Is Asian Hospitality Comparative in U.S. Market?

An Examination of Asian Hotel Companies’ Entry into the U.S. Lodging Industry

A Project

Presented to the

Faculty of

California State Polytechnic University, Pomona

In Partial Fulfillment

Of the Requirements for the Degree

Master of Science

Hospitality Management

Pattraporn Supapipatpong

2018

SIGNATURE PAGE

PROJECT: IS ASIAN HOSPITALITY COMPARATIVE IN U.S. MARKET? AN EXAMINATION OF ASIAN HOTEL COMPANIES’ ENTRY INTO THE U.S. LODGING INDUSTRY

AUTHOR: Pattraporn Supapipatpong

DATE SUBMITTED: Winter 2018

The Collins College of Hospitality Management

Dr. Edward Merritt ______The Collins College of Hospitality Management

Dr. Neha Singh ______The Collins College of Hospitality Management

ACKNOWLEDGEMENTS

This work would not have been possible without support of Dr. Edward Merritt,

Dr. Neha Singh, and Dr. Myong Jae Lee. I started this project in February 2012 with tremendous help and advice from Dr. Myong Jae Lee but I left the project to join the

United State Army Program call “MAVNI” for international student to get United States citizenship. During the past 4 years that I worked as a linguist for Defense POW/MIA

Accounting Agency (DPAA) in Hawaii. I never forgot where I left off at the Collins

College at Cal Poly Pomona. Every time that I asked myself, “If today is my last, what would I like to do?” Finishing this project and completing the degree was always my answer. After my break from the Army in November 2017, I come back to Cal Poly

Pomona to pursue my dream of completing my degree. Without asking me a lot of questions, Dr. Neha Singh helped me get back to the program and was willing to be my committee Chair for the project. The same day Dr. Edward Merritt offered to help me on completing the project. I feel so grateful and had tears in my eyes that day. This all reminds me of my first impressions of the campus. Faculty members were all warm, welcoming, motivating and encouraging towards students to pursue their dreams and successes. For these reasons, I would like to thank to Dr. Edward Merritt, my teacher and mentor for this generous time and commitment. Throughout my project periods, he has always been patient to support and guide me to the right direction and bring me back on track. Dr. Merritt has taught me more than I could ever give him credit for here.

I would also like to extend my thanks to those people who helped without hesitation in proof read and edit my paper. They are Kayla Stanley, my buddy and her

iii

cousin. Other people include Milio Medina, Elke and team members from Veterans

Resource Center. I have a heart of gratitude for all that give me assistance for this project.

Lastly, I would like to thank my family. My parents, and my two older brothers and Alvin for supporting and encouraging me to complete this dissertation. Thanks again to all the kind people who have provided help to me!

Thank you Thank you Thank you.

ABSTRACT

Purpose

This paper aims to empirically evaluate how Asian based hotel companies have made their strategic choice to expand beyond their home territories which include China,

Singapore, Hong Kong or Japan by opening and managing hotels in non-Asian destinations to achieve growth. This may be a competitive advantage decision that other hotel companies in the United States should implement in order to enhance their brand awareness in non-Asian destinations for greater market penetration and other related network advantages.

Design/methodology/approach

This is a analyzes article about both various Asian hotels and United States hotels by comparing Occupancy Rate, Average Daily Rate and Revenue per available room

(RevPAR) development practices based on content analysis of published references.

Following that, there is an analysis of the global hotel industry, and how it is used to identify the top Asian hotel management companies in the United States market. Finally, history of Asian hotels in United States is traced to examine key success factors for their growth and to identify issues and concerns for such companies’ development into United

Sates.

Findings

There are a number of approaches that Asian hotel companies have adopted for

International expansion based on their match with companies’ key success factors. These

include Prime location, Brand have local appear, Authentic Asian service experience,

Sensory Branding, Innovative technology, Celebrity endorsement, Customer delight and

Hotel Standardization and Staff quality.

Research limitations/implications

The review of the literature for this paper focuses only the top 7 Asian hotels companies:

Peninsula, Shangri-La, Mandarin Oriental, Raffles, Nikko, and Langham and does not

cover smaller Asian companies that may have had other successful global expansion

records.

Practical implications

The paper also provides high-level guidelines for what factors make Asian hotel groups successful to expand their business internationally including locations in North America and non-traditional markets. Non-Asian hotel groups may also learn from this Asian wave of hotel development.

Originality/value

There has been limited, if ever any, previous literature on the strategic development choices of Asian hotel management companies. As such, this paper contributes to the literature and holds such an important but largely overlooked area in hotel management.

Keywords

Competitiveness, Asia, Strategic choices, Hotel, International hotels,

Internationalization strategy, International expansion, Asian hotel management

companies.

Paper type

General review

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TABLE OF CONTENTS

Signature Page ...... ii

Acknowledgements ...... iii

Abstract ...... v

List of Tables ...... x

Chapter 1: Introduction ...... 1

Introduction……………………………………………..…………………………..…1

Objectives…………..………………………………………..………………………..4

Chapter 2: Literature Review ...... 6

Introduction……………………………………………..………..……………………6

Luxury Hotel…………………………………………………………………………..7

Hotel Brand Segmentation………………………………………..…………...………8

The United States Economic Overview………………………..…………………...…8

United States Hotel Industry…………………………………………..………………9

A Brief History of Asian Brand Hotel Entry In The U.S. Lodging Industry……...…10

Major Players……..…………………………………………………………....…….10

Chapter 3: Methodology ...... 15

Introduction………………………………………………………………..…………15

Basic Research Methodology……………………………………………..…………15

Data Processing and Analysis………………………………………………..………16

Chapter 4: Findings ...... 18

Performance Comparison of Asian Brand Hotels and U.S. Brand Hotels………..….18

viii

Success factors and Strategic Options of Asian Hotel Companies in USA………….22

Asian Hotel Companies Awards in USA………………..………………….....……..26

Chapter 5: Discussion ...... 29

Domestic Trips by US Residents and Inbound Trips by Non-US Residents……...…29

Chapter 6: Conclusion and Implementation ...... 34

Conclusion………………………………………………………………….………..34

Limitations and Future work……………………...……………………..……...……35

References ...... 37

LIST OF TABLES

Table 1: Comparing Occupancy, Average rates, and RevPAR in the competitive luxury hotels 2010-2015…………………………………………………………………………19

Table 2: Comparing Occupancy, Average rates, and RevPAR in the competitive upper- upscale hotels 2010-2015………………………………………………………………...21

Table 3: Success factors and Strategic options of Asian hotel Companies in USA

(Selected Example)…………………………………………………………………...….23

Table 4: Asian hotel companies awards in USA……………………………………..….27

Table 5: Domestic Trips by US residents and inbound trips by non-US residents………29

