Overview Company BackgroundAitken Spence PLC incorporated and listed on the Colombo Stock Exchange since 1983 and a company operating for 150 years. It is a diversified Group of Companies with a strong regional and international presence in the fields of Tourism, Maritime & Logistics, Strategic Investments and Services with 16 segments under them. Aitken Spence headquarters in Colombo, Sri Lanka, operates in Maldives, Oman, India, Bangladesh, Fiji Islands and Mozambique with about 13,600 employees in the above mentioned countries.Diversification of the Segments with the Destinations at Aitken SpenceTourism(Sri Lanka, Maldives, India & Oman) Maritime & Logistics(Sri Lanka, Maldives, Fiji Islands, Bangladesh & Mozambique)Strategic Investments(Sri Lanka) Services(Sri Lanka & Maldives)-Hotels-Inbound & Outbound Travel-Airline GSA -Maritime & Port Services-Freight Forwarding & Courier-Integrated Logistics-Airline GSA (Cargo)-Maritime Education -Power Generation-Printing & Packaging-Apparel Manufacturing-Plantations -Inward Money Transfer-Elevator Agency-Insurance-Property ManagementNumber of Employees in each destination of Aitken Spence PLCHistory of the Aitken SpenceAitken Spence founded as a Partnership by two Scottish Merchants, Thomas Clark and Patrick Gordon Spence in 01st of September 1868 in the port town of Galle.
The name of the partnership changed to Aitken Spence Company’ with the joining of two brothers Edwards and S R Aitken to Thomas Clark and Patrick Gordon Spence.
Then in 1952, the Partnership transformed into a Private Limited Liability Company. The Company shares were quoted on the Colombo Stock Exchange for the first time with an issued share capital of 51 Million and Aitken Spence became a PLC in 1983.Aitken Spence HotelsAitken Spence Hotels started the first resort hotel as Neptune Hotel’ in year 1973 designed by the renowned architect Geoffrey Bawa and currently operates a chain of 22 hotels and resorts in Sri Lanka, India, Oman and in the Maldives under the brands of Heritance Hotels & Resorts, Tuurya by Heritance, Aitken Spence Hotels & Resorts and Adaaran Hotels & Resorts. They are as follows;Growth of the Aitken Spence Hotels:Growth of the Aitken Spence Hotels (Cont’d):1.2 Business Concept of Aitken Spence Hotels38271452730500Aitken Spence Hotel Holdings PLC adopts a focused and a holistic approach’ towards sustainability which is aligned to the Integrated Sustainability Framework of the parent company with wide spread business interests in different countries. (P 62)Holistic Approach:This is the newest and the latest concept to the marketing which is introduced as an answer to fundamental changes in the current market environment. Changes could be identified as; demographic changes, internet development, globalization, hyper competition, corporate social responsibility etc. of Aitken Spence HotelsUppsala Internationalization Model’ explains how the companies or the firms gradually intensify its operations and activities in a foreign market. Following key features are to be taken into consideration prior to moving into the foreign market.Experience gained from the local / domestic market.Choosing of culturally or geographically close countries to start up the business.Mode of entry to the new market (Traditional exports). dimensions applied to Aitken Spence Hotel Holdings PLC given in the following: Kotler’s CCDVTP’ Marketing TheoryAccording to Philip Kotler’s CCDVTP Marketing Theory, there are three initial requirements to be full filled for an organization to be succeeded. They are as follows:Creating Value=Product ManagementConvey Value=Brand ManagementDeliver Value=Customer Management Web Site – Travel Agents – Tour Operators – Social Media00CommunicateOfficial Web Site – Travel Agents – Tour Operators – Social Media283845088582502952745715CreateCreating authentic experiences while adding moments of joy & happiness which uplifts the lives of the different people from different areas all over the world00CreateCreating authentic experiences while adding moments of joy & happiness which uplifts the lives of the different people from different areas all over the world297180283210DeliverOnline Customer Service – Tour Agents – Tour Operators00DeliverOnline Customer Service – Tour Agents – Tour Operators28397209477702940057782ValueThe wide range of hotels among four countries under four different brands with authentic experiences and with competitive rates to cater diverse people00ValueThe wide range of hotels among four countries under four different brands with authentic experiences and with competitive rates to cater diverse people28403552465420294005168437Target MarketMainly the tourists who are travelling to the countries where the Aitken Spence Hotels are operating for leisure, business and others00Target MarketMainly the tourists who are travelling to the countries where the Aitken Spence Hotels are operating for leisure, business and others28409908207702971809052ProfitGenerated Revenue: Rs 19.6 Bn (Increased by 7% compared to last year) – Average Guest Satisfaction Score: 90.9% – Payments to the employees Rs. 3.5 Bn (Increased by 12%compared to last year)00ProfitGenerated Revenue: Rs 19.6 Bn (Increased by 7% compared to last year) – Average Guest Satisfaction Score: 90.9% – Payments to the employees Rs. 3.5 Bn (Increased by 12%compared to last year)0499110001.3 