Evaluating The Sustainability Business Of Hotels In Azerbaijan Tourism Essay

Evaluating The Sustainability Business Of Hotels In Azerbaijan Tourism Essay Azerbaijan, as a country situated in the Caucasus has a very advantageous location for tourism, but tourism is not a leading sector in Azerbaijan. The most important industry here is oil sector as Azerbaijan has very rich oil reserves and economy depends and develops on the oil industry. Over 90% of annual income comes from our oil industry and the difference between oil industry and the others is huge. So thats why Azerbaijani government wants to cover this difference and the best way is to improve tourism sector because we have the potential. Even in the world tourism is the second biggest industry after the oil sector. Most of the tourists coming to Azerbaijan are business travellers and the reason is oil industry again. That is why the hotels are mostly specialized in business tourism. There are some hotels that I would like to mention: The Landmark Hotel, Hyatt, Ramada Baku, Radisson SAS and Park Inn. As a best practice in sustainable hospitality experience I would like talk about Hyatt. In comparison with above mentioned hotels, Hyatt Hotels Baku has a real professional background and prosperous experience in hospitality industry. Contribution to the Body of Knowledge Actually there have been done no studies and researches on sustainability of the hotels in the market in Azerbaijan that made it a challenge to discuss the topic with extremely lack of information given. Therefore, this thesis can be accepted as one of the first researches on the sustainability of the hotels in the market, but not in respect to the environment and nature. Research Questions While working on this topic I am going to find answers to the following questions: What is the current situation in hospitality industry? What are the barriers for sustainability of hotels? Which are the ways of breaking the barriers of hotels sustainability? SWOT analyze What are the recommendations and suggestions for sustainability? Methodology This thesis will be done by hermeneutical kind of research as I am going to search existing literature, statistical reports, articles, etc. While reviewing these materials I will analyze and gather all necessary information and give a final report on sustainability of hotels. In order to get intended information about the hotel I have contacted the sales marketing manager of Hyatt Baku Mrs. Bahar Dadashova. So far we had only one conference call to inform her about my intention, however in the run of the thesis we will keep in touch. Definitions This chapter gives an overview of the different definitions of sustainable tourism. On the other hand, some studies done concerning kinds of sustainable tourism itself. So far, these definitions give an idea about sustainable tourism and its main factors. Sustainable Tourism Sustainable tourism development is defined by the Word Tourism Organisation (WTO), as a development that meets the needs of present tourists and host regions while protecting and enhancing opportunity for the future. It is envisaged as leading to management of all resources in such a way that economic, social, and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, and biological diversity, and life support systems (World Tourism Organisation (WTO), 2003). Based on the Rio de Janeiro Declaration on Environment and Development, 12 guiding principles of sustainable tourism are set in the Agenda 21 for the travel and tourism industry (United Nations Environment Program (UNEP), 2002). In the tourism context, sustainable tourism is often associated with nature orientated tourism or eco-tourism (Eagles et al., 2002) and has become central in the debate on environmentally integrated tourism development (Gà ¶ssling et al., 2002). Tourism in Azerbaijan Sustainability of the hotels in Azerbaijan is very young as the tourism industry itself. The Republic of Azerbaijan was established in the early 1990s. Since the establishment economy of the country was depending on oil industry. 95% of the budget was contributed by the countrys oil industry. The best alternative to cut down this dependency on oil in the budget is to develop tourism industry. Azerbaijan has very good potential for tourism; high mountains, beautiful forests, ancient history, different historical sites and monuments, lots of artists, poets etc. The Ministry of Tourism and Culture of the Republic of Azerbaijan was established in 2005. One year later Azerbaijan Tourism Institute (ATI) under the Ministry of Tourism and Culture of Azerbaijan was opened. ATI is established in order to cover the lack of qualified staff in tourism sector which is a global issue in world tourism industry as well. Sustainable Tourism in Azerbaijan As it was mentioned above tourism sector in Azerbaijan is young compared to the other industries. Talking about sustainability of the hotels in Azerbaijan we can only mention very few hotels e.g., Hyatt Hotels Baku, Radisson SAS Baku. The names mentioned above are one of the first hotels in