MBA462M Fundamentals of Services Management

CONTINUOUS INTERNAL ASSESSMENT - 1

7P mapping for Hongkong & Shanghai

Submitted by,

Brunda Chavan 2027555

J Narendhar 2027909
Koushik K 2027910
Aromal S 2027917
MVN Sai Jithin 2027929

MBA PROGRAMME
SCHOOL OF BUSINESS AND MANAGEMENT
CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE
JULY 2021
 TABLE OF CONTENT

Sl. No Particulars Page No

1 About the Organization
- Introduction
- Evolution 1

- Services offered
2 7 P’s of Marketing Mix 7
3 Failures/challenges faced by the company 18
4 Strategies for Improvement 19
5 References 21
THE HONGKONG AND SHANGHAI HOTELS LIMITED
HSH (Hong Kong and Shanghai Hotels) is a luxury hotel and real estate company founded in 1866
and traded on the Hong Kong Stock Exchange (00045). Under the Peninsula name, it owns and
runs some of the world's most prestigious hotel establishments. Peninsula Hotels now operates 10
hotels throughout Asia, the United States, and Europe, with three more under construction in
London, Istanbul, and Yangon. The company possesses a HK$45 billion (US$5.8 billion) portfolio
of assets, which includes a small number of ultra-luxury hotels, critical real estate assets, and
tourism assets, including The Peak Tram, one of Hong Kong's most popular tourist attractions.
HSH businesses are grouped under three divisions: hotels, commercial properties and clubs and
services.

EVOLUTION OF THE HONGKONG AND SHANGHAI HOTELS LIMITED

HSH was one of the first companies to be listed on the Hong Kong Stock Exchange and is now
the oldest registered company on the Hong Kong Firms Registry and one of the world's oldest
hotel companies, having been founded on March 2, 1866 as The Hongkong Hotel Company,
Limited. The fascinating tale of HSH has been inextricably linked to its birthplace, Hong Kong,
for over a century and a half.

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While developing to meet changing times at home and abroad, HSH has never lost sight of its
history or tradition, and it continues to strive to duplicate the service and style standards that have
won it the title of "The Far East's Leading Hotel Company." HSH's strategy is still based on the
principle of "Tradition well served."

The HSH legacy now includes ten Peninsula Hotels throughout the world, as well as The Peak
Tram, The Peak Tower, and The Repulse Bay Complex in Hong Kong, totaling HK$45 billion.
The Hongkong Hotel Company, Limited, owner of the Hong Kong Hotel (opened in 1868), was
formed in 1866 and was one of the first firms in Hong Kong to be listed on the Hong Kong Stock
Exchange. HSH, CLP Holdings, and the Kadoorie family established the Hong Kong Heritage
Project in 2007 to archive historical materials. The archive, which is open to the public, contains
audio, video, and documentary documentation of HSH's operations throughout the nineteenth and
twentieth centuries.

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HOTELS: FROM HONG KONG TO THE WORLD

Asia Europe USA

1. ASIA REGION

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2. EUROPE REGION

3. USA REGION

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SERVICES OFFERED

The Peak Tram in Hong Kong, one of the world's

oldest and most famous funicular railroads, rises from
28 metres to 396 metres above sea level over a 1.4-
kilometer route at a gradient of 4 to 27 degrees. Since
1888, the Peak Tram has transported tens of millions
of visitors from around the world and Hong Kong to
the city's most popular attraction. It is the foremost
method for visitors to travel to the Peak and continues
to grow to accommodate increasing tourist numbers

Peninsula Clubs & Consultancy Services provides

private members' clubs and resort enterprises in Asia
with conceptual guidance, planning, project
coordination, and full operational management, as
needed.
Hotel’s administer one of the world's most
prestigious private members' clubs, which are an
integral component of Hong Kong's social and
professional fabric. The Hong Kong Club, The Hong
Kong Club, The Hong Kong Club, The Hong Kong
Club, The Hong Kong Club, The Hong Kong
Bankers Club and The Refinery.

