead to damages, but there are also good benefits to Dusit Thani:

1. Provides a cost-effective way to boost people to log on and view the hotel’s site. It
is free and quick.
2. It has a viral effect- passionate reviewers will spread the word using their social
media accounts, and awareness will be spread very quickly.
3. Engages the potential customers, by communicating with them actively and on a
personal basis.
4. Protects the hotel’s reputation through constant monitoring and replies to negative
reviews posted.
5. Creates loyal customers, generates more sales boosts brand awareness.

38
 Apart from these benefits, Dusit Thani has its own application for smartphones to
launch their campaigns. The customers can access the application and see Dusit Thani’s
updated news and promotions. This can help increase sales because it will create awareness of
the latest promotions.

Social media is impacting the way customers perceive and approach the hotel
industry. 4hoteliers.com reported that over 2/3s of hotel bookings in the US was influenced
by the internet. Furthermore, according to a survey on Marketingsherpa.com, it was found
that 62% of the respondents check hotel reviews instead of consulting with a friend or a
newspaper for a recommendation. By evaluating the hotel’s participation when it comes to
social media, the level of success is high and positive, because almost every company in
Thailand is using this and benefiting from it immensely. For example, Thai Airways or its
subsidiary like Nok-Air also uses social media as a tool to advertise, inform, and to
communicate with the customers via their web pages (www.facebook.com/nokairlines).

If Dusit Thani effectively uses Twitter, Facebook, YouTube, official webpage and
blogging, Dusit Thani can massively create awareness and generate more sales and revenue
along with more loyal customer base (Social Media Solutions, 2011).

Threats

Because Social Media is viral in nature, some hotels have had their reputations
damaged due to the incorrect use of social media. If the hotel is not transparent about its facts
and information, is not honest about what they advertise and cannot create trust among its
customers, it can cause more damage to the brand’s reputation in the long run. Dusit Thani
needs to be aware of its impact and know how to use these tools in a precise way (Social
Media Solutions, 2011). To make sure that Dusit Thani does not face the negatives of using
social media, it must follow a few guidelines:

 Be upfront about any advertisements and sponsors related to the hotel

 Dusit Thani must not use manipulation or bribery to gain reviews and advertising.
 The hotel must be transparent about its aims, missions, motives and methods it
uses to serve the customers.
 The hotel must give consistent, valuable content and interact with the audience by
addressing negative reviews and making sure all the needs and demands are met.

39
Also, when comparing Dusit Thani to other big hotel chains like Marriott and he Ritz
Carlton, they are still further behind. This is because Dusit Thani’s social media tools only to
advertise their promotions and updated news. But other hotels allow their customers to search
for the nearest routes available to reach the hotel as well as book using the mobile
application. Therefore, Dusit Thani can lose its customers because their mobile applications
are not as advanced.

V. Global Segment
Chinese tourist in 2012
Thailand has
become one of the
main holiday
destinations for Chinese
travellers, as
there is an increase in their economic wellbeing. In 2012 the Chinese tourism news
approximately more than 2 million Chinese tourists arrived at Thailand for sightseeing and
shopping leisure times. Since Chinese citizens are hardworking labours they have only a few
days a year travelling in Thailand at which they spend maximum 5 to 6 days in the Kingdom.
It has been calculated that Chinese travellers spend at least 5000 Baht a day in Thailand,
which helps in the inflow of money. According to TAT Thailand can generate 80 billion Baht
from Chinese tourists alone. TAT continues to promote Thai tourism in China to create a pull
factor for Chinese tourists to travel to Thailand (Chinese tourism, 2012).

In 2012 not only did Chinese tourists come for leisure but also business. According to
china daily 1.7 million in 2011, that shows a significant increase year on year. Thailand’s
world rebound hospitality and cuisines; Chinese companies select Thailand as one of the
main destinations for their employee’s incentive trips. In November from the 4th to the 20th
2012 10,000 employees from health food supplement companies traveled to the country as an
incentive award for part of meeting sales target.

The Thai ambassador to China said: "The large number of Chinese tourists visiting
Thailand reflects not only China's strong economy but also the confidence and trust the
Chinese people have in Thailand."

Zhou Fangye, one of the researchers of the Chinese Academy of Social Sciences said
the increase in numbers of Chinese tourists would benefit Thailand in the long run. "The
tourists will promote the tourism industry in Thailand and create more jobs for local people,
40
Thai culture has become increasingly popular in China, with the first Thai Film Week being
held in Shanghai from Nov 15 to18, with 12 films shown at four cinemas.” (Zhou, 2012)
 However, according to an article published in The Hong Kong Polytechnic University,
there is a dark side to Chinese tourist coming to Thailand. There has been complains for the
last couple of years of unethical practices called the zero dollar commission tour. This has
been a problem for Chinese tourists entering Thailand. This is the deal between the Chinese
tourist agents in China selling tour packages to Thailand with the price lower than the cost
price itself. This already creates an unethical cutthroat pricing strategy to the competitors.
This is not the end as they sell just the flight tickets and the accommodation while leaving
everything else to the tour guide in Thailand to handle. This is also unethical as they convey
limited information. When Chinese tourists whose like to go shopping and visit sightseeing’s
but cannot speak Thai are taken to places where the tour guide in Thailand can heavily
overcharge them to gain their commission. Most of the time the tour guides are Chinese non-
licensed tour guide in Thailand. This can cause a huge problem to Tourism in Thailand
(Zhang & Yang, 2008).

Asean Economic Community (AEC)

In year 2015, 10 countries in the Southeast Asia including Thailand are going through
with the implementation of free trade between the countries. Therefore the barriers to entering
each other’s country will be reduced. Thailand is considered to have a strategic location as the
country is located in the middle of Southeast Asia it is the hub of transportation this means it
has the opportunity to be the main place for tourism and conference (AEC, 2012).

There are both positive and negative effects for Thailand upon the arrival of the 2015
AEC free trade agreement. Thailand needs to prepare extensively to encounter and embrace
the oncoming opportunities instead of being heavily affected by it.

VisanuVongsinsirikul, director of Dhurakij Pundit University’s ASEAN Community

Preparation Centre (ACPC) said “the most influential body with the power to prepare the
country for changes, called on the government to think and act as soon as possible. Otherwise
Thailand would lag behind other countries rather than be able to grasp the opportunities.”
After observation that no major steps of preparation have been taken by them.

“Thailand has advantages over other Asean countries in terms of geographical

features, weather, races and cost of living. The question is how can we make use of the

41
advantages we have?” he said, “Foreign languages, English in particular, are our big problem.
But we can learn them,” he said.” We cannot escape the AEC. Even if we don’t want to work
in other Asean countries, citizens from those countries will certainly come to work in
Thailand,” he said. The government should put preparing for the AEC on the national agenda.

“Prime Minister (YingluckShinawatra) should assign each ministry to study what it

should do and present its own proposals to the premier. Then, the ministries implement the
proposals. If the government tries to achieve good preparation and successfully does that, it
will be the government’s great accomplishment.”

ACPC is now putting an effort to train and educate the Thai working citizens about the
ASEAN community and the AEC in the future and inspire them to find and grasp their
opportunities. They are doing this by providing seminars and training course on ASEAN
community to agencies that request for it. More drastic step will be taken when they move
such courses in to educational institutes by inviting ASEAN experts from UN to share their
knowledge. The ACPC has cooperated with Thailand’s development research institute to
carry out research on their competitors for example Singapore, Malaysia, the Philippines and
Indonesia.The centre has also carried out surveys on CEO of companies to see on how and
what they think about AEC and what they want the government to do to help in the future.
The survey will be voiced to the government and use as guidelines for education
improvements.

However, most educators do not understand AEC as well as they are supposed to
show that the education ministry shows less preparation English communication skills should
drastically improve in Thailand to compete with the other members of ASEAN who has
much better English skills compared to Thailand. Problem solving skills should be
emphasized to guide students through future problems.

WiriyahRuechaipanit, founder and coach of www.eduzones.com, a popular education

site in Thailand, said “Only a bachelor’s diploma is not enough. They should learn an
occupation, like cooking or haircutting, which will give them more job opportunities. They
should learn how to search for knowledge by themselves. When studying what they like, they
should study it deeply. Lastly, they should not forget to adhere to what people consider as
morality,” he said. (The nation, 2012)

42
Opportunities

1. Chinese tourists provide relentless market shares, as it seems to increase 6 percent

every year. Since Thailand have relationship with China it is opportunistic to create
more attractions and packages to attract even more Chinese tourists.
2. Thailand has a strategic location as it is in the middle of southeast Asia and can
become the hub of tourism during AEC as it is the main focused destination in terms
of convenience for many ASEAN countries and has possibly the best world renowned
hospitality to offer this can be a big opportunity for Dusit Thani to aim at the ASEAN
trend packages. Such as ASEAN conferences, Business travels discount for ASEAN
groups.
Threats
3. One of the biggest threats and problems about the Chinese tourist’s policy is the in
ethicality of the Zero dollar commission tour. This can cause Chinese tourists to have
a bad image on Thailand after being heavily taken advantage of by tour packages to
Thailand and lose market share and image.
2. “Labour costs in Thailand are on the rise, while the opening up of our neighbours’
economies will soon draw many of their workers back home. The way to respond to
the coming shortage of cheap labour is to use less people today, by eliminating low
value-added processes, creating leaner business processes and using greater
automation. The biggest impacts of the AEC in 2015 will be on competitiveness and
worker-mobility. And though we are still three years away, it is crucial that you
prepare your business as much as you can, while you still have some breathing space”
Said ApirakJatukanyaprateep a partner in consulting services at Deloitte Touche
Tohmatsu Jaiyos(The Nation, 2012).

VI. Physical Segment

Pollution problems
Bangkok collects
8,000 tons of trash every
day; however, hundreds
of tons never get
processed. According to the government’s pollution control department, garbage
disposals and pollution have reached a critical level in Bangkok. Boats in the Chao Praya
River release their exhaust directly into the waterways and waterside buildings pump waste
into the water. Increasing levels of pollution can lead to serious health problems in
43
adults and young
children. (Pulitzer Center, 2012) There are three main environmental problems, which are air,
water and noise pollution.

 Air pollution: Air pollution in Bangkok has reached critical levels with hazardous
substances reaching 3 times the acceptable level in some areas in Bangkok.
Authorities are mainly concerned about the levels of benzene, usually found in the
smoke of tobacco and petrol, which has been linked with cancer and anaemia. For
instance, the acceptable level of benzene level is 1.7 microgrammes per cubic metre,
but Din Daeng community had 5.2 mg/cu m, ChokechaiSai Road had 3.9 mg/cu m
and Chulalongkorn Hospital had 4.5 mg/cu. (Bangkok Post, 2011)

Source: PCD Bangkok Daily Air Quality, 2011

 Water Pollution: Evidence has shown signs of the deterioration of water due to the
black color and odors (lack of oxygen being dissolved) in rivers, canals and other
water areas in Bangkok. Currently, the daily water sewage in Bangkok is 2.5 million
cubic metres/day, with 75% coming from household use and 25% from industrial use.
On average, the dissolved Oxygen in Bangkok is only 0.1-1.5 mg/1 which is
unacceptable according to the Water Quality Standard category 4, which is a class
reserved for water that is fairly clean requiring special treatment process before
consumption. There are two contaminated water supplies, which are surface and
ground water contamination.The surface water contamination comes from

44
 Bangkok’s canals. The current pollution in canals is 1.5 which is considered very
severe as canals still act as a direct discharge for waste water even though there’s a
requirement for large buildings to treat their waste water.

Source: Department of ground water resources

 Noise Pollution: The noise from Bangkok’s traffic coming from the dense traffic and
a large number of vehicles is certainly considered pollution. The average noise level
in Bangkok is measured at 84 decibels, which is against the accepted safe level of 70
decibels, as recorded in a survey recorded in 2008. It showed that noise level ranged
from 62.8-82.1 decibels within the 24 hour average.

45
 Source: Faculty of Science, Chulalongkorn University

 Energy consumption: Currently, the energy consumption has been continuously

increasing at an average rate of 4.4% (Channukul, 2011).

Source: Department of Alternative Energy Development and Efficiency (DEDE)

According to the table above, we can see the transportation sector consumes the maximum
energy in 2009 and the industry sector is second in energy consumption, showing its
importance for the hotel industry. A high level of energy consumption in a country can lead to
an increase in global warming. According to the UN, they estimate a 2-4 degree Celsius
increase in global temperature leading to a rise in Bangkok’s sea level by 20-50 cm in the
next 10-15 years. Statistics show that Bangkok residents (12 million people) consume :

- 206 million kilowatts of electricity

- 34 million liters of oil
- 400,000 liters of gasohol
- 25,000 kg of natural gas

Source: Bangkok Metropolitan Administration (BMA)

46
 Water consumption: Bangkok’s average water consumption is about 340
liters/person a day. Ground water users include the agriculture sector (1.47%),
Domestic sector (34.17%) and Industrial/commercial sector (64.36%) which relies the
most on ground water.

Source: Department of ground water resources

47
This ground water use leads to ground water depletion (water level drawn down leading to
difficulty in extracting water), Land subsidence (over pumping, flooding, damage to
infrastructure, deteriorate drainage system), water quality deterioration.

 Travel Attractions: Since Bangkok is the largest city as well as the capital of
Thailand, it is one of the most popular tourist destinations in South East Asia. You can
find tradition, culture and distinct flavours of food, beautiful beaches and impressive
infrastructures in and around Bangkok. Bangkok is famous for its temple tours, beauty
of the river Kwai, Siam Niramit Show, Calypso Cabarat, Grand Pearl Cruise, River
cruise to Ayutthaya, the floating market, Siam Ocean world and so many more. These
attractions bring in tourists from all over the world, especially from western countries
because of the sunny weather and friendliness of the people. Travel attractions are
very important for the hotel industry as it generates higher sales with new and
improved tourist spots. It also generates revenue for hotels by organizing tours and
packages to these attractions.

 Natural or Man-made disasters: Many disasters have occurred in Thailand leading

to economic losses. Some were natural such as floods and storms and some were
manmade. The most recent natural disaster was the July 2011-January 2012
widespread flooding in 65 provinces leading to the confirmed deaths of 815 people,
21,000 kilometres of farmland damaged and an estimated economic loss of 1,425
million baht. The damage caused to the tourism sector was massive, with a combined
loss of US$825 million due to the reduction of international and national tourism
(TAT, 2011)

48
Moreover, before the flooding in 2011, the Indian Ocean earthquake in 2004 also had a
significant impact on the tourism industry.

Source: Asian Disaster Preparedness Center

The total amount of damage and losses for the tourism sector due to the tsunami is estimated
at 71,972 million baht. Moreover, even today, tourists are quite reluctant to travel to places
that have been hit by the tsunami. To increase sales and bring back tourists to this sector, TAT
must educate foreigners and locals about the steps and precautions that have been taken

49
to ensure their safety. They should also educate tourists about surviving and combating events
that are unpredictable.

Opportunities:

1. The natural or manmade disasters can provide an opportunity for Dusit International to
give back to the community and offer a crisis relief fund and other services to the
people. Dusit International embraces Corporate Social Responsibility (CSR)
philanthropy. Their aim is not only to do the right thing and act responsibly, but to
also encourage their employees, partners and guests to follow the same core values. To
reach their goal, they run a charity programme called ‘Dusit Smiles’ partnered with
‘Operation Smile’ giving children an opportunity to learn, grow and have good health.
They help raise funds to support Operation Smile, a charity programme that provides
reconstructive surgery for children born with facial deformities. They have also taken
a benchmarking under ‘EarthCheck programme’ to protect the environment by
reducing carbon footprint and being sustainable in order to be one of the leading hotel
brands in Asia. Currently, 11 of their hotels in Asia and the Middle east and as well as
the Maldives have participated. They also received a silver certification achievement
by EarthCheck in 2010 and 2011.

2. With new infrastructures being made and old infrastructures being renovated, the
tourism authority of Thailand has revealed that the tourism revenue in 2012 nearly
reached 1 trillion baht with an increase of 15% of tourists coming into Thailand. The
majority of travellers visiting Thailand in 2012 were Chinese, South Korean and
Japanese. (TAT, 2013) Dusit International could use this information to provide more
services that suit and will attract Chinese, Japanese and south Korean customers. It is
an opportunity to gather information and conduct research on the preferences of
tourists from these countries. They should also make it an opportunity to expand their
business and infrastructure as within the year 2013, they should be expecting a heavy
flow of inbound tourists.

50
Threats:

1. There is always a risk of a disaster occurring again. This is shown to be a huge threat to
the tourism sector and its hotels including Dusit International. In the past, for instance
the tsunami caused Dusit Thani Laguna Phuket to temporarily close down. The floods
decreased their sales tremendously. Therefore, they should always be prepared for
such disasters. This can be done by:
- Identifying the kinds of catastrophes that could occur.
- Set up a basic preparedness kit/booklet/presentation to staff.
- Consider becoming a disaster response center (good publicity for the business).
- Establish a plan in advance as to how the business will operate during a disaster.
- Back up essential computer/non electronic information.
- Have a temporary location to evacuate to in mind.
- Create a communication plan for emergencies.
- Take out sufficient business insurance for at least 6 months.

By following these steps, there is a chance of a lesser loss occurring to the company (eHow
money n.d.).

2. Due to the dangerously increasing levels of air, water and noise pollution, tourists
might choose to travel elsewhere due to health concerns which will reduce the sales of
Dusit International. Chemicals from pollution have been linked to deadly diseases
especially cancer. In the future, the pollution levels have been predicted to get worse
unless some form of action is taken by the government and the people. Waste needs to
be disposed off the correct way, pollution levels need to be monitored and controlled
and sectors need to be more sustainable and environmentally friendly.