Azerbaijan. They are still operating successfully and still very strong in the market. To go back to the Soviet Union period then we can talk about the Hotel Azerbaijan and Absheron Hotel. Those hotels had a big market share as well and were very popular at that time. They had been operating for a long time. The sustainability factors were; Good location Contribution by the government Best service for that time Best staff Since 2005 these both of the hotels were destroyed one after another and now there are 2 big constructions going on; Hilton and JW Marriott. The JW Marriott is replacing Bakus famous Absheron Hotel, which has been demolished, and will be part of a mixed use development designed by ReardonSmith to include 16 floors of private residences, serviced apartments, retail and offices as well as the 20-storey hotel. The architects had a number of key considerations to balance in their concept: location, the high water table, local conventions and successful hotel operations and of course, the clients aspirations for this important building. The result is a unique design that makes a virtue out of addressing these potentially competing dictums. The Hotel Hilton Baku, which is being built in Baku on Azadlig Avenue (instead the hotel Azerbaijan), will be commissioned in August 2011. The total area of five-star hotel Hilton Baku is 42,160 square meters. The hotel will consist of 25 floors and 308 rooms. There will be elevators with panoramic views, different restaurants, concert and exhibition halls, recreation centre at the 670 square meters, sports and fitness centres and swimming pools in the hotel. A bar, which rotates 360 degrees and covers the entire panorama of Baku, will be located on the top floor of the hotel. Hyatt Hotels Global Hyatt I guess this is the only hotel that actually stopped growth of the company related to its policy: Global Hyatt has concentrated on high-end segment, but nevertheless it is among the ten largest. In 2007, the chain launched an innovative hotel brand Hyatt Place, where everything is created based on the results of surveys carried out among the discerning tourists. The hotel is not only providing exclusive services but also tries to make emphasize on its buildings and design. History Hyatt Hotels Corporations well-established reputation as an industry innovator provides a wealth of inspiration as the company looks forward to its next era of creative hospitality. Known around the world for its brands Hyatt Regency , Grand Hyatt , Park Hyatt , Hyatt Place , Hyatt Summerfield Suites and Andaz the entire collection of Hyatt hotels and resorts weaves together authentic service with leading technology to offer its guests unique restaurants, luxury accommodations and distinctive spas. With its new initiatives and design elements continuing to evolve, the next half-century of Hyatt innovation will continue to provide its guests a world of uncommon travel experiences. Hyatt Hotels Resorts opened its first property, a small motor hotel at the Los Angeles International Airport, in 1957 and its portfolio quickly grew to include several other modest hotels along the West Coast and in Chicago over the next ten years. In 1967, Hyatt opened its first major John Portman design ed hotel, Hyatt Regency Atlanta, in Georgia, which featured a space-age design with a dramatic, 21-story atrium lobby. The revolutionary architecture spawned scores of atrium lobbies around the world, effectively changing the course of the lodging industry and reshaping the Hyatt brand as an innovative and significant global hospitality leader. Hyatt successfully distinguishes itself within the competitive hospitality marketplace with six different brands, each designed to deliver experiences attuned to the lifestyles, attitudes, values, and aspirations of the guests for whom it is designed. The 2007-launched Andaz brand is sophistication made simple delivered with a genuine warmth; Hyatt Regency enables productivity and revitalization within a responsive, convenient and contemporary environment; Park Hyatt , a discreet and refined collection located in fashionable cities around the world, epitomizes modern luxury; Grand Hyatt properties are some of the most architecturally dramatic hotels in the world, offering stunning design and a myriad of innovative food and beverage concepts; Hyatt Place is designed for the 24/7 lifestyle of todays multi-tasking business traveller, and Hyatt Summerfield Suites , a reinvention of the all-suites, extended-stay hotel, features timely amenities and inviting, residential design. As a unified portfolio, Hyatts properties share core values across the Hyatt brand: exceptional guest service, upscale amenities, popular food and beverage programs, and innovative interior designs that incorporate local art and style. Currently offering travellers a choice of more than 365 hotels and resorts in over 45 countries, Hyatt Hotels Corporation continues to build on its commitment to clients, staff, partners and the environment as it grows its dynamic vision for the future of hospitality. International chain