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Banyan Tree Hotels, Research Paper Example

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Research Paper

Abstract

Excellent opportunity for entry of market is offered by Brazil for hotel and tourism industry. An economy that is improving means that the middle class of the nation is rising to a more improved status of living with an increased capital in the hand enabling a greater power for purchase. Therefore, international services that are of high quality are coming more into demand. There are number of opportunities that are present in Brazil for the first time, with an extensive amount of work being done in the development of hotel industry and its concept in the market.

The main objective of this study is to bind together the themes of internationalization and the emerging market specific nation that is Brazil to the analysis’ of the process of internationalization in the industry of lodging, with the main focus on the lodging firms that are multinational. The research report also highlights and recommends the foreign entry mode strategies to be adopted by Banyan tree hotels to venture in the Brazilian market by establishing new outlets namely ‘Hotel Harmony’ at Sao Paulo city in Brazil. The paper critically examines the current business opportunities within Brazil and examines the potential of growth for Banyan tree hotels in the Brazilian market.

Introduction

Brazil stands out in the sector of emerging markets as a country in South America that weighs heavily over all other South American countries. It is one of the largest countries in the world with a population that is the fifth largest in the world. The Gross Domestic Product of Brazil has a rank of 9 in the whole world as per the purchasing power. It ranks the 7th in the world with respect of nominal GDP. It is most likely to become one of the four of the largest economies of the world as a whole by the year 2030 AD. The rapidly developing economy has hotel room requirements in order to afford the incoming visitors in the business sector. The tourism is increasing rapidly as an industry and its needs must be satisfied adequately. The lodging position of Brazil has a need for rethinking in the light of two of the most important upcoming events in the near future namely the FIFA World Cup 2014 as well as the 2016 Olympic Games to be held in Rio de Janeiro(Brazil_Tourism).

Excellent opportunity for entry of market is offered by Brazil for food, beverages, and the business of hotels, which are desirous of expanding their base internationally. Strategies are being framed and developed by Brazilian government in order to provide support to the companies that are willing to grow and expand their horizon in trade in Brazil. In the major cities of Brazil like Sao Paulo, Rio de Janeiro, Florianopolis, Curitiba, Belo Horizonte, conditions are very suitable for entry of new entrepreneurs. An economy that is improving means that the middle class of the nation is rising to a more improved status of living with an increased capital in the hand enabling a greater power for purchase. Therefore, international food and beverages that are of high quality are coming more into demand. There are number of opportunities that are present in Brazil for the first time, with an extensive amount of work being done in the development of hotel industry and its concept in the market (Tourism).

The main objective of this study is to bind together the themes of internationalization and the emerging market specific nation that is Brazil to the analysis’ of the process of internationalization in the industry of lodging, with the main focus on the lodging firms that are multinational. The research report another aim is to highlight and recommend the foreign entry mode strategies to be adopted by Banyan tree hotels to venture in the Brazilian market. The paper critically examines the current business opportunities within Brazil and examines the potential of growth for Banyan tree hotels in the Brazilian market.

Mode of Entry in Brazilian Market

Opportunities in Emerging Brazilian Market

The primary opportunity the scene is the careful positioning of the concepts of ‘mid-market’ that taps into the purchasing power of the middle class that is emerging as a whole unit. A very low supply of mid market quality international beverages and food is present in Brazil and the urban Brazilian market hotel brands. Banyan hotels have to ensure that it adapts and copes with the hotel brand in urban market strategies in order for them to fit the local conditions.

Research conducted recently by the consumer goods industry(2012) at the time between the year 2003 and 2011 showed that an astounding 487 million people have decided in joining class A or class B or class C in Brazil up. As a result of this there has been a growth of almost 50% since the year 2003. It has been appointed by the institute that only the class C itself on its own has made 39.5 million customers newly made which is along a growth of 46.57%.The population of Brazil in the year 2009 was a total of 193,733,800.The very moment a one class to another one that is higher shows how powerful the market has become in Brazil. It also shows that the country has really become an opportunity for business in a big way (Industry Report: Consumer goods and retail: Brazil.).

