Resource Based View In The Hospitality Sector

Published Date: 02 Nov 2017

The concept under resource-based view characterises each organisation as having different capabilities and hence a certain level of uniqueness which are considered as "resources". These resources are the underlying factors which provide a competitive advantage to an organisation in the market (Buttle and Bowie 2012). In the case of organisations in the hospitality sector, there are resources which are tangible and intangible. Since the hospitality sector is largely service-oriented, many of the brand identities and perceptions of the customers would be dependent on the intangible factors such as the service and the brand image (Pierce and Moukanas 2002). It has also been studied by Beri (2009) that the capabilities of a firm can also be considered as the resources especially for service-based organisations.

When analysing the resources of an organisation, especially the tangible assets, the location is a unique factor along with the physical assets. However Chon and Maier (2009) designates that all the physical assets cannot be considered as resources as most of them are expected by the customers. There are certain unique factors which differentiate a hotel property from another such as a large swimming pool, the quality of the room, room environment, atmosphere and similar factors which can be differentiated or compared with the competitors. When considering repositioning, some of the tangible assets cannot be changed, especially the location and the larger environment associated with the location (Merrilees and Miller 2008).

The intangible resources of an organisation would be the capabilities of the firm and more importantly the brand image (O’Fallon and Rutherford 2010). It has been identified from the concept of resource-based view that the organisational capabilities and brand image can change over a period of time. The brand image depends upon the customer perceptions and the organisational capabilities depend on the management. The managerial abilities are a significant determining factor in the success of the repositioning strategy as the flexibility of the organisation contributes to responsiveness to the market conditions (Zaransky 2009).

As identified previously, repositioning involves the first step as the identification of the tangible and intangible assets and hence the resources of the organisation. Since some of the resources cannot be changed and some others cannot be encouraged to improve the performance (Hassanien et. al. 2012), it is necessary to identify those resources which can provide value over the long-term and hence competitive advantage. Based on this perspective Ng (2009) have considered that a resource can contribute to long-term competitive advantage when there is demand, the competitors are unable to replicate the resource and when the organisation is able to invest in the resource and generate long term profitability.

Hence it is necessary that an organisation should consider the resources which can be leveraged and compare it with the competition. This would require a careful analysis where some of the resources are selected for modification and some others which have to be eliminated. Although the market demand has to be considered, the emergence of new players in the market also has to be analysed as the repositioning strategy would take some time to put into effect. Overall from the above it can be concluded that repositioning is an external change of an organisation especially a change in the perception of the customers in comparison with the competition by leveraging the unique resources of the company which cannot be replicated by the competition.

Repositioning in the Hospitality Industry

As indicated previously, the tangible factors associated with an organisation in the hospitality industry, especially hotels cannot be changed significantly to align with the market characteristics. Hence the repositioning of the brand in the hotel sector would be to change the intangible factors associated with the organisation to ensure competitiveness. This is advocated by Hassanien et. al. (2012) and confirmed by a study of repositioning of various hotels. The study has identified that repositioning was conducted for expansion of market share, repositioning to service a separate market segment, entering into new markets by developing new products and services. However it has been found from the studies of repositioning of hotels that most of it consists of improvising on the already existing assets both tangible and intangible. Furthermore the studies piloted by Cant and Styrdom (2009) specify that the main consideration for hotel repositioning is to change the existing impression about the brand.

Based on some actual practical examples of repositioning and the research studies which have analysed them, one significant conclusion is that many of the repositioning involved only perception changes rather than actual.

Gupta (2012) have confirmed this suggestion that many of the brand repositioning have consisted of changing the outward design which are the intangible elements that would create an impression in the minds of the consumer about the change. Pike et. al. (2010) has identified the change in pricing and market orientation as a way to reposition the brand. Nevertheless most of these changes did not have a significant impact or a change in the actual tangible factors which the customers could gain after the repositioning. However, almost all the research studies and thus the researchers are in agreement in their view about repositioning of hotels and its association with renovation.

Although it has been suggested previously that little tangible improvements occur in repositioning of hotel properties, almost all repositioning has been researched from the perspective of hotel renovations. Hence a change in the tangible elements of a hotel is the main basis for repositioning even though the theoretical concepts provide otherwise. Further this can be considered in line with the resource-based view point where the resources (tangible and intangible elements) are changed to develop an alternative perspective for the customers. Hence the resource-based view point about repositioning can be considered as very relevant for hospitality organisations.