Hyatt Corporation is one of the leading hotel companies in North America. Owned by the Pritzker family of Chicago, Hyatt manages or licenses the management of 87 hotels and 16 resorts (with a total of 55,000 rooms) in 83 cities in the United States, Canada, and the Caribbean. In addition to its resorts, Hyatt has also developed other special hotel conceptsthe Grand Hyatt, the Park Hyatt, and Classic Residence by Hyatt. Grand Hyatts are large-scale, higher priced hotels located in culturally rich cities, with three in the United States (New York, San Francisco, and Washington, D.C.). Park Hyatts are modelled after small European hotels and are located in Chicago, Los Angeles, San Francisco, and Washington, D.C. The Classic Residence by Hyatt properties offers luxury retirement apartments for rental. Starting in the mid-1990s, the company has also sought growth opportunities in franchising, time-share properties, free-standing golf courses, and casinos. Hyatt Hotels Baku Hyatt Hotels Baku consists of 2 hotels -Hyatt Regency Baku and Park Hyatt Baku Hyatt Regency Baku was reconstructed and opened in 1995; second renovation was implemented in 2005; Park Hyatt Baku was open in 1999 and most of the rooms were refurbished with new facilities in 2008 Best Sustainable Hotel Chains InterContinental Hotel Group Since 2004, this hotels chain became the largest in the world. To date, it owns more than 600 thousand hotel rooms, scattered across the globe. Each year their number is being increased by 5,9%, mainly due to the expansion of Holiday Inn Express, but also because of the increasing number of hotels Crowne Plaza and the emergence in Europe, Staybridge Suites and Indigo boutique hotel. Marriott International The company claims that every year, growing by 4,7% and in the near future has plans to build 800 hotel and add to the existing 500 thousand rooms 125 thousand more. The Group also promises to invest a lot in pre-existing ones, including the Marriott floor, numerous brands, covering all niches of the hotel business from budget options for poor tourists to luxury hotels for the discerning VIP-persons. Hilton Hotels Ranking as the fourth largest chain, this brand is popular not only with luxury hotels, but also because of the scandalous Paris Hiltons escapades, the former heir to the empire hotel room. The company is known propensity for innovations: the first one of its owners have introduced a system of star ratings, equipped hotel with Wi-Fi. However, the chain began to suffer losses, and in 2007 the former owners were forced to sell the hotel business group Blackstone. In 2008 net increased with 300 new sites, and the growth of the company was mainly due to expanses of the United States. But the emergence of the companys portfolio of brands Doubletree, Homewood Suites, and especially the Hilton Garden Inn and Hampton Inn, as well as the construction of Hilton Hotel in provincial Russia say the desire to start taking over the world. ANALYZING THE general statement Hyatt Hotels in Azerbaijan Hyatt Hotels Group is focused on enhancing the brand preference by continuously improving the performance of their existing hotels and successfully expanding the presence of their brands in select markets worldwide. Smart growth and development is fundamental to achieving these aims. As a company, they add hotels in locations throughout the world where their loyal guests and customers want them to be. Hyatt team works closely with the development partners to ensure their success through innovative and efficient design, operational excellence and effective sales and marketing strategies. Hyatt Hotels are focused on the role of development within the organization and have formed a dedicated and experienced global development team. Hyatt Hotels Baku is committed to establishing a reputation as the leading hotel complex in Azerbaijan and the Caucasus region. Their service is known to anticipate, meet and exceed the guest expectations. In order to retain the established position as the market leader in Baku, they focus on the quality of the operation, the physical aspects of both of the hotels, safety and security as well as creating exciting, innovative and trend setting products throughout. Management Widely recognized and industry leading brands of Hyatt Hotels have consistently received top rankings, awards and accolades for service and guest experience from independent publications and surveys, including Travel and Leisure, Mobil and AAA. The mission of Hyatt is to provide authentic hospitality by making a difference in the lives of the people. They focus on this mission in pursuit of the goal of becoming the most preferred brand in each segment that they serve for the associates, guests, and owners. Hyatt Hotels support their mission and goal by adhering to a set of core values that characterizes their culture. Globally, they manage, franchise, own and develop Hyatt branded hotels, resorts and residential and vacation ownership properties around the world. As of March 31, 2010, the companys worldwide portfolio consisted of 434 properties. Sales