A study Sobral (2007) reflects that the huge movement in the society in Brazil for the reduction of the equality in economy is the most important finding. This is also be noticed by 246 1,000,000 people that has been improving from class E to class D that followed a reduction of a huge number of people in the class D, 79 million to be exact, that were moving to the class C, that is upwards. This is a sign that the economic inequality in Brazil is decreasing by the day. That income of the Brazilians has been growing since the year 2003.The reduction of inequality has also been occurring in Brazil of late. Therefore, these two factors combine together form the fundamentals of the growth of Brazil as a nation from the economic standpoint, which is aided by the successful control of inflation taking place around the planet (Sobral).

The evidence of this continuous growth is that a huge number of people have joined the classes A, B and C in the last two years or so. This number is an overwhelming 13.3 million. The ultimate result for INPLEXCO is very much evident. These range from the demand for quality of high latency and the offers of food and beverage. These things make it very clear that the market structure of Brazil is bound to help the entrepreneurs that are coming to Brazil to exploit its huge resources (Sobral).

The middle class of Brazil, which are emerging out of their economically backward status, are presently conquering the basic needs of life. They consume more food as well as better facilities of transportation and housing. Therefore, it is very much evident that the huge increase in the consumption of the products and services that are directed towards increasing the self-esteem and respect for the other people will increase significantly in the near future. Also the industries related to hospitality and entertainment is also likely to make huge amount of benefits in Brazil in the near future (Tourism).

Evolving Brazil lodging industry

The market in Brazil is emerging and has a growth potential that has been researched and proven. The sector of tourism is experiencing unprecedented growth and with the major upcoming events like the FIFA world cup 2014 and the Olympic Games in the year 2016 is sure to shoot up the demands for hotels to a great extent (Tourism)

The expectations about the demands that are long-term are placed formally on the middle class of Brazil that is growing very rapidly indeed. This is a result of the international exposure of Brazil. Presently the middle class of Brazil has the ability to afford domestic vacations to a higher degree. In the meantime there is a realistic possibility that the huge exposure of the Brazil internationally and its unprecedented economic growth is most likely to lure visitors from overseas.

GDP Growth

(Tourism)

Figure 2: GDP Growth

The lodging sector too has shown huge growth all across the country. The growth has mainly been centered in the regions of northeast and the cities of Sao Paulo and Rio de Janeiro. The part of the country in the northeast at present is getting a huge share of the invested capital into the lodging industry of Brazil. Sadly, this is the most underdeveloped part of the nation, at least for now. The South-East markets, markets at Rio de Janeiro and Sao Paulo are undoubtedly the largest economic centers in Brazil. Due to the geographic distance to all the other large economies of the world, the business culture here in Brazil has developed to be very unique indeed. However, it is quite a large economy itself in this regard. The economy in Brazil was a closed one from the 1970s to the report of the 1990s. Therefore, self-sufficiency was the policy that was adopted by the government. Portuguese is the official language of the country. The business people speak English mainly, who are very less in number (Brazil.).

The invention of the classification of national hotel system back in June 2011 was the very significant development in the Brazilian lodging industry. The identification of every category of accommodation is on the basis of star ratings with range from 1 to 5. Therefore, the criteria of a five star estate are not limited. The criteria for classification are based on the international standards. While on one hand the ratings of the resource will be between four and five, there is a possibility that the bed and breakfasts may go up to only a 3 stars (Industry-Overview).

As per the reports on Brazilian tourism in the year 2011, the newly formed reading system has the ability of lodging only the firms that have been registered and have qualification from the ministry of tourism. The main goal is to provide information to the visitors about the availability of standard accommodation all across the country.

Appropriate Entry Strategy

The modes of entry of the foreign markets and its choices are very important because it is expected to generate great influences or a few defenses of the business. Entry mode may be defined as a structural agreement that has the ability to allow a firm in implementing the market strategy of its products in host country true that getting out of only the operations related to marketing or both operations of marketing and production all by itself or through a partnership with others.

Why not Non-Equity Modes and Joint Venture

There are various suitable modes of entry for Banyan Tree hotels in the Brazilian market namely non-equity modes which are the modes, that do not allow the entailment all the equity investment, by an entrant that is from a foreign land. These modes of entry are very popular with in the firms of customer service like lodging and restaurants (Erikson).