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 This operation, which began at The Peninsula
Boutique at The Peninsula Hong Kong, has grown
quickly in recent years. Peninsula Merchandising
creates and distributes a variety of Peninsula-branded
foods, gifts, and award-winning cookbooks.

The Peninsula Boutique at Hong Kong International

Airport was the first outside of a Peninsula hotel to
open, followed by similar sites in prominent
department stores around mainland China, Japan, and
Taiwan.

Peninsula Merchandising also offers online shopping

in Hong Kong, with more international websites
coming soon.
The gorgeous Carmel Valley in California is home to
Quail Lodge & Golf Club. The Valley is the ideal all-
year getaway due to its mild climate, and the Club offers
a variety of activities to take advantage of the natural
beauty of the environment as well as the attractions of the
Monterey peninsula.
Quail Lodge's hotel section has 93 guestrooms, each with
a private terrace or patio overlooking the Lodge's lakes,
golf course, or gardens. In 2013, the rooms were entirely
renovated.
The annual Quail Motorsports Gathering is held at Quail
Lodge & Golf Club, and it raises money for local and
national charities.

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7 P’S OF MARKETING MIX

Introduction to marketing Mix

A service is something that brings utility or value to the customer in the form of an intangible
product and the managerial discipline that focuses on customers and services is known as service
management. A popular concept in service management that helps in deciding the framework of
marketing strategies from the strategy formulation to implementation phase is the 7p’s of
marketing. The 7p’s are product, price, place, promotion, people, process and physical evidence,
a diagrammatic representation below highlights the factors that need to be taken into consideration
under each of the 7p’s.

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MARKETING MIX - 7P'S MAPPING FOR THE HONG KONG AND SHANGHAI
HOTELS LIMITED

1. Product –

The 7Ps begin with 'product.' This could refer to a physical product, a service, or an experience.
The product should be appropriate for the task at hand, operate well, and deliver exactly what
customers anticipate. So, regardless of the product or service, it's critical that it meets market
demands and meets or meets the Customer's expectations.

Hong Kong and Shanghai Hotels (HSH), Limited is a hotel group's holding company under the
Peninsula brand. HSH owns and runs some of the world's greatest luxury hotels, as well as strategic
real estate and tourism assets, including Hong Kong's famed Peak Tram. Hong Kong and Shanghai
Hotels (HSH) cater to a variety of market sectors through its many brands, which include The
Peninsula Hong Kong, The Peninsula Bangkok, The peninsula Shanghai, The Peninsula
Beijing, The Peninsula Tokyo, The Peninsula Manila, The Peninsula Paris, The Peninsula
New York, The peninsula Chicago, The peninsula Beverly Hills .The organization has
established itself as a brand that provides guests with Asian-style services and hospitality.

Source: Flickr

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HSH owns and operates the Peak Tram, one of Hong Kong's most popular attractions. The Group
also owns and manages Quail Lodge Golf Club in Carmel, California, USA; Peninsula
Merchandising, which operates the Peninsula Boutiques around the world; and Tai Pan Laundry
services in Hong Kong. Under Peninsula Clubs and Consultancy Services, HSH manages the
prestigious Hong Kong Club, The Hong Kong Bankers Club and The Refinery in Hong Kong.

Hong Kong and Shanghai Hotels are an opulent hotel group that offers a renowned and luxury stay
at its resorts and hotels. It provides spacious rooms with a lovely view that are nicely decorated.
Television, Wi-Fi access, an attached bathroom, a telephone, a walk-in closet, and a balcony are
among the amenities available in the rooms. There are many different types of rooms to pick from,
including the Executive Suite, Premier Room, Executive Room, and Deluxe Room. The hotel has
a safe deposit box, parking, non-smoking rooms, a beauty salon, a hair salon, and a clinic, among
other amenities. It features a conference center as well as other business-related facilities such as
a meeting room, courier service, and secretarial service. Courier services, valet and laundry
services, 24-hour room service, expedited check-out, and check-in choices, and a complimentary
shoeshine service are among the hotel's unique features.

