Hotel Pest Analysis

The boutique luxury hotel market has grown by 6.1 percent per year since 2009, and it expects that growth to accelerate through 2019 (International Business Times, 2015). In order to capture this rise in demand major hotel chains have launched their own boutique lifestyle brand extensions such as Canopy and The Curio Collection by Hilton, The Autograph Collection and Moxy by Marriot and Sofitel So by Accor. With these new players entering the market it is vital that the established boutique luxury hotel brands innovate and I will be analyzing how Banyan Tree Hotels & Resorts (BTHR) and Six Senses Hotels Resorts Spa (6S) have done so by focusing on their hotels in Thailand.

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PEST Analysis

By analyzing the political, economic, social and technological

The threat of new entrants is medium-low as there are high capital requirements needed to buy and build a hotel in Thailand and permits and licenses are required for building a new hotel if over 80 rooms (Thai Embassy, 2015). Well-trained senior management labors for hotels are relatively expensive (BOI, 2015) but the cost of switching for customers can be low. The buyer power could be considered very high as there is a large supply of boutique luxury hotels in Thailand and there is very good availability of full information on price and product. If there is a psychological attachment to a brand or the buyer has high loyalty status/points then the high switching cost could lower the buyer power. The threat of substitution is relatively high, especially from the Luxury Villa Market, which grew by over US$7 billion globally from 2015 -16 (Forbes, 2015). This is because they offer luxury products with increased privacy at a similar cost. The bargaining power of suppliers is quite low as there are a large number of F&B suppliers, large numbers of suppliers of hotel hardware such as furniture, bedding, fixtures and fittings and weak trade unions (CRS Asia, 2015). Overall the intensity of competitive rivalry is moderate to high in the boutique luxury sub-industry in Thailand as buyer power is very strong due to availability of full information (Porter,

(Oesterwalder & Pigneur, 2010)

Ten Types of Innovation

10 ways in which the boutique luxury sub industry has innovated are:

Profit model – Boutique hotels use flexible pricing such as yield management to maximize their revenue. They sell different rooms at different prices with various hurdles such as advanced purchase rates, seasonal based offers and minimum stay restrictions. They also used bundled pricing to sell rooms with spa treatments or half and full board packages to maximize profit. The hotels are also using premium pricing for higher room categories such as suites or villas.

Network – BTHR used complementary partnering with another hotel group to share costs of a call centre. Hotels also use opaque pricing to sell distressed inventory to secondary markets.

Structure – The hotels use decentralized management to empower employees such as BTHR giving creativity guidelines to housekeepers. They also centralize sales and marketing in head offices. Another structure innovation is outsourcing their PMS System to a third party vendor

Process – BTHR and 6S use localization to adapt its offering and worked closely with local