Jumeirah Saadiyat Hotel Cruise Line Business Research Paper
Executive Summary
This is a marketing plan, proposing a new business, particularly starting a cruise line business for Jumeirah Saadiyat hotel, which is a popular company within the hotel and hospitality industry. The target market for the cruise line venture are the millennials since they are the neglected potential customer base within the cruise industry.
The main goal of this marketing plan is to create a new lucrative venture that will increase the company’s presence and market share in other parts of the world. Another goal of the plan is introducing a new set of cruise ships that will be operating in rivers. The third goal of the plan is enhancing the use of technology within the cruise industry to meet the demands of the millennials.
This is a very lucrative business considering the fact that the cruise industry is currently among the fastest growing industry in the hospitality and travel industry. It is thus important for Jumeirah Saadiyat hotel to consider starting the business.
Market Description
The target market of choice are the millennials. This group is made up of individuals aged 21 years to 54 years old. Often, the cruise service business has been associated with renowned business people who are about 45 years old. This is a notion that has been propagated by the fact that this is the age category that has the potential to afford the products and services within the cruise business. However, the recent past has seen an increase in the number of youngsters being announced as billionaires. Also, within the contemporary society, the millennials have proved to be the leading group who often like taking vacations to luxurious places (Amin & Priansah 2019). This target market has been chosen specifically because it has not been explored by other cruise industry who are more interested in older people. The cruise ships will be customized and branded for the youngsters and millennials in general to accommodate for young people.
Environments
The major environmental factor that has the greatest effect on the marketing of the cruise service business is the environmental and liability laws that are there is United Arab Emirates. There are environmental laws and liability clauses that are very harsh especially when it comes to mishaps and environmental disaster. This environmental factor has a negative impact on the business since it can be very costly in the occasion that the cruise ships find themselves in the wrong side of the law. Moreover, harsh environmental laws will affect the business since they will increase the cost of compliance and limit the destinations that are being targeted by the business (David, 2016).
Also, most of the parts in United Arab Emirates are either desert or semi desert. This has both positive and negative effects. Negative effects manifest in the occasion whereby the target customers are afraid of the harsh desert conditions and thus opt to go for vacation in other regions. On the other hand, it is an advantage since there are people especially the youngsters who enjoy such whether especially when it comes to vacations. Therefore, climate and climate change is the second environmental factor that has greatest effect on the product marketing.
Moreover, many cruise businesses face the challenge of shortage of fuel. However, for Jumeirah Saadiyat hotel. Shortage of fuel will not be a challenge since the Middle East is known to be the leading countries in fuel production. Another environmental challenge can come from environmental groups that are trying to raise awareness regarding the harmful activities that are conducted by cruise ships. This will be a challenge since it develops a negative image for the cruise service industry.
Product Review
Jumeirah Saadiyat hotel is a luxury hotel offering different kinds of products and services within the hotel and hospitality industry. The core products being offered are foods and beverages. However, the services are key to the business operations. Customers pay for the amazing services which ranges from accommodation, sporting events, night clubs, beach, health club, pool for both children and adults, tennis, fishing, golf course, shopping mall and boating or sailing among others.
The cos t of different products and services at Jumeirah Saadiyat hotel differ, however, the charges for one night stay for two adults is averaged to begin from £224 inclusive of fees and taxes. The rate policy is in United States dollars while a standard room goes from $408-$980 (USD). On the other hand, a suite costs from $871 (USD) (David, 2016). Credit cards are accepted while reservations have to be guaranteed with a credit card. Meals are paid for separately. When booking for villas and suites, deposits have to be made 1 night earlier. Self and valet parking are offered for free. Check-ins period starts from 3PM to 5.30AM while check out time is at noon. Additionally, there are other guest services such as babysitting, complimentary coffee, laundry services, currency exchange and common area wireless internet access.
Competitive Review
Jumeirah Saadiyat hotel has numerous competitors within the hotel and hospitality industry. Some of these competitors are also running the cruise service business. They are threatening because they operate from major organizations that are offering competition not only in UAE but internationally. The three major competitors for the new business will be Hyatt Hotels Corporation, Four Seasons Holdings and Fairmont Raffles Hotels International Inc.
