Situation Assessment
SWOT Analysis
Strengths
• Brand Portfolio Diversification
o Enabling cross sales
o Enabling trading down the aged hotels to the lower segments without losing business
• Steady/growing revenue stream
• Technology (state-of-the-art reservation system)
• Relationship with other leading companies in different businesses
• Franchise nature: Ability to expand the business with relatively low investment
Weaknesses
• Franchise nature, along with brand diversification: Hard to manage and control comparing to own-subsidiaries
o Each has its own objective and focus
o Sales Cannibalization generates conflicts and loss of credibility, while profit pooling (working with own-subsidiaries) is not a possible solution
• Low degree of communication between the company and franchisees
• No clear image/picture of the brand in customer’s mind (both Choice and the hotels)
• Homogenous customer characteristics for all 7 segments in terms of income level, age, and purpose of the trip: greater chance of cannibalizing one another and loss of opportunity to serve other markets
Opportunities
• Expansion of the hotel franchisees
• Expansion of the customer base with emphasis on promotional programs
Threat
• Switching of both potential franchisees and customers to other hotel chains
The market
The lodging industry was growing and enormous in size; people tended to travel more despite the age of technology that had brought about distant communication. Hotel chains had increasingly gained market dominance and power, giving difficult times to independent hotel operators. Having multiple brands for a hotel company was not uncommon, and the market was general ...