Peninsula Merchandising Limited develops and distributes Peninsula-branded merchandise and

operates Peninsula Boutiques in key gateway cities in Asia with the goal of diversifying the brand
and increasing brand recognition in markets where the company does not operate a Peninsula hotel.
A unique facility for physically challenged people, as well as a babysitter and daycare center, is
available at the hotel. The tour desk, automobile rental choices, and airport transfer are among the
company's travel services. A gift shop, shopping arcade, foreign exchange office, and florist are
among the shops on the hotel grounds. In its restaurants and bars, Hong Kong and Shanghai Hotels
and Resorts offer a variety of food options to suit individual tastes.

2. Place –

According to Riaz & Tanveer (n.d.), Place in the 7Ps refers to the product's availability to the
targeted clients. Goi (2011), proposes that a company's location strategy refers to how it will
distribute the product or service it is providing to the end consumer and is considered to be one of

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the most market-oriented Ps with respect to marketing. The distribution process makes goods or
services available to consumers or other businesses who require them. Locations chosen for
distribution must be given the maximum market penetration and should have readily available
amenities such as transportation. The customer's ease of access has always had an impact on a
company's sales. (Khan, 2014)

The Hongkong and Shanghai Hotels Limited, is a globally renowned hotel chain that engages in
the ownership, management, and development of The Peninsula Hotels, as well as a number of
other real estate and tourism assets which includes The Repulse Bay, The Peak Tower and The
Peal Tram, which is considered to be Hong Kong’s most desired tourism attractions.

It was originally established at Hong Kong in the year 1866, but has now managed to expand its
presence throughout Asia, Europe and Northern America. The Hongkong and Shanghai Hotels
Limited owns and operates ten Peninsula hotels, which are located in Hong Kong, Shanghai,
Tokyo, Chicago, Beverly Hills, New York, Paris, Manila, and Bangkok. The principal strategy is
to operate only one Peninsula hotel in each of the major city around the world. These hotels are
considered as ‘trophy assets’ in these cities as these properties are exceptionally rare and are in
high demand by the investors.

The primary function of any hotel industry is to provide services and hospitality to its customers
in order for them to experience a pleasant stay. The Peninsula Hotels offer a sophisticated and
extravagant ambiance to their customers by raising the standards of a conventional hospitality
experience. This hotel shifts its focus on building up a long-term relationship with its loyal clientele
who are willing to pay premium prices for a superior luxury service and product. This is achieved
by offering a high level of personalization services and attention to the minutest of the details.
Currently the Hong Kong and Shanghai Hotel Limited are in the midst of initiating an expansion
programme. With sufficient investments and funds allocated, they are planning to establish three
new Peninsula hotel development projects in London, Istanbul and Yangon.

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3. People –

People are referred to as the service professionals who create and deliver the service. The services
include personal interactions between customers and site staff, and these encounters have a
significant impact on the customer's sense of service quality. Personnel is critical to providing
excellent service to clients. Furthermore, clients frequently associate service characteristics with
the company for which they work. Personnel is also seen as a significant component of a customer-
centric organization and distinguishes factors such as product, services, channel, and image. It is
impossible to achieve a customer-oriented approach if the employees do not cooperate.

The Hongkong and Shanghai hotels, limited divides people into two groups: designated clientele
and service forces. The target guests are mainly from the upper class or those with more financial
means. The hotel caters primarily to tourists and business people. Tourists from other countries
are more ready to stay in a posh and expensive hotel because they are from a higher socioeconomic
category and prefer a more relaxed lifestyle. Apart from tour groups, the man of affairs is another
client required to stay in a five-star hotel because the corporation will cover their expenses.
Concern travelers staying at a five-star hotel will project a positive picture of the firm they
represent.