Hotel Renovation as a Repositioning Strategy

Renovation is considered as the main tool for repositioning of a hotel property. Renovations of the hotel according to Simms and Trott (2007) are the improvement in the tangible elements. This can be a complete modification of the entire property, new extensions, renovating fixtures, equipment, additions and changes of furniture. As identified in the previous sections, repositioning has been considered along with new product development and innovation. Innovation or new product development is the work involved in developing a new idea and concept. According to Aldin et. al. (2004) innovation and product development is a continuous process involving varying degrees of change from the existing. Innovation can be highly discontinuous giving rise to entirely new products which require different positioning strategies. According to Kalafatis et. al. (2000) an innovative product or service can be defined from the perspective of the organisation and the market. The concept of new product development and innovation has been connected with renovation of hotel properties and repositioning. Repositioning in the hospitality sector especially hotels has been considered as strategic (Lo et. al. 2012), contributing to operational and functional necessities (Simms and Trott 2007). Renovation is also essential to sustain the competitive advantage, sustain the market share, improve operational efficiency (Wong and Merrilees 2007), improve the brand image, compliance with new regulations, technology and market conditions (Saxena and Khandelwal 2010). According to Bruyn and Freathy (2011) renovation is considered as the most important practices adopted by hotel are in the repositioning.

Since there is a necessity for a tangible change which needs to be perceived by the customers, hotels have adopted renovation to either improve the positioning or repositioning. From the above it can be concluded that the concepts involved in product repositioning, especially through innovation and new product development is the main underlying factor in the renovation of hotel properties. Similar to innovations and new product developments, hotels can reposition by changing the tangible aspects which can be felt and perceived by the customer.

Chapter 3: Methodology

Research Philosophy

The philosophy adopted by the researcher in the context of the study is described as the way in which knowledge is developed in a structured manner Saunders et. al., (2003) which as per Chapman (2005) is highly dependent on the viewpoint adopted by the researcher about the study and also about the larger context within the study is conducted. Taking a particular research philosophy would highly depend upon the research question and also the mentality of the researcher. Various research philosophies are positivism, realism and interpretivism (Walliman 2010).

Positivism considers social reality as the observable, abstract and hence to be studied based on specific concepts and rules and hence adopting a very strict scientific method (Jackson 2010). According to Saunders et. al., (2003) involves the generation of hypothesis, tested using the data collected often in a quantitative manner (Kothari 2009) however qualitative data is also utilised. On the other hand interpretivism approach focuses on context specific evaluation and interpretation of the subject reality and hence stresses on the importance of the context in which the study is conducted rather than the specific concepts and rules (Saunders et. al., 2003). Hence the researcher deviates from the strict scientific considerations and evaluates the research questions, the roles of the individuals or the subjects under the study and hence developing a deeper understanding of the research subject, further contributing to context based conclusions (Bryman and Bell 2007). Realism on the other hand considers social reality to be studied based on scientific principles, however specifies that it is also dependent upon the thoughts and processes of the research subject or the individuals connected with the research (Cooper and Schindler 2006).

Rationale for Adopting Interpretivism

The researcher has adopted an interpretivist research philosophy as the aim of the research is to analyse the repositioning strategies, tactics and practices adopted by Crowne Plaza hotel brand. The repositioning strategy is an on-going one, in other words it is being operationalised as the research is conducted, the researcher does not have sufficient data which can provide conclusions about the suitability of the adopted strategies and practices by Crowne Plaza brand which can be concluded as successful or unsuccessful. The success or failure of the repositioning strategy would be evident only after it is implemented and analysed by the customers.

However at this stage the researcher intends to evaluate the present functions, working and development in Crowne Plaza hotel and hence utilising the specific situation and the context. Moreover an in-depth study of the strategy, tactics and practice is required to be conducted, furthered by a qualitative mode of research. Hence the researcher has adopted interpretivism rather than positivism and realism which if taken could only result in generalisations. Further positivism and realism, to be used, would necessarily require quantitative data to make generalisations about the strategies adopted by Crowne Plaza brand.

Rationale for Adopting Deductive Approach

The researcher has used a deductive approach considering that several frameworks and conceptual models of repositioning are available and most of them are having very much practical implications especially in the hospitality industry. The literature review provided deeper insights about the strategy of repositioning, in general terms as well as for hospitality context. It was analysed that the resource-based consideration of repositioning is important for hospitality companies and especially for hotels were location cannot be changed and the other resources especially the intangible factors can be modified. Further repositioning was evaluated as a modification of the customer mentality mainly to capitalise on a better positioning of the organisation.

These are the frameworks which are used by the researcher; or in other words those concepts and theories are being used throughout the research study, especially in the data collection, the development of the questionnaire for the interview and even the analysis of the data. The researcher does not intend to develop new strategies, concepts or frameworks for the repositioning. Rather the researcher focuses on the present mode of repositioning especially the strategy adopted by Crowne Plaza brand and relevance and close match to the theoretical framework evaluated in the literature review. On this basis it can be considered that the deductive framework is utilised by the researcher.

Research Strategy

Strategy of research can be considered from different perspectives and undeniably an analysis of various books provide different aspects and details about a research strategy. Indeed the research strategy is about the applied aspects of research especially data collection, analysis and when going deeper about the accessibility of data, reliability, validity, limitations and so on. Several types of research strategies are gained by different types of groups. According to Sekaran and Bougie (2010) the research strategy can be qualitative or quantitative. On the other hand Cooper and Schindler (2006) direct research strategies to be experiment, survey, case study, grounded theory and ethnography.