Hyatt Hotels Corporation
Hyatt Hotels Corporation us ab American multinational hospitality firm that has its headquarters in Chicago. The company’s mission is delivering distinctive experiences for their guests while its vision is “To deliver distinctive experience for our guests” which clearly shows that the company portrays itself as a prominent player in the market. The company’s brand services have been segmented on the basis of bundle of ambience, offerings and complementary services such as hygiene, pricing, staffs, Gym, Spa, housekeeping services and the locations at which their hotel and cruise lines are located.
Hyatt Hotels brand has positioned itself as a prominent player within the hotel and hospitality industry. The brand is perceived as culturally rich brand that provides significance to the local, culture, traditions and generally the entire community.
The provisions of the company’s brand are strategized in a manner that it targets individuals based on their income levels and bundled services. As a result of this positioning stand, they have employed differentiation strategy to ensure that they provide promising services for their customers who range from clients interested in either 3, 4 or 5 star hostels/resort experience. Also, there distribution strategy entails expanding via a series of acquisitions and alliances. A good example is the recent alliance whereby New Ocean Resort Casino in Atlantic City which joined Hyatta Hotel group.
Four Seasons Holdings
Four season is another major competitor that Jumeirah Saadiyat Cruise service will be competing against. It is an international luxury hotel and resort firm that has its headquarters in Toronto, Ontario, Canada. The company has positioned itself as the world’s premier luxury hospitality company. Their main marketing strategy is differentiation and enhancing the value of the service being offered in the eyes of their clients. The company has differentiated itself through its primary capabilities which is charging premium price. Initially, the company founder’s strategy which continues to prevail was to run the business from the client’s point of view. The company usually tries to fulfil the needs of the target customers in relation to luxury.
Fairmont Raffles Hotels International Inc.
Fairmont Raffles is another major competitor that will bring competition to Jumeirah Saadiyat cruise business. It’s a global hotel management firm that has its headquarters in Toronto, Ontario, Canada. Fairmont raffles has positioned itself as the leading and preferred hospitality company. Their main goal is providing outstanding engaging services that will make sure that their customers feel valued. The company usually tries to treat each and every customer as a unique person. Their main target are rich travelers while the marketing strategy currently being employed is diversification. The company is trying to expand to other parts of the world and increase its customer base.
Distribution Review
Cruise line distribution channels
There are different kinds of distribution channels that are being employed within the cruise industry. Even though cruise business is an outlier of the travel industry, which largely depends on online booking, cruise business is largely managed offline as most of the bookings are conducted offline. Online booking within the cruise industry accounts for only 20% of the net revenue (David, 2016). However, online distribution cannot be negated since it plays a significant role in increasing the generated revenue. A major distribution channel in the cruise business is agent assisted bookings. Booking for a cruise can be a very challenging process. As a result, many customers prefer going through agents. On the other hand, research shows that there has been an increase of self-service cases whereby clients research on cruise ship companies and make their own evaluations. There has also been an increase in bookings from mobile phones. Even though many people do not prefer direct booking, direct distribution is gaining prominence as people conduct research by themselves and carry out the booking processes by themselves as it is perceived to be cheaper.
Broad recent trends in sales within the cruise line industry
The cruise line industry is considered one among the fastest growing industry in the hospitality niche. There has been constant increase in annual revenue generated from the industry. There is an emerging trend of increasing generation Z customers which was something that was hardly evident in the past (David, 2016). Cruise business has been targeting old people since they are the one perceived to have enough money to pay for the luxurious services being offered by the industry. 2018 statistics show that the cruise industry is estimated to be $150 billion worth. Starting from the year 2009, the passengers of people travelling and vacationing using cruise ships has grown immensely from 17.8 million to 30 million. The growth has reflected a 5.4% annual growth rate. Similarly, the cruise industry revenues has grown immensely from an estimated 15.7 billion in the year 2010 to an estimated 31.5 billion in 2020 which reflects a compounded growth rate of 7.2% (David, 2016).
How the product will be sold and places it will be available
The main distribution channels that will be used for Jumeirah Saadiyat cruise line will be through agents and online booking. The business will be operated globally.
