Nikko Hotel SWOT Analysis

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Nikko Hotels is part of an international chain of hotels, which operate in Europe, Asia, South Pacific, and North America. The parent company that owns Nikko Hotels is Okura Hotels. Nikko Hotel officially started the operations in 1972, which was at that time the global brand hotel of the airlines known as Japan Airlines with the very first inception property located in Jakarta. The Japan Airlines Ltd owned Nikko Hotels up to the year 1990; after that, it was renamed to JAL hotels. What followed is that this company was going through an acquisition, and this led to shared ownership with Okura Hotels. Nikko Hotel as a subsidiary of Okura Hotel is an organization that operates under three companies, the Okura Hotels, Hotel JAL city, and Nikko Hotels International, the company has the most extensive international portfolio than any company in Japan, but still, there are efforts of expanding the collection. Just as any other the Nikko Hotels under the Okura Hotels Ltd, has their philosophy of Japanese hospitality known as ‘O-mo-te-na-shi’ which has taken the world by a storm and is rather captivating to market of the international properties of Nikko Hotels.

JAL being the international operator, the brand strives to establish a strong position in the international market. Just as fellow companies like Hilton Hotels, although Nikko Hotel cannot be compared to such, the fact remains that it has achieved a lot like currently have a branch in East Africa (Tanzania), despite the standard operating space of Europe and Asia (Nikko Hotels International). Just like any other brands, the Hotel has achieved a lot of milestones, such as being recommended by Forbes Travel Guide. Today the main Focus will be at Nikko Hotel San Francisco, whereby this Hotel was opened in the year 1987. Still, the Hotel had challenges and still is a challenge to transfer the Japanese philosophy that the company relies on to the multicultural American market. Nikko San Francisco focuses on the Hotels and resorts company, and the internal environment is rather good as they have the unique design, well-trained staff, and the Japanese culture, while the external environment has stiff competition and threat of new substitutes. While these factors are going to be discussed in detail below some of the strategic plans will focus on making the hotel stand out more so that the new competition cannot be a problem, again maintaining the excellent customer relationship, through the excellent services provided.

Environmental Analysis (SWOT Analysis)

The SWOT analysis will help in developing strategic plans that will cope better with the situation. The SWOT analysis is a simple tool that looks at the strengths, weaknesses, opportunities, and threats of Nikko Hotel, which means that it will provide a compass for improving the performance of the company and establishing future directions (Greenley, 2014).

Strengths

Modern Design

Hotel Nikko is located at 222 Mason Street San, Francisco, California. It is a high-rise hotel that is 28 stories tall and has 532 rooms. The modern design was a result of a renovation that was dome about a year ago. The hotel has a lounge, spa, cabaret room, and finally a restaurant. There is Restaurant Anzu that is on the second floor of the hotel which is overseen by the food and beverage director in addition to these there is the health club that runs 24 hours which provides services like a steam room and fitness center. In addition to these, there are also regular but essential features like free WIFI and access to the Internet. With such amenities, Hotel Nikko stands out form other Hotels mainly because it holds ceremonies like weddings, parties, and other functions. The highly designed rooms are what keeps customers keep coming back and the apparent customer service.

Qualified Staff

This hotel has been running for about four decades, which implies that there is a lot of hotel management experience and employee apprenticeship. Based on the Japanese philosophy of Hospitality, employees are treated with respect and trust, which is believed to reciprocate. The employee is allowed to make mistakes and learn from, which makes them feel like home at work, that directly reflect on the customer service provided. The employees are well trained and well managed just as a result that comes from the experienced company executives, in addition to this, the hiring of employees is done distinctively to maintain the quality of employees. There are also designed rules on how guests should be treated, like at times the rooms service which visits the rooms regularly.

High Number of Loyal Customers

Hotel Nikko has become a household brand, that has loyal customers both from California and beyond. This is due to the hospitality experience presented at the hotel. Such as a different restaurant such as ANZU, the high-end bedding, and the other modern amenities. This hotel attracts customers of all demographics. Majorly people visit the hotel for events such as weddings, conferences, birthdays or it might just be someone visiting the city. In addition to all these, the hotel has been recognized by various organizations and has been awarded including their staff, for instance, Antonin Careme who is in charge of the ANZU restaurant has been a recipient of the American Culinary Federation medal. This creates a curiosity for guest hence coming to experience why Hotel Nikko so excellent.

Best Location

The Hotel is located in San Francisco, Union Square surrounded by other Buildings, such as the Moscone Centre and it is also near the Ocean hence easy access to the beach, therefore during holidays people would consider the hotel. Business meetings and conference might also find the hotel due to the precise nature of the hotel and the features.

Weaknesses

Lack of Enough Rooms

Because Hotel Nikko is a favorite for most people, it comes a time that guests overbook, and there is room shortage. Hence what is done is that overbooking is allowed to cover for the reservation that might go through, which at times customers attest to getting the room they reserved, and yet they have assured the rooms were available. It is a concept that most companies use, including airlines, but it is unethical.

Archaic Facilities

Still, after the reservations, there are some modern facilities which can not fit into the building architecture due to design. This makes the hotel miss out in various upgrades that the younger customers may prefer. It is a factor that needs to be considered since renovations in a few years to come won’t just cut it. Some customers might not come back to the hotel due to this issue.

