DECLARATION OF

WORK

1. This is compiled by
me.
2. This work has not
been accepted in
any previous
application for a degree or diploma, by me or anyone else.
 3. All the work in this assignment is completely done by me.
4. All verbatim extracts have been distinguished by quotation marks and the sources
of my information have specifically been acknowledged.

Date:
________________

Jana van der Merwe:

_______________

Contents

Executive summary……………………………………………………………………… 4

Introduction ……………………………………………………………………………… 5
The SWOT analysis
- SWOT analysis of the Michelangelo……………………………………………6

- SWOT analysis of the new service ………………………………………….10

Benchmarking……………………………………………………………………………12

Market Segmentation ……………………………………………………………………16

Description of the new service …………………………………………………………

EXECUTIVE SUMMARY
Within the hospitality industry, various factors need to be considered when a hotel wants
to add a new product or service. A great deal of thought has gone into the marketing side
of adding a new service to this hotel and it is of great importance that the finances are
finely and accurately calculated and that the project is thoroughly planned.

The marketing section is divided into three main parts: the marketing mix;
communication plan, which will also cover the promotional mix; and the segmentations
of the target group. Without proper research and the above mentioned factors, the hotel
will be unable to properly promote and create awareness about this new service, which
could result in the hotel leading to a major downfall of profits and potential clients.

The new service of the Michelangelo Hotel is having an African themed rooftop
restaurant and cocktail lounge overlooking the entire metropolitan area of Sandton City.
This will be an amazing cultural and dining experience for any client. The restaurant will
be surrounded by ethnic African dancers with upbeat music and will have a specialty
African or regular al la carte menu.

It is important to consider the financial division when adding this service to the hotel, as
one must know what equipment and other contributing elements is needed. By knowing
these costs it is possible for the hotel to be able to see that by adding this service how
both the hotel as well as the guests will be able to benefit from this additional service. To
ensure that potential guests are completely aware of this new service, the marketing
department must plan and budget very carefully.

By adding this new service to the hotel, it is possible to make the “African dream” a
modern reality.
INTRODUCTION

As a member of the Leading Hotels of the world, The Michelangelo Hotel is a 5 star
luxury hotel set in one of the fastest moving cities in the world. With its signature
Renaissance architecture, elegance, extraordinary facilities and service excellence, the
Michelangelo makes a lasting impression from the moment one arrives. The
Michelangelo Hotel is situated in the Nelson Mandela square in the bustling metropolis
of Johannesburg and is a perfect complement to Sandton’s exclusive business district.
Towering over this lively city, this Hotel offers a spectacular view as it is tallest building
of this area. By adding a Rooftop African themed restaurant and cocktail lounge to this
Hotel, one can experience the true “African dream” brought to the modern metropolitan
of Johannesburg.

SWOT ANALYSIS OF THE MICHELANGELO

A SWOT analysis is a technique used to assist the Marketing department in order to asses
a product (Stimpson & Borrington, 2010). For the implementation of strategic planning
 for any company, it is useful to make an analysis that takes into account not only their
business, but complete your competitors 'activities' and events in progress in the industry.
The SWOT analysis is one such analysis (M. Morison, 2008). The components of a
SWOT analysis helps to minimize the potential impact of the weaknesses in your
business while maximizing your strengths. Ideally, one plays strengths against market
opportunities caused by shortcomings in the products of competitors and / or services.
By using a SWOT analysis, one can asses the strengths, weaknesses, opportunities and
threats of a product or service. A SWOT analysis can also be used to review the business
as a whole (M. Morrison, 2008).

The following SWOT analysis is a reflection of both the internal (strengths and
weaknesses) and external (Opportunities and Threats) factors of the Michelangelo hotel.

INTERNAL
Strengths Weaknesses
POSITIVE

NEGATIVE
- Very Competitive hotel - Expensive room rates
- Part of Leading Hotels of the world - Poor maintenance and upkeep
- Good reputation - Food quality not up to standard
- Location
- Not enough variety of dining
- Strong ethical values and mission
places within the hotel
statement
- Experienced, resourceful and
dedicated workforce
- Popular destination for both leisure
and business travelers

Opportunities Threats

- Growing Market - Staff turnover to competitors

- Location (view) - Economic slowdown
- Overprovision of hotels in the area
- Has the opportunity to expand its
(competitors)
restaurant
- Decline in foreign guests due to
the ending of the FIFA World Cup
EXTERNAL
Table 1.1