SWOT Analysis
|
Strengths |
Weaknesses |
|
The company has access to more than 20, 000 travel and booking agents
|
It will be new to the cruise line business while its competitors have experience and resources in the industry |
|
Opportunities |
Threats
|
|
i. Availability of global market. Since Jumeirah Saadiyat is not a player in the cruise line industry, it has the whole world market to explore. This is an opportunity for the company since it is well known globally. ii. Integration and control of distribution channels. Since the company has been in operation for a long time within the travel and hospitality industry, it will easily use and control its distribution channel to their advantage. iii. More focused website. The company has a good website that is accessed by millions of people globally. This is an opportunity for the company as the platform can be used to advertise the new business line. |
i. Environmental pressure activists. There is intense pressure from environmental activists who complain that cruise industry is harming the environment. The threat will be avoided by ensuring that all the environmental laws have been followed to the latter. ii. Terrorist threats. The company will ensure that there is enough and well skilled security personnel in the business operations. iii. Rising fuel and operational costs. There has been notable inflation in regard to fuel and operational costs. This challenge will be dealt with by coming up with good forecasts and a good budget that caters for any expected emergencies. |
Objectives and Issues
- Increase the company’s market share in other parts of the world
How will the business win target customers amidst other thriving companies within the same industry?
- Introducing cruise ships that will be operating in rivers
Since it is a new innovation, how will it be tested?
- Increase the use of technology to satisfy the needs of the increasing customers in the cruise industry
What are the most desired technologies by millennials?
- Marketing Strategy
Positioning
In marketing, the term market position entails the customer’s perception of a brand or rather a product in association the rivaling products and branding. Positioning is the process of creating the image or rather identity of a product or brand so that the customers will have a certain perception of the product or brand (Wood & Jobber 2016). Jumerirah Saadiyat will have to establish an image for their cruise line within the minds of the target customers. This will help the company in acquiring a unique place within the market. This will be done effectively by separating and distinguishing the brand from the competitors. Therefore, there is need of developing key attributes for the business. For example, key attributes can be developed in the form of client satisfaction, charges and quality. For this particular business, it is important that the business positions itself as….
Marketing Research
- The legal requirements for starting a cruise business
- The most desired locations by majority of cruise customers
- The projections of cruise business in the near future
Product Strategy
Diversification should be the main strategy employed by the cruise line business. Unlike its competitors, Jumeirah Saadiyat should revamp the mass market cruise and luxury cruise and on top introduce river cruises. Considering the fact that cruise ships have come up as cities that are virtually floating, it offers a receipe that is successful for people that like entertainment and refreshing drinks, creating a lot of fun in the clients exploration will be an advantage for the success of the business. The cruise line should have trips and stop overs in varied nations on a daily basis. This is important as it will be a good source of revenue for the business. The diversified mass market strategy offering many services will be appropriate since it will motivate customers to demand for more.
For the luxury cruise, this specific package should concentrate on offering high class luxury and not anything less. It should be based on people who have high status on the society and have a different and unique impression from the mass market cruise line. The luxury cruise line should provide services that are in line with the social status of the customers. It can be attained by providing personalized services. For instance, one crew personnel should be assigned for every passenger. The trips should also be personalized and topped up with refined set of meals and other kinds of luxury amenities.
On the other hand, the river cruise should concentrate on individuals with a cultural interest. This is important since it will be cruising along rivers that have well developed cities and civilizations. Moreover, the river cruise line will be an added advantage for the company since different regions around the world have varied cultural features with beautiful river sites that have recently been identified as the most desired tourist attraction sites. Due to these, cruise line such as Jumeirah Saadiyat cruise line can capitalize on this particular demand from the customers by introducing river cruise line. For the river cruise line, the capacity of the ship will be small compared to the ones for the sea. Also, with smaller capacity, the fixed cost for the entire cruise line will be reduced.
Price Strategy
The price strategy that will be employed by the cruise line business is value based pricing. Value based pricing entails setting a price basing on how much the customer believes the commodity being sold is worth. Therefore, it will be very important to explain to the customers the kinds of services and hospitality that they will be expecting. Therefore, the cruise packages will be based on the experience and the benefits that the customer will garner. According to the value-equivalence line, Wood & Jobber (2016) explain how quality is justified by the charges at which cruise packages are given. In the occasion whereby clients feel that they will get quality service, they are more likely to pay an equivalent price for the service being offered. The figure illustrated below depicts two points; point A and point B. Point B is the favourable point while point A is the unfavorable one. Examining the figure, point B is the position at which Jumeirah Saadiyat cruiseline line is supposed to maximize its cruise packages.
Figure 1. Value Equivalence Line (Wood & Jobber 2016).