VII. Political/Legal Segment

Tourism industry is on its own a dynamic one. It has many factors to consider inside
and outside the country that can affect the well-being of the industry inside Thailand. One of
the main factors that have been affecting Thai tourism industry and, therefore, Dusit Thani in
Thailand is the political instability. During the last few years there was a decrease in inbound
foreign travellers but has increased in number as political situation became more stabilized in
2012.

51
 Tourism in Thailand seems to be brighter this year, but there is still a fear in tourist
about the political instability in Thailand, according to the Centre for Economic and Business
Forecasting. "I believe tourism is a rising star to help drive the economy if there is no serious
political trouble taking place,'' said Assistant Professor ThanavathPhonvichai, the centre's
director. The center of Economic forecast survey results show that most of the tourism
industry competitors in Thailand including Dusit Group are more alert about the
unpredictability of political unrest the study show 29 % of them are worried about political
problems; 24% on economic crisis, 23% on natural disaster and 22% on new disease
outbreaks.

There is still a lack of political stability according to 40% of 600 tourism industries
nationwide that had surveyed from December to January the 3rd. “It was clear that politics was
considered as a key risk to the industry”. Since early in 2012, there were incidents, the
intent towards the amendment of the constitution and a clash involving PreahVihear
Temple.
The harm to tourism industry will highly depend on the level of political heat. If there
is another incident, which involves the well-being of the tourist such as the shutting down of
an airport, there will be a colossal impact on the country. This had led stiffness in the
government to make new investments in the industry. 85 % of the industry has made no plans
for any kind of investments in 2013. They are anticipation and evaluating the economy and
political view carefully before they make any investment this may lead to lack of
development. Only 33 %of the industries have a positive view on the economy in 2013. Even
an increase in the minimum wage by government to 300 baht the industries are expected to be
able to adapt to this new environment. The government should assist in Tax deduction and
compensation to help the industry in difficult times while in the long term training and
development could help Thailand cope up with changes in the future. The increase in tourist
arrivals would ease their rising cost (Maliwan, 2012).

The Tourism Authority of Thailand (TAT) is expected to meet their target of 24.5
million, which is an increase of up to 11.4 per cent from last year. Tourism revenue is forecast
to increase by 19.1 % to 1.149 trillion baht and spending per head by 6.9 % to 46,898 Thai
Baht. SuraphonSvetasreni, who is TAT's governor, agrees with the forecast, but the political
uncertainty will be the biggest challenge to meet these goals. TAT now will use the forecast to
design their way to achieve them.

52
 Even with glitches in the global economy namely the Europe sheer debt crisis and the
United Sates facing the fiscal cliff, which affects the world economy, Thailand’s tourism
industry is still on the rise. In 2012, research has found that in 49% of the industry did not
feel the impact of such a drop yet. In 2013, 48 % of the response believes that tourism
prospects in Thailand will be stationary from 2012, but 47 % said the situation would
improve. According to third viewed eco-tourism as the market with the most potential as 80%
of travellers come to Thailand to experience Sea, Sand and nature based experience. They feel
that the government should promote it. Followed by 21% of shopping purposes, 21% of
wedding reasons and 20% for health tourism (The Nation, 2013).

 Government Policy – Visa

The new Thailand and Cambodia joint visa policy. The Thai and Cambodian
governments introduce this policy to assist their inbound tourism by allowing tourist to apply
for visa in one of the countries and can have access to both countries instead of applying in
both embassies. “Once the project is launched, it will make it more convenient for tourists to
travel between two countries if they need to apply for visas for both countries; however
tourists have to pay a fee that covers entry into both countries.” Thailand at the present
already allows 45 nations to enter their country without visa application. There is yet to be a
definite decision about allowing 5 countries along the Mekong River to share visa pass. This
can indeed bring both benefits and losses. (Ngamsangchaikit, 2012)

 Miracle year of amazing Thailand 2012-2013

Recently tourists have been hesitant to enter the kingdom of Thailand resulting from
the devastation of yellow and red shirt riots that closed down the Suwarnabhumi airport and
2011flood crisis. To draw tourist back to Thailand the government have launched the

53
campaign “ miracle of amazing Thailand” effective 2012 to encourage Thai and foreign
tourists to travel domestically in Thailand to circulate the flow of wealth in the country and
improve Thai tourism industry. The campaign will also push domestic travellers to explore
Thailand’s unseen attractions and traditions. It is expected that the target of this campaign
must hit the annual revenue of 2.2 billion Thai Baht by the end of 2015.

The campaign is also expected to help increase the number of tourists travelling to
Thailand on arrival counts up to 19.55 million in 2012. It can be said that the campaign has
been a success as the head count of visitors to Thailand is 22million at the end of 2012. This
even will showcase new Thai tourism destinations and trade product for those who choose to
travel in Thailand (TAT, 2012). Mr.SombatKurupan the permanent secretary of Tourism and
Sports said, “From 2011 to 2016, Thailand has proposed to host more than 300 sports events.
Out of this number, 253 are at the international and regional levels. For instance, Thailand
will serve as host of such major international events as the Futsal World Cup 2012 in
Bangkok and the Asian Beach Games 2014 in Phuket. A great number of both athletes and
tourists will visit Thailand for these events.” (The Government Public Relations Department,
2012). In order to assist tourists in their travels to Thailand the Ministry of Tourism and
Sports had cooperated with agencies in opening the Tourist Service Center at Suwarnabhumi
Airport. The center provides assistance to tourist from 14 countries namely Chinese,
Japanese, Korean, Russian, English, Italian, French, Spanish, German, and Thai (2012).

 Educational Policies and Philosophies

Thailand is well known and famous for their hospitality and service. It is not a
surprise that many institutions tend to focus on tourism industry training in Thailand. These
institutes provide training facilities and knowledge specifically for the tourism industry
besides, many well-known universities have provided curriculum focusing on the travel and
hospitality industry. For instance, Mahidol University, Silapakorn University, Srinakarinwirot
University, Rachapat University and Bangkok University and the Dusit Thani college and
training center. They provide students with first hand training experiences and a strategic
course to follow to improve the next generation of tourism and hospitality specialist.
Effective professional tourism workers are so in demand that Thai government had set mutual
fund amounting up to 1000 million baht to support on developing tourism human resources.
(Tourism council of Thailand, 2012) this is purely to elevate the level of professionalism in
the tourism sector to have core competency and comparative advantage over other countries.

54
Opportunities

1. The campaign has made it more comfortable for tourists to travel in Thailand. As there
is a clear increase in the arrivals of tourists this can be an opportunity for Dusit Thani
to take advantage of this campaign to draw in customers to stay with them. As there
are numerous events that are going to be held in Thailand in 2013. This means more
invectives to travel. The campaign “Miracle year of Thailand” focuses on Thai
traditions which fits perfectly with the Dusit Thani theme by creating tour packages
cooperating with the events can draw in more occupancy on their part therefore,
generate more revenue from both domestic travellers and foreigners. They have the
best opportunity as they have their branches in every main province in the country.

2. Thailand has the policy to allow 45 nationalities to enter without visa. There is an
additional party of Cambodians, which means a new target market for Dusit Thani.
They can promote themselves by registering with traveling agents in Cambodia to
increase their push factor therefore the pull factor of Dusit Thani. This can create
dominance in this market in the future.

Threats
3. The
visa
policy
that
allows
people
from
other
countrie
s to
enter
Thailan
d
without
acquiring a specific visa for the country is an opportunity for the country to be open
and have new target markets. However, it is also a dangerous opportunity for those
countries along the Mekong River as Thailand and Dusit Thani will have to compete
in a whole new market against 5 other regions trying to draw customers away from
Thailand.

55
2. Dusit Thani’s educational curriculum is falling behind the lights of the Mahidol
University international college as it is also partly supported by the government. To be
able to produce exceptional graduates in this field is going to be difficult to compete
External Environment Analysis

To analyse the entire external environment of the Dusit International needs careful
steps to accomplish. Due to the constant change in these external environments such as the
fluctuation of both Thai and global economy, the fear of political instability, technology
changes, demographic segments of quests and the upcoming turning point of the level of
competition in 2015, the AEC free trade agreement. In all these points above lie both
opportunities and threats to Dusit international. After the external environmental analysis
there are specific steps that Dusit International takes to effectively analyse these external
environments. These steps are called global environmental analysis or the Macroenvronmental
analysis:

Step 1) Environmental scanning

The first step is called scanning. Environmental scanning is about pinpointing or

identifying changes in trend of the external environments. By scanning the important external
components Dusit International can identify some areas that they may have overlooked or
changes that have not yet become a pattern of behaviour, but can become a recognisable
pattern in the future (Dillerup, 2006). Scanning can be done in many ways such as television,
through Internet, data analysis, etc.

Dusit international scans the external environments regularly to update themselves

against their competitions and to keep up with changes in world trends and behaviour to study
the market better. For example:

After scanning economical segment the results show that there is an economic
downturn plus the United States fiscal cliff that is causing inflation and economic instability.
However there have been more Chinese travellers arriving at Thailand than any other
countries in the ASEAN community according to Bangkok Post. This shows the change in
the duration of travelling customers as Chinese travellers stay for maximum 5-6 days. This
can possibly be a pattern for Dusit International to take into account if this continues. Their
new aim could be to offer shorter duration travelling packages and increase the promotion at
China. Dusit from varieties of publications about the world trend retrieves this information’s
and its economical surroundings this type of scanning is called “Undirected Viewing”. It is

56
the most cost efficient way of scanning and yields the widest fields of results. It does not have
a focus point of information gathering as it looks at the big picture of the external mechanism
that concerns with the organization this methodology is best to analyse economical and global
outcomes. There is another method adopted by the Dusit group to its own organizational
benefits or specific information’s for example. “The statistics shows that 65% of male visited
the hotel and only 35% of female visited the hotel. The guest age falls between 31-40 years.
The guest of Dusit Thani indicated that purpose of their trip is for travel and leisure
purposes.” This is a clearly identified field of information and shows that Dusit International
stick strictly to their target market. This type of scanning is called “conditioned viewing
which they apply to study the demographics of their guests. (Mercer, 1998)

Step 2)Environmental Monitoring

After scanning and observing the changes in the external environment trends and
potential critical patterns they must be monitored. This brings the organization to the next
step of Macro-environmental analysis called monitoring. Monitoring is defined as “the
process of repetitive observing for defined purposes, of one or more elements or indicators of
the environment according to pre-arranged schedules in space and time, and using comparable
methodologies for environmental sensing and data collection” (Agarwal, 2005). Through this
process the scanned trends and data about the environmental factors are recorded over time to
check for its consistency in patterns. As well as the historical patterns that can be beneficial
for Dusit International. For example:

“In 2012 not only did Chinese tourists come for leisure but also business.
According to china daily 1.7 million in 2011, that shows a significant increase year on year.”
written in the global segment above that Chinese travellers arrivals at Thailand are increasing
year by year and had already increases to 2 million arrivals at the end of 2012 alone this
shows significant inclining graph of Chinese travellers, which indicates a possible increase
next year. New trends to focus on for Dusit Thani as the major share of the tourism market in
Thailand as monitored are the Chinese travellers. By monitoring the Chinese travellers it was
shown that they travel for leisure purposes and shopping is their main activity. Chinese
travellers also fit the target market of the Dusit Thani international.

57
Step 3) Environmental Forecasting:

The speed and the fluctuation of the external environments in the future are
predicted through the environmental forecasting. The most important point of focus for this
step in global environmental analysis is the threats that may cause Dusit International
problems in the future. However, forecasting can also present opportunities and preparation
period for the organization. There are many methods of forecasting or sources of forecasting.
For example, forecasting by using leading indicators in economy, forecasting by expert
judgement. There are many sources for future indicators of market trend. (Clements, 2002)

One of the main indicators of a definite change in trend is the 2015 AEC. The
increase in competitiveness and an exchange in population thus the change in employment
trends and skill requirements in the future are the forecasts made by Economical experts in
Thailand. For example:

“Most educators do not understand AEC as well as they are supposed to show that the
education ministry shows less preparation English communication skills should drastically
improve in Thailand to compete with the other members of ASEAN who has much better
English skills compared to Thailand. Problem solving skills should be emphasized to guide
students through future problems.” As said by Dr.Vongsirikul the director ACPC. This poses
a threat on Dusit Thani employment quality as they focus on Thai employees. More English
speaking employees will be needed in the future as competition will increase between hotels
from all the ASEAN communities which can lead to leakage in the country.

Forecasting can also lead to indication of opportunities such as for the fourth coming
AEC 2015. Thailand will have an opportunity to be the hub of tourism in the community in
the future. The director of ACPC said, “Thailand has advantages over other ASEAN countries
in terms of geographical features, weather, races and cost of living. Thailand also has a
strategic location as it is situated in the middle of South East Asia. Making itself a hub of
travelling stops, this is an opportunity, for Dusit Thani to assess the possibilities of increase in
customer counts.

58
Step 4) Environmental Assessment

In the final and most difficult step of the Global Environmental Analysis comes
the assessment. It is the accumulation of all the findings the company has gathered to review
the trend of its probability of occurrence. These analyses are then evaluated to specify
whether it will be a risk or a chance for the organization. This is how Dusit International can
determine their strategic move to suit the forecast as assessed. Assessment also measures the
degree of which the forecasted change can impact the company. These assessments are also
classified into the degree of severity of impact on the company therefore Dusit Thani can
choose its priority. The change in trend that has the highest occurrence and the most
significant impact on the organization will be its first priority to focus on.

For example, in 2012 the introduction of 300 Baht minimum wage rate that will
directly affect the employment conditions and cost of Dusit Thani had to be assessed and
strategically dealt with by the organization by downsizing.

59
Industry Environment Analysis

Porter's five forces model:

60
 1. Threats of new entrants to an industry

Barriers to entry are, therefore, very important in determining the threat of new
entrants. An industry can have one or more barriers. The following are common examples of
successful barriers:

Barrier Notes
Investment cost High cost will deter entry
High capital requirements might mean that only large
businesses can compete
Economies of scale Lower unit costs make it difficult for smaller newcomers to
available to existing firms break into the market and compete effectively
Regulatory and legal Each restriction can act as a barrier to entry
restrictions E.g. patents provide the patent holder with protection, at least
in the short run
Product differentiation Existing products with strong USPs and/or brand increase
(including branding) customer loyalty and make it difficult for newcomers to gain
market share
Access to suppliers and A lack of access will make it difficult for newcomers to enter
distribution channels the market
Retaliation by established E.g. the threat of price war will act to discourage new entrants
products But note that competition law outlaws actions like predatory
pricing

The threat of new entrants in the Hotel Industry is if the new entrants move into an industry
then they will gain market share and rivalry will intensify. New entrants increase competition

61
in the sector, which may drive down prices and profits. The new entrants may add capacity,
introduce new products or processes and may bring a fresh perspective and new ideas all of
which can drive down the prices and increase in cost. Nowadays there is an intense increase in
the competition especially in the hotel industry no matter if it’s local or international. To
illustrate, hotel industries have high entry and low exit barriers this is because usually hotel
industry requires a huge amount of capital for investment in terms of economies of scale,
product differentiation, government policy, capital requirements, switching costs, access to
distribution channels (Barriers to Entry, 2007). For example, the larger hotels enjoy
economies of scale because standard features such as the front desk and communications can
service multiple rooms simultaneously. Also, high capital requirements are sometimes
associated with economies of scale because new entrants need to invest in a large facility to
be cost competitive. Therefore, companies with no experience in the industry investing in
hotels would result in a great threat. In addition, a new entrant will be at a substantial cost
disadvantage because of size and few firms will enter and also the established firms enjoy
loyal customers or simply being one of the first competitors in the particular market. These
factors make it very difficult for the new entrant to compete. Moreover, Thailand has
oversupply of accommodation so customers gain more benefits as they have more choice so
investors need to compete in terms of excellence by equipping the latest technologies and
designs with very competitive price (Rapidbi, 2012).

2. Bargaining power of suppliers

If a firm’s suppliers have bargaining power they will:

 Exercise that power

 Sell their products at a higher price

 Squeeze industry profits

If the supplier forces up the price paid for inputs, profits will be reduced. It follows that the
more powerful the customer (buyer), the lower the price that can be achieved by buying from
them.
Suppliers find themselves in a powerful position when:

 There are only a few large suppliers

 The resource they supply is scarce

62
  The cost of switching to an alternative supplier is high

 The product is easy to distinguish and loyal customers are reluctant to switch

 The supplier can threaten to integrate vertically

 The customer is small and unimportant

 There are no or few substitute resources available

Just how much power the supplier has is determined by factors

Factor such as:
Note

Uniqueness of the input If the resource is essential to the buying firm and no close
supplied substitutes are available, suppliers are in a powerful position

Number and size of firms A few large suppliers can exert more power over market
supplying the resources prices that many smaller suppliers each with a small market
share

Competition for the input If there is great competition, the supplier will be in a
from other industries stronger position

Cost of switching to A business may be “locked in” to using inputs from

alternative sources particular suppliers – e.g. if certain components or raw
materials are designed into their production processes. To
change the supplier may mean changing a significant part of
production

Bargaining power of supplier means the ability to influence the setting of prices, the
more concentrated and controlled the supply the more power it wields against the market.
While this is not an extensive threat in the hotel industry as it can have a huge impact
especially in the area of labour. With an aging population, there are fewer people to fill
service industry jobs and hotel industry is all about providing service and they need a lot of
manpower to run their business operations and, therefore, hotels which can attract excellent
staff have a greater chance of providing excellent and exceptional experiences to their
customers, so hotel staff are their suppliers who are in charge of their daily operations (Riley,
2012). Moreover, the other supplies that are needed by hotels are also easier to attain through
internet channels whether originated by the supplier or by the hotel chain.

