Novotel Situational Analysis

This report is a situational analysis on the hotel chain Novotel. The objectives of the analysis is to ascertain where Novotel stands in the Wellington 4 star accommodation market. Information had to be found from secondary sources and this may limit the accuracy or detail of the report.

Novotel is an international hotel brand born in 1967 that belongs the larger Accor Hotels group. Novotel is a four star hotel that in particular specialises in luxury accommodation and conference facilities for travelling businessmen while also catering strongly for families who want high class but affordable holiday accommodation (Accor Group. (2013).). The Novotel brand has over 400 hotels the world over with 7 in NZ (1. Novotel.(2013).). The NZ hotels are located in Wellington, Hamilton, Rotorua, Queenstown, Christchurch and two in Auckland. The Accor group and Novotel in particular has a strong commitment to sustainable development and have taken steps towards having sustainable practices under the international Planet 21 framework (2. Novotel.(2013).).

The focus of this report will specifically be on the Wellington Novotel. Novotel as a whole offers special deals for families with children and provides 24hr catering to its guests as well as contemporary room design with all the latest technological extras. The chain has expertise in the organisation of meetings and extends this knowledge to their professional clientele wishing to conduct business at one of Novotel’s many efficient and comfortable venues (Accor Group. (2013).). Novotel Wellington boasts 139 rooms, a fitness centre, its own restaurant and one of Novotel’s state of the art conference rooms. (2. Novotel.(2013).).

Market analysis:

Novotel operates within the luxury accommodation market, specifically the 4 star market catering to travelling businessmen and diversifying to specialise in families with young children. The market that Novotel operates in is competitive due to the limited number of market groups that are specifically catered too. This limits the market that the firms are vying for and makes competition high.

The target market of Novotel and the four star accommodation sector is segmented by demographic and psychographic strategies. The demographic strategy used is income, luxury accommodation is more costly to customers or in this case guests. As such Novotel and other competitors in the market target a segment of the population most likely to have the income to afford the higher costs, such as businesses and their representative. Novotel differs from the market in their targeting as families do not tend to have the same income as travelling businessmen which is why Novotel offers free accommodation to children 16 and under staying with parents or grandparents. The main psychograph used to segment the market is by using shared activities of guests.

For example Novotel’s corporate guests can be segmented by their mutual activity of travelling on business and the family guests can likewise be grouped by their shared holiday making intentions. Currently Novotel is promoting the child friendly environment they provide, along with the complimentary accommodation and breakfasts available for children as well as the fact that they are heavily involved in sustainable development. While those aspects appeal to the families Novotel also publicize their advanced conference rooms and experience in hosting a business meeting for their guests.

The luxury accommodation market is an oligopoly with a small number of sellers while the greater accommodation market is closer to monopolistic competition with many firms offering the same product with slight differences such as price, amenities offered etc. Latest consumer trends for June 2013 in the broader accommodation market shows New Zealand guest nights overall fell 0.8 percent. Guest nights fell for backpacker accommodation and motels, but rose for hotels and holiday parks (1. Stats NZ. (2013).). These statistics are mixed for Novotel as they fit into the hotels group meaning there are more people purchasing what they offer but this also shows less people are purchasing in general. However the slight decrease in overall guest nights across the market is after seasonal variation has been removed. Overall the NZ accommodation market is experiencing a 13 month trend of growth and is at an all time high (1. Stats NZ. (2013).). See appendix A.

Competitor Analysis:

Novotel is in direct competition with other luxury accommodation providers in their bracket such as Rydges Hotels, City Life Hotels and James Cook Grand Chancellor Hotels. These three competitors hold a four star plus rating like Novotel (Qualmark. (2013).). Novotel is a smaller hotel that is an average to strong player in the market. All three of the organisations competing with Novotel are larger hotels capable of catering to more guests at anytime. Rydges and James Cook have roughly twice the guest capacity of the Novotel (2. Rydges Hotels. (2013).) (James Cook Grand Chancellor Hotels. (2013).). All four hotels offer similar services with little setting them apart in the main. All four simultaneously appeal to the businessmen wishing to stay in Wellington. James Cook has 2 restaurants on premises and Novotel and Rydges only have 1 but City Life does not offer restaurant services.