marketing department of Hyatt Hotels Baku Sales and Marketing department in Hyatt Hotels Baku consists of 8 employees which are-Director of Sales, Catering Manager, 2 Banquet Sales Managers, 2 Rooms Sales Managers, Sales Executive and Revenue Analyst. Besides, there can be Sales Admin Assistant, Sales Coordinator, Regional Director of Marketing, Marketing Communications Manager. Hyatts worldwide Sales and Marketing teams strive to build brand preference and drive revenue to our hotels. Our sales and marketing strategies are rooted in a comprehensive understanding of our customer segments, the current dynamics of the marketplace and the most effective use of new technology and media platforms. Hyatts marketing strategy is designed to secure and build brand value and awareness while meeting the specific business needs of hotel operations. Building and differentiating the brand position of Hyatt and our sub-brands is fundamental to increasing Hyatts brand preference and demand, rate premium and related business imperatives. Hya tt is focused on targeting the distinct customer segments that each of our brands serves and supporting the needs of the hotels by thorough analysis and application of data and analytics. There is a coordinated and integrated communication strategy for the Hyatt master brand and each of the sub-brands across every distribution channel. Promotion of Hyatt Hotels Baku in the World Hyatts Central Reservation System is an important contributor to the performance of the hotels system wide. The system booked 11.8 million room-nights in 2008, representing approximately $2.3 billion in rooms department revenue. Reservation centres are located in the United States, Australia, India, UAE, Germany, Japan and China to provide 24/7 access to prospective guests. Hyatt Hotels work closely with the distribution partners to ensure that they maximize market share across all channels. These include traditional travel agencies (e.g., American Express, Carlson Wagonlit), online travel agencies (e.g., Expedia, Travelocity and multiple regional agencies, etc.), opaque agencies (e.g., Priceline, Hotwire) and multiple user-generated sites that link back to Hyatt.com (e.g., Trip Advisor). Hyatt also has extensive marketing partnerships with all global and regional airlines. Product knowhow Hyatt Baku Hotels offers unmatched variety of facilities and services within one complex, including business and communication technology, vast fitness and relaxation facilities, an array of dining and entertainment opportunities, shops and offices. The USP of Hyatt Hotels Baku is: favourable location and convenient access to select business centres and government offices; the only complete lifestyle complex in the city, featuring 2 hotels, office and residential facilities, wide variety of FB Outlets, multifunctional meeting and conference facilities and state-of-the-art Health and Fitness Centre; largest global distribution / reservation system; largest inventory of suites present in the city suitable for large VIP government groups. Contribution from the Hyatt Hotels International Hyatts properties and preopening sales offices are supported by a network of salespeople in key markets around the world. Sales professionals represent all Hyatt destinations and focus on all relevant market segments e.g., corporate accounts, M.I.C.E. accounts, key wholesalers, travel agencies and luxury travel specialists. Additional support is provided to hotels with dedicated resources managing programs such as Virtuoso American Express Fine Hotels Resorts. The network includes offices in New York, Chicago, Los Angeles, San Francisco, Washington D.C., Mexico City, London, Mainz, Sydney, Melbourne, Riyadh, Tokyo, Hong Kong, Singapore, Beijing, Shanghai, Bangalore, New Delhi and Mumbai, as well as additional coverage throughout Continental Europe. Each office is responsible for ongoing support of the Hyatt portfolio. Additionally, each office coordinates the presentation of Hyatt and Hyatts sub-brands at important industry events and shows such as ITB, World Travel Market and Asia Luxury Travel Market. Hotels also have the opportunity to participate in annual Hyatt fairs and sales calls coordinated by each worldwide sales office. These events provide the hotels with face-to-face access to Hyatts best existing and potential clients. Competitiveness of Hyatt Hotels Currently eight five-star international hotels are under construction in Baku. This is not just about attracting well-heeled tourists, as Baku still has a relatively small demand for luxury hotels. It is about making Baku competitive as a mega-event Mecca. Baku will be promoted as a site for conference tourism, Gurbatov, the tourism official, said. Each year, Baku hosts more government-sponsored conferences and other events. But the creation of the appropriate infrastructure luxury hotels, large expo-centres, convention centres, conference halls and stadiums will allow the government to bid on hosting large-scale international events. One 33,800-square-meter exposition centre opened in Baku in May; the