THE CORE COMPETENCES AND STRATEGIC MANAGEMENT OF RAFFLES

I.

Introduction

The Raffles Hotel was established in 1887 in order to commemorate Stamford

Thomas Raffles who established free trade policy in Singapore for the British East
India Company in 1819. It is on of the few remaining 19th century in the world and
became a national monument upon its centenary in 1987. More a legend than a hotel,
Raffles Hotel Singapore is much heralded as a tourist attraction. The Raffles Hotel
Singapore is the flagship hotel among twelve luxury hotels that operated by Raffles
International Limited and recognized as core business to provide capital for group
expansion. It is consistently rated as the best hotel in the world, but is challenged by
the turbulent market. Hotel industry relies heavily upon tourism. Many hotels slashed
their prices by almost 50%. As of 2004, hotel industry is recovering, but not so
optimistic for the Singapore hotels due to the effect of Southeast Asian bombing.
Hotel industry especially upscale category is income elasticity of demand which
means, as incomes rise, more consumers are capable of seeking luxury hotels, and
there is more opportunity for luxury hotels to take advantage of the situation.
Technology is definitely the driving force of todays hotel industry. With internet,
online reservations, credit card payment, and diversified online services just need few
mouse clicks. Hoteliers are forced to think about how best use technology as a
fundamental part of business and driving force of competitive advantages. The luxury
hotel sector represents the highest level of standards in terms of quality services, staff
excellence and business diversity. Raffles Hotel Singapore is one of the interesting
cases within the luxury hotels sector.
II.

Core Competences

Raffles Hotel is unique because of its rich history. The building standing there
tells us Singapores prosperity and declining in different stages. Its colony civilization
background shaped and formed Raffles Hotel distinct competency and makes hotel
outstanding. Even Westin Stamford, the tallest hotel in Asia standing beside it, still
has to bend down under Raffles- the grand old hotel. The amazing thing is Raffles
Hotel makes the history which is dead become alive. They translated Singapores
colonial era lifestyle into architecture, decoration, cuisine, art, staffs uniform, and
even into service. The original colonial architecture of the three-storey building,
ivory-colored Raffles has appeared on many stamps, postcard and picturesque.
Raffles suites, decorated as the 19 centurys style; Raffles staff, wore colonial
military uniforms and batik clothes with orchid; Raffles service, and old world
nostalgia service; Raffles culture, the older the better All these evoke memories
of Raffles early heydays and differentiate itself from most luxury hotels. Raffles
believes it has strong brand leadership in hotel segment. The strength is evidenced; it
is consistent ranked the best hotel in the world and Asia-Pacific Region. It was rated
highly for its historical landmark, excellent and professional service, security, and
amenities. It benefits from customers penetration and customer loyalty as a result of
highly branding recognition.

The competences represent the personality, ability, knowledge and the skills
factors. Raffles Hotel emphasizes on personalized services and insists on a high staff
to guest ratio of 2:1. By providing sufficient resources, the hotels management
ensures that staffs are not overstrained so that the high level customer care expected
form them is not compromised. Staffs are encouraged to interact with guests in order
to get to know each guests preferences and needs, so as to deliver personalized
services. They are also trained to observe and attend to the smallest needs of guests.
For example, a painting in a suite will be taken down if it is observed that a guest
dislike it.
STRENGTHS
WEAKNESSES
Top market presence
Challenge from price war
Well educated skilled staff
High labor turnover
High quality service
Low
motivation
in
service
providing
Strong facilities capacity
Old building constraints
Management control and discipline
Over rigid management
OPPORTUNITIES
THREATS
Primary market form Asian Pacific
Traditional tourists market declined
Region
Changing in customers needs for
Emerging markets in China and
cheap hotels
India
Strong Singapore currency
Internet-eHotel
III.