Rationale for Adopting Qualitative Strategy

Considering the variations in the research strategies mentioned above, the necessity being an in-depth evaluation, the researcher has utilised qualitative forms of data collection and analysis. This involved a subjective consideration of the entire data collection and analysis process wherein an interview was utilised, using a semi structured questionnaire to collect valuable and context specific data about the restructuring of Crowne Plaza hotel brand. A quantitative study need large amount of data from different sources which was not available due to the limitations of accessibility. The researcher had only access to certain individuals in one of the Crowne Plaza hotels in London - The City hotel, who were willing to participate in the study and hence the need for adopting a qualitative study. Moreover the research philosophy adopted is interpretivism, necessitating and further validating the use of qualitative research strategy.

Sample

A sample according to Jackson (2010) is developed due to the impracticality of conducting a research on the entire population. A sample according to Kothari (2009) is a subset of the population; however should be representative of the population. Different types of sampling methods are divided as probability and non-probability sampling method (Cooper and Schindler 2006). Probability has the statistical precision which contributes to the reliability and validity of the conclusions (Burns and Burns 2008). However in many cases non-probability sampling methods are adopted due to limitations, accessibility and so on.

Sample of Research

In the present case also, researcher was unable to develop a sample framework for a probability sampling method wherein a subset of the larger population could be used for the collection of data. As indicated the population would be the managers of Crowne Plaza hotel who are involved in the development and the operationalisation of the repositioning strategy and the senior consultant/ expert at IHG head office who is involved with repositioning strategy of the Crowne Plaza brand.Due to the problems of accessibility, a non-probability sampling method was chosen.

A convenience sampling method was chosen as the best possible alternative of all the non-probability sampling approaches. A convenience sample as per Saunders et. al., (2003) would be based initially on the convenience of researcher in accessing the respondents and further by the convenience of the respondents in providing the data. Further the researcher also evaluated the ability of various persons involved with the repositioning strategy of Crowne Plaza hotel in providing reliable and valid data. In other words researcher evaluated the knowledge, experience and the involvement of several managers of one particular hotel within the brand family - Crowne Plaza London - The City hotel. The researcher has worked in this hotel for a period of time and hence has accessibility to some of the managers.

Upon evaluating the experience and involvement with the current repositioning strategy, the researcher concluded the availability, accessibility and the knowledge of three managers in the hotel as to provide in-depth details about the repositioning strategy of the hotel. These three managers were involved in the operationalisation of the repositioning strategy although there were also involved in the creation of the strategy at the higher levels. The managers directly reported to the project teams involved in developing the repositioning strategy at the higher levels of Intercontinental hotels group. Hence they have better and deeper knowledge about the various elements of the repositioning strategy and its operationalisation in not only the particular hotel but also in several other hotels in the same brand family.

Apart from the managers working at the hotel, the researcher also contacted a senior expert and a consultant working for Intercontinental Hotels Group headquarters through a colleague who is working as the Meetings and Events Senior Supervisor at the Crowne Plaza London – The City hotel, the evidence for which is attached in the appendices section of the report. With the help of the colleague working at the hotel, an unstructured confidential interview was organised. Although the researcher did not directly contact the senior expert/consultant, the credentials of the person in terms of the expertise and experience were verified through the other managers working in the hotel. In fact the three managers, with whom the researcher conducted an interview with, are reporting to the senior expert at the Intercontinental Hotels Group (IHG) headquarters and hence directing the strategy on behalf of the group.

On this basis it can be considered that the sample is the three managers and the senior expert/consultant working at the headquarters who are involved with the repositioning of Crowne Plaza brand. Due to several ethical considerations especially about the need for maintaining the confidentiality of the respondents, the researcher is unable to provide full details of the respondents, either the names or even their designations.

Data Collection

As indicated in various phases of the methodology section a qualitative strategy was adopted which necessitated the utilisation of a particular data collection technique. Although there are several tools used for primary data collection, such as interviews, survey, observation and so on, faced with the need of developing qualitative data, the researcher finalised on interviews as the data collection instrument. Even in interviews there are different types such as a face-to-face interview, telephonic interviews and so on and since the researcher did not have direct accessibility to the sample (three managers and the senior consultant at the headquarters), a telephone interview was conducted directly with the three managers and indirectly with the senior consultant. A telephone interview also has the limitations of a lack of personal touch, was the only feasible option available to the researcher mainly because of the limitation of location and distance. However the researcher has fully prepared for the interview and had conducted a mock interview or a pilot testing of the research instrument (interview questionnaire). In the case of the senior consultant, the researcher sent out the interview questionnaire to the colleague working in the hotel who had contact with the senior consultant at the headquarters. The colleague conducted the informal interview and provided the details through e-mail.

The interview questionnaire was semi structured enabling the researcher to move around the research questions to develop more data considering the knowledge and experience of the three different managers. The interview questions were mostly based on the theoretical framework about the repositioning strategy in general terms as well as in specific terms. The interview questions also revolved around the framework analysed in the literature review, especially about the resource-based consideration. The researcher also utilised several other secondary data sources especially from websites and other articles and journals, mentioning the repositioning of Crowne Plaza hotel brand.

