Managing Central Parcs: Lessons in International Resort Management

EXECUTIVE SUMMARY

The hospitality industry is one of the leading service industries in the world and offers lucrative opportunities like foreign exchange, business investment, and foreign exchange. Resort business continues to be one of the fastest growing businesses when compared with other areas of the hospitality industry. The present report evaluates the management practices followed by a leading specialty resort called Central Parcs in UK and tries to come out with recommendations for its growth. Just like any other firm in the resort business, Central Parcs too follows special kind of managerial practices. Being a service involving close interaction with consumers, Central Parcs puts special emphasis on recruiting and training quality human resources for its resorts. It has its own ‘Training Academy’ and a leadership development programme which helps its employees in advancing their skills. Marketing and branding of Central Parcs was also handled specially by focusing more on the requirements of the customers. Feedback from consumers is carefully collected and used for coming up with future development plans of the resort. Operations management of a resort is another area which requires special attention. Central Parcs has recently made its bookings online which drastically increased its occupancy rates. In order to mitigate any possible risks due to failure of supplies, Central Parcs followed a supplier registration which assigns grades to suppliers depending upon their past performance. The improving growth rates in the global economy after the financial crisis of 2008, throws open new opportunities to Central Parcs by attracting the new affluent customers from Asia. Recommendations to achieve future growth are given at the end of the report.

INTRODUCTION

Being a leading service sector in the world, the tourism industry offers countries with opportunities for lucrative business investment, key source of foreign exchange, and creation of new jobs. In today’s hyper competitive tourism industry, resort business continues to be the best and the fastest growing when compared with other businesses of the industry. While resorts have traditionally been seen as the crucial segments of the hospitality business, there has been some renewed interest and growth in this sector in the recent past (Brey, Morisson, & Mills 2007). Resort development continues to be considered as a viable means of international business and multibillion dollar properties are being developed for that purpose (Vencat & Au 2006). Governments world over too are now recognizing the importance of resort development as an economic growth generator and giving various incentives for firms involved in the development and maintenance of resorts. Furthermore, the resort business itself is now perceived as mature and there has been some significant consolidation in the industry and greater focus on developing resort destinations which are well integrated similar to hotel chains. But developing and maintaining a resort is quite different maintaining a regular hotel chain in almost all respects. Businesses involved in maintaining resorts need special kind of managerial practices when compared with other businesses in the tourism industry. The kind of people that are targeted by the resort businesses and their operational requirements vary drastically from other businesses. The following report is based on the Central Parcs resort operating in Nottingham, United Kingdom. The report will critically evaluate the managerial issues impacting the development, marketing and operation of an international resort.

THEORETICAL FRAMEWORK

Academic research and evidence from the industry points out a need for different kinds of managerial practises for international resort business in general and the different kinds of international resorts like mountain-based resorts, beach resorts, speciality resorts, and golf-based resorts in particular. The present project focuses on the problems and issues involved in the maintenance of a noted speciality resort, Central Parcs. All the issues related to the development and management of speciality resorts like human resources management, marketing, operations, etc. will be evaluated in the project. The existing management practices followed at Central Parcs will be discussed in detail first. A set of recommendations which can be helpful for the future growth of the company’s resorts will the dealt later.

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ISSUES INVOLVED IN MAINTAINING INTERNATIONAL RESORTS

Maintenance of an international resort requires a different managerial practices and managers who are well-trained in all the issues involved in resort maintenance. People who are involved in the maintenance of international resorts should have good knowledge and experience in various aspects related to resort business like handling of business operations, marketing and advertising, inventory management, personnel management, handling of public relations, and most importantly imagination to solve unique problems faced by the industry. Below are the key issues involved in maintenance of international resorts dealt with respect to Central Parcs in Nottingham.

CENTRAL PARCS: A NATURE BASED SPECIALITY RESORT

The conceptual design philosophy of a speciality resort involves physical balance, between the resort area and market, and economic balance between investment and earning power. Physical balance means that the size of the resort area in a speciality resort must be sufficient to meet the needs of the market without being too large that the area will remain underutilized. Balance is required even within the resort area. Capacity of the facilities where the resort is situated dictates the number of visitors that can be accommodated which in turn determines the support facilities that will be required. Economic balance means the amount of money invested in the project by the developer and the future earning capacity of the resort. Quantity and quality of investments must be good enough for the developers to get a good return on their investments. Management of the resort should also ensure that the costs of running the resort are also kept in line.