Chapter 1: Introduction

Introduction

The Asian luxury hotel brands known as The Peninsula, Mandarin Oriental,

Shangri-La, Raffles and Nikko have growing evidence of rapid spread in North America

(Harvey, 2007; Watkins, 2010; Terrero, 2015) and make up over 40% of the top 10

luxury hotel chain (Larry Olmsted, 2015). In general, U.S. hospitality success may not only be identified by only customer satisfaction with products and services (Knutson,

Singh, Yen, & Bryant, 2003; Gagnon & Yae Sock Roh, 2007) or from the American

Customer Satisfaction Index: ACSI (Deng, W., Yeh, M., & Sung, M., 2013) but also

addressed from the large number of property expansion ( Crowell, 2008; Serlen, 2012;

Ernst & Young, 2015). It may be that customer purchase decisions are influenced by

worldwide brand recognition such as Marriott, Hilton, and Hyatt (Kim & Kim, 2005,

IBISWorld, 2015). However, studies done by Walsh (2002) & Josh Sims (2015) showed

that the small quantity of Asian hotel property firms in the USA is not the case. Stand

outs in hotel guest satisfaction are determined by ACSI and the popular Conde Nast

Traveler USA, Travel and Leisure’s World’s Top Hotel List and other hospitality

journals have shown consistency in this (Mills, 2006 ; J.D.Power, 2012; CNT Editors,

2015). While the linkage between guest satisfaction and Asian hotel brands are evident,

there are other related factors that influence the success of non-Western operators which

remain largely unanswered. Therefore, understanding success and entry of the Asian

brand into the U.S. lodging industry is of great importance because they may provide

what hotel guests desire from their hotel experiences. Although existing research on U.S.

multinational hotel brands have expanded globally, it has been the subject of numerous

works ( Brouthers, 2002; Altinay, 2005; Dev, Brown, & Zhou, 2007; Villar-García &

Pla-Barber, 2011; Alon, Ni, & Wang, 2012; Huang & Cai, 2015). The present study of

specific Asian hotels that venture into the USA have remain under-studied. Only some

topics related to the success of Asian-owned firms in the USA have been covered (Robb

& Fairlie, 2009).

International service companies that run successfully in the United States of

America are an ideal example of how Asian companies have competitively exercised

their procedures within the U.S. market. For example, Singapore Airline (SIA) has

competed with both United Airlines and British Airways, becoming one of the very best

airlines in the world (Chan, 2000; L. Heracleous & Wirtz, 2006) by using innovating

technology of products and service differentiation strategies from the very beginning of

entered United States (Loizos Heracleous & Wirtz, 2009). On the other hand, Aman

Resorts from Indonesia has become one of the strongest brands in the hospitality industry

by focusing on well-traveled for each location as an international market entry strategy.

Additionally, luxuries in hotels give customers more equivalence to good service and a convenient location in comparison to prices when booking a hotel (Chan & Wong, 2006;

Jackson, L. A., 2013). Offering a unique product and service is a competitive advantage in foreign markets which has been proven in the work of Silivia, Cristiana & Cristiana

(2006); Dev, Brown, and Zhou (2007) and Walls, A. R. (2013). Location helps luxury

properties to partition their products and services from other brand hotels (Manning,

Rodriguez & Ghosh, 1999; Withiam, 2005; Tsung.-Yu Chou, et al., 2008; Kwang-Woo,

et al., 2010). The benefit of having a unique product and providing services of globalized

companies is apparent. What remains unclear is how Asian hotel brand products and

services are deviant from other big hotel chains in the U.S. hospitality market. Thus, it is

important for the hotelier to identify an oriented strategy that contributes to the

succession of the North American hospitality environment.

Extensive review of various literature reveals that international companies enter

the foreign market using various brands as a business strategy (Dioko & So, 2012;

Douglas, Craig, & Nijssen, 2001; Tasci & Denizci Guillet, 2011; Therkelsen, 2003).

According to a study done by O’Neill and Mattila (2010), the link between brand and guest satisfaction has well been established. Similar to Dev et al. (2009) defining that brand is crucial for a firm’s positioning and product attributing. Following this through,

Banyan Tree resorts, a global hotel from Singapore, uses a very clear positioning of a

“romantic escape for couples” in expanding to different countries. Banyan Tree resorts is

becoming one of the strongest brands in hospitality industries worldwide with the

consistent occupancy rates of 65-67 percent, even in the economic downturn (Roll,

2006). Similar to Samsung, a digital products company from South Korea, they used to

produce cheap copies of Japanese electronic goods. Today, American perception of

Samsung is the innovation of the world-class designs. For example, in the United States,

Samsung rates highly successful with a brand value of $32.9 billion in U.S. currency

making it within the top 100 international brands (Satyanarayana, R., Anand, B., &

Vutukuri, P., 2013). The successful branding strategies from Banyan Tree resorts and

Samsung lay out an important trend that makes Asian hotels succeed in the unstable U.S.

market.

Asian hotels are spread out throughout the U.S. market (Tan, 2011). The luxurious decoration and eastern service style strategies contribute to a strong style of the hotel (Kyte, 2009) but what makes customers of Asian hotels build loyalty and give these hotelier sustained profitability remains questionable (Doyle, 2011). Answers to these questions are of great importance because it will bring an understanding to hotel business professions and other related hospitality industries on becoming a successful hotel brand in a different country as well as how to develop business for future growth (Xiao,

O’Neill, & Mattila, 2012).

Thus, the purpose of this paper is to investigate how well the Asian brand hotel companies can compete with the U.S. brand hotels within the U.S. hotel market. More specifically, the study examines the performances of studying brand hotels over time and identifies the market strategies, making the products and services of Asian hotels which are different in the U.S. marketplace.

To accomplish the aforementioned purposes, the following objectives were established:

1. To document changes in patterns of occupancy rate, defining

ADR, RevPar, and the number of hotels in the U.S. luxury hotel market with

respect to Asian brand hotels and U.S. brand hotels.

2. Identifying underlying factors that can make Asian brand hotels

have significant difference in the U.S. lodging industry in terms of marketing,

human resources, finance, and organizational culture.

3. Evaluating guests’ experiences about Asian brand hotels and U.S.

brand hotels.

The success and expansion of Asian brand hotels leading into the U.S lodging industry is of great emphasis because they seem to provide what hotel guests want in relation to services provided by Asian brand hotels in the United States.