While members of the service forces are involved in the engagement, The Hongkong and Shanghai
hotels limited hotel must recruit and hire staff who have demonstrated accomplishments and
positive attitudes. Making ability and competence can be linked to skills. Attitudes are the
behaviors that all hotel employees must learn, such as being helpful, antiphonal, and smiling. The
Hongkong and Shanghai hotels limited hotel has provided training programs for all hotel personnel
to improve their skills. Employees can fulfill clients in any situation and return them to their actual
selves thanks to their accomplishments and attitudes.

4. Price –
The pricing should represent the customer's perception of the worth of the product and be in line
with the budget. If the customer thinks the price is too high, it can cause losing a market that's in
it for a bargain; if your price is too low, then you run the risk of losing that all-important profit.

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The Hongkong and shanghai hotels, limited provide wide variety of services in in different
countries providing services like Peninsula Hotels, various Commercial properties, Clubs.
The average room rates are shown in Hong Kong dollar, for peninsula hotels in Hong Kong, others
in Asia, USA, and Europe. The room rate is categorized under 4 quarters of 2019-2020. It can be
analyzed the Covid 19 Pandemic has affected the quoted room rates, as there is a decrease in the
rates for the room.

This decrease in room pricing can be a strategy to overcome the impact caused by the pandemic
and to attract more customers. It can be also analyzed that the Peninsula hotels slightly increasing
its room rates in 2020, as it’s a recovery stage after the pandemic. The pricing comes to normal
strongly in USA and Europe rather than slight Increase in Hong Kong and other Asia.
Due to the Pandemic's impact, the leisure segment is the sole source of recovery, and it may be
further diversified for increased market reach and revenue management.

5. Promotion -

Promotions by a company lead to gaining brand or service recognition. Companies use various
tools such as social media, events, endorsements, merchandising, special offers, campaigns, joint
ventures, etc. These tools add value to the company.

Hongkong and Shanghai Hotels have been a well-known brand. This company is very famous for
the offers they provide their customers. The company believes that the interconnection between
the client and the company is very essential and the marketing of Hongkong and Shanghai hotels
is based on this very same principle.

Following are the ways in which the Hongkong and Shanghai Hotels market their service:

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 1. Special Packages
2. Special offers for accommodation, dining, spa, conferences, etc.
3. Social Events & Campaigns
4. Social media marketing
5. Weddings

Offers for Rooms & Suites:

Dining:

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Spa & Wellness:

Weddings:

Hongkong and Shanghai hotels promotes their service majorly through social media and online
marketing. The company provides their clients with the feedback and review options. Good
reviews would help the company acquire more clients. The company offers their clients with the
convenience of paying less for more benefits. The company offers their customers to experience

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the luxurious stay, various delicacies as special packages offered by the Hongkong and Shanghai
Hotels depending upon the season and requirement of the clients.

6. Process

Hongkong and Shanghai hotels believes in fast processes, from check-ins and addressing
complaints to providing room service, it believes that customer’s time is precious and in this fast-
moving world where people are always running short on time as they need to reach their respective
places quickly. Any hassle or block in the service delivery process will lead to dissatisfaction of
customers which is against the policy and values of the organization. When the room is being
prepared for customer check-in, the house-keeping department make sure that all the room
amenities are provided as per the check list. For e.g., certain room amenities like 3 embroidered
laundry bags, 2 closed slippers with logo, 2 shoe bags, etc. are provided by the hotel. In fact, the
processes are so specifically laid down that hotel staff are even advised on what to say and what
words to use while talking to a customer.

Keeping customers informed, reducing waiting times, and making service providers helpful are
critical issues that the company should consider. This process is one that is usually overlooked by
many companies. Customers ringing phones to the company are an important source of income
rather than having to listen to recorded messages before they go through. The use of online portals
for operational processes also builds a strong backup for managerial purposes at Hongkong and
Shanghai hotels. This hotel has adopted the use of social media such as YouTube, Facebook,
Instagram and Twitter. These social media have been useful in obtaining customer feedbacks. A
number of customers will give up in the process and thus they might shift to other places telling
other customers not to use the products. The hotel also has developed a mobile application for
online booking and reservation system and thus has been able to save on the customer’s time and
money thus achieving greater customer satisfaction.

