ZZZ: Business Consultancy Group Report
Bachelor of International Marketing
BI Norwegian Business School/Kingston University
02.05.2018
Marius Børthus, Joakim, Braastad, Dennis D. Karlsen, Ingrid A. Thingnes, Kristoffer Nerbøvik
This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School has cleared the methods applied, the results
ZZZ: Business Consultancy Group Report
Group 1
Kingston University
BS6704 – International Business Practice
Word Count: 4,769, including in-text referencing
02. May 2018
K1735674 K1735599 K1735578 K1735585 K1735593
Disclaimer Page
This material is based upon student’s work supported by Kingston University. Any opinions, findings, conclusions, or recommendations are those of the authors and do not reflect the views of Kingston University, its employees or its administration.
Contents Page
DISCLAIMER PAGE ... 3
EXECUTIVE SUMMARY ... 6
1 INTRODUCTION TO THE REPORT ... 8
1.1PROJECT OUTLINE ... 8
1.2MAIN OPPORTUNITIES AND CHALLENGES ... 8
1.3KEY PERSONNEL AND CONTACTS ... 8
2 BACKGROUND ... 9
2.1THE CLIENT PROFILE ... 9
2.2INDUSTRY AND INTERNATIONAL BUSINESS ENVIRONMENT ... 9
2.2.1 Main Existing Market ... 10
2.2.2 New Market - Spain ... 10
2.3COMPETITOR ANALYSIS ... 10
2.3.1 Spain-Holiday ... 11
2.3.2 Friendly Rentals ... 12
2.3.3 Airbnb and other disruptors ... 13
2.4SUPPLIER ANALYSIS ... 13
2.4.1 Licences in Barcelona ... 13
2.4.2 Networking with Suppliers ... 15
2.5ORGANISATIONS OBJECTIVES FOR INTERNATIONAL BUSINESS ... 15
2.5.1 Preferred Supplier ... 15
2.5.2 Networking ... 15
2.6KEY OPPORTUNITIES AND CHALLENGES FOR INTERNATIONAL STRATEGY AND INTERNATIONAL BUSINESS ... 15
2.6.1 Opportunities ... 15
2.6.2 Challenges ... 16
3 RESEARCH ... 17
3.1RESEARCH METHODOLOGY ... 17
3.1.1 Secondary Research ... 18
3.1.2 Primary Research ... 18
3.2RESEARCH FINDINGS ... 19
4 CONCLUSION ... 20
4.1RECOMMENDATION ... 20
4.1.1 Barcelona ... 20
4.1.2 San Sebastian ... 21
4.2PRICE ESTIMATES ... 21
4.2.1 Limitations to Our Estimates ... 22
5 LIMITATIONS ... 22
6 REFERENCES ... 23
7 APPENDICES ... 26
7.1PRICE ESTIMATES ... 26
7.2PESTLEANALYSIS ... 26
7.2.1 Political ... 26
7.2.2 Economic ... 26
7.2.3 Social ... 27
7.2.4 Technological ... 27
7.2.5 Legal ... 28
7.2.6 Ecological ... 28
7.3SWOTANALYSIS ... 28
7.3.1 Strengths ... 29
7.3.2 Weaknesses ... 29
7.3.3 Opportunities ... 30
7.3.4 Threats ... 30
7.4ACCOMMODATION SURVEY ... 31
Executive Summary
This report is investigating the opportunities for ZZZ to move into Spain, more specifically Barcelona and San Sebastian. ZZZ will have the opportunity to increase their market share in this region, and make a profit. Existing clients and network can help with an easy entry. When it comes to challenges, it is found that creating a network of suppliers and the licence laws in Spain are the most important.
Looking at the business environment, it is found that Spain has some differences with France, where pre business meeting is more common. Furthermore, some political issues have been found with Catalonia pushing for independence in 2017. The economic growth in Spain is decreasing, however, still growing by 0,7%.
ZZZ´s suppliers will be apartment owners in Spain, where it is found to be a significant supply. The government is trying to control this by requesting licences for renting out apartments. This can be seen as an issue, however, there are about 9.700 licences in Barcelona alone.
Beside existing clients, previous experience in Barcelona is an important opportunity for ZZZ to take an advantage of, together with the fact that competitors are competing by lowering their prices.
Looking at challenges, it is also worth motioning the need to acquire local knowledge and additional employees to handle this market.
In the research conducted, different locations in Spain were considered, mainly with a focus on important events and trade shows. Moving on, enquires by email was sent to different hotels and tourist offices to get a sense of the demand during the events. Online enquires was also conducted.
The result was further elaborated with databases and statistics. To strengthen our arguments and primary research, we created a questionnaire and phone interview, but had no luck in retrieving data from this. Findings from our research revealed that San Sebastian and Barcelona was good alternatives for ZZZ to expand. The Mobile World Congress (MWC) in Barcelona and San Sebastian Film Festival both had over 90% booking rate at hotels, and ZZZ had existing clients at both.
Furthermore, it was found other events in these cities that could be beneficial for the company.
Looking at what presented, the consultants are recommending ZZZ to enter Spain, with a prioritized effort on Barcelona. Both because of a high booking rate, existing clients and previous experience.
