The Corinthia Palace Hotel Company Ltd Company Tourism Essay

The Corinthia Palace Hotel Company Ltd Company Tourism Essay With 380 million international arrivals annually and market share of more than 40% of global tourism Europe commands the position as the number one tourist destination European Commission Vice-president Antonio Tajani- Journal of the Institute of Tourism Studies Dec 2010 pg 30. Company History Corinthia Palace Hotel Company Ltd is a Maltese registered company that owns The Corinthia Palace Hotel and Spa. The hotel enjoys a central location in the San Anton area. This Boutique style hotel neighbours both the Official Residence of the President of the Republic of Malta and the San Anton Botanical Gardens. Initially in 1920s, the site was a private residence called Villa Refalo, which was later sold to the Pisani family in 1959. (IL-Haddiem, 1968). The villa was transformed into the Corinthia Restaurant in the 1962. The company name Corinthia stems from the trademark columns that remain a prominent feature in the Villa Corinthia Restaurant. The restaurant prospered and was particularly popular with both locals and expatriates on field breaks from Libya. The success of this fine dining restaurant led the Pisani family to engage the services of architect Dom Mintoff, who designed and supervised the building of one of the finest hotels of its time. The hotel was amongst one of the first five star hotels in Malta to have full conference facilities in addition to 141 rooms, 11 suites, Garden Spa and 5 food and beverage outlets. The official opening of the hotel in the June of 1968, was conducted in the presence of then Minister of Education, Culture and Tourism, Doctor George Borg Olivier, His Excellency Duke of Edinburgh and renowned actor Roger Moore. The success of this enterprise has set the foundation for Corinthia Group of Companies, as we know it today. The group is organised into four business units, each of which plan and implement well-defined strategies driven by single objective of continued growth. The unanimity of purpose, to achieve our founders vision, towards expanding the Corinthia Portfolio Internationally, is driven by Mr Alfred Pisani himself. To date the company owns or operates sixteen hotels in nine countries. Mission Our Mission is to provide our guests with the craftsmanship of care Company Philosophies The company philosophy is primarily based on the core values, mainly integrity, honesty, trust and respect, which form the foundation of relationships within the Corinthia Group as well as with our customers and business partners. Definition of an Industry. There are numerous sources that provide a definition of an Industry, however, the succinct description in The Oxford English Dictionary of an industry is as follows :- a particular form or branch of economic or commercial activity Snapshot of the Tourism Industry in Malta Economic Performance According to its 2010 report  [1]  , Travel and Tourism contributes towards 19.4% of the GDP (EUR1,151.4 million) with a forecasted increase of a further 3.6 % by 2020. Export earnings from International Visitors is expected to reap in the region of à ¢Ã¢â‚¬Å¡Ã‚ ¬ 777 million with a forecasted growth to à ¢Ã¢â‚¬Å¡Ã‚ ¬ 1443.4 million in 2020. Currently, 23.7% of the labour market are employed in industry related occupations and it is anticipated that this will rise to 28.9 % by 2020. These statistics substantiate that Travel and Tourism is perceived to remain one of the key engines for growth for the Maltese Economy. Tourist Performance Although the National Statistics Office has not issued the official statistics for 2010 Parliamentary Secretary for Tourism estimated that the total number of Tourists to the island was in the region of 1.3 million  [2]  . This is an .1 million increase on 2009 figures  [3]   Capacity : The National Statistics Office December news release Collective accommodation establishments :Oct 2010 reported that there are a total of 158 accommodation establishments on the Maltese Islands which equates to a total bedstock of 17,966 . During the month of October statistic report that the total amount of non resident arrivals in109,581 visitors who stayed an average stay of 6.3 nights. 5 Star Hotels on the Island Currently , there are a total of fifteen accommodation establishments that are classified with a 5 star rating. During the month of October, this accommodation tier enjoyed an occupancy of 73 %. Having an information at hand is invaluable when assessing the viability of an industry. The World Travel and Tourism Council uses set Indices which can be valuable to ascertaining an Industrys attractiveness and future economic potential. The use of PESTLE to scan the Broad Environment for drivers of change There are numerous characteristics or strategic elements that can influence the life cycle of the local tourism industry. One organisation, acting independently, may have very little influence on the broad environment: however, the forces in this environment can have a tremendous impact on the organisation (Enz, C.A, 2010).p16  [4]  . Consequentially, if one was to consider this statement in todays local business scenario, it consolidates the school of thought that theres a limited likelihood that organisations have opportunities to influence the broad environment. However, according