Harvard Case - Orchid Ecotel: Leveraging Green Hoteling as Core Competency
"Orchid Ecotel: Leveraging Green Hoteling as Core Competency" Harvard business case study is written by Rama Deshmukh, Atanu Adhikari. It deals with the challenges in the field of Marketing. The case study is 19 page(s) long and it was first published on : Oct 26, 2011
At Fern Fort University, we recommend that Orchid Ecotel adopt a multi-pronged strategy to leverage its green hoteling as a core competency, driving both brand differentiation and business growth. This strategy will focus on enhancing the eco-friendly features of the hotel, building a strong brand identity around sustainability, and strategically targeting niche market segments.
2. Background
Orchid Ecotel is a new boutique hotel in Thailand focused on sustainable practices. It offers a unique experience by integrating green building materials, energy-efficient systems, and local sourcing. However, the hotel faces challenges in attracting a wider customer base and establishing itself as a leader in the eco-tourism market.
The main protagonist is the hotel's owner, Ms. Siriporn, who is passionate about sustainability and eager to make Orchid Ecotel a successful venture.
3. Analysis of the Case Study
This case study can be analyzed using the following frameworks:
- SWOT Analysis:
- Strengths: Unique green positioning, high-quality service, strong local sourcing, passionate owner.
- Weaknesses: Limited brand awareness, lack of marketing budget, dependence on local market, potential for higher operating costs due to sustainable practices.
- Opportunities: Growing demand for eco-tourism, potential for international expansion, partnerships with eco-conscious organizations, leveraging social media for marketing.
- Threats: Competition from established hotels, economic downturns, fluctuations in tourism, potential for negative publicity if sustainability claims aren't met.
- Porter's Five Forces:
- Threat of New Entrants: Moderate, as setting up a sustainable hotel requires significant investment and expertise.
- Bargaining Power of Buyers: High, as tourists have many options and are price-sensitive.
- Bargaining Power of Suppliers: Moderate, as Orchid Ecotel relies on local suppliers, but can leverage relationships for better pricing and quality.
- Threat of Substitutes: High, as other hotels offer similar amenities and experiences at potentially lower prices.
- Competitive Rivalry: High, as the hotel industry is highly competitive, especially in popular tourist destinations.
- Marketing Mix (4Ps):
- Product: Enhance the eco-friendly features, offer unique experiences like farm-to-table dining and nature walks, and develop a strong value proposition around sustainability.
- Price: Implement a premium pricing strategy to reflect the unique value proposition and target a higher-paying segment of eco-conscious travelers.
- Place: Leverage online booking platforms and develop partnerships with travel agencies specializing in eco-tourism.
- Promotion: Focus on building brand awareness through targeted digital marketing campaigns, social media engagement, and partnerships with environmental organizations.
4. Recommendations
Orchid Ecotel should implement the following recommendations:
- Strengthen the Eco-Friendly Features: Continue investing in sustainable practices and enhance the hotel's eco-friendly features. This could include installing solar panels, implementing water conservation measures, and offering electric vehicle charging stations.
- Develop a Strong Brand Identity: Create a unique brand identity that emphasizes the hotel's commitment to sustainability. This can be achieved through a strong brand name, logo, and messaging that resonates with eco-conscious travelers.
- Target Niche Market Segments: Focus on attracting specific target markets like eco-tourists, adventure travelers, and wellness seekers. This can be achieved through targeted marketing campaigns, partnerships with relevant organizations, and tailored offerings like yoga retreats or nature tours.
- Leverage Digital Marketing: Utilize digital marketing channels like social media, search engine optimization (SEO), and paid advertising to reach target audiences. Create engaging content that showcases the hotel's sustainable practices and unique experiences.
- Build Strategic Partnerships: Partner with travel agencies, environmental organizations, and local businesses to expand reach and attract new customers. This can include co-marketing campaigns, joint promotions, and referral programs.
- Implement a Premium Pricing Strategy: Position Orchid Ecotel as a premium eco-friendly hotel and justify a higher price point by offering a unique experience and emphasizing the value of sustainability.