San Sebastian could also be a great opportunity for ZZZ, with high booking rates, existing clients and a lower need for resources.
When estimating a profit, we used rates from existing sites, and found prices on a three bedroom during the MWC on £1,050. Adding the 40% raise from ZZZ and comparing with the number of
apartments in Cannes, we think a profit of £142,800 during the MWC is within reach, only
considering the cost of the suppliers. This estimate could change over time, both because the prices change closing in on the congress and that estimating 400 apartments would probably be too high in the short term.
There have been limitations when conducting this report mainly in terms of research. Access to the network of clients and their contact info would help this in some extent. Furthermore, financial limitations prevented the access of data for research. Additionally, some limitations were found in terms of language and time.
1 Introduction to the Report 1.1 Project Outline
This report is created to investigate opportunities for ZZZ Corporate Accommodation to expand into a new market in Spain. Firstly, a background for the report is presented with a brief introduction to the company including a description of their philosophy, facilities, history and staffing situation.
Moving on, the main competitors are presented and elaborated on, with a description on the business environment in Spain. The objectives for ZZZ´s international business is provided, with key opportunities and challenges. Moreover, research is presented with both methodology and findings, and the report is finalised with a recommendation for ZZZ´s entry into Spain and a conclusion on the report.
1.2 Main Opportunities and Challenges
The main opportunities for ZZZ when expanding their business to Spain is to increase their market share in this region and make profits. This will help to generate more than one source of income, and to not be dependent on Cannes alone. Furthermore, it is a good opportunity for ZZZ to use their network and existing clients, and the previous experience from Spain, to expand into a new market.
In terms of challenges, suppliers would be one of the most principal ones. Building a strong and sufficient network in the new market can take time. Furthermore, different laws within this industry needs to be accounted for and can vary from different geographical locations.
1.3 Key Personnel and Contacts
The report is conducted by Joakim Braastad, Ingrid-Alis Thingnes, Kristoffer Nerbøvik, Marius
Børthus and Dennis Dokken Karlsen. The intention of the report is both providing the client company with a record of the project, while fulfilling the requirements of the International Business Practice module at Kingston University. During the process of the project, assistance has been provided by the faculty of Business and Law at Kingston University with Dr. Riccardo Vecchiato and Ilia
Protopapa. Further assistance has been provided by Helen Gavine and Tessa Erasmus from ZZZ Corporate Accommodation.
2 Background 2.1 The Client Profile
ZZZ is a company based in London, which provide accommodations for corporations related to exhibitions and trade shows. The company was founded in 2002 by Helen Gavine (ZZZ, 2018). ZZZ started out by providing accommodations for events in Cannes, e.g. MIPIM. In the very beginning they rented accommodations to people they know, before they got several clients. They have further expanded their business and now provide their service in several other locations, such as Barcelona during the Mobile World Congress (MWC). The company strives to offer a service that exceed the competitors with better quality and service, which can be seen with their meet and greet service, corporate entertainment, local knowledge, and more.
ZZZ consist of a team of 7 employees, that are split between their offices in Richmond, London and other locations where they operate such as Cannes and Barcelona. The team provides different services within the company, and includes finding accommodations, booking and managing tasks in terms of events and details for the clients.
The financial situation for ZZZ is currently good, and rising. The net worth of the company was at
£328,335 in 2017 (Companycheck, 2017), and this is a good rise compared to 2013 when it was below 0.
Table 1 (Companycheck, 2017)
2.2 Industry and International Business Environment
When looking at the industry and international business environment, both the main existing market and the suggested new market have been discussed. Furthermore, a PESTLE analysis (see 7.2 PESTLE Analysis) has been conducted together with a SWOT analysis (see 7.3 SWOT Analysis).
2.2.1 Main Existing Market
ZZZ is based in London, and do a lot of their business from this location. However, the main source of revenue is currently from Cannes, France, which is their most important market. France has experienced a good financial year in 2017, and the economic outlook for the future is bright (FocusEconomics, 2018a). Reduced unemployment is expected, and this will lead to a stronger income growth and private consumption (FocusEconomics, 2018a). In terms of ZZZ, this could mean that people buy more vacation homes, which will mean more potential suppliers. However, ZZZ should not depend on only one source of income, and therefore it is important to look at the environment in Spain as well.
2.2.2 New Market - Spain
There have been a lot of uncertainties in Spain because of political issues, as Catalonia was pushing for independence in the fourth quarter of 2017 (BBC, 2018). The economic growth in this quarter decelerated, however still increasing with 0.7% (FocusEconomics, 2018b). Furthermore, the
economy is expected to remain resilient this year, and economic growth in 2019 is foreseen to be at 2.3% (FocusEconomics, 2018b). When looking at ZZZ´s business, rental law need to be considered in Spain, where landlords need to have a licence to put their apartment up for rent (see 2.4 Supplier Analysis).
Disruptors such as Airbnb (Airbnb, 2018a) is present in Spain as well, although the government have put their effort to control how much impact they have on the local housing market (Emarketer, 2017). However, disruptors are becoming more popular, and according to Emarketer (2017) more than 25% of people older than 10 years in Spain, used sharing economy in 2016.