In the catering department Novotel is the only to offer 24/7 room service and this is a very high point of parity for any guests that keep late hours. Rydges offers 5 conference rooms and Novotel and City Life only offer 1 but James Cook have 8 and they have a corporate lounge for business guests to relax. However three of the four hotels have diversified their offerings to expand beyond the corporate class. Novotel and City Life caters to families with their special family offers while Rydges and James Cook offer the facilities for wedding parties. City Life and Rydges Hotels have very advantageous points of parity as they have aligned themselves with other organisations in Wellington that will provide extra service to their guests. City Life is partnered with Corporate Taxis (City Life Hotels. (2013).) and Rydges has an association with the World Of Wearable Arts event held every year in Wellington (Rydges Hotels. (2013).).

Rydges also have blogs and notes written for their customers on their website in order to better inform guests about activities and special events in the Wellington region during their upcoming stay. Novotel is the cheapest out of the four organisations followed by City Life, Rydges and James Cook Grand Chancellor. For these competitors lowest price isn’t necessarily the most important factor due to the fact it is the luxury not the economy accommodation market. Consumers are electing to pay more for a better service therefore being the cheapest isn’t necessarily an advantage. For a perceptual map see Appendix B.

For a strengths/weaknesses grid see Appendix C.

Although all four of these hotels have a Qualmark rating of four stars plus they have different consumer perspectives. Rydges, James Cook and City Life are all Australasian based companies and have a greater familiarisation with the NZ market at the expense of not being as large as other organisations and not having the same prestige coming from being a large multi-national. Novotel on the other hand is an international brand that moved into NZ’s main centres, this means they are less well known but they carry with them a larger promise of quality and consumer trust. However being the large organisation that it part of an even larger corporation that owns many brands of hotel comes with the heuristic that individual consumers don’t matter. To compensate for this Novotel may have to put greater emphasis on their customer service and care they provide for their guests.

Macro Environment Analysis:

The accommodation market is one that is not affected much by political factors, as regulation is not generally required within the industry. However there is an Act from 1969 that created an association for hotel workers who hold an on-license or an off-license or a general managers certificate for the purpose of promoting the general advancement of the hotel industry, the regulation of its members and codes of business ethics to regulate its members (Parliamentary Counsel Office. (1969).). This Act provides members of the association with basic rights of a union as well as laying out the practices and protocols that must be followed when dealing with guests/customers while using suggestions and experience from these members to make the NZ accommodation a better experience for guests and more profitable for the industry.

The economic market as a whole in terms of average income earned can affect the kinds of accommodation that consumers will seek. If economic times are tough then consumers will lean towards cheaper accommodation when they require it. The Novotel will prefer the economic situation to be strong as they are a four star hotel and therefore at the more expensive end of the market. The current NZ economic market is following a long trend of median consumer income rising (2. Stats NZ. (2013).) See Appendix D.

This is a positive signal for Novotel as a high end market choice. Increase in consumer income leads to increase in consumer spending and spending on higher quality goods.

The socio cultural environment of NZ is a very small town culture. If the option is available consumers will stay with relatives rather than pay for accommodation, also NZ has an international reputation as being thrifty which is a factor that counts against a high range hotel chain such as Novotel. NZ also tends to be critical of big business and are more favourable to local businesses and small operations. To combat this Novotel must market themselves as a caring organisation and give to things in the community that will create goodwill between guests and the organisation. Also Novotel must promote that the experience of staying in luxury accommodation such as theirs is worth the cost.

The technology available in the external environment is a big factor for the accommodation industry as more effective/efficient technology can help improve the service provided to guests. Novotel keeps up with the latest advancements with Wi-Fi available in all rooms, LCD television and apple product docks (3. Novotel. (2013).). Luxury accommodation is all about the experience and the quality of the stay because it is the same basic product as cheaper alternatives in the industry. The more enjoyable the guest finds their time there the more likely the business is to receive repeat business. Examples may range from spa pools and other luxury amenities to a wider range of channels available on the room TVs.

Environmental factors could include factors such as seasonal change. For Novotel Wellington the summer would be better for business than other seasons due to the better weather encouraging families to holiday. The NZ accommodation sectors data shows a trend of guest nights spiking in January for at least the last 3 years (3. Stats NZ. (2013).). See Appendix E.