Chapter 2: Review of Literature

Introduction

Various international companies entering the foreign market have highlighted branding as a driver to a successful business strategy based on evidence in the work of

Tasci & Denizci Guillet, 2011 and Dioko & So, 2012. Some might say that the star rating is an indicator for service quality; however, the staring system cannot guarantee a quality mark anymore (Star Quality, 2011). In one country five stars could be equivalent to a lower rating elsewhere (New ratings for five stars, 2010). Thus, it is well documented that brands are the prime marketing concern for the international hotel industry (Chipkin,

2006; García, Gómez & Molina, 2012). Specifically for luxury properties, a brand is very important in order to compete in the market (McQuilken, 2011). Many multinational companies prefer to use brand extension for new marketing services as it is

cheaper and has a lower-risk, compared to building a new brand that involves tremendous

advertising costs (Bhat & Reddy, 2001). In the U.S., the market is dominated by major chains that already exist all over the country (Aronson, 2009). However, as Asian brands strive to become global, Asian chains use their value name as a tool in order to attract both Eastern and Western travelers in the U.S. market (Ricca, 2011). According to the study by O’Neill and Mattila (2010), the link between brand and guest satisfaction has been well established. In addition, identifying the relative importance of each Asian brand attribute provides information regarding how well the international hotel chain is meeting the needs of the customer. Determining a customer’s perceptions of Asian hotel

brand product and service performances will help local hotel chains understand the success stories behind foreign brand strategies. Hopefully this knowledge will benefit as a greater value for guests in a world that contains a great variety of global brands to choose from (Wood, Pitta, & Franzak, 2008).

The rest of the paper is organized in different segments. First, starting off with a review of related literature. On to a brief review of the history of Asian brand hotel entry in the U.S. lodging Industry. Then is the performance comparison of Asian brand hotels and U.S. brand hotels. Next will be the study of International companies’ success strategies in the U.S. market in relation towards the Marketing, Human Resource,

Finance and Organization Culture. Finally, ending with an informative conclusion and the implications of literature review.

The Review of the Related Literature

Luxury Hotel

The term luxury comes in various connotations and is constantly evolving from old to new meanings with a significant difference. However, defining a luxury hotel is challenging and not easy in the current market situation (McQuilken, 2011). In earlier studies, Bernstein (1999) identified a taste of luxury hotel based on four categories: cost, time, prestige and aggregate. Cost is something a consumer pays for certainly, not just based off the quality, but functionality that others are unable to afford. Time refers to the hotels intention to provide an enjoyable and lasting memory to each guest. On the other

hand, prestige is about status, beliefs and creditability of the hotel in the consumer mind.

As for the last, aggregate is the guest’s impression that can create a surprising moment.

In today’s business, luxury hotels are all about creativity (Esposito, 2011; Walls,

Okumus, Wang & Kwun (2011) and inventing a superior experience (McKenzie, 2004) with more affordability and accessibility (Colyer, 2009).

Hotel Brand Segmentation

Support research coming from Travel & Tourism Market Research Handbook

“Chapter 62: Hotel & Resort segmentation” (2014) published that the majority of the

Asian brand hotels including the Peninsula Hotel, Raffles, and The Mandarin Oriental

Hotel Group are in the luxury market segment while Nikko and Langham are in the upper-upscale segment. For the purpose of this paper, the study will focus only on luxury and upper-upscale markets in comparison with U.S. hotel brands by major companies in the same segment. The luxury segment brands by Starwood include St. Regis, W Hotel and Ritz-Carlton by Marriot, and Waldorf-Astoria by Hilton. The upper-upscale segment will cover Westin and Sheraton by Starwood as well as Hyatt, and Doubletree and

Embassy Suite by Hilton (Baker, 2011).

The United States Economic Overview

The United States’ economy is in an unstable condition. By this, the domestic product (GDP) has annual growth average of only 2.2 percent (Powell, B., & Smith, T.

L., 2016). The trade balance during 2015 was largely negative due to the slowdown in

international growth, especially in China; the slowing in growth has highly impacted U.S.

exports and oil prices have fallen more than expected. However, consumer spending is

growing. The U.S. housing market was also strong and the labor market average job saw

an increase of $187,000 per month (Witte, W. E., 2016).

United States Hotel Industry

The United States’ hotel industry was affected by a reduced amount of

international tourists arriving in the United States since 2009. However, as the volume of

travel activity continues to recover from 2010 to 2015, IBISWorld (2015) report that the

industry has experienced growth over five years of good performance. In 2015, domestic

travels grew at an annualized rate of 1.6 percent while the international arrivals grew 4.2 percent. The average occupancy levels were also expected to increase to 65.5 percent

(STR, 2015). These trends imply that the hotel industry may have a positive outcome going into 2016. In relation to this, according to the PricewaterhouseCooper report, this year Average Daily Rate (ADR) will change the primary driver to RevPAR growth.

ADR is expected to increase 5.7 percent in 2016, driven almost 99 percent of the 5.7 percent growth in RevPAR. Overall, lodging demand is expected to increase 1.9 percent in 2016. Construction for new hotels increased by 40 percent in 2015. Lodging supply in

2016 will capture 1.9 percent in expected growth (PWC, 2015). All this information may show that the industry has consistently been growing due to the benefit of government visa processing and its Visa Waiver Program for international visitors since 2012

(Industry Wrap, 2012). There is an improvement in economics whereas the

unemployment rate has declined, and consumers have spent more on travel and leisure at

an annualized rate of 2.7 percent over the last five years and will continue onward to

2020 (IBISWorld, 2015). IBISWorld also forecasts that in the next five years, hotel revenues will significantly increase, because occupancy levels will begin to exceed long- run averages. Hotel managers will have an important role in developing pricing, the extended-stay hotels, boutique hotels, spa healthy retreats and resorts that will be a new trend in the market.

A Brief History of Asian Brand Hotel Entry in the U.S. Lodging Industry

MAJOR PLAYERS

The Peninsula Hotel Group

The Hong Kong based Peninsula Hotel Group traces back to 1928 as The

Peninsula, a joint venture between The Hong Kong and Shanghai Hotels Limited, and the

Kadoorie family. It primarily served as a five-star commercial and residential property in

Asia (Hong Kong, Shanghai, Tokyo, Beijing, Bangkok and Manila), one in Paris and

three operating in North America (Chicago, New York and Beverly Hills). The shopping

arcades, food and beverage outlets, golf, management and consultancy services for clubs,

laundry and dry cleaning services, and transportation services are another part of the

company business as well.

Peninsula Hotel Group was in a different position than other hotels as they were

the first hotel in Asia that employed pageboys (An employees who first greeted and

welcomed guest at the entrance) to respond to the guest’s needs. The signature service of

Peninsula Hong Kong's fleet of 14 Rolls-Royces, the rooftop heli-pad in the Bangkok

property, and unsurpassed location by the Chao Phraya River makes the brand unique and

well-known to guests all over the world. Unlike most hotels, the Peninsula Hotel was not

subjected to heavy competition with any other hotel group. Instead it focused on a more

dedicated approach by building a strong brand, letting their standards grow higher to

delight customers (Peninsula Hotel Group, 2015).