As seen in the SWOT analysis (Table 1.1), the Michelangelo has much internal strength.
This simply means that the Michelangelo posses certain characteristics that other hotels
do not have or posses in such abundance. These factors all contribute to the popularity of
this hotel, therefore bringing in more and more clients and more profit. The location,
which is perhaps the biggest strength of this hotel, is due to the fact that no other hotel in
the area is as comfortably situated or close to the shopping district of Sandton city as the
Michelangelo. The hotel therefore offers an unlimited haven for any traveler after
shopping at Sandton City Centre. It is also the tallest building in the area, offering
breathtaking views of the city. Thus this hotel has the perfect location that enables easy
access as well as amazing views to the entertainment and corporate capitol of Africa

Due to the fact that the Michelangelo is a member of Leading Hotels of the World ( ),
there is a lot more arousal around this hotel as it is the only hotel in the area that has
accomplished this standard of excellence. This factor produces thus a massive strength
for this hotel as none of the Michelangelo’s main competitors (the Westcliff Hotel, The
Ten Bompas and the Palazzo Monte Casino) have received this prestigious reward. This
hotel is the most popular hotel for both leisure and business, which is a good strong point
for the Michelangelo, as other hotels are not as orientated on both leisure and business
and are often unwelcoming corporate hotels.

The staff of the Michelangelo creates the standard for all the others in the area as it has
been described by some as simply the best service in and around the area: “The best
service that I, or my colleges, have ever encountered” (Tripadvisor, 2010). This
dedicated workforce is a major strength of this hotel as it has opened the door to so many
more potential clients.

It is said that that the weakness of a hotel is the most important of the SWOT analysis, as
this is an internal problem that the hotel can change or improve (Stimpson & Borrington,
2006). As any other hotel in the Hospitality Industry, it cannot be flawless. The
expensive rack room rates of this hotel, poor upkeep and maintenance issues present
weaknesses of this hotel. These weaknesses, however small or big, can influence the
hotel in such an enormous way. The hotel can very easily lose clients if they should
receive poor service or experience facilities at such a low levels that they may never
return and in turn, lose al lot of profit. The high prices of this hotel cannot necessarily be
attached to the service and facilities of the hotel. When people pay such a high fee for a
hotel, their expectations are very high and should maintenance and upkeep issues not be
addressed or met up to standards, then people will refuse to pay such excessive amounts
in the future.

External opportunities such as the opportunity to take full advantage of the growing
market are present. The hotel is a very high class hotel with a good reputation and lots of
recognition. The Michelangelo also has a USP due to the vertical magnitude of the hotel
It has the opportunity of taking full advantage of the roof top and all the amazing views
there are to offer. The hotel has the ability to utilize the open rooftop and create a new
restaurant and cocktail lounge as it has a lot of space and available resources to be able to
do this. This will draw in more consumers and ideally, bring in more profit.

Opportunities should be analyzed and see if any elements can contribute to controlling
the external threats (Morrison, M. 2008). Threats seen in the hotel are mainly the
competition from competitor hotels. By looking at the Position matrix (Figure xxx), it is
clear that all these competitors are in the same class as the Michelangelo, offer a big
threat to the hotel as they can offer cheaper prices for more or less the same service,
facilities and guests experiences. Sandton is an upper class area that is always changing
with technology. The Michelangelo has a big challenge in order to stay at the top.
Clientele will be expecting the best services and facilities. The other major threat to the
hotel is the fact that there is a big decrease in the total amount of foreign visitors after the
ending of the world cup. This was a very convenient location for all soccer fanatics, as it
is close to the Guatrain, but now the hotel must find an alternative way to bring up its
occupancy again to be able to have the same profit turnover.
 SWOT ANALYSIS FOR NEW SERVICE: A ROOFTOP RESTAURANT AND
COCKTAIL LOUNGE

The following SWOT analysis is a possible reflection of the internal and external factors
that will influence the opening of a new rooftop restaurant as well as how it will be
beneficial for both the hotel and the guest.
 INTERNAL
POSITIVE Strengths: Weaknesses:

- Good brand image for the hotel
- Unique selling point (USP)
- Good cultural environment
NEGATIVE
- Construction time will take
time
- Limited seating available
- Increase in labour costs of
additional staff

Opportunities: Threats:
- Increase image for the hotel - Unpredictable weather
- Encourage more guests to stay at - Noise (from the traffic below)
the hotel
- Increase in profit turnover
EXTERNAL
Table 1.2
This new rooftop restaurant and cocktail lounge will provide a new cultural dimension
and raise cultural experiences of this vibrant country to a new level. Not only will it
create awareness of all the different cultures in this country, but will also display how
proud South Africans can be of this amazing cultural diversity. This will also increase
the image of the hotel for not only foreign visitors, but also for local individuals as it will
clearly showcase that South Africa is proud of its heritage.