All operations at Hongkong and Shanghai hotels are clearly defined and communicated to the
employees. They make sure that employees are well trained, and knowledgeable of all processes

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related to operations. All stages of operational processes focus on maintaining a high-quality level
and standard of the products.

The hotel has also defined clear processes for people management through streamlining its human
resource management department. It has defined guidelines regarding recruitment, training,
compensation management, and performance appraisal of employees. All people related processes
are not only communicated to the management and supervisors, but also to employees to create a
sense of transparency, and an environment of trust. Progressive people management systems and
processes have allowed to keep its workforce motivated and happy which reflects in satisfied
customers.

Hongkong and Shanghai hotels also has defined policies and processes for managing and
maintaining quality. All products undergo triple quality checks to ensure that customers receive
the best product. In addition to quality checks at the production and distribution level, the
management has also placed separate quality maintenance and quality check department. The
quality maintenance department has experts who make sure that not only the final product but also
the processes involved in producing the product were infused with quality.

One of the recent challenges faced by the company is new safety guidelines and regulations placed
by different countries. Also, there is an increase in operational cost because of the enhanced safety
measures and precautions. These new rules and guidelines have greatly decreased the service done
to the customers and thereby, customer satisfaction is also decreased. The best strategy to
overcome this challenge is to invest in digital technology to offer extra convenience to its
customers in terms of check in, stay and check out. The app allows visitors to manage their stay
with higher efficiency. For e.g., any complaints or service expected can be done via the mobile
application instead of doing it in person. This helps in checking in, staying and checking out
without meeting any hotel staff which greatly helps in following the new set of rules and
guidelines.

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7. Physical Evidence

The physical evidence is also important in the marketing strategy for Hongkong and Shanghai
hotels as it works towards influencing the consumers in favor of the brand and its offerings.
Shangri-La hotels, their properties, decor etc. are their biggest physical evidence. It refers to
tangibles in intangible delivery. Brochure is the most common physical evidence. In addition to
this, business cards of managers, invoice of payment, interior of the hotel which includes outdoor
swimming pool, salon, clinics, etc. All these things are consistent within the hotel chain but is
heterogenous when it comes to comparing it with its competitors.

The hotel design is also important for Hongkong and Shanghai hotels because it controls the level
and nature of experience and interaction that the customers have with the product and the brand.
The hotel atmosphere makes the customers feel relaxed and comfortable so that they can interact
with, and enjoy product offerings by Hongkong and Shanghai hotels.

Hongkong and Shanghai hotels has a unique style in its decorations which is different from other
players in the industry. Hongkong and Shanghai hotels also has a vibrant touché to its rooms,
which is regularly changed in terms of colors and patterns. The logo for the company is simple,
and recognizable by the consumers easily. The brand logo has also become a symbol of confidence,
ambition, and aspiration for consumers who use products by the hotel. The packaging of the
products is sophisticatedly done and matches the brand image developed and maintained by Hong
Kong and Shanghai hotels.

The website design is simple and easy to use. It has a customer friendly user interface which allows
easy navigation and understanding of its various product offerings. The design patterns, and color
change on the website with changes to the product packaging to match various campaign needs
and sale offerings are designed in the way that will attract more customers.

The most common physical evidence of Hongkong and Shanghai hotels is the brochures which
mostly customers can request at the counter. Business cards of receptionists or managers can be
regarded as physical evidence as it can be used for next visits or recommendations. When
customers made payment of the hotel room, an invoice of payment will be received by customer.

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It belongs to physical evidence as shows that customers are able to enjoy the optimum level of
satisfaction of services.

The major challenge faced by the company in its recent times are its old and outdated rooms, and
outdated fun activities in its certain hotels. The best strategy will be to plan some major renovation
program for certain hotel rooms. For example, when the renovation is fully completed, those
improved design and architecture will give the resort a stronger business platform for the
company’s future growth and well to compete strongly in this competitive marketplace. They
should try to satisfy customers of their specific services provided which can’t be found among
competitors. This will lead to a competitive advantage for them and customers will be looking
forward for new venture and service provided by Hongkong and Shanghai hotels.