Porter’s Value ChainA group of activities which are performed to design, produce, market, deliver and service the product to create value for its customers can be identified as the value chain defined by Michael Porter. (KocBozdag, 2017)1.3.1 Aitken Spence Hotels Value Chain AnalysisPrimary ActivitiesInbound LogisticsAitken Spence Hotels inbound logistics represents a highly sophisticated system that ensures smooth operations in more than 2,800 rooms across 23 hotels and resorts in 04 countries around the world.OperationsAitken Spence Hotels operates its business via the following segments:Ownership Segment: This segment consists of 17 hotels with 2,363 rooms owned by Aitken Spence Hotels.Management Segment: This segment consists of 06 hotels with 494 rooms managed by Aitken Spence Hotels.6800859652000188150532004000Aitken Spence Hotels operations are divided into two geographical segments:South AsiaMiddle EastHighest level of standard of service, a high level of service personalization and integration of information and sophisticated technologies are included in the main sources of value in the Aitken Spence Hotel’s business operations.Outbound LogisticsThis refers to the procedures required to deliver the finished products to the customer. Service provision of the highest standards, the provision of transportation services to the customers could be identified as some of the competitive advantages associated with outbound logistics.Marketing and SalesMarketing and sales practices of Aitken Spence Hotels depend on the application of various components of marketing communication mix and the company generated revenue of Rs 19.6 Bn an increase of 7 per cent compared to the last year.ServiceA high quality of service is also one of the major sources of competitive advantages. The customer service can be reached by customer service hotline, emails and also via the social media.Support ActivitiesAitken Spence Hotels support activities are consists of three main segments as follows:Hotel Operations Front OfficeHouse KeepingFood and BeveragesHotel Support Services MaintenanceFinanceAdministration and HROther Group Support Services Central ReservationsSales and Marketing, Branding and Corporate CommunicationsCorporate House KeepingCorporate Food and BeveragesCentral Purchasing and MerchandisingEngineering and ProjectsCorporate FinanceCorporate Learning and Development299783515938500-8509014859000Value Creation Model at Aitken Spence Hotel Holding PLC Performance Review3327400150495001.4.1 Sri Lankan SectorAn increase in average occupancy levels to 64% compared to 63% in the previous year, with strong operational performance in the Sri Lankan cluster. Revenue growth of 8% outperformed industry growth while operating profit increased by 17% to Rs. 1.1 Bn contributing 40% to consolidated operating profit during the year while recorded an average satisfaction rate of 89.9%. (pg 67)3529965234315001.4.2 South Asian and Middle East SectorAitken Spence Hotel’s South Asian and Middle East Sector led by Maldives recorded a revenue growth of 7% while contributing 67% to consolidated revenue. The sudden upward movement in room inventory and the growing competition from the informal sector pressured the profit margins to 13% from 15% and declined of 7% in both operating profit and pre-tax profit.(pg 69)Key Issues of Aitken Spence Hotels1. Customer Loyalty: Before making a reservation, customers normally surf through the internet about similar hotels and compare the rates and facilities.2. Rates and Packages: Competition among the competitors with comparative rates and different tour packages.3. Presence in the Social Media: In the present market, Social Media plays a very important role especially in Face Book and Instagram. However, it is recommended remain attractive and visible to aggressively defend its competitors.4. Employee Turnover in early stages: Average Length of Service of an Employee is 05 years.(pg108)2. Situational Analysis 2.1 PESTEL AnalysisA Business Strategic tool used to find, evaluate, organize and track macro-economic factors by the organizations or firms which can make an impact on their businesses at any given time. Under this strategy, it examines the opportunities and threats due to Political, Economic, Socio Cultural, Technological, Environmental and Legal forces. Environment Factors DescriptionPolitical Factors -End of the Civil war in 2009 gave an opportunity to Sri Lanka to become one of the safest destinations to travel. (Government’s investment in infrastructure development)-Sri Lanka Tourism’s new branding campaign So Sri Lanka’Economic Factors -The weakening of the GBP against the LKR as a result of UK’s decision to leave the EU. Sunday Bombings in Sri Lanka:Sri Lanka faces a huge blow to its economy after this brutal incident taken place. For an example; thousands of holiday makers cancel their trips after the UK Foreign Office advised all but essential travel causing a USD 1.5bn loss to the economy. Socio Cultural Factors -The rise in the trend of Eco-Tourism offerings in the properties. Pg58-Millennials & Generation Z’s have emerged as leaders in global travel. Pg47 Technological Factors -Online reservations (45% of travellers use an app to help plan travel)-Transparency provided by the internet bookings (read blogs, reviews etc) 7/10 travellers post vacation photos