The researcher initially conducted a mock interview with one of the managers of a hotel in India to analyse the reliability and validity of the research instrument (semi structured questionnaire). Further for the telephone interview, the researcher fixed the time for the interviews with the three managers and completed the interview over a period of three days. During the interview, the researcher noted down the answers to the different questions which was further used for analysis.

Data Analysis

A type of data analysis technique-contextual, content analysis technique where the qualitative data was initially coded and the specific conceptual factors were analysed in an interpretative method was used by the researcher. In other words researcher evaluated the data noted down during the telephonic interviews and used the same for comparison and triangulation. The three managers and the senior consultant provided different perspectives about the strategy and its operationalisation with respect to Crowne Plaza repositioning which was used by the researcher to develop the context specific aspects related to the specific interview questions and develop the common themes from the three interviews. The interview data was used in conjunction with other secondary sources and the classical framework from the literature review to develop the conclusions.

Limitations

The main limitation faced by the researcher was the accessibility to the respondents. The researcher faced with the barrier of geography and distance did not have direct contact and hence was unable to conduct a face-to-face interview with the respondents. Although in the initial stages it was thought that the sample respondents (the three managers) would not be able to provide sufficient data; in the end and after the data analysis was completed, found that the data provided is highly reliable and valid based on the triangulation method. Further the data provided through the colleague from the interview conducted with the senior consultant also provided sufficient reliability. Even if the researcher was faced with the limitation in terms of the barrier of geography and distance, it has not affected the reliability and validity of the analysis and the conclusions.

Chapter 4: Findings and Results Analysis

In this section, the researcher evaluates the interview data along with secondary data collected from websites and other sources. The basis for evaluation is the repositioning strategy adopted by Crowne Plaza hotels. The interview was conducted with the managers who were in charge and responsible for operationalising the repositioning strategy at Crowne Plaza London - The City hotel and the senior consultant/expert to whom the three managers were reporting to in the headquarters of Intercontinental hotels group. The perceptions of the managers and the consultant in the form of in depth details given by them through the interview is analysed along with the main concepts evaluated in the literature review.

Repositioning

The main focus of the interview was to analyse how Crowne Plaza brand is being repositioned and whether it is actually the repositioning of rebranding. Indeed in the case of Holiday Inn, the term rebranding was more used while in the case of Crowne Plaza, the various secondary sources in the form of company websites and third-party websites have mentioned repositioning. As evaluated from the literature review, repositioning is a strategy to align the organisation/product/service with the existing or future market conditions (Bennett and Strydom 2009). More than alignment, it is realignment and indeed from the interview details, the term repositioning has come up more often. "The repositioning strategy is in the operational phase and currently the first phase is underway which we have titled "freshen up" concentrating on improving product quality and developing a new brand identity. We planned to complete it during 2012, however in some hotel properties we're still going on with the product quality improvements. The second phase of the repositioning will involve targeting a new customer segment which we have titled "move up" based on the improved product quality and services. We plan to launch concentrated brand awareness programme of the new brand in this phase. The third phase of the repositioning strategy is to differentiate the Crowne Plaza brand from competition with certain innovative hallmarks. Currently we are in the second phase of the strategy where almost all the properties are targeting new customer segment". It can be concluded that although there are certain elements of rebranding, Crowne Plaza is currently undergoing more of the repositioning.

According to one of the managers "one of the reasons for repositioning was the necessity to differentiate the brand from the competition; We found that Crowne Plaza brand has much the same brand identity as that of the competitors and improving the differentiation in a meaningful and relevant manner can improve the prospects of the brand". Even though this would mean that there is a form of rebranding, since differentiation from competition would be more in line with the brand concepts rather than positioning; the same manager has indicated that the focus or the objective of repositioning "is to concentrate on the upper upscale market or the younger business segment; the brand offers premium services focusing on business and leisure travellers". Similarly the other managers and the senior consultant have also indicated that the main activities or the operationalisation of the strategy would be "in the targeting of new customer segment". This view is echoed by the other managers and indeed it can be concluded from the interview that the strategy is to "align the brand with the upper upscale market and to target the customer segment identified as "striver" where there is a significant growth potential" (senior consultant at the headquarters).

However from the interview, the researcher has analysed that there are certain elements of rebranding involved especially in terms of changing the perceptions of the customers by changing the external appearances. According to one manager "the actual factors we are going to change are the colour scheme which will contribute to a new brand identity". Similarly when analysing the reasons for rebranding, two of the managers indicated that "one of the reasons for repositioning was the inconsistency of the services and the brand identity". Furthermore it is seen from the responses to the interview questions that the targeting of the upper upscale market would be "a significant addition to the overall brand portfolio".