There is a good amount of risk involved in the sharing of business. In such cases it is very important to consider that the profit that will be earned with a shared as well. Therefore, due to the involvement of a local firm and a foreign one in the joint venture, conflict of the interests may occur to any time due to the defense’s and cultures. Therefore the disadvantages associated with the potential loss in control and also the establishment of the rival. But as per the current scenario at Brazilian market, joint venture is not suitable for Banyan Tree hotels.

Moreover, in order to accomplish successful joint venture it is really important for an organization to know deeply about the planned international market. The irrational joint venture without any critical analysis of the other party the strategy turn out to be a unsuccessful venture which may even hamper the future strategies of a particular organization. Hence as Banyan Tree Hotels is stepping on Brazilian Market for the first time ever, it is very vital that it adapts the appropriate strategy.

Franchising and Joint venture

As per the current scenario and available business opportunities within Brazilian Market, the franchising entry mode is the most suitable and highly recommended mode of entry. Franchising may be defined as the practice through which the franchiser (one company) does the supply of intangible property and such similar assistance over a period, to another company, which is known as the franchisee. Differences can be drawn between the product, the trade name franchisee, and a franchisee of business-format. Franchising has several advantages as well as disadvantages as a mode to the entry in foreign market. The advantages that the franchiser has the ability to expand internationally at a speed far greater and with less capital investment without having to do with the management risk of the day-to-day life. However, various kinds of difficulties may arise during the controlling of the franchisees and the maintenance of its quality although operational standards and procedures exist. Legal limitations may be applied and trademark protection or the copyrights have less chances of being given in the host country. When two or more firms create a separate form of their own in joint venture that targets the achievement that aims the achievement of a joint business aim. This is a very fluent mode of the entry in the lodging markets (Hotter).

City to Enter

Sao Paulo is one of the highly recommended cities to Banyan Tree Hotels in Brazil. The booming tourism and lodging business of this city and various attractive tourist places have already grabbed the eyeballs of various tourists from all over the world. Hence this being the current situation and Banyan Tree Hotels being the experienced player in the hotel business industry can very well set up its outlets in this city. As Banyan Tree Hotels is newly stepping into Brazilian market it is recommended it starts over with two outlets in Sao Paulo and later on down the line the management can think of expanding its outlets based on the level of acceptance and success in the Brazilian Market.

Adapted product and promotion strategy

Brazil has the source market, which is one of the fastest growing in the whole world. It ranks as the third largest market outbound in Americas with respect to expenditure. The tour is under the as grown significantly in the last few years and has caught on to become the most important industry in Brazil. It has a total band of Asian of about 9.1% to the GDP and has made way for 2,826,000 jobs in the whole country. The increased number of jobs account for an increase in 2.9% of employment in the country (Gillespie).

Brazil is a country that is distance away from the main feeder markets of the world for tourism. Therefore the primaries visitors coming are through domestic travel only. The number of visitors from within the country is increasing but there is a need for the industry that instability at an increased rate. The demand from the external market has remained constant to around five million visitors every year with the decreased growth expectations owing to the exchange present currently. On the other hand, the numbers of Brazilians that are interested in traveling to various parts of their own country and in knowing their own country are increasing by the day (Fleury).

It was expected from Brazil India 2011 that it would receive a total of over five million tourists internationally that would help them generate a total expense of more than BRL 12.5 billion. The contribution of leisure travel with respect to spending is the largest portion with nearly 90% to the GDP. In contrast the spending a business is only worth mere 10.5% to the GDP. Specific product strategies and adaptations of promotions will be discussed in this section. Recommendations can also be provided to these adaptations through the availability of specific details and such other illustrations (Tourism).

Brand name

Although Portuguese is the most commonly used language in the people of Brazil as it is the native language of the country, it is in the best interest of marketing that the name of the Banyan Tree Hotel Outlet to be kept in English. Therefore the new outlet can be named as “Hotel Harmony” symbolizing the peaceful and enjoyable stay at new outlet in Sao Paulo city of Brazil.