63
 Dusit Thani has been established for quite a long time and had built a strong
relationship with the suppliers, creating loyalty towards each other and is able to bargain for a
cheaper price from the suppliers. Therefore, these suppliers have a low bargaining power to
these hotels since they rely on these powerful hotels to keep their business running (Customer
Loyalty, 2012). In addition, a hotel has various types of product and therefore they need
different suppliers to supply them with the materials and for Dusit Thani hotel to bargain for
cheaper price is very easy is because everyone wants to supply to them as they will
eventually need to supply to many of its chained hotels too. Moreover, the substitutability of
them is relatively inexpensive which is due to the large scale of suppliers.

3. Bargaining power of buyers

Powerful customers are able to exert pressure to drive down prices, or increase the
required quality for the same price, and therefore reduce profits in an industry.

A great example in the UK currently is the dominant grocery supermarkets which

are able exert great power over supply firms. You can see a great video about this issue
here.

Several factors determine the bargaining power of customers, including:

Factor Note

Number of customers The smaller the number of customers, the greater their
power

Their size of their orders The larger the volume, the greater the bargaining power of
customers

Number of firms supplying The smaller the number of alternative suppliers, the less
the product opportunity customers have for shopping around

The threat of integrating If customers pose a threat of integrating backwards they will
backwards enjoy increased power

The cost of switching Customers that are tied into using a supplier’s products (e.g.
key components) are less likely to switch because there
would be costs involved

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Customers tend to enjoy strong bargaining power when:

 There are only a few of them

 The customer purchases a significant proportion of output of an industry

 They possess a credible backward integration threat – that is they threaten to buy the

producing firm or its rivals

 They can choose from a wide range of supply firms

 They find it easy and inexpensive to switch to alternative suppliers

The bargaining power of buyers tend to be greater when they are more hotels and
more number of competitors this is because Thailand has over supply of accommodations so
customers gain more benefits as they have more choice, therefore, customers will have a high
bargaining power this is because customer is being given the opportunity to make comparison
and they can choose the most preferred type of hotels. Also, hotels will use various
promotions and advertisement to attract customers (Bangkok post, 2011). On the other hand,
the bargaining power of customers is that the customer has the ability to force down prices,
bargain for higher quality or more services and if hotels cannot reach up to their expectations
then they can easily switch to other competitors and this can be the threat for the hotel if they
do not respond to customers’ needs and wants.

In addition, customers will be willing to pay a premium price for a high service
quality. So when the hotels are offering high service quality then the customer will have a low
bargaining power as they are willing to pay at a high price as they value the service (Searcy,
2012). To illustrate, Dusit Thani target two main group of customers based on their length of
stay at the hotel that is short haul and long haul customers. Short haul customers are those
customers that travel for business purposes and they make their booking at Dusit Club which
is much more expensive and customer are willing to pay for it is just because of the
extraordinary services that are provided to them. However, for long haul customers travel for
recreational purposes and want to experience the uniqueness of Thai culture (Dusit
International, n.d.). As a result, Dusit Thani does not have to depend on customers with low
bargaining power as they target various group of customers

Furthermore, customers are comfortable with computer technology and therefore it

has become much more convenient for them to simply go online and book a hotel themselves
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by eliminating all other intermediaries as they no longer need travel agents, corporate travel
consultants or middle men of any kind to determine where they will stay. Customers are
finding internet businesses like cheaphotels.com which will negotiate or discover bargains for
them. As a result, the hotels need to minimize the customers bargaining power by
differentiating their products from other competitors and service offerings. For example,
Dusit Club provides loyalty programs to their customers by offering them “Dusit Gold Card”.
This can help to minimize the bargaining power of customers and can be one of the profitable
businesses (Dusit International, 2013).

4. Threat of substitute products

A substitute product can be regarded as something that meets the same need

Substitute products are produced in a different industry –but crucially satisfy the same
customer need. If there are many credible substitutes to a firm’s product, they will limit the
price that can be charged and will reduce industry profits.

As an example, consider the many substitutes that consumers now have to buying a
newspaper for their news:

The extent of the threat depends upon

 The extent to which the price and performance of the substitute can match the industry’s

product

 The willingness of customers to switch

 Customer loyalty and switching costs

If there is a threat from a rival product the firm will have to improve the performance of their
products by reducing costs and therefore prices and by differentiation.

In the hotel industry, there is usually another hotel that is just around the corner. They
appear in all price ranges varying from different level of services and amenities. The constant
challenge will always be to get the guest to choose Dusit Thani Hotel over other competitors.
In addition, the internet makes the overall market more efficient while expanding the size of
the potential market and creating new substitution threats. Internet allows the users to gain
access to discuss about the products as opposed to other interruption marketing such as
television commercials. Direct marketing and other sources of media can also be used instead
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of the Internet as it serve as a promotional and informative mean as well (Porter’s Model,
2011).

In terms of lodging business, there are various substitute products for hotel and is
definitely a threat to the industry because if they are not able to reach up to customer
expectation and satisfaction then eventually they will lose their customers so in order for the
hotel industry to retain their customers they need to differentiate their products from other
competitors so that customers left with no choice but to purchase only from you, however this
is very hard for the hotel industry. To illustrate, there are various substitute products for hotel
industry which includes resorts, residences, boutique hotels and motels. However, these
substitutes’ products cannot be compared with the luxury hotels due to the extraordinary
services and amenities that are provided by them even though they are operated for the same
purposes (Hotel Marketing, 2010). For example, Dusit Thani Hotel offer various alternative
products to their customers as it is one of the five –star hotel that take these substitutions
products to be the most important component. Dusit has operated three substitutions under
three sub-brands which include Dusit Thani, DusitD2 and Dusit Residences. Firstly, Dusit
Thani comprises of both hotels and resorts styles and they have got two branches in Thailand
which are Dusit Thani Pattaya and Dusit Thani Huahin. Secondly, DusitD2 is one of the
boutique hotels that are filled with Thai unique style of decorations. As a result, Dusit Thani
can attract a wide range of customers from anywhere both local and international (Phan-
Udom, 2011).

5. Degree of competitive rivalry

If there is intense rivalry in an industry, it will encourage businesses to engage in

 Price wars (competitive price reductions),

 Investment in innovation & new products
 Intensive promotion (sales promotion and higher spending on advertising)

All these activities are likely to increase costs and lower profits.

Several factors determine the degree of competitive rivalry; the main ones are:

Factor Note
Number of competitors in the Competitive rivalry will be higher in an industry with
market many current and potential competitors
Market size and growth prospects Competition is always most intense in stagnating

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Product differentiation and brand
loyalty
The power of buyers and the
availability of substitutes
Capacity utilisation
The cost structure of the industry
Exit barriers
will remain thus adding to the intensity of competition
markets
The greater the customer loyalty the less intense the
competition
The lower the degree of product differentiation the
greater the intensity of price competition
If buyers are strong and/or if close substitutes are
available, there will be more intense competitive
rivalry
The existence of spare capacity will increase the
intensity of competition
Where fixed costs are a high percentage of costs then
profits will be very dependent on volume
As a result there will be intense competition over
market shares
If it is difficult or expensive to exit an industry, firms

The rivalry among competitors in the hotel industry is fierce as it can lead to
aggressive pricing and promotion in order to attract customers to them. The hotel industry is a
mature industry marked by intense competition. To illustrate, Thailand hospitality face high
pressure of room rate because the room rate in Thailand is lower than many other countries as
Thailand has oversupply of accommodation so investor need to compete in terms of
excellence and that lead to price war that is by lowering down their prices and thus shrinking
their profit margin. Although this is always beneficial to customers, this can become
potentially destructive as lowering the prices too low will negatively affect the profitability of
the competing firms. Moreover, intense rivalry will bring the challenge to the marketing
arena. Firms in very tight competition will have to invest more resources in promoting their
products to sustain their visibility in the market and keep their existing customers’ loyalty
(Tavitiyaman, 2011). For example, the 5 Star Alliance such as The Peninsula Hotel,
Banyantree Hotel, Dusit Thani Hotel or Sukhothai Hotel is offering the similar level of
services, facilities, accommodations. Since they are various hotels under Star Alliance so it’s
difficult to identify who are the competitors of Dusit Thani. Furthermore, the standard room
price of Dusit Thani is higher than Conrad hotels and resorts at six thousand baht per night
however, the price of Dusit Thani tend to be lower than few hotel such as Sheraton hotels and
resorts at eight thousand four hundred and fifty baht. To conclude, Dusit Thani intensity of
the rivalry among the competing firms is not that high (Five Star Alliance, 2013).

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Industry Environment Analysis

Strategic Dimensions

 Extent of technological leadership

Technology has been a key driver of growth for the hospitality sector over the last
decade. New technologies for jobs like real-time inventory access, seamless exchange of
operational information and collation of key performance data have the transformed the hotel
business. In addition, hotels are under intense pressure to keep up with expectations of guests
that they are implementing new technologies to regain their edge (Pandey, 2010). Leading
hospitality industries are using technology products to differentiate themselves from their
competitors and thereby increasing market share and improve revenue. Even the smaller hotel
brands are switching to technology products to equip the guest rooms with the latest
electronics. For example, the Digital Door Viewer (DDV) is one of the technologies that can
benefit both to the hotel operations and hotel guests. The view from DDV is far superior to
the peephole and that the DDV is far more convenient to use since the guest is not forced to
place her face very near to the door to view. As a result of equipping the guestrooms with
Digital Door Viewers is the commitment of the hotel to differentiate itself in the market
(Hospitality Industry, n.d.). With the use of technology, it can help increase customer
experience leading to higher loyalty. Also, technology has increased profits for hotels and for
long- term basis by reducing manpower and improving the quality of service. Innovative
technology benefits the hospitality industry in a number of ways for instance, increasing
customer satisfaction by 82.4 %, increasing employee efficiency by 79.9%, generating
revenue by 71.3%, improvement of hotel awareness and increased sales and reservation
(Brewer, 2008). Moreover, software is also important in hotel. Nowadays most hotels
commonly use software to do check-in, check-out and record guest’s information. For
example, software that are used for front office department is Property Management system or
PMS that manages all aspects of hotel operations which has front desk and back office
modules such as handle guest profiles etc. Other hotel software is Central Reservation System
(CRS) and Internet booking engine (IBE) (Smith, n.d.).

Furthermore, each hotel installed different kinds of programs suchas Opera and
Fidelio are widely used in Thailand (Thais hotel directory, 2012).In order to offer a variety of

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payment options, some hotel managers have adopted cashless payment systems via the use of
radio frequency identification (RFID). RFID utilizes computer chips and antennas, allowing
the chips to wirelessly communicate with a receiver. The system is being integrated with POS
systems to process credit card and debit account transactions There are various other
hospitality management software includes sales and catering software, which will have a POS
module to manage, and track sales from restaurants, lounge/bar, and room service (Brazeal,
2012). Currently, many hotels try to invent new innovation to increase guests’ experiences as
well. Due to intense competition and high level of expectation from the guests many hotels
try to invent new innovation to differentiate themselves from the competitors and to increase
guest’s experience. To illustrate, many larger hotel groups such as Starwood Hotels and
Resorts are investing in application for the mobile market which allow the end user to find
nearby hotels and check their room rates and not only that but also to create a closer
relationship with customers. Another example is that the Peninsula Hotel in Tokyo offer
hotel’s own art collection through a guided iPod commentary where the guest can request
complimentary use of an iPod in major shopping area and other sites along the way.
Moreover, JW Marriot Seoul’s offer the remote Jack Pack in guest rooms that allows guest to
control audio and video and play files (Hume, 2012). As a result, it is very significant for the
hotel industry to update and to adopt new technologies in order to differentiate themselves
from the competitors so as to be the leadership of hotel industry and also with the use of
technology, it can enhance customer experience and also this would motivate employees to
work more efficiently.

 Product quality

Product quality is basically meeting or exceeding customer expectations. To meet or

exceed customer expectation, the hotel must fully understand all service attributes that
contribute to customer value and can lead to customer satisfaction and building customer
loyalty. The success of any hotel industry is all about providing high quality products or
services that meet up to customer satisfaction and reach up to their expectation and eventually
this can create customer loyalty. Therefore, every hotel main goal is to build a customer
loyalty because customer loyalty is the only proven way to compete with rivals without
having to forfeit revenue. Also, gathering constant customer feedback to make sure the needs
of the customers are being met will ensure loyalty remains strong. In addition, in the area of
hospitality, Total Quality Management (TQM) is a participatory process that empowers all
levels of work in groups in order to establish guest product or service expectations and

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determine the best way to meet or exceed these expectations. Moreover, the concept of
product quality is widely discussed in the hospitality management. Quality in the hospitality
industry is defined as “the consistent delivery of products and guest services according to
expected standards”. As a result guests are willing to pay more when they visit hospitality
properties offering them with services that meets or exceeds their expectations (Kapiki,
2012). Furthermore, SERVQUAL is the most often used approach for measuring service
quality in order to improve the quality of service as experienced by means of comparison
between expected and perceived quality after the customer has received the service The
SERVQUAL has been efficient method used to measure consumers’ perceptions of service
quality. It is a technique that attempts to measure the five main characteristics of tangibility,
reliability, responsiveness, assurance and empathy. First is the tangibility are modern
equipment, visually appealing facilities and materials associated with the service, and
employees who have a neat, professional appearance. Second is the reliability is performing
services right the first time, providing services at the promised time and keeping customers
informed about when services will be performed. Third is responsiveness is providing prompt
service to customers and readiness to respond to customers’ requests. Fourth is assurance is
making customers feel safe in their transactions, employees who are consistently courteous
and employees who have the knowledge to answer customer questions. Fifth is empathy
which means giving customers individual attention, employees who deal with customers in a
caring fashion, employees who understand the needs of their customers and having the
customers’ best interest at heart (Kumar, n.d.).

According to Dr.NopadolRompho, a research was conducted by comparing two hotel

types which are boutique and the business hotel in Thailand and to understand the
expectation, perception and gaps between expectation and perception regarding hotel service
quality. After conducting the research, the analysis shows that the service quality of hotels in
Thailand was moderately low meaning that many of the hotels were not able to deliver
services as promised and expected. In addition, the customer expectation of the services of the
boutique hotels was higher than that of the business hotels. The overall average expectation
of service quality of the boutique hotels (4.21) was higher than that of the business hotel
(3.98). Therefore, this creates gap between expectation and perception explicitly that reflect
the service quality of hotels (Rompho, 2012). Based on the research that was conducted the
services of hotels in Thailand were weal in terms of problem resolution and customer
compensation since employees lacked understanding of customer problems,

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probably due to the hotels management system. Also, the front office staff members had
insufficient authority to make decisions and authority was mainly centralized at the
management level. To improve such service quality, the authority to make decisions should
be assigned to the staff responsible for performing specific tasks or for contacting customers
so that they will be able to respond to customer needs and solve customer problems promptly
and conveniently. He also emphasized the need for hotels to develop more effective internal
communications system to facilitate a greater understanding of company policy as it relates to
providing quality services for the customer. Service quality depends on the process of
designing services and strategies. The managers need to understand a variety of customer
needs, while the hotel staffs needs to convey and deliver quality services to all the customers.
The type of hotel also plays a very important role in the perception and expectation of service
quality. Customers have different expectations and perceptions for different types of hotel. As
a result, there is no “one best way” to improve the service quality in the hotel industry
(Quality management in hospitality industry, 2010).

 Pricing policies

In the hospitality industry, a common problem is the perishable products and services
have led hoteliers to seek for new strategies in their pricing which has led to dynamic pricing.
Dynamic pricing which is part of revenue management is a familiar concept in the hotel
industry and was presented to buyers about a period ago. In addition, dynamic pricing is
already in use with the published daily rates of hotels and increasingly with corporate clients.
Dynamic pricing refers to pricing on demand, based on customer value and the willingness of
the customers to pay for the room and it is controlled by revenue manager or sophisticated
automated systems. In dynamic pricing, there is an agreement that customers will get a certain
discount from the hotel’s best available rate (BAR) which are based on annual
accommodations volume. The discount usually applies to all the different room categories.
Moreover, dynamic pricing has been in use for consumer prices but it is now use today for
business sector too. For example, Scandic Hotels Ltd has had dynamic pricing in use since
2006 and Hilton Hotels 2004. However, different hotels set the price differently that depends
on the season such as low and high season and, therefore, we notice that the room rate
changes each day on online travel agent website. The reason for hotel industry to implement
dynamic pricing is that it can help hotels to minimize lost and generate more revenue to the
hotels and also because there are number of global events such as 9/11, SARS and Foot-and-
Mouth disease that cause a sudden drop in the room occupancy and, therefore, this forced

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hotel to use new pricing methods (Hyrkas, 2011). As a result, hotels have benefited from
dynamic pricing in the current economic situation as it helps hotels in terms of increased in
number of booked rooms. Also, eventually when more buyers would be respecting
accommodation agreements, dynamic pricing reduce the number of lacking room nights.
Furthermore, in the early 2000s, dynamic pricing was first introduced in the hotel industry by
chains like Marriot, Hilton and InterContinental. Dynamic pricing has become increasingly
important because inventory for any hotel company is sold at certain price points, and the
type of guest staying at the hotel pay different price points which is followed by a normal
distribution curve as shown in figure 1.

With the preset price points, all the white space under the normal distribution curve
for the guest-price mix is LOST opportunity to maximize revenue. This is where dynamic
pricing can be directly applied – by allowing an almost infinite number of price points
(coupled with the corresponding number of guests), the white space under the normal
distribution curve is greatly minimized, thereby reducing the lost opportunity, and
consequently leading to maximized revenue, as shown in figure 2. As a result, successful
implementation of a dynamic pricing solution requires skilled knowledge workers need to be
hired and trained them to do the job correctly and it also requires keen interest and attention
to the hotel company’s organizational needs. To conclude, Dynamic pricing benefits hotels by
helping to utilize perishable inventory as this benefits guests by creating offerings at attractive
price points which also benefits shareholders and stakeholders (Farahmand, 2008).

