overview of jw marriott hanoi

NATIONAL ECONOMICS UNIVERSIITY INTERNATIONAL SCHOOL OF MANAGEMENT AND ECONOMICS

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INDIVIDUAL ASSIGNMENT New Venture Creation

Table of Contents

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Figure 2: Asia-Pacific Hotel Performance & Key Macroeconomic Indicators Forecast

Introduction

1 Problem statement

Market fluctuations present an ongoing challenge as well as a chance for innovation and adaptability in the fast-paced world of the hospitality business These oscillations cover a wide range of factors, including seasonal demand variations, economic shifts, technological upheavals, and world events It is crucial for hospitality businesses to not only adapt to these changes but also find methods that will enable them to prosper in this always changing environment

The tourism and hospitality sector are an important pillar of the global economy, making up a powerful force that generates 10% of the global GDP and employs more than 320 million people worldwide (Statista, 2023a) Due to its sophisticated web of links with various other sectors, this industry's substantial impact has a significant ripple effect much beyond its immediate sphere of influence (Conte, 2021) The tourism and hospitality sector operates as a microcosm of globalization due to its extensive international reach and the inherent connections it shares with various industries resulting from related industries, political decisions, and cultural systems across the global landscape (Sigala, 2020) This connection highlights how vulnerable the sector is to the fast-spreading effects of regional health, pandemic, economic, and social crises

Several pivotal events have left an indelible mark on society, underscoring the pervasive impact of unforeseen disruptions The 9/11 attacks in 2001 not only changed the world's security environment, but also heralded a period of stricter international travel laws and increased security procedures (Josephs, 2021) In addition, the 2008 global economic crisis sent shockwaves across the financial markets, starting a chain reaction that resulted in job losses, foreclosures, and global economic downturns (Kubickova, Kirimhan and Li, 2019) Expansions of contagious diseases have also had an impact far beyond their original locations The SARS outbreak in 2003 led to travel bans and widespread panic, which had a detrimental impact on hospitality and tourism (Ivanov ef al., 2022) Similar public health concerns were raised by the swine flu pandemic in 2009, the Ebola outbreak in 2014, and the Middle East respiratory syndrome (MERS) outbreak in 2015, leading to international collaboration and travel warnings.

Collectively, these incidents highlight how vulnerable our linked world is to crises that cut over national boundaries, highlighting the crucial need for preparedness and international cooperation in limiting their profound social effects The tourism and hospitality sector are profoundly impacted by these crises as they inject a high degree of uncertainty, impose travel restrictions, introduce more stringent economic considerations, and influence the factors that guide tourists’ choices to embark on journeys and destinations’ capacity to welcome them (Géssling, Scott and Hall, 2020) For instance, according to a 2005 report from The World Tourism Organization (UNWTO), the 2003 outbreak of severe acute respiratory syndrome (SARS) resulted in a decline in international tourism of 12 million people, or 1.5%, across the board The effect was even more noticeable in Southeast Asia, where travel and tourism fell by over 14% (UNWTO, 2005) In particular, a severe 50% decrease in international tourist arrivals to many sites was observed over two consecutive months, April, and May (Statista, 2023b) The Asia and Pacific region's tourist industry, which had been expanding steadily, had a dramatic decline with a notable drop of 9.0% (Goretti and Leigh, 2021) Furthermore, the UNWTO reported in 2005 that tourism overall in Southeast Asia had decreased significantly by 13.9%

There is no denying that COVID-19 has had a tremendous impact on the global tourist and hospitality sectors, and this impact has also had an enormous impact on Vietnam (GSO, 2021a) (See figure 1) CBRE data show that the COVID-19 epidemic and the ensuing lockdowns and travel bans had a lasting impact on Vietnam's tourism industry in 2020 With foreign arrivals and domestic travel excursions falling by a startling 56% and 50%, respectively, when compared to the previous year, this formerly booming industry experienced a significant setback in the first half of the year (CBRE,

2022),

The Vietnamese government suspended all foreign travel to the nation before the end of March 2020 to stop the spread of COVID-19 (Tran e¢ al., 2020) When compared to the same period the year before, this proactive effort caused a spectacular decline of 99% in foreign arrivals during the second quarter of that year (GSO, 2021b) Average Revenue per Available Room (RevPAR) fell significantly in Hanoi during the first half of 2020 by 56% year over year, while in Ho Chi Minh City (HCMC), the loss was even

more dramatic, with a startling 64% decline in RevPAR over the same period (CBRE, 2022b) During this time, RevPAR in Vietnam decreased by a comparable 55% year- over-year When social isolation was enforced countrywide in April, occupancy rates fell to their lowest point As local visitors resumed travel in May and June, occupancy rates gradually increased