Product adaptations

The main goal that Banyan Tree hotels should have in mind when expanding into Brazil is that of bringing a completely new type of experience in accommodation and dining to the guests. The success of the Hotel Harmony is in the fact that it brings the very unique experience in its room service and restaurant that has never been experienced prior to this in Brazil. After making quite an extended research and reading through various reviews and such other descriptions of the most popular restaurants in Brazil is websites and such public media, nothing quite like the Hotel Harmony could be found in Brazil. The more important factor is that the Hotel Harmony will have a very unique distinction of bringing to the stay that is very new and very different. The worldwide tourists in Brazil will find a familiarity with the name of the Hotel Harmony being English (Ireland).

Size of the Hotel

The inside of the Hotel Harmony will be very unique indeed. The large reception desk with a kind and classic service, displaying various diversified theme inside the hotel having world class service with more than 250 rooms at service. Due to this reason, the hotel could not be any smaller than some of its other outlets of Banyan Tree hotels. It would be very good it the largest of cities in the land had hotels like that Hotel Harmony. In this procedure it would be possible for the accommodation of all the attractions that the hotels that are present in the best of the cities of the world today.

Operations and Staff

The time of new outlet in Sao Paulo, Brazil will be open 24/7 providing the world class hosting service for both domestic as well as international tourists. However, on getting a feel of the hotel present in Brazil, one gets the idea that they are open until midnight or 1:00 AM in the morning.

Operation Hours

Figure 3: Operation Hours

But the timings of the restaurants to be established in the big cities will be same as given in above. Hotel Harmony would definitely improve employment opportunities in Brazil in the important cities. Since every hotel needs to be staffed heavily, there is the scope for a large number of workers to be recruited.

Promotion Mix Recommendation

Several factors need to be kept in mind during the development of promotional strategies in a country for into one’s own. There are a large number of factors that play a part in influencing marketing success in Brazil.

Adaptation of logo

There is a trend among all the Banyan Tree Hotels to use the same logo as well as the unique name for the new outlets all across the country. That has an added advantage in the fact that the barrier of language differences can be overcome easily.

Promotional Logo

Figure 4: Promotional Logo

Hotel LOGO

The Banyan Tree Hotels is an organization from Thailand and Southeast Asia that has an added advantage because their Brazilian consumers have the knack of purchasing products from Thailand and Southeast Asia despite the existence of differences in culture and believes as such.By doing the marketing an advertisement as an experienced hotel business player from whole of Southeast Asia, the new outlet will surely attract the consumers in the newly formed market (Nee).

Hotel atmosphere in Brazil

Because of the reason that the stay at hotels gives an experience of tremendous the environment to the customers, the restaurants are part of the strategy of promotion. The Banyan Tree Hotels theme that is promoted by the hotel draws consumers that are on the lookout for quality stay and good food and entertainment. The hotel gives an atmosphere like one’s own home and family.That did not take the advantage of the fish tanks and the various other displays including the animal display while they are getting the best out of the meals with their parents. The culture in Brazil is tailor made for the families. Therefore having a very valley friendly atmosphere at the resort increases its popularity to a large extent.

Printed and online advertisements

Another very important strategy that is currently employed by the Banyan Tree Hotel outlets all over Asia is the utilization of the printing advertisements as well as the online ones. The Banyan Tree new outlet also can offer advertisements in Portuguese as well as in Spanish since there are the popular languages in Brazil. Another is a Brazilian cons humor gets the 9.3 per cent of the direct mailing every month. The availability of the coupons is an added advantage. Due to the increased use of the Internet or the past three years in history, availability of online coupons as well as printed ones make matters better for the consumer. So that only one is dated chances of being informed every time a new coupon comes up (Gillespie).

Charitable organizations or loyalty programs

There is an increased trend of Banyan Tree hotels in the participation of charities in countries other than Brazil. They also participate with the organizations having a relationship with charity in Brazil. The ultimate aspect of Banyan Tree hotels marketing will put into effect the rewards for the consumers.

Promotional campaigns

Besides the regular campaigns for promotion, there is a need for the Banyan Tree hotels to utilize the upcoming World Cup in 2014 to do the advertisement for the hotel stay. New consumers will come into Brazil from the world over. Since the Banyan Tree hotel’s new outlet is a very new concept, is no wonder that the consumers coming in would definitely be interested in the new kinds of stay and environment in Brazil. They will also find the new kind of experience very enjoyable and enthralling indeed. If possible, they can also use the tactics of using the top soccer players of the planet to go ahead and promote their organization. Since soccer is followed all over the world and is very popular in all parts of Brazil as well, this kind of campaign can work miracles for its publicity. It is also very important to emphasize on the family atmosphere that the hotel has.

