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Publish Date: 2024-10-03

Harvard Case - Sri Lanka's Aitken Spence Hotel Holdings: Competitive Strategy and Sustainable Tourism

"Sri Lanka's Aitken Spence Hotel Holdings: Competitive Strategy and Sustainable Tourism" Harvard business case study is written by Beng Geok Wee, Ivy Buche. It deals with the challenges in the field of Service Management. The case study is 22 page(s) long and it was first published on : Oct 23, 2008

At Fern Fort University, we recommend that Aitken Spence Hotel Holdings (ASHH) adopt a multifaceted strategy focused on enhancing service quality, customer experience management, and sustainable tourism practices to solidify its position as a leading hospitality provider in Sri Lanka. This strategy will involve leveraging service design, employee empowerment, and technology-enabled services to create a competitive advantage in the market.

2. Background

Aitken Spence Hotel Holdings (ASHH) is a leading hospitality company in Sri Lanka, with a diverse portfolio of hotels catering to various segments. The company faces challenges from increasing competition, evolving customer preferences, and the need to adapt to the changing global tourism landscape. ASHH recognizes the importance of sustainability and aims to integrate it into its operations.

The case study focuses on ASHH's efforts to develop a competitive strategy that balances profitability with environmental and social responsibility. The company is exploring various options to enhance its service offerings, improve customer experience, and position itself as a leader in sustainable tourism.

3. Analysis of the Case Study

To analyze ASHH's situation, we can leverage the Service Profit Chain framework, which emphasizes the link between employee satisfaction, customer loyalty, and profitability.

Service Quality: ASHH needs to focus on enhancing service quality across all touchpoints of the customer journey. This can be achieved through:

  • Service System Design: Implementing a robust service design process to ensure seamless and efficient service delivery. This includes service blueprinting, which maps out the customer journey and identifies key touchpoints for improvement.
  • Employee Empowerment: Empowering employees to make decisions and resolve customer issues effectively. Employee incentives and employee performance management systems can be implemented to motivate employees and ensure high service standards.
  • Service Recovery: Developing a comprehensive service recovery process to address customer complaints and turn negative experiences into positive ones.

Customer Experience Management: ASHH needs to prioritize customer experience management by:

  • Customer Journey Mapping: Mapping the customer journey to understand pain points and identify opportunities for improvement.
  • Service Innovation: Developing innovative service offerings that cater to evolving customer preferences. This could include personalized experiences, technology-enabled services, and unique offerings based on local culture and heritage.
  • Customer Relationship Management (CRM): Implementing a robust CRM system to gather customer data, personalize interactions, and build lasting relationships.

Sustainable Tourism: ASHH should further integrate sustainability into its operations by:

  • Service-Dominant Logic: Adopting a service-dominant logic approach, where the focus shifts from delivering tangible products to creating value through service experiences. This includes collaborating with local communities and promoting sustainable practices.
  • Diversity and Inclusion: Promoting diversity and inclusion within the workforce and fostering a culture of respect for local communities.
  • Technology-Enabled Services: Leveraging technology to reduce environmental impact, improve operational efficiency, and enhance customer experience. This could include implementing energy-efficient systems, digital platforms for guest communication, and sustainable waste management practices.

4. Recommendations

1. Enhance Service Quality and Customer Experience:

  • Implement a comprehensive service design process: This should involve service blueprinting to identify key touchpoints and opportunities for improvement.
  • Empower employees: Provide employees with the training, resources, and authority to make decisions and solve customer issues effectively. Implement employee incentives and performance management systems to motivate and reward high-performing employees.
  • Develop a robust service recovery process: This should include clear procedures for addressing customer complaints, providing timely solutions, and turning negative experiences into positive ones.
  • Leverage technology to enhance service delivery: Implement self-service technologies, such as online check-in and digital concierge services, to improve efficiency and customer convenience.

2. Focus on Sustainable Tourism:

  • Integrate sustainability into all aspects of operations: This includes reducing energy consumption, minimizing waste, and sourcing locally produced food and beverages.
  • Partner with local communities: Engage with local communities to create sustainable tourism initiatives and promote cultural experiences.
  • Develop innovative sustainable tourism offerings: This could include eco-friendly activities, educational programs about local wildlife and ecosystems, and partnerships with local artisans and farmers.
  • Promote sustainability through marketing and communication: Highlight ASHH's commitment to sustainable tourism practices through its marketing materials, website, and social media channels.

3. Leverage Technology for Competitive Advantage:

  • Implement a robust CRM system: Gather customer data, personalize interactions, and build lasting relationships.
  • Develop mobile applications for guest services: Provide guests with access to information, booking services, and personalized recommendations through mobile apps.
  • Utilize data analytics to optimize operations: Analyze data to identify trends, improve service delivery, and personalize customer experiences.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core competencies and consistency with mission: The recommendations align with ASHH's core competencies in hospitality and its commitment to sustainable tourism.
  • External customers and internal clients: The recommendations address the needs of both external customers and internal clients, including employees, investors, and local communities.
  • Competitors: The recommendations aim to differentiate ASHH from competitors by focusing on service quality, customer experience, and sustainability.
  • Attractiveness: The recommendations are expected to enhance customer satisfaction, increase revenue, and improve profitability.

6. Conclusion

By implementing these recommendations, ASHH can enhance its service quality, improve customer experience, and solidify its position as a leader in sustainable tourism. The company can achieve a competitive advantage by leveraging service design, employee empowerment, and technology-enabled services to create a unique and valuable proposition for its customers.

7. Discussion

Alternative strategies include focusing solely on cost reduction or pursuing aggressive expansion without considering sustainability. However, these options carry significant risks and may not be sustainable in the long term.

Key assumptions:

  • The tourism industry in Sri Lanka will continue to grow in the coming years.
  • Customers will increasingly value sustainable tourism practices.
  • ASHH will be able to successfully implement the recommended changes.

8. Next Steps

  • Develop a detailed implementation plan: This should include timelines, budgets, and key performance indicators (KPIs).
  • Pilot test new initiatives: Pilot test new service offerings, technology solutions, and sustainability initiatives before rolling them out across the entire portfolio.
  • Continuously monitor and evaluate progress: Regularly track KPIs and make adjustments to the implementation plan as needed.

By taking these steps, ASHH can successfully navigate the challenges and opportunities in the hospitality industry and achieve its goals of sustainable growth and profitability.

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Case Description

By 2008,Aitken Spence Hotel Holdings PLC (ASHH), a leading Sri Lanka hotel group had established a reputation for operating iconic resorts, in particular, its resort at Kandalama in the central highlands region of the country. Heritance Kandalama, the resort, had evolved after a troubled beginning to gain international recognition for its social, ecological and environmental best practices. In large measure, this was due to the emergence of a set of people management practices that had evolved an organizational culture with values that supported these best practices and enabled the resort to survive, notwithstanding ongoing civil conflict in Sri Lanka. In 2007, ASHH launched a strategic drive into hotel management services in India. A major element of the group's brand equity was its core competency in sustainable and community-sensitive development, much of which it had acquired through the Heritance Kandalama resort experience. A key challenge for ASHH: Can the group's philosophy of sustainable development be successfully implemented in India's hospitality industry? How could ASHH use the Kandalama experience to manage hotels in the culturally and socially diverse towns and cities of India?

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