This would be the only rooftop restaurant and cocktail lounge in the area, making this
the ultimate USP (Unique Selling Point) which makes this a good strength for the hotel.

These above mentioned factors (as seen in Table 1.2), will greatly improve the dining
experience of any guests and will also improve the image of the Michelangelo, as people
have a hunger for cultural experiences (****reference****), especially foreign guests.

It should be kept in mind that building this restaurant will take some time and that the
construction noise may bother some guests. There would also be a potential increase in
labour costs, not only for contractors, but also for the additional staff that needs to be
hired.
Overall, the rooftop restaurant and cocktail lounge has the potential to improve the
recognition of the Michelangelo above other hotels and will elevate the hotel to a much
higher standard. Guests will be encouraged to stay at the Michelangelo in order to make
easier use of this exciting dining experience. There are however, some drawbacks that
need to be considered when adding this service. Drawbacks such as unpredictable
weather and noises may arise from the ongoing traffic. These drawbacks can be
eliminated by adding a glass rooftop to this restaurant. By doing so it is possible to keep
the view and at the same time eliminate all the forces of nature such as rain, wind or hail.

By adding this rooftop restaurant, the Michelangelo is able to make a lot more profit and
potential future clients.

BENCHMARKING

There are a lot of competitors in the Sandton area as this is a bustling and vibrant place,
home to a large cosmopolitan population and business centre of Johannesburg. The top
three competitors, according to trip advisor and the virtual tourist are:

The West Cliff Hotel is a big competitor to the Michelangelo Hotel, as it is recommended
by 86% of travelers as one of the best hotels in Johannesburg (Tripadvisor, 2010).
The five star West Cliff Hotel is set on a beautiful Cliffside garden Estate, out looking
Zoological gardens in the centre of the city. There are several services and facilities that
this hotel offers. These facilities and services are: Concierge guide, children’s facilities
(The Johannesburg Zoo, Duck feeding, Exotic birds, Art fun, Colour Café , Theatre
Classes, Star gazing and Lustrous Lipizzaner) a selection of restaurants (La Belle
Terrasse and Loggia, The Conservatory & Pool Bar and The Polo Bar), Botanica Spa
Suites -for both men and women- a fully equipped gym, shuttle service for within a 15
km radius of the hotel, access to tennis courts positioned high above the city, grounds
perfect for a jog or cycling and some of the area’s best golf courses.

The West Cliff Hotel also has a wonderful conference facility for any type of conferences
or business meetings and offers an amazing venue for weddings. The rates vary from
R2890 to R4350 (rack rate) per room per night, depending on the room and the time you
go to the hotel.

Not only does this hotel offer excellent facilities, but it also offers outstanding service.
“After being so impressed with another hotel in this area, we decide to try another hotel
and my expectations of the Westcliff hotel was not only met, but exceeded” (Tripadvisor,
2010). Situated on a very convenient location, “Great location which was close to the
zoo, Sandton and other attractions” (Tripadvisor, 2010).

This hotel offers a major threat and is the primary competitor of the Michelangelo, as it
has multiple facilities that the Michelangelo does not have. The Michelangelo does not
offer a dining experience as extensive as the Westcliff hotel or any kind of children’s
facility. Guests like to have different experiences when dining and as the Michelangelo
only has one main dining area (The Piccolo Mondo), guests can become bored with
having the same meals everyday and will make their stay at the Michelangelo bland and
uninteresting. Families or working mothers staying at the hotel and will therefore rather
choose a hotel that caters for children’s facilities and the needs of them (more child-
friendly). This will result in a loss of potential clients as families, especially mothers,
cannot experience the Michelangelo as much as they could have if the hotel had provision
for children. These factors will result that guests that fit this demographic segmentation
would much rather stay at the Westcliff hotel than at the Michelangelo.