Furthermore, it is important to keep in mind that clients of ZZZ are often visitors from other countries, which could make local income growth etc. immaterial in this situation. The business environment in Spain is different from what ZZZ is used to, mainly in France. It is more common with pre business chats in Spain, and the communication style is a bit more formal when discussing business (Business insider, 2015).
2.3 Competitor Analysis
The competitor analysis focus on Spain-Holiday and Friendly Rentals, as these two are seen as the strongest competitors to ZZZ in the chosen market. Both are operating in Barcelona and San Sebastian. These two competitors offer high quality service, well-functioning websites and present
themselves as a professional and safe channel for both homeowners and customers. In addition to the main competitors mentioned, there are other disruptors such as Airbnb, HomeAway and Booking.com.
SilverDoor Apartments and Barcelona-Home.com are companies that offer corporate
accommodation, but only in Barcelona. In this analysis, these two will not be in focus compared to the two main competitors.
2.3.1 Spain-Holiday
With main offices in Malaga and 17 employees, the company founded by Claus Sorensen in 2002 is now the fastest growing holiday rental site in Spain. Spain-Holiday have been a market leader in holiday rentals for over 15 years and offer over 75 homes in Barcelona and 7 in San Sebastian, alongside several other properties all over Spain. The company also operates in 13 European
markets and advertise the properties in over 13 different languages. In 2012 they had 6,000 Spanish properties online. In 2018 they offer over 10,000 (Spain-Holiday, 2018a).
The advertising options the homeowners have with Spain-Holiday is either to do Instant Booking or Annual Subscription (Spain-Holiday, 2018b), as provided in Table 2.
Advertising options with Spain-Holiday
Instant Booking Annual Subscription
Company sends you confirmed bookings Homeowner receive enquiries directly from the guest
Company handle guest payments Homeowner handle guest payments
Flexible cancellation options Homeowner handle contracts and cancellations
Secure payments Secure communication
No annual fees or guest fees No commission, just one annual fee Pay per booking 15% + iva Pay per year 245 euros + iva
Table 2
2.3.2 Friendly Rentals
Friendly Rentals´ main office is located in Barcelona, but they have local offices and representatives at all locations, with a staff of 60 employees, according to their own website (Friendly Rentals, 2018).
Established in 2003 with a goal to offer their clients the best selection of apartments at the most competitive prices through focusing on short- and mid-term rentals. At this day, the company have over 2,000 apartments in 19 major cities, also in America. In the markets this report focus on, they offer 403 apartments in Barcelona and 26 in San Sebastian. When describing their own team, they state that what makes them different from 99% of competitors is that they ensure friendly
personalised service 24/7. This company is part of NOVASOL, one of Europe’s biggest holiday rental companies (Friendly Rentals, 2018).
Friendly rentals operate within 10 different destinations in Spain. Table 3 presents the cities and number of properties in the given cities.
Barcelona 406
Madrid 214
Valencia 60
San Sebastian 26
Seville 71
Bilbao 4
Costa Brava 4
Granada 40
Malaga 27
Sitges 79
Table 3 (Friendly Rentals, 2018)
Friendly Rentals work together with hundreds of travel agencies and offer to prepare a business plan and forecast the income for your property as a homeowner. To get in contact with homeowners is easy through Spain-Holiday as they provide emails and telephone numbers. Friendly Rentals do not.
2.3.3 Airbnb and other disruptors
Alongside the main competitors, there are other disruptors in the market as well. Airbnb being one of them. When booking a home through Airbnb, customers can use a filter to specify the reason for the trip, if it is for a family or colleagues. When choosing the homes suitable for people going on work-related trips, Barcelona present 287 different homes (Airbnb, 2018b), while San Sebastian have 33 (Airbnb, 2018c). This is per 26 April 2018. The homes Airbnb offers in both Barcelona and San Sebastian are located within relevant distance to the events in which this report mention.
It is worth mentioning SilverDoor Apartments and Barcelona-Home, as both of these companies offer corporate accommodation, but only in Barcelona. SilverDoor Apartments was founded in 2000 and got offices in Lancaster and Singapore (SilverDoor Apartments, 2018). Within Spain, they have got 42 apartments in Barcelona, 33 in Madrid, and 1 in Valencia (Friendly Rentals, 2018). Barcelona- Home was founded in 1996, and their main offices, with an international team of more than 40 employees, are located in Barcelona. They have got approximately 350 homes in Barcelona. The company was also awarded first place by the Holiday Home Association in 2015, and was a finalist in 2016 (Barcelona-home, 2018).
2.4 Supplier Analysis 2.4.1 Licences in Barcelona
According to the supplier analysis, there are a lot of apartment owners in Barcelona who want to rent out their apartments, even more than the government appreciates. This have resulted in the requirement of licenses for short-term rental to tourists, a requirement that limits the availability of apartments for ZZZ. The requirement of licences embraces all housing for tourists, including hotels, hostels and tourist apartments. ZZZ need to find suppliers that hold licences for their apartments, in order to legally do business with them. Today there are approximately 9,700 licences for tourist apartments distributed in Barcelona, a number that have been stable for the last four years after the government stopped issuing new licences in 2014. The legal tourist apartments hold about 50,000 beds (Burgen, 2017). It is still possible to acquire a licence in some parts of the city, but this is a demanding process. If the Barcelona City Council grants you the licence, you will have to pay a €227 licence registration fee (Carbray, 2018). When your apartment is granted a tourist licence, the licence does not expire. However, the licence will be taken away if the legal requirements are not followed. To make sure the laws are followed, the government have created a team of legal
inspectors working to ensure that tourist accommodations complies with regulations (García, 2016).
