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THE MINISTRY OF EDUCATION AND SCIENCE OF

THE KYRGYZ REPUBLIC

KYRGYZ ECONOMIC UNIVERSITY named after M. Ryskulbekov

TOURISM, HOSPITALITY AND ENTERPRENEURSHIP DEPARTMENT

Named after Prof. Dr. Zh.Chuburova

COURSEWORK

EVALUATION OF COMPETITIVE ADVANTAGE BY THE EXAMPLE

OF THE HYATT REGENCY BISHKEK

on ‘International Tourism’ academic course

By Medina Yisabaeva

ID 4079

Coursework Advisor: Date:


Dr. Dinara Bobusheva
Head of Department: Date:
Prof. Dr. Zhanyl Chuburova

Bishkek 2020
KYRGYZ ECONOMIC UNIVERSITY named after Musa Ryskulbekov

TOURISM, HOSPITALITY AND ENTERPRENEURSHIP DEPARTMENT

ABSTRACT

EVALUATION OF COMPETITIVE ADVANTAGE BY THE EXAMPLE

OF THE HYATT REGENCY BISHKEK

COURSEWORK

By Medina Yisabaeva

Hotel industry is an important part of the service sector, which is a combination of activities

aimed at serving the population. A feature of these types of activities is that the product

offered to consumers has served as a service. Continuous growth in hotel competitiveness

requires constant work, both creative and analytical, in order to create new interesting

services, stop production of unprofitable outdated services and improve the existing ones

that are in demand. During the whole process of continuous updating, the main thing is not

to lose the unique atmosphere of the hotel itself, since the atmosphere of the hotel itself can

be an important criterion for its competitiveness.

The relevance of the research topic is competitiveness of hotel business ability to be

flexible, adapt quickly under constant changes in the external environment in order to

increase or maintain its market position.


Coursework Advisor: Dr. Dinara Bobusheva, Ph.D. of Economic Sciences

Signature: Date of approval:

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КЫРГЫЗСКИЙ ЭКОНОМИЧЕСКИЙ УНИВЕРСИТЕТ

ИНСТИТУТ МЕЖДУНАРОДНОЙ ЭКОНОМИКИ, БИЗНЕСА И ТУРИЗМА

ОТДЕЛЕНИЕ ТУРИЗМА, ГОСТЕПРИИМСТВА И ПРЕДПРИНИМАТЕЛЬСТВА

АННОТАЦИЯ

ОЦЕНКА КОНКУРЕНТНОГО ПРЕИМУЩЕСТВА

НА ПРИМЕРЕ ХАЯТТ РИДЖЕНСИ БИШКЕК

Курсовая работа

Медины Ыйсабаевой

Гостиничный бизнес является важной частью сектора услуг, который представляет

собой совокупность мероприятий, направленных на обслуживание населения.

Особенностью этих видов деятельности является то, что товар, предлагаемый

потребителям, обслуживается как услуга. Непрерывный рост

конкурентоспособности отелей требует постоянной творческой и аналитической

работы, чтобы создавать новые интересные услуги, останавливать производство

убыточных устаревших услуг и улучшать существующие, которые пользуются

спросом. Уникальность атмосферы отеля может стать важным критерием его

конкурентоспособности.

Актуальность темы исследования - конкурентоспособность гостиничного бизнеса,


способность быть гибким, быстро адаптироваться в условиях постоянных изменений
внешней среды с целью увеличения или сохранения своей позиции на рынке.

Научный руководитель: Динара Бобушева., к. э. н., доцент

Подпись: Дата утверждения:

iii
ABSTRACT
Hotel industry is an important part of the service sector, which is a combination of activities

aimed at serving the population. A feature of these types of activities is that the product offered

to consumers has served as a service. Continuous growth in hotel competitiveness requires

constant work, both creative and analytical, in order to create new interesting services, stop

production of unprofitable outdated services and improve the existing ones that are in demand.

During the whole process of continuous updating, the main thing is not to lose the unique

atmosphere of the hotel itself, since the atmosphere of the hotel itself can be an important

criterion for its competitiveness.

The relevance of research topic confirms by the needs to assess the competitiveness of hotel

business ability to be flexible, adapt quickly under constant changes in the external environment

in order to increase or maintain its market position.

Key words: competitive advantage, hotel business, hotel services, hotel business improvement,

Hyatt Regency Bishkek, Sheraton.

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TABLE OF CONTENTS:

INTRODUCTION …………………………………………………………………………. 1

CHAPTER I.

THEORETICAL AND METHODOLOGICAL ASPECTS OF THE HOTEL


COMPETITIVENESS: ………………………………………............................................ 3

1.1. Basic nature of the ‘competitive advantage economic category’. .…………………… 3

1.2. Basic indicators of competitive advantage in hotel business. ………………………… 9

CHAPTER II.

EVALUTION OF COMPETITIVE ADVANTAGE IN HOTEL BUSINESS: ………... 16

2.1. Evaluation of competitive advantage of Hyatt Regency, Bishkek. …………………... 16

2.2. Evaluation of competitive advantage of Sheraton, Bishkek. ……………............... 27

CHAPTER III.

PROSPECTIVE IMPROVEMENT OF COMPETITIVE ADVANTAGE OF HYATT


REGENCY, BISHKEK: ………………………………………….………………………. 33

3.1. Comparison of competitive advantage of Hyatt Regency, Bishkek v.v. Sheraton,


Bishkek. ……………………………………………………………...……………….. 33

3.2. Technical proposals on improvement the competitive advantage of Hyatt Regency


Bishkek……………………………………………………………………………….. 39

CONCLUSION …………………………………………………………………………….. 43

BIBLIOGRAPHY ………………………………………………………………………….. 46

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LIST OF TABLES:

Table 1: Liquidity Analysis of Hyatt Hotels Corporation in 2016-2019

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LIST OF FIGURES:

Figure 1: Dynamics of liquidity of Hyatt Hotels Corporation in 2016-2019.


Figure 2: Number of Marriott International hotels worldwide from 2009 to 2019

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LIST OF ACRONYMS:

SAAS Software as a Service


MAR Marriott
HLT Hilton
HRC Hyatt Regency Club
HHC Hyatt Hotels Corporation

viii
INTRODUCTION

The modern tourism industry is one of the most highly profitable sectors of the global economy.

Significant tourism revenues come from both small countries and large developed states. For a

long time hotel business and tourism as two areas of public life were inextricably linked. We are

constantly witnessing how tourism affects the development of hotel business and, conversely,

how the development of tourism depends on the level of hotel business. Today, this industry is a

powerful system of economy of a region or a tourist center and an important component of the

country's economy. In most countries, hotels play an important role, providing opportunities for

business meetings, meetings and conferences, as well as for recreation and entertainment. In this

sense, hotels are just as necessary for the economy and society as well-organized transport,

communications and retail distribution systems for various goods and services. The main, classic

collective type of tourist accommodation is a hotel, the basic principle of organization of which

is the availability of rooms. It is well known that hotels provide a range of required services:

daily bedding, housekeeping and a list of additional and related services.

In fact, the hotel consists of several enterprises, each of which keeps track of its income and

calculates its prices. Every day, thousands of goods and services are sold by the hotel. The work

of each specialized unit requires conscientiousness on the part of the performers and quality

control on the part of the corresponding department, so that many small tasks are carried out as

they should. The success of this work depends on the coordination of the actions of a huge

number of different people.

Hotel industry is an important part of the service sector, which is a combination of activities

aimed at serving the population. A feature of these types of activities is that the product offered

to consumers is served as a service. In modern conditions, when the hotel services market has

developed and operates in the country, which is divided into segments and there is fierce

competition within each segment, to maintain competitiveness it is necessary to develop and,

moreover, continuously.

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The first impression that the guest receives from the hotel complex depends on the work of hotel

services. The task of the head of any hotel is to control the entire process of receiving and

accommodating guests, skillfully resolving conflicts from which the prestige of the hotel may

suffer. The introduction of new information technologies in the hotel business helps to improve

the quality of service while reducing staff.

Computerization of hotels, which began back in the 80s. XX century. At present, is proceeding

rapidly and in two main directions: 1) connecting hotels to the world transnational computer

networks of universal and specialized purpose for the implementation of the function of constant

and quick booking of hotel rooms from anywhere in the world; 2) automation of labor-intensive

technological procedures for hotel management (planning, accounting, control procedures), as

well as automation of technological procedures for life support and security. The most important

function of the administrative service is to maintain the necessary level of comfort and sanitary-

hygienic condition of hotel rooms, as well as public premises.

The relevance of is given coursework is defined as competitiveтness hotel business ability to be

flexible, adapt quickly under constant changes in the external environment in order to increase or

maintain its market position.