Distribution Strategy
The brand will expand through a series of acquisitions and alliances. The business will thrive by acquiring upcoming and well established cruised lines. Acquiring these lines will help the business establish a strong presence in different markets and region (Amin & Priansah 2019). Also, alliances are good since they will help the company to excel without requiring much resources since it will be partially a joint venture. However, the company should base its focus on franchising activities. Going the franchise way is a good strategy since it will help the business to increase its presence in the market and at the same time reduce its dependency on their owned properties and capital necessities. The cruise business will be a good venture since it will help in breaking the current stereotype that the brand’s position is just based on a hotel stay.
Marketing Communications Strategy
The most ideal market communication strategy for the business will be an integrated marketing communications plan as it will provide the most effective mechanism for disseminating Jumeirah Saadiyat cruise line new venture. The term marketing communication strategy refers to the techniques used by a business to send the correct marketing information to the target customers through appropriate medium at an appropriate time to attain high sales (Amin & Priansah 2019). The choice of a marketing strategy should be one that ensures the intended message is effectively and efficiently delivered. An integrated marketing communications plan is a suitable choice since it united all the other parts of the marketing plan to have an integrated approach that will ensure a successful marketing implementation for a particular product and in this case it is the new cruise line business. An integrated approach is also suitable since it allows for regular evaluations and changes to the product mix (Amin & Priansah 2019). This is essential as it will help the company to maintain high standards in regard to quality which is critical to the survival of the business. The communication strategy for Jumeirah Saadiyat cruise line should focus on selling the advantages of using their service rather that its features since the business operates within a service industry. In the service industry, customers are more interested in the benefits of a product rather than its features.
Basing on the identified target audience, the focus of the business should be on the communication objectives which should be crafted following the hierarchy of effects theory. The business ought to create awareness of the new venture to at least 60% of the target market. After awareness has been raised, there is need of generating interest that will make the customers have the desire to try out the product. Awareness will be attained by notifying the target customers of the different kinds of packages that will be offered. Therefore, it is important to begin by consolidating the business’s identity through creation of basing things such as business’ website, chose colors, create business colors and a simple but attractive logo.
The business should also create brochures with all the information that a customer might need to know. The brochures should contain information on the kinds of services offered, the quality of the services, destinations to be toured and the guarantees that people should have if they try out the service. The brochures should then be disseminated via travel agents and common places where youth, young adults and families visit such as sports clubs and resorts. Print advertising will not be very suitable in this situation since it is rarely read by the target market. On the contrary, audio visual advertising should be used as it has a higher power that will lead customers to review the cruise line service. Therefore, the most effective advertising channel will be through television and social media. Majority of the target customers are great fans of social media and television. As a result, the marketing message will be easily and effectively distributed through these channels.
Budgets
Money Needed
Cruise line business is a very expensive venture. Basing on the available money, the business can choose between buying their own cruise ships and renting. The projected initial cost for starting the business is $2 billion. This is a sum of all the money that will be used in buying three cruise ships, marketing the business and hiring and maintaining all the staff and equipment for the first year. The money can be outsourced from the company savings, borrowed from banks and even ask some investors to contribute to the new business then they will acquire some shares of the business.
Expected Revenue
State a general figure for expected sales for each of your first three years.
The expected sales for the first year is projected to be around $1.5 million. The net profit for the second year will increase by 100% making the net profit to be $3million. The third year will not see much change in profit since the business will have picked up in the course of the first and second year. As a result, the curve will start to flatten and the projected net profit will be approximately $3.3 million.
Expected Expenses
The main items that will make up a large parts of the business’s expenses will be the purchase of the initial cruise ships, marketing, cruise maintenance fee and staff salaries.
Controls
Controls are an important part of operations when starting and marketing a new venture since they help the business to take appropriate corrective measures where faults are identified. They can also be used as a source of motivation in the case whereby the business is running appropriately as intended and can also be used as a measures of performance. Therefore, the three control tests that will be created to assess the success of the business are monitoring customer feedback, measuring target market sales and budgeting and monitoring spending. Customer feedback can be monitored through polls and surveys while sales can be measured basing on units sold or the revenue that has been generated. Budgeting and monitoring spending can be measured through evaluating the cost used in advertisement and the revenue being generated.
References
Amin, M. A. S., & Priansah, P. (2019). Marketing Communication Strategy To Improve Tourism Potential. Budapest International Research and Critics Institute (BIRCI-Journal), 160-166.
David Mc A, B. (2016). The cruise industry: past, present and future. Journal of Tourism. Research, 141.
Wood, M. B., & Jobber, L. (2016). The marketing plan handbook. Pearson.
0
1555