Picture 1 (Ajuntament de Barcelona, 2018)
Picture 1 shows the different areas of Barcelona, and the number of apartments and licences in the different areas (Ajuntament de Barcelona, 2018). Area 1 is the city centre, with 5,358 licences divided on the 33,240 apartments in the area. Area 1 will not be issued any more licences; if an apartment in Area 1 loses its licence for any reason, the same licence will be issued an apartment in Area 3 with the same number of beds. Area 2 will keep its current number of licences, meaning if an apartment loses its licence, the same licence will be issued another apartment in the same area with the same number of beds. Area 3 will receive the lost licences from Area 1, and there might be opened for issuing new licences in this area. Area 4 takes in the three big development areas in the city, with specific regulations. New housings used for tourism are not permitted in these areas. The ATE areas are areas that require special treatment because of their urban morphology and main uses, these mainly concerns historic centres.
2.4.2 Networking with Suppliers
To get in touch with possible suppliers, we recommend to browse Spain-Holiday, as they provide contact information of their homeowners online. An opportunity would be to contact Spain-Holiday and other similar operators to propose a collaboration.
2.5 Organisations Objectives for International Business 2.5.1 Preferred Supplier
One of the most important objectives for ZZZ should be to become the preferred supplier of apartments in the corporate market in Barcelona and San Sebastian. This is a long term objective, and will be reachable if the company get as big here as in Cannes.
2.5.2 Networking
In a shorter term, an objective should also be to establish a network in the given cities. ZZZ need to create a network of supplier, and also make an effort to acquire new clients.
2.6 Key Opportunities and Challenges for International Strategy and International Business 2.6.1 Opportunities
2.6.1.1 Client Base
ZZZ have developed an enviable client base, including international market leaders. Some of the company's existing clients attend several conferences across the world every year. This opens a major opportunity for ZZZ to follow their current clients into new markets. One of ZZZ´s clients from MIPCOM and MIPTV, RedBull Media House, is a collaborative host of San Sebastian Film Festival´s adventure film section, Savage Cinema (San Sebastian International Film Festival, 2017). Heineken Jazz Festival in San Sebastian works in collaboration with one of ZZZ´s client companies from MIPCOM; Universal Music Group (Donostia Kultura, 2018). Google, which is a client of ZZZ for the Cannes Lions, is a partner of 4YFN (GSM Association, 2018), the start-up platform of Mobile World Congress, taking place in Barcelona at the same time as the Mobile World Congress. These three clients, among other current clients, are able to contribute in the expansion of ZZZ geographically. As these are large companies operating in several businesses, they might be able to help ZZZ increase their reputation across other businesses as well, if ZZZ becomes their preferred supplier.
2.6.1.2 Experience from Barcelona
Since 2012, ZZZ have provided their clients with accommodation during the Mobile Worlds Congress in Barcelona. Revenue from Barcelona accounts 4% of total income (Gavine and Erasmus, 2018), and the potential for growth in this market is big. However, the time and resources have currently been too limited to enter the Spanish market fully.
2.6.1.3 Low Price Spanish Competitors
Some of the Spanish competitors push their rental prices down, as they focus on tourists. If ZZZ manage to offer a higher price for a more professional service, they can offer a higher share to the apartment owners to acquire their apartment, this can eventually lead them to become the preferred customer of the suppliers.
2.6.2 Challenges
2.6.2.1 Dependant on Suppliers
ZZZ is highly dependent on their network of suppliers, the apartment owners. The company need to obtain a good and professional relationship to their suppliers, built on mutual respect, to agree on terms and negotiate the best deals beneficial to both parts. Such relationships might take time to establish.
2.6.2.2 Rental Licences in Barcelona
The rental licenses in Barcelona bring a major challenge in form of limited legal apartments.
Websites and agents advertising illegal apartments might be given fines of up to €600,000 (García, 2016).
2.6.2.3 Local Knowledge
To stay competitive in the business, ZZZ need to gain local knowledge on the cities and the area around the cities where they offer accommodation. This is a service that the customers appreciate, both in terms of information on where to stay and information on how to move around the city. To offer a high quality call service, their employees need to know how to travel and navigate through the city, to decrease the travel time.
2.6.2.4 Small Company in Terms of Employees
As ZZZ have a small team of employees, this might bring some possible issues in terms of manpower to serve the customers. As the areas of operations increase, ZZZ will need more people to serve their customers in hundreds of different apartments around the city, and possibly in different cities at the same time.
2.6.2.5 Language Barriers
To enter Spain, language barriers is an important challenge to consider. Spanish people are commonly known for preferring Spanish over English. However, Barcelona is a tourist city where many of the locals speak English, and you probably only need to handle this issue when networking with your suppliers.