Continuous growth in hotel competitiveness requires constant work, both creative and analytical,

in order to create new interesting services, stop production of unprofitable outdated services and

improve the existing ones that are in demand. During the whole process of continuous updating,

the main thing is not to lose the unique atmosphere of the hotel itself, since the atmosphere of the

hotel itself can be an important criterion for its competitiveness.

2
CHAPTER I.

THEORETICAL AND METHODOLOGICAL ASPECTS OF THE HOTEL


COMPETITIVNESS

1.1. Basic nature of the ‘competitive advantage economic category’.

Competitive advantage is a system that has some exclusive value, giving it superiority over

competitors in the economic, technical and organizational fields of activity, the ability to more

effectively manage available resources.

J.J. Lambin gives the following definition of competitive advantage: “These are the

characteristics, properties of a product or brand that create a certain superiority for a company

over its direct competitors”1. These characteristics (attributes) can be very different and apply

both to the product itself (basic service) and to additional services that accompany the basic one,

to forms of production, sales or sales specific to the company or product. The specified

superiority is relative, determined in comparison with the competitor occupying the best position

in the market or in the market segment. The author calls this most dangerous competitor a

priority.

The study of competitiveness is one of essential market research components to develop

strategies and tactics of the subject's activity in the market, choosing the right way to improve the

technical level and quality. In modern vocabulary of domestic industrialists and businessmen the

term “competitiveness”, unfortunately, is used extremely rarely, indicating a weak involvement

of the industry Kyrgyz Republic into the international division of labor and generally low

competition in the domestic market. Meanwhile, gradual integration countries into the global

economic community and the development of competitive environment in the domestic economy

makes the problem of increasing the competitiveness products of Kyrgyz Republic is highly

relevant. In the broadest sense in relation to the economic sphere competitiveness means

possessing properties that create advantages for the subject of economic competition, and these

1
J.J. Lambin. Strategic Marketing Management, 2016.

3
properties can relate to various subjects of competition types of products, enterprises (producers

of goods), industries, and, finally to countries. Competitiveness is seen as in factorial and in the

resulting planes.

Competitive advantages are a concentrated manifestation of superiority over competitors in the

economic, technical, organizational areas of the enterprise, which can be measured by economic

indicators (additional profit, higher profitability, market-share, sales). It must be emphasized that

competitive advantage cannot be equated with the potential capabilities of the company. Unlike

opportunities, this is a fact that is recorded as a result of real and obvious preferences of

customers. That is why in business practice, competitive advantages are the main goal and result

of economic activity.

There is no universal definition of competitiveness and no maybe, and we believe that it can

depend solely on in relation to which object (subject) or subject it belongs. It should be

especially noted that in the economic literature, in including foreign, competitiveness is

interpreted by differently depending on the nature of the object to which this concept applies:

 At the level of goods and enterprises -microcompetitiveness,

 At the level of individual industries – mesocompetitiveness and finally

 At the national level economy of the country - macro-competitiveness.

And between concepts of these three levels there is a close external and internal dependence, as

evidenced by the statement of M. Porter about that the country's competitiveness is determined

competitiveness of enterprises directly accepting participation in the competition in the domestic

and foreign markets1.

In the economic literature, competitive advantages are often identified with the ability of firms to

more effectively manage available resources, i.e. its competitiveness. It should be noted that such

an analogy has good reasons, since the meaning of competitiveness is most often interpreted as

the ability to get ahead of rivals in achieving their economic goals. However, there is a causal

difference between these concepts. Competitiveness is the result of fixing the presence of
1
Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter.

4
competitive advantages; without the latter, competitiveness is impossible. However, the presence

of individual competitive advantages does not mean automatic preference. Only in combination

can they have a decisive influence in choosing the best. In addition, competitiveness is affected

by strategic and tactical changes in the market that are not related to the activities of the

enterprise (changes in demand, demographic shifts, natural phenomena, etc.). From a

comparison of these concepts, an active interest in studying the nature of competitive advantages

becomes clear. It is caused by a desire to understand the mechanism of competitiveness, to reveal

its internal connections.

Competitive advantages are the result of low cost of production, a high degree of differentiation

of goods, reasonable market segmentation, implementation of innovations, quick response to

market needs. They may also include a higher level of labor productivity and qualifications of

production, technical, and commercial personnel; quality and technical level of manufactured

products; managerial skills, strategic thinking at various levels of management, reflected in

economic growth.

The concept of competitive advantage is comparative, and therefore relative, and not absolute,

since it can only be assessed by comparing the characteristics that affect the economic efficiency

of sales.

The main objective of the enterprise is to be better than specific competitors acting with the

company on the same market (with overlapping goals). In this regard, any performance results

should be compared with the results of competitors. For example, in order to evaluate the event

“10% reduction in production costs at the company”, it is necessary to know the same indicator

among competitors. Similarly, if “the firm's market share has increased by 3% over the control

period” and the main competitor has increased by 10–20%, then such an event is difficult to

evaluate positively.

The competitive advantage of the company is not always obvious. In practice, the differences

between the company and its competitors, which are selected to assess advantages or

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disadvantages, can be very subjective, depending on what management attaches importance to -

internal factors, customers or competitors. When forming a competitive advantage, the following

options are possible:

 concentration on competitors, based on a comparison of the company with its closest

competitors (the market environment in this case is characterized by significant

competition);

 customer orientation and customer satisfaction when managers rely mainly on

customer opinions on how the company looks in comparison with competitors;

 market orientation, when attention is paid to both consumers and competitors.

In order for any factor to be not just competitive, but a decisive advantage, it is necessary that it

be of key importance in meeting the needs and at the same time be based on the uniqueness of

the company’s business. Both basic quality and the uniqueness of the product matter.

Factors that determine the competitive advantages of a company as a complex, multifunctional,

open, hierarchical socio-economic system are numerous and diverse in terms of the sources and

nature of their manifestation. Their classification is difficult, but necessary. Often, the following

five groups of competitive advantage factors are distinguished: resource, technological,

innovative, global, and cultural. The given set of factors of competitive advantages can be

supplemented by organizational and structural factors, which J. Schumpeter at one time paid

attention to. These include a large number of factors contributing to a synergistic effect due to:

 restructuring of the company through the sale of unprofitable and unpromising business

units;

 simplification of the production system;

 mergers and acquisitions in strategically promising sectors;

 globalization of business operations1.

So, it is no coincidence that the vast majority of industrial enterprises, banks, financial

companies, communications and communications organizations, trade and other areas of


1
Theory of Economic Development by Joseph Schumpeter

6
economic activity prefer to consolidate their efforts as conditions conducive to increasing their

competitiveness and achieving strategic advantages.

Unlike product competitiveness, an organization’s competitiveness cannot be achieved in a short

period of time. The competitiveness of the organization is achieved with long-term and flawless

work in the market. From this we can conclude that a company operating a longer period of time

in the market has great competitive advantages over a company that is only entering this market

or operating a short period of time in it. In other words, the competitiveness of an organization is

determined by its competitive advantages.

In the theory of competitive advantages developed in the studies of the famous American

scientist M. Porter, there are two types of competitive advantages of the enterprise: low costs and

differentiation of goods. Low costs reflect the ability of the company to develop products with

lower costs than competitors. Differentiation is the ability to provide customers with unique and

greater value in the form of high quality goods, market novelty goods, high quality after-sales

services, etc.

Competitive advantage of any type gives higher efficiency than competitors. Firms with low

costs at equal prices with competitors have the opportunity to make big profits. Accordingly, for

firms with differentiated products, the profit per unit of output will be higher, since

differentiation allows the company to set high prices, which, with equal costs with competitors,

gives large profits.

The competitive advantage of the enterprise may be high competence, which is manifested in

superiority over competitors in the economic, technical, technological, organizational fields of

activity. Often there are two groups of factors that provide a company with competitive

advantages - superiority in resources (best quality, low prices, etc.) and best craftsmanship,

ability, abilities (everything related to the efficiency and quality of all types of work: research,

design , planned, etc.). Of particular importance are the competitive advantages achieved through

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the improvement of the second group of factors, since they require a complex and systematic

organization of work and considerable intellectual effort, but it is difficult to copy them.

Competitive advantages must necessarily be embodied in the product, price, quality of service,

low costs and other indicators of the company and be perceived by the consumer, i.e. they should

be measured, evaluated by economic indicators: higher profitability. a larger market share, a

large sales volume, etc. The advantages that were not realized in the competition are not the

benefits per se, since they did not translate into new performance results and did not lead to a

new state of the company.

Benefits vary by industry. So, for high-tech companies, competitive advantages will be mainly

related to technical superiority, product and technological innovations, for companies serving

mass demand, this is, first of all, brand recognition, low costs, and territorial location.