Shangri-La Hotels and Resorts

Shangri-La Hotel was founded in 1971. It is known as one of the world’s finest hotels and also one of the longest-standing international hotel brands. Shangri-La is known for being a resort for vacation and relaxation. The first hotel was started with its deluxe property in Singapore. In total, there are 72 hotels and resorts throughout Asia

Pacific, the Middle East, Europe and two in North America (e.g., Santa Monica,

California and Manhattan, New York). There are new hotels under development in Canada, mainland China, India, Philippines, Qatar, Turkey and the United Kingdom

(Shangri-La hotel and Resorts, 2015).

Mandarin Oriental Hotel Group (MOHG)

Mandarin Oriental Hotel began in 1963 in Hong Kong as a luxurious service hotel. In 1987, a group member of international luxury hotel investment, Jardine

Matheson Group and Mandarin Oriental Hotel Group, entered the Hong Kong Stock

Exchange under the name of "Mandarin Oriental International Limited” (MOHG).

Today, the group operates 45 properties including 11,000 rooms in 25 countries, with 13 hotels in Asia, 10 in Europe and 6 in North America. The award-winning luxury spa brand and outstanding Asian hospitality services make the hotel successful in the United

States (Keller, 2015). MOHG operates three hotels in Hong Kong, two hotels in Macaw and their many properties in Bangkok, Tokyo, Manila, Jakarta, Singapore, Kuala

Lumpur, Chiang Mai, London, Paris, Munich, Geneva, Prague, Barcelona, New York,

Las Vegas, San Francisco, Washington D.C., Miami, Boston, Riviera Maya and Bermuda

(Mandarin Oriental Group, 2015).

Nikko

Nikko Hotel International (NHI) was started in 1972 in Jakarta as the global hotel of Japan Airlines. The Okura Hotels & Resorts owns the Nikko chain as well as Hotel

JAL City in Hawaii, the Halekulani hotel, and the Waikiki Park hotels. In 1973, they opened their first hotel in Japan. Today, NHI chains have properties in Asia, Europe,

North America, and the South Pacific. Nikko also opened the high class Hotel Nikko in

San Francisco, (U.S.) in 1990 and is still profitable. The Hotel has 510 guest rooms, 22

suites, an atrium covered 115 meter pool, a 24 hour health club, steam and sauna rooms, a whirlpool spa, and a dinner theatre (Nikko, 2015).

Raffles

Raffles Hotel is one of the world's most famous hotels based in Singapore. The colonial-style signature was established in 1887 by the famous Armenian Sarkies

Brothers and opened in 1887. Raffles was named after Singapore's founder Sir Stamford

Raffles. Raffles Holding hotels is located mostly in large Asian and European cities, including Beijing, Osaka, Amsterdam and Berlin. The hotel is no longer managed by

Raffles Holdings since it left the hotel business not wanting to spend significant capital investments in order to gain the size needed for global competition (Gunter, 2006).

Raffles is now managed by Colony Capital, a U.S. based company (Roger Yu, 2005). In

2006, the hotel combined with Fairmont Hotels & Resorts by Kingdom Hotels

International, and Colony Capital became Fairmont Raffles Hotels International (FRHI).

FRHI Holdings Limited is a leading global hotel company with over 100 hotels under the

Fairmont, Raffles, and Swissôtel brands. The company also manages Fairmont and

Raffles branded estates and luxury private residence club properties (Terrero, 2011). In the USA, a total of 21 operating properties Swissôtel sites include Texas, Chicago, New

York, California and Hawaii (FRHI, 2015).

The Langham

The Langham Huntington, U.S.A is a luxury resort hotel located in Boston,

Chicago, New York, San Francisco and Pasadena, California. They are named after The

Langham in London, the first European grand hotel. It is owned by Great Eagle

Holdings, Hong Kong and is managed by Lanham Hospitality Group (LHG). It was founded in 1963 in Hong Kong and listed on the Hong Kong Stock Exchange in 1972.

Major brands include The Langham Place, Eaton Luxe and Eaton Smart. The properties of LHG spread throughout New Zealand, Australia, China, India, Hong Kong, United

Kingdom and United States of America (“Langham Powers Ahead,” 2011). The original

hotel was built in a Spanish Mission Revival-style by famous artist General Wentworth,

and was designed by Charles Frederick Whittlesey. A new version of the building was

built in 1991 with 392 rooms (The Langham, 2015).

Chapter 3: Methodology

Introduction

One of the most important steps in the research process is choosing an adequate research design. According to Zikmund’s Business Research Methods (page 65), a research design is “a master plan specifying the methods and procedures for collecting and analyzing the needed information”. There are four basic research methods for a descriptive and causal research analysis such as surveys (interviews and questionnaires), experiments (laboratory and field), secondary data studies, and observations. An adequate research method or technique is chosen as a function of several factors, such as the objectives of the research, the available data sources, the urgency of a decision to take further action and the cost of obtaining the data.

The research process for this project follows the typical flowchart described in

Zikmund (page 61): problem discovery, exploratory research, problem statement (with objectives), basic research method, sampling, data collection, data processing and analysis, interpretation of findings, and preparation of the written report. This study uses both primary and secondary data which are closely linked to the specific research objectives (sub-problems) identified in Part I, Issue 4 “The objectives of the study”.

Basic Research Methodology

The purpose of this study is to contribute to the knowledge and comprehensive

content analysis for both luxury and upper scale hotels. The study attempts to understand

the unique characteristics of each of the Asian brand hotels and the differences in their

operation patterns by comparing their performance to a U.S. hotel. Given this information, the current study objectives of this study are as follows. First, this study aims to identify the hotel financial performance of the occupancy rate, ADR, RevPar, and the number of hotels in U.S. luxury market in regard to Asian brand hotels and U.S. brand hotels. Second, this study investigates underlying factors that can make Asian brand hotels have significant differences in the U.S. lodging industry in relation to marketing, human resources, finance, and organizational culture. Third, this study conducts an overall evaluate guests’ experience about Asian brand hotels and U.S. brand hotels. Thus, these studies are certainly useful for advancing theoretical and managerial knowledge for hotel industry.

Data Processing and Analysis

Standard editing and coding procedures are being utilized. The primary data collected at Issue 3 “Basic Research Methodology” is analyzed in accordance with the descriptive statistics procedures using frequency distributions analysis, percentages,

category of percentages and mode analysis. In the process of analyzing data, the simple

and/or cross-tabulation techniques will be utilized. The data for the study were provided

by Smith Travel Research, Inc. (STR). Specifically, STR provided the occupancy percentage, ADR and RevPAR for each of the sample hotels for the time period of 2010

through 2015. This procedure will be utilized to determine which hotels have highest

rate of ADR, RevPAR and Occupancy rate when compare to the industry at the same year.