3 Research
3.1 Research Methodology
International business strategy addresses one key question: Where to locate the activities of the value chain to allow the company to achieve, sustain, and enhance its competitive advantage. The consultants started to search between different countries and tried to look at what the different places had to offer. We searched each country and downed towards Spain, then we needed to find out which areas that would be of interest. We found several places to investigate and seek deeper information about. There were places that had different events, and some of these only lasted one or two days, but we wanted events that lasted longer.
There is a wide range of variety of accommodation in Spain, ranging from Tourists-use flats, Tourist accommodation establishments (e.g. hotels, apartment-hotels, hostels or guest houses, tourist apartments), youth hotels and collective residencies with temporary accommodation. (Ajuntament de Barcelona, 2018). When conducting research for this consultancy project, several types of accommodations were considered, both hotels and private accommodations, but also new disruptors in the industry such as Airbnb (2018a). Initially pre-selected countries were considered and researched, together with cities in the selected country. This led us to Spain, and the cities of Barcelona and San Sebastian (further elaborated in 3.2 Research Findings).
The research for ZZZ Accommodation regarded what kind of opportunities Spain had to offer, and if ZZZ should expand further into this market or not. Research is an important factor when picking the
after all what the task is about, and what we need in this project. Research is a systematic process that involves collecting, analysing and interpreting data for decision making and recommendations.
The objectives for the methodology was to gain an insight in Spain, information about Spain and what kind of opportunities this country holds for ZZZ.
3.1.1 Secondary Research
We started by looking at all available information that could help identify the audience and market in Spain. We did a lot of research on competitors and suppliers, given that this is some of the most important factors when entering. Secondary research is a cheaper way to gather information as the information is already out there. It is a good way to start, when it is more difficult to gather primary research. The drawback when it comes to the secondary research is that the results or the
information found is not specific to our business, this can make the information less valid. However, it is giving us an overview of the area. We considered all kinds of published research; reports, statistics, databases, tourist events, the library and surveys. We narrowed down to our target group;
business people.
3.1.2 Primary Research
Primary research is research that is conducted by yourself or by a research firm you hire for the project. The research can include focus groups, surveys, interviews, and observations. Primary research aims to answer questions relevant solely to your company. For instance, if you are launching a new website and want feedback on its design and efficacy, your research firm would share it with focus groups to gauge their responses to the site. Primary research gives you more specific results (Fatteross, 2018).
The next step after secondary research was to do some low-cost version of primary market research such as surveys or questionnaires (see 7.4 Accommodation Survey). This was more difficult because of our limitations. We needed to find out how the target group found places to stay during the events. If they were happy with the experience they have had or if they wanted something different or better. Secondary research is giving us a start to build on, and primary research is helping us with identifying the specific needs.
The first survey did not work. We wanted to carry it out by mail, but because of limited resources this proved difficult to distribute correctly. We did not have the money, network nor time for gathering enough contact information and resources (see 5 Limitations). We put out a lot of
different emails to try to get insight in numbers and information about hotels, accommodations and different apartments. We had issues with getting answers, and tried to change the approach and how we presented ourselves in the emails. It was very limited information that they could offer, as most of it was confidential. We also tried to make interviews conducted by phone, where we called companies that we knew attended the events. However, we were not able to contact the right people in the business to get the information we wanted for the research.
3.2 Research Findings
When looking at our research findings, there were two cities we found to be good for ZZZ´s expansion. The cities are Barcelona and San Sebastian, and they have promising events that can fit for ZZZ, both because of attendance of existing clients, and that the booking rate during events is more than 90%. Some of ZZZ´s existing clients attending events in Barcelona and San Sebastian are Google and Deloitte. The benefit of having existing clients at the events is the advantage of providing a good stream of profit from the start, if choosing to expand.
The queries that we did got us some answers in terms of number of hotel rooms in given cities and the booking rates. The research provided information about San Sebastian, where it was between 500 - 600 hotels rooms that were 4-5 stars. In Barcelona, we found 67,640 in total.
In Barcelona, the Mobile World Congress is a great opportunity, as well as the Bridal Fashion Week.
The Mobile World Congress is taking place in February, and has a booking rate of over 90%. There are a lot of exciting clients here that potentially can become good collaborators in the future. When looking at San Sebastian, there is a Film Festival that has many similarities with the Cannes Film Festival, and this can be exploited further. In San Sebastian, we also found Heineken Jazz Festival that can be used as an additional business in this market. San Sebastian is not a city ZZZ need to use a lot of resources to enter, compared to bigger cities like Barcelona.
The mentioned events are professional trade shows, however, the jazz festival and the film festival have consumer attraction as well. During these events, it is found that the demand is high with accommodations as well as increased rates during this period. Our research also revealed that ZZZ have clients already attending these events, except for Bridal Fashion Week.
4 Conclusion 4.1 Recommendation
To conclude this report, a recommendation on how the consultants think ZZZ Corporate Accommodation should proceed when expanding will be provided. It is recommended that the company enter the Spanish market. Due to the data collected from the findings, there is potential for making significant profits here.