However, it is important to note that the markets for four and five-star hotels in HCMC and Hanoi, which customarily rely on foreign visitors, had only modest increases in occupancy rates, with a corresponding monthly increase of 1 to 1.5 percentage points (VietnamPlus, 2022) The prospects for the recovery of Vietnam's tourism and hospitality industry in 2021 and beyond are contingent on the global containment of the pandemic, which remains an unpredictable variable (Constantin, Francois and Le, 2021) Due to the Vietnamese government's successful pandemic control, the outlook is fortunately still positive Vietnam's tourism industry may potentially recover to pre-crisis levels by the year 2024, as stated by research done by McKinsey in 2020, using a "zero-case-first" strategy, the country's strong local economy, and proactive government actions The situation may, however, continue to change, and the timing of the recovery may depend on current events and general circumstances

Experiencing market turbulence, most recently caused by the COVID-19 epidemic In response to the pandemic's difficulties, Marriott International has put in place a number of actions designed to lessen its effects These actions include lowering executive staff salaries, putting temporary employees on leave, stopping brand standard audits, and delaying planned renovations by a year While upholding a firm commitment to pricing control, the corporation has also taken initiatives to reduce marketing expenses and other financial responsibilities (Wood, 2020).

COVID-19 had an outsize impact on Vietnam’s tourism sector

Figure 1; Covid-19's impact on Vietnam's tourism sector[ CITATION Con21 \i 1033 ]

This report will explore what factors, events and impacts of market fluctuation have caused in the Vietnamese hospitality industry with a focus on the case study of the JW Marriott Hanoi by using SWOT, Porter 5 forces, and Pestel, offering valuable insights and recommendations to navigate these challenges effectively

In Vietnam, JW Marriott proudly operates two distinguished hotels: JW Marriott Hanoi and JW Marriott Emerald Bay Resort & Spa JW Marriott Hanoi, the subject of our focus, is a prestigious 5-star hotel situated on Do Duc Duc Street, Me Tri Ward, Nam Tu Liem District, Hanoi Nestled within the serene National Convention Center campus, JW Marriott Hanoi is the preferred destination for discerning leisure and business travellers exploring the vibrant city of Hanoi (Hoang Huong, 2017) This iconic hotel, completed and inaugurated on October 16, 2013, represents a milestone as the first 5-star hotel project initiated and constructed by Bitexco Group and expertly managed by the esteemed Marriott International Group An impressive investment totalling $250 million has gone into crafting this masterpiece (Bitexco, no date).

Spanning an impressive 75,000 square meters, JW Marriott Hanoi rises gracefully with 9 floors, housing 450 luxurious guest rooms Beyond the opulent accommodations, the hotel offers a collection of 7 distinct restaurants and bars, complemented by essential facilities like well-appointed meeting rooms, spacious conference halls, a serene spa, and an inviting swimming pool (Chau, 2021) JW Marriott Hanoi has garnered numerous prestigious awards, affirming its commitment to professionalism and unparalleled service (Vietnamnet, 2020) Recent accolades include recognition as one of the Top 10 5-star hotels by the Vietnam National Administration of Tourism in 2019, the esteemed Luxury Lifestyle Award for the Most Luxurious Hotel in Vietnam in 2019, and the title of Top Hotel in Vietnam by VCCI in 2020 In 2021, JW Marriott Hanoi continued to shine with honours such as a coveted spot among the Top 25 Hotels in Asia by Travelers’ Choice Awards from TripAdvisor, along with the distinguished title of No | Hotel in Vietnam, further solidifying its status as an emblem of luxury and hospitality excellence

Background and analysis

The hotel industry has grown greatly in recent years; therefore, it is expected that other firms will enter the market This industry is significantly impacted by the dynamics of travel and tourism, which presents exciting potential for inexperienced players The hotel business has a bright future ahead of it despite the global economic slump, with more expansion forecast (CBRE, 2023) (See figure 2) There is an increasing likelihood that new competitors will enter the Asia-Pacific market as visitor numbers increase and new travel routes open (Beattie, 2022) These entrants might become modest, independent business owners, but it is unclear how successful they will be The premium segment, where the greatest profitability often exists, requires a big initial capital expenditure, which frequently serves as a major barrier to entry for inexperienced players (Hofstrand, 2018)

