A SWOT

Analysis of

Le

Meridien

Barbarons

Hotel

Researched and

compiled by J. Cesar

ADHM Student

August 2010

Commissioned by

Miss M. Mathiot (Lecturer)

Principles of Management

Abstract

One among the famous hotels in Seychelles, the Le Meridien Barbarons Hotel and Spa has, a

few years ago, been acquired by the giant Starwood brand. Starwood Hotels & Resorts

Worldwide, Inc has other famous hotel brands such as the Sheraton, the St. Regis, the Westin,

the Four Points, et al. These hotels are found all over the planet and they total up to 1000

units comprises of various sizes and standards.

The Le Meridien Barbarons Hotel is a three star accommodation and service unit located on

the west coast of Mahe Island in the Seychelles exotic tropical islands‟ destination. It offers

the best competitive rates of its genre and targets groups, families and businesses market

segments. With that in mind, this hotel has a high potential demand for its services. It has

been exploring and exploiting these segments profitably up to now as per its strengths and

opportunities. Parallel to that, there have also been difficult times as per its weaknesses and

threats. This hotel has managed to navigate its way through its business environment by

facing the many changes that influences the micro and macro environments of organisations.

This study is a snapshot of its current methods and strategies of management effectiveness

and efficiency. It portrays how this hotel is facing its internal and external business

environments so that it can generate profits and continuity within the hotel industry of

Seychelles. In the management vocabularies; this report is a SWOT analysis of the hotel in

question.

Table of Contents

Introduction 01

The Le Meridien Barbarons Hotel 02

Organisation Structure 03

Business Environment 04

PESTAL analysis 04

Analysis of LMB Internal Attributes (strengths & weaknesses)

Analysis of LMB External Conditions (opportunities & threats)

SWOT Analysis Structure of LMB 10

Conclusion & Recommendations (goal & strategy formulation) 12

References 14

Appendices

Introduction

Any analysis of an organisation or business entity is recommended to begin by using the

system thinking approach towards it. This would help understand the organisation‟s system

interrelationship between its different components or departments within. Its application is

known as systems analysis and the important tool for this analysis is the systems thinking.

“System thinking is a way of helping a person to view systems from a broad perspective that

includes seeing overall structures, patterns and cycles in systems, rather than seeing only

specific events in the system” www.systemsthinker.com, 2010. It is also defined as

“Systems thinking is a way of understanding reality that emphasizes the relationships among

a system's parts, rather than the parts themselves” www.systemsthinker.com, 2010. Both the

definitions highlight the fact that system thinking is the understanding of the system on the

whole including all the parts of it and the relationships they maintain with each other.

Likewise this report is in line with emphasizing students of the hospitality management to

understand and use the system theory and approach for analysing hotels‟ structure, operation,

performance, etc. Important part of systems thinking is the analyzing and evaluating of the

SWOT and PESTEL. This report focuses on both. In the same spirit, the data gathered for

the study have been sourced out by going to the subject hotel. It is to be noted that the

management of the Le Meridien Barbarons Hotel and Spa (LMB), was not cooperative.

Statistical data was not given, thus a quantitative analysis has been difficult if not impossible.

The qualitative system approach of the study has been mainly conceptualised and realised

through personal observations and questions on site.

The PESTEL analysis which is necessary to be conducted before the SWOT so as to

understand and absorbed the internal and external factors of the organisation is outline in the

preliminary part of the report together with a detail introduction of the hotel. The

organisation structure in line with decision making is also featured in the first part of the

study. The SWOT evaluation is explained and discussed in the second part.

Le Meridien Barbarons Hotel and Spa

In 1972 Air France launched Le Méridien as a extension of its business ventures to support its

growing airlines in many destinations around the world. From 1972 to 1994, Le Meridien

had 21 Hotels opened in Europe, Africa, and Middle East. In 1997, Meridien was sold by Air

France. Up to date Starwood owns 1000 hotels including 120 luxury & upscale hotels in over

50 countries. Starwood Hotels acquired Le Méridien in 2005 and the following year, Le

Méridien transitioned into Starwood systems and standards.