Hence Intercontinental hotels group by repositioning Crowne Plaza to target the upper upscale market is trying to develop a brand in the upscale segment which can compete with the competitors such as Marriott. Although the general strategy can be considered as the repositioning, the focus is to create a brand in the upscale segment which would complete the overall brand portfolio for Intercontinental hotels group. It can be seen that Intercontinental hotels group have several brands targeting different segments of the market; however do not have one currently targeting the upscale segment. The competitors in the segment are able to gain improved revenues as identified from the interview and the Intercontinental hotels group wanted to position their hotel in the segment. Incidentally Crowne Plaza is considered as one brand which has a unique position although not in the upscale market however has the potential to move into the upscale market. Indeed this potential of Crowne Plaza to move to the upscale market is voiced by the three managers.

Apart from the basic elements of repositioning and rebranding, some of the reasons mentioned by the interviewees indicates that the reasons contributing to the decision to reposition Crowne Plaza is not only stemming from the desire to have a brand in the upscale market; but also because of the inconsistency in the services and products of several Crowne Plaza hotel properties. Intercontinental hotels group have roughly around 400 Crowne Plaza hotel properties around the world, most of it in the United States. According to the senior consultant at the headquarters "there are significant levels of inconsistency in the quality of services and products provided by the different hotel properties; There is also a plan to remove those properties from the Crowne Plaza brand who are not performing to our expectations and hence alignment of the brand and the consistency in the services". As indicated in the literature review, repositioning can be to correct the present position or to improve the position so that benefits can be gained. Indeed the literature on the subject is validated as Crowne Plaza is trying to which is considered as not performing to the expectations. "Around 10% of the hotels which are not performing to the expectations of the brand and might need significant levels of capital expenditure to improve the performance are weeded out from the brand portfolio. The other 90% of the existing Crowne Plaza hotels are moved up by improving the tangible and intangible elements as indicated by the managers". Hence a part of the strategy is to correct the present positioning of some of the Crowne Plaza hotel properties and another part is to improve the position so that better benefits and rewards can be gained.

Process of Repositioning

The interview has provided significant details about the process of repositioning of Crowne Plaza. The strategy is divided into three phases indicates a well thought out plan for changing the present positioning of the brand where, "in the initial stage, the focus is on improving the product and quality dimensions of the services, improving the consistency of the various hotel properties and starting with the external modifications". It is seen from the literature review that repositioning is often considered with image makeover and a change in perception. However to develop a change in perception it is necessary to have some tangible changes along with the intangible changes. This is the reason why all the managers and the senior consultant indicated that the initial stage would be focusing on the internal aspects or changing the tangible elements. Indeed the quality of the products "especially the bedding programme, improving the layout of the front reception, lobby, changing certain services" and so on is planned. In fact a six process repositioning strategy analysed by Hassanien (2008) is roughly in line with the three stage repositioning adopted by Crowne Plaza.

Repositioning is often considered with the marketing factors, the second and third stages of repositioning of Crowne Plaza are indeed very much pertinent to marketing and advertisement. According to the managers "the second phase would be targeting of a new customer segment and the third phase would be to improve the brand positioning". This is indeed in line with the concepts evaluated in the literature review. Undeniably it is in the second and third phases where the marketing factors are coming into play in the repositioning. However it is also necessary to change the old perceptions with a new idea for the new repositioned Crowne Plaza property. It is not clear from the interview how the organisation is going to change the previous viewpoints of the customers. Indeed it had been suggested by the senior consultant that "at least 10% of the hotel properties would be removed because they were are not performing to the expectations and even with significant capital expenditure, they would not be able to come up to the standards we are expecting". Further on "the first stage is mainly to bring the consistency among all the hotel properties". The only factor which seems to indicate to the customers a change from the previous version of Crowne Plaza is the bedding programme, changes in the lobby and so on. However it is doubtful whether these changes are going to provide a new perception to the customer about the changed brand.

Challenges in Repositioning

There could be a significant challenge for Crowne Plaza as the upper upscale market would mean the increase in the room rates from the existing ones. According to one of the managers "the current average room rate for Crowne Plaza hotel properties is around $110 and for the upper upscale market we are targeting is getting around $150". Such a drastic change in the room rates would require significant change in perceptions; otherwise the strategy might backfire and the customers might leave the Crowne Plaza brand. Without a doubt it is pertinent to note that the second stage is to change the perceptions of the customer, however the managers have not been able to adequately explain how the organisation is going to change the perceptions except for the modifications indicated.

Moreover Crowne Plaza is not focusing on a significant change in its outlook which has been done for Holiday Inn. In the case of Holiday Inn there was a significant change in the external aspects of the brand from the previous ones. However, according to one of the managers "we are not planning to change the signage and most of the appearance". This would mean that there are no significant changes in design to come for Crowne Plaza external appearance. This would be a significant negative point for Crowne Plaza repositioning as a customer would not be able to feel the difference from the old ones to the new ones except when they come into direct contact and interaction by way of booking the rooms and getting the services from the new brand with the increased room rates.

Chapter 5: Discussion and Interpretation

Introduction

In the previous section the analysis of the results of the interview was evaluated in line with certain literature which the author deemed was necessary to be coupled along with the results analysis. In this section a discussion of the previous results analysis is provided to identify some of the pertinent deviations and the correlations of the repositioning strategy of Crowne Plaza with the already identified frameworks in the literature review. Since the research is proceeding with a deductive approach, the researcher has narrowed down the discussion on to the main elements evaluated in the literature review.

