Table of contents
TABLES AND DIAGRAMS
1.1 AIMS AND OBJECTIVES
1.2 HISTORICAL BACKGROUND AND CURRENT OUTLOOK
1.3 INTRODUCTION OF THE CHAIRMAN
1.4 ORGANISATIONAL STRUCTURE
2.1 DATA SOURCES
2.2 NATURE OF DATA
3. THE MICRO-ENVIRONMENT OF ROCCO FORTE HOTELS: A SWOT ANALYSIS
4. THE MACRO-ENVIRONMENT OF THE BUDAPEST LUXURY HOTEL MARKET: A PESTEL ANALYSIS
4.1 KEY FACTS ABOUT BUDAPEST
4.2 PESTEL ANALYSIS OF BUDAPEST
5. A COMPETITION ANALYSIS OF THE BUDAPEST LUXURY HOTEL MARKET: PORTER’S
5.1 THE BARGAINING POWER OF SUPPLIERS - LOW
5.2 THE BARGAINING POWER OF BUYERS - LOW
5.3 THE THREAT OF NEW ENTRANTS - MEDIUM
5.4 THE THREAT OF SUBSTITUTE PRODUCTS - HIGH
5.5 THE INTENSITY OF COMPETITIVE RIVALRY - MEDIUM
6. AN APPROPRIATE MARKET ENTRY STRATEGY FOR BUDAPEST
6.1 ANSOFF’S PRODUCT AND MARKET MATRIX EXPANSION GRID
6.2TRIBE’S SIMPLIFIED STRATEGY CLOCK: THE MOST SUITABLE PRODUCT AND SERVICES
6.3 HOTEL EXPANSION: CORPORATE LEGISLATION AND CORPORATE FINANCE
This report aims to present a conceivable development country for the Rocco Forte Hotel Collection. Because the company’s vision is to have one company in each key European city, this analysis also suggests the city as well as the country, namely Budapest in Hungary.
The current performance figures of the company are quite impressive. There has been rapid expansion over the last 10 years since the company was formed, mainly through acquisitions or by building new properties in important European cities.
The SWOT analysis shows that the company seems to be on the right track and apart from some inevitable threats, such as terrorism or strong competition in some markets, the company is well positioned to operate successfully in each market.
A PESTEL analysis of Budapest has shown that that city offers particularly high potential for investment generally but also for expansion of the luxury hotel market, as the demand for high-class accommodation is rising and the EU accession has been a catalyst for the growth efforts of the city, the region and the country generally.
Porter’s 5 forces framework demonstrated that competitive rivalry is of medium strength but that the capabilities of the Rocco Forte Hotel Collection should provide the company with an excellent gateway to compete successfully in this market.
A market entry strategy was proposed using Ansoff’s market and product expansion matrix and Tribe’s simplified version of Bowman’s strategy clock. The findings were that a limited diversification and differentiation-based strategy are the appropriate market entrance strategies.
The corporate legislation form should be as a Hungarian Limited Liability Company (equal to the British “Ltd”) and in terms of corporate finance the market entry should be achieved by acquisition of an appropriate property, or by building a new one in the right location.
After an examination of all factors, the author believes in the success of a new Rocco Forte Hotel in Budapest under given conditions.
1) Rocco Forte Hotels map
2) Rocco Forte Easy Connect Description
3) PESTEL analysis of Budapest regarding its expansion attractiveness
4) Key characteristics of the Budapest hotel market
Tables and Diagrams
A) Main Body
Table 1.4 – Rocco Forte principal group investments
Diagram 5 – Overview of Porter’s 5 forces
Diagram 6.1 – The 9-Box Grid of the Ansoff Matrix
Diagram 6.2 - Tribe’s simplification of Bowman’s Strategy Clock
Graphics 1.2 – Rocco Forte Hotel map
1.1 Aims and Objectives
The aim of this dissertation is to investigate the future development potentialities for the Rocco Forte Hotel Chain.
In order to acquire the necessary information the objectives were determined as:
- introducing the recent and current corporate strategy and development plans.
- identifying an appropriate country or trading continent into which Rocco Forte may wish to develop.
- justifying a conceivable development plan.
