As the travel growth is getting stronger by each day globally, Maldives is becoming more attractive as a tourism destination with fantastic accessibility options. To cater with this high demand Villa Hotels & Resorts holds highest number of bed capacities in the Maldives. As the leading holder, Villa group owns and currently operates 5 well known resorts in the Male’ Atoll, Ari Atoll and in Baa Atoll. These resorts are managed by their own brand name Villa Hotels.
Villa Hotels and Resorts offer different standards of resorts which are 5 Stars Paradise Island, Sun Island and Royal Island. As 4 star resorts Holiday Island Resort and Fun Island Resort as 3 Star resort. Since 1986 Villa Hotels is committed in bringing the tourism industries to new heights by understanding customer satisfaction accordingly providing and promoting exceptional services that exceed all expectations (Villa Hotels & Resorts, 2016) As Villa Hotels & Resorts is a subsidiary of Villa Shipping & Trading Pvt.
Ltd., The Villa group have been invested in different industries. Which are Aviation, Tourism, Oil & Gas, Trading, Transport & Shipping, Engineering & Project Development, Fisheries, Real Estate, Media and in Education sector. But the Villa Hotels and Resorts is known as the cash cow for the whole group. Vision “To be a leader in corporate industry in the Maldives” (Villa Shipping & Trading Company Pvt Ltd.
, 2012, Company Profile) Mission “To create good customer relations through distinctive services and to remain committed in meeting and exceeding customer expectations through dedication in all aspects of services provided” (Villa Hotels & Resorts, 2016). As millions of people are active in different social media platforms to bring more exposure, Villa Hotels have their own Facebook page, Facebook shop, Instagram, Twitter, LinkedIn and in Google Plus and most importantly their latest website with mobile optimization feature attracts more customers. The website provides unique packages and can do make multi room bookings which in only available in Villa Hotels website (www.villahotels.com). Facebook page have more than 100,000 likes and twitter with 5000 followers.
According to the Villa Hotels Marketing team they are now on process of verifying the Facebook and twitter account. Until now no Maldivian business account hasn’t been verified by any of social media platforms. Villa Hotels and Resorts are planning to go international by opening a resort in Bali or Singapore. 2.Factors As to reach the vision of the company, Villa Hotels needs to invest in a foreign market.
Villa Hotels have highest percentage share in tourist arrival to Maldives. Moreover, going through China and Indian Market arrivals, Villa Hotels only holds more than 40% share in Maldives. There are some factors that contribute to enter a foreign market such as diversifying the business, Low cost, availability of resources and to increase the profit and sales of the company (Schmidt, 2015). Diversification itself has potential to increase the total return and diversify the total portfolio. The potential to increase total return is evident as because Maldives market underperform international markets always.
Moreover, Geographical diversification is an important way for improve risk adjusted returns through diversification (Kuepper, 2016). And Diversification enables tobuild a portfolio with generally less risk than the combined risks of the individual securities if not the company have to take unnecessary risks. Before diversification, company needs to know which market there are targeting. A developed market, Emerged market or is it a frontier market needed to be decided. Because risk and return are related, investing in emerging and frontier markets may expose investors to a higher potential rate of return – but also bigger potential losses – compared to investing in the developed market (Get Smarter, 2016). For example, Singapore has a developed economic system where the country is looking for more FDI. The importance of investing on low cost country is also an important factor to look over. For now, China has been the country with lowest labour cost.
But year by year as theproductions are increasing cost of labours are also increasing. As investing on a low-cost country would make easy set up businesses and foreign government help would more as their also wants foreign investment more. Moreover, foreign investment in low cost countries would develop infrastructure and economy of that country. And every direct and indirect parties will be eager to help the company. In other hand availability of resources is also an important factor. Even though is cost being high getting all the resources from that country is very important. For example, in Maldives, for the foreign investors they must import each and everything from other countries which brings high cost for the investment even for only shipping it costs a lot.
For example, in Singapore, everything is possible to get easily. Even for the transport logistics are easy in Singapore as Singapore is one of the developed countries in the world. If to invest in tourism sector it’s very important to get resources needed easily. Moreover, to maximise the profit also we could invest on foreign countries. But the success in international business depends on the effectiveness of operational strategies. When managing a multinational corporation, must align the performance targets with the prevailing market realities and globalization trends in different countries. It is important to rationalize the expectations and harness the core competencies toward the pursuit of competitive advantage in international markets (Cole, 2016).
3.Sources of Information Before considering going with International Villa Hotels needs to do full research study of those countries and markets in depth. At first Villa Hotels needs to define the problem of doing the research, methods, create objectives, determine the market structure which the company will be taking their product/service and then determine and collect the relevant information needed for theresearch through primary and secondary resources Primary tools are direct observation, interviews and observations.
And for secondary government statistics, published documents on internet and newspapers and competitor’s websites and blogs. At first Villa hotels needs tosend a team to Singapore and Bali for the direct observation by attending travel and trade fairs and exhibitions held in these countries and observe how culture works and attitude of the societies. Observation is the best way of collecting primary data. Moreover, interviews do helps a lot too. Interviews can be used to explore the views, experiences, beliefs and motivations of individual participants (P.