- Develop Customer Loyalty Programs: Offer exclusive benefits and rewards to repeat customers, encouraging them to return and become brand ambassadors.
- Monitor and Evaluate Performance: Track key performance indicators (KPIs) such as website traffic, social media engagement, and customer satisfaction to measure the effectiveness of marketing efforts and make necessary adjustments.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Orchid Ecotel's core competency of sustainable hospitality and its mission to provide a unique and eco-friendly experience.
- External customers and internal clients: The recommendations are designed to attract eco-conscious travelers while also motivating staff to embrace the hotel's sustainable values.
- Competitors: The recommendations differentiate Orchid Ecotel from competitors by focusing on its unique green positioning and targeting niche market segments.
- Attractiveness ' quantitative measures if applicable: The recommendations aim to increase revenue and profitability through targeted marketing, premium pricing, and customer loyalty programs.
6. Conclusion
By adopting a comprehensive strategy that leverages its green hoteling as a core competency, Orchid Ecotel can establish itself as a leader in the eco-tourism market, attract a loyal customer base, and achieve sustainable growth.
7. Discussion
Other alternatives not selected include:
- Mass market approach: Marketing to a broader audience without focusing on sustainability, which could lead to lower prices and potentially dilute the brand's unique value proposition.
- Aggressive expansion: Rapidly expanding the hotel chain without careful planning and market research, which could lead to financial strain and quality control issues.
Risks and key assumptions:
- Competition: The hotel industry is highly competitive, and new entrants may emerge with similar sustainable offerings.
- Economic downturn: A global economic downturn could negatively impact tourism and reduce demand for eco-friendly hotels.
- Sustainability claims: Maintaining the hotel's sustainability claims requires ongoing investment and effort, and any perceived inconsistencies could damage the brand's reputation.
8. Next Steps
Orchid Ecotel should implement the following steps:
- Develop a detailed marketing plan: Outline specific marketing strategies, target audiences, budget allocation, and key performance indicators.
- Implement digital marketing campaigns: Launch targeted social media campaigns, optimize website for SEO, and explore paid advertising options.
- Build partnerships with relevant organizations: Identify and establish partnerships with travel agencies, environmental organizations, and local businesses.
- Develop customer loyalty programs: Create exclusive benefits and rewards for repeat customers.
- Monitor and evaluate performance: Track key performance indicators and make necessary adjustments to the marketing strategy.
By taking these steps, Orchid Ecotel can successfully leverage its green hoteling as a core competency and achieve its goals of brand differentiation, business growth, and sustainable success.
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Case Description
Vithal Kamat (CMD, Kamat Hotels India Ltd.) is a second generation entrepreneur who has taken the Kamat Hotels brand to new heights. A small restaurant chain was transformed into a full-fledged hospitality services group under his leadership. Kamat Hotels (India) Ltd. included five major verticals from five-star luxury hotels (The Orchid Ecotel) to economy restaurants (namely Kamat Restaurants) that catered to the different customer segments. Kamat had ambitious plans for the expansion of every vertical using alternative growth strategies. However, the recent economic slump had caused a sudden setback due to the fall in average room occupancy and competing room-tariff rates offered by other hotels. In such a tumultuous situation, Kamat planned to use the core competency of the hotel as an 'ecotel,' that is, an environment friendly hotel, to go in for corporate branding and lever its position in the market. The case illustrates the challenges faced by Kamat in extending the core competency of 'The Orchid' to its other verticals. The Orchid had performed better than the industry average until 2008. However, in 2009, the performance dipped, partly because of the economic recession. This prompted the board members of the company to decide on extending the core competency of the ecologically sustainable hotel into other verticals. However, this decision had to be considered carefully in the light of its impact on 'The Orchid' as well as on the other verticals. What are the challenges that will be faced while extending the core competency of 'ecoteling' to the other verticals? There were numerous related issues that needed to be addressed strategically as well as tactically, in order to maintain a balance between extending the core competencies across the verticals while extending the brand per se.
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