Raffles Corporate Strategies

The hotel is a mature industry shows zero or little growth. The possibility for
continued growth is diversification, utilizing existing capabilities and competences to
allow hotel gain competitive advantage over substitutions, and thus attract new
customers coming into the market.
In 2001, Raffles holding acquired Swissotel and diversified its branding to four
star deluxe branding. This strategy is successful because Raffles Hotel picked the
right point to start differentiation. Accordingly, differentiation strategy for service
industry should be designed as late as possible in the value chain, it is most effective
when delivered directly to the customers. Raffles Hotel employed differentiationbased focused strategy targeting at upscale customers. This strategy is successful
because the target market niche is wealthy enough to be profitable and offers good
growth potential. They are extremely rich and will not consider top-end hotels to be
alternatives. They are willing to pay big price premium for the very finest items and
top service available.
The strategy is successful also because it picks a niche that is well suited to its
resource strengths and capabilities. Raffles core competencies and unique
capabilities in serving the target market niche provide the strongest the most
dependable basis to against challengers, also act as an entry barrier to dissuade

potential new entrants. Even if some niche customers have substantial have
bargaining leverage, their power is blunted somewhat by the downside of shifting to
rival hotels which less capable to meet their expectations.
But how long Raffles Hotel will sustain in this niche market? Raffles Holding
realized group long term profitability shouldnt rely solely in this small upscale group
of customers that Raffles Hotel attracted. In particular, they launched a relateddiversification strategy as a corporate level strategy, and started to diversify its
business to four star hotel business and hotel management business.
IV.

Raffles Innovation and Future Sustainability

Raffles Hotel has succeeded in formulating the strategies which fit them the most;
however, several problems arise in implementing these strategies. Firstly, strategies
are all about people. But Raffles HR finds difficult to attract and retain good staffs to
support and complete designed strategic process. To make the job attractive, HR has
signed a bonuses and incentives programs for those who work over one year. In 2000,
Group established the Raffles International Training Center in Singapore, all new
staff now can receive on going

THE CORE COMPETENCES AND STRATEGIC MANAGEMENT OF RAFFLES

HISTORY

True luxury is not just about what you do, its about how you feel.
For 126 years Raffles has gone out of its way to give you the warmest welcome, the
richest experiences and the fondest of memories. And today the legend continues all
around the world. From the classic colonial splendour of Raffles Singapore where it all
began to Dubai, Seychelles, Cambodia, Paris, Beijing, Hainan, Makati and Makkah, the
Raffles name is synonymous with luxury, glamour and extraordinary adventure. Each
hotel is an oasis of calm and charm at the crossroads of a civilisation. Each is a
carefully chosen destination in its own right. Each is uniquely, indefinably, sublimely
Raffles.
Now, as we grow, and reach new and sometimes surprising destinations, our guests
can rest assured that wherever in the world we travel, we will remain distinctly
Raffles - infused with the same spirit of adventure, luxury and sublime service.
Exciting and enchanting, refreshing and reinvigorating, Raffles is loved by those with
an adventurous spirit and a taste for the very best.
Raffles. Legendary service since 1887.

In 1996, there was one hotel in the Raffles Group - the famous Raffles
Hotel in Singapore. In 2001 there are 38 hotels under Raffles management.
The Raffles International brand started in 1989, built around a famous
product associated with top service quality. The word "International" was
introduced to add vision to the brand, and now the brand name stands for the
promise of product and service excellence. Since then, Raffles has acquired
other famous brand names, such as Brown's Hotel in London and Hotel Vier
Jahreszeiten in Germany. Many other property acquisitions have followed,
including the Swissotelchain. The aim is to have 12,000 rooms by the end of
2003.
But despite this rapid niche area growth, there has been a conscious effort to
build a consistent and meaningful brand architecture. The focus of the
business of the Raffles brand is lifestyle, not property, and the Raffles
International master brand has a two-tier strategy. The Raffles-branded
hotels and resorts target affluent leisure and business travelers, while
the Swissotel and Merchant Courthotels aim to give quality and comfort to
modern business travelers. The challenge to Rafflesmanagement was how to
keep the brand equity of all the famous brand names in the portfolio, and yet
build up the equity of the Raffles Internationalmaster brand. The linking is