Campaign through FIFA world cup promotion

Figure 5: Campaign through FIFA world cup promotion

The promotion of the Banyan Tree hotels by various international athletes and soccer players of worldwide fame would ensure the consumers all over the world is attracted to the hotel. Incorporation of the logo of the World Cup 2014 can have a great chance to be a success in advertisement and in generating tremendous amounts of profit from visits of customers in huge numbers.

Television installations

In order to provide for the fans of FIFA, television sets must be installed for the games to be enjoyed at the same time as they are dining. This is very important since are not doing so would lose a huge amount of consumers on the basis of popularity. Although this goes against the environmental atmosphere of the rainforest café with the sub was to be very natural. Yet at times of global events like the FIFA world cup 2014, such an improvisation is a necessity indeed.

Conclusion

The markets that have already developed have now become saturated. Hence they are now not the focus of the multinational enterprises or the MNE s. The MNEs are now more focused on the potentials of growth in the newer locations. The new markets in the new areas and new locations are also the emerging markets. On one side they are great new opportunities to the MNE s. On the other side they also pose a very strong challenge to them as well. The MNEs or the Multi National Enterprises have had their eyes set on these new emerging markets. Research in the field of academics has also increased in this sector in the previous decades. The main focus of the MNEs has also changed from the most developed countries to the rather more emerging markets in the more developing nations (Industry-Overview).

The globalization of the firms is one of the crucial steps that an organization takes in the process of its expansion. In this proposal, the study highlights the fact that though Brazil does provide an effective and lucrative means of business yet there is critical need of strategic entry in the market due to the considerable number of organizations in the hotel industry. Out of the status as an activity in service, quite a number of special features can be found in the lodging industry. The services of core hospitality can only be given in the destinations that are foreign and therefore the facilities present in that country must be in operation. The consumption and the production of that service occur at the same place and time. The customer as well as the supplier must be present at the place of delivery of the service.

Recommendations

Reduction in service price in order to get through the markets that exist today and interaction of a product at prices lower than the normal would ensure that the new customers be lured. Improvement of the services and products is required. Focus on the given on the niche market. Innovation has a place to stay ahead in competition at the marketplace. And enhanced number of the products that exist and a version of it that exist might be a good example of innovation in this field. New markets according to geographic locations must be targeted for the products that exist today. New channels for distribution must be created in order to penny to hit the newly for markets or the ones that exist.

Simply put the cost to be the first amongst all takes the greatest cost due to the various reasons. In origin of the service needs investment that is higher but into the research and development than it needs in case of imitation of the product. Education of the required marketplace and the testing forces held in high spending on the promotion of advertisement.

References

“Brazil.” travel & tourism forecast world 3.4 (2005): 51-56.

Brazil-tourism-report. Brazil tourism report q4 2012. Quarter report. Brazil, 2012.

Erikson, kristina. Entering the brazilian market: a guide for lean consultants. New york: diplomica verlag, 2009.

Fleury, afonso. Brazilian multinationals: competences for internationalization. London: cambridge university press, 2011.

Gillespie, kate. Global marketing. California: cenage learning, 2010.

Hotter, siegfried. International joint ventures in brazil ́s markets: overcoming market entry barriers and expanding international business into the markets of brazil. London: grin verlag, 2012.

“industry report: consumer goods and retail: brazil.” consumer goods industry report 11.2 (2012): 1-15.

Industry-overview. “hotels & motels industry profile: brazil. .” industry overview (2011): 1-69.

Ireland, r. Duane. Understanding business strategy concepts plus: concepts and cases. London: cenage learning, 2011.

Nee, patrick w. Making money in brazil: brazil business guide and contacts. London: patrick nee, 2012.

Sobral, filipe. “an analysis of the dynamics of the tourism industry in brazil: challenges and recommendations.” international journal of contemporary hospitality management; 19.6 (2007): 507-512.

“tourism.” latin america monitor: brazil monitor; 19.6 (2012): 6-8.

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