LMBH closed its doors in 2004 and after a one year renovating construction project reopened

as a 4 stars + hotel now part of the Starwood group. It has in total 124 rooms categorized as

Suites (4), Superiors (38), Deluxe beach front (11), and Standard garden view (71). The hotel

consists of two main restaurants; the Mangrovia (Buffet) and the Cocoteraie (A la carte).

There is a Tapas/Sandwich bar and a main bar (Le Patchoulie) attached with the lobby.

The Le Mangrovia Restaurant is open from 7 to 11 am for Buffet breakfast and from 7 to 10

pm for Theme night Buffet dinner. The price is 45 euro per person excluding 10% service

charge. The La Cocoterai Restaurant is located at the pool side. It offers a la carte Creole

special & Grill for lunch, and, an a la carte fine dining experience for dinner. All prices

includes 10% service charge.

The rooms‟ rates per night on B&B are 325 Euros for Standard garden view, 360 Euros for

superior ocean view, 425 Euros for Deluxe beach front view and 495 Euros for Suite. The

rates given exclude the 10% service charge. HB can be included at 45euros + 10% per

person.

The core mission statement of LMBH is regulated and the Starwood group and most of the

objectives alike. The training manager provided the two main mission points they focussed a

lot upon. These are to provide to their guests not only a great stay but also an active

discovery that they themselves control. Their stay must inspire them to be creative by giving

them a new perspective. That LMBH creates for the guests feeling of personal growth,

enrichment and a sense of community and affiliation beyond delivering a beautiful design, an

accommodating room and a comfortable bed.

Organisation Structure of LMBH

Decision Making

Quality and timely decision making is essential for the success of any firm. In fact, how an

organisation chooses to design its decision-making rules are one of the most fundamental

aspects of its internal design. A firm‟s ability to make good decisions is particularly

important in the face of increasing global competition, and the greater uncertainty from

exposure to more competitors and a greater number more markets that this brings, Brickley et

al (2004).

The decision making strategy of the LMB is as per its Organisation Structure (OS) portrays;

it identifies a balance of power within the executives personnel or the management segment

and the junior authorities within the structure. There is both a flat and tall tendencies within

the structure. This would suggest that the decision takings can be both centralised and

decentralised. It is obviously reasonable to assume that these two are used systematically and

contingently as per situations arises. This is helpful in deciding upon the most effective

solutions to solving major and minor problems respectively, and to yield maximum benefits

from the globalised product markets and from the internal potentials. As a member of the

Global Starwood group, the centralise aspect of LMB‟s OS reflects the corporate‟

management system. It is a mean of having a contingent control over its various hotels‟

market outlets.

Business Environment of the LMB

Business covers complex activities of industry and commerce involving organizing

production, delivering product to customer with ultimate objective of profit maximization.

Business Environment consists of factors that have a bearing on the business, such as the

strengths, weaknesses, internal power relationships and orientations of the organisation;

government policies and regulations; nature of the economy and economic conditions; socio-

cultural factors; demographic trends; natural factors; and, global trends.

PESTEL Analysis

Political and Legal factors:

In Seychelles there exists a strong socialist political regime and a planned economy that is

gradually being transformed into a more free type of market. This dictates a mixed type of

economy which means the government still holds major control over the tourism industry.

The political power is tested through an every five year contest decided by the citizen. The

next election is due in 2011 which gives LMB one more guarantied year of the

macroeconomic stability it is enjoying. It should be noted that the government of the day

offers many opportunities through concessions and minimum policies and regulations for

hotels. This is enjoyed by LMB as an opportunity. As a small island state, there is a scarcity

of labour to sustain the many hotels, thus as a threat LMB has to import foreign labour

increasing cost. The Seychelles Company Law of 1995 is the framework for the current

legislation on corporate governance locally. Under the Company Law, a company is a

separate legal entity in which Directors represent the company. Seychelles belongs to the

Indian Ocean Island state tourism destinations below the line of equator which offers an ideal

climate for the growing world tourist market demand. In this group there are countries like

Mauritius, the Maldives, Reunion, Madagascar, Rodrigue which are direct competitors.