In stark contrast, the Marriott International Group holds a commanding presence in the lodging sector thanks to its ownership of an astonishing array of twenty-nine unique brands that offer a wide range of services Smaller businesses find it extremely difficult to

compete with such a massive corporation, unless they can provide great services or have incredibly uncommon access to significant investment resources As a result, the surviving big businesses are where the Marriott International Group and other significant competitors in the lodging industry face their toughest competition Wyndham Destinations, Intercontinental Hotels, Hilton Worldwide, Hyatt Hotels, Four Seasons Hotels and Resorts, and Millenntum & Copthorne are just a few of the major competitors in this long-running competition As shown by its financial performance, Marriott International has regularly outperformed these rivals over the years The astounding total revenue recorded by Marriott International in 2022 was $20.77 billion, far above the maximum revenue of its closest rival, which was $8.9 billion (Capuano, 2023)

Source: Smith Travel Research, Oxford Economics, International Air Transport Association

Figure 2: Asia-Pacific Hotel Performance & Key Macroeconomic Indicators Forecast [ CITATION CBR23 \I 1033 ]

A buyer is characterized by Collins' dictionary as a person who is currently using or intends to use a company's services One of the elements of Porter's Five Forces Industry Analysis is the notion of Buyer's Bargaining Power, which refers to the influence that customers can exert over firms to persuade them to offer better products, better customer

service, or lower pricing (Porter, 1980) A thorough analysis based on several crucial elements is required to determine the level of customer power Although the hotel business has a sizable consumer base, historically, before the start of the COVID-19 epidemic, buyer power might be said to be quite low According to the World Tourism Organization (UNWTO), around 1.5 billion foreign tourists will go abroad in 2019, representing a 3.8% rise from the previous year and outpacing the global economic growth (+3%) This was the tenth year in a row that growth occurred It is interesting to note that Hanoi has a small selection of high-quality hotels or resorts despite having a sizable consumer base As a result, the JW Marriott became one of the few choices if one wanted a posh or high-class experience while in Hanoi, especially because it had just received the coveted five-star rating from Forbes Travel Guide and The Guide Awards (Xuan Mai, 2014) As a result, customers had little influence in this situation

However, the COVID-19 pandemic's appearance significantly changed the situation, turning low buyer power into high buyer power This change was principally brought on by a sharp decline in the number of customers Compared to the same period last year, there were 61.6% fewer foreign tourists to Vietnam during the first seven months of 2020 (Truc Anh, 2020) Increased promotions and discounts were needed by businesses like JW Marriott Hanoi to draw clients more regularly because of this sharp reduction As a result, the previously oligopolistic market structure changed into one focused on the client, giving them more power Buyer power is modest in the context of the entire industry, with innovation and customer retention taking the lead Leading industry players, like the Marriott International Group, stress customer-centric tactics and offer a range of services, with a post-COVID focus on boosting client loyalty through customized deals (Solis, 2020) In conclusion, the dynamics of the JW Marriott's customer base have undergone considerable changes, going from low levels prior to COVID-19 to elevated levels throughout the pandemic Buyer power in the industry is still moderate, which is supported by attempts to increase customer loyalty and innovate

We discover a complex environment while assessing the supplier's negotiating position at JW Marriott The supplier power in this sector can be characterized as moderate and is influenced by unique factors that give suppliers benefits There are many

different providers in this industry, including property owners, developers, real estate companies, architects, and marketing firms Suppliers and partners within the Marriott International Group have a significant impact on the company's sales and profitability The approach taken by the organization with suppliers entails careful selection and ongoing relationships Large companies like Marriott choose reliable vendors with a reputation for high quality over smaller, less reliable alternatives that are motivated by price The trust and dependability that support these partnerships are shown in the enduring connections that have been built over many years with suppliers and partners Although these partners offer Marriott favorable rates, quality control and a consistent presence in the industry remain crucial Because of this, the Marriott International Group's perspective on supplier bargaining leverage favors stability and dependability over pure cost competition