Chapter 4: Findings

Performance Comparison of Asian Brand Hotels and U.S. Brand Hotels

In view of the organization’s emphasis on improving operating profitability at the property level, the income statements are the primary tools in every industry to weigh decisions (Ryan, 2012). The accurate indicator can help management make decisions quickly and effectively (Denizci & Xiang, 2009). Acknowledging that, in comparing between competitive business performance and the revenue per available room

(RevPAR) is used as the financial performance indicator in the hotel business (Manson,

2006). Mandelbaum (2011) also supports that ADR is a significant prediction that is directly linked to RevPAR.

The following table provides a summary of the hotel financial performance of the occupancy rate, average daily rates (ADR), and RevPAR for the competitive set. The time frame of the study covered a six-year period between 2010 and 2015. The sample for this research was provided by Smith and Travel Research and Hotel company’s annual report from 2010-2015. This information serves as useful to illustrate how well the Asian hotel brands are compared to American company brands.

Table 1:

Comparing occupancy, Average Daily Rate (ADR) and RevPAR in the competitive luxury hotels

2010-2015

Occupancy

(Starwood) (Marriott) (Hilton) Industry

Shangri- Ritz- Peninsula Mandarin Raffles St.Regis W Waldorf Year La Carlton

2010 65.00% 69.00% 69.00% 68.00% 60.80% 72.70% 67.60% 61.70% 67.50%

2011 69.00% 68.00% 71.00% 62.50% 62.20% 74.90% 66.00% 65.00% 69.00%

2012 73.00% 64.00% 71.00% 62.80% 61.40% 75.00% 69.90% 71.50% 72.50%

2013 74.00% 74.20% 75.00% 63.00% 65.10% 77.30% 71.30% 72.50% 72.90%

2014 71.00% 80.00% 74.00% 63.70% 66.80% 80.20% 72.90% 71.40% 74.40%

2015 75.00% 74.00% 75.00% 64.00% 69.00% 80.80% 74.80% 63.00% 74.80%

Average Daily Rate (ADR)

2010 $648 $620 $880 $629 $287.38 $271.02 $280.17 $264.43 $246.91

2011 $614 $670 $880 $650 $298.35 $283.82 $308.44 $312.96 $270.32

2012 $741 $650 $915 $670 $307.46 $304.77 $303.78 $300.54 $275.91

2013 $669 $662 $947 $650 $319.95 $312.19 $328.83 $302.87 $293.44

2014 $788 $690 $986 $680 $348.14 $295.56 $338.48 $337.01 $305.17

2015 $755 $732 $970 $698 $333.27 $590.27 $350.61 $234.93 $323.49

RevPAR

2010 $445 $356 $279 $342 $174.64 $197.13 $189.30 $187.85 $166.58

2011 $421 $382 $303 $365 $185.46 $212.60 $203.45 $317.74 $168.72

2012 $540 $375 $650 $372 $188.79 $228.51 $212.34 $211.70 $169.83

2013 $494 $396 $706 $350 $208.24 $241.35 $230.82 $219.54 $177.77

2014 $558 $398 $732 $381 $232.68 $236.94 $246.89 $240.61 $187.01

2015 $568 $372 $720 $360 $229.79 $234.53 $270.54 $148.04 $198.97

Source: PwC, based on Smith Travel Research data 2010-2015

Source: Hotel company annual report 2010-2015

Looking at the occupancy rate for the luxury hotel market from 2010 to 2015, W

hotel from Starwood got the highest rate. On the other hand, two of Hong Kong based

Shangri-La hotel & Resort, the Mandarin Oriental Hotel Group (MOHG) and the

Peninsula had the second highest occupancy rate when compared amongst competitive sets with a little higher than the industry average. Moving on to the ADR, Mandarin

Oriental has maintained the highest rate above the industry average from 2010 to 2015.

In 2010 and 2011, the Peninsula hotels become number one in RevPAR, while Mandarin

Oriental got the highest RevPAR from 2012 to 2015.

The result of the comparison table makes the author even more curious since the

Shangri-La hotel only provides 2 properties, Peninsula holding 3 locations while

Mandarin Oriental has only 12 properties in North America. They still can compete statistically to the big US chains such as Starwood, Marriot and Hilton. This raises

questions whether the Asian service standard is highly recommended in the Western

market (Wolfe, 2004). Another question to consider is that because it in demand in a high

class luxury while supply so small in number? Next, the author will provide a table

comparing the occupancy, average rated and RevPAR with an Upper-upscale segment in

the same manner.

Table 2:

Comparing occupancy, Average Daily Rate (ADR) and RevPAR in the competitive upper-upscale hotels 2010-2015

Occupancy

(Starwood) (Hyatt) (Hilton) Industry

Embassy Nikko Langham Westin Sheraton Hyatt Doubletree Year Suites

2010 77.80% 42.30% 65.80% 64.10% 65.30% 63.20% 73.30% 93.40%

2011 83.80% 51.40% 68.30% 64.80% 68.60% 65.80% 77.50% 78.30%

2012 83.40% 72.70% 68.30% 64.80% 73.70% 70.70% 74.10% 70.70%

2013 83.00% 74.80% 70.40% 65.30% 74.70% 72.70% 75.50% 71.00%

2014 84.10% 79.00% 76.10% 70.20% 75.00% 71.20% 72.90% 73.40%

2015 84.00% 75.20% 77.70% 72.10% 73.50% 78.50% 82.30% 74.50%

Average Daily Rate (ADR)

2010 $132.20 $220 $175.05 $143.23 $197.59 $109.74 $117.90 $136.13

2011 $139.60 $224 $182.54 $147.94 $200.57 $112.54 $129.60 $137.74

2012 $172.00 $219 $186.48 $152.52 $206.00 $124.60 $140.51 $155.43

2013 $187.79 $228 $189.03 $154.98 $215.00 $127.64 $143.51 $164.26

2014 $228.00 $242 $184.60 $150.50 $188.00 $134.46 $144.04 $171.65

2015 $309.00 $256 $182.78 $144.89 $222.00 $234.93 $157.01 $182.12

RevPAR

2010 $102.85 $93 $115.18 $91.84 $129.04 $91.00 $91.83 $99.86

2011 $116.89 $115 $124.62 $95.82 $137.55 $93.40 $94.60 $107.91

2012 $137.86 $159 $127.44 $98.82 $152.00 $90.20 $103.00 $93.18

2013 $155.83 $170 $132.99 $101.24 $161.00 $92.81 $108.32 $97.01

2014 $173.42 $191 $134.00 $105.65 $141.00 $95.72 $105.02 $103.89

2015 $189.61 $192 $135.00 $104.44 $151.00 $148.04 $129.04 $111.47

Source: PwC, based on Smith Travel Research data 2010-2015

Source: Hotel company annual report 2010-2015

For the Upper-upscale market, the average daily rate for this market rose slightly