accomplished by keeping the "Raffles International" name in taglines on all

hotel corporate identity and communications materials. For example, for the
prestigious brand hotel Brown's, the endorsement is "Brown's Hotel, a
Raffles International Hotel," while for the Swissoteland Merchant
Court hotels each name is signed off with a tagline, "Managed by Raffles
International."
It will be interesting to see if consumers actually know the difference, and I
am sure that, after considerable education through market communications,
some research will take place to reveal what actual consumer perceptions
are. There is a slight danger that the prestigious Raffles brand name might
suffer some damage to its image when attached to properties of lesser
stature.
CORE COMPETENCES

Raffles Hotel is unique because of its rich history. The building standing there
tells us Singapores prosperity and declining in different stages. Its colony
civilization background shaped and formed Raffles Hotel distinct competency and
makes hotel outstanding. Even Westin Stamford, the tallest hotel in Asia standing
beside it, still has to bend down under Raffles- the grand old hotel.
(PICTURE OF STAMFORD AND RAFFLES)

They translated Singapores colonial era lifestyle into

architecture, decoration,cuisine, art, staffs uniform, and even into service.

The original colonial architecture of the three-storey building, ivory-colored

Raffles has appeared on many stamps, postcard and picturesque.
(pictures)

Raffles suites, decorated as the 19 centurys style; Raffles staff, wore colonial
military uniforms and batik clothes with orchid; Raffles service, and old world
nostalgia service; Raffles culture, the older the better

Raffles believes it has strong brand leadership in hotel segment. The strength is
evidenced; it is consistent ranked the best hotel in the world and Asia-Pacific
Region. It was rated highly for its historical landmark, excellent and professional
service, security, and amenities. It benefits from customers penetration and
customer loyalty as a result of highly branding recognition.

Raffles Hotel emphasizes on personalized services and insists on a high staff to

guest ratio of 2:1. By providing sufficient resources, the hotels management

ensures that staffs are not overstrained so that the high level customer care
expected form them is not compromised. Staffs are encouraged to interact with
guests in order to get to know each guests preferences and needs, so as to deliver
personalized services. They are also trained to observe and attend to the smallest
needs of guests. For example, a painting in a suite will be taken down if it is
observed that a guest dislike it.
SWOT ANALYSIS
STRENGTHS
Top market presence
Well educated skilled staff
High quality service
Strong facilities capacity
Management control and discipline

WEAKNESSES
Challenge from price war
High labor turnover
Low
motivation
in
service
providing
Old building constraints
Over rigid management
OPPORTUNITIES
THREATS
Primary market form Asian Pacific
Traditional tourists market declined
Region
Changing in customers needs for
Emerging markets in China and
cheap hotels
India
Strong Singapore currency
Internet-eHotel
CORPORATE STRATEGIES

In 2001, Raffles holding acquired Swissotel and diversified its branding to four
star deluxe branding. This strategy is successful because Raffles Hotel picked the
right point to start differentiation.
Raffles Hotel employed differentiation-based focused strategy targeting at upscale
customers. This strategy is successful because the target market niche is wealthy
enough to be profitable and offers good growth potential. They are willing to pay
big price premium for the very finest items and top service available.
The strategy is successful also because it picks a niche that is well suited to its
resource strengths and capabilities. Raffles core competencies and unique
capabilities in serving the target market niche provide the strongest the most
dependable basis to against challengers, also act as an entry barrier to dissuade
potential new entrants.
But how long Raffles Hotel will sustain in this niche market? Raffles Holding
realized group long term profitability shouldnt rely solely in this small upscale
group of customers that Raffles Hotel attracted. In particular, they launched a
related-diversification strategy as a corporate level strategy, and started to
diversify its business to four star hotel business and hotel management business.