Although there may be a little concern about customers switching to alternatives due to prospective substitutes that could emerge outside the hotel industry's established bounds While there are many alternatives to hotels for lodging, including RVs, camping, and even staying with friends and family, these options rarely provide the same level of convenience In addition to offering a place to stay, hotels also offer a variety of other services like on-site dining options and spas While alternatives do present some competition, they are nothing compared to a business with a strong brand presence and a track record of happy clients

Even though there are other ways to enjoy the amenities that JW Marriott offers, such as hotels that offer 5-star quality rooms at a lower price point, according to Traveloka, and despite the abundance of highly regarded dining and entertainment options like Su Buffet, Hai Cang restaurant, Chen by NamChen, and The Rooftop, El Gaucho the overall threat remains low to medium This is partly attributable to JW Marriott's 39-year history of providing top-notch, distinctive services, a heritage that cannot be readily duplicated Few locations can match the extensive range of services provided at a single facility, thus establishing JW Marriott's uniqueness in the industry

Competitive rivalry, a crucial indicator of the competitive environment, depends on tactical choices that can either reduce or increase profitability These strategies include price reductions, increased marketing spending, and investments in initiatives to expand and improve services and products However, it is important to keep in mind that Hanoi only has 15 5-star hotels and resorts, which is a small amount As a result, the effect of current rivals is still moderate to low Additionally, the distinctive and well-placed offers of businesses like JW Marriott further shield them from direct competition in the luxury hospitality sector, defining them as unique entities in the sector

Marriott International Group keeps a close eye on factors that have a significant impact on the political sphere These elements include the threat of terrorism, the condition of world politics, and simmering political unrest in enticing tourist hotspots Terrorism tops the list of these worries since it seriously jeopardizes the company's operations (Schmude, Karl and Weber, 2020) Terrorist attacks or armed conflicts can cause air traffic to be disrupted, which makes potential visitors afraid and makes them decide against visiting these places (Musavengane and Zhou, 2021) Events like the downing of Malaysian Flight MH17 in Ukraine and the horrific 9/11 tragedy in the United States, both of which continue to throw a lingering shadow over visitors! willingness to move freely, serve as a striking demonstration of this anxiety

Political influences have recently made a significant mark on Vietnam's thriving hospitality sector The ongoing territorial conflicts in the East Sea, also known as the South China Sea, involving Vietnam and surrounding countries, most notably China, stand out as an unusual event These ongoing conflicts have caused periodic surges in political tension, which have had a noticeable impact on Vietnam's tourist and hotel industries One of these effects is the fluctuation in visitor numbers, especially from China, because of rising and falling diplomatic tensions (CFR, 2023) The stability and growth of Vietnam's hospitality industry have been severely hampered by these swings This ongoing story highlights the political developments in the South China Sea as being both immediately relevant and still having a lasting influence on Vietnam's hotel sector.

The industry's capability for adaptability and resilience remains crucial in ensuring its continued success as it navigates these complexities

With an annual GDP growth rate of 7.5% in 2022, the Vietnamese economy had impressive performance Vietnam's GDP per capita increased to $4,164 as a result, placing it fifth in the ASEAN area and 38th out of 157 nations (Worldbank, 2022) Despite the country's relatively low cost of living, which encourages people to seek options for savings and investments outside of their principal commercial operations, Vietnam's per capita GDP continues to expand A considerable link between GDP and the hotel sector may be seen throughout history Since the 1920s (and its precursor, gross national product), there has been a persistent and distinct association between the demand for hotel accommodations and the US GDP As of right now, the ratio between them is 1:1 and 1:4 (Zhang and Lu, 2022)

The hotel industry is significantly impacted by changes in GDP, particularly in Vietnam, where hotels are still seen as a component of the entertainment industry rather than a top priority for residents to spend their money on As a result, when people do not have enough money to cover their basic needs, they are less inclined to engage in leisure activities like staying at five-star hotels like the JW Marriott Many Vietnamese may experience decreased income, decreased customer demand, and subsequently decreased hotel bookings and profitability in the recovery after the COVID-19 pandemic context

The unit has developed a pricing management strategy for 2022, aligning with the National Assembly's target to keep inflation below 4% (VNA, 2022) The Market Control Department intends to work closely with other government agencies in the upcoming months due to the unpredictability of some commodity prices in 2022 In order to respond to changes in demand, they will put in place flexible management, monitoring, and price stability systems The overall goal is to keep inflation within the designated target range They are developing a pricing plan for necessary commodities and public services at the same time Several experts emphasize potential inflationary pressures for