Repositioning of Crowne Plaza Brand

The perspectives of positioning and repositioning indeed seems to be valid when analysing the strategy of Crowne Plaza whereupon the Intercontinental Hotels Group had indeed conducted a rebranding exercise for Holiday Inn although at that stage many considered whether it was indeed a rebranding or repositioning. However in the case of Crowne Plaza, the strategy clearly points out the salient aspects of repositioning rather than rebranding. Indeed Crowne Plaza have termed the strategy as a repositioning rather than rebranding even though the second and the third phases of the strategy involves certain branding aspects or the change of brand elements.

The objective of repositioning as identified from the results further points out that the parent company (Intercontinental Hotels Group) is trying to position Crowne Plaza at a higher level than the present or in other words to target a separate market segment where by a change in positioning was required. Indeed it was analysed from the literature review that repositioning is conducted when there is a wrong position for the product or the service or the organisation or when extra benefits can be accrued by changing the present positioning (Hassanien et. al. 2012). Indeed the results analysis contribute significant details about the wrong positioning of Crowne Plaza in the form of the inconsistency of product and services and the potential accrual of benefit for Crowne Plaza brand in changing the present positioning. IHG currently do not have a hotel brand in the market segment. In this manner, the company is losing out on potential revenues and the franchise opportunities from those hotel properties which are having a better quality and range of products. Along with the repositioning, the franchise intends to add more number of hotels into the brand portfolio and hence increasing the potential of the company.

The main aspect of repositioning, especially developing a change in perception of the customer is identifiable in all three stages of the strategy adopted by Crowne Plaza. However certain deficiencies and deviations from the identified framework are also pertinent to be pointed out. The hotel after the repositioning would not have a unique selling proposition as identified by (Cant and Styrdom 2009). Indeed there seems to be a strategy for differentiating from the competition, but the managers have not been able to elaborate on how the new repositioned brand would be going about doing this. Although certain elements such as the tangible factors especially the training programme, appearances of the lobby, improving the training of the staff and so on are pointed out, these are all required for a move to the upper upscale market to compete with the existing hotels/competitors such as Marriott. Since Marriott is an incumbent, it will have an advantage as the present customer base of Crowne Plaza may not be keen to fork out extra room rent for the upscale services. Moreover it is necessary to attract the customers in the upscale market and the researcher feels that it is in the third stage that most of these changing perceptions would come about. However the managers have not been really forthcoming about the strategy and tactics to be adopted in the third phase apart from the general indications about advertisements, brand repositioning, targeting a new customer segment and so on.

Apart from the above, the repositioning of Crowne Plaza also does not seem to have a significant alignment with the concepts of brand communications and marketing communications as analysed by (Nykiel, 2008). Many organisations according to Ferrell and Hartline (2010) ignore the need to provide a positioning message to the target market. Even with the knowledge gained from the rebranding of Holiday Inn, it is perplexing to note that Crowne Plaza is not going in for a change in the signage and its external appearance to a great extent. Indeed the success of the rebranding of Holiday Inn was thought to be mainly because of the significant external appearance change. The managers and the senior consultant have been categorical in the assertion that such a significant change is not being planned at the present moment and it is on this basis that the researcher is having doubts about the strategic alignment with brand communications and marketing communications. For a hotel property the important communication message in terms of the repositioning can be from the external appearance change which has indeed been conducted for Holiday Inn. However in the case of Crowne Plaza, the company prefers to keep most of its external appearance except for changing the lobby and some of the training programme. Moreover there are certain indications about improvement in services in the front-end of the hotel, however this would not be seen or visible and hence would not form part of a strategy. Indeed there are elements of the brand communications and marketing communications in changing the website of Crowne Plaza which would provide the details of the improvements in the hotel and the services to the target customers.

However the main threat for Crowne Plaza repositioning would come from a strategic miscarriage of implementation, resulting in the hotel property positioned at a place facing direct competition from the existing and incumbent competitors such as Marriott or Hilton. Although it is identified and analysed that the upscale customer segment is increasing both in terms of numbers and revenues, a change in positioning without a significant branding and marketing communication strategy can relegate the positioning of the brand. Overall it can be considered that the present strategy although having certain limitations, mainly because it is in the operationalising phase, it is adequate to change the position of Crowne Plaza hotel brand. However the researcher has not been able to evaluate whether the strategy would be successful or not and there are certain points which indicates to certain deficiencies in the strategy especially related to brand communications.

Chapter 6: Conclusions and Recommendations

Conclusions

The research started with the aim of analysing the strategies and methods used by Crowne Plaza hotels in its repositioning to target the upper upscale market. In line with the general aim, research objectives were formulated to understand the literature on repositioning and the specific context of the hospitality sector. Further objectives were to analyse the specific repositioning strategy and the methods adopted by Crowne Plaza. The first objective was completed with the help of literature review where several concepts and theories relating to the repositioning of organisations in general and hospitality companies in particular were analysed. The main learning gained from the literature review was that the repositioning is generally a change in perceptions or creation of those changes in perceptions in the minds of the customers. Repositioning is not just conducted to correct any present positioning but is also to improve the prospects of the organisation. In the case of hospitality industry, especially hotels, one important and very recent example is the repositioning/rebranding of Holiday Inn.

