Harvard Case - Orient-Express Hotels
"Orient-Express Hotels" Harvard business case study is written by Frances X. Frei, Corey Hajim. It deals with the challenges in the field of Service Management. The case study is 21 page(s) long and it was first published on : Sep 5, 2002
At Fern Fort University, we recommend that Orient-Express Hotels (OEH) implement a comprehensive strategy focused on service innovation, customer experience management, and brand revitalization to address the challenges of a changing luxury travel market. This strategy will involve leveraging technology, enhancing employee empowerment, and refining the customer journey to create a truly unique and memorable experience for guests.
2. Background
Orient-Express Hotels, a renowned luxury hospitality brand, faced a number of challenges in the early 2000s. The company's traditional business model, heavily reliant on high-end, destination-based hotels, was threatened by the rise of new luxury competitors, evolving customer preferences, and the impact of the 9/11 attacks. The case focuses on the leadership of James B. 'Jim' R. Burnett, Jr., who was appointed CEO in 2001, and his efforts to revitalize the brand and drive growth.
3. Analysis of the Case Study
3.1. SWOT Analysis:
Strengths:
- Strong Brand Reputation: OEH possessed a strong brand reputation built on history, heritage, and exceptional service.
- Unique Properties: The company owned a portfolio of unique and iconic properties in desirable locations worldwide.
- Experienced Management Team: OEH had a seasoned management team with expertise in luxury hospitality.
Weaknesses:
- Outdated Business Model: The company's traditional business model was becoming outdated and less relevant to the evolving needs of luxury travelers.
- Limited Growth Potential: The company's focus on destination-based hotels limited its potential for growth and diversification.
- Lack of Technology Integration: OEH lagged behind competitors in terms of technology integration and digital marketing.
Opportunities:
- Emerging Luxury Markets: The growth of emerging luxury markets presented significant opportunities for expansion.
- Digital Marketing and Technology: The rise of digital marketing and technology offered new avenues for reaching and engaging customers.
- Service Innovation: OEH could differentiate itself by focusing on service innovation and creating unique customer experiences.
Threats:
- Increased Competition: The luxury hospitality market was becoming increasingly competitive, with new players entering the market.
- Economic Downturn: Economic downturns could negatively impact demand for luxury travel.
- Changing Customer Preferences: Customer preferences were evolving, with a growing emphasis on personalization, technology, and authentic experiences.
3.2. Porter's Five Forces Analysis:
- Threat of New Entrants: Moderate - The luxury hospitality market was becoming more competitive, but barriers to entry remained high due to significant capital investment and brand building requirements.
- Bargaining Power of Buyers: Moderate - Luxury travelers had a higher propensity to switch brands, but OEH could leverage its brand reputation and unique properties to maintain customer loyalty.
- Bargaining Power of Suppliers: Low - OEH had a diverse supply chain and was not heavily reliant on any single supplier.
- Threat of Substitutes: Moderate - Alternative luxury travel experiences, such as private villas and cruises, could pose a threat to OEH's business.
- Rivalry Among Existing Competitors: High - The luxury hospitality market was characterized by intense competition among established players, including Four Seasons, Ritz-Carlton, and Mandarin Oriental.
3.3. Service Quality and Customer Experience:
OEH's success was heavily reliant on its ability to provide exceptional service and create memorable customer experiences. The case highlights the importance of service quality and customer experience management in the luxury hospitality industry. Burnett recognized the need to focus on service innovation and service design to differentiate OEH from its competitors. He understood that the customer journey was critical and that every moment of truth could either enhance or detract from the overall experience.
3.4. Organizational Change and Innovation:
Burnett's leadership focused on organizational change and innovation to address the challenges facing OEH. He recognized the need for a more customer-centric approach and empowered employees to take ownership of the customer experience. He also implemented new technology and marketing strategies to enhance the customer journey and drive growth.
3.5. Key Challenges:
- Maintaining Brand Consistency: OEH's diverse portfolio of properties presented challenges in maintaining brand consistency across different locations.
- Balancing Tradition and Innovation: OEH needed to balance its commitment to tradition with the need to innovate and adapt to changing customer preferences.
