Service Management

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CASE STUDY A
From 0 to 100 in 3 years 4 months: Shangri-La, Sydney
Dr Troy Heffernan, University of Plymouth, UK and Marcelle Foundling, Charles Sturt University, Australia You cannot transport a culture, but you can indeed translate it; that is, take into account and adapt to the local environment (Giovanni Angelini, CEO and managing director of Shangri-La Hotels and Resorts (Hamdi 2006)).

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INTRODUCTION
The Hong Kong-based Shangri-La Hotels and Resorts is the largest Asian-based deluxe hotel group in the region. The name ‘Shangri-La’ and company philosophy, ‘Shangri-La hospitality from caring people’, were inspired by James Hilton’s legendary novel, Lost Horizon. The novel’s mythical paradise perfectly encapsulates the ideal of genuine serenity and service for which Shangri-La Hotels and Resorts has come to be recognised. ‘Shangri-La Care’ is a living culture within the group, strongly supported by the top management and continuously cascaded through the organisation. In July 2003, the group took control of its first Australian property, Shangri-La Hotel Sydney (formerly ANA Harbour Grand Hotel) as part of a global expansion strategy. Of the 49 Shangri-La hotels worldwide, 37 are owned by the group through Hong Kong-listed Shangri-La, Asia. The Sydney venture represents a shift away from the owner-operator strategy of previous years as it leased the property. The company recognises that greater expansion opportunities are available through lease, joint venture or management contracts, but such projects threaten control over the quality of the Shangri-La brand. In this context, success in Sydney has far-reaching implications for success of the group. The struggles with cultural adaptation and adjustments to organisational processes will provide a springboard for organisational learning and inform the group’s expansion into other non-Asian locations. Located in the heart of the historic Rocks district, Shangri-La, Sydney is most famous for its sensational views of Sydney Harbour and twin CASE STUDY

icons the Harbour Bridge and Opera House. In March 2005 an A$37 million refurbishment was completed, incorporating guest rooms, public areas, restaurants and bars and setting a new citywide benchmark for accommodation, food and beverage products and service. Performance figures showed rapid improvement under the new management and have been continuing to improve over the last 3 years 4 months. A competitor analysis carried out by ANA Harbour Grand Hotel showed it was ranked fourth against the other major luxury hotels in Sydney in 2001 and third in 2002. In July 2003 Shangri-La, Sydney was ranked fourth against its competitors (Four Seasons, Westin, Sheraton and Intercontinental) in occupancy ranking, third for average revenue per day and third for revenue share index. By December 2005 and December 2006 year-todate figures showed that Shangri-La was ranked number one over all these key indicators. As further recognition of Shangri-La’s success, the hotel received seven industry awards in 2005. In 2006 it won Best Luxury Accommodation, NSW Tourism Awards; Australian Hotels Association

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Deluxe Hotel of the Year; and Australian Hotels Association Most Creative Marketing Campaign. The hotel was also voted One of the Top 20 Overseas Business Hotels, Conde Nast Traveller (UK) 2006–07, demonstrating Shangri-La’s growing international reputation. Shangri-La went from ‘0 to 100’, from arriving to number one, in the Sydney deluxe hotel market in a short period of time. However, the transition has not been easy, with a number of challenging cultural and operational issues that needed to be addressed.

would be difficult without the ability to employ new staff endowed with the necessary serviceoriented attitude characteristic of the ShangriLa brand (Bettencourt, Gwinner and Meuter 2001). The second implication was the practical obstacle to...
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