Competitive advantages should be:

 significant, i.e. stand out from the competition:

 visible, i.e. distinguishable customers,

 significant for the consumer, i.e. bring him perceived benefits,

 sustainable, i.e. maintain its relevance in the face of environmental changes by

unreproducible competitors;

 unique, i.e. benefits cannot be obtained from other manufacturers of the goods;

 profitable for the company, i.e. production volumes, cost structure and market prices for

the goods offered allow you to successfully work in the chosen field of activity and

receive sufficient profit.

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1.2. Basic indicators of competitive advantage in hotel business.

In the conditions of increasing competition in the hotel services market, the problem of ensuring

the competitiveness of the hotel and its services becomes especially significant. Hotel

competitiveness is ability and opportunity accommodation facilities to carry out activities for the

provision of hotel services in a market environment, as well as to have advantages over

competitor hotels and thereby receive additional profit, aimed both at the development of the

hotel and its staff, and at providing quality hotel customer service. Competitiveness is the result

of fixing availability competitive advantages, without which it is impossible to achieve

competitiveness.

It should be noted that the process of creating competitive advantages is very time-consuming

and requires constant work to improve their activities.

It is important to understand that most of the resources that create a competitive advantage for a

hotel can be easily copied by competitors over time. Competitive Advantage Based on

introduction of innovative technologies, sooner or later become available to competitor hotels,

therefore, the timing of innovation should be less than the time for their development and

repetition by competitors. However, competitive advantages such as having a high reputation,

loyal highly qualified personnel, effective marketing, the use of effective management systems

are difficult to copy, because for their development and implementation you need high financial

and time costs, which indicates their high importance in assessing the competitiveness of the

hotel.

Separately, we would like to emphasize the fact that in the field of hospitality only those means

withstand fierce competition accommodations that offer their guests high-quality hotel services,

which is impossible without a highly qualified and motivated staff. The hospitality staff is an

important part of hotel services, and therefore the quality of hotel services depends on his

qualifications, skill, motivation, involvement in the efficient operation of the hotel.

9
Reserves to increase the competitiveness of enterprises operating in the hotel services market

must be sought in high-quality (quality of service and maintenance), economic and marketing

factors influencing it.

The main directions of improving quality indicators hotel competitiveness are the introduction of

international hotel service standards; introduction of modern information technologies that

expand the availability of hotel services; improving the organization of all cycles customer

service of a hotel company; professional development of personnel directly related to the

organization of basic and additional services, etc. To the main directions of improving economic

indicators the competitiveness of hotel enterprises should include the improvement of financial

management and increased efficiency use of financial resources of a hotel company;

improvement of forecasting and budgeting of the hotel enterprise. To the main directions of

improving marketing indicators the competitiveness of hotel enterprises should include:

improving the communication policy of promoting hotel services on the market, the development

of various forms of cooperation with tourism organizations, the media, congress centers, large

corporations, international organizations; improvement of sales policy based on continuous

monitoring of the effectiveness of sales channels; improving pricing based on analysis of supply

and demand, development of discount systems, price differentiation, etc.

However, it should be noted that when developing strategic and operational decisions, the

manager must take into account all factors affecting the competitive position of the hotel;

unidirectional measures will not give desired effect of increasing competitiveness. Competition

in the hotel industry is an effective mechanism to reduce the individual costs of hotel production

services, saving all types of resources, improving the quality of service in the hospitality

industry, the introduction of innovative technologies throughout the entire production cycle of

hotel services, further differentiation of offers in the hospitality industry.

The competitiveness of the hotel can be estimated by some main parameters. The first is the

hotel’s ability to offer consumer hotel product with more attractive characteristics than

10
competitors, and secondly, efficiency hotel market activity, defined as the ratio of received

market result to the costs incurred, thirdly, market a result that allows the hotel to develop quite

successfully in run and meet the needs of the owners as well as the hired staff.

Hotel competitiveness indicators1:

 value and natural (depending on units measurements);

 quantitative and qualitative;

 in absolute and/or ratio format.

All indicators used for marketing analysis activities of a hotel company can be summarized in

the system (groups indicators):

 number and structure of hotel staff (number staff, number of staff per guest, etc.);

 size, structure and dynamics of hotel income enterprises (average price of rooms sold per

day, average the price of available rooms, the growth rate of income, etc.);

 size, structure and dynamics of hotel costs enterprises (average cost of various types of

services with rooms per day, average salary of staff, ratio of fixed and variable costs,

total cost price, etc.)

Business activity of a hotel company (average ratio room loading, average number of daily

rooms ready for rent, average number of rooms sold per day, average daily rate accommodation,

average load factor of beds, etc.);

Demand for hotel services (demand elasticity, determinants of demand, etc.);

Hotel company pricing (average daily rate rooms, average daily rate for the industry average,

price level for Compared with competitors, etc.);

Product competitiveness (single indicators competitiveness, group indicators of competitiveness,

integral indicator of competitiveness (e.g. rating);

The effectiveness of the hotel business in providing services (return on sales, cost, return on

assets, income on one employee, the income received to the planned, etc.);

1
https://reports.weforum.org/

11
The financial results of various departments (average purchase price of one restaurant client,

turnover places in a restaurant, sales volume of catering enterprises, sales volume additional

services, etc.)

Competitiveness Criteria: Guest Satisfaction Hotels can be appreciated thanks to the reviews left.

Guest reviews about staying at the hotel as an effective method of assessing the quality of

service.

Previously, in hotels “Book reviews and proposals” have long disappeared from use. They were

replaced by sheets of questionnaires (reviews) of guests about the quality of service or, in other

words, questionnaires Guest Satisfaction Survey where guests can express their opinions about

the level of service and the quality of the services offered. Analysis of questionnaires allows you

to see the real picture of what is happening in the hotel from the inside, through the eyes of

customers. Based on customer responses it’s easier to identify poor quality service. Very

important directly from the client to receive information about the strengths and weaknesses in

customer service. Candid guest opinions provide significant assistance in improving activities

hotel company. The satisfaction of guests can also be assessed using an online survey.

Customer Satisfaction Survey

The client will not only buy by himself, but will also recommend purchasing hotel goods and

services to friends. This is one of the best ways. measuring customer satisfaction. The survey is

conducted quickly and with minimum cost. Improving the customer satisfaction rating system

aims to constantly monitor the state of satisfaction, the comparison of the results with the

requirements and expectations, identification of trends in their changes in order to adopt

managerial decisions. This direction is very important, as the activity any hotel today exists in

conditions of high competition. Therefore, one of the most important conditions for a successful

existence organization should be its focus on the consumer.

Staff assessment is widely used in hotel enterprises. Human Resource Assessment is a

formalized actions aimed at studying the current state human resources in the organization. For

12
the audit of human resources can be applied a variety of sources and techniques, namely: open

vacancies, layoffs, job descriptions, salary increases, programs training, insurance, interview

results, work schedule, certification, complaints, sales.

An assessment of the management of the quality of services in hotels is provided, due to

compliance with service standards, control systems the services offered. In the hotel industry to

analyze the problem of condition quality of service and organization of management of this

process mainly used quality assessment, which includes various methods for determining

compliance with quality standards, and allowing fair assessment of their activities, to identify

those parties in which may be promising improvement. Main hotels problems:

 staff competence;

 lack of monitoring of the quality of services provided in Hotels

 lack of a clear system for managing the quality of services. Quality hotel product

(services) - a set of its properties that determine his ability to meet customer needs.

In the hotel industry, quality assessment, which includes various methods (interrogative,

organoleptic, etc.) determining compliance with quality standards, allows fair evaluate their

activities, identify those parties in which it is possible promising improvement, widely used for

problem analysis quality of service status and organization management process.

Based on the above material, the conclusion follows that competitiveness is not once and for all

this characteristic, it requires systematic work and adaptation to the external and internal

environment market.

The main feature of the modern world is the introduction of innovation. This trend is inherent in

the hotel business. Potential a hotel services consumer is a person for whom information

technology has become a major component of his life. This is the main the reason for the

introduction of technical innovations in hotels.

Technical innovation can be divided into two categories. To the first category includes

innovations related to technical equipment for internal and external work of the hotel. Data

13
technologies allow to optimize and simplify the work of staff hotels, as well as facilitate access

to hotel services directly to the client. Hotels are currently moving to a new level of booking, and

use Saas technology, more known as “Cloudy”. This technology allows systems receive

subscription information, as well as manage the sales department and hotel marketing.1

In addition to systems that allow you to manage the hotel and carry out employee interactions

with customers, there is a technical equipment providing comfort and safety of living in hotel, as

well as support staff. It equipment and makes up the second category of technical innovation in

hotel business. Today it’s getting harder to attract customers, only comfortable apartments and

convenient geographical location. It becomes a necessity to have such a set of technical services

such as satellite TV, free wireless Internet, phones and this is far from a complete set.