REASONS FOR SUCCESS/FAILURE OF 7P MAPPING

The hospitality industry's 7 P service marketing mapping enables us to understand the exact needs
of the intended customers and to service these needs in an appropriate manner. A number of key
points must be addressed in order for hotels' marketing to be successful. These include: what a
company or service industry, such as a hotel, will produce, how much a hotel will charge, how that
particular hotel will deliver its products or services to guests, and how it will inform its customers
about its products and services. A well-thought-out 7P mapping will result in a clear understanding
of these aspects, resulting in fewer discrepancies.

The Hong Kong and Shanghai Hotel Limited decided to expand its lodging network after an
effective 7P mapping allowed it to compete within the industry. It underwent a rapid expansion in
the mid-1980s, constructing numerous lodgings over the next decade, and by the end of 1999, it
was reported that they were operating with 10 hotels throughout the globe. The Hong Kong and
Shanghai Hotel Limited management team decided to expand significantly more forcefully and,
as a result, capitalized on their current success and raised assets during this timeframe for
additional expansion. The hotel representatives make the visitors feel exceptional and important
during their stay at the hotel and focus on the guiding principle put forth by the upper management.

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Key failures of 7P mapping at Hong Kong and Shanghai Hotel Limited are as follows:

 As a result of its focus on servicing Asian markets and incorporating Chinese and Asian service
principles, it lacks a significant number of hotel chains in Europe and Northern America.
 One more problem it faces is that front-line employees are hesitant to make decisions. The
employees must be self-reliant and must have degree of freedom to make situational choices
rather than depending on their immediate superiors.
 HSH is expanding in accordance with its core values (to parts of Europe and Southern Asia).
It is a significant challenge for the company to expand its operations in other territories where
the cultural and social norms being practiced are vastly different.

STRATEGIES FOR IMPROVEMENT OF 7P FOR HONGKONG AND SHANGHAI

HOTELS

The knowledge gained from operating in the Asian market, which has lower labor costs, will allow
it to strategize and implement measures required to reduce overall operating costs while still
providing a favorable and pleasant service to its customers. The Hong Kong and Shanghai Hotel
Limited has strong brand recognition, as well as exceptional and quality service. The brand must
leverage these advantages, as well as its experience catering to a wide variety of customers from
various regions and focus on expanding into Northern America and Europe.

The acquisition of local hotels, as well as the implementation of service and product components
that resonate with the brand HSH will help the brand grow exponentially and at a faster rate.
Because Hong Kong and Shanghai Hotel Limited is expanding based on its core values, it is a
significant challenge for the company to expand beyond its existing territories, where cultures
differ. The 7P analysis needs to be re-evaluated in a way that balances the modern and western
aspects of the brand while still maintaining its fundamental values.

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Value-based pricing Strategy

It is a method of determining hotel tariffs based on a guest's perceived worth of their stay. The
technique differs from the commonly used "cost-plus" and "competitor-based" pricing strategies
in the lodging industry today.

When opposed to hotels that primarily provide commoditized features and services, hotels and
resorts that provide unique or highly desirable features or services, such as Hong Kong Hotels, are
better equipped to take advantage of value-based pricing techniques.

Users can achieve this goal using value-based pricing by combining behavioural analysis and value
engineering, far more powerful and precise than cost justification or investment analysis
methodologies.

Value-based pricing is typically implemented in three steps:

 Customer Driven Value Analysis- The first stage is determining what customers want and
assigning values to their desires. The next stage is to compare how well different hotels
meet the needs of their guests.
 Competitive Value Analysis -The Analytic Hierarchy Process (AHP) evaluated which
hotel qualities were valuable to guests. For each competitive hotel, the approach was also
used to rank the primary features and create a value index.
 Competitive Value Pricing - Pricing techniques that consider both competitive factors and
how much customers value the guest stay experience is being planned.

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REFERENCES

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