Background of Novotel

Discuss about the Strategic Issue for Paul Dubrule and Gerard Pelisson.

Strategic Management forms an essential part of any organization irrespective of the kind of industry, the given organization belongs to. The given report will be discussing one such strategic issue related to the organization which has been chosen for the given hospitality industry. The hotel which has been chosen is the Novotel. It is an international hotel which provides a great experience to the tourists. The given report will be discussing a strategic issue related to the hotel and provide relevant solutions for the same. The chosen issue for the purpose of the given essay is the issue related to globalisation. Hence, today globalisation has had an impact on the operations of Novotel and the way in which the strategic operations will be effected by globalisation will be discussed.

The Novotel is a part of the Accor group of Hotels which was initially found by two friends Paul Dubrule and Gerard Pelisson. The Novotel was the first hotel group which they opened back in the year1967. Through the continuous creativity and the boldness of the staff, the hotel has become what it is today, a five star rated hotel and one of the most popular ones around the globe. The hotel has branches in more than 100 countries and serves over thousands of customer daily (novotel.accorhotels.com., 2018).  The hotel has a workforce of more than 2,50000 people and the staff is committed towards providing quality services to its customers. However, recently, the company has been facing certain issues with respect to the globalisation aspect. The issue will be discussed in the given section.

According to Krugman  (2017),  Globalisation has become a critical aspect for any business organization in the 21^st century specially in the hotel industry where the customers and guests visiting the hotel need to be provided with adequate services so as to ensure that they are able to enjoy their stay and the business is very successful (Wheelen et al., 2017).  For the purpose of the given report, 3 relevant issues with respect to globalisation which are being faced by Novotel will be discussed. These issues are general to the tourism and hospitality industry however, its impacts on the given industry will be discussed in order to figure out what is the main problem being faced by Novotel and how it can be combated.

It has been observed that as Novotel is an international hotel, the hotel is required to localise their offerings in order to captivate the customers belonging to the different country. The main tagline of their operations should be that they need to think global and act local which means that their strategic plans for the long term welfare of the hotel should be to ensure that the hotel is able to perform well (Lasserre, 2017).  Along with this it is suggested that the differentiation strategy is followed by the hotel to face the fierce and cut throat competition present in the external environment of the tourism industry.

Globalisation and the Hospitality Industry

 

Figure 1: The components of global integration (Sources: Niewiadomski, 2014). 

According to Mowforth and Munt  (2015) , globalisation is a critical aspect of any business enterprise and has a tendency to have an impact on the economical as well as political environment of the business. The hospitality industry is very often regarded as one of the most global sectors present in the economy. The travel industry has been greatly impacted by the increased travel frequencies of various individuals and that has in a way had a positive impact on the hotels as their demands have increased considerably. Therefore, for this purpose the first problem or the strategic decision that needs to be essentially identified by the Novotel hotels is the issue related to the Location. Location forms an essential aspect of the hotel industry whereby the hotels need to strategically evaluate all options available to it and decide upon the location which would best suit their target market decisions and the kind of resources they are willing to employ (Niewiadomski, 2014).  These decisions are quite easy to make when the location of the hotel is in the country where the hotel originates in however, in cases where the hotel needs to expand its operations, it becomes essentially important to consider the location as a choice of a wrong location may impact the operations negatively (Barney, 2014). 

For example, when Novotel decided to open its branches in India, which is a developing nation, it had to be very considerate about the different locations where it operates in because the country is a relatively poor economy and if the company expands in a location where the target market is not suitable then, it may incur losses. A similar case happened when a competitor industry in a similar industry decided to open its hotel in Shanghai, the company opened its branch in the Lujiazui industry. The tower in which it decided to operate in is a business house with more than 500 companies (Wright, 2016).  Hence, when any of the business consultants decides to hold a conference, their choice is always Hyatt. In a same manner, Ritz Carlton closed in Vegas after struggle because it was a high end hotel in a place which was required to be lively.