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  Distribution channels

Hospitality industry usually uses different channels for the distributions including
distribution through other properties through their own chain, joining hands with well-
organized marketing consultant, using third party for outsourcing on their behalf. Most
companies involved in this business also use travel agents, tour operators and incentive
houses as their channel of distribution. Distribution channel can be defined in simple words
as medium for customers to get sufficient information about desired product or services at
right time. This helps them to make a right decision to purchase a product, to make a right
reservation in their desired hotel or pay for required product. Now a day's hospitality industry
is making use of electronic distribution channels widely (Haraketi, 2011). Firstly is the usage
of internet in hospitality industry as a medium communication and it is used as a major
marketing and communication tools in this business world. The internet is known as global
network of networks. Many of the hotels have started using e-commerce as their business
tool. They also started to redefine their roles and operations in order to provide better service
to the changing needs of customers In addition, electronic channel has become one of the
main significances for the hospitality industry for the distribution of the inventory. A good
distribution channel is essential for the hotels due to high competition from competitors.
Therefore, most of the hotels are using electronic distribution (e-distribution) channels in
order to be able to provide better and faster services to customers. This will increase the
profitability to both customers and company helping them to build a better relationship
between them. Internet distribution can be done by many methods (Heller, 2011).

Firstly, indirect channels, hotels can easily sell their products to retailers and
wholesaler such as online travel agency (OTA). Online travel agency has become the most
popular way for the travellers to book the hotel this is because it saves a lot of time and
money that is instead of spending hours on the computer searching for the best travel deals
that might lead to frustration. Therefore, online travel agents can help access the information
that will best meet the customer’s needs and budget. Also, travel agents can help score a great
deal on a package or promotion. Some of the examples of online travel agents are agoda,
expedia, booking.com, trip advisor, sawadee.com can access to information about rates and
routes that average consumer might not have, thus saving customers time and money and to
make decision easier (Gidman, 2008). According to the research from the Cornell Center for
Hospitality Research found that nearly 74 percent of consumers looking for a hotel will visit
Online Travel Agency to make their booking decisions, and just about 10 percent of

74
consumers that go directly to the hotels websites. For example, expedia received about 7
percent to 26 percent more bookings than when they were not displayed. Moreover, Online
Travel Agency website are widely being used by Thais and other foreigners to search for the
destination and to access to various kinds of information’s, therefore, OTA can help hotels
sells their room easily and more conveniently (Hotel Marketing, 2011). Thus many of the
hotels contact agoda to sell room for them this is because agoda is the largest Online Travel
Agency and it is expanding in to European countries at a very face pace and also agoda
always keep its brand popular by encouraging customer to join their activity through websites
as they set up an event and let customers vote and those who win will be provided with a free
accommodations. Furthermore, they remove all language barriers as they provide all forms of
languages and now it has been translated into 37 languages and it is easy to access,
convenient and fast (Clark, 2009).

Secondly, hotel direct channel is the method that the hotel uses to communicate, sell
and deliver their products and services directly to consumers or business customers. Hotels
market their products without other intermediary involvement such as wholesalers, retailers or
distributor. For example, customers can directly book or make reservations through hotel
websites without involving any of the third parties such as agoda, expedia or sawadee.com
(Internet Distribution, 2012).

Another method of distribution channel for hotel industry is most of the hotels use
social commerce website such as Ensogo.com, groupon.com to sell and distribute their
products. Generally, these two websites has helped many of the companies including hotels,
restaurant, souvenirs, etc to sell their products at a cheaper price. However, this is done so that
customers become aware of their products and that they will make a purchase and with a
hope that will become our regular customers. To illustrate, these websites will help the hotels
sell room at a cheaper rate to customers. For example, Dusit Thani hotel use social commerce
that is Ensogo.com to sell their rooms at a cheaper price especially during low season and
also to create awareness amongst people. Therefore, these websites can be used for marketing
and promotional purposes as well.

The last method that is widely used as a distribution channels is mobile application.
According to the Trip Advisor survey, 38 percent of the travellers have used their mobile
devices to plan a trip and 60 percent of respondents said they have downloaded travel
applications on their mobile devices. Therefore, mobile devices such as smart phone like

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Blackberry, IPhone can help hotels to sell and distribute their products. This is because most
of the travellers used their mobile devices to research restaurants, check flight status and
checked in to a restaurant, hotel or attraction using their mobile device while on a trip.
Moreover, a research that was conducted by PhoCusWright shows that 75 percent of the
frequent business travellers are smartphones owners. As a result, there is enough evidence for
the hotel industry to use mobile application and some hotels have already started and are
successfully doing it (Saracut, 2012). Also, having a mobile application offers a better
opportunity to create a close connection with the guests. For example, most of the hotels such
as Dusit Thani, Starwood and Marriot international has their own application where customers
can easily checked in to a restaurant, hotel or reserve the rooms and can access through
various kinds of information that a customer is looking for.

 Customer service

Customer service is a mind-set where the hotel guest’s needs and wants come first.
Customer service is series of activities which are designed to increase the level of satisfaction
for the customers and that a product or service has to meet up with the customer’s
expectation. It is also a provision of service to customers which are done before, during and
after sale. Therefore, most of the five star hotel customer service is a business skill where
hotel employees, management and hotel owners constantly provide service to their guests in a
professional and pleasant manner. In addition, the importance of customer service may vary
by product or service, customer and industry. The perception of success depends on the
employees who can adjust themselves to the personality of the guest. Also, it plays an
important role in the company’s ability to generate income and revenue (Titus, 2013). A
customer service experience can change the entire perception a customer has of the
organization. Most of the five star hotels challenge in working with customer service is to
ensure that they have focused fully on their attention on the right key areas, which are
measured by the right Key Performance Indicator (Reh, 2013). Moreover, like Dusit Thani
employees have built a strong relationship with their customers which are crucial for return
business and positive hotel reviews. Hotel customer service begins with a positive
relationship between the guest and the hotel employee. Therefore, for the employee to build a
relationship with the guest is by using listening skills and paying attention to what the guest
says. Customer service is not only about listening to the customers but it also about body
language. Good hotel customer service body language consists of eye contact, which let the
guest know that they are being listened to. For example, Dusit Thani employees greet a guest

76
with a warm smile which help the guest feel more comfortable and the hotel employee are
more approachable towards customers. Also, speaking clearly and confidently with the guests
demonstrates professionalism.

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Competitors Environment

Four Seasons Hotel

General Background

The Four Seasons, which is a Canadian based company, has been in operation for
more than 50 years. The first Four Seasons hotel was opened in 1961 and has been
continuously developing and expanding until it has reached 90 branches in 36 countries
worldwide. Due to its exemplary services, Four Seasons hotel has become one of the world’s
top hotel chains.

In Thailand, Four Seasons has opened 4 branches altogether- Four Seasons Hotel
Bangkok, Four Seasons Resort Chiangmai, Four Seasons Resort Koh Samui and Four
Seasons Tented Camp at Golden Triangle(Four Seasons Thailand, n.d.).

Vision, Mission and Objectives

The Four Seasons culture is strongly grounded in their staff. Over more than 50 years,
their staffs have built a relationship with the guests based on trust, reliability and personal
connection. Their goals, beliefs and principles are described in the Four Seasons corporate
mission statement. This mission statement guides the actions of every staff at Four Seasons
and is the foundation of what they do on behalf of the guests. Their mission statement has
FOUR important attributes:

a) WHO THEY ARE: They choose to specialize within the hospitality industry by
offering experiences of exceptional quality. They want to be recognized as a hotel that
manages the finest hotels and resorts, create properties of high value using superior
design along with deeply instilled ethics of personal service. This allows The Four
Seasons to satisfy customer wants and needs and to maintain their position as the
world’s premier luxury hospitality company.
b) WHAT THEY BELIEVE: Their greatest asset and the key to their success is their
people. Each staff must have a sense of dignity, pride and satisfaction in what they do.

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 The satisfaction of guests depends on the united efforts of all the staff, and they will
be most effective when they work together cooperatively and respectfully.
c) HOW THEY SUCCEED: They succeed when every decision is based on a clear
understanding of their beliefs and actions, along with a good financial planning. Four
seasons expects to achieve a fair and reasonable profit for the company’s prosperity
and the long term benefits of its hotel owners, guests as well as staff.
d) HOW WE BEHAVE: To demonstrate their beliefs in a meaningful way, Four Seasons
staff treats each other with importance and respect, and set a good example for each
other. In all their interactions with customers, guests, colleagues as well as business
associates, they seek to treat others the same way they would like to be treated.

The Golden Rule: Four Seasons adopted the “Golden Rule”, which states: “Do unto others
as you would have others do unto you”. This has become the underlying foundation for
the Four Seasons company culture.

Analysis: Dusit Thani and Four Seasons have comparatively similar goals. Since both aim
to provide the best service to their customers as much as possible, this makes them direct
competitors and both compete within the same market. However, there are also distinct
differences between the two companies. Dusit Thani does not only aim to provide
outstanding services, but they also ensure that all their services represent the Thai culture.
On the other hand, the Four Seasons strongly follow the “Golden Rule” and focus on
managing their employees well to make sure they treat the guests in the most hospitable
way.

LIVING VALUES: Four Seasons hotels and resorts play a major role in CSR (Corporate
Social Responsibility). They believe in making a difference and giving back to the local
communities. The Four Seasons have done numerous activities to contribute to the benefit
of societies around the world. For example: Planting 10 million trees around the world,
Launching the green meetings program, protecting the sea turtles in Nevis, providing
textbooks for students in Costa Rica, donating teddy bears to the less fortunate and so on.
Their contributions to communities continue to grow and make a significant difference.

COMMITMENT TO AN ETHICAL CULTURE: The Four Seasons Hotels are committed

to conducting their business in a way that complies with the law and is consistent with the
highest ethical standards to prevent bribery and corruption. They are dedicated to using
all reasonable efforts to make sure that all the service providers under

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 Four Seasons- including employees, contractors and agents, are aware of these ethics and
conduct the business in an anti- bribery way (Four Seasons Hotels and Resorts, n.d.)

ENVIRONMENTAL MISSION STATEMENTS: According to the hotel, “Four seasons

involves employees and guests in the common goal of preserving and protecting the
planet. We engage in sustainable practices that conserve natural resources and reduce
environmental impact. As importantly, sustainable tourism will enhance and protect the
destinations where Four Seasons operates for generations to come”.

Analysis:

Four Seasons have made it clear why protecting natural resources is important to them.
They have clear aims and engage their staff in being committed to protecting the
environment. However, to ensure that they truly implement activities for sustainability,
they should hire a Chief Sustainability Officer who can create a concrete mission
statement and develop an environmental action plan for the entire organization. Also, they
should be transparent about their entire sustainability project and publish an annual report
documenting all the work they do for the environment. Furthermore, to ensure the success
of the new sustainability program, Four Seasons will need to train their staff to
incorporate “green’ ideals into everything they do (The Natural Strategy, n.d.)

Current Strategy

Analysis:Four Seasons and Dusit Thani fall under the same strategic group because they
have and sell similar services and use similar strategic actions. When compared to the Four
Seasons, Dusit Thani is much smaller in terms of size and revenue earned, therefore it is
almost impossible for Dusit Thani to gain the same amount of market share as the Four
Seasons. Dusit Thani can, however, maintain its competitive advantages and create strategies
that will help them compete only with hotels in the same region. Also, Dusit Thani can use a
strategy called “competitor intelligence” to collect data about its competitors, analyse their
strategies and use it as a tool to improve and differentiate themselves from others. They can
also implement dynamic pricing for limited supplies. Since the hospitality industry is price
sensitive, Dusit Thani must ensure that they are proactive and reactive on the prices they set.

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Assumptions

Although the Four Seasons is one of the world’s top hotel companies, they are still behind the
big chain hotels such as Starwood and Marriott Inc. In 2002, Four Seasons earned C$285
million as total revenue, which was much lower than the previous year. The chart below
shows that since 2002, Four Seasons has lower earnings per share than Starwood and Marriott
(Mitchell & Nelson, 2003)

The most current and vital strategy used at the Four Seasons is Customer Relationship
Management (CRM). Hotels need to be more creative and be able to differentiate from other
hotel chains, because competition is increasingly very quickly. CRM is crucial because it
assists in attracting and retaining customers to the company, which suggests that this strategy
helps to increase and maintain profits. (CRM, 2012) CRM is all about collecting customer
data and creating a customer profile. Guest data must be recorded accurately and in detail
from the first visit itself. CRM allows all hotel employees to remember the customers’ needs,
preferences and behaviours. This makes the guests feel important and special when they are
recognized and therefore makes them impressed by the service. Moreover, CRM prevents the
employees from repeating their mistakes because the guests will not be pleased. CRM works
well in Four Seasons because it links with the “People Principal” concept. Lastly, all the
employees at the Four Seasons are very well-trained and well-treated so they will serve all the
customers using the best attitude.

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 Another important strategy is the level of technological leadership. Four Seasons is
investing in software to help the company manage the hotel in a more effective manner. This
software allows all the Four Seasons branches worldwide to connect and share guest profiles.
This will allow all employees to access the software and communicate in a better way.
Moreover, Four Seasons also use Social Media extensively and spend half of its digital
marketing budget on this because it is very fast as well as low in cost. Although having this
type of marketing campaign is nothing unique, it is a vital tool because customers can
research as much of information as they please about special promotions, locations and
outlook of the hotels (Parr, 2012).

The Four Seasons truly believe that the hospitality industry will flourish and grow,
despite all the issues the world faces. According to Mr.FitzGibbon, president of the
worldwide hotel operations, he states that “The sky is the limit”. Thus, the company has
made plans to double their number of hotels in the next decade. The new hotels will be built
in developing regions, specifically in the Asia-Pacific, South America, Africa and other
regions they predict will create an opportunity for Four Seasons to expand. The Four Seasons
anticipate a great opportunity for them to expand in South America due to the increase in
North American travel. Furthermore, the Four Seasons sees a trend developing when it comes
to dining experience. The major trend now is dining in high end restaurants that are situated
in top hotels, due to good image and brand name. The target audience remains the same
between the ages of 42-44 years of age, but their preferences and behaviours have changed.
People belonging to this age group still want to feel young and fun, so the Four Seasons is
adapting and changing their strategies to satisfy what customers want.

Company’s

Capabilities Strengths

1) During the passing years, Four Seasons has been awarded with numerous awards
regarding the service industry. This increases their brand image immensely and allows
them to be viewed as a trustworthy hotel, which leads to an increase in sales and
revenue. They were voted one of the “100 best companies to work for”(Higley,2007)
which means that apart from customers, the employees rely and trust the Four Seasons
brand as well. This is the direct result from Four Season’s service culture and the pro-
activeness of their HR department. All employees belonging to the Four Seasons
receive higher salaries than the industry average, including good benefits and higher

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 opportunities to get promoted. All these factors result in a low turnover rate of only
11%, which is 16% lower than the average turnover rate in the entire industry (CRM,
2012). When the employees trust the hotel, more people will want to apply for jobs at
the Four Seasons. Therefore, it allows the hotel to have a wider selection of people to
hire into the company.
2) Quality is clearly a strong point among the Four Seasons hotel chain. This brand
positions itself as a luxury brand, where it is not solely about beautiful design and
infrastructure, but more importantly about luxury in service. The service element
differentiates Four Seasons from the rest of the chains.(Higley,2007) Service comes
from the employee’s personal attitude, so it cannot be copied by others, so it is
extremely vital to know how to manage, control and develop the staff. Since Four
Seasons focuses on empowering their employees, by trusting them to do their job in
their own way and trusting their capabilities completely. Therefore, the hotels are
excellent at keeping their staff happy. By trusting the employees, they will reciprocate
and work more effectively because they will enjoy what they do. This creates a
competitive advantage for the Four Seasons.
3) Lastly, brand recognition is one of the biggest strengths of the company, because Four
Seasons has been well-known in the hotel industry for a long time and people view
the hotel as trustworthy and one of the top hotels in the world. Their brand name
attracts numerous customers and generates large amounts of sales and revenue.

Weaknesses

1) Even though the Four Seasons sell exemplary services, it is still not differentiated
enough to create a rare selling point. Their services can be found elsewhere in other 5
star hotel chains and this makes them too similar to their competitors such as Shangri
La, Intercontinental, Marriott and most certainly, Dusit Thani.

Analysis:

According to the research gathered, Dusit Thani and Four Seasons are significantly
similar. They both provide excellent service and are viewed as trustworthy by their

83
customers. Both their interior designs and architecture make the hotels appealing, but also
their services and the outstanding atmosphere within their establishments.

However, what makes Dusit Thani different from Four Seasons is that they have a
touch of being “Thai” in all the services they provide, which is their unique selling point.
However, what Four Seasons provides can be found in any other five star hotels. Another
point is that the Four Seasons brand is more well-known around the world and therefore they
have a larger base of loyal customers. Also, the Four Seasons hotels are easier to find
compared to Dusit Thani hotels, so more customers have access to it. A strategy that Dusit
Thani can use is open more branches around the world, so it is accessible to a wider range of
customers. Since its strength is already its ability to demonstrate Thainess, they should use
this to its full advantage as a tool for marketing. If Dusit Thani is able to expand to other parts
of the world, it will allow people who do not have enough money to travel to Thailand to be
able to stay at the hotel and experience the Thai nature it has to offer- they can experience the
Thai Food, Thai Smile and Thai Lifestyle as if they really are in Thailand. This will make
them extremely unique and successful.