- determining the most suitable service products for the company to develop for that particular location.
- proposing possible internationalisation modes and frameworks which the company could use to gain and protect market share.
-formulating an appropriate market entry strategy for Rocco Forte.
1.2 Historical background and current outlook
Rocco Forte Hotels was established in 1996 by Sir Rocco Forte in order to create a unique collection of luxury hotels in Europe. Each hotel is characterised by its individual style, which reflects its nationality and location. The company purchased the Balmoral Hotel in Edinburgh in February 1997 as the flagship of the collection and in the following ten years acquired a further ten hotels which are all situated in important European cities such as St Petersburg, Rome, London and Berlin (see appendix 1). All twelve Rocco Forte hotels are members of the Leading Hotels of the World marketing group. (Press Information 2007) In 2002 Sir Rocco Forte & Family Plc and Uberior Investments Limited, a wholly-owned subsidiary of the Bank of Scotland, entered into a joint venture under the name Sir Rocco Forte & Family (Luxury Hotels) Limited which was created to acquire and build luxury hotels in Europe. Parts of this joint venture are the properties in Munich and the refurbished Richemond in Geneva, which both open in 2007, and also the property in Prague which will open in 2008. (Report and Financial Statements 2006) On 5April 2007 the St David’s Hotel & Spa in Cardiff was sold for £32.5m in order to “...have extra resources available for our expansion programme on mainland Europe.” (http://www.roccofortehotels.com/thestdavidshotel/index.html)
Some more properties are managed under the Forte banner but branded separately.
1.3 Introduction of the chairman
Sir Rocco Forte is chairman and chief executive of Rocco Forte Hotels. He founded the company in 1996, following the hostile takeover of his family’s huge hotel and restaurant chain “Forte plc” by Granada in January 1996, after an intense bidding battle, only two years after Sir Rocco became chairman of the group; Forte plc has since been broken up. (The Rocco Forte Story 1999)
Sir Rocco is the driving force behind the preservation and development of the collection. His vision is to establish the world’s leading luxury hotels in every key city in Europe, amounting to about 20 properties which assure the highest quality accommodation, facilities and services, and to be personally involved in all details of the business (The Collection 2006).
1.4 Organisational structure
Sir Rocco leads the management team at the corporate office in London and he is supported by two managing directors: Richard Power (sales and marketing) and Moreno Occhiolini (hotel operations) who also oversee operations at their own properties. The company has sales offices in London, Rome, Frankfurt, Moscow, New York City and, since 2006, in Madrid and Los Angeles. (http://www.roccofortehotels.com/corporate/index.html)
The company is established as a Public limited company (Plc) but the investments in the group’s subsidiary undertakings are organised differently in each country; either as private company limited by shares (Ltd) in Great Britain or so-called “Società per Azioni” (S.p.A., equal to a Plc) companies in Italy or a “GmbH” (equal to a Ltd) in Germany. The holdings differ between 50 and 100%, the principal activities are hotel operation, hotel development and hotel management. The following table provides an overview:
illustration not visible in this excerpt
Table 1.4 – Rocco Forte principal group investments
Source: Report and Financial Statements 2006
After the decision was made in which country or in this case city the company might want to expand the next step was to find suitable sources in order to come to a conclusion if this development idea seems to be feasible or not.
2.1 Data sources
Only secondary research was used, as the author’s primary source, who works at the Rocco Forte headquarters, could not provide me with the necessary information in time.
The author concentrated on the Internet in order to use only the most up-to-date information. Within the internet sources such as newspaper articles and conference proceedings were examined. Next to this the company was consulted for press material so brochures, the 2006 financial report of the Sir Rocco Forte & Family Plc and press reports were taken in consideration. For the application of the academic modules business books such as Tribe (1997) and university lecture information were used.
Additionally the company was contacted in order to find an interviewee who could answer some questions in terms of the company’s development plans. But as the appropriate people all work in London, the interview was not feasible for my contact person in the time available. The word restriction and the time to conduct that report were the limiting factors of this paper.
2.2 Nature of data
The author made use of quantitative as well as qualitative data according to the requirements. Mostly a mixture of both turned out to be the best way in order to present current figures and give a verbal analysis of it.