Chapter One Introduction
This chapter will introduce the research background, purpose and significance of theresearch. Furthermore, it also includes the domestic and foreign literature reviews onsimilar topics, as well as the research contents and methodology.
1.1 ResearchBackground, Purpose and Significance
The Lao PDR is situated in the center of Indochina and South-East Asia. Given itslocation, it is very much a destination added on to the list of countries visited by touristas they plan their trips to neighboring countries, rather than being the specific country ofintended travel. Thus, several factors at the regional, global levels are rather influential tothe trend and performances of Lao tourism. External factors such as that of thecircumstances of politics and the economy, natural disasters, climate change and terroristattacks can all affect the movement of tourists to the region.Laos does not release monthly tourism performance figures to the public like itsAssociation of Southeast Asian Nations (ASEAN) neighbors. The yearly estimate for2015, indicated that approximately 70% of tourists were from inside the region,especially Thailand. The other 30% come from America, Europe, Japan and Australia. Atthe same time, there are currently more tour companies than before. There is an additionfrom 236 companies in 2011 to 342 companies in 2014. The number of hotels,guesthouses and resorts also jumped from 1,926 five years prior, to 2,426 the previousyear, the media report said. The Ministry of Information, Culture and Tourism attributedthe growth in tourism to improvements and developments of the sector. In whichfollowed the improvement in organizational structure, which has resulted in a moresystematic workflow. (Represent Asia, 2016)Online travel agencies, or also known as OTAs are becoming the concern in severalaspects for the hospitality industry, as these kinds of websites are turning into the top ofthe mind choices for consumers’ in decision making when it comes to almost anythingrelated to traveling.
1.2 Domestic and Foreign Literature Reviewon Similar Topics
Laos’ accommodation situation is distinct and dynamic. Reports show a vacuumbetween upscale resorts and small, family-run guesthouses. International chains arestarting to eye the nation, while eco-accommodation is on the rise. (Lanith, 2017)An increase in tourism cooperation with regional countries will be the essentialfactors to contribute to the success of Lao tourism. In the unique tourism developmentfor Laos, tourists circulate living in the country with the neighboring countries.Overall, the number of tourist arrivals to Laos continually increases with an averagegrowth rate of 13.90%. Although there are some substantial and slight changes inspecific periods, (in 2001 because of terrorist attacks on September 11 in the UnitedStates, as well as the 2003 SARS epidemic in Asia), the frequency of tourist arrivals toLaos continues to increase gradually. (Lao Tourism Development Department, 2015)
Chapter Two Theoretical Framework
The theoretical framework that is used in the research will be elaborated in thischapter, including the 7Ps Marketing Mix, 4 Cs Theory, as well as the Market Positioningand Segmentation Theory.
2.1 Marketing StrategyTheory
A familiar marketing tool in which is mostly used and heard of, is of course themarketing mix. The traditional marketing mix, 4Ps : Product, Price, Place and Promotionwere designed in the period where businesses sold products, instead of services and itwas not well known about the essentiality of customer service in brand development.Booms and Pitner added 3 ‘service mix P’s over time and the model was later devisedand published in the book by E. Jerome McCarthy in 1960, Basic Marketing. AManagerial Approach, as the 7Ps model.Those additional Ps were; Participants (renamed People), Physical evidence andProcesses. Therefore, it is recommended that the full 7ps of the marketing mix areimplemented when looking into a company’s competitive strategies nowadays. Themodel helps to evaluate and point out key issues that influence the marketing of productsand services. It is currently referred to as the 7Ps framework for the digital marketingmix, as this model can be applied to online channels to provide a practical approach.Thus, multichannel businesses can also utilize it to suit their operations.Objectives can be set by companies with the 7Ps model, conduct a SWOT (strengths,weaknesses, opportunities and threats) analysis and implement competitive analysis. Theframework can help evaluate the existing business and figure out suitable approaches,while evaluating the elements of the mix.