The next issue faced by Novotel due to the Globalisation is the existence of economics The economics related to a hotel in a country can be measured as the market share that can be occupied by a hotel when it needs to expand. Globalisation is generally considered to be critical when a given hotel decides to expand in order to gain additional market share. This is based on the concept that when the hotel will expand it will easily be able to attract a larger market share. It is suggested by Jones, Hillier and Comfort (2016,) that when a hotel decides to expand, and as all trade barriers have been brought down by the governments, these hotels need  to consider the world as a global village. The Accord group of hotels has its operations in more than 100 countries however, a majority of the branches of the Novotel have expanded in lieu of competition and in order to survive (Liu et al., 2014). Globalisation has been a boon but it has also forced the different hotels to expand its operations as they might succumb to the rivalry in the industry, Novotel has expanded in such countries, however it has been facing intense competition from other groups like Hilton, Marriot and Hyatt.

Strategic Issues Related to Globalisation in Novotel

The third critical impact of globalization on Novotel as a part of the hospitality industry is the varying culture of the different countries in which the hotels operate. The world has become a small place and different people tend to have different traditions and cultures it needs to abide by in order to ensure that the company is able to easily blend in the given economy and attract the customers. Expansion with respect to difficult countries is often considered to be an essential aspect and proves to be very risky for any organization. The hotels also need to consider the change in currency rates and price accordingly. The staff needs to behave in a unique manner in different countries (Niewiadomski, 2016). If the company expands to a country like Japan and other countries then, it needs to see to it that they employees belong to the local culture and know how to engage the customers. Along with this Globalization brings in cultural diversity in the organization and it is important for the firm to adapt to different cultures easily. It is extremely important for Novotel to adapt to different cultures and then ensure that it achieves success.

Conclusion

Therefore from the given analysis it can be stated that the hotel, Novotel under the Accord group is a well maintained group of hotels which have been successful since its incorporation. However it had been facing certain Strategic issues with respect to Globalization which have been discussed in the given report. Certain recommendations for Novotel to combat with the given issue have been provided in the given section.

Hence, as analyzed earlier, it becomes increasingly important for Novotel to ensure that it engages in certain strategic considerations which will help the hotel to ensure that it is able to achieve success. The given recommendations are as follows:

1. Adjusting of factors and scanning external environmental factors- With the advent of globalization, it becomes increasingly important for any business organization to ensure that it engages in effective external environmental scanning which would go a long way in helping Novotel in engaging in strategies which will assist it in its expansion and competition polices. Furthermore, it will be able to evaluate the different factors which may obstruct its operations.
2. Standardization- Minting a sense of standards in the hotel is very important. All hotels under a particular brand need o have standardized operations and sense of service quality. This shall ensure uniformity (Hill, Jones & Schilling, 2014). Novotel needs to ensure that all its operations in different countries are standardized.
3. Localization- Furthermore, Novotel is also required to engage in localization which will ensure it is able to adhere to the needs of the local market.

References

Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher ed.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Jones, P., Hillier, D., & Comfort, D. (2016). Sustainability in the hospitality industry: Some personal reflections on corporate challenges and research agendas. International Journal of Contemporary Hospitality Management, 28(1), 36-67.

Krugman, P. (2017). Crises: The price of globalisation?. In Economics of Globalisation (pp. 31-50). Routledge.

Lasserre, P. (2017). Global strategic management. Palgrave.

Liu, W., Guillet, B. D., Xiao, Q., & Law, R. (2014). Globalization or localization of consumer preferences: The case of hotel room booking. Tourism Management, 41, 148-157.

Mowforth, M., & Munt, I. (2015). Tourism and sustainability: Development, globalisation and new tourism in the third world. Routledge.

Niewiadomski, P. (2014). Towards an economic-geographical approach to the globalisation of the hotel industry. Tourism Geographies, 16(1), 48-67.

Niewiadomski, P. (2016). The globalisation of the hotel industry and the variety of emerging capitalisms in Central and Eastern Europe. European Urban and Regional Studies, 23(3), 267-288.

novotel.accorhotels.com. (2018). Novotel Hotels: book a hotel for family holidays or business trips.  Retrieved 28 April 2018, from https://novotel.accorhotels.com/gb/usa/index.shtml

Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. pearson.

Wright, S. (2016). Language policy and language planning: From nationalism to globalisation. Springer.