From the analysis it was found that Holiday Inn was more of the rebranding rather than repositioning as the hotel brand even after the completion of the strategy targeted the same set of customers as the first position at the same market space and hence there was no change in the position. Indeed the concepts and theories related to repositioning indicate that the present position with respect to targeting the market is the main factor to be changed. Hence a product or service or an organisation presently targeting a particular segment of the market may not be generating enough revenues due to wrong position or court have the potential to improve the revenues if they improve their position by targeting another set of the market.

Furthermore it was analysed that within the hospitality sector, most of the repositioning/rebranding is conducted by renovations. The hotel properties cannot be changed as the location is fixed and there are significant differences with respect to repositioning of the product with that of an organisation. The repositioning of the hotel brand would be to renovate some of the tangible and intangible aspects associated with the hotel thereby contributing to a change which has to be evoked in the minds of the customers. Several factors and concepts relating to repositioning indicated that the company needs to analyse its present position, formulate a strategy, devise a plan to enhance its products and services and then communicate the changes to the potential target market.

Coming to the second objective of analysing the repositioning strategy of Crowne Plaza, the author conducted an interview with three managers of Crowne Plaza London-The city, which is poised for repositioning and an indirect interview through a colleague working at the hotel with a senior consultant/expert involved in repositioning of the Crowne Plaza brand from the Intercontinental hotels group headquarters. Indeed the three managers working for Crowne Plaza are point managers from the Intercontinental hotels group for operationalising the repositioning at the hotel and these three managers report to the above-mentioned senior consultant/expert at the headquarters. The three managers’ are aware and quite knowledgeable about the strategy and the various elements of the strategy. However it needs to be pointed out that the repositioning strategy is currently underway and it is expected to be completed by 2015. Hence the analysis conducted on the data collected from the interview might have some limitations with respect to validity, as the time moves on the same questions relating to strategy of repositioning might evoke different kind of answers as there might be a change in strategy. Hence the analysis is time dependent.

Coming to the conclusion from the analysis; it is seen that the strategy is generally in line with the repositioning of hospitality organisations identified from the literature review. A three stage plan is adopted by Crowne Plaza, initially with respect to renovations of the hotel properties, improving the product, services offered, and most importantly developing consistency in terms of products and services of the different Crowne Plaza hotel properties across the world. In line with the strategy, at least 10% of the hotel properties are said to be removed from the brand portfolio as they are substantially below the expectations and hence including them might require significant capital expenditure which would not warrant the potential revenues to be gained in future. Furthermore it was identified that the need or the reason for repositioning, is quite relevant to the concepts analysed in the literature review. Indeed one of the reasons for repositioning is because of the wrong positioning of some of the Crowne Plaza hotels.

The Crowne Plaza hotel brand in general has the potential to improve its revenue generation capability and can compete with the likes of Marriott in the upper upscale market, however is presently targeting the lower end of the upscale market. The Intercontinental Hotels Group currently do not have a brand targeting the upper upscale market. Hence in terms of this it can be said, certain Crowne Plaza properties are positioned wrongly. On the other hand there are other Crowne Plaza hotels which are not providing the same kind of products and services and hence there is a significant discrepancy in terms of consistency of the services and products offered by different Crowne Plaza hotel properties. This is indeed a significant factor which needs to be rectified only through improvements, however has to be communicated to the new target market.

It is here that the author has certain disagreement with the managers which were also voiced by them as a threat to repositioning strategy. When these hotel properties are renovated, and starts to target the upper upscale market, they would have to substantially increase the room rates. Currently some of the hotel properties are giving a low quality of service whereas some others are providing high-quality, and there is indeed a discrepancy in the room rates of these hotels. The strategy is to develop the consistency in terms of quality of services and products and hence increase the room rates to that of the upper upscale market. The target market would be the young business segment and competitors would be the likes of Marriott. In terms of the threat, the managers were not able to provide a convincing reply to how they intend to cope with the potential of the negative fallout as the customers may decide to change their allegiance because of the high room rates. Moreover the targeted market may not be significantly convinced about the quality of products and services provided by the repositioned Crowne Plaza brand.

The methods adopted by Crowne Plaza especially the operationalisation of the strategy has not been fully analysed as it is still in the operationalising phase. However the general outlines of the strategy by means of three phases have been carefully evaluated. The first phase is almost over where the focus was on improving the consistency and the quality of products and services offered. The second phase is currently underway were the properties are now starting to target the upper upscale market and communicating that brand message. In the first phase, several changes were introduced, in line with the needs and requirements of the young business customers. The second and third phase is more in line with branding and marketing communications. However it is with respect to the method adopted which is significantly different from that of the strategy adopted for Holiday Inn that the author again has certain reservations. In the case of Holiday Inn, there were significant changes in the external elements of the hotel especially the signage, logo, and the visual appearances and so on. The entire hotel from the outside looked totally different from the previous one and this could indeed have contributed to the success of the rebranding of Holiday Inn.

