Is Asian Hospitality Comparative in U.S. Market?
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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 In Hospitality Management By 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 ii 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. iv 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 v 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. vi Keywords Competitiveness, Asia, Strategic choices, Hotel, International hotels, Internationalization strategy, International expansion, Asian hotel management companies. Paper type General review vii 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 ix 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 x 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