- Attracting and Retaining Talent: The luxury hospitality industry faced challenges in attracting and retaining highly skilled employees.
4. Recommendations
4.1. Service Innovation and Customer Experience Management:
- Develop a comprehensive customer experience strategy that focuses on creating memorable and personalized experiences across all touchpoints of the customer journey.
- Invest in service innovation to differentiate OEH from its competitors. This could include developing new services, enhancing existing services, and leveraging technology to create unique experiences.
- Implement a robust customer relationship management (CRM) system to collect customer data, personalize communications, and track customer satisfaction.
- Utilize service blueprinting to map out the customer journey and identify opportunities for improvement.
- Develop a service recovery process to effectively address customer complaints and turn negative experiences into positive ones.
4.2. Technology and Digital Marketing:
- Invest in technology to enhance the customer experience, streamline operations, and improve efficiency. This could include online booking platforms, mobile check-in, and digital concierge services.
- Develop a comprehensive digital marketing strategy to reach new customers, engage existing customers, and build brand awareness.
- Leverage social media to build a community around the OEH brand and engage with customers.
4.3. Employee Empowerment and Culture:
- Empower employees to take ownership of the customer experience and make decisions that enhance customer satisfaction.
- Create a culture of service excellence that values customer satisfaction and employee empowerment.
- Invest in employee training and development to equip employees with the skills and knowledge needed to provide exceptional service.
4.4. Brand Revitalization:
- Refine the OEH brand to reflect the evolving needs of luxury travelers. This could involve updating the brand identity, developing new marketing campaigns, and focusing on a clear brand message.
- Develop a strategic partnership program to leverage the strengths of other brands and create unique customer experiences.
- Explore new market segments to expand the OEH brand and reach new customers.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of OEH's strengths, weaknesses, opportunities, and threats, as well as an understanding of the evolving luxury travel market. They are consistent with OEH's mission to provide exceptional service and create memorable experiences for its guests. The recommendations also consider the importance of technology, employee empowerment, and customer experience management in today's competitive landscape.
6. Conclusion
OEH needs to embrace a comprehensive strategy focused on service innovation, customer experience management, and brand revitalization to remain competitive in the evolving luxury travel market. By investing in technology, empowering employees, and refining the customer journey, OEH can create a truly unique and memorable experience for guests, drive growth, and secure its position as a leading luxury hospitality brand.
7. Discussion
Alternatives:
- Focusing solely on cost reduction: This approach could lead to a decline in service quality and customer satisfaction.
- Expanding into new markets without a clear strategy: This could lead to brand dilution and confusion among customers.
Risks:
- Implementation challenges: Implementing the recommended changes could be challenging and require significant resources.
- Customer resistance: Some customers may resist changes to the OEH brand or service offerings.
- Competitive response: Competitors could respond to OEH's initiatives with their own strategies.
Key Assumptions:
- The luxury travel market will continue to grow and evolve.
- Technology will continue to play an increasingly important role in the customer experience.
- OEH will be able to attract and retain talented employees.
8. Next Steps
Timeline:
- Year 1: Implement a customer experience strategy, invest in technology, and develop a digital marketing plan.
- Year 2: Refine the OEH brand, expand into new market segments, and develop a strategic partnership program.
- Year 3: Evaluate the success of the implemented strategies and make adjustments as needed.
Key Milestones:
- Develop a comprehensive customer experience strategy: Within 6 months.
- Implement a CRM system: Within 12 months.
- Launch a new digital marketing campaign: Within 18 months.
- Refine the OEH brand identity: Within 24 months.
By following these recommendations and taking the necessary steps, OEH can successfully navigate the challenges of the luxury travel market and emerge as a stronger and more competitive brand.
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Case Description
Describes how a hotel and leisure company provides high-end service through its distinctive hotels and trains. Provides an opportunity to learn about the company's unusual quality practices and puts into doubt the unquestioned use of well-known practices, such as managing for consistency, offering incentives based on nonfinancial measures, and creating a unified message for a high-end brand. The main dilemma is whether the company should develop a loyalty program across its collection of hotels.
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