In the case of Crowne Plaza, the managers and the senior consultant have mentioned that there are no significant changes to the signage, the logo and so on even though there is a change in the colour scheme, improvements in the lobby, the reception/front desk and so on. However since it is not yet completed, the author has been unable to verify the actual changes in practice and to conclude whether the minor changes in the appearances can contribute to a significant change in perception about the brand. This is one another area where Crowne Plaza Hotel would need to evaluate their strategy. Overall the strategy is in line with the general concepts, theories identified literature review, and it is indeed possible that there would be changes in the strategy as it is still being operationalised. Based on the reservations and discrepancies found out by the author about the strategy and its implementation, the following recommendations are provided.

Recommendations

It was found that there were two major flaws in the strategy when analysed with the literature on repositioning. The recommendations are to correct the strategy in terms of making significant changes in the external appearances which can contribute to changes in the perceptions of the customers and with respect to target the upper upscale market and hiking the room rates. These recommendations are specific, measurable, attainable, realistic and timely (SMART) although these aspects are not provided separately. The author has evaluated the applicability of the recommendations and has concluded that they are realistic and SMART. In sync with the third objective stated which recommends to make improvements to the repositioning strategy of the Crowne Plaza brand following are recommendations stated which IHG can look over.

Recommendation - 1

The first phase of the strategy namely, "move up" is currently underway which involves improving the products and services and certain external appearances. In line with the implementation strategy for Holiday Inn, the author recommends that Crowne Plaza also adopted significant changes in its external appearance especially the signage, the logo, the colour scheme and so on for the entire hotel property. A change in colour scheme is indicated, however only for the rooms.

The recommendation is that a new colour scheme be identified for the Crowne Plaza hotels and when this is painted on the hotel properties can indicate to the customer a complete renovation.

Moreover changes in the lobby and the reception area have to be substantial especially from a visual perspective rather than a tangible perspective. Hence the signage and the logo can be altered by Crowne Plaza to indicate to the customer that they have made significant changes.

This recommendation is indeed based on the experience of Holiday Inn and its success and rebranding. Hence this proven strategy can be implemented for repositioning of Crowne Plaza hotels.

In terms of the cost of this change in strategy, the author feels that since Crowne Plaza has already decided on repositioning, it should go all the way and should allocate more capital expenditure for these improvements. It is expected that the capital expenditure for a significant change in the external appearance would be at least 50% more than the present expectations. However since the target segment and the target room rate is again more than 50%, the return on capital would be adequate to cover the initial expenses. Moreover this would contribute to a significant alteration of the perceptions of the customers as is evident from the example of the rebranding of Holiday Inn.

Recommendation - 2

The second recommendation is with respect to the hiking in room rates which would be implemented in the third stage after the Hotel completes the renovations and starts targeting the upper upscale market. In this phase, the hotel would lose the current customers or it is quite possible that the current customers would move their allegiance to other hotel property brands mainly because of the significant increase in room rates.

It is recommended that the hotel shift to the upper upscale room rate in a gradual manner than at one go. Currently the room rates at Crowne Plaza hotel properties on average are in the range of $100-$110. The expected target room rate is in the range of $140-$150. Rather than going for a steep hike, thus losing the existing customer base, it is recommended that Crowne Plaza hotel properties strategically hike the room rates in a step-by-step manner.

Once the renovations complete, the room rates can be increased by 10% hence achieving an average of $110.

After this is achieved, in the next season period or when there is high demand such as the holiday season, the room rates can be further increased by 20% to 30% depending upon the demand and hence reaching around $140 on an average.

The next step of hike should be in the next holiday season or after a period of one year and it should be only at this stage that the targeted room rate should be achieved that is on an average room rate of $150.

By a gradual shift in upward movement of the room rates, the current customers can be retained for a certain time period while the existing customers are targeted and acquired. It is expected that in the range of $120-$130, a high portion of the current customers would still be retained and indeed at this stage the new target customer base can be acquired and their retention can be planned. Since it is only after a year's period that the targeted hike is completed, the author expects that by this period the new customer base would be a solid foundation, after retention tactics are employed. At this stage it is expected that the old customer base would be lost, but the hotel can expect the revenues to keep on coming and hence not a shock of change.

Recommendations for Future Research

The present research is conducted at the time of the operationalisation of the repositioning strategy of Crowne Plaza Hotel brand. It is recommended that further research be conducted in a quantitative and qualitative manner to analyse the success or failure of the repositioning undertaken by the Crowne Plaza hotel brand after it is completed. It is very essential to conduct such a research as it would give a definite idea to the planners and experts to analyse whether this strategy of repositioning to target the upper-upscale market consisting of the young business clientele was good strategic move to attract more business or was a failure.