government has also begun construction of a 60,000-seat soccer stadium. The sprawling 90,071-square-meter Heydar Aliyev Cultural Centre, designed to look like rippling waves, will open in 2013. Attracting sporting events and conferences to these venues is a matter of both the country s prestige and commercial profit from foreign visitors, Gurbatov added. For now, expectations run high that the owners of the new hotel under construction will benefit from their investments assuming that the government succeeds with its conference tourism strategy. Commented Kenan Aslanly, an analyst at Bakus Public Finance Monitoring Centre: If this strategy is successfully implemented, the country will win both economically and politically. Jumeirah will be the first new hotel to open in 2011. Jumeirah will have reasonably strong brand awareness in Baku, since a) Dubai is a very familiar weekend / holiday retreat for Azerbaijanis and b) Middle-Eastern and Persian business is growing in Baku due to the development in the city with Dubai as an ideal. Jumeirah is located close to the Presidents Dacha, approx 15 minutes outside the airport (45 minutes from city centre). The President will use this hotel to host visiting diplomatic delegations and Ministry conferences due to the close proximity to the airport, Buta Palace conference centre and to his summer residence / Dacha, where he resides between April October every year. This will affect Park Hyatt, as we currently get the majority of this business. It will also affect Hyatt Regency when it comes to groups and associations (e.g. sport groups) which look for a secluded place with spaces for outdoor activities (pools, golf course, tennis etc), and groups looking for a location outside the city centre to avoid late party nights. The Marriott (80 room inventory) is located close to Jumeirah. Due to a small inventory and inconvenient location, it will not impact Hyatt much, despite being a well known, international brand with an aggressive opening-strategy to drive occupancy. JW Marriott (228 room inventory)will open Q1 2012.Located at Bakus Freedom Square a national symbol and location of military parades as well as the seafront boulevard with the Caspian Sea beyond. This hotel will also have to compete in the corporate market to achieve occupancy. Hilton will open in June 2011 and is located right next to Park Inn, sea side in the centre of the city. The two hotels have the same owner, something which is of great concern for Park Inn. Park Inn opened in 2005, but is still worried about getting a new, international brand as competitor- and has great concerns about losing corporate agreements for companies located around the hotel and group business. Landmark is also very concerned about this new entry on th e hotel scene. We think the Hilton will also affect Hyatt Regency, both for groups and transient business. Fairmont is the largest of the new hotels; the hotel will also have to compete in the corporate market to achieve occupancy. They will be able to offer moderate corporate rates due to the size of the property, and due to the location we can expect companies and individuals visiting for meetings with ministries etc to perhaps choose this location. Hyatt used to be a good location as we are only a 5-10 minutes drive from the parliament and several ministries. Four Seasons hotel is scheduled to open late 2011. Park Hyatt is currently the only official protocol hotel in Baku, but it will mainly lose this status once Four Seasons is opening. The hotel will be more or less purpose built to host high-ranking government officials, diplomatic visits, VIPs etc., with a 3-bedroom Presidential suite and several 3-bedroom and 2-bedroom suites and a room type called Deluxe deluxe with two k ing beds in the same room (suited for the American- and Asian market). Four Seasons will also have a 330 m2 ballroom. Sheraton is still a project to rebrand the Airport hotel (ex Holiday Inn) Sustainability of Hyatt Baku Hotels Hyatt Hotels Baku has started operating in Azerbaijan since 1995. First, Hyatt Regency was opened in 1995 after the à ¢Ã¢â€š ¬Ã… ¾Contract of Century (Baku-Tbilisi-Ceyhan oil pipeline). Then in 1999 due to the high demand Park Hyatt was opened next to the Hyatt Regency. Till 2004 both of the hotels were very strong and almost alone in the market. The only competitor was Radisson SAS. In 2004 another brand Park Inn penetrated into the market. Since then the market share of Hyatt Hotels in Baku is decreased slightly. Because still the demand is high and accommodation facilities are not enough to meet the need. Currently, Baku features only a few luxury hotels run by international chains the Hyatt Regency, Park Hyatt and Radisson SAS, Park Inn and Airport Hotel. If Azerbaijans Eurovision contestant, Safura, had triumphed at the annual pop extravaganza this year, Baku would not have had the facilities to host the event in 2011, noted Faig Gurbatov, national coordinator of the governmen ts Tourism Development Project, an initiative run jointly with the United Nations Development Programme. Since the 1995 