The Ten Bompas is a perfect haven for sanity and tranquility, situated in Bompas Road,
Dunkeld West, is a five star luxurious contemporary boutique hotel- ideal for any deluxe
travel. Outdoor terraces, garden and lap pool allow guests to make the most of the
beautiful South African climate, whilst in the heart of the business area. The elegant bar
area is an ideal place to entertain business guests or to relax before dinner. The hotel has
an award winning restaurant with its own wine cellar.

The Ten Bompas also offers a range of functions and conference facilities. Ten Bompas
has developed expertise in successfully staging various types of functions and events –
from weddings to motor car launches, fashion shows and press conferences. The price
range for this hotel is from R3500 R4000 per suite per night (Including breakfast,
complimentary mini bar, hot beverages and in-house laundry services). The price for a
full day’s conference (08:00-17:00) is R450 per delegate and for a half day (08:00-12:30)
is R375.

This hotel is a big competitor to the Michelangelo Hotel, as it offers the same (and more)
services and facilities. The strengths of this hotel are also the Michelangelo’s weakness.
The USP of this hotel, a private wine cellar of an amazing selection of wines, is not the
only factor that makes this hotel a threat to the Michelangelo. This hotel is not as
expensive as the Michelangelo (The Ten Bompas rack rate for a suite is a third of that of
the Michelangelo’s) and considering that the economy is not at its best, becomes a better
hotel to the average customer of both these hotels. As this hotel is a boutique hotel, it is
much smaller and offers more personal service and attention than at the Michelangelo
“The real highlight was the friendly and appreciative staff always on hand and so polite
to us!” (Tripadvisor, 2010). This hotel is recommended by 82% of travelers on
Tripadvisor, only 4% less than the Westcliff hotel. Therefore these two hotels offer a
great threat to the Michelangelo as their reputations precedes them.

The lavishly stylish Palazzo Monte casino is perfectly located in the up market suburb of
Fourways Johannesburg, a mere 15 minutes from Sandton, South Africa's business
hub, 40 minutes from O.R Tambo International Airport and 20 minutes from Lanseria
International Airport. The hotel forms part of the award winning Monte casino
Entertainment Complex, offering some of the best entertainment in the area. The hotel
characterize true style and luxury, with world-class facilities for the business and leisure
traveler, making this the top travelers destination. It also includes a variety of tastefully
decorated rooms that vary from the luxurious 3- bed roomed Penthouse to comfortable
standard rooms that cater for all tastes and travel requirements.

Guests can enjoy leisure time around the magnificent outdoor swimming area which
offers a light menu as well as a Thai massage therapy service. The hotel offers a true
culinary experience at the Medeo Restaurant which serves Italian flavoured dishes with a
delicate French and African flair. The Palazzo Monte Casino offers fully equipped
conference rooms that caters for all business and travelers needs and is described as a
“Beautiful hotel with excellent staff” (Tripadvisor, 2010).

The Palazzo Monte Casino is cut-throat competitor to the Michelangelo, as this hotel
offers unlimited and unparallel entertainment options for the guests. This hotel offers all
the facilities and services that the Michelangelo offers, which results in a big increase of
competitiveness between these hotels.

By adding this new and exiting rooftop cocktail lounge, the Michelangelo offers a very
unique must experience dining facility. None of its competitors will be able to compete
with this, as the Michelangelo is the tallest building, resulting in the best view. The
Michelangelo will therefore improve on its weakness and build on its opportunities to be
the best hotel in this area.
This addition will increase customer popularity of the Michelangelo, which will result in
more recurring customer patronage and ultimately placing it where it should be, at the
top.

MARKET SEGMENTATION

To be able to sell your product effectively, it is essential to know what the potential
market is for the product or service, as well as the best ways to reach potential consumers
(Terrell, 2005). That is why it is of great importance to segment your market.

Segmentation is the division of a total market into its component parts that consists of
people or organizations that share similar characteristics, resulting into a demand for the
same service or product (Cahill, 1997). Consumer Market Segmentations is a basis for
factors that varies amongst groups within a market, but is consistent within these groups.
There are four primary bases where “Market segmentation can be identified by
examining demographic, psychographic and behavioral differences amongst buyers”
(Kotler, 2006). Psychographic and behaviorist bases are used to determine preferences
and demand for a product and advertising content, while geographic and demographic
criteria are used to determine product design and regional focus (Cohen, 1998).