Technology

This connects to the previous point, as technology has become an essential factor in our modern lives. Internet access is one of them, but it does not mean that there another issue that is not covered by the Hotel, the hotel can improve incentivizing the technology side by being up to date with gadgets that customers would prefer in a room. For instances such as a smart tv or yet a room with a card key or biometric security (Lin 2016). There are online reservations which the hotel has done an excellent job but not good enough to get the most customers; the hotel has few pictures which are shown on the page for both the exterior and interior which is not enough as competitors provide a virtual Tour in a well-developed website.

Social Media

Online presence is essential for any company that is in business at the moment but this Hotel, has social media sites in almost all the websites, but the problem is the interactions with customers is not enough, and the updates also take longer. The hotel has not adequately invested in staff who can manage their social media sites, which is working against them because social media has become the modern-day word of mouth communications. Assuming the social media pages leads to negative reviews that in turn, hurt the Hotel Nikko brand. And an online reputation is essential in gaining more customers.

Opportunities

Economic Growth Shift

The hotel industry has registered a robust value growth during the past years, with the expectations of other establishments to come up short. It has been reported that the leisure segment of the hotel industry has the most growth and the business segment following, this means that there is more opportunity for Hotel Nikko to explore new markets and target customers in the leisure segment that will help Nikko hotel to gain more customers.

Increased Number of Travelers

This is also a trend that is experienced as more people travel, that is there is stronger growth in international travel. The hotel is well known, so what is left is for the company to find a way to tap into this market.

Internet

Nikko hotel management should improve in how they utilize the Internet when it comes to the advertisement, such as Google advertisements and other social media sites. Also looking into websites that promote the hotel industry such as www.hostelworld.com and www.bedandbreakfast.com that could improve the online approval.

Cultural Diversity

Hotel Nikko being original with Japanese roots the company should tap into this space to develop more interests for the customers, who would be interested in the Japanese culture cuisine. This is because that one restaurant is not enough for the whole hotel and customers to form outside.

Threats

Unhinged Global Environment

The hotel industry is affected by geopolitical factors or the macroeconomic factors, for instance, the US terrorist attack of September 11, 2001, led to an economic recession which affected the hotel and tourism industry, and to imagine that the United States is one the world’s largest tourism market (Gut and Jarrell, 2007). This directly a threat as Hotel Nikko is a ‘big city hotel’.

Ferocious Competition

Brand recognition is significant to the current market; a sharp brand image helps to attract more customers, Nikko Hotel huge hotel operator competitors such as Hilton Worldwide and Marriott International who most of the times offer brand chains. Which means more companies or the more hotel chains results in competition, with companies such as Airbnb that automate the hotel industry. Hence it is crucial for the Nikko Hotel to establish its place.

Substitute Hotels

Substitutes come in when the high-end hotel’s mess, up just like the overbooking incident, they offer the same service but at a lower price, which is working. For instance, there is the automated online service Airbnb that has around 34,00 listing in New York.

Overall Strategy and Challenges

All of the strategies came from the Okura-Nikko website, which serves as the headquarters for all the chain hotels. Various strategies were spelled out in the site. The first one is the globalization strategy as the chain plans to extend to other parts of the world such as Hilton Worldwide which is a challenge because the chain has not covered enough to be competitive which such giants. The next strategy was the new web strategy that is aimed at enhancing the web presence of the company through Search Engine Optimization, which will help out the company to have a more online presence, which was a problem. Lastly, is the lifestyle strategy, whereby the company plans to unveil the ‘Nikko Style Lifestyle-brand’ Hotel in Nagoya, that will serve as a modern brand to deal with the issue of technological advancement.

Conclusion and Recommendation

In conclusion, it is safe to say that Hotel Nikko and other industry players are experiencing a gradual increase in the business; this is due to the development happening in the industry and the economic shift. Nikko Hotel should use the Strategy tool provided as the SWOT analysis regularly, this is because by understanding the strengths, weaknesses, opportunities, and threats, the Hotel can be well familiar with situations and the best decision making will take place. Also, it is wise for the Hotel to understand that the shift in the economy can go both ways, it can work for the industry and the economy can work against the sector hence the critical thing to do is to take advantage of the economic shift. In addition to that Nikko Hotel management should recognize that, the strength of Uniqueness and the location is evident for their customers, but the most important thing is to get new customers and create a better reputation especially online. This can only be through collaborating with other industry players to hold events to attract people as part of their community social responsibility.

References

Nikko Hotels International. Retrieved from https://www.okura-nikko.com/nikko/
Greenley, G. E., & Bayus, B. L. (1994). Marketing Planning Processes in the UK and US Companies. Journal of Strategic Marketing, 2(2), 140-154.
Hotel Nikko San Francisco. Retrieved from https://www.hotelnikkosf.com/
Lin, X. (2016). Strategy Analysis of a Boutique and Lifestyle Hotel: A SWOT Analysis (Doctoral dissertation, California State Polytechnic University, Pomona).
Gut, P., & Jarrell, S. (2007). The Silver Lining on a Dark Cloud: The impact of 9/11 on a Regional Tourist Destination. Journal of Travel Research, 46(2), 147-153.
Okura Nikko Hotels. Retrieved from https://www.okura-nikko.com/

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