via social media) pg47Environmental Factors -Reliable environment management systems (Heritance hotels are ISO 500001 certified) pg60Legal Factors -Comprehensive Health & Safety policy framework.pg48-Reducing Carbon FootprintsCompetitor Analysis 2.2.1 Porter’s Five ForcesPorter’s Five Forces is the tool that shape the framework of all the organizations and stating the rules of competition in order to obtain profits in an organization. The five forces are as follows:Competitive RivalryPowerful BuyersPowerful SuppliersPotential New EntrantsSubstitute Products(Dobbs, 2014)-47815522860000SWOT Analysis StrengthsMulti-destination Portfolio: Sri Lanka, Maldives, Oman & India Strong Brand Reputation: Aitken Spence Hotels, Heritance Hotels & Resorts, Turyaa by Heritance & Adaaran Hotels & ResortsCollection of unique properties providing authentic experiences: Natural beauty, Green ConceptSkilled & Professional team:3,430 number of employees with average training hours 3.13 per employee per annum.61 number of Awards & Recognitions (13 Corporate Awards, 28 Property & Brand Awards & 20 Online Platform Recognitions)Long-term relationships with channel partners:898 Tour Operators / 1,709 Registered Travel Agents / 1,331 Registered Corporate Clients. WeaknessesSeveral properties require refurbishmentEmployee Turnover in entry categoriesEmployee Turnover rate at 29%.OpportunitiesAnticipated boom in Sri Lankan & Maldivian tourism marketsNumber of Tourists arrived to Sri Lanka in 2017 ” 2.1 Mn & in 2018 ” 2.3 Mn.Number of Tourists arrived to Maldives in 2017 ” 0.99 Mn & in 2018 ” 1.08 Mn.Increasing popularity of sustainable destinationsNature Lovers Forests ” Heritance Kandalama, Heritance Tea Factory (Sri Lanka)Beaches ” Heritance Negombo, Heritance Ahungalla (Sri Lanka) & Adaaran Hotels & Resorts, Heritance Aarah (Maldives)Preference for experiential travellingDesserts ” Dessert Nights Camp (Oman)Traditional Medical Treatments at Heritance Ayurvedha Hotel (Sri Lanka)Increasing connectivityUse of Social Media (Facebook, Instagram, Twitter & YouTube) ThreatsThreat of Terrorism & FearEaster Sunday Bomb Attack in Sri Lanka on 21/04/2019.ISIS attacks in Middle East CountriesChanging demographic profile of travelersAge, Gender, Income, needs & wants of travelersIntensifying competition among operators and from the informal sectorShortage of skilled labourAverage Length Service of an Employee ” 5 yearsClimate change risksNatural disastersGeopolitical tensionsCritical Analysis of Aitken Spence Hotels3.1 VisionTo achieve excellence in all our activities, establish high growth businesses in Sri Lanka and across new frontiers, and become a globally competitive market leader in the region.(pg6)Marketing objectivesAchieve growth targets above the industry average.Implementation of the new loyalty programme.Sustain and leverage the developed brand proposition based on the results of the brand exercise and consolidate portfolio of brands to drive planned enhancements.Continue to look at optimizing the funding avenues in order to offer better returns to stakeholders.Market Entry StrategyAitken Spence Hotels enters into international market in 1995 by acquiring its first island in the Maldives, Bathala Island Resort, and thereby becomes the first Sri Lankan hospitality company to invest overseas. Accordingly they have acquired hotels in Maldives, Oman and India. In 2014, Aitken Spence Hotels entered to a joint venture agreement with Spanish Company RIU to construct a 500 room, 5 Star Resort which commenced its operations in 2017.(pg 34 & 35)Hollensen’s Decision Making ModelWhen linking with the global marketing process, there are five key decisions to be taken prior to entering the new market. (Hollensen, 2011)-6413526416000 Marketing StrategyA digital Marketing strategy is a series of actions that help a company to achieve its goals / objectives via carefully selected online marketing channels such as Internet, Mobile Apps, E-mails and paid / earned or owned media. Web Site value of the aitkenspencehotels.com is currently at USD 1,060 and roughly 457 unique visitors per day which generates 1,452 daily page views with approximately daily revenue (from advertisements) of USD 1. The Global Traffic Rank of the website is 705,289.5270528067000 Targeting and PositioningAitken Spence Hotels segmentation, targeting and positioning refers to how the company divide its customers into segments and choose individuals to sell its products or services and positions the services to full fill the needs and wants of these target market in the best possible manner.SegmentationDividing the market into segments based on the characteristics of the specific market. TargetingAitken Spence Hotels uses different types of customers to the segments mentioned above.025463500Positioning026987500Dobbs, M. (2014) Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24 (1), p.32-45. Emerald [Online]. Available at: doi:10.1108/cr-06-2013-0059 [Accessed: 16 July 2019].Koc, T. and Bozdag, E. (2017) Measuring the degree of novelty of innovation based on Porter’s value chain approach. European Journal of Operational Research, 257 (2), p.559-567. Elsevier BV [Online]. Available at: doi:10.1016/j.ejor.2016.07.049 [Accessed: 9 July 2019].Hollensen, S. (2011) Global Marketing – A Decision Oriented Approach. 5th ed Essex: Pearson Education Limited, p.6-7.