from 2010 to 2015. RevPAR also rose from $99.86 to $111.47 respectively. However,

the occupancy rate dropped 93.4 percent in 2010 to 78.3 percent in 2011. This was due

to the United States economic downturn beginning in 2009 (IBISWorld, 2012). In this

segment, the Nikko, Japanese hotel had the highest number of occupancy rate of 77.8

percent in 2010 and remained number one in 2015 with a rate of 84 percent. On the other

hand, the Langham had the highest number of ADR from 2010 to 2015 while Nikko hotel

became number one ADR in 2015. Additionally, from 2010 to 2011, Hyatt got the

highest RevPar but from 2012-2015, the Langham become number one. It is important to

note that financial strategies can come in many different ways, not only the ranking. The

Asian hotel brand is among the few international luxury hotel chains which has had a

slower expansion. It is considered to be a part of the strategic position and financial

strategy that makes each Asian hotel brand memorable to the customer (Serlen, 2008).

Success factors and Strategic options of Asian hotel Companies in USA (Selected

Example)

As it has already been identified, the Asian hotel performance regarding the

luxury and upper-upscale show a significant number of growths in terms of financial

analysis. A conclusion may be that Asian hotel brands in the U.S. have a healthy and

continuous good performance overtime. However, the table does not bring fully into view

the marketing strategy and other related factors that can contribute to the study. The next table will go over the successful strategies that Asian brands use in the U.S. market.

Table 3:

Success factors and Strategic options of Asian hotel Companies in USA (Selected Example)

Success Factors Development Strategy Strategic Options Hotels Examples

Prime locations Inbound trips by none-US resident Build up international client base as Langham Hospitality Group, Shangri- well as US base La Hotels & Resorts, Mandarin Oriental

Brand have local appear US client who doesn’t know whether Service norms are increasingly Mandarin Oriental the company from Asia universal

Core competencies of authentic Guest care where value come from Mandarin Oriental, The Peninsula Asian service experience Distinctively Asian approach to service hotels, Nikko hotel, Raffle hotels

Market research and understanding Proximity to key markets, differentiate Langham Hospitality Group themselves and realize greater profit Built a sustained global brands with Asian roots Marketing Strategy Build positive emotional experiences Mandarin Oriental with brand Sensory branding

Human resource Access to multiskilled and well trained Having an experience workforce, A Shangri-La Hotels & Resorts staff certain attention to detail

Quickly adopt new technology Fast service to experience Innovative technology Mandarin Oriental

Receiving the benefit word of mount Compatibility between the brand and Celebrity Endowment Mandarin Oriental Recommendations personality, identity and positioning

Customer delight Long term relationship with customer Customer relationship management Mandarin Oriental, The Peninsula (CRM) hotels

Organizational cultures Represented the heart and soul of the hotels Family of employees, Personal The Peninsula hotels connection between staff and guests

Note: Data from IBISWorld (2017), and Carmen, Grace, and Rob (2015).

Asian hotels companies have developed their success strategies by starting from opening in gateway city locations, because the numbers of inbound trips by non-US resident

(especially Chinese traveler) have grown rapidly, and they look to their familiar brands when they travel the world because it give them a sense of home (IBISWorld, 2017).

However, some location reflect the location where they are while still having Asian qualities to be part of their philosophy because travelers look for experiences when they come to hotels. Where hotels originally from not the case (Torres & Edwin, 2014). It more about iconic and global recognition (Semone, 2003). At the same time, traditional

Asian service experience for international expansion are just as important. According to

Martin, the author of “Asian brand strategy book” he mentions the values that Asian hotels contributes are humility, respect, courtesy, helpfulness, selflessness, and, above all,

sincerity. These are virtues deep-seated in the Asian culture, which are a core element of the Asian brand identity.

Moreover, Asian hotels determined to grow globally, so they spend tremendous amounts in market research analyzing and gaining in-depth insights on their main customer group, which are Premium frequent business travelers. They found that business travelers disliked the misery of always departing and arriving oversea alone, constantly missing birthdays, weddings and other important social gatherings. It’s mandatory to ensure that guests have meaningful experiences away from home and feel comfortable in their new surroundings (Martin, 2010). Evidently, Asian chains have achieved differentiation through developing strong Asian styles by incorporating Sensory branding as marketing strategy to address the four senses of hearing, taste, smell and touch to enhance the guest experience with visit (Ahn et al., 2013).

As hospitality is a service business, people are one of the most important resources that need to be trained for Asian companies to be successful in a foreign environment. Dedicated staff are the key. The actual quality and level of service and hospitality provided by management and staff of the hotel or resort is critically important, especially if it matches the expectations and demands of guests in all areas of operation.

(Carmen, Grace, and Rob, 2015). Asian hotels continually adapt to the changing needs of customers, thereby quickly adopting new technology strategies is a competitive advantage for the chains. Innovation have increased labor productivity, lowered labor costs and enhanced customer service within the Hotels. They have also specifically benefited from the widespread proliferation of the internet, which enables operators to

gather information, manage reservations and remotely purchase supplies, thereby lowering overall costs.

Innovation is not the only ways to excite customers and allow brand to refine and redefine its core brand philosophy in line with customer needs, but also allow brands to compete effectively in the international hospitality market (IBISWorld, 2017). Many

Asian hotel companies started and expanded through market from receiving the benefit word of mount recommendations. Some chains use celebrity endorsements who regularly stay at the hotels and are true fans to be an influencer or credibility factor that shift consumer’s acceptance the brand in the market. The goal of this strategy is to create and maintain a lifetime association that brings value. The hotel`s benefits from this relationship are the expectation that the guest will return, that he/she will spread a positive word of mouth (Oh & Pizam, 2009, p. 118-120). The concept of customer delight are prioritized and serve as a goal –to delight their guests.

Asian hotels companies understand that the only way to keep their guests and make them come back again is by making the guests leave more than just satisfied.

Customers ‘delightful experiences ultimately influence an organization’s overall success

(Finn, 2005). When customers have delightful experiences, compared to when they are merely satisfied, their loyalty is enhanced (Barnes, Beauchamp, & Webster, 2010; Finn,

2012). Asian hotels strive to achieve this goal through continues effort to understand their guests and their needs, through responding to their requirements and requests each and every day (Lee & Shea, 2015).