The speedy development of information technology in the past twenty years hascaused the dramatic expansion of tourism e-commerce (Buhalis & Law, 2008; Dale,2003). OTAs or Online Travel Agencies are companies that offer their websites asplatforms for consumers to reserve various services related to travelling directly via theinternet. They are third-party agents that resell hotel rooms, trips, cars, flights, vacationpackages, which are provided or organized by others.These kinds of commercial transactions or online travel shopping have become verypopular these days. Last minute consumers are the segments that highly utilize theseplatforms due to the frequent and convenient access through smartphones. Consumersare always on-the-go and OTAs provide them with the availability of booking enginesand reservation solutions. The main advantage is that these platforms are capable inensuring that booking confirmations and payments are made instant. OTAs are perceivedby consumers to offer a variety of choices at low prices. As such, they are considered bymany as the dominant choice when it comes to making travel arrangements. (Law, Chan,& Goh, 2007)
Chapter Three External Environment Analysis of the Hotel OTA Development .............. 43
3.1 Introduction to the Hotel .............. 43
3.2 External Environmental PESTEL Analysis of OTA Development ............. 44
Chapter Four Internal Environment Analysis of Vansana Riverside Hotel........... 51
4.1 Revenues and Costs of the Hotel .............. 51
4.1.1 Revenue Generated from OTAs ......... 52
4.1.2 Marketing Costs ........ 56
4.2 Internal Environment SWOT Analysis ...... 58
4.3 Internal Problems Related to OTA............ 62
Chapter Five Solutions of OTA Marketing Strategy........ 68
5.1 Customer Targeting and Service Strategy ............. 68
5.2 Channel Distribution ........ 76
5.3 Pricing...... 79
5.4 Marketing Communication Strategy ......... 83
Chapter Five Solutions of OTA Marketing Strategy
The possible solutions that Vansana Riverside Hotel can consider to execute will beshown in this chapter. Several aspects that will be covered are customer segmentation,channel distribution, pricing model and after-sale customer service to help improve theirmarketing operations more effectively. This chapter will take Robert Lauterborn’s 4Ctheory into consideration as well, by integrating his principles into the solutions for thehotel’s marketing strategy.
5.1 Customer Targeting and Service Strategy
Vansana Riverside Hotel has a variety of customers from all over the world.However, based on the information collected by the hotel, one type of segmentation thatthey can use to distribute their customers into is according to their demography, based ontheir travel purposes.The customers can be divided into three main categories as leisure travelers, businesstravelers and student travelers. Therefore, each category of customers has specific sharedcommon interests and needs that are likely to differ from those in another category. Inother words, it is the first C of Lauterborn’s 4C theory, consumer .The hotel can use thisform of segmentation to help target the needs of their consumers more efficiently, inorder for them to satisfy their guests according to their interests.Furthermore, based on the proportions of each segment, the hotel would be able toestimate which kind of traveler would be visiting throughout each period, based on theguests’ preference, such as through which distribution channel they mostly reservethrough, season and be able to gain an improved control over the reservation patterns.Thereby, allowing the hotel to prevent against their first internal problem of havingreservation mismanagement.
First of all, unless there is a proper distribution structure, conflicts of interestbetween distribution decisions can arise. The potential influence that distribution canhave on customers is considerable. The capability of getting products or services is adimension regulated by the marketing mix. It is essential for the hotel that customershave access to their services through channels that meet their requirements, together withthemselves.Secondly, relationships developed with channel intermediaries like OTAs, based onpartnership, can definitely be used to build competitive advantage. The goal for the hotelshould not just be developing programs to attract barely the customers, but also allparties in their distribution channels. This way, the hotel can encourage thoseintermediaries to deal with their service. The values can be, as the benefits they perceiveto flow from the hotel compared to perceived costs. The incurred cost is more than whatthey pay for the service, but can be the other transactional costs involved in activitiesalong their journey to make reservations up till making payments. These costs are mainlythe concerns of evaluation for customers. Since the hotel provides service as theirproduct, components of the offer will be intangible. Therefore, their image and serviceelements play important roles.