Over 60% of business travelers planning a business trip use the hotel chain mobile app. Came to

such conclusions specialists of GBTA (Global Business Travel Association) during survey

among American business travelers.

Slightly less than half of the respondents (43%) check in the application the status of your order

or operate with points acquired in the program loyalty. About 40% use a mobile app to hotel

reservations. One in four business tourists is looking for restaurants or local attractions app

located near the hotel. And only one in ten uses applications for ordering service in a hotel room.

Over 35% of respondents said mobile apps they do not need hotels, as they can book the same

services online or in person. Every fifth business traveler thinks it’s inappropriate to download a

mobile application to your phone, as stays in a hotel for a very short period.

Tourists who travel frequently interested in having power supplies and USB ports (35%

interviewed). 1% less in favor of streaming service and 32% for Chargers in the room. In 4th

place by the number of given votes turned out to be keyless entry technology in the room (27%)

and on fifth ─ mobile registration (22%).

1
https://searchcloudcomputing.techtarget.com/definition/Software-as-a-Service

14
18% business tourists expressed their desire for hotels to do guest profiles for a more

personalized service. Moreover, 34 % of guests are willing to add their personal data. Thus,

technical innovations for a hotel company guarantee of successful struggle with competitors2.

Fast service should be one of the basic rules of the hotel. Hoteliers are looking for innovations to

incorporate into their facilities. Through the use of new technologies, hotel managers hope to

attract new customers and improve the quality of guest services. Recently, their hotel companies

have been promoting hotels in social media. These include blogs, forums, social networks, video

hosting, free encyclopedia.

For example, on a Facebook page, hotel staff can chat with clients, and between them. This

interaction attracts new customers and increase the loyalty of existing ones. However, in the near

future, hoteliers who do not use innovation in promotion will be less competitive.

2
https://www.gbta.org/

15
CHAPTER II.

EVALUTION OF COMPETITIVE ADVANTAGE IN HOTEL BUSINESS:

2.1. Evaluation of competitive advantage of Hyatt Regency, Bishkek.

Hyatt was founded by Jay Pritzker in 1957 when he purchased the Hyatt House motel adjacent to

the Los Angeles International Airport. Over the following decade, Jay Pritzker and his brother,

Donald Pritzker, working together with other Pritzker family business interests, grew the

company into a North American management and hotel ownership company, which became a

public company in 1962. In 1968, Hyatt International was formed and subsequently became a

separate public company. Hyatt Corporation and Hyatt International Corporation were taken

private by the Pritzker family business interests in 1979 and 1982, respectively. On December

31, 2004, substantially all of the hospitality assets owned by Pritzker family business interests,

including Hyatt Corporation and Hyatt International Corporation, were consolidated under a

single entity, now Hyatt Hotels Corporation1.

Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company

with a portfolio of 19 premier brands. As of December 31, 2018, the Company's portfolio

included more than 850 properties in 60 countries across six continents. The Company's purpose

to care for people so they can be their best informs its business decisions and growth strategy and

is intended to attract and retain top colleagues, build relationships with guests and create value

for shareholders.

The Company's subsidiaries develop, own, operate, manage, franchise, license or provide

services to hotels, resorts, branded residences, vacation ownership properties, and fitness and spa

locations, including under the Park Hyatt®, Miraval®, Grand Hyatt®, Alila®, Andaz®, The

Unbound Collection by Hyatt®, Destination®, Hyatt Regency®, Hyatt®, Hyatt Ziva™, Hyatt

Zilara™, Thompson Hotels®, Hyatt Centric®, Hyatt House®, Hyatt Place®, Joie de Vivre®,

1
https://hospitality-on.com/en/worldwide-hospitality-awards/hyatt-hotels-corporation/hyatt-hotels-corporation

16
tommie™, Hyatt Residence Club and Exhale® brand names, and operates the World of Hyatt®

loyalty program that provides distinct benefits and exclusive experiences to its valued members.

Hyatt Hotels Corporation Purpose, Vision, Mission, and Values

Purpose: To care for people so they can be their best.

Vision: A world of understanding and care.

Mission: To deliver distinctive experiences for their guests.

Values: Respect, integrity, humility, empathy, creativity, and fun are our shared core values1.

Purpose, vision, mission, and values are brought to life by colleagues, whom they refer to as the

Hyatt family. They believe their colleagues embody they purpose of caring for people, including

each other, guests, and ultimately owners.2

This commitment to genuine service and care is what differentiates them and drives guest

preference. The management teams at each of their managed properties lead by example, and

they provide them with the appropriate autonomy to make operational decisions in the best

interest of the hotel and brand. They believe the managers of their franchised properties are

experienced operators with high standards who have demonstrated commitment to their values

and their approach to caring for guests to enhance guest satisfaction. High levels of guest

satisfaction lead to increased guest preference for their brands, which they believe results in a

strengthened revenue base over the long term.

They also believe engaged colleagues will enhance efficient operation of their properties,

resulting in improved financial results for their owners. Sustained adherence to these principles

is a basis for their brand reputation and is one of the principal factors behind the decisions of

their diverse group of owners and developers to invest in the Hyatt portfolio of properties around

the world. They work with existing and prospective owners and developers to increase their

presence around the world, which they expect will lead to guest satisfaction, brand preference,

and new channels for professional growth for colleagues.

1
https://about.hyatt.com/
2
Ibid.

17
Competitive Advantage of Hyatt Hotels Corporation

Hyatt Hotels Corporation has significant competitive strengths that support their mission to

deliver distinctive experiences for guests and goal of being the most preferred brand for their

colleagues, guests, owners, operators, community members, and shareholders.

World Class Brands.

Hyatt Hotels Corporation believe their widely recognized, industry-leading brands provide them

with a competitive advantage in attracting and driving preference. They have consistently

received top rankings, awards, and accolades for service and guest experience from independent

publications and surveys, including Condé Nast Traveler, Travel and Leisure, Forbes, AAA, and

J.D. Power. Hyatt Hotels Corporation brand recognition and strength are key to their ability to

drive preference.

Global Platform with Compelling Growth Potential.

Hyatt Hotels Corporation existing global presence is widely distributed, and hotels operate in

some of the most populous urban centers around the globe. They believe their existing hotels

provide them with a strong platform from which to selectively pursue new growth opportunities

in markets where their brands are under-represented. Their dedicated global development

executives in offices around the world apply experience, judgment, and knowledge to ensure the

Hyatt portfolio of properties enhances preference for their brands.

An important aspect of their compelling growth potential is their strong brand presence in higher

growth markets such as Greater China, India, and the Middle East. The combination of their

existing locations and brands, experienced development team, established third-party

relationships, and significant access to capital provides them with a strong foundation for future

growth and long-term value creation.

Deep Culture and Experienced Management Teams.

Hyatt has a strong culture rooted in values that have supported our past success and form the

foundation for our future. The members of the Hyatt family are united by shared values, a single

18
purpose, and a common goal. Hyatt colleagues at Hyatt properties are led by an experienced

group of general managers. For example, the general managers at their full service managed

hotels have an average tenure of more than 20 years. Regional management teams located

around the world support their hotel general managers by providing resources, mentorship and

coaching, owner support, and other assistance. Senior operating management has an average of

approximately 30 years of experience in the industry. Their seasoned executive management

team sets overall policies for their Company, supports regional teams and colleagues around the

world, provides strategic direction, and leads global growth initiatives.

Strong Capital Base and Disciplined Financial Approach.

Hyatt’s approach is to maintain appropriate levels of financial leverage through industry cycles

and economic downturns. At December 31, 2017, they had cash and cash equivalents and short-

term investments of $552 million and available borrowing capacity of $1.5 billion. They believe

that as a result of their balance sheet strength, they are uniquely positioned to take advantage of

strategic opportunities to develop or acquire properties and brands or invest in new lines of

business. They adhere to a formal investment process in evaluating such opportunities with input

from various groups within their global organization.

Diverse Exposure to Hotel Management, Franchising, Ownership, and Development.

Hyatt Hotels Corporation believe their experience as a multi-brand manager, franchisor, owner,

and developer of hotels makes them one of the best positioned hospitality companies in the

world. Their mix of managed, franchised, and owned properties provides a broad and diverse

base of revenues, profits, and cash flows and gives flexibility to evaluate growth opportunities

across their lines of business.

High-Quality Owned Hotels that are Located in Desirable Markets and are a Source of Capital

for New Growth Investments.

At December 31, 2017, Hyatt’s portfolio of properties consisted of luxury and upper-upscale full

service hotels and resorts, upscale select service hotels, all inclusive and wellness resorts, and

19
other properties including branded spas and fitness studios, residential properties, and vacation

ownership properties in key markets around the world. The portfolio totaled 34 owned properties

and 27 managed or franchised properties that are owned or leased by unconsolidated hospitality

ventures. Their owned full service hotels are located primarily in key markets, including major

business centers and leisure destinations with strong growth potential, such as Chicago, London,

Mexico City, New York, Paris, San Francisco, Miami, Seoul, and Zurich. Their unconsolidated

hospitality ventures include 50% ownership interests in properties in Mumbai and São Paulo. A

number of their owned hotels and unconsolidated hospitality venture properties are unique assets

with high brand recognition and a strong position in local markets.