Indirect competitors are Sri Lanka, Malaysia, Vietnam, Thailand, Singapore, Myanmar,

Cambodia, etc. Indirectly it affects LMB by minimising its potential customers though

marginal.

As Seychelles enjoys a stable political environment the hotels operates in a comfortable

environment benefits them both economically and politically. This compliments the

enjoyment of investments on an international playground with brands such as Starwood thus,

Le Meridien, Hilton, the Bayan Tree and the Constance group. This has brought major

economic gains for the country because of its political preferences.

All countries have laws and regulation that governs business so that it has a coneatrol of

what is happening in the business environment. Some laws are beneficial to parties concerns

and some may create discomfort in their business environment.

Economical factor:

Seychelles is considered as a developing country. Due to the government policies and

treasure of national resources, the GDP growth has been increasing rapidly from last few

years. The NSB Statistical Bulletin August 2010 shows an increase in the Bed Occupancy

per night from previous years, from 24.3 to 33.7 in thousands. Visitor arrivals have increased

by 6% from 2009 in contrast to the first three months of 2010. This is an opportunity for

LMB. Seychelles has exclusive tourism resources such as beautiful beaches, all year warm

climate, rich marine fauna and flora. It is among the most expensive tourist destination on

earth. Exchange rate Seychelles Rupee (SCR) per US dollar ~12.50 (2010) compare to ~

SCR08.00 in 2000. The tourism sector and hotels provide major source of income for

industrial production from 12.3% in 2000 to 14.6% in 2010, thus the government encourages

through attractive laws and regulations, all to invest in the local industry. Increase in hotels is

evident and that means increase competition for the LMB. The scale of economies and the

scope of production have increased progressively, and the base of technology also improved

as well. An international competitive have mutually increased in this industry affecting the

macro environment. Then within the country the government allowed schemes for the

training, development and empowerment of the people in this sector, increase local

specialisations and skills. This leads to the LMB business improvement.

The hotel contributes towards the economic benefits of the country, not only towards the tax

that the government receives or the employment made, but also what economist called the

multiplier effects.

The LMB believes in a policy of buying locally, in doing so helps generates the multiplier

effects within the micro economy. In simple terms it means that the LMB creates other small

businesses to operates and prosper, it creates jobs for families, it excites the economic

activities within the country, etc. As part of an international group LMB is among hotels that

the profit is leaked is out into countries of origin. This is what economists described as

leakages in the system. In addition to that, the lack of specialists (especially managerial

human resources) on the local market, LMB has to import them thus leaking more earnings.

Social factor:

Seychelles has a small population increasing at a slow rate, currently estimated at 85000 of

which a significant number lives in foreign countries. The workforce when removing

pensioners and scholars can be estimated at around 40000, thus importation of labour is

essential. Females are roughly equal to males which mean lesser potential workforce. The

above suggest a very high labour cost. Essentially above 95% of its populations are literate.

3.6% of their GDP is spent on education. This country has a rich diversity of cultures and

social behaviours inherited from their multiracial background, thus flexible to workforce

diversification. As the biggest employer, the tourism industry potentially employed 16.7% of

the country‟s manpower, NSB Statistical Bulletin (2010).

The LMB participates actively in corporate social activities and has a dedicated in service

training program for its employees. The hotel promotes different incentives to educate and

motivate all employees. Besides donation to several orphanage villages, the hotel contributes

and hosts several activities that benefit the society in general. LMB has a large intake of STA

students every year for practical trainings; this, in return benefit not only Le Meridien hotel

but the Seychelles tourism industry in general.

In service training is a must at LMB as Starwood the parent company stresses on it and has a

dedicated program. Cross exposure common practice in the hotel and in return the hotel can

identify potential staff for promotion.

Various activities are in place at the hotel to motivate their staff, such as monthly and yearly

staff award, be a guest program, transportation and free meals. A major incentive the hotel

has adopted is the introduction of service charge and yearly bonuses given to all staff.

Even with all these incentives, LMB are faces strong competition to keeping its valuable

staffs. Recently with the completion of Ephelia Resorts, manpower decreases considerably,

this in return has put a negative impact on the hotel. The question is what has generated such

movement of the staff? It was difficult to find as we were not able to get access to a proper

statistical survey to prove our hypothesis. The management also did not provide it.

