Strategic Analysis of Shangri-La

Strategic Analysis of Shangri-la

I. Introduction

The hospitality industry constitutes an economic sector with the fastest growth worldwide. At present, the industry continues to receive recognition as a profitable and progressive industry. The hospitality industry offers diverse opportunities for employees and varied services and features to customers. This means that overall industry actual and potential provisions are unlimited, which accounts for continuous shifts or adjustments contributing to industry viability. Diversity in employment and service offerings of the international hospitality industry has resulted to the higher number of people employed in the hospitality industry more than in manufacturing firms. (1998)

Due to the profitability and viability of the industry, it has also evolved into one of the most competitive economic sectors ( 2000). Heightened competitiveness in the industry could draw out the untapped capabilities of hospitality firms. On a firm level, hotel managers face the challenges of shifts in its target consumer segments coinciding with changes in consumer demands, issues of liquidity, and intense failure percentage within the industry (1999). To survive, hospitality firms need to deal with all these multifaceted issues by understanding these problems and implementing appropriate strategies. To understand how well firms in the hospitality industry ensure the competitiveness of the firm, a strategic analysis of Shangri-la hotel in Hong Kong is the case in point. Shangri-la constitutes one of the top and long-standing international hotels and brands.

II. Analytical Discussion

A. Introduction to Shangri-la

Shangri-la constitutes an investment holding company focusing on the establishment and operation of hotels together with associated real estate properties as well as providing hotel management or related services. The company primarily engage in operating hotels and leasing spaces for commercial, residential and other purposes. Shangri-la was incorporated in Bermuda but its main headquarters is located in Hong Kong. At present, Shangri-la has been in operating in the industry for 36 years, which makes the company a stable and strong industry player. In Hong Kong, there are two Shangri-la hotels, Island Shangri-la and Kowloon Shangri-la.

1. Physical Resources

Shangri-la carries a long-term perspective by acquiring or holding majority control over the land upon which it constructs its hotels. Kowloon Shangri-la is 100 percent owned while Island Shangri-la is 80 percent owned. Although, purchasing land is more