Special deals in the summer months, particularly January or increased advertising during this period could maximise Novotel’s ability to increase their guest nights during this peak period.

TOWS analysis:

Opportunities:
Wellington is a city that attracts a large number of families and businessmen both international and domestic. If Novotel could affiliate themselves with conferences or major tourist attractions perhaps negotiating packages so that tickets and accommodation can be bought in one they could potentially increase their guest nights. Similar to what Rydges Hotels have done by becoming associated with WOW (1. Rydges. (2013).). Stats NZ shows an increasing percentage of guest nights are being spent in hotel accommodation (1. Stats NZ. (2013).).

A local ad campaign that would increase consumer knowledge of Novotel’s services and quality that could raise public profile and increase bookings. At the same time as increasing local knowledge of the organisation Novotel could display to the market that it has knowledge of its location. This could also be done in the same vein as Rydges Hotels by placing material written by their own managers or staff highlighting activities in the Wellington area and offering information to guests on how to best approach them (1. Rydges. (2013).).

A mutually beneficial association with local business such as taxi companies or car rental companies where both organisations recommend each other’s services to their customers like the relationship that City Life Hotels has with Corporate Taxis (2. City Life Hotels. (2013).). A relationship such as that could boost awareness and customers for both organisations and possibly establish Novotel as a go to hotel in the Wellington region due to constant recommendation.

Threats:
Novotel faces threat from its competitors as all are better entrenched in the NZ market with a more recognised brand name locally. Novotel needs to ensure that it holds a high standard of quality and focuses on its points of parity such as their strong affinity with family guests and their expertise in the field of hosting business meetings.

Strengths:
Novotel has a trusted brand name and a good reputation internationally in the accommodation industry and this increases consumer confidence in their service if they have never stayed with them before and also increases the likelihood of business through person to person referral. They have earned a four star plus rating in the NZ market and have that rating endorsed by Qualmark (Qualmark. (2013).).

Novotel has strengths in the field of family accommodation and hosting business meetings. They offer special deals to families with children under 16, two years older than their competitors City Life (Accor Group. (2013).) (3. City Life Hotels. (2013).). The offers in place for family guests are above and beyond what is offered by competitors and puts them ahead in any choice of accommodation for families. Novotel Wellington boasts one of the chains advanced ergonomic meeting centres and has the experience to make the conference a success (Accor Group. (2013).). Despite having only 1 meeting centre this is a significant strength because of the advancement Novotel as a brand has made in the field.

Novotel is the only hotel among its immediate competitors that has 24/7 room service. This is a very effective and simple point of parity. It requires little effort and increases satisfaction for couples/businessmen that return late or families with young children that wake early an require food or beverages that would be unavailable at other hotels.

Weaknesses:
Novotel Wellington is small by the standards of its competitors and this limits its potential. For example it is only capable of holding one conference at a time due to the size of its premises. There is not much that can be done about this without purchasing more property/expanding the property that already exists.

Another weakness of Novotel is their website. It is easy to navigate but is low on details specific to Wellington or even NZ. The Novotel website is a .com address that gives an overview of the company as a whole without any scope for trip planning or local knowledge of their hotels. There is nothing on the website that makes a potential guest decide that they have to experience that particular hotel.

Novotel Wellington lacks local advertising. Novotel Hamilton/Tainui is partnered to the Waikato Rugby Union (Waikato Rugby Union. (2013).) and as a result gets a large amount of advertising from it along with fans staying at the Novotel during game weekends. This is something that is lacking with Novotel Wellington, they lack attachment to the local area and lose out on potential guests as a result.

Target Market:

Novotel Wellington has its target market segmented by using psychographic and demographic bases. Firstly the psychographic base of shared activities. Novotel has two target markets, families and travelling businessmen. Both of these markets have a strong shared activity, holidaying and business. Families can by segmented by the fact that families generally travel because they are on holiday and this provides Novotel with a common thread that they can target in order to reach their desired market. The business clientele that Novotel strongly caters to can just as easily be reached by the common aspects of accommodation travelling businessmen will be looking for such as proximity to the CBD and access to Wi-Fi. Secondly by demographics such as income and family structure.