Technological factor:

Seychelles has a poorly developed transportation system. Tourist usually travels by

expensive taxis. There is an international airport, with water ways and inter air ways linking

most of the 115 islands. The international communication is slow but reliable; the

government is working on linking through the fibre optic cable system. The country is

relatively not too far behind the world technological advancement, thus LMB enjoys the

benefits of such.

Environmental factor:

Due to its geographic location, Seychelles is free from all types of natural disasters. There

are evidently no major natural disasters. It enjoys a rich ecological system as a main resource

for tourism. The LMB is no exception to that; it enjoys a beautiful beach in a peaceful and

quiet area.

Seychelles has strict environmental laws that protect its territory, fauna and flora. The hotel

has to comply with all these rules and regulations that are in place. The country has a good

reputation toward the protection of its environment with almost 50% declared has protected

parks.

This has set limits to which LMB has to comply with regards to its expansion project to the

property making it more attractive with added value.

LMB has a superb beach front view but with a reef barrier close to its beach, this has made

swimming difficult for guests. Even in cases that the hotel would like to create any artificial

swimming area the law prohibits them from doing so.

It is the responsibility of LMB to keep its coastal vegetation and all its vicinity clean at an

acceptable standard. LMB participates actively in maintaining the marshes and mangroves

protection program surrounding the hotel. The hotel contributes in maintaining of the wet

lands that surround its property.

The hotel has to comply with all the environmental issues that include solid wastes and waste

water that it generates. Even if it is a costly program, a considerable amount of their budget

goes towards waste removal and waste water treatment. The hotel has recently invested a

substantial amount of capital towards a new waste water treatment plant that is more

environmentally friendly. Wastes should be disposed as per the environmental laws that are

in force. Any breach of these regulations will result in penalties or strict action taken against

them by the government.

Key finding and analysis:

Seychelles‟ tourism investment climate is ranked attracting in the international comparisons.

Micro- and Macroeconomic instability is still viewed as the biggest obstacle, followed by

corruption in the local economies. Other major obstacles include labour scarcity, low

specialisation rate, tax administration favouring larger foreign corporate bodies and ignoring

the local entities which can help in the multiplier effect benefits, high costs of financing and

unstable labour regulations, high costs of living and uncertainty of the „indigenous

productivity‟. The PESTEL analysis is a macro scanning from LMB‟s perspective. The

factors have indirect impacts on hotels in the country. LMB can yield both threats and

opportunities from them.

SWOT Analysis of Le Meridien Barbarons Hotel

This analysis identifies and analyses Strengths and Weaknesses within LMB, as well as

Opportunities and Threats revealed by information gathered on the external environment. It

is use to develop plan affecting various internal and external factors, and maximises the

potential of the strengths and opportunities while minimising the impact of the weaknesses

and threats. It can be used when developing strategic plan or planning a solutions to

problems. Analysis of the external environment is vital for it is uncontrollable by managers

and affects the hotel. They can be the culture, economy, health, sources of funding,

demographics, etc, of the Seychelles. The internal analysis examines capabilities of LMB

hotel by analysing its strengths and weaknesses especially within the management areas. The

external analysis looks at the main points in the environment, and identifies those that pose

opportunities and those that pose threats or obstacles to performance.

SWOT Analysis Structure of LMB

Strengths Weaknesses

-Latest technological resources (internet, satellite

TV, POS, intranet, Key cards, etc) -Not utilising potential human resource abilities Inte

rn

al

Fa

cto

rs

-Has a well established Brand: 'Starwood' -Poor managerial quality (too dependent on HQ)

-Marketing is centralised at HQ

-Poor staff's performance (lack of effective

control)

-The only large hotel with 4star rating - lower

rates (average annual room occupancy: ~70%) -Poor infrastructure/product quality & quantity

-Has a well established reputation

-Emerging competitors with better products as

per quality & quantity

-Equipped with a standard Conference Centre

-Lacks complete managerial control/low

decision making (? centralised from HQ?)