to The principle of Enactment organisations do not have to submit to the existing forces in the environment. (St.John, Harrison ,2010)  [5]  . One example of how this is validated in the local context, is through management agreements that hoteliers have formed with Internationally renowned Brands. In contrast, the Corinthia Palace Hotel, has established its own brand called Corinthia Hotels International Ltd (CHI Ltd). The strategic choice to create a Maltese Brand is a means to differentiate between the International brand names such as Hilton, Inter Continental, Marriot and Starwood Hotels that currently operate on the Island. Through a concept of backward integration the Corinthia Brand has eliminated having to pay substantial contributions to third party Management Companies by forming its own unique Brand. Additionally, it has been able to penetrate the International Tourism Industry by offering Management Contracts to overseas operators in the Industry. The task of measuring competitiveness is full of complexities as there are numerous forces at play. Therefore, it is of paramount importance to have a thorough understanding of both the potential threats and opportunities available. This will then provide the basis for which a company responds to trends and influences by integrating its resources to achieve a strategic advantage on its competitors. Local firms competing within the Tourism Industry invariably have similar resources available to them. Additionally, each will be challenged by similar forces. Therefore, it is safe to assume that most will pursue similar strategies. However, the company that best acclimatises itself through capitalising on its strengths, its unique resources and capabilities is more likely to be successful. All organisations formulate business plans that will enable the firm to use its core competencies to achieve its mission, goals and strategies. PESTLE Analysis Therefore, in order for any business enterprise to adapt to the broad environmental forces it is common practice to analyse key indicators in the macro environment by situational analysis. The four areas that are believed to influence and form the context in which the firm operates are as follows :- Political Forces Economical Forces Socio cultural Forces Technological Forces The Political Environment can significantly influence an industry and organisations. Economic Performance Political Scenario in Malta The tou The Maltese Government recognises that Tourism is a key contributor to the Maltese Economy. The government has collaborated with Public Employment Services, Educational Institutions and Social partners to invest and improve on the current skills set of the current labour market. The broad environment. Forces within both the Broad and Task environment are critical determinants for strategy formulation for any organisation. However, the core of a firms business environment is formed by its interaction and between three key stakeholders and their impact on the market place :- Customers, Suppliers, Competitors. This is more commonly known as the Task Environment. All contemporary organisations within all Industries face forces that can significantly affect profitability. If a firm understands these forces, then it can develop a business level strategy that allows the business to either take advantage or protect itself from these forces, which in turn allows the firm to be consistently profitable.'(Ahlstrom.D,2009)  [6]  . Although many business models exist, most companies use the framework of environmental understanding established by Economist Michael Porter to measure potential of an in Industry. Porters Five Forces Model In the March- April 1979, one of the most cited authors in Business and Economics, Professor Micheal. E. Porter, published an article in the Harvard Business Review, titled How Competitive Forces Shape Strategy.  [7]  . In this article he wrote : Competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond the established combatants in a particular industry. Customers, suppliers, potential entrants, and substitute products are all competitors that may be more or less prominent or active depending on the industry. The state of competition in an industry depends on five basic forces. The collective strength of these forces determines the ultimate profit potential of an industry. This article formed the basis of Porters Five Forces Model. This user friendly model is now widely applied by many organisations to formulate the firms business level strategy. Corinthia Palace Hotel is no exception. Key strategic decision makers within the company use this model in their business plan to represent their analysis of the dynamics of the competitive structure and each forces influences the Maltese Tourist Industry . Bargaining Power of Customers Bargaining Power of Suppliers Threat of New Entrants The Threat of Substitute Products or Services Function The hotel has two primary functions which are to provide accommodation and catering services to travellers. Market Although perceived as a business hotel, the main market is leisure travellers. The tour operator and Leisure Segments constitute approximately 64% of the hotels market share. The company enjoys amongst the highest customer retention rate within the Corinthia group, averaging in the region of 20%. Suppliers