4.1.1 Barcelona
First of all, it is recommended that your options should be limited to entering Barcelona alone or both locations. Barcelona is found to be a big market when focusing mainly on the Mobile World Congress, however, there are also other exhibitions, like the Bridal Fashion Week. The next Mobile World Congress is taking place 25-28 February 2019. According to Statista, we found that 97% of hotels were booked in 2017 (Statista, 2018). Looking at hotels for the same congress in 2019, 85% of the hotels in the city are already booked as of 13 April 2018 (Hotels.com, 2018).
Picture 2 (Hotels.com, 2018)
Adding on to this argument, there was found that existing clients of ZZZ Accommodation, e.g.
Google and Deloitte are already attending the Mobile World Congress. The advantages for the company with this, is that these clients can provide a good stream of profit from the beginning of an eventual expansion. Mobile World Congress is a big event with many potential clients, and together with the fact that ZZZ already have started to work in Barcelona, the consultants would like to emphasise that this need to be a prioritized location. Based on the analysis conducted, the consultants recommend that an entrance to this market can be made already in 2019.
4.1.2 San Sebastian
Secondly, San Sebastian is also regarded as a natural location to expand further. In addition, there are not a lot of resources demanded to enter this market compared to bigger cities like e.g.
Barcelona. For instance, assets like money, staff, expertise etc. does not have the same
requirements as for a bigger market. The physical area of the festival is narrowed along the beach.
Hence, it is comparable to Cannes.
As for the customer base in this market, the consultants can report that Red Bull Media House is already established in San Sebastian.
4.2 Price Estimates
Furthermore, we tried to estimate how much profit you could make in this particular market. The apartment rates from Spain-Holiday gave an indication of a price of £1,050 for a three-bedroom during the 4 days of the MWC. By removing Spain-Holiday´s fee, and adding 40% increase in price as instructed by the ZZZ, a profit per apartment will be approximately £357 per night.
Estimating a total profit has been difficult. However, considering the provided example and the 400 apartments such as ZZZ have in Cannes, we think the company can make a total profit of £142,800 during the Mobile World Congress. This is before taxes and other expenses.
The given price estimate is calculated with an apartment with three bedrooms in Barcelona with good quality (Spain Holiday, 2018c). Prices are collected from Spain-holiday and showed a price at
£1,050 for three nights during the festival (25/2-28/2 2018). When removing the 15% fee that Spain- holiday are charging, it leaves a price of £892.5 which is the profit of the homeowner. Adding ZZZ´s 40% will give a price of £1249.5 and a profit of £357 for one apartment. This estimate is created at 20 April 2018, and will probably change over time (see Appendix 1).
Picture 3 (Spain Holiday, 2018d)
4.2.1 Limitations to Our Estimates
The prices and profits might also be even higher than our estimates given that the price could increase closer to the congress. In this report, there has been drawn a comparison between the Barcelona market and the market in Cannes (i.e. the 400 apartments) because of the previous experience and results ZZZ have. This is not because the consultants believe that the company will rent out exactly 400 apartments. However, this was implemented as a template in order to calculate in the most specific manner possible. The explanation for this method is based on the information acquired through ZZZ Accommodation and research conducted by the consultants.
5 Limitations
When conducting the consultancy work, some limitations appeared mainly in terms of the research.
Early in the process, a survey was created with a plan to gather data about companies attending events in Spain. We needed to get information about where, how and who the companies contacted when booking accommodations. However, limitations stopped us from distributing the survey.
Firstly, was it proved more difficult to find participants for the survey than first expected. Companies attending exhibitions were approached by e-mail, however, the response was weak. Some
companies did not answer and others answered very vague. This was believed to originate from a poor network and missing contact info for key personnel in the given companies. Furthermore, the project was limited by financial resources and time.
Financial limitations were mainly connected to cost of retrieving reports of some companies, and access of data for research. Time was also a minor limitation given the deadline given for the module assignment. Adding on, some limitations were found in terms of language, and none of the authors of this report speak the language of the country that was researched.
6 References
Airbnb (2018a) Home. Available at: https://www.airbnb.co.uk/ (Accessed: 19 March 2018).
Airbnb (2018b) Barcelona. Available at: https://www.airbnb.co.uk/s/Barcelona--
Spain/all?place_id=ChIJ5TCOcRaYpBIRCmZHTz37sEQ&query=Barcelona%2C%20Spain&refinement_p aths%5B%5D=%2Ffor_you (Accessed: 1 May 2018).
Airbnb (2018c) San Sebastian. Available at: https://www.airbnb.co.uk/s/San-Sebastián--
Spania/homes?refinement_paths%5B%5D=%2Fhomes&place_id=ChIJFf5oO_6vUQ0RSUaGlFnFPuQ&
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15 March 2018).
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(Accessed: 24 April 2018).
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7 Appendices 7.1 Price Estimates
Prices are in pounds (£) and for one, 3-bedroom apartment in Barcelona during the MWC 2019.
Spain holiday price 1.050
Spain holiday fee (-15%) 892,5
ZZZ´s increase in price (+40%) 1.249,5
ZZZ´s profit (1249,5-892,5) 357
Profit when comparing with 400 apartments (Cannes) 142.800
7.2 PESTLE Analysis 7.2.1 Political
Changing government regimes, terrorism etc. all have a direct impact on the (global) hospitality industry. In an environment free of turmoil, the hospitality industry can flourish. Political stability is therefore always good for the hospitality industry. On the other hand, if there is conflict and/ or terror in a specific market, the hospitality industry cannot flourish, as the direct impact will hit negatively in terms of lower degree of tourism.