Shangri-La Hotel

General Background

“A tropical retreat by the magnificent river of kings “, as their slogan says, is a place where
people can get away from their busy life and rejuvenate themselves. Located on the banks of
the Chao Praya River, the Shangri-La hotel is ideal for leisure as well as business travellers. It
is 35 minutes away from Suwarnabhumi airport. The hotel comprises of 802 luxurious
guestrooms facing the river or city in two neighbouring towers, the Shangri la wing and
Krungthep wing. The rooms have a traditional Thai feel, with silk and teak finishing. For
business travellers, Shangri la offers a higher standard of accommodation called the ‘Horizon
club’. All the rooms in the club are equipped with personal voicemail, executive sized desk
and a private fax machine with a complimentary Wi-Fi facilities, suit pressing service,
beverages and snacks, private meeting rooms, wide selections of newspapers and magazines
as well as board games.

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The hotel also consists of seven restaurants offering a wide range of international cuisines
serving Thai, Italian, Chinese and other cosmopolitan dishes.

Vision, Mission and Objectives

Vision: “To be the first choice for guests, colleagues, shareholders and business partners.
(Shangri la core values, 2012)

Mission: “To delight our guests every time by creating engaging experiences straight from
our heart” (Shangri la core values, 2012)

Objectives: The core values that they follow are:

- We will ensure leadership drives for results.

- We will make guest loyalty a key driver for our business.
- We will enable decision-making at the guest contact point.
- We will be committed to the financial success of our own unit and of our company.
- We will create an environment where our colleagues may achieve their personal and
career goals.
- We will demonstrate honesty, care and integrity in all our relationships.
- We will ensure our policies and processes are guest and colleague-friendly.
- We will remain deeply committed to our social responsibility by making a positive
contribution to our communities, environment, colleagues, guests and business
partners.

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Analysis: Comparing the visions, missions and objectives of Dusit Thani hotel and Shangri la
hotel, we can see that Dusit Thani focuses more on trying to be the world’s most valued
hospitality brand; they seem to have most of their focus on their reputation and giving back to
their investors rather than working towards giving their customers the maximum satisfaction.
Moreover, Dusit Thani has more resorts and hotels as well as a service apartment compared to
Shangri la, which has fewer hotels and resorts. Shangri la tends to focus more on quality
compared to quantity. Their objectives take everyone into consideration, customers, investors
and shareholders, employees, community and the company as a whole is very important to
them.

Current strategy

Since Shangri la has reached its maturity stage, its current strategy is to maintain
their current market share. In this stage, research costs are the minimum and profits are
generated, investment goes into product improvement and enhancement. Since the
competition is high in this stage, they need to look for new ideas and make improvements to
stand out among its competitors. Their aim is to attract new customers and increase the
existing customer base. Since customers already know about the hotel, advertising costs are
low and they might even reduce their price to compete in tougher times. This stage is usually
a stable stage.

Moreover, by winning awards, they remain in the public eye and maintain their status as a
high end brand. Their most recent awards include:

86
 World's Best 500 Hotels, Travel + Leisure (USA), 2009

 Top Asia Hotel in Thailand, Travel + Leisure "T+L 500" (USA), 2010

 Best Business Hotel in Bangkok, Business Traveller (Asia Pacific)

 Top 25 City Hotels in Asia, Travel + Leisure "World's Best Awards" (USA), 2009

 One of the Gold List Properties in Asia, Australia and Pacific Nations, Conde Nast Traveller
(USA), 2009 & 2010

 Top 10 Hotel Spas in Asia, Travel + Leisure "World's Best Spas" (South East Asia),2010

(Shangri la awards, 2012)

Analysis: Both Dusit Thani and Shangri la are at their maturity stage. Since they have the
same target market and competitors, they are each other’s direct competitors. The hotel
business is all about the ‘survival of the fittest’, one of the two will eventually reach the
decline stage and leave the market, while the other, if they have continuous improvement and
innovations, can remain in the market for a longer time. Both hotels need to focus on
retaining old customers and findings new markets for their products. They need to remain in
the public eye at all times. To do that, they need to be unique, sustainable, have excellent
customer service and also give back to the community.

Assumptions: The Shangri la group has come a long way since the 1940s, with expansions,
renovations, entering new markets and starting campaigns, they have become the leading
Asian-based luxury hotel group in the region. With their deluxe hotel accommodation, caring
service and fine food, we can see a bright future for them and their future developments. They
have big plans for the year 2013-2016, with new exciting hotels and resorts being developed
in different parts of the world (Shangri la future developments,2012).

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 Hotel kame Location

2013 Shangri-La Hotel, Qufu Qufu, §łainIand China First quarter

8hangri-La Bosphorus, Istanbul Istanbul, Turkey First quarter

Jing An Shangri-La, West Shanghai Shanghai, IdainIand China Second quarter

Traders Hotel, Putefi Harbour, Johor, Malaysia Nusaaya,Maaysia Secondpuańer

8hangri-La Hotel, Chongqing Chongqing, Mainland China Third quarter

Shangri-La Hotel, Lhasa Lhasa, Mainland China Third quarter

Shangri-La Santa, Hainan - Resort Sanya, l7ainland China Third quarter

Shangri-La Hotel, Shen\ang Shenyang, Mainland China Third quarter

Shangri-La Hotel, goha Doha, Oaar Third quarter

8hangri-La Hotel, at The Shard, L00Ö00 London, United KihgüołTl Third quarter

2014 8hangri-La Hotel, Bangalore Bangalore, India First quarter

Sh$ngn -ca Hnlel N an›ng Nan ing, MaJnlano Chlna

sha ngrİ-LÂ H0Ieï. Qinhu an ț d4o Qinhuangüao, Mainland China

Sha ngri -La H0reł, TangShan Tangghan. Mainland China

ßhaagri-La Holed, Tianjin Tiflõjin. Rßinlaø d think

Palm Rełreaî Shangń-La. Bangalore Bąngalprę. India

Traders øøei. ct›en»ai
C hen nai. lftdia
î2hangrİ •La's Hambantota Resort & Spa. Sn Lanka Hamüantola, Sri Lanke

2015 Shangfi-La HoIeî. ChangSha caançsna. uainiana onira

Harbin, Hainland China
Shangri•La HarŁiin, S0ngbei Di strid
Shangri-La HoIe1. Jiuan Jlnan,UalolandChlna

Shangñ-Ła Hotel. Xiamen Xìamen, Idainland China

Shangri -La Holel. Yingk.ou YIngHOU, Mainł4nd ChInd

9hangri•La Hotøł. Zhouahan Zhouenan. Mainland China

Shangr-La ai the Fa It u anil a fJaniia. Philieeines

Shangn •La Holed, Colombo Colombo, 9û Lanka

2018 Shangrł-La Dalian, Wolong Bay Dallan. łgainiand Chin a

Shangri •La Hotøl. Zhengzhou Zhangzhou, Halnland China

Shartprt-Ła Hotel. 2huhai Zhuna•, Uaínian0 China

 Source: Shangri la future developments, 2012

Company Capabilities:

 Strengths: Their biggest strength is their location, since they are located near the
Chao Praya River; the hotel guests have a magnificent river and city view. Guests can
also use the boat to cross over across the hotel. Moreover, they are located near the
BTS station and can travel easily around Bangkok. Also, their facilities, extra services,
excellent customer service, restaurants and business centres are suited to the
individual needs of guests.
 Weaknesses: Since Shangri la is competing with many new hotels with new ideas as
well as old hotels with a big market, customers might not pick this hotel as a first
choice. Also, since they are located in Bangkok’s busy area, the noise, water and air
pollution might make the customers think twice before staying. The room rates
offered are also quite high, which plays as one of the main factors for customers
staying elsewhere.

Analysis: Dusit Thani and Shangri la are located in very good areas of Bangkok. Shangri la
has the river view whereas Dusit Thani has the city view, with proximity to Siam Paragon,
Central World and MBK which are famous tourist spots. On the negative side, both face the
problem of Bangkok’s traffic and pollution as well as high room rates.

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Internal Environment

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Resources

Resources is one of the most important thing whenever setting up a business.

According to business dictionary, “resources is an economic or productive factor required to
accomplish an activity, or as means to undertake and enterprise and achieve desired outcome.
Resources are basically the inputs into a firm’s production process. Without resources there
can’t be a business because it is important and is used throughout the process of the business,
from the beginning till the end. With the right kind of resources, a business can be able to do
great things and become successful so therefore looking into the resources of a big company
such as Dusit will enable us to learn so many things and gain a lot of tips and remedies in this
subject.

Additionally, Dusit International has over 22 hotel properties located in Thailand and
overseas with plans to open more in the future. It comprises of five hotel brands: Dusit Thani
Hotels & Resorts, Dusit’s second generation dusitD2 hotels & resorts, Dusit Devarana hotels
& resorts, Dusit Princess Hotel & Resorts and Dusit Residence Serviced Apartment (Dusit
International, n.d.).

There are two types of resources:-

A. Tangible resources
These resources in the company are assets that can be seen, touched, and quantified.
They are any company’s property that has a physical existence and is one you can reach out
and touch.

 Financial resources
Financial resource is the money available to a business for spending in the form of
cash, liquid securities and credit lines. Before going into a business, a company needs to
secure sufficient financial resources in order to be able to operate efficiently and sufficiently
well to promote success.According to the annual report of Dusit International in the 3rd quarter
of 2012, Dusit Thani overall performance reveals that the company is able to borrow funds
from financial institutions without the risk of being unable to pay back the debts. Dusit Thani
financial statements shows the total liabilities of the company equals to 3,752.64 million baht
and total equity equals to 4,446.12 million baht (Financial Information, n.d.).Therefore, Debts
equity ratio of Dusit equals 0.84, which is lower than 1 which means
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that the company has equity more than debts. A low percentage means that the company is
less dependent on leverage; money borrowed from or owed to others. The lower the
percentage, the less leverage a company is using and the stronger its equity position. As a
result, Dusit has the capacity to generate funds for future hotel project development.

 Organizational resources
Management

 Mr.ChaninDonavanik, Chief Executive Officer

 Mr. Giovanni Angelini, Vice Chairman

 Mr. David Shakelton, Chief Operating Officer

Sales and Marketing

 Ms. Catherine McNabb, Vice President Sales and Marketing

Education

 Mr.KhampiSuwanarat, Managing Director – Education

 Mr. Gary Cromie , Joint- Venture Director of Le Cordon Bleu Dusit Culinary School

Human Resources

 Mr. Tan Eng Leong, Vice President – Human Resources Development

Operations
 Mr. Jiri Kobos, Vice President – Operations

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 Moreover, Dusit Thani has six main formal report structures of the company including
Annual Report, Financial Statement, Annual Registration Statement, Notice, Performance
Report and Minutes. In addition, Dusit Thani organizational reports are always up-to-date in
its website and have issued various formal organizational reports to public. Dusit is very open
to the public about showing their performance and can easily create trust from the customers
(Dusit International, 2012).Moreover, publics are able to look and compare the yearly
performance of Dusit Thani and can determine which year they perform better.

 Physical resources

Dusit International is a member of the Preferred Hotel Group. Dusit International

comprises of five hotel brands which are Dusit Thani Hotels & Resorts, Dusit’s second
generation dusitD2 hotels & resorts, Dusit Princess Hotel & Resorts, Dusit Devarana Hotels
& Resorts, and Dusit Residence Serviced Apartments. It also operates its own signature
Devarana Spa. A Devarana Spa meaning “garden in heaven” and it will excite the senses and
make spa lovers feel truly special as if you are in heaven. Dusit Thani offer a unique product
called Devarana Spa and it is offered only in Dusit Thani and DusitD2 hotels and resorts
(Devarana Spa, 2006). Apart from spa, Dusit hotel also provide other standard facilities and
services to their clients. To illustrate, Dusit Thani Bangkok offers a fully equipped
computerized Executive Business, Centre with Reuters wire, private boardroom, business

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library, translation, printing, personal computers, fax, and secretarial assistance, a golf driving
range, a gift shop and other eleven restaurants at Dusit Thani. In addition, meeting facilities
are also available with a selection of function rooms and big conferences even the Napalai
Ballroom are available which can accommodate up to two thousands of people. Dusit Thani
has an outdoor swimming pool which is set in the hotel’s landscaped central gardens. Also,
there is a well-equipped Fitness Centre with gymnasium, whirlpools, saunas, squash and
tennis courts are provided at the Dusit hotel (Dusit International, 2013). Moreover, from the
beginning Dusit Thani was able to achieve high popularity as it set new standards for
Bangkok’s hotel industry. Since then, the hotel has remained in the front ranks despite an
unprecedented scale of new hotel construction and stiff competition. However, Dusit would
become better known internationally with its expansion that is Dusit has expanded its
properties even more worldwide including Egypt, Maldives, Philippines and United Arab
Amirates. Also, there will be eight upcoming properties of Dusit which will be situated in
United States, India, China, Thailand and Saudi Arabia (Oakley, 2012).

Furthermore, Dusit International offers special promotions to their romantic couple

guests such as The Dusit Thani Bangkok Explorer promotion that offers spa, sightseeing and
spa in one package. In terms of accommodation, since Chinese New Year is coming up, Dusit
Thani Bangkok would offer special packages to ring in the New Year, complete with all the
traditional festivities and exquisite Chinese culinary delights with more other promotions
(Dusit Thani, n.d.).

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  Technological resources

Dusit Thani offers various kinds of products and services that will be used as the same
trademark which would include real estate management and development, lease land, meeting
arrangement, hotel management, health club and restaurants (Dusit Thani, n.d.). Moreover, on
the October 19, 2009, a European community trademark registration was filed for Devarana
Spa by Dusit Thani Public Company Limited. Devarana Spa at Dusit Thani Bangkok is truly
an oasis of tranquillity at the centre of the city. It’s filled with sparkling water pond, natural
light and vibrant color all harmonize in the expansive reception area. Also, all treatment
rooms provide beauty, comfort and privacy with double rooms available for those who wish
to share their spa experience. Furthermore, the Devarana Spa trademark is filed in the
category of Cosmetics and Cleaning Products, Paper Goods and Printed Material, Medical,
Beauty and Agricultural Services (Dusit Thani PCL, 2009). Dusit also have Dusit
Princess,Dusit Residence trademark and Dusit Devaran which are the subsidiaries business of
the company besides these two trademarks

B. Intangible resources

The assets you cannot touch or see but that have value. It is an asset that is rooted in
the firm's history created over a period of time.

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  Human resources

At the end of 1992, Dusit Thani had 995employees. Dusit Thani is directly managed
by a General Manager, Mr. Daniel McCafferty, an Irish who has been in this position for 6
years. He reports directly to the Senior Vice-President, KhunKhampiSuwanarat.
KhunChaninDonavanik believes that the proper development of tourism begins with quality
people. No input is more important than the contribution of the employees. In addition, the
company builds a strong relationship and trust with its employees by creating a friendly
environment. And each and every employees in Dusit Thani are given equal importance that
is the company held birthday party for employees whose birthday falls on that month and all
other department such food and beverage department, housekeeping department, top-level
executive will attend the birthday party and this give great importance to the Dusit employees.
Moreover, Dusit has never discriminated their employees in terms of gender, age, race, or
education. All are given equal respect (Dusit Thani Hotel, n.d.). In any hotel organization,
they must be well trained employees because if they are well trained, given good benefits and
proud of whom they work for. They will provide guests with good service and that in turn
translates into a high return rate of guests and a high rate of return for the investors (Human
Resources, n.d.). This philosophy is the essence of the company's corporate culture and Dusit
Thani is noted for it. Loyal employees with a turnover rate of only 0.3 percent. Moreover,
they ensure that all hotel staff needs to have all the necessary knowledge, skills and
competencies and that the staffs are being developed for performing excellently in their
current jobs and future responsibilities. In addition, Dusit Thani hotel has develop and
manage a high performance human resources training and development programs employees
by conducting various training courses based on different levels of work experience such as
new hire training for departmental head level, and manager level, and personal development
course that enables the staff of Dusit Hotel to continuously learn and acquire new skills and
competencies that enhance performance and productivity employees (Human Resources
Development, n.d.). Furthermore, they tend to have a good teamwork of staffs and all the staff
is committed to their work and they put in 100 % effort. Also, the value of Dusit Thani Hotel
is to maintain customer focus, good teamwork and respect for their staffs. Also, Dusit Thani
invests US$100,000 on a six- month Mini Master of Business Administration (MBA) as Dusit
recognizes the importance of talent development so that the participants can keep their
company competitive. In this program, twenty nine participants are selected from all
departments such as Human Resources, Food and Beverage department, Rooms division,

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Sales and Marketing. The course consists of subjects which are included in hospitality
management which are Managing Human Resources and Leadership, Marketing
Management, Managerial Accounting and Corporate finance (An international marketing
strategy analysis, n.d.).

 Innovation resources

Dusit Thani keeps on contributing different techniques and strategies that relates to
‘loyalty programs’ that will keep their customers and employees for a longer period of time
because if our associates are happy, they tend to keep our customers happy as well. They
want to achieve the goal to be able to sustain their employees and make them feel like home
and enjoy staying in the company as well. The main purpose is to help increase the
company’s competencies to generate new ideas and innovations for the successful of the
organization (Customer royalty, 2011). Additionally, Dusit International has turned to IDeaS
Revenue Solutions to enhance its demand forecasting and boost revenue performance in 13 of
their Asian based properties. Dusit International is installing the IDeaS Revenue Management
System (RMS) at certain properties, and the IDeaS Forecasting Management System (FMS) at
other properties when working with IDeaS. The combination of the two systems provides
Dusit International with accurate pricing and a clear vision to their data across all hotels,
creating a solid platform to build a strong organizational-wide revenue culture. Moreover,
Dusit International has recognized that having the right technology and strategies in place
when it comes to business forecasting and pricing is critical, given the growing levels of
competition in the regional and local hotel sector. IDeaS has help Dusit in their operation
matters regarding forecasting process so that better decisions can be made with regards to
evaluating and maximizing revenue opportunities. Since Dusit has work with IDeaS, Dusit
have seen a more pro-active implementation of strategies and more business decisions made
based on facts and figures as opposed to just assumptions(Dusit Partners IDeaS, n.d.).
Therefore, the more accurate forecasting has help Dusit to instil a stronger revenue culture
within the hotel and has led to better cost control and manpower management. Dusit has to
constantly innovate to ensure they are operating at their best. Thai is in terms of Revenue
Management, it was identified that they needed different revenue and forecasting solutions at
different properties. It was clear that a single software solution was not going to give them
what they needed. Thus IDeaS approach of data consolidation as well as revenue and pricing
will help Dusit drive better revenue.