Gill, 2008). Villa Hotels team can meet for interviews or by telephone with tourism related authorities to collect and get knowledge of the industry in those countries. For secondary data’s government statistics is very helpful. To know the market trends, customer’s needs, arrivals to the countries are important data’s for the research. And by government stats would know the spending power and pattern of the customers. And these data’s are most reliable and accurate data’s that can be collected and most of the data’s are available in internet.
And then published news blogs and documents in internet and newspapers are also very important. To get an idea and history of incidents and accomplishments can be tracked down by these. Through these information’s Villa Hotels will be more aware of current affairs of those countries. And moreover, competitors websites and social media platforms will give an idea how they are marketing and what the markets they are focusing and what the customers are expecting from those countries. 4.Business area & Impacts Before investing in a foreign market its very important to know the business etiquettes of the international market, know the history of the foreign country’s currency value fluctuations, foreign country laws and rules of the businesses and find out what the competitors have done in the same territory. As to invest, Villa Hotels & Resorts choose to invest on Singapore and Bali.
Now we look on impacts on business by investing in Singapore and Bali. Only by analysing Political situations, Economy, Legal system, Environment & Cultural factors, Transportation, Technological & ICT infrastructure, Labour force, Size and the scope of the market would let us know the impacts on the business and feasibility to invest on Singapore or Bali tourism sector. Moreover, Villa Hotels is more interested in to provide a medium level accommodations for the travellers. Going through Travel & Tourism Competitiveness Report 2015 by World Economic Forum, top five performers in Asia-Pacific are the most advanced developed economies: Australia, Singapore, Hong Kong SAR and New Zealand. Singapore have been ranked in 3 out of 141countries in GDP per capita (World Economic Forum, 2015). And Singapore is listed as 2nd country that encourages to Foreign Direct Investment. On overall ranking in the report Singapore is ranked in 11th with a value of 4.86 (World Economic Forum, 2015).
Yes, in Singapore, should pay more than other places in Asia for everything but the quality of life in Singapore is second to none. Its excellent business environment (1st) and high-quality human resources (3rd) are extremely conducive to the development of its Travel & Tourism industry, which is also a high national priority (4th). Singapore has taken the necessary measures related to international openness (1st) to ensure the seamless arrival of international visitors, and has strong ground (2nd) and air (6th) transport infrastructure (World Economic Forum, 2015). The country has experienced an increase in spending on sightseeing, entertainment and gaming, and ranks top for entertainment in terms of online searches. Similarly, to other advanced economies, however, Singapore is not a very price-competitivedestination (116th). It should also dedicate more efforts to environmental sustainability (51st), notably high water stress (128th) and damageto coastal ecosystems (Henderson, 2015). Going through Bali (Indonesia) in Travel & Tourism competitiveness report 2015 Indonesia ranked in 50 out of 141 countries. Indonesia’s economy is on the rise and thus seeing the country take its rightful position as a major destination for foreign direct investment (FDI).
In the report its ranked 132 out of 141 countries which is a huge concern. And they have been ranked 38 inthe transport infrastructure. And price competitiveness its 3rd ranked country out of 141. And what other concern is ICT readiness which is 85, comparing with Singapore those are huge disadvantages.
The political risk in Singapore is relatively low. According to the Political and Economic Risk consultancy, Singapore is the lowest political risk in the Asia. It’s a democratic country that people elects the representatives to lead the country. Today due to this stability Singapore has changed to a peace and high standard of living.
And this attracted lots of investment around the world. But as Singapore is also a democratic country the influence from Western Countries and American’s will be high. People Action Party (PAP) rules the country and this country is famous for its anti-corruption policies which also attracts foreign investments (Ajmera, 2015). Indonesia has undergone a political transformation since the upheaval of 1998 which saw the fall of General Suharto after 30 years of authoritarian rule and a collapse of the Rupiah.
The country is now a vibrant democracy that is continuing to strengthen its political structures and deepen the enfranchisement of the population. Comparing with Political situation of both countries it seems that both countries willing to protect the investors and welcome more investments. Indonesia has never impressed in the Annual Corruption Perceptions Index (by Transparency International).
This index indicates the level of political corruption in a given country. Currently Indonesia’s ranks number 88 (out a total of 175 countries) but its performance has shown a steady improvement since the start of Susilo Bambang Yudhoyono’s administration in 2004. This section provides a detailed account on the past and present of corruption in Indonesia. One other main problem is the fear of terrorist attacks. As Singapore is a well-established and developed economy, country is a target of the terrorist organization. These are things needed to be consider before investing a foreign country.
What worrying is safetyand security in Bali. following the 2002 bombing of a Kuta nightclub in Bali was devised after the attack took place, which led to slow andlaborious recovery of tourist confidence and revenues after the 2002 Bali bombings, around three-quarters of hotels dropped their prices, byan average of 37%. Investing on Singapore will have positive impacts than bali if compared with safety and secutiry..