One example is Brexit, as this had a significant impact on the tourism and hospitality industry in several markets in Europe. These impacts are hurting revenues for the hospitality sector as they have a significant influence on the revenues and profits. A single terrorist event also affects tourism deeply in an area for a prolonged period of time. Another aspect is the status of the military and security apparatus in the respective nation and its reputation on the political landscape also affects the condition of tourism there (Pratap, 2017).
7.2.2 Economic
Economic factors remain a major factor behind the high demand in the tourism sector globally. With growing labor market comes stronger consumer spending. Disposable income in addition to average
hourly incomes have also risen. These are all positive signs for the hospitality industry, and the situation of demand is healthy and the hotel brands should be able to benefit from the current situation. Airlines will also reap benefits from this healthy economic situation, however, rising operational costs will create pressures (Pratap, 2017).
The recent recession proved that depending upon the economic conditions, the consumers of the hospitality industry would willingly cut on their travel expenses. The condition of the economy affects the purchasing power of the travellers. If the economy is flourishing, the consumers would be able to spend more on leisure activities. Otherwise economic slowdown affects their pockets and then the industry. Under such conditions, the players, including hotel brands and airlines, are forced to cut down prices to fuel demand. The result is reduced profits. The exact opposite happens when economic activity is higher.
7.2.3 Social
As the economic trends, the social trends also shape the tourism industry and the effects can be just as deep. Consumer preference in lodging has taken a shift in the recent years as their preference has shifted in the favour of private accommodations. The rise of Airbnb (disruptor) is a challenge for the established names in the hotel segment. Similarly, ride sharing brands are rising against the
traditional taxi brands. Other social factors that affect the global hospitality industry is, as mentioned earlier, consumer preference. If consumer sentiment is favourable, both airlines and hotel brands start to gain (Pratap, 2017).
7.2.4 Technological
Technological factors have grown to be the facilitators of demand for the tourism industry in the 21st century. In airlines, booking and marketing, technology is the biggest influencer. This is due to the facilitation of communication and information transferring, which is bridging the gap between several parts of the world (globalisation). Tourists are trying to find the best deals themselves before they start with the initial booking by conducting their own research. When new tourist destinations emerge, then a substantial amount of credit goes to the rise of technology.
Hotel and airlines brands are using information technology to serve their consumers better. Digital check ins and kiosks have grown popular as a result of this. Social media and the mobile technology are also affecting this. Mobile technology has fuelled the growth of tourism by facilitating mobile bookings, check-ins, messages etc. Technology has worked in the favour of both sellers and buyers (Pratap, 2017).
7.2.5 Legal
The regulatory environment in the tourism is quite complex. This is due to important concerns like labor and public security. In addition, there are other laws that influence this sector, however, public safety and labor laws remain the most important concerns. Tourism brands cannot lose focus of risk management. If they do this, they risk losing market share (Pratap, 2017).
The legal challenges and pressures in the tourism industry are substantial. For brands operating in several nations, it is critical that they are familiar with the local laws in the respective markets. Staff training is another aspect which has become increasingly important over the years to prevent legal hassles. Statistically, cities and nations which are considered safer in terms of lower levels of crime, have larger numbers of tourist visits each year.
7.2.6 Ecological
As for the ecological factors, sustainability remains a key concern in tourism. The focus has had a shift towards ecotourism. United Nations officially recognised 2017 as the International Year of Sustainable Tourism of Development (Pratap, 2017).
Other environmental concerns including transport operators and the hotel and restaurant brands are also important for tourism operators. Managing ecological impact and waste management are amongst the challenges of importance for the tourism operators. Weather conditions on travel and tourism is another important factor, and especially the airlines are affected by this. If e.g. a stormy weather or natural disaster happen, it will affect the whole industry directly. Seasonal tourism is also an aspect, as this is affected by demand and supply of tourism in various areas. As a final note, cities that are greener and cleaner receive tourists in larger numbers.
7.3 SWOT Analysis
Strengths
• Good expertise and experience
• Personal follow-up
• Booking diversity
• Local knowledge (e.g. Cannes)
• Network (e.g. Cannes)
• Extra value
Weaknesses
• Limited offering worldwide
• Small company (i.e. employees)
• Lack of local knowledge (i.e. in a new market)
• Lack of network (i.e. in a new market)
• User friendliness Opportunities
• Existing clients in new markets
• Large corporate events
• Low price competitors
Threats
• Dependent on specific events
• Geographical distance
• Disruptors
• Licences
7.3.1 Strengths
The main strengths of ZZZ lies in their good expertise in addition to their broad experience in this particular industry sector. The fact that they also offer personal follow up in terms of a welcome package and a meet and greet scheme is also regarded as a strength.
The company is also agile in terms of their offering and the fact that they offer booking diversity (e.g.
hotels, apartments etc.). The local knowledge and their network in the operating markets (e.g.
Cannes) are also regarded as significant strengths, and, aligned with the “excellent quality” offered, the consultants have reasons to believe that this is a clear competitive advantage.