Lastly, therefore working together as colleagues is the communication platform

Asian hotels used to inspire, instruct and guide behavior of all its employees and bring

best services to the customer. They have generally succeeded to incorporate their local

cultures to create unique brand appeal. Asian cultures exhibit more hospitable characteristics and graciousness (Wan and Chon, 2010) as opposed to Western cultures

with more monotheistic faiths that value individualism and competitiveness (Hofstede et

al., 2010). This affects the way that different cultures behave at work and how they deliver service. Management style, consumer behavior and communication are highly affected by culture. Asian hotel companies operating in non-Asian destinations must

learn how to navigate and manage within different cultural backgrounds to achieve

desired service delivery.

Measuring performance is one way to present management capability (Halachmi,

2005). Much more than a measuring, it of great important to know what critical success

factors that organization operates presently and where it is heading to (Armstrong and

Baron, 2011). At the same time, evaluating overall guest’s experience about hotel

services will give the clear understanding of what make Asian brands hotels successful in

the U.S. market. The North America Hotel Guest Satisfaction Index Study and Awards

winning received from American institutes will be used in this study to validate the stand

out in customer perception of the Asian brand hotels.

Table 4:

Asian hotel companies awards in USA

Awards Asian Hotels Brand Rank Year Awards By

Best hotel in the world Langham Place, New York 2 2017 Condé Nast Traveler Best hotel in the world Mandarin Oriental, Boston 6 2017 Condé Nast Traveler Best Hotel in the United States The Peninsula Beverly Hills 1 2013-2017 Global Traveler Best Hotel in the United States The Langham, Chicago 2 2017 Global Traveler Best Hotel in the United States The Peninsula Chicago 3 2017 Global Traveler Best Hotel in the United States Mandarin Oriental, New York 6 2017 Global Traveler Best International Hotel Chain The Peninsula Hotels 3 2017 Global Traveler Best Corporate Social Responsibility Program and Shanri-La Hotels and Resorts 1 2017 Business Travel Awards Best Upscale Hotel Brand Most Innovative Guest Experience The Peninsula Beverly Hills Best of the best 2017 Virtuoso Top 10 U.S. Hotels for Business Travelers The Peninsula Beverly Hills 1 2017 Condé Nast Traveler Best Hotel Club Floor The Peninsula Hotels 4 2017 Global Traveler Best Hotel Website Mandarin Oriental 8 2017 Global Traveler Best Hotel Rewards Program in the World Shangri-La Hotels and Resorts 6 2017 Global Traveler Golden Circle Best Hotel Rewards Program in the World Fairmont President’s Club 8 2017 Global Traveler Best Frequent-Stay Customer Service, Americas Fairmont President’s Club 10 2017 Global Traveler Best Hotel App Fairmont Hotels & Resorts 8 2017 New York City Top 50 Langham Place, New York, 1 2017 Global Traveler Fifth Avenue Condé Nast Traveler New York City Top 50 Mandarin Oriental, New York 37 2017 Los Angeles Top 25 The Langham Huntington 15 2017 Condé Nast Traveler Las Vegas Top 12 Mandarin Oriental, Las Vegas 3 2017 Condé Nast Traveler San Francisco Top 20 Hotel Nikko San Francisco 6 2017 Condé Nast Traveler North America Hotel Guest Satisfaction Index Fairmont Hotels & Resorts 7 2017 Condé Nast Traveler North America Hotel Guest Satisfaction Index Mandarin Oriental Included in this segment 2017 J.D. Power but not ranked due to small sample size

Note: Data from Conde Nast Traveler (2017), J.D. Power (2017) and Global Traveler (2017).

In 2017, Asian hotels brands are rank on the top 10 best hotel in the world, not one but two Hong Kong-based hotel companies appeared in the top ten list. Langham

Place, New York and Mandarin Oriental, Boston took up the second and sixth positions, respectively. This was from the leading source of news and analysis for the global hotel industry as well as for use by academic researchers (F. L., 2000). Condé Nast Traveler send out survey cards and received 30,000 vote responses from reader break down in each categories. As well as the J.D. Power 2017 North America Hotel Guest Satisfaction

Index study based on responses gathered between June 2016 and May 2017 from more than 63,000 guests in Canada and the United States. This included guests who stayed at a hotel in North America between May 2016 and May 2017. Fairmont Hotels & Resorts and Mandarin Oriental from Asian are top received high scores of North America Hotel

Guest Satisfaction Index 2017. Also, according to Global Traveler rating Peninsula at

Beverly Hills to be number one in best hotel in the United States for 5 consecutive years,

Langham at Chicago got the second and Peninsula at Chicago got the third. The various success factors combines with wonderful guest experience proven by achievement rewards are complete packages that bring Asian hotels expansion in US successful. Next section will provided a few key insights into success strategy that Asian hotel companies used in US market.

Chapter 5: Discussion

As mentioned in previous chapter, a prime location where potential customer are

is the key consideration for Asian hotels companies expanding overseas.

Table 5:

Domestic Trips by US residents and inbound trips by non-US residents

Source: IBISWorld(2017)

According to IBISWorld (2017) industry report “Boutique Hotel in the US”,

domestic trips by United States residents are expected to increase in 2017, representing a

potential opportunity for the industry. Also, inbound trips by non-US residents is

expected to increase over 2017 and demand for hotels increase. International visitors, especially Asian travelers, are more likely to use familiar hotel accommodations that give them sense of home when travel (Pine et al., 2000).

In a market where competition implies many, Asian hotel companies should focus on innovative technology as adapt strategy to the changing needs of customers. In 2015,

Shangri-La announced the integration of virtual reality (VR) experiences. VR enables travel advisors, meeting planners and potential clients to virtually experience Shangri-

La’s global destinations instantaneously. In 2017, Mandarin Oriental, Las Vegas introduced the robot “Pepper” as ambassador to assistance and give information in an exciting and innovative way for guests. Brand strategies that are envisioned with innovation as one of the core elements affords the brand a long lasting competitive advantage that would even withstand system level shocks such as recession (Martin,

2017).