to nowadays both of the Hyatt Hotels in Baku were operating very successfully. This is a main factor showing its sustainability. Demand Demand for Hyatt Regency and Hyatt Park (Baku) is quite high. The average occupancy rate (annually) is around 69%. In high seasons this figure increases up to 90-95%. Target Market One of the components needed to apply hotel revenue management is market segmentation. It allows you to target and market to a variety of consumer groups with different behaviour with an offer that matches their needs and budget level. Your hotel market segmentation shall help to identify the purpose of the trip: either business or leisure. The price does not decide of the market segmentation. Clear distinction must also be achieved between individual and group business .The market segmentation shall help you identify the trends of your business: Length of Stay Day of Weeks stays Total Revenue per room, Total Revenue per client Lead Time Cancellation No Show ratio Due to the last trends in Azerbaijan 3 industries are increasing rapidly e.g., oil business, pharmaceutical industry and information telecommunications sector. Guests from the above mentioned industries are coming to stay at Hyatt very often. Also, the number of governmental officials and walk-in tourists is high enough. Maritz guest satisfaction survey (Benchmarking) Since the competitor hotels give wrong information, Hyatt International has decided to change their strategy. Now, Hyatt Hotels are not doing benchmarking. Hyatt Hotels Baku uses the services of Maritz. Maritz is a guest satisfaction survey. Maritz protects the data about the companies by the world-class policies and procedures. Maritz has developed a security program which includes: Physical Security and Controls Network Architecture and Security System and Remote Access Controls Application Security Database Security Call Centre Security Security Administration Intrusion Detection Change Management Data Back-up and Retention Business Continuity and Disaster Recovery Guest Satisfaction Surveys As many hotel chains Hyatt hotels International check the guest satisfaction level. In order to obtain the information about the service quality and better to understand the needs and wants of the guests. Hyatt Hotels Baku is also conducting such kind of surveys in order to get the needed information. Mostly the comment cards are used in hospitality sector. Either the cards are put on the table in the rooms or reception provides with comment cards at the check out. As I have mentioned already, I had a meeting with the sales marketing manager of Hyatt Hotels Baku. She showed me a guest comment card. How would you rate the quality of the food? How would you rate the service quality? Please rate the cleanliness of the facilities. Please rate the friendliness of the staff. Please rate your overall experience. How likely are you to refer us to a friend? Each question can get minimum 1, maximum 5 points from each respondent. The points from each respondent per question are added together. Then they calculate the percentage out of the maximum e.g., 3 respondents answered the 1st question and the results were 5, 4 and 3 points. 5+4+3=12 12*100/15=80% (15) is the maximum number of points for 3 respondents With the results of this short survey conducted among the guests of Hyatt Baku Hotels you can get to know in the chart below: Figure 1: Guest satisfaction survey chart Guest portfolio of Hyatt Hotels Baku by the regions The guest of Hyatt Regency and Park Hyatt are very multi-national. All around the world guests come to stay at Hyatt. Mainly the guests of Hyatt Hotels Baku are Europeans, from GCC and North America. SWOT Analysis Figure 3: Strength Weaknesses Internationally recognized brand Global reservation system with the link to all GDS distributors Quality service and facilities Excellent FB choices Known Health Fitness facilities Extensive room suite inventory with two hotels Increased sales presence NFPA standard life safety Multi lingual/ international staff WWSOs Some companies perceive Hyatt as expensive Hotel considering it only for the management Location away from the city business district is a barrier to some companies All hotels offer complimentary Internet facilities, unlike Hyatt, where the service is perceived too expensive by corporate travellers Opportunities Threats Brand awareness for potential acquisition. To be in line with modest technologies and systems Constantly work on improvements Active promotion on local market Upscale fitness facilities is a very strong decision making point for hotel choice on the market Luxury room inventory and good balance between suites and standard rooms is a strong asset to target any business opportunities in the market Continue building necessary networking and be aware of latest market trends Additional distribution channels Brand restrictions do not allow to compete with lower brand rate offers Create inconveniences in acquisition of leisure business Internet is still very expensive, thus it affects in decision making process for most of organizations