Novotel is a four star plus rated hotel which fits into luxury accommodation and therefore it is more expensive than average accommodation. There is little point targeting a segment of population that would struggle to afford to stay at the Novotel. Therefore segmenting by a base of income and combining that with family structure to identify families with children under 16 and the income to afford a guest night is an effective way to locate a target market. More readily available demographics such as job type would be useful in locating the corporate target market that Novotel also has.

Conclusions/Recommendations:

Novotel Wellington is part of a strong international brand that finds itself in a market where it is not reaching its full potential. In order to take full advantage of that market I recommend that Novotel:

1. updates its website so that it highlights the activities and special events around the Wellington region and provides more imperative as to why guests should choose to stay at the Novotel. This will be successful for Novotel because it will encourage guests using the website to want to use their accommodation. This will increase guest nights and reinforce the same product to the same market following the strategy of market penetration. The benefit of this recommendation initially will benefit the guests of Novotel as they will gain a better experience from their stay however in the long run Novotel will benefit from increased good will from guests.

2. becomes partnered with either the Wellington Lions or the Wellington Phoenix. This will be successful for Novotel because it will involve expanding to another target market of sports fans and with the proximity to Westpac Stadium this will be a good location for those fans to wish to stay. Partnering with either of these sports teams will lead to advertising at the stadium and on the teams website which increases exposure to the new target market that they will be trying to acquire. If this is coupled with marketing their location it would be a very effective market development.

3. affiliates itself with Combined Taxis or Kiwi Cabs in order to create a mutually beneficial arrangement. This will increase Novotel’s marketing as drivers working for that company will recommend Novotel for accommodation and in return Novotel will always call cabs of that company for their guests when it is requested by them. This will create an easier decision for guests if they are new to the city or unsure of a quality place to stay. This is another strategy following market penetration.

If Novotel Wellington carries out any of these recommendations it will increase their guest nights and market share in the four star plus market in Wellington.

Reference list:

1. Novotel. (2013). Retrieved from
http://www.novotel.com/hotel-directory/gb/australia-pacific/new-zealand/new-zealand-hotel.htm 2. Novotel. (2013). Retrieved from
3. Novotel. (2013). Retrieved from
http://www.novotel.com/gb/hotel-3276-novotel-wellington/index.shtml 1. Stats NZ. (2013). Retrieved from http://www.stats.govt.nz/browse_for_stats/industry_sectors/accommodation/Acco
mmodationSurvey_HOTPJun13.aspx Qualmark. (2013). Retrieved from:

http://www.newzealand.com/int/accommodation/search/
Grand Chancellor Hotels. (2013). Retrieved from
http://www.grandchancellorhotels.com/nz/jamescookwellington/rooms-en.html 2. Grand Chancellor Hotels. (2013). Retrieved from
http://www.grandchancellorhotels.com/nz/jamescookwellington/ City Life Hotels. (2013). Retrieved from
http://www.heritagehotels.co.nz/hotels/citylife-wellington
2. City Life Hotels. (2013). Retrieved from
http://www.heritagehotels.co.nz/hotels/citylife-wellington/destination/for-business-travellers 3. City Life Hotels. (2013). Retrieved from
http://www.heritagehotels.co.nz/hotels/citylife-wellington/destination/for-families Rydges Hotels. (2013). Retrieved from
2. Rydges Hotels. Retrieved from
2. Stats NZ. (2012). Retrieved from
http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/NZIncomeSurvey_HOTPJun12qtr.aspx Accor Group. (2013). Retrieved from

Parliamentary Counsel Office. (1969). Hotel Association of New Zealand Act 1969. Retrieved from http://www.legislation.govt.nz/act/public/1969/0139/7.0/DLM3136000.html 3. Stats NZ. (2013). Accommodation Survey: June 2013 – tables. Retrieved from http://www.stats.govt.nz/browse_for_stats/industry_sectors/accommodation/AccommodationSurvey_HOTPJun13.aspx Waikato Rugby Union. (2013). WRU Partners. Retrieved from

http://www.mooloo.co.nz/commercial/wru-partners/