Please conduct a SWOT analysis of Sheraton (hotel) as a global brand

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Please conduct a SWOT analysis of Sheraton (hotel) as a global brand

Sheraton's main strengths are the fact that Sheraton is part of a worldwide network of 550+ hotels, has a strong brand presence and effective marketing campaigns, strong history of strategic acquisition and pipeline development, hotels spread across 70 countries and several awards awarded to the group that strengthen the brand. Sheraton's main weaknesses are its focus on luxury, the fact that innovation is easily replicated in customer service, brand dilution and cannibalization and the hotel industry being very competitive, mature and seasonal. The biggest opportunities for Sheraton are the large scope of expansion in the affordable luxury field, high growth of hospitality business in developing markets, online market growth, luxury hospitality market growth and overall market growth in 2017. The main threats for Sheraton are geopolitical and other risks, terror attacks and the constant need to update and reinvent the customer service experience.

OVERVIEW

Starwood Hotels & Resorts Worldwide owns Sheraton Hotels, and is a global hotel enterprise that specializes in providing a luxury hospitality experience. Starwood Hotels and the Sheraton Group own and lease their properties. Their target customer group is business travelers, vacationers and honeymooners. Sheraton is one of the biggest hospitality companies globally. Their motto is: "At our core, we remain true to the values that began our journey 80 years ago".

STRENGHTS

1. Part of a worldwide network of 550+ hotels under Marriott group — Sheraton hotels are part of the Starwood Group, that was acquired last year by the Marriott Hotels & Resorts. As part of the Marriott group, Sheraton hotels are now part of the 566 hotels and resorts operating under the brand.

2. Strong brand presence — "Sheraton boasts a portfolio of over 435 hotels and 88 resorts in more than 70 countries worldwide".

3. Effective marketing campaigns — One of the most recent campaigns the Starwood group did was a collaboration with famous Instagram personalities in order to promote the hotels. Starwood Hotels collaborated with five high-reach French Instagram influencers and gave them a chance to create engaging social media content that allowed their followers to reserve a room directly through a link place at the top of each influencer's profile. The campaign had a reach of almost 500,000 Instagram users.

4. Strong history of strategic acquisition and pipeline development — As already mentioned, Sheraton was recently acquired by Marriott hotels which will allow it to grow further. As of September 2017, just under the Sheraton umbrella there are two different brands: Sheraton and Four Points by Sheraton. Additionally, the Starwood group sold off many of its properties and decided to stick to generating profit by focusing on franchising and management contracts. This led to a lot of free capital that Starwood invested in further development of the group.

5. Sheraton has a long tradition of hotels and has its hotels spread across 70 countries — on their website, Starwood states: "Sheraton boasts a portfolio of over 435 hotels and 88 resorts in more than 70 countries worldwide" and "Since our first hotel in 1937, Sheraton Hotels & Resorts has been a transformative figure in the world of travel. With innovative programming, worldwide destinations and a commitment to our guests, we perpetually Go Beyond to remain at the forefront of the industry."

6. Several awards awarded to the Starwood Hotels that strenghten the brand — Starwood Hotels and Resorts have been listed on Forbes Lists as "#108 Canada's Best Employers, #96 Innovative Companies (2016), #1.214 Global 2000 (2016), #1.452 in Sales, #1.170 in Profit, #839 in Market value and #321 America's Best Employers (2016)".

WEAKNESSES

1. Focus on luxury — The whole Starwood group is very focused on providing a luxury hotel experience, which comes with certain risks. The group is open to vulnerability to future potential global economic crisis as well as the shift from luxury to budget travel.

2. Easily replicated innovation in customer service — Any kind of introduced innovation can be easily replicated by other hotel.

3. Brand dilution and cannibalization — Academic papers suggest that although there are "several benefits associated with implementing brand extension strategies, such as lower marketing costs for introduction of new products, there are also unfavorable consequences including cannibalization and brand image dilution". By extending the Marriott brand, both Sheraton and other brands under the Marriott umbrella face the potential of this weakness.

4. Hotel industry is very competitive, mature and seasonal — The competitive nature of hotel industry is intensified by the fact that the "cost of product differentiation and switching costs are very low". Additionally, mature industries are defined as industries that are their peak "or just past it. While earnings may be stable, growth prospects are few and far between".

OPPORTUNITIES

1. Large scope of expansion in the affordable luxury field.

2. High growth of hospitality business in developing markets — "Emerging cities across Asia and the Middle East are fast becoming the new lands of opportunity for investors and developers within the hotel industry. These emerging hot spots have some of the largest supply pipelines in the world, and are set to see their total number of rooms increase by 30 percent in the next few years."

3. Online market growth - According to the most recent data, "65% of the world’s travel booking happens online." Global digital travel sales have grown more than 25% since 2014. It is expected this number will increase to $817.54 billion by 2020 which is a 45% increase from 2016's sales.

4. Market growth in 2017 - The world outbound travel is expected to experience a growth of between 4% and 5% in 2017.

5. Luxury sector growth in 2017 - Following a decrease in profit in 2016, global luxury travel spending is again back to growth levels of 6% for the first part of 2017.

THREATS

1. Geopolitical and other risks - economic slowdowns, terrorism, environmental concerns, increasing fuel prices, currency fluctuation and inflation are always risks to the hospitality industry. Additionally, the hotel chain can always experience a climate of change in global tastes when it comes to travelling.

2. Terror attacks - The increasing number of terror attacks makes certain destinations less attractive than others, such as for example Turkey, Middle East or Africa: "Many people (45%) now have serious safety and security concerns, especially about certain countries, and about two thirds of them plan to only travel to international destinations they perceive as being safe".

3. Constant need to update and reinvent the customer service experience - "Third-party travel intermediaries, home rental services companies such as Airbnb and HomeAway, and traditional technology players are disrupting the hotel marketplace by offering travelers more dynamic solutions based on their needs. Consumers now expect the hospitality industry to deliver the seamless and predictable consumer experiences they receive from Uber and Amazon. And a wealth of social, mobile, analytics, and cloud capabilities emerge every day, increasing the imperative for hospitality CMOs to create experiences that extend and deepen relationships with travelers. To thrive in this environment, hotels are evolving by not only enhancing their legacy product offerings, but by taking advantage of emerging technology solutions to assume a much more expanded role in their customers’ lives."

CONCLUSION

A SWOT analysis has been made on the example of Sheraton hotels, which operate under Starwood Hotels. Starwood Hotels group was recently acquired by the Marriott Hotels group that owns 550+ hotels worldwide.
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