In terms of customer satisfaction, Asian hotel brands have made inroad to the U.S. market by building positive emotion association between guests and brand by their seeing, sounding, touching, smelling and testing or otherwise known as “Sensory branding” (DeLisle, 2012). Lindstrom (2005) mentioned that if the consumer’s senses are more involved, they may strongly connect with the brand which may imply that it can be increased willingness to pay more. Consequently, it also creates the difference from the competitor and additionally brings the loyalty of a customer to the firm in the end

(Davies et al., 20003). Following these examples, many Asian hotels in the U.S. are using Spas as sensory brand marketing. The Peninsula Spa is voted to be the number one spa in the USA by readers of Conde Nast Traveller magazine in 2012 (PR, 2012). The

Peninsula spa relaxation rooms have integrating wellness of Peninsula's scent: ESPA's

Energizing candle, with notes of peppermint, eucalyptus, and lime into the overall guest experience (Mikesell, H,, 2016). On the other hand, the Chuan Spa, featuring treatments

inspired by traditional Chinese medicine and modern innovation at the Langham

Huntington, California is voted the number one favorite multiple location spa in 2015 by

the American spa professional’s choice award 2015 (Mikesell, H., 2015). Next, the body

exfoliated using detoxifying body program at Mandarin Oriental, New York, Boston and

Miami are famous and unique in services (Nied, J., 2015). Providing these services to consumers serves as a highly intelligent way of attracting customers while keeping in mind the brand’s commitment to innovation and luxury service. As mentioned above, today’s hotel is not only selling a place to sleep but selling an experience to create a lasting relationships with the customer. According to Martin, the author of Brand Sense and Cornell Hospitality Quarterly, studies support that the first impression is when a

guest arrives in the hall room, hotel decoration, their food, or the most obvious

enrichments of the spa (Landry, 2005; Rodwell, 2008).

Another approach for the quality of products and services in the hospitality

industry is the standardization that adds value to the chain. The firms with more

standardized outputs are more likely to globalize (Peggy A. Cloninger & Ziad Swaidan,

2007). Over time, Asian hotel brands represent the highest standard of products and

services that remain determinable. For example, the Mandarin Oriental have bedside

reading programs that offers a couple complimentary books to guests in their rooms and

keeps tracks of which books they have to read so if they return to the hotel, they will

receive a new set of related towards the books guests read (Urell, C., 2005). Mandarin

Oriental also has data-rich profiles for individual guests by identifying their favorite

suites at favorite properties, in-room newspapers, bed type, and favorite food during of

stay. These features can lead a guest feel more special and more at home. In relation to

this, the Shangri-La hotel developed a unique customer service culture by distributing

VIP or loyal customer pictures so hotel staff could refer to them by name. This helped to reinforce and build relationship. A Chinese green tea service, which will be serve right to regular customers or first time customers once they entered their room (Chon, K., 2015).

The Peninsula hotel also accommodates in a unique way by implementing a policy try never to say no to any guest. The iconic Peninsula Pageboys are well trained to respond to the guests’ needs. On the technological side, a touch bedside panel for guests to control the TV, lighting, and thermostat, order room service, and send concierge requests make the hotel popular among business travelers.

In 2015, The Peninsula Hotels, Shangri-La Hotels & Resorts and Mandarin

Oriental Hotel Group were voted to be top 5 overall hotel brands for business and best 3 customer service hotels according to the Travel & Leisure magazine. The same year, the

Fairmont President’s Club was voted to be number one in the top 3 loyalty program (The

Best in Business Travel, 2015). These awards support that Asian hotel products and services in USA may be seen as excellent in the consumer’s mind.

It is widely accepted that the most important thing for the organization is the people supporting the organization’s goals. Most of the Asian hotels take this as the policy to treat employees’ right for the best performance. For example, Langham

Huntington creates a fair working environment with a lot of activity all year round to help workers feel like coming to socialize with friends everyday (Li, 2007). It is also blending their brand with the local community in order to create a sustainable corporate culture

(Management news, 2010). The Peninsula prefers not to use celebrities as the endorsement for the company, but rather use the iconic pageboy, who never says no to

the guest to be an endowment of Peninsula in the campaign “Portraits of Peninsula”, which highly incorporates both the customer and worker (Peninsula Hotels, 2004). The application of the principle of “treat all people with the same level of respect” is highly seen in Asian hotel companies. Shangri-La hotel is using customer relationship management (CRM) as part of corporate culture to interact with both customers and company workers (Heffernan and Droulers, 2007). As Riddle (1992) states, the Asian service styles are more people oriented while the West are focused on efficiency of service delivery and time saving. The Asian hotel brands that operate in U.S. are carrying out a significant examination of how different cultures can be established with the highest perception of brand in the U.S market (Martin Roll, 2010).

Chapter 6: Conclusion and Implication

Researchers acknowledge that increasing competitiveness in the business world

has focused enterprises to seek new ways to increase customer satisfaction in order to

create a sustainable competitive advantage (Berman, 2005). For the luxury hotel and

upper-upscale hotel segment, unique quality orientated service could well hold the key to

maintaining a competitive advantage over rivaling companies. A strategic competitive

advantage of Asian hotels in the United States; the blending of Asian hospitality in

America location. The organizational routines and activities associated with Asian

hospitality represent strategic capability as the service is valued by customers, superior to

competitors, difficult to replicate and specific to organization (Collis & Montgomery,

1995).

Conclusion

In summary, Asian hotel companies are known for their excellent consumer

services from the heart (Wan and Chon, 2010; Ahn et al., 2013). Asian hotel brands in the U.S. have a healthy financial and continuous good performance overtime. However, past research evidence suggests that financial measures are not enough to explain an organizations success. According to Kaplan and Norton (1992), financial measures need to be complemented with nonfinancial performance measures (Paul, 1999; Phillips,

2007). The success factors of Asian hotels represent the following prime location for

convenience to customers, brands that have local appearance to give the sense of location, authentic Asian service experiences that none replaceable, in depth marketing research and understanding where they heading to, excellent human resources with many years of experience, the innovative technology that is ahead of what customer are expecting celebrity endowment as powerful word of mouth, customer delight and lastly, organizational culture that keep all employees together as a family, and customer perception through unique culture orientated services that combine warm service with cultural highlights. All of these integrate with customer satisfaction in relation to product or service, to produce product quality.

The conclusions and implications of this study can assist hoteliers in the United

States to learn and apply competitive advantage to provide a great experience for customers. For Asian hotel companies: Asian hotel companies that have successfully expanded overseas should bear in mind their past success factors and ensure they continue to leverage those advantages even as they evolve new competencies. For non-

Asian hotel companies: American brands and European brands that entered or already operate in the US market, it is good to know the new players, protect their territory, and raise their relevance to appeal to new travel segments towards their existing customers against the new competition.

Limitations and future work

There has been little previous literature on the strategic development choices of

Asian hotel management companies. This paper thus contributes by examining a number

of data from a company to identify hurdles and provide recommendations for Asian hotel

companies that are wishing to expand internationally. However, there are limitations with

this review. First, the paper focuses on only the top 7 Asian hotel companies in the hotel

list. It does not cover other Asian companies of smaller scale that may have had

successful global expansion records. Second, this review is not able to provide insight on

what these companies are currently planning and where they are heading in the near

future. Lastly, this study also has not examined the modes of international brand entry

such as management versus franchising of third-party-owned properties. Currently, management contracts are still the most common method of participation for Asian brands into the international arena. It would benefit the hotel industry from learning

more about the management style, practices and key success factors of Asian-based hotel groups.

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