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  Reputational resources

Dusit International is widely recognized for its commitment to quality, combining

modern international accommodation standards with superior service and décor that is
distinctly Thai. The Dusit Thani Group has a deeper understanding of owners' requirements
for running a successful hotel operation. This differentiates it from the purely management
company competitors. In addition, Dusit Thani offers facilities and services of high
international standards with traditional Thai hospitality.In Dusit Thani the service is warm and
efficient, consistent in all areas – front office, room service, dining outlets, etc. It is this
superior service that ensures that the guests, both local and international, will continue to
return (Saad, 2012). Thailand's tourism industry had yet to show signs of the enormous
growth it was later to record, and the success of a large five-star city hotel was far from
certain.However, from the beginning, Dusit Thani was able to achieve high popularity as it set
new standards for Bangkok's hotel industry. All these 60 years, the name Dusit Thani has
been a hallmark of Bangkok. Dusit Thani brings to its guests a heavenly stay, which is true to
its name a town in heaven (Dusit International, n.d.). Furthermore, Dusit is reputable for its
excellence delivery of customer service which finally enhanced the trustworthiness from
customers and Dusit has always been committed to its customers and so the company has
received many awards for excellence service.

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Capabilities

To be able to develop a competitive advantage the firm must have the resources and
capabilities that are superior to those of its competitors. Without superiority, the competitors
simply could replicate what the firm was doing and any advantage quickly would disappear.

Dusit’s Capabilities:

Capabilities of a firm refer to the ability to utilize its resources effectively. Basically a
good example is the ability to bring a product to market faster than competitors. It has
emerged over time through complex interactions among tangible and intangible resources.
The activities that relate to a firm's capabilities are the activities through which the
firm adds unique value to its good or services over an extended period of time.

Key sources of a firm’s capabilities come from employees and the ideas of the
employees.

 Unique skills and knowledge

 Functional expertise

Distribution

In order to reach its markets globally, Dusit Thani has implemented many distribution
systems. As part of the strategies Dusit Thani has its 28 global sales offices as well as
Regional Sales Offices in the United Kingdom, Germany, China, Hong Kong, Singapore,
India, and Dubai.In order to broaden its sales reach in addition to existing global sales offices
and regional sales offices, in 2010 Dusit Thani had introduced global distribution system in
partnering with Preferred Hotel Group™. By being the first hotel group to be switching to the
private label chain code BC in the Global Distribution System through SynXis Central
Reservation System. This will allow Dusit to have access to an extensive global network of
travel agents in excess of 750,000 terminals worldwide. It is undeniable that internet plays an
important role in connecting with customers nowadays. Like other hotels, Dusit has its own
official website to provide necessary information for the customers such as room rate, room
types, hotels history, services facilities, maps, special promotion and many more as well as

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offering services like online reservation. Therefore, in order to strengthen its capability in
driving people to its website Dusit has constantly updates its website to look as the search
engine optimization (SEO). The website has also been translated into multiple languages
including Arabic, Chinese, Japanese, English and Thai. There are also special packages
offered to certain customers segments such as family, golfers, or honeymoon couples
packages. The appealing complimentary offered by the hotel can attract more of these target
customers to choose Dusit Thani as their first choice. Online travel agent booking is another
mean that can effectively draw a lot of customers to Dusit Thani. These include Agoda
website that has reputation among the travellers in searching for hotels in a cheaper price.
Dusit Thani doesn’t over look at this point where they have to maintain their best available
rate on these websites all the time. Moreover, Dusit has partner with airlines and Credit Card
companies to attract airline frequent flyers and credit card users. This will allow the guest to
redeem the credit card points or travelling mile for their free stay.

Human resources

Human resources capabilities play a major role in strategy implementation and

becoming more actively involved in the strategic management process. Especially in
hospitality industry where the quality of staffs would directly effects the quality of service
provided to the guests. In order to support Dusit International's expansion Dusit sees the
importance of providing the best education to staffs from basic to top-level knowledge to
develop its capabilities. Therefore, in 1993 Dusit had set up Dusit Thani College which is now
becoming the leading center of hospitality learning regionally.

In 2009 Dusit Thani College initiated a programme with Lyceum University in the
Philippines. The graduated students would have great career opportunity working with Dusit.
By doing this Dusit can ensure the quality staffs who has knowledge and skills to work with
them. Because Dusit knows that this capability of the quality people they have would bring
them with new ideas generating, meaning these people would lead to development of the
hotel. Dusit International also has an alliance with Le Cordon Bleu, the world's largest, and
distinguished culinary arts institute in Paris.Besides Dusit Thani College and the Le Cordon
Bleu Dusit joint venture, the Dusit Executive Development Center Co., Ltd. (DEDC),
established in 2005 provides top-level executive training courses and customize programmes
to individuals and various organizations dealing with, the hospitality industry. DEDC actively
collaborates with leading institutes and universities to provide the most reliable quality and

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solid expertise in the hospitality industry. After Dusit has set up Dusit Thani College (DTC)
and Dusit Executive Development Center (DEDC) they see the opportunity in building skills
for their people. Therefore, they invested US$100,000 on 6 month Mini Master of Business
Administration (MBA) programme in Hospitality Management to provide their executives
who have the potential to take on future senior leadership roles in order to assist Dusit
International’s global expansion. Moreover, it is important to provide participants the
knowledge to keep themselves and our company competitive. As this course could help
broaden their vision and the hospitality best practices which will also support them to
progress in their profession.

Apart from the education area, Dusit has also worked with Investors in People (IIP)
where they provide Dusit with a frameworkto address structured change within HR
department and also the hotel as a whole. The structure change allows the staffs to have better
communication with top management. As a result, Dusit have a much more vibrant team,
empowered and willing to engage. This allows them to have improvement in staff retention
and profitability of the hotel (Investors in People, 2011).

Management Information Systems

Dusit Thani has acquired a software system called OPERA Central Systems solution
by signing a contract with Micro- Fidelio in 2007. They have a binding contract with this
company as their supplier of Information systems and software updates. This contract made
Dusit Thani the first Hotel in Thailand to possess this software system. This system includes
quick and efficient functions that are easy to operate and as well as easy to train their new
front office staff to be familiar with the system. OPERA Customer Information System
(OCIS) safe storage of guest information, OPERA Web System (OWS), OPERA Reservation
System (ORS), and OPERA Sale Force Automation (SFA). By signing this contract not only
the reservation department benefited but all departments did, as their system is a package of
sales management systems and web management as well. Changes in system hasn’t been
made since 2007 as Dusit Thani believes in long run familiarity with the system to save both
cost and time for training and development (Travel News, 2007).

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Marketing

Marketing can be described as the process of communicating the value of the product
or service to customers. In order to be success in marketing we need to first do the customer
analysis in order to identify your customer segments to meet their specific needs. Dusit has
developed customer profile in order to reveal the demographic characteristics of the
customers. By gathering data by segment such as the occupancy by each segment and room
revenue generated by the various segments(Quintos, B., 1993).This will allow Dusit to be
able to identify which segment of customers visit which hotel most. By narrowing down the
segment they can adjust their marketing strategy according to customer needs and wants by
their segments. As Dusit knows that different segment of customers would certainly demand
different kind of services. And if the hotel provide service that meet up with customer needs
and expectation it will lead to satisfaction and return of the customers in the future. From the
long experience of their operation in the five-star market segment, Dusit Thani has realized
the potential of the four and three-star market that keeps growing nowadays. This lead to the
strategy for expanding new hotels which aim to attract new target groups such as
government/embassy,package, tour, airlines,convention, tourist and others (Quintos, B.,
1993). By doing this will allow Dusit to increase their market share. Dusit also continuously
communicate with the existing customers through the use of e-mail and release the updated
news through “Dusit E-News” to keep their existing customers up to date with the news about
Dusit as well as special promotions offered to them. Moreover, one of the potential customers
of Dusit are golfers. Dusit allows these golfers to enjoy the privilege of making room
reservation as well as golf service reservation directly through www.dusitgolf.com (Opera
Central Reservation system, n.d.). Dusit also offer Dusit Wine & Dine membership to
encourage more visits of the customers to their restaurants. The customers will receive
exclusive benefits at all restaurants and bars of Dusit Thani, dusitD2 and Dusit Princess
Hotels & Resorts. Furthermore, Dusit also partnering with Impact By Marketing Solutions – a
provider of Database Marketing, Customer Relationship Management (CRM) and Loyalty
Marketing Solutions for the Hospitality Industry (Opera Central Reservation system, n.d.).
By partnering with Impact Marketing Solutions enables Dusit to continuously develop its
marketing strategies. For example, Dusit has Dusit Gold Card offered for guests who are
recognized as one of their most valued guests. Dusit Gold Card will allow the card holder to
receive many privileges and benefits such as priority room reservations, special room rates,
VIP recognition, welcome drink, complimentary fresh fruit, express check-out, savings on

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laundry and restaurants, and guaranteed late check-out until 2 pm. Up until now Dusit has
large number of current guests who owns the gold card therefore the card has recently
developed to improve data collection of the customers through Customer Relationship
Management (CRM) (Opera Central Reservation system, n.d.). Apart from this Dusit
International is also a member of Global Hotel Alliance (GHA) to better serve their clients.
GHA consists of 140 upscale and luxury hotels and resorts, spread over 41 countries. Each
brand is a key player in their main region such as Dusit International in Thailand, Kempinski
in Europe, Landis in Taiwan & China, Marco Polo in China and Hong Kong, and Pan Pacific
in the Pacific Rim. Through www.globalhotelalliance.com the member of GHA can make
online hotel reservation as well as airline reservation. By choosing GHA travellers can be sure
that they will have a unique, local experience in a four or five-star hotels while receiving
consistent levels of service and recognition, regardless of their choice of hotels. Dusit Gold
Card Members are entitled to receive member benefits of the participating Global Hotel
Alliance hotel’s program they are visiting.In addition, as GHA expands its network of
member hotels, Dusit Gold Card Members will have even more destinations to experience the
special benefits offered by member hotels (Opera Central Reservation system, n.d.).

Management

Dusit Thani emphasize heavily on quality work force. For that they have created a
Hospitality curriculum college of their own to develop young generation to have the “Dusit
mentality” as a working level as well as managerial level. The company stress on Human
Recourses quality recruitment as they attempt to do both internal and external recruitment.
This creates a competition for employees to enhance and develop themselves to be promoted
and people from outside the company to expect high standard, which intern produce good
quality recruits. Good quality managers mean good vision. This combined with extensive
research and development can make Dusit Thani’s aim of global expansion more successful.
They recently chose Dubai as their next expansion target as their research tells them “For the
hospitality industry, Dubai offers a unique blank canvas, which has allowed developers to
create architectural masterpieces” (Wilson, n.d.). Dubai could be the next hub of tourism in
the future. This creates a room for managers to grow and help Dusit towards its vision.

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Research & Development

As research has shown in Thai companies there is a lack in revenue management

team. Revenue management is one of the most important aspects of any company as it
regulates and manages company’s revenue and therefore income. Dusit Thani has made a
development by becoming a partner with IDeaS revenue Solution to help them manage
revenue. Later on Dusit Thani decided to deploy the IDeaS Revenue management system now
widely known as RSM at their properties to develop the level of technology and attract
potentially talented revenue managers to work at their hotel. They also circulate the FMS
which is Forecast Management System of IDeaS. Both the systems are highly effective
revenue management and forecast creating a solid revenue culture in Dusit Thani(Dusit
Partners IDeaS, n.d.).

Dusit Thani is one company that keeps researching about potential suppliers and tends
to find new options to widen their supplier span and have power over them. They aim to
develop themselves and have good supply of commodities and raw materials by standing
strong in supply management. Keeping a range of suppliers is also beneficial to its size and
ranges of services provided to their guests. Due to vast technology in today’s world it is easier
for Dusit Thani to research and develop their strong supply chain and stay a strong
competitor in the market both present and future base.

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Core Competencies
Core competencies are capabilities that serve as a source of competitive advantage for
the firm over its rivals. In order to identify and build core competencies there are four criteria
of sustainable competitive advantage to be meet. For a capability to be a core competence, it
must be valuable and unique from a customer’s point of view. For a competitive advantage to
be sustainable, the core competence must be inimitable and nonsubstitutable from a
competitor’s point of view.

In this section, we would like to use the four specific criteria in identifying which
capabilities are core competencies. The four Specific criteria are listed following:
 Valuable
 Rare
 Costly-to-imitate
 Non-substitutable capabilities
We will simply summarise and listed down the main capabilities of Dusit’s according
to our research as mentioned in the previous sections. Then identify which capabilities are
core competencies or just competitive advantage.

Valuable capabilities

Valuable capabilities allow the firm to exploit opportunities or neutralize threats in its
external environment. By effectively using capabilities to exploit opportunities, a firm creates
value for customers. In order to exploit opportunities Dusit invests in the new Dusit website
targeting increased online bookings and elevating the Dusit brands through online media
channels. With the fast changing in technology today, Dusit has made Dusit.com a priority for
the future of the company. They continually upgrade their website to keep up with
changes.With a fresh look and design, as well as many new features they provide a more
convenience to guests to book, and confirm their business or leisure tripsworldwide. In
addition, the new Dusit website will also help them understand their customer’s behaviour
better with guest history, web statistics, conversion rates and Google analytics features (Dusit,
n.d.). Moreover, Dusit International is also a member of Global Hotel Alliance (GHA) to
better serve their clients. GHA consists of 140 upscale and luxury hotels and resorts, spread
over 41 countries. By going to www.globalhotelalliance.com the members of GHA

105
including Dusit Gold Card can make online hotel reservation as well as airline reservation. By
doing so Dusit will create value to customers as customers would gain many privileges and
benefits out of this. Not only it would benefit the customers but it will allow Dusit to gain
credit among international guests as well (Dusit, n.d.).

Rare capabilities

Rare capabilities are capabilities that few competitors possess. Although, Dusit
capabilities in developing its website and joining GHA are valuable in customer perspective,
many competitors can easily possess these valuable capabilities. However, it is rare for
competitors to establish their own effective training programme.Unlike other training
programmes Mini MBA programme of Dusit is exclusively developed by Dusit Thani
College (DTC) and Dusit Executive Development Centre (DEDC) where it is specially
provided to executives who have the potential to take on future senior leadership roles in
order to assist Dusit International’s global expansion. The goal of this programme is to
prepare their people for challenges ahead according to global expansion as well as ensuring
talented people to help them strive for excellence. As Dusit believe that well educated staff
would lead them to the next step towards the company vision (Human Capital, n.d.)

Costly to imitate capabilities

Imitating Dusit’s brand image is difficult for competitors since Dusit has a long
history of over 60 years of experience in the hotel field. The essence of Dusit Thani is best
symbolized by the statue of King Rama VI situated opposite to the Dusit Thani hotel. King
Rama IV has come up concept in 1918, named Dusit Thani, meaning “Town in Heaven”. The
company takes not only its name, but also much of its character, from the ideas of King Rama
VI, whose thoughts on the modern state blended Western and Thai influences. Thus, the
architecture of Dusit Thani hotels display traditional Thai style while facilities and amenities
surpass the high expectations of modern deluxe service. This creates Dusit Thani to be one of
the nation’s leading hotel companies (Dusit, 2011).Another capability that is difficult for
competitors to imitate is their relationship with customers. As Dusit has a good customer
loyalty programme like Dusit Gold Card where currently there are a large number of
customers holding Dusit Gold Card. In order to receive large number of loyal customers the
hotel would need to gain trust from customers over time which is hardly imitated by the
competitors.

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Nonsubstitutable capabilities

Nonsubstitutable capabilities are capabilities that do not have strategic equivalents.

Since Dusit has existed for over 60 years, Dusit Thani culture and values have held its soul of
being the “Heaven on Earth” according to its name. The hotel has continuously emphasized
the beauty of the Thai culture as an advantage for creating unique experience for guests. No
matter where in the world Dusit Thani hotel chains are located, they implement the most
important Thai culture called “Wai” and “Siam Smile” to impress their guests.These are the
differences that separate Dusit from the rest.To successfully implement these essences
worldwide, Dusit Thani distributes “Dusit Daily News” to every single department in its chain
during the morning brief session so that every staff can read and share Dusit Daily News.
Dusit Daily News also contains Our Brand Credo, which reminds staff the way “Dusit
People” work such as “By continually striving to redefine industry standards”, The Dusit
Valuewhich emphasizes the value Dusit Thani has carried such as “We celebrate those with
positive ambition who search ways to transform not just do the same”, Today’s thought which
gives good philosophy about way of life such as “So of cheerfulness, or a good temper, the
more it is spent, the more it remains, Thai Talk, which shares employees knowledge about
Thai culture such as Thai food, Thai Clothes, or Thai Dance. Moreover, it also includes
achievements that inform staff about achievements the hotel has such as lists of property that
reach monthly goal or monthly customer satisfaction survey. The objective of Achievements
is to encourage staff to keep working hard. Lastly, their morning brief will end with “Dusit
Service Quality” which reminds Dusit staff to maintain their service quality.In addition to
requiring its employees to attend daily morning brief, the hotel also asks its top-level
executive to join the morning brief on a weekly basis in order to inform employees about
activities the company is planning to do so that everyone will know which direction the
company is heading into. Furthermore, the hotel encourages its staff to keep “Brand Credo”
pamphlet in their billfold so that they can remind themselves of their credo every time when
they open their billfold (International marketing, n.d.). To summarize, as Dusit capabilities
has met all four criteria of sustainable competitive advantage it can be said that Dusit are
likely to be able to achieve sustainable competitive advantage as well as above average
return. And if Dusit continue to focus on developing its capabilities to be valuable, rare, costly
to imitate, and nonsubstitutable, Dusit would sustainably have advantage over its competitors
and earn above average return.

