Al Ahlia Hotels & Resorts: Success in the Long Run

Al Ahlia Hotels & Resorts: Success in the Long Run

The annual board meeting is less than a month away and Omar is struggling to perfect his strategy for achieving long-term success and sustainable growth for Al Ahlia Hotels and Resorts. As a 4 star hotel chain, Al Ahlia has had a profitable run since its inception in 2005. Customers appreciated the resort’s modern day design combined with elements from the Arabic culture and favored it over the competitors due to its convenient location and state-of-the-art facilities. The hotel chain currently has two fully functioning resorts in Al Ain – Al Ahlia Grand and Al Ahlia Pearl. The management is also in the final stages of negotiating a deal to build its third extension, Al Ahlia Gold, in Ruwais.

However, rising competition and changing market trends has forced management at Al Ahlia to rethink its development plan and growth strategies. While Al Ahlia Pearl was able to maintain a steady market position by attracting tourists traveling on a budget, Al Ahlia Grand primarily relied on corporate clients that were quickly moving on to more sophisticated alternatives such as Hilton and Rotana. The hotel had also started losing a significant amount of sales to Dubai, as the city offered better and more exciting recreational activities and tourist destinations. Previously, management had addressed these issues by advertising aggressively, investing in external partner collaborations, and developing loyalty programs for its customers. This time, however, none of these efforts had helped Al Ahlia regain its declining market share. 

It was clear to Omar that to manage long term success in a dynamic environment, Al Ahlia would need to get better at retaining its customer base. To address this issue, he recruited a research team to better understand how long term growth could be attained. The team conducted a pilot market study and explored potential factors that may influence sustainable growth in the hotel industry. After the preliminary study, the team proposed a more focused study on customer satisfaction and its link to achieving a better competitive position. It was hypothesized that by means of better service quality, relationship management, and careful pricing, Al Ahlia would be able to differentiate itself from its competitors in the regional market, which would ultimately lead to sustainable growth and long-term success.

The following theoretical framework was developed to diagrammatically represent the proposal:

To test this model, a quantitative research method was employed where the main mode of data collection was self-administered questionnaire. The research targeted all past and current customers of Al Ahlia Grand and Al Ahlia Pearl, and respondents were sampled based on their availability and willingness to participate in the study. While most of the hotel guests were from the GCC region, due to time constraints, the questionnaire could not be made available in Arabic. Questionnaires were emailed to visitors who had stayed at the hotel over the last 6 months and copies of the instrument were also available at the reception desk and inside the rooms and suites.

The questionnaire was composed of multi-item scales that tapped each construct using a set of questions measured on a five point Likert scale. The construct of customer satisfaction was further classified to include items on service innovation, relationship management, and service pricing. Competitive position or advantage was assessed in terms of how customers perceived the Al Ahlia brand name. Lastly, items relevant to sustainable growth measured hotel performance using the three sustainability dimensions – people, profit, and planet. Additionally, respondents were asked to rate their satisfaction with different hotel facilities, such as room services, gym and recreation, food and catering, etc. Demographic variables, such as age, gender, education, nationality, and reason for stay, were also included in the questionnaire. To ease data entry and analysis, no open ended questions were include in the survey.

Data collection was stopped after a period of two weeks to proceed with data editing and analysis. A total of 223 questionnaires were received of which 200 were useable. 76% of the questionnaire came from Al Ahlia Pearl and the remaining 24% were from Al Ahlia Grand. The responses were coded and studied using correlation, regression, and analysis of variance (ANOVA) at a significance level of 0.05 (alpha). The results of the analysis are as follows:

Table 1: Anova: Single Factor
Groups SumAverageVariance  
Room Services 175.93.510.23  
Food & Catering 209.64.590.15  
Gym & Recreation 174.93.230.20  
Customer Service 160.22.500.03  
       
ANOVA      
Source of VariationSSdfMSFP-valueF crit
Between Groups0.2520.1253.4490.0393.05
Within Groups40.971980.278   
Total41.22200    
Table 2: Correlation Analysis
 Service
Quality
Relationship ManagementPricing StrategyCompetitive PositionSustainable Growth
Service Quality1    
Relationship Management0.561   
Pricing Strategy0.320.021  
Competitive Position0.750.690.321 
Sustainable Growth0.620.320.720.831
Table 3: Multiple Linear Regression Model
R Square0.43    
      
ANOVA     
 dfSSMSFSig. F
Regression21.870.924.230.014
Residual19739.30.26  
Total29941.2   
      
 Coefficientst StatP-value  
Intercept1.759.190.0003  
Service Quality3.52-2.550.0023  
Relationship Mgmt.0.150.390.0602  
Pricing Strategy2.12-2.550.0009  
Table 4: Mediation Analysis
Step 1: (path c) : Customer Satisfaction -> Sustainable Growth  p-value = 0.001 Step 2: (path a) : Customer Satisfaction -> Competitive Position  p-value = 0.007                   Step 3: (path b) : Competitive Position -> Sustainable Growth  p-value = 0.0002                 Step 4: (path c’) : Customer Satisfaction & Competitive Position -> Sustainable Growth  p-value = 0.034

1-What threats to reliability and validity are evident in this study? How may 2-these be overcome? What threats to reliability and validity are evident in this study? How may these be overcome?

QUESTION 3

  1. Results of single factor ANOVA are depicted in Table 1.

a) What hypothesis is being tested here? Interpret the results.

b) Why has the research team used ANOVA instead of a t-test to examine this hypothesis? 

c) Which hotel facilities should the management at Al Ahlia Hotels & Resorts be focusing on? Use results in Table 1 to support your answer. 

QUESTION 4

  1. Which variables appear to be correlated with each other? 

QUESTION 5

  1. The influence of service quality, relationship management, and pricing strategy on competitive position is assessed using multiple linear regression in Table 3.                                                                                    

a. Develop and interpret a multiple linear regression equation.                                                                            

b. Which independent variable has the strongest influence on Resistance to Change? Explain. 

c. Comment on the model’s goodness of fit. 

d.  Does the model appear to be valid?e. Can any of the independent variables be dropped from the model? Why or why not?  

QUESTION 6

  1. Is there sufficient evidence to conclude that Competitive Position mediates the relationship between customer satisfaction and sustainable growth? Use Table 4 to justify your answer. 

QUESTION 7

  1. What advice would you give to Omar for his board meeting?
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