The government is a major and active player in the economy, owning substantial productive assets (land and capital). The government directs and targets the economy through laws, regulations and incentives, and participates in business ventures through Singapore’s unique hybrid, the government-linked company (GLC). Constraints on Singapore economy is shortage of labours, rising cost of labours, and declined productivity of the country and competitiveness in Tourism sector is high.
Currency risk is also needed to be considered. There is a possibility that investment might felt relative to US dollars, lowering the return after its translated back to dollars. As in Singapore pricing competition is very low this would create difficulties in selling products. Financial and Banking system in Singapore is one the best around the globe. They follow high rules and regulations in banking system. Comparing in Bali the cost of labours are very low and resources are available at very cheap. there’s one central problem: the value of the currency. The rupiah has lost 10% of its value against the dollar since last year.
And it’s a problem that is dogging Indonesia, even while the country welcomes delegations from around the world to the World Economic Forum and the president promises stronger growth. After the independence in1965, Singapore kept the British Legal System,although made some modifications to suit the laws to Singapore. In Singapore, the penalty for corruption is fining with USD100,000 or 5 years’ imprisonment or both. Due to the growth of the electronic commerce it requires a transparent market regulations and legislation. In Singapore, legal regulatory and business environment required to support industry development and growth in economy. Indonesia has never impressed in the Annual Corruption Perceptions Index (by Transparency International).
This index indicates the level of political corruption in a given country. Currently Indonesia’s ranks number 88 (out a total of 175 countries) but its performance has shown a steady improvement since the start of Susilo Bambang Yudhoyono’s administration in 2004. Comparing with other Asian tourist cities like HongKong and Kuala Lumpur Singapore is a tourist destination with relatively heavy tax. In addition to value-added tax, it is necessary for tourists to pay extra 7 percent consumption tax and 10 percent service charge in restaurants. It is much higher than other tourists’ destinations.
As well, the duty rebate policy in Singapore is less competitive. It is a huge disadvantage for Singapore to develop trade retail industry. Most tourists prefer shopping in a foreign country. For instance, it is well-known that Chinese tourists are keen on buying luxurious brands, like Louis Vuitton, Chanel and so forth. However, most of them choose to shop in Hong Kong where tax is low, rather than Singapore. The Singapore government should review its tax categories and amount for tourism economy to attract tourists whose main travel purpose is shopping (BlaBla Writings, 2015). Singapore is the second dense population in the world with the population of 5.
399 million in 2013 with different ethnic groups which is concentrated in the age of 15-64 years of 76.3% and follows 15.2% of 0-14 years and 8.5% of citizens over 65-year age.
Due to the government, free educational programs the literacy rate is 92.5% of the populations (UNWTO, 2010). This produces high quality workforce and the labour cost goes high day by day. Moreover, the workforce should pay of 10% of salaries to the central provident fund for the retirement. Reports suggest that most Singaporeans doesn’t like blue collar jobs like construction. Indonesia has witnessed sustained and structural outbursts of violence throughout its history, but it seems justifiable to pose that the demise of the strong New Order government in the late 1990s has enabled both ethnic and religious violence to flare up in the regions because of the reduced role of the army in Indonesian society. Singapore has been known as high dense pollution country especially air pollution. Singapore is making effort in eliminating the air pollution by setting regulation and standards of stringent emission, promotion of energy efficiency and introducing natural energy.
One of the main concern in Singapore is the country doesn’t have enough water support for their needs. In 2009, Indonesia’s National Climate Change Council reported that the country was the world’s third largest greenhouse emitter (Fogarty, 2009).Besides rainforests and forest fires, the industry segment was also identified as a responsible party in greenhouse gas emission in theIndonesian economy (Resosudarmo and Irhamni, 2008) Well in Singapore too Internet plays a huge role in the advancement of the country.
The cost of and time of conducting businesses are lowered and social networking was boosted while residents can connect easily with therest of the world. Easy accessible to the country and travel around the country made easier with the high-speed rail way system and public transportations. Singapore is one the country who follows e-government.
To save time and productivity everything is connected thjksfbrough internet. To be investing in Singapore, a highly trained IT team would be needed. Meanwhile in ICT Indonesia have been ranked very lower comparing to Singapore. 5.Recommendation & Conclusion After seeing the impacts, I recommend investing Villa Hotels in Singapore. As Singapore’s corruption level is very low. Resources are available easily.
And Security wise Singapore have been one of the safest place is Asiaregion. The disadvantage is high costs involve directly and indirectly as the standard of living is so high in Singapore. Moreover If invested inIndonesia the cost would be very low. Villa Hotels needs to invest abroad is that to diversify and maximise the profit. And its important to choose cost effective country.
Villa Hotels already holds 5 resorts in Maldives which are Paradise, Sun, Holiday, Royal and Fun Island Resort. The best 2 countries to invest is Singapore and Indonesia. But after reviewing all the impacts its better to invest in Singapore.