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Competitive Advantage

A competitive advantage exists when a hotel has a significant edge over the
competition. Usually, this means the hotel can do something competitors can't do or has
something competitors lack. While it is extremely difficult to sustain a competitive
advantage, hotels work to create advantages through the development of resources and
capabilities. Better resources and capabilities lead to higher levels of success. However, not all
resources and capabilities are equal in their ability to help a hotel achieve sustainable
performance. To illustrate, Dusit Thani has two competitive advantages over its competitors.

Firstly, Dusit Thani has a competitive advantage in terms of its brand image. Dusit is a
very unique 5-star hotel in the classic luxury market. It has more hotels in its home market
that is in (Thailand) than its competitors. Dusit is confident to be successful in this market
through its unique brand image and high quality service. Dusit always presents themselves as
Thai Hotel up until today. All products and services reflect how to be Thais, so most
foreigners would prefer to stay at Dusit than other hotel in order to experience truly Thai
Hotel. The company tried to enriches customer’s unique experience by creating Thai culture
and tradition. In addition, its unique image as a Thai hotel as well as the very positive and
unique image of Thai hospitality gives Dusit a highly differentiated and desired brand
association where its direct competitors such as Four Season and Shangri-La hotel cannot
compete in terms of its brand image. Also, many tourists have trust in Dusit Thani that they
will receive exceptional services from the service providers and thus Dusit tend to gain loyal
customers.

Secondly, Dusit Thani has a competitive advantage in terms of its own training
institution which is Dusit Thani College. Dusit has its own training institution aiming for
developing employee’s skills and knowledge in every aspect of hotel carrier, which is Dusit
Thani College where the competitors do not have. This institution aim is to produce good and
quality people to work more productively in the hotel. Therefore, Dusit’s employees have the
same mind-set of the standard about the company resulting in providing exceptional services
to their customers. To develop employee’s skills and knowledge, the company provides Mini
M.B.A courses for its nominated employees in order to develop their capabilities
resulting in
better service performance. Therefore, Dusit people are stronger to serve customers
than other competitors such as Four Season and Shangri-La who do not give this
kind of 108
opportunities to their employees. However, to maintain its competitive advantage, Dusit has
to be innovating by coming by with new session of higher standard in order to keep
improving the skills and knowledge of the employees and hence increasing the profitability
for the company.

To conclude, Dusit Thani aim to further strengthen Dusit’s image of Thai hospitality
and keep improving its service quality. Also, Dusit try to eliminate all other cultural problems
by standardizing Dusit’s service while leaving enough room to tailor the service to each
customer’s wishes in order to sustain its competitive advantage over its rivalry.

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Value Chain Analysis

Value Chain Analysis describes the activities that take place in a business and relates
them to an analysis of the competitive strength of the business.If the business is to achieve
competitive advantage by delivering value to customers, managers need to understand which
activities they undertake are especially important in creating that value and which are not.
The value chain concept is important to understand this describing the categories of activities
within and around an organization, which together create a product or service". Influential
work by Michael Porter suggested that the activities of a business could be grouped under two
headings:

I. Primary Activities- those that are directly concerned with creating and delivering a
product (e.g. component assembly).It is the activities involved in the development,
production, sale, and distribution of an organization's products and services to its
customers and after sale support. They consist of the following:

 Inbound logistics – These are all the processes related to receiving, storing, and
distributing inputs internally. Your supplier relationships are a key factor in
creating value here.
 Operations – These are the transformation activities that change inputs into
outputs that are sold to customers. Here, your operational systems create value.
 Outbound logistics – These activities deliver your product or service to your
customer. These are things like collection, storage, and distribution systems, and
they may be internal or external to your organization.
 Marketing and sales – These are the processes you use to persuade clients to
purchase from you instead of your competitors. The benefits you offer, and how
well you communicate them, are sources of value here.
 Service – These are the activities related to maintaining the value of your product
or service to your customers, once it's been purchased.

II. Support Activities, which whilst they are not directly involved in production, may
increase effectiveness or efficiency (e.g. human resource management). It is rare for
a business to undertake all primary and support activities. It is the activities that
sustain primary activities and other support activities.

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  Procurement (purchasing) – This is what the organization does to get the
resources it needs to operate. This includes finding vendors and negotiating best
prices.
 Human resource management – This is how well a company recruits, hires,
trains, motivates, rewards, and retains its workers. People are a significant source
of value, so businesses can create a clear advantage with good HR practices.
 Technological development – These activities relate to managing and processing
information, as well as protecting a company's knowledge base. Minimizing
information technology costs, staying current with technological advances, and
maintaining technical excellence are sources of value creation.
 Infrastructure – These are a company's support systems, and the functions that
allow it to maintain daily operations. Accounting, legal, administrative, and
general management are examples of necessary infrastructure that businesses can
use to their advantage.

In today’s world, millions of dollars are spent for designing hotel services each year.
Design is accepted as the main factor for intentional competition. In general, hotel
practitioners and managers view design as only some aspects of hotel services such as interior
design or Internet based services. There are few activities performed to get customer
feedback. Additionally, Value Chain for hospitality is different from other industries this is
because hotel industry focuses mainly on providing exceptional services to the customers. In
addition, in the service industry we do not have the real operation of inbound or outbound
logistics. The operations in the manufacturing sector are far different to those in the service
sector. Therefore in this report, we will discuss five primary activities and four supporting
activities of Dusit hotel.

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Primary Activities

The first primary activity is service design. Service design can be both tangible and
intangible. It can involve artifacts and other things including communication, environment
and behaviors, whichever forms it takes it must be strategically applied. Poor service design
can lead to 25 percent to 40 percent loss of total income. Service design involves the
translation of ideas, solutions and intentions into a specific configurations or arrangement of
equipment, space and other resources. Therefore, a good service design ensures that resources
are allocated as effectively as possible. Service design in the hotel industry is very crucial for
its success. The quality of service design is created with a certain number of employees in
proportion with the hotel capability and with the respective training. A good service will
enhance the product’s value and will be crucial for the guest that will have to choose in which
of the many hotels to stay. In addition, service is all about perceptions of customers, so the
design should be attractive so that it can meet up to customer’s satisfaction. For example,
Dusit Thani hotels are full service hotels. Generally, full service hotels provide greater
services in order to reach up to guest expectation. To illustrate, Dusit Thani Bangkok was
designed to emulate this kind of perfection. From the architecture and interior design that
displays traditional Thai artwork to facilities that surpass the highest expectations of modern
hospitality. Dusit Thani tries to ensure that all the needs and wants of its guest would be
fulfilled. In addition, they offers a wide range of facilities which includes executive business
centre, barber and beauty salon, choice of eleven restaurants, bars and lounges, daily shuttle
by Dusit Sprinter to Dusit Thani HuaHin and Dusit Thani Pattaya, Devarana spa and in house

112
shopping arcade with jewellery shops, fashion apparels, tailor and drugstore (Dusit Thani
Bangkok, n.d.). In addition, Dusit Thani Hotels & Resorts are classified as a full service
luxury hotel. Hotels are decorated with Thai distinctive inspiration with well-designed
teakwood furniture’s, facilities that give the graceful Thai sense rooms. Also, Dusit Thani
hotels and resorts provide various numbers of facilities which include baby-sitting service,
laundry and valet service, spa, limousine transport service and they also provide broad
Internet for all guests. Customers can choose their preferred type of restaurant as Hotels &
Resorts provide more than five restaurants. Moreover, DusitD2 Pattaya, the room facilities are
also very distinctive in terms of providing iPad clock, attractive sexy bathroom and also the
flat screen television. The restaurant has open kitchen in the centre of restaurant as some guest
enjoy watching the chef cooking or preparing dish in front of them as this can create a unique
dining experience for all the guests in the hotel (DusitD2 Pattaya, n.d.). Furthermore, Dusit
Thani deliver exceptional Thai style service to all their customers by showing them respect
and also focus on reliability that is to deliver the service as promised to the customers. The
staffs of Dusit offer personalized service to each of the customers individually which gives
customers a feeling of genuine warmth and welcoming for all the guests.

The second primary activity is knowledge management which is a process that

involves connecting people with people, as well as people with information. A knowledge
management system is useful only if it is accepted throughout a hotel or a tourism
organization. In addition, knowledge management has become increasingly important for
hotel industry that wants to protect market share, explore future opportunities, and stay ahead
of the competition. To create a competitive advantage requires developing and leveraging
organizational knowledge of both the internal and external environments and the various
levels within the organization. Basically, knowledge management is the ability to understand
and know how to provide service to customers in such a way that the first time itself the
customers are fully satisfied with the service and leaves with no complains (Hallin, 2008). For
example, Dusit Thani recognizes the importance of development policy in terms of
knowledge and development of employees in all levels. It is important to provide all the
employees with sufficient amount of knowledge to keep themselves and the company
competitive. Therefore, the staffs are trained by the Dusit Executive Development Centre
which was established to provide top-level executive training courses and customized
programs to individuals in the hospitality industry (Dusit International, 2013). Moreover,
Dusit Thani circulates “Dusit Daily News” to every single department in its chain during the

113
morning brief session so that every staff can read and share Dusit Daily News which can help
them to improve their communication skills. Also, Dusit Daily News contains Brand Credo,
which reminds the staffs of the way Dusit People work such as by continually striving to
redefine industry standards. Lastly, their morning brief will end with “Dusit Service Quality”,
which reminds Dusit staff to maintain their service quality. Furthermore, employees are
clearly being informed on the weekly basis about the activities that the company is planning
to do so that everyone will know which direction the company is heading into and they can
go on to the right direction to help the company achieve their goal (Eberle, n.d.). “Key
Performance Indicator” or KPIs was developed by Dusit Thani as the foundation to analyze
and track performance of the employees and base key strategic decisions regarding staffing
and resources. As a result, key performance indicator or KPI can help employees of Dusit
Thani and managers to see the overall goal plan and understand how their individual goals fit
into the company’s business objectives thereby creating an atmosphere where employees feel
energized and engaged in the success of the company. Also, managers can more easily stay in
touch with employees progress during every phase of goal completion and by giving them
feedback to help keep improving on their performance (Rey, 2013).

The third primary activity is delivering system management. Dusit has its
International standards and the delivery system is distinctive Thai artistry and graciousness
personifies the earthly manifestation of its name which means in Thai, a town in heaven. In
addition, Dusit Thani wants to provide Thai hospitality with local sense to customers. Starting
from the first part that is Dusit Thani website is designed in a very Thai traditional way where
the guests can see on the Dusit Thani homepage is the Thai traditional dressing worn by the
Dusit staff which gives customers a sense of Thai culture. Moreover, when the guest check in,
firstly, the guests will be greeted with “WAI” consists of a slight bow, with the palms pressed
together in a prayer –like fashion by its staff. For example, in Dusit Club, while guest are
waiting to check in they are served with welcome drinks and a cold towel to refresh
themselves and also during the day customers are served with free cold drinks, fruits, cookies
and pastries and the guest can come and grab at any time of the day they want. Furthermore,
one of the restaurants in Dusit Thani hotel is Benjarong restaurant where authentic Thai
cuisine is prepared by the Thai chef and served in an elegant Thai setting that is Thai
traditional music opened for customers (Dusit Thani Bangkok, 2010).

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 The fourth primary activity is moment of truth management. A moment of Truth
(MOT) occurs when a customer comes in contact or interacts with the service provider and
experiences their level of quality. A positive moment of truth with customer takes the
company closer to the promised land of satisfied customers, high share of inputs and repeat
business and this creates customer satisfaction. And a negative moment of truth creates
dissatisfied customers who will look elsewhere to get their needs met. However, a
combination of positive and negative encounters will make the customer feel unsure of the
organization’s service quality, doubtful of its consistency in service delivery, and vulnerable
to the appeals of competitors. Therefore, it is a crucial moment for service provider to
influence customer perception of service quality to maintain good reputation of the company.
Based on the research of Dusit Thani Huahin, customer really appreciate and very satisfied
with the decoration and guestroom facilities which mean that the hotels already have efficient
resource, but as it can be seen in the rating that customers are not very satisfied with the way
staff interact with them. The overall rating on the level of satisfaction of guests towards staff
is 3.17 out of 5 where 1 represent strongly disagree and 5 strongly agree (Sivilai, n.d.). From
this rating we can see the staffs needs to be trained more and they should improve in moment
of truth so that they can deliver exceptional services to guest that can meet up customer
expectation and satisfaction For Dusit Thani Hotel, customers were very satisfied and they
really appreciated the way the hotel staffs perform recovery efforts as they perform
excellently in coping with customer’s problem. Additionally, the staffs responded culturally
up to the standard thereby meeting up to guest satisfaction and can develop a positive service
encounter (Dusit Thani, n.d.).

The fifth primary activity is service competitive. The hospitality industries are highly
competitive and are subject to risks relating to competition that may adversely affect its
performance. The success of any hotel industry depends upon the ability to compete
effectively in markets that contain numerous competitors, some of which may have
significantly greater financial, marketing and other resources which can eventually cause the
hotels to reduce or lower down their prices that can affect their profit margin. Therefore, each
hotel need to adopt Blue Ocean Strategy by coming up with a unique product or service that
can differentiate themselves from other competitors. Blue ocean strategy is the new concept
where there is no competition at all that is instead of competing they set themselves away
from other competitors. Then the service provider can provide customers with valuable,
innovative and unique service and also competitors hardly follow you and can enjoy a high

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profit margin (Trehan, 2005). To illustrate, one of the direct competitors of Dusit Thani is four
season. Both the hotels are full service luxury hotels and provide outstanding services to their
guests. However, Four Season Bangkok provides luxurious dining in room for customers and
offers twenty four hours fitness service with personal training and for them. Human assets are
the fundamental elements of hospitality services and it is their priority to ensure employee
satisfaction as when employees are happy eventually they can keep our customers happy
(Four Season Hotel, n.d.). On the other hand, Dusit Thani also stands out having the
uniqueness in terms of Thai Hospitality. Moreover, many of the foreigners choose to stay at
Dusit Thani is because Dusit Thani is widely recognized for its commitment to quality,
combining modern international accommodation standards with superior service and décor
that is distinctly Thai and also the architecture and interior design displays traditional Thai
artwork where foreigners are eagerly want to experience this type of culture. As a result, Thai
style service of Dusit Thani can be competitive advantage against the competitors.

Supporting activities

Supporting activities are the activities that the firm do in order to support the primary
activities. There are basically four supporting activities that can help to increase value in
Dusit service.

The first supporting activity is people which are the most important attribute.
Especially in hospitality industry where the quality of staffs would directly effects the quality
of service provided to the guests. As a result, hotels need to have a good management in
human resource. Dusit Thani has around 2800 employees in 9 branches of hotels in 2011 and
has subsidiaries employees about 302 people. Additionally, Dusit Thani foster employee
development and this was done through training to learn a new job skill or tuition
reimbursement to help further employees education. Dusit Thani creates open communication
between employees and management by holding regular meetings in which employees can
offer ideas and ask questions. They have an open door policy that encourages employees to
speak frankly with their managers without fear of repercussion.Moreover, Dusit Thani
motivate their staffs and encourage them to have a good relationship with each other, so it can
increase the teamwork skills and to work more productively that can help increase company’s
profitability.

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 To illustrate, Dusit Thani Laguna Phuket creates Inspiration through team building
excursion. The team building excursion was held so as to reward to all employees for their
passion and dedication. Dusit Thani Laguna Phuket aims to create inspiration and strengthen
relationship within the organization under the company’s vision, to create a unique experience
for the guests by providing useful training and team building activities throughout the event.
Moreover, this team building activities were specifically designed and created to increase
motivation, promote discipline and to create a better understanding between colleagues. Mr.
Peter Komposch, the General Manager of Dusit Thani Laguna Phuket said that “As we
realized how important teamwork is, we always encourage our staff to build a strong working
environment through the team building excursion. As a result, the team building excursion is
being held every year however, it is not held only to enhance the communication and
collaboration for the managers but to show some sort of appreciation to our staff so as to
encourage them for their outstanding performance that they have devoted to Dusit Thani
Laguna Phuket (Dusit Laguna Phuket, 2010). Thus, if employees are happy and satisfied with
the job they are doing they can keep customers happy by delivering services that meet up to
their expectation. Therefore, if customers are happy with the services provided to them then
they can become our retained customer and hence increase the profit for the company.
Therefore, employees want to be recognized for more than just their pay grade, but for the
contributions they are making on a day-to-day basis, from managers and peers.

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 The second supporting activity is Process Information focus on the information
available within the supply chain.Dusit use Opera Central System Solution to distribute
information about customer reservation right away to every Dusit hotel. The system includes
Opera Reservation System (ORS), Opera Customers Information System (OCIS), Opera Web
System (OWS), and Opera Sales Force Automation (SFA). By using this information system
would allow each Dusit international hotel chain to directly connect to every customer
through all distribution channels globally such as travel agency, online booking, hotel website
and telephone. As over 500,000 travel agencies worldwide would be able to access to the
hotel’s Opera Central Reservation system this can also lead to the increase in reservation
volume and gain more market share worldwide. Moreover, the hotel would be able to respond
to the customers and give out information about their reservation right at the moment the
customers make reservation. This can help the hotel to save time,unnecessary costs as well as
ease of complex procedure for both hotel and customers. In addition, Opera Sales Force
Automation is also designed for support the sales team where sales manager would have all
the information he needs at his fingertips that he can manage and measure the efficiency of
the sales force and marketing campaigns (Opera Central System, 2009).