-Significant number of continuous repeated

guests

-Unreliability of staffs/unwilling and

uncommitted

-Excellent CSR programs (donations, strong

interaction with community, sponsorships, etc) -Poor equipment's quality & quantity

-In-house incentives („2 b a Guest‟, cross

exposures, service charge, monthly/annual

employee awards, monthly resto-lunch, team

building activities,

-Needed importation of foreign labour (high

labour cost)

-Benefits from Starwood consistent trainings &

upgrading

-Poor product supplies and scarcity of quality

products (freshness)

-Plenty of space on property to exploit

(expansion)

Opportunities Threats

Ex

te

rn

al

Fa

ct

ors

-Seychelles' Tourism dependency - main source

of income

-Low frequency flights to and from

western markets

-STB's constant international marketing strategies

-Opening of Ephelia targeting same

market segment

-Government's calls for partnership and supports -Ephelia's new Conference Centre

-STA's constant development training of human

resources -Seychelles unstable economy - inflation

-Closure of Equator and Mahe Beach Hotels

-Frequent world crisis - natural disasters,

wars, financial crisis, etc

-Political stability

-Govt. tax invasion increases payroll

(from 2.5% to 13.5%)

-Fibre optic settings soon to be materialised

-Constant influx of larger hotel

investments in the country

-Increased flights in developed countries-high

income earners

-Seychelles high cost of living -

expensive for its market segment

Positive Negative

Conclusion

As been detailed in the report, the many factors in the LMB business environment are

classified into internal from its microeconomic environment and the external from its

macroeconomic environment. The SWOT evaluation specifically identified them into

strengths and opportunities as the positive factors that can be exploited and/or developed to

yielding maximum benefits and productivity. Weaknesses and threats are negative factors

that can be explored and/or disposed of depending on the situation. Turning them into

beneficial elements is usually done by using the positive to extract their benefits. The matrix

is how LMB use these strengths within the hotel to take advantage of these opportunities in

the external sphere? Secondly, how do LMB overcome the weaknesses inside the hotel that

prevent them taking advantage of these opportunities? Thirdly, how do LMB use these

internal strengths to reduce the likelihood and impact of these external threats? Lastly, how

do management plan to overcome the weaknesses that will make these threats a reality? The

answer to the matrix is theoretically simple as in translating them into tasks for the Project

Plan. This can be effectively done by the managing by objective (MBO) approach.

It should be noted that the management of this establishment were very uncooperative and

that has made this study practically impossible. This supports the reason why the report is

focus on a more qualitative than quantitative approach.

But the management is a strongly decentralise one because therefore most of the executive

decisions are made and/or approved at the Headquarter in the USA. The two sister hotels in

the Seychelles are periodically provided with new strategies and plans for implementing in

the locations. Questions still prevails.

This hotel is located in an attracting and relaxing area with potential for growth that is not

being exploited. It is strongly recommended to any management team that take the challenge

to revise the mission statement with open objectives and try to utilise the internal factors of

its business environment to minimise the negative barriers. After all, management can only

control what are inside the organisation. Opportunities from the outside can be explored to

eliminate the weaknesses from the inside. Any managerial decision should be conducted

through an analysis of both the internal and external spheres so as to yield maximum benefits

and eliminate maximum disadvantages. The LMB hotel is no exception and it is actually not

using its potential capabilities.

References

-Brickley, J., Smith, C., Zimmerman, J. (2004); Managerial Economics and Organisational

Architecture, 3rd

Edition, McGraw-Hill, New York

-Figure 1, NSB Statitical Bulletin, August 2010; Employment 2010 No.2, Percentage of

Formal Employees by Industry: All sectors, January to March 2010

-System Thinking [Online] Available from: www.managehelp.org/misc/defn-

systemsthinking.pdf [Accessed: 20th July 2010]

-Table 1, NSB Statistical Bulletin, July 2010; Visitor Arrivals by Country of Residence

-The System Thinker [Online] Available from:

http//www.thesystemthinker.com/sytemsthinkinglearn.html [Accessed: 14th

July 2010]

-Wendy Boniface, July 2010: Training Manager, Le Meridien Barbarons Hotel & Spa, Grand

Anse, Mahe, PO BOX 626