They believe their owned assets provide them the opportunity to support growth through the

disposition of selected assets to fund expansions of their core business as well as the opportunity

to unlock additional shareholder value through targeted dispositions that allow for incremental

return of capital to shareholders or additional strategic investments that provide new avenues for

growth.

Business Strategy

Hyatt’s strategy to drive long-term sustainable growth and create value for customers,

colleagues, and shareholders is focused on the following three areas:

 Maximize their Core Business: They will continue to grow and run core business to the

best of their ability in order to be best-in-class while generating profits to fuel their

growth.

 Integrate New Growth Platforms: They are identifying new opportunities and areas to

invest in that their guests care about and that provide additional paths for growth

(including wellness and alternative accommodations).

 Optimize Capital Deployment: They are taking a comprehensive and disciplined

approach to their deployment of capital, including selling a portion of their owned

20
properties, which they believe will allow them to fuel the growth of their core business,

invest in new platforms, and return capital to our shareholders.

Hyatt Hotels Corporation implements their strategy through a focus on four strategic priorities:

 Cultivate the Best People and Evolve the Culture

Cultivating the best people and evolving the culture focuses on attracting, developing, rewarding,

and retaining individuals who distinguish Hyatt from our competitors and provide a unique

experience to guests. They recognize their people and their culture are their greatest assets and

the core of their strategy. Their goal is to develop a strong pipeline of diverse and talented

colleagues and to provide them with opportunities to fulfill their personal potential and

development while helping to make Hyatt successful.

Their brands are defined, in large part, by the commitment to genuine service and care that their

colleagues deliver to their guests. They believe that while a great product is necessary for

success, a service model that promotes genuine care for their guests and focuses on particular

needs is the key to a sustainable long-term advantage. Therefore, they strive to involve their

colleagues in deciding how they care for guests and identifying what they can do to improve

guest satisfaction. They rely on their hotel general managers to lead by example and foster

colleague engagement. In addition, they are focused on providing colleagues with the tools and

technology needed to perform their jobs more effectively and efficiently to allow for further

engagement with guests. They believe colleague engagement results in higher levels of customer

satisfaction and improves the performance of their properties. To assist in this process, they aim

to ensure talented management teams are in place worldwide and to reward those teams that

achieve higher levels of colleague engagement, guest satisfaction, hotel financial performance.

Their reputation is a reflection of how they conduct themselves and their business in the

communities in which they live and work. One of our principal tools to enhance Hyatt's

reputation is Hyatt Thrive, their global corporate responsibility program. Through Hyatt Thrive

initiatives, they volunteer in their communities, support organizations that work in their

21
communities, and work to reduce their waste and carbon footprint to make the communities in

which they operate places where they want to live, where guests want to visit, and where their

owners want to invest.

 Build and Deliver Brand-Led Experiences

In support of their goal to become the most preferred hospitality brand and to foster quality

growth, they have focused on creating a meaningful portfolio of brands that deliver unique

experiences for the high-end traveler. Their objective is to differentiate their brands both from

one another and from their competitors. Each of their brands provides a distinct experience for

different traveler mindsets, while all of their hotels strive to deliver genuine care. They have

developed a personality and identity for each brand that results in a distinct look and reflects

experiences and attributes unique to that particular brand.

Successful innovation has been a hallmark of Hyatt since its founding, with a commitment to

impactful architectural design of hotels in both the large-scale convention and smaller leisure

markets. They continuously probe deeper and uncover new opportunities for enhancing the guest

experience in each of brands. They have a long track record of creative approaches to food and

beverage at their hotels throughout the world, and they have created profitable and sought-after

venues that create and enhance demand for hotel properties.

They develop loyalty by fostering personal relationships and creating emotional connections that

inspire brand preference. They believe true loyalty is built by deep interpersonal connections,

authenticity, care, and trust. In 2017, they launched World of Hyatt to continue celebrating

members, build community, and engage with high-end travelers. The World of Hyatt loyalty

program is designed to attract new guests and to demonstrate loyalty to their existing guests. In

addition, the Hyatt Credit Card, a co-branded Visa credit card between Hyatt and Chase Bank

USA, N.A., continues to show strong growth in card member acquisitions and member

engagement.

 Operate with Excellence

22
A key component of their strategy is to maximize revenues and manage costs at their managed

hotel properties. They strive to optimize revenues by focusing on revenue management and

establishing and increasing guest loyalty to their brands. They work to expand Hyatt's share of

room revenue by continuously striving to provide genuine guest service and delivering value to

their guests. Their existing customer base is diverse with different needs and preferences. They

aim to provide differentiated service and product offerings targeted at each customer segment

within each of their brands, including meeting planners and convention guests, leisure guests,

and business travelers, in order to satisfy customers' specific needs.

They manage costs by setting performance goals for their hotel management teams, optimizing

distribution channels, and granting their general managers operational autonomy. They support

these cost management efforts by providing their general managers with tools and analytics from

their regional and corporate offices and by compensating their hotel management teams based on

property performance. In addition to managing hotel level costs, they strive to keep corporate

costs aligned with growth through efficient resource allocation, which they expect will generate

savings supporting their ability to fund additional growth and further invest in their brands.

 Grow With Intent

They are focused on creating long-term shareholder value, and on where and how invest to

expand their presence in key locations. They believe the scale of their presence around the world

is small relative to the recognition of their brands and their excellent reputation for service and,

therefore, they have a unique opportunity to grow.

 Increase Market Presence.

Hyatt focus their expansion efforts on under-penetrated markets where they already have an

established presence and on locations where their guests are traveling but where they do not have

a presence. They intend to expand their presence by increasing the number of hotels in the Hyatt

portfolio, primarily by entering into new management and franchise agreements. In financial

aspect, the competitive advantage of the Hyatt Hotels Corporation has been assessed in terms of

23
liquidity. The data represented in table 1 below illustrate the dynamics of current and quick

liquidity:

24
Table 1.

Dynamics of liquidity of Hyatt Hotels Corporation in 2016-2019.

2016 2017 2018 2019 (est.)


Current Assets 1 139 1 327 1 345 1 363
Current Liabilities 924 992 1 061 1 130
Cash & cash equivalents 482 503 1 014 1 525
Accounts Receivable 304 350 427 504
Short-term investment 56 49 116 183
CR 1,23 1,34 1,27 1,21
QR 0,91 0,91 1,47 1,96

Source: Annual Balance Sheets of Hyatt Hotels Corporation, 2016-2019.

The related figure 1 represents the expecting dynamics of liquidity below:

Liqudity Analysis of Hyatt Hotels Corporation in 2016-2019


2.50

1.96
2.00

1.47
1.50

1.000.91 0.91

0.50

0.00
2016 2017 2018 2019 (est.)

CR QR Polynomial (QR)

Source: Annual Balance Sheets of Hyatt Hotels Corporation, 2016-2019.

They believe their intense focus on each customer group that they serve and their understanding

of how they can serve them in new locations will result in quality growth. Over the past few

years, Hyatt has made significant progress in expanding presence through development of new

hotels and conversion of existing hotels. Additionally, they are focused on continued growth of

development pipeline. They have expanded their pipeline by an average of 12% per year since

25
the time of their IPO in 2009. Since 2009, they have also entered 188 new markets and 17 new

countries.

Expansion in dynamic markets like Greater China and India is central to their growth strategy as

representation in key cities and resort destinations provides them with the opportunity to drive

preference for their brands as they serve a broader base of guests in these high growth and under-

penetrated markets. At December 31, 2017, there were over 140 hotels open or under

development in Greater China in markets such as Beijing, Hong Kong, Shanghai, and Shenzhen.

In India, there were over 50 hotels open or under development at December 31, 2017. In addition

to Greater China and India, they have also announced further expansion plans into diverse

international markets including Canada, Germany, Indonesia, Japan, Pakistan, Saudi Arabia, and

Thailand1.

1
https://about.hyatt.com/
26
2.2 Evaluation of competitive advantage of Sheraton, Bishkek.

Sheraton Hotels and Resorts is an international hotel chain owned by Marriott International. As

of December 31, 2018, Sheraton operates 441 hotels with 155,617 rooms globally, including

locations in North America, Africa, Asia Pacific, Central and South America, Europe, the

Middle East and the Caribbean1.