The third supporting activity is physical aspects. Dusit Thani is a five star hotel, so
customers come with high expectation that they will be receiving great services and facilities
from the hotel. Customer satisfaction can be increased by all these physical things such as the
facilities, architect, infrastructure, and decorations etc of the hotel. In addition, each of the
Dusit brand has represent different type of infrastructure depending on the theme of hotels.
For example, Dusit D2 Hotel represents Thai architecture and design. Also, the hotel offers
convenience facilities for the guest such as sunset lounge, D spa and pool bar. Moreover,
Dusit Thani Bangkok building is decorated with distinctive Thai artistry and graciousness
personifies the earthy manifestation of its name which means Thai, a town in heaven. Also,
Dusit Thani offers the epitome of spa haven (Devarana spa) and offers outstanding fitness (D
fit) for the guest to use during their stay at the hotel. Furthermore, Dusit Thani tends to
remove all language barriers by providing all forms of languages such as Chinese, Japanese,
and Arabic for their target customers. Thus most of the customers find it very convenient,
easy and fast when they enter the Dusit web page. Employees wear traditional Thai dress as
their uniform to represent richness of Thai cultures (Dusit Thani Bangkok, 2010). As a

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result, the hotel provides a unique opportunity for guests to experience Thai culture and
hospitality, presented through the approach to customer service. The general ambience of the
hotel, including furnishings, has a strong Thai theme and traditional Thai musicians play in
the hotel lobby. Therefore, all of these physical aspects can make customers truly experience
the Thai hospitality.

The last supporting activity is punctuality and reliability. Punctuality and reliability
plays a key role in the service industry which means that it is the ability of the employees to
perform promised service dependably and accurately. It includes “Doing it right the first
time”, which is one of the most important service components for customers. In addition,
reliability extends to provide services when promised and maintain error- free records. For
example, Dusit Thani employees perform task that have been promised to guests and resolve
problems encountered by guests. Moreover, the customers are sensitive to issue such as the
telephone being picked up within five rings and their reservations being correct. Thus
reliability can assure the service consistency and confidence to customers. The aspects of
timing also bear a major value attached to service customers. To illustrate, a survey was
conducted at Dusit Thani Huahin, where they were 7300 respondents are customers of the
hotel. Based on the survey, it indicates that the respondents were not very satisfied during the
check in time as the respondents face with some error and problems thus the check in process
do not have reliability. However, during the check-out time respondents were quite satisfied
which indicates that the billing process quite has punctuality and reliability. The average of
reliability at Dusit Thani Hotel is about 3.15 (Sivilai, n.d.). But when comparing to the
competitors they performed much better in terms of punctuality and reliability. As a result, the
employees of Dusit Thani needs to be trained more and improved in this aspect in order to be
able to compete with other five star hotels.

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Outsourcing

Outsourcing is the act of one company contracting with another company to provide
services that might otherwise be performed by in- house employees. Often the tasks that are
outsourced could be performed by the company company itself, but in many cases there are
financial advantages that come from outsourcing. Many large companies now outsource jobs
such as call center services, e-mail services, and payroll. These jobs are handled by separate
companies that specialize in each service, and are often located overseas. Therefore those
processes could be done more efficiently and therefore more cost-effectively, by other
companies with specialized tools and facilities and specially trained personnel.

Moreover, Outsourcing in the hospitality industry is far more difficult to handle than
other industries this is because hospitality business is all about providing excellence service to
the customers and which services cannot be outsourced from elsewhere. Therefore, the
company has to rely on the internal resources itself. However, there are many reasons that
companies use the outsourcing strategy, but the most prominent advantage seems to be the
fact that it often saves money. Many of the companies that provide outsourcing servicesare
able to do the work for considerably less money, as they don't have to provide benefits to
their workers and have fewer overhead expenses to worry about. Also, outsourcing helps in
saving cost, saving time and hiring less people. For example, if you’re installing a new
computer system, you might have one IT person and if you do not outsource, you need to set
up new department and have higher cost in hiring IT experts and installation machines.

There are some examples of Dusit’s outsourcing-

 RingZero Networks (Thailand) Co,, Ltd.

The IT Services business unit of RingZero is an employee and client centric provider
of a high quality, timely and cost effective range of technology consulting and IT solutions.
Our core business revolves around software development, professional services (outsourcing)
and business solutions (Ringzero Network, n.d.). We are a Microsoft Certified Partner and
represent numerous world-class software solutions including Microsoft, Bond Wireless,
Pervasive and Kermeet to mention only a few. Our clients include AIS, Nokia, Bank of
Ayudhya, UBC, Ayudhya Allianz Insurance, TRUE, Conrad Hotel, Dusit Group, Fuji Xerox,

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Tourism Authority of Thailand, Bank of Asia, Krungthai Card, GE, Shell and more (Ringzero
Network, n.d.).

Moreover, Ringzero has renovated the website for Dusit Thani International Hotel.
They have developed the website to be more up to date and by designing the website in such
a fashionable way so that it looks more attractive and will draw the customer’s attention to
choose to stay at our hotel. Also, they have renovated the website to be easier to access,
convenient and fast. Also, they provide precise information that customers that is suitable for
the target market and provide information that customers are looking for. They now use tactic
in their website that is to let customers decide right away or they will lose opportunity.
Ringzero spent almost one year to create a new fantastic website for Dusit Group. As a result,
the new website renovated by Ringzero can therefore meet the customer’s needs and wants.

Furthermore, Dust Thani Dubai achieves recognition by Investors in People (IIP).

Investor in people is a global framework for improving business productivity, performance
and competitiveness in organizations through good practice in people management. The Dusit
Thani Dubai is the first hotel in the Dusit International group and in the region to gain
recognition by IIP gaining The Standard Certificate. This is was achieved by working towards
a number of standards set down by IIP to ensure that all people management and development
activities in the hotel are associated with business goals and targets (Dusit Thani Dubai,
2011). Besides Ringzero and Investor in People, Dusit also outsources other aspects of their
business such as interior design, custom events and logistic service.

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Company Analysis

Strength

1) One of Dusit Thani’s greatest strength is its extensive experience in the Hotel industry.
Dusit Thani possess over 60 years of experience worth of knowledge in the hotel
industry. Dusit is also owned by a Thai royalty, which makes this hotel a well- known
image of Thai hotels for foreigners to visit. Thus creating a strong brand image as a
Thai traditional hotel as it is Dusit Thani’s theme. All the Dusit Thani products reflect
their “Thainess”. This strong brand does not exist only in Thailand but all around the
globe as it truly represent Thai hotel industry with royalty and well-known high
quality service. However, there have been a lot of Thai hotels appearing in the market
not only in Thailand but also around the globe. Dusit Thani now needs to up their
game to be able to compete with these new hotels. However, Dusit still has the
competitive edge by holding its extensive experience and a strong brand image, which
is difficult to compete against.
2) Dusit Thani is one of the very few hotels in Asia who has their own training
institutions that aims to develop employee’s skills and knowledge in every aspect of
the hotel industry. One of the very few hotels that have their own college as its
training centre, which is called Dusit Thani College. Their institution aim to develop
hoteliers with the mentality that fits Dusit Thani image and service quality in order to
earn revenue and at the same time maintain the Dusit Standard through new
generations. The company also provides Mini MBA courses for employees in order to
develop them not just as workers but also as managers. This will result in better
service quality as well as a more sustainable one. This sets them apart from their
competition. Since other hotels do not give such opportunities on employee
development.
3) Dusit Thani also has strategic locations on their branches of hotels. They all are
located in convenient area for customers to find facilities such as mass transits,
department stores and travel attractions where associability is not a problem. For
example, Dusit Thani HuaHin is located at the beachfront with shopping malls
surrounding it. Dusit Thani Bangkok is located in the middle of the city in the
business district where mass transit and transportation systems are easily accessible. It

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 is because of its locations that Dusit Thani can sell their rooms and attract visitors this
shows that they strategically place their hotel branches by looking at the nature of the
city whether it is business base city or leisure based.
4) Dusit Thani is also one of the core members in the AHA (Asian Hotel Alliance)
which is currently assisting them in their expansion through Asian countries making
their brand even wider and more well-known than it already is. This aspect can also
assist them in the coming age of AEC 2015 to fend off or stand their ground against
competitions.
5) Employee satisfaction is one of the key components of motivation within a company
and Dusit Thani performs strongly in this part. The communications between the
employees in Dusit Thani is regarded as highly important and is a tradition to have
good communication creating team work with in the staffs and reduces rate of
turnovers which can result in their core competency as stabilizing employees prove to
be a difficult job in the hotel industry. For example, they have a program called “Dusit
Weekly News”. Their department heads hosts meetings with their staffs every Monday
to drive them with directions of the company and performance evaluation from
employees. Employees are also allowed to give feedback about their works and
express their ideas to their heads. This creates a 2 way communication streak which
increases the level of understanding among co-workers. This creates the feeling an
autonomy therefore job significance.

Weaknesses

6) Dusit Thani’s image is Thai traditional service and design in their hotels. Their rooms
and facilities are aimed to show their Thai cultural lifestyle. Sometimes sticking to
image and being too traditional can cause Dusit Thani to go out of style. According to
research above Dusit Thani do not regularly innovate or change their ways to fit the
change of demand trends but stick to their roots and their recitative customers.
According to Agoda reviews customers complains that their rooms are too old-
fashioned.
7) There are few issues about Dusit Thani’s branches to be considered. As some of their
branches received only a satisfaction level of around 3 out of 5 ratings. Dusit Thani
being a 5 star hotel satisfaction for customers must be their main focus. The current
pricing of Dusit Thani is from 5000 Baht standard room up to 20000 Baht of suits.

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 The price according to customers is considered high which means high expectations
from their side for Dusit to deliver. This proves instability of standard in all the
branches, which can lead to disappointment when value for money is concern.
3) Dusit Thani still lacks competitiveness over big hotel chains like Accor or Starwood.
Dusit Thani is considered a niche market concept hotel as they haven’t expanded as much
as their competitors globally. They have currently expanded to many Asian and
Middle East countries like Philippines, India, China and the United Arab Emirates.
Their closest rivals with similar ideas of hotel from India the Taj Hotels has already
expanded to England and even Boston in United States. This causes them to loose
opportunities and market share globally.

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Are vision and missions clear and measurable?

Dusit Thani reaches their goal by striving to be the company that delivers excellent
services to their customers. Dusit International has set up a vision, mission, goals and
objectives so as to ensure that all the stakeholders are able to understand the operation in the
same way and to go in the right direction. Thus these vision and mission are measurable by
means of customer satisfaction survey, customer complaints and the most important is by
means of awards. In addition, Dusit Thani has received a Certificate of Excellence awards.
However, this award is only presented to those establishments that consistently achieve
travellers review on trip advisor and whose performances and services has shown exceptional
in their industries and is extended to qualifying business worldwide. Moreover, the Certificate
of Excellence awards gives high rated establishment around the world the recognition that
they deserve. The award was presented to DusitD2 Chaing Mai, Dusit Thani Laguna Phuket,
Dusit Thani Pattaya, Dusit Thani Dubai and Dusit Thani Manila. Therefore, both the branches
of Dusit located in Thailand and other countries have received this award (Certificate of
Excellence, 2012).

Even though Dusit has always strive to be the company delivering an exceptional
hospitality experience to the world so as to achieve their goal. However, the company still
cannot achieve the standard of innovation and perfection as mentioned in the vision statement
of Dusit. This is because there are still customer complaints about the overall quality service
of the hotel. Based on customer satisfaction survey of Dusit Thani HuaHin, the means score
were 3.20. It was above the neutral point, which could mean the acceptable at the minimum
level. But, the company did not get 100 percent satisfaction as the company still did not
outperform well enough to achieve a complete satisfaction (Sivilai, n.d.). Moreover, as
mentioned in the mission statement that Dusit will be one of the world’s most valued
hospitality brands, but the company is still unable to achieve this mission is because the
company has never been granted this kind of award. On the other hand, the company is trying
hard and putting in all their effort to fix these imperfections and, therefore, lots of expansion
and renovation are being formulated and implemented both in Thailand and many other
countries. To illustrate, Dusit Thani Manila is a luxury hotel that is situated in the heart of the
Philippines’s premiere financial district has renovated luxury suites and 538 luxury rooms and
the staffs of Dusit Thani Manila are highly trained so that they can provide exceptional

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services to the guest that can leave them with no complaints but can experience the true royal
Thai hospitality (Dusit Thani Manila Hotel, 2010).

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Recommendation

TRIS rating, a company that assesses and analyses the credit worthiness of a company
downgraded Dusit Thani PLC (DTC) from ‘A-‘to ‘BBB+’ due to DTC’s weak performance
and expected slow recovery. The rating takes into consideration DTC’s hotel portfolio which
consists of the location of each of their hotels and resorts, the experience of the management
team, the diversification of the geography, and their potential for expansion. The intense
competition and the unstable nature of the hotel industry is the off set of these factors.

DTC’s business strategy is considered to be conservative because their main focus is

expanding their company. Over the past few years, their business was greatly affected by the
unfavourable market conditions, such as the Middle East, which is their main market that
faced an economic downturn. Their operating cash flow and income was unstable due to the
fluctuating nature of the industry, competitors and political instability, this will limit their
ability to increase their room rates especially in Bangkok. The company’s main operating
performance was driven by 3 hotels: Dusit Thani Bangkok, Dusit Thani Pattaya and Dusit
Thani Manila, with other owned hotels contributing a fairly small amount. Although there
was an increase in the number of tourists visiting Thailand in 2011, the recent floods has
slowed the pace of recovery for the hotel industry. Moreover, although they have businesses
overseas, 70% of their income in 2010 still came from the domestic market (Tris Rating,
2011).

Currently, DTC has got a ‘stable’ outlook. To remain in the market, they need to create
a competitive edge and increase their profitability. They need to penetrate new markets,
conduct more research on the preference of their customers. They need to aim to keep repeat
customers and attract new customers by being in trend and keep up with technology such as
electronic check ins, hi tech facilities in rooms, electronic menus etc. Moreover, since they
have many branches spread around the world, they should also consider closing down hotels
or resorts that are not profitable, and give their time, effort and investments to profitable ones.
Customer service should also be a priority for them; they should invest in language and
service training for employees as well as keeping them motivated and happy in their work
place to provide excellent customer service.

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Conclusion

After analysing the hospitality industry, it is inevitable that a number of new firms are
entering the market in the hotel business all over the world. Even though Dusit Thani is
expanding their target market to increase their international awareness, and become more
well-known overseas, they still need to come up with strategies to attract and maintain their
current customer base. This is because all these new entrants might become Dusit Thani’s
competitors sometime in the future, and they have more variety of high end hotels to choose
from. Therefore, to retain their customers, Dusit Thani has re-launched their customer’s
loyalty program as well as created several product lines to ensure that all customer needs are
met.
As mentioned above, the core competencies consist of four important capabilities:
value, rare, costly to imitate and non-substitutable capabilities. Firstly, to keep up with the
“Value” aspect of these core competencies, Dusit has its own spa treatment chain called
Devarana Spa as well as making themselves the members of the Asian Hotel Alliances
(AHA). These two factors add tremendous value to the company, which contributes to an
increase in sales and profits. The second factor is the “rare” aspect. To ensure that they have a
unique trait in the market, Dusit Thani has established the Mini Master of Business
Administration Programme (MRA) for the over-all skill enhancement of its employees. The
third factor is the cost of imitation. Apart from being opened by a Royal Thai Woman, Dusit
has been in operation for more than 60 years. Because of their tremendous experience in the
industry, Dusit Thani can be considered as the nation’s leading hotel chain that emphasizes on
characteristics of being “Thai”. The touch of Thai is seen in everything they do, from their

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services to the hotel’s architecture and décor. In addition, the company also started the loyal
marketing program referred to as the “Dusit Executive Club” and the “Dusit Gold Card”, with
an objective to keep their customers loyal and satisfied, and eventually to gain revenue. The
last factor is the non-substitutable capabilities, and to ensure this core capability is met, the
hotel has a joint partnership with AMEX, which allows AMEX card holders to enjoy benefits
during their stay with Dusit Thani.
When talking about the competitor analysis we covered above, it was found that
Dusit Thani and The Four Seasons share a few similarities, where they aim to deliver the best
customer service as they possibly can. However, the difference between the two is that Dusit
Thani is unique in the way that it represents the beauty of Thai Culture, while the Four
Seasons seem to be a little international focused. When comparing Dusit Thani with Shangri-
La hotels, both the hotels have a good location, because Shangri-La is located along the
ChaoPhraya River and Dusit is located close by to all the well-known department stores.
However, both these companies face the problem of being located in a traffic-prone area.
Moreover, Dusit Thani has a good value when analysing the service they provide to
customers. This is because the hotel owners/directors have good knowledge about managing a
hotel. They also use the Opera System to ensure that the information is flowing effectively
and smoothly within the company. And to make sure the employees are working to their best
capabilities using training and be able to monitor employee behaviours, Dusit uses Key
Performance Indicator system. Apart from discussing all these strong points about Dusit
Thani, we must also discuss their flaws. To begin with, there are some management errors at a
few branches, and in terms of their Physical appearance, Dusit Thani is an old hotel, so its
facilities are old as well. If the hotel does not renovate and renew their physical setting, it can
effect customer satisfaction and customer appeal.
To conclude, the capabilities of the Dusit Thani group can be divided into 6
categories: Distribution, human resource, management information system, marketing,
management and research development. If they manage all these capabilities well, they can
improve their value, sales as well as their reputation as the world’s leading hotel chain.

129
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