Yesterday I just got a chance to have a conference call with Abacus Singapore. Before the call, the partner has emailed me a presentation which I would call this paper, "Abacus Analytical Paper."
It's basically a 34-page powerpoint presentation. Presentation itself could be divided into 3 major sections: Abacus Introduction, Analysis on BW and Abacus Reaching Out Tools.
In this article, I want to focus on the analytical part.
There are numbers of slides that caught my attention: top hotel chains in Abacus system, high demand destinations, high demand markets, BWI top 10 markets, BWI top 10 destinations, BWI top 10 travel agents and BWI top 10 booked hotels.
After reviewing those slides, I got the following impressions.
- Abacus client based seems to be high end as its top hotel chains are in premium category i.e. Shangri la, Hyatt, Sherton, Marriott, Westin and etc.
- 99% of its top destinations are in Asia.
- Somehow, BWI top destinations contain no Asian destinations yet America and Europe.
From those impressions, I transcribed them into the following information before formulating the proper and tailor-made strategies for Abacus.
- In Asia, Abacus customers prefer to stay with 4-5 stars hotels.
- BW can only capture those who travel outside of Asia.
I may deploy the following strategies
- For Asia, put focus on good hardware hotels.
- For America and Europe, I will elaborate more in another article as we need to analyze more info before deriving to the strategies.
Once the investment has been made, the focus is now put on how to get the money back plus a profit or financial term called "Return on Investment."
The hotel owner does not only want his money back but also how to get it back as soon as possible. How to get a quick return? The answer is to get a tool. It's like changing a car flat tire. The better the equipment, the quicker the job.
Without a jack, changing a car tire can be a tiresome job. It can take you hours after hours to get the job done. With the hydraulic jack, the job can be a piece of carot cake :)
In this case, association with a hotel chain is serving as a hydraulic jack.
The fact is that even with a hydraulic jack we still get perspired. Hydraulic jack is an equipment to help us get the job done quicker and less tired. It is not the replacement of our works. We still have to remove the flat tire out, put on the new one, tie up the knot and etc.
To go with a hotel chain or not, the basic hotel works remains there. With a chain, we got a jack. Without a chain, we got no jack.
Hotel is a form of real estate investment. As a real estate investment, it's in a sense a capital intensive business. A hotel owner needs to acquire or lease a piece of land, hire an achitect to draw a blue print and get a construction company to develop the project. All these processes take years. Lot of money have been invested but not even a penny has been earned.
Moreover, after the project has been completed, the owner needs to bring in manpowers. Hotel business is not just capital intensive but also labor based business. As an owner from the beginning till now, he has to pay, pay and pay :(
Labor Based Business means it's a high ongoing overhead cost. The longer the business runs, the higher the cost incurs.
As a result, a hotel owner needs to understand hotel business model lest he/she will suffer financial difficulties.
To make it easy, "Business Model" is how a company makes money through delivering total value solutions either in form of product or service to certain group of customer.
Starbucks delivers good atmosphere coffee place to customer door where a customer can meet up friends and do their notebook works outside home. Starbucks serves as customer second home.
McDonald's delivers value for money quick meal for customer who has limited time.
iPhone delivers a total solutions of mobile communication and entertainment device. Apple's iDevices are seamlessly interfaced with online world.
In order to develop a right business model, the company needs to understand customer's needs and be able to develop solutions to those needs.
Once the company product or service is able to penetrate into customer mind, it creates brand loyalty.
From brand loyalty, it paves way for company future development of new products or services.
A great product vs great business model which one do play more significant contribution to business success.
Having a great product is definitely a plus in doing business. Yet, great product alone seems not enough. Let's take few minutes to scan through 2 world most successful products i.e. McDonald's and Apple and etc. McDonald's hamburger is certainly not the most delicious hamberger on our entire planet. Many people claim that they can make more delicious hamberger than McDonald's but yet McDonald's is world #1 hamberger company.
Samsung has claimed that its mobile screen technology "Super Amoled" is better than iPhone Retina Technology. Perhaps, the Korean is right. Nevertheless, iPhone is more popular and more successful than Samsung Galaxy S and other models combined.
Why?? What play behind the success of those products? The answer is "Business Model."
Next time we will come see together what is a business model?