History

The origins of Sheraton Hotels date to 1933, when Harvard classmates Ernest Henderson and

Robert Moore purchased the Continental Hotel in Cambridge, Massachusetts. In 1937,

Henderson and Moore purchased the Standard Investing Company and made it the company

through which they would run their hotels. Also in 1937, they purchased their second hotel, and

the first as part of the new company, the Stonehaven Hotel in Springfield, Massachusetts, a

converted apartment building. The chain got its name from the third hotel the pair acquired, in

Boston, which already had a large lighted sign on the roof saying "Sheraton Hotel," which was

too expensive to change. Instead, Henderson and Moore decided to call all of their hotels by that

name.

Henderson and Moore purchased Boston's famed Copley Plaza Hotel in 1944, and continued

expanding rapidly, buying existing properties along the East Coast from Maine to Florida. In

1947, Sheraton was the first hotel chain to be listed on the New York Stock Exchange. Sheraton

Hotels merged with U.S. Realty and Improvement Corp. in 1948, forming Sheraton Corporation

of America.

Corporate Structure and Business

Marriott is a worldwide operator, franchisor, and licensor of hotel, residential, and timeshare

properties under numerous brand names at different price and service points. Consistent with

focus on management, franchising, and licensing, they own very few of our lodging properties.

They were organized as a corporation in Delaware in 1997 and became a public company in

1
https://sheraton.marriott.com/about-us/
27
1998 when we were “spun off” as a separate entity by the company formerly named “Marriott

International, Inc.”

They believe that our portfolio of brands, shown in the following table, is the largest and most

compelling range of brands and properties of any lodging company in the world.

They discuss operations in the following reportable business segments: North American Full-

Service, North American Limited-Service, and Asia Pacific. Our Europe, Middle East and

Africa, and Caribbean and Latin America operating segments do not individually meet the

criteria for separate disclosure as reportable segments.

Acquisition of Starwood Hotels & Resorts Worldwide

On September 23, 2016 (the “Merger Date”), we completed the acquisition of Starwood Hotels

& Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc.

(“Starwood”), through a series of transactions (the “Starwood Combination”), after which

Starwood became an indirect wholly-owned subsidiary of Marriott. Their Financial Statements

and related discussions in this report include Starwood’s results of operations only from the

Merger Date through year-end 2018 and reflect the financial position of our combined company

at December 31, 2018 and 2017 except where we specifically state otherwise, such as certain

statistics described under the caption “Performance Measures” in Part II, Item 7.They

refer to their business associated with brands that were in their portfolio before the Starwood

Combination as “Legacy-Marriott” and to the Starwood business and brands that we acquired as

“Legacy-Starwood.” See Footnote 3. Dispositions and Acquisitions for more information.

Starwood Reservations Database Security Incident On November 30, 2018, we announced a data

security incident involving unauthorized access to the Starwood reservations database (the “Data

Security Incident”).They have completed the planned phase out of the operation of the Starwood

reservations database, effective as of the end of 2018. For further information about the Data

Security Incident, see Part II, Item 7 “Management’s Discussion and Analysis of Financial

28
Condition and Results of Operations” and “Data Security Incident” in Footnote 7. Commitments

and Contingencies in Part II, Item 8.

Company-Operated Properties

At year-end 2018, they had 2,020 company-operated properties (566,759 rooms), which included

properties under longterm management or lease agreements with property owners (management

and lease agreements together, the “Operating Agreements”), properties that they own, and home

and condominium communities for which we manage the related owners’ associations.

Terms of our management agreements vary, but they earn a management fee that is typically

composed of a base management fee, which is a percentage of the revenues of the hotel, and an

incentive management fee, which is based on the profits of the hotel. Their management

agreements also typically include reimbursement of costs of operations (both direct and indirect).

Such agreements are generally for initial periods of 20 to 30 years, with options for us to renew

for up to 50 or more additional years. Their lease agreements also vary, but may include fixed

annual rentals plus additional rentals based on a specified percentage of annual revenues that

exceed a fixed amount. Many of our Operating Agreements are subordinated to mortgages or

other liens securing indebtedness of the owners. Many of their Operating Agreements also

permit the owners to terminate the agreement if we do not meet certain performance metrics and

financial returns fail to meet defined levels for a period of time and they have not cured those

deficiencies. In certain circumstances, some of management agreements allow owners to convert

company-operated properties to franchised properties under their brands.

For the lodging facilities they operate, we generally are responsible for hiring, training, and

supervising the managers and employees needed to operate the facilities and for purchasing

supplies, and owners are required to reimburse them for those costs.

They provide centralized reservation services and advertising, marketing, and promotional

services, as well as various accounting and data processing services, and owners are also

required to reimburse them for those costs.

29
Franchised, Licensed, and Unconsolidated Joint Venture Properties

They have franchising, licensing, and joint venture programs that permit hotel owners and

operators and Marriott Vacations Worldwide Corporation (“MVW”), our former timeshare

subsidiary that we spun off in 2011, to use many of their lodging brand names and systems.

Under their hotel franchising programs, they generally receive an initial application fee and

continuing royalty fees, which typically range from four to six percent of room revenues for all

brands, plus two to three percent of food and beverage revenues for certain full-service hotels.

They are a partner in unconsolidated joint ventures that manage and, in some cases, own hotels.

Some of these joint ventures also provide services to franchised hotels. They recognize their

share of these joint ventures’ net income or loss in the “Equity in earnings” caption of Income

Statements. Franchisees and certain joint ventures contribute to marketing and advertising

programs and pay fees for use of centralized reservation systems.

They also receive royalty fees under license agreements with MVW and its affiliates for certain

brands, including Marriott Vacation Club, Grand Residences by Marriott, The Ritz-Carlton

Destination Club, Westin, Sheraton, and for certain existing properties, St. Regis and The

Luxury Collection. They receive license fees from MVW consisting of a fixed annual fee,

adjusted for inflation, plus certain variable fees based on sales volumes.

At year-end 2018, they had 4,735 franchised and licensed properties (729,413 rooms) and 151

unconsolidated joint venture properties (21,196 rooms).

Residential

They use or license our trademarks for the sale of residential real estate, often in conjunction

with hotel development, and receive branding fees for sales of such branded residential real

estate by others. Third-party owners typically construct and sell residences with limited amounts,

if any, of capital at risk. They have used or licensed their JW Marriott, The Ritz-Carlton,

Ritz-Carlton Reserve, W, The Luxury Collection, St. Regis, EDITION, Bulgari, Marriott,

Sheraton, Westin, Four Points, Delta and Autograph Collection brand names and trademarks for

30
residential real estate sales. While the worldwide residential market is very large, we believe the

luxurious nature of residential properties, the quality and exclusivity associated with their

brands, and the hospitality services that they provide, all serve to make residential properties

bearing trademarks distinctive.

Seasonality

In general, business at company-operated and franchised properties fluctuates only moderately

with the seasons and is relatively stable. Business at some resort properties may be seasonal

depending on location.

Relationship with Major Customer

They operate or franchise properties that are owned or leased by Host Hotels & Resorts, Inc.

(“Host”). In addition, Host is a partner in several partnerships that own properties that they

operate under long-term management agreements. See Footnote

Intellectual Property

They operate in a highly competitive industry and their brand names, trademarks, service marks,

trade names, and logos are very important to the sales and marketing of our properties and

services. They believe that their brand names and other intellectual property have come to

represent the highest standards of quality, care, service, and value to customers, guests, and the

traveling public. Accordingly, they register and protect intellectual property where they deem

appropriate and otherwise protect against its unauthorized use.

Brand Portfolio

They believe that their brand portfolio offers the largest and most compelling range of brands

and properties in hospitality, with two overall styles of hotels -- Classic, offering time-honored

hospitality for the modern traveler, and Distinctive, offering memorable experiences with a

unique perspective -- each of which they group into three quality tiers: Luxury, Premium, and

Select.

31
Luxury offers bespoke and superb amenities and services. Classic Luxury hotel brands include

JW Marriott, The Ritz-Carlton, and St. Regis. Our Distinctive Luxury hotel brands include W

Hotels, The Luxury Collection, EDITION, and Bulgari.

Premium offers sophisticated and thoughtful amenities and services. Classic Premium hotel

brands include Marriott Hotels, Sheraton, Delta Hotels, Marriott Executive Apartments, and

Marriott Vacation Club. Our Distinctive Premium hotel brands include Westin, Renaissance, Le

Méridien, Autograph Collection, Gaylord Hotels, Tribute Portfolio, and Design Hotels.

Select offers smart and easy amenities and services with longer stay brands offering amenities

that mirror the comforts of home. Classic Select hotel brands include Courtyard, Residence Inn,

Fairfield by Marriott, SpringHill Suites, Four Points, TownePlace Suites, and Protea Hotels.

Their Distinctive Select hotel brands include Aloft, AC Hotels by Marriott,

Element, and Moxy.