ZZZ also bring extra value in terms of events, e.g. ski events. Last, but not least, their homepage with a simple setup speaks for user friendliness, which also must be considered a significant strength (e.g.
“available properties for rent”).
7.3.2 Weaknesses
As for the company’s weaknesses, they first and foremost have a limited offering on a worldwide basis. They are only present in a few specific markets/ cities, and this makes them less dominant on a global scale.
Second, they are a small company in terms of number of employees. This could be a weakness as the workload could be too tremendous at times with higher intensity.
Their local knowledge, which is mentioned in the Opportunities section, also have a downside. While local knowledge without doubt is a strength, the company is also very dependent on this. Lack of local knowledge in unexplored, new markets of choice therefore remain a threat as the company will lose, if not the biggest, one of their significant strengths. This is due to lack of knowledge on e.g.
legal and political factors. Lack of network is another weakness on this matter as this is something
7.3.3 Opportunities
There are also reasons to believe that ZZZ will meet less resistance in entering new markets in terms of easier adaptability compared to their respective competitors. The fact that they already are established in Barcelona would speak for a simplified process in entering this market again. This is due to their knowledge about the legal system in this country/ city, their existing clients which are already established in this market, knowledge about corporate events, and the low-price
competitors.
7.3.4 Threats
The main threat of ZZZ Accommodation is that the firm is very dependent on specific events. This leads to an unsteady cash flow because the company relies on the high demand from customers during specific events in different seasons throughout the year.
The fact that there is significant geographical distance between the markets (i.e. main office in London, customer base in Cannes) is also regarded as a threat because their agility is hampered (i.e.
they are locked into one market, however, they operate on a managerial level in another).
7.4 Accommodation Survey
Start of Block: IntroQ1 This survey is used to get an overview of how companies aquire accommodations for trade fairs and events in Spain. The data is collected for an assignment conducted by graduate students at Kingston University, London. We would like to thank you in advance for providing us data through this survey.
Q2 Name of your company:
________________________________________________________________
Q3 Which of the following events do your company attend?
▢
Mobile World Congress - Barcelona (1)▢
Bridal Fashion Week - Barcelona (2)▢
Automobile - Barcelona (3)▢
San Sebastian Film Festival - San Sebastian (4)▢
Heineken Jazz Festival - San Sebastian (5)▢
Click to write Choice 6 (6)▢
7 (7)▢
Non of the above (8)Skip To: End of Survey If Which of the following events do your company attend? = Non of the above
Q4 Approximately how many from your company attended the events?
o
Less than 10 (1)o
10-30 (2)o
30-50 (3)o
More than 50 (4)Q13 When you are booking accommodation for events like this, what is more important?
Extremely important (1)
Very important (2)
Moderately important (3)
Slightly important (4)
Not at all important (5)
Quality (1)
o o o o o
Distance from
event (2)
o o o o o
Service (3)
o o o o o
Distance to city
centre (4)
o o o o o
Networking opportunities
(5)
o o o o o
On site food and beverages
(6)
o o o o o
Q5 How do you usually arrange accommodation?
o
Hotel (1)o
Private Accommodation (2)o
Hotel and private accommodation (3) End of Block: IntroStart of Block: Hotel Display This Question:
If How do you usually arrange accommodation? = Hotel
Or How do you usually arrange accommodation? = Hotel and private accommodation
Q6 What Hotel did you use?
________________________________________________________________
Display This Question:
If How do you usually arrange accommodation? = Hotel
Or How do you usually arrange accommodation? = Hotel and private accommodation
Q7 Hotel Satisfaction, how pleased were you with...
Extremely
satisfied (1) Somewhat satisfied (2)
Neither satisfied nor dissatisfied (3)
Somewhat
dissatisfied (4) Extremely dissatisfied (5)
Quality (1)
o o o o o
Service (2)
o o o o o
Distance from
event (3)
o o o o o
The booking
process (4)
o o o o o
Logistics with group bookings
(5)
o o o o o
Local expertise
(6)
o o o o o
End of Block: Hotel
Start of Block: Private Accommodation Display This Question:
If How do you usually arrange accommodation? = Private Accommodation
Or How do you usually arrange accommodation? = Hotel and private accommodation
Q10 What provider of apartment/house did you use?
________________________________________________________________
Display This Question:
If How do you usually arrange accommodation? = Private Accommodation
Or How do you usually arrange accommodation? = Hotel and private accommodation
Q8 Apartment/house satisfaction, how pleased were you with...
Extremely
pleased (1) Somewhat pleased (2)
Neither pleased nor displeased
(3)
Somewhat
displeased (4) Extremely displeased (5)
Quality (1)
o o o o o
Service (2)
o o o o o
Distance from
event (3)
o o o o o
The booking
process (4)
o o o o o
Logistics with group bookings
(5)
o o o o o
Local expertise
(6)
o o o o o
End of Block: Private Accommodation Start of Block: Block 3
Q12 Have you experienced difficulity in bookings, due to high demand?
o
Always (1)o
Most of the time (2)o
About half the time (3)o
Sometimes (4)o
Never (5)Q14 Would it be useful with a service that provides private accommodation for your company at chosen events? - Including personal service and local knowledge