Number of Marriott International hotels worldwide from 2009 to 2019:

32
The related figure 2 represents the dynamics of hotels of Mariott Corporation

1
Source: https://www.statista.com/statistics/247285/number-of-marriott-international-hotels-worldwide/

33
CHAPTER III.

PROSPECTIVE IMPROVEMENT OF COMPETITIVE ADVANTAGE OF

HYATT REGENCY, BISHKEK

3.1. Comparison of competitive advantage of Hyatt Regency, Bishkek v.v.

Sheraton, Bishkek.

A competitive advantage exists when the firm is able to deliver the same benefits as competitors

but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products

(differentiation advantage). Competitive advantage is a theory that seeks to address some of the

criticisms of comparative advantage. Competitive advantage theory suggests that states and

businesses should pursue policies that create high-quality goods to sell at high prices in the

market1. M. Porter emphasizes productivity growth as the focus of national strategies 2.

Competitive advantage occurs when an organization acquires or develops an attribute or

combination of attributes that allows it to outperform its competitors.

Today, Hyatt operates under 3 business segments:

1. Hotels and all-inclusive resorts: Hyatt operates hotels and resorts by management model,

franchise model, or owned and leased model. The company operates nine brands. Marriott

(MAR), Hilton (HLT), and Starwood (HOT) are some of its major competitors in the hotel

segment.

2. Residential units: The company licenses trademarks to be used for residential units. Hyatt

owns one of these residential units. Marriott (MAR) and Starwood (HOT) are some of the

major competitors in the residential units segment.

3. Vacation ownership units: Hyatt previously developed, operated, marketed, and sold

timeshare intervals and fractional ownerships under the Hyatt Residence Club brand name.

1
Types of Competitive Advantage and Analysis Wang, Wen-Cheng.
2
Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter.

34
The company sold off its vacation ownership business to ILG in October 2014. Hyatt has a

master licensing agreement in which it receives a license fee to allow ILG to use its trademarks.

The company competes with Marriott (MAR), Starwood (HOT), and Wyndham (WYN) in the

timeshare segment1.

The services of the brand are the segmented basis on the bundle of offerings, ambience,

complimentary services like Spa, Gym, Hygiene factor, pricing and staffs, housekeeping services

and locality at which these hotels, resorts & properties of the brand located.

Strong Financial Company: Pilling up with the cash and the short-term investments $538 million

along with the borrowing capacity of $ 1.4 billion which is supported by the real estate properties

that the company have in the strategic locations globally is the confidence building factor for the

company2.

Renowned Brands: In a hospitality industry the intangible things have a great impact on the

demand pattern, just like the company have leading brands in its portfolio due to which Hyatt

Hotels have received various awards, accolades and top ranking from Forbes, Fortune,

Interbrand and various others because of the user experiences & services it has delivered to the

customers.

The brand Hyatt Hotels operates in the strategic businesses such as Upper Upscale, Luxury,

Upscale and Branded Residentially and General Hotels.

In the Upper Upscale category, Hyatt has the chain of Hotels such as Hyatt Regency, Hyatt, and

Hyatt Centric contributing revenue of around 50% and is, therefore, is starring in the BCG

matrix.

In Luxury segment, it has Park Hyatt, Grand Hyatt, and Andaz generating revenue of around

20% and is, therefore, is starring in the BCG matrix. The other segments constitute of hotels such

as Hyatt Place, Hyatt House, Hyatt Ziva, and Hyatt Zilara. These are 3-4 stars hotels which

1
https://www.marketing91.com/marketing-strategy-of-hyatt/
2
https://www.owler.com/company/hyatt

35
compete with a large number of international and national hotels, therefore, it is the question

mark in the BCG matrix.

The Global hospitality company has been ranked 9th in Fortune 500 magazine and 17th in the

list of Best Employers for Diversity1.

The brand manages state of the art properties globally in form of hotels, residential & vacations

properties. The differentiating experiences coupled with the loyalty programs in the name of

World of Hyatt has helped the brand in increasing repeat customers and brand value over the

years.

Market analysis in the Marketing strategy of Hyatt with the advent of health tourism and

increasing business activities across the borders in tourism and hospitality industry, there has

been the vast increase in the investments such that it has become top 10 sectors attracting foreign

professionals and tourists.

Hyatt Hotels believe in comprehensive understanding of customer’s wants and desires.

Company is focused on putting its best foot forward by offering excellent products and services

in luxurious settings. They have a dedicated team where researchers offer their opinion on best

options that are suitable to meet the requirements of both customers and company. Hyatt Hotels

have adopted a premium pricing policy for its products as they cater to both high-profile business

class and upper class section of society.

This policy have proved to be a success as customers who are part of Hyatt Hotels are interested

more on service quotient than on prices. Hyatt realizes that high volume will lead to greater

revenues and hence it offers discounts on group bookings as well as on extended stays. Vouchers

for meals, complimentary suites, and lucrative deals for regular customers are some of the ways

in which it tries to cut down its premium prices for regular customers.

Hyatt has implemented a top-notch marketing strategy that is especially designed to build and

maintain positive awareness and brand value by meeting every conceivable need of the

1
https://fortune.com/best-companies/2019/hyatt-hotels/

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customer. It offers several schemes for the benefit of its customers. Hyatt rewards the loyalty of

regular clients via signature membership card called Hyatt Gold Passport.

It is a reward program offering discounts and promotions to members. Voucher cards are offered

to customers if their stay extends to more than two consecutive nights. Hotel chain has several

eloquent taglines like- We care for people so they can be their best and you’re more than

welcome. In year 2016, Hyatt was ranked at 47th position in terms of best US Company by

Fortune magazine1.Guests at Hyatt are their best advertising mediums as top services prompt the

guests in hotel promotion through mouth publicity.

Hyatt has tied up with and has created distinctive guest segments, network of which is helping

the brand in further growing the businesses of the company. Since the time of launch of its IPO

in 2009, the company has increased its pipeline by 12% per year on an average which has helped

the company in entering 45 markets and 15 new countries2.

Hyatt hotels corporation code of business conduct and ethics: Doing what’s right

 At Hyatt, they are in the business of caring for people so they can be their best

 To be at their best, both as individuals and as an organization, they act ethically and

follow the laws and requirements that apply where they do business.

 Their code is intended to help them make the best choices at work.

 Their Code applies to everyone in the Hyatt family — including colleagues supervisors,

managers, leaders, senior management, and the board of directors.

 They ask questions when they need guidance. They speak up if they think something is

wrong.

How they treat one another

 Mutual Respect

They contribute to a positive work environment by treating everyone around them the

way they hope to be treated. They never insult, bully, or harass others.

1
https://fortune.com/best-companies/2016/hyatt/
2
https://www.owler.com/company/hyatt

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 Diversity & Inclusion

They treat everyone with kindness and professionalism and make fair employment

decisions.

 Safe Workplace

They work hard to ensure that their workplace is free of unsafe conditions or violence.

 Human Rights

They support and respect the rights of their colleagues, guests, and members of their

communities.

How they protect information and assets

 Confidential Information

They protect the confidential information of their Company, their colleagues, guests, and

their business partners.

 Protection and Proper Use of Assets

They demonstrate good judgment regarding the Company’s property and assets. They use

these responsibly and only for business activities.

How they demonstrate integrity in their business dealings

 Gifts and Entertainment

When they exchange gifts and entertainment, they use good judgment.

 Bribes and Kickbacks

They don’t make promises or grant favors in exchange for a business advantage, and they

comply with all laws that prohibit bribery.

 Competition and Fair Dealing

They compete fairly and never make agreements (in person or in) writing, formally or

informally) with competitors that could restrict competition.

How they communicate honestly and transparently

 Responsible and Communication

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They communicate truthfully, accurately, and consistently about the Company, and do

not speak publicly on the Company’s behalf unless authorized.

 Accurate and Transparent Records And Financial Reports

They maintain correct and complete financial accounts and have internal controls in place

to provide accurate and reliable financial reporting.

How they act as responsible professionals

 Conflicts of Interest and Corporate Opportunities

They seek to avoid conflicts of interest or even the appearance of a conflict, and we

disclose any conflicts that they become aware of.

 Insider Trading

They don’t trade in the securities of Hyatt or provide tips to others based on material,

non-public information.

 Political Involvement

They respect individual political participation, but political participation needs to remain

separate from company business.

How they care for their communities and planet

They have a commitment to corporate social responsibility and sustainable business practices1.

1
Hyatt hotels corporation code of business conduct and ethics, 2020.

39
3.2. Technical proposals on improvement the competitive advantage of Hyatt Regency

Bishkek.

Any organization is located and operates in the environment. Each action of all organizations

without exception is possible only if the environment allows its implementation. The internal

environment of the organization is the source of its vitality. It contains the potential that enables

the organization to function, and, therefore, to exist and survive in a certain period of time. But

the internal environment can also be a source of problems and even the death of the organization

if it does not provide the necessary functioning of the organization.

Competitive advantages are not eternal, they are conquered and maintained only with the

continuous improvement of all areas of activity, which is a laborious and, as a rule, expensive

process.

The company's reputation has developed over a long time and depends on many factors.

Therefore, maintaining a good reputation is one of the main tasks that company leaders set for

themselves to achieve success.

The hospitality industry continues to evolve. Millennials crave adventure on their getaways, not

simply luxurious accommodations. People of all ages take better care of their physical selves

even while they travel.

To gain an edge over the competition, hoteliers must create a unique brand. They should offer in-

demand perks and exercise creativity when inventing one-of-a-kind experiences.

In order to choose the right competitive advantage, it is necessary to conduct a comparative

analysis of the conditions for the provision of hotel services by competitors. The most successful

examples of competitive advantages for the hotel industry:

 Service leadership

 Focusing on the quality of service of certain customer groups

 Advantage of low price (provided there is the possibility of obtaining higher profits in

comparison with competitors)

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 Convenience of using the service and minimizing the time of the client

 Providing free meals or other additional services

 The most profitable loyalty programs that encourage re-purchases and more frequent use

of hotel services

 Convenient hotel location for certain customer groups

 The presence of all necessary additional services (conference room, wi-fi, internet, pool,

beauty salon, restaurant, etc.)

 A unique style of decorating and servicing the hotel, allowing the consumer to immerse

themselves in a completely new environment

Cater to International Travelers

International travel is increasing. Airports Council International named Dubai International

Airport the busiest hub worldwide. What does this mean for hoteliers?

Managers can offer promotional materials and activity guides in a variety of languages. They can

hire multilingual staff whenever possible. This makes it easier for guests to communicate clearly

with employees. They should check their booking pages to ensure the text translates well.

Provide More Spacious Accommodations

The bed takes center stage in many traditional hotel rooms. While this arrangement works for

travelers who only need a place to rest, it leaves others frustrated. People on extended business

trips want spacious work areas. Families with children appreciate room for them to play on the

floor. Parents don’t want to roll over on a Lego in the middle of the night.

However, when remodel, consider adding features like swing wall beds. Such devices offer

guests a way to transform their space and create more floor area for work or exercise. They can

adjoin rooms, giving teenagers privacy while keeping them safe.

Create an Experiential Getaway

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Travelers today crave adventure. They want to immerse themselves in their destination and trek

off the beaten path. Hotel owners benefit from expanding concierge services to create an

experiential getaway.

Hotel can partner with local adventure outfitters like scuba dive companies. They can provide

guides for guests leery of exploring a new city. Even including perks like errand running and dry

cleaning gives travelers more time to focus on fun, not picking up necessary groceries.

Enhance Fitness and Spa Facilities

Today’s travelers care about their health and physical appearance. Hoteliers of yesteryear often

placed a few pieces of secondhand equipment in a spare closet and called it a fitness facility.

Today’s guests demand more.

Some hotels are adding fitness equipment to guest rooms and streaming pilates classes via on-

demand TV. Others expand their present facilities with upgraded equipment. You can also

partner with instructors who offer specialty classes like yoga.

Institute of Sustainability Measures

Guests seek accommodations that take measures to protect the planet. Fully 73% of millennial

report they’ll pay more for eco-friendly brands. If it’s time to expand your facility, consider

pursuing LEED certification by complying with green building initiatives.

Even if it’s not time to remodel, small upgrades make a big difference. Install automatic light

and climate controls in guest rooms. When travelers exit, such devices turn off lamps and TVs

and adjust the thermostat. Swap out tiny plastic shampoo and body wash bottles for larger,

multiuse dispensers. If your facility features a restaurant, serve locally grown produce.

Offer Unique Brand Perks

Guests return when they enjoy one-of-a-kind perks they can’t find elsewhere. Some facilities

offer wine tastings and even hangover concierge services for travelers who overindulge. Others

offer family packs containing small toys and coloring books.

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When considering perks to make your brand unique, keep your target market in mind. For

example Hyatt can run a convention center that caters to business travelers, remember, they

crave the technology necessary to work on the road. Invest in a dual Wi-Fi system. Keep one

public for use in meeting rooms and make the other secure and available only to paid guests.

Executives don’t want to rearrange furniture to find outlets to charge their devices. Install

charging ports in all guest rooms with space for phones and tablets aplenty.

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CONCLUSION

In the new millennium, tourism has firmly established itself in many countries as the main

branch of the economy and the fastest growing economic sector, which guarantees the influx of

foreign currency and the creation of jobs. International tourism provides the highest export

earnings in the world and is an important factor in ensuring the balance of payments for most

countries.

The practice of servicing the Kyrgyz Republic’s hospitality and tourism industry follows the

laws of the development of international tourism and is closely connected not only with the

expansion of legal and economic rights and responsibilities, but also with the need to introduce a

flexible system for managing their activities that is maximally adapted to changes in the

surrounding competitive market environment.

The provision of tourism and hotel and restaurant services as related elements of the service

infrastructure is currently one of the rapidly developing areas of business activity. The growth of

supply and demand in the field of tourism and social and cultural services is characteristic both

for most developed foreign countries and for Kyrgyz Republic.

If for the West this growth is mainly connected with an increase in wealth, an increase in

purchasing power, and an expansion of the sphere of population’s requests, for Kyrgyz Republic,

which is in a state of stagnation and decline, close to collapse, such a situation may seem

incomprehensible at first glance.

With the gradual development of civilized market relations in Kyrgyz Republic, with the

expansion and expansion of the sphere of real production, individual and medium-sized

businesses, with the growth of the middle class, the society in Kyrgyz Republic will increase and

differentiate the needs for tourist services and related services. A trend towards this has been

observed in recent years, and those hotel enterprises that will be able to correctly assess changes

in needs, market conditions and choose the appropriate business strategy, that is, will benefit.

44
correctly implement progressive conceptual principles and specific methods of strategic

management and marketing in the organization of their work.

The hotel business in our republic has changed significantly. In the very understanding of the

hotel business, such categories as income, return on investment, profit, service, customer

acquisition, solving tasks with minimum resources, reducing dependence on various factors

uncontrollable by management have come to the fore. Under these conditions, modern

management methods and, of course, its quality are of paramount importance in the hotel

industry. Moreover, only effective management is capable of provide the right and right

decisions in financial management, personnel management, long-term budget planning, in the

development of new forms and methods of organizing the production activities of the company.

Management is aimed at ensuring rational and pragmatic business management at the firm level

in conditions of scarcity of resources, the need to achieve high end results with minimal costs. In

hotel management there is no ideal and unified management model.

Nowadays, the hotel industry is an industry with a high level of competition. Increasingly, we

are witnessing how a new hotel opens. New concepts are created with the goal of fully satisfying

the needs of certain consumer groups. Enterprises are created, and after some time some of them

cannot withstand competition and go out of business. In the hotel industry, the word "service"

means a system of measures that provide a high level of comfort, satisfying the most diverse

household, economic and cultural needs of guests. And every year, these requests and

requirements for services are increasing. And the higher the culture and quality of guest services,

the higher the image of the hotel, the more attractive it is for customers and, no less important

today, the more successful the material prosperity of the hotel.

Today, Hyatt Corporation is one of the strongest and most competitive hotels in the world. One

of the most effective success factors for Global Hyatt is the philosophy of using national art in

the decor and design of hotels. Reflecting the lifestyle, culture and heritage of the country where

45
the hotel is located and focusing on locally produced products and national cuisine, Hyatt has

become a truly international company.

Hyatt has a bright future, building more and more new hotels in different countries of the world.

The corporation is constantly introducing new ideas in various aspects of hotel operations,

especially in the concept of the service sector, restaurant and bar, as well as computer

technology. It is the constant pursuit of new and better means of service that has made Global

Hyatt the successful and competitive company in today’s market.

The hospitality industry has now reached a state where it can be assessed as stable. When you

strive for this state, you wait for it for a very long time. Then everything starts to level out; new

cadres and young people appear in the industry. There is a desire to learn from experience.

Today, guests should receive maximum satisfaction from their stay at the hotel. In this regard, all

programs provide for the reorientation of employees and industry enterprises to high-quality

services for those arriving in the capital for tourist purposes, whether business, specialized or

educational tourism. Interest in Kyrgyz Republic is growing steadily, which is confirmed by the

data of the World Tourism Organization. The structure of the industry will develop, the number

of jobs will increase, and those who work and will work in the hospitality industry are

guaranteed stable and high earnings. At the same time, one must be prepared to work in

conditions of increasing competition. New hotel enterprises, of course, will form tougher

competition conditions, and not only managers, but all personnel together must prepare for them

accordingly.

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