Central Parcs based in Nottingham is an award winning nature-based speciality resort started by a Dutch Entrepreneur Piet Derksen. The first resort was started in the year 1968 at De Lommerbergen in Holland. Piet Derksen later expanded his business to UK when he first established a speciality forest based resort in Sherwood Forest in 1987. Central Parcs resort is based on a unique ‘villa in the forest’ theme which was revolutionary in UK. The resort provides short break holidays in the forest all through the year. By the year 2014, the resort was expanded to five different locations across the UK, viz. Sherwood Forest in Nottinghamshire, Elveden Forest in Suffolk, Longleat Forest in Wiltshire and Whinfell Forest in Cumbria, and Woburn Forest in Bedfordshire. Since the resort is focused on forest based holidays to the customers, the management of Central Parcs has decided on establishing the resorts some of the biggest forest regions in UK. Central Parcs gets visitors from all over the world even though most of its visitors are from UK itself. Families with young children and nature lovers form the key customer base of the resort. Demand for the resorts of Central Parcs is peak during the main holiday seasons like Christmas holidays, New Year holidays, Easter, and other major international holiday seasons. As it is a forest based speciality resort, most of the resort activities take place out in the open. Hence, whether has a major impact on the activities of the resort. Being located in a cold region winters generally see a fall in the number of visitors to the resort. As most of the visitors are from the rich or upper middle customers with while collar jobs, the regional and global economic conditions also have a bearing on the short term business prospects of the resort.

MANAGERIAL ISSUES

As already mentioned in the introduction of this report, managing an international resort requires special kind of management practices due to the general intricacies that are involved. Each of the resort operated by Central Parcs in UK is called a holiday village which offers an extensive range of services like sports and leisure activities to engage children; bars, restaurants, and retail outlets for the adult visitors. Central Parcs follows well tested management areas like human resources management, marketing, operations management, and finance. Below is the description regarding the handling of managerial issues in Central Parcs:

Human Resources Management

Human resources are given paramount importance in the running of Central Parcs. The importance of human resources in hospitality management has been well emphasized. Lot of research studies have examined how employee performance can contribute to the organizational bottom line (Kuslavan, et al. 2010). Hence, all major international resorts put a lot of emphasis on the recruiting, training, and proper handling of their human resources. Human resources management is a key strategic and operational concern within the tourism and resort management industries (Baum, Amoah, Spivack 1997). Being a service involving close interaction with its customers at every step, the human resources (employees) play a crucial role in the successful running of any resort. Central Parcs puts lots of emphasis on recruiting and training the best candidates for its resorts. To cater to its unique training needs, it has setup its own ‘Training Academy’ which trains newly recruited employees and apprentices. The training academy offers 450 different courses related to business. As of 2014, 165 individuals were working as apprentices in the training academy. Most of these apprentices will be later absorbed into Central Parcs as full time employees. This ensures that its employees are well trained in their work right from the time they are recruited into the organization.

For its existing employees, Central Parcs provides a good leadership program called ‘Aspire Leadership Development Programme’ (ALDP) so that they can enhance their leadership skills and get promoted to the next level of management (Central Parcs Annual Review 2012). Over the years, Central Parcs made ALDP as the central route to develop its employees into the next level of management hierarchy. This unique leadership program helps Central Parcs in attracting and retaining talented people who want to progress in the hospitality sector. During the year 159 employees of Central Parcs completed atleast one of the three levels of the ALDP programme. In order to further motivate its human resources to deliver the best, Central Parcs was planning to implement an auto-enrolment pension scheme which gives pension benefit to all its employees. Another scheme being mulled by the management of Central Parcs was to offer an enhanced work place saving scheme.

MARKETING AND BRANDING

Marketing of international resorts needs a different set of efforts when compared with other hospitality businesses. Unlike other businesses, the core customer base of an international resort is a few affluent customers who can afford international travel and middle class families who are looking for short and affordable holiday breaks. Being a forest based speciality resort, Central Parcs gets lot of visitors from the local UK market itself. Consumers, the main targets of marketing efforts have received substantial attention in academic and industry research. Changing consumer demands and travel trends like shortened stays have increased the importance placed on amenities and activities at international resorts (Burnside 2003). Central Parcs provides world class amenities for a reasonable price and provides various kinds of activities like outdoor sports, indoor activity centres, special activities for children of different ages, etc. Central Parcs positions its brand as a provider of high quality short breaks to families. Another important area of focus is to project the Central Parcs as a brand committed to sustainable growth. Central Parcs makes it a point to minimise the consumption of water and electricity as well as effective management of waster that is generated in the operation of the resort (Central Parcs Annual Review 2012).

Effective segmentation of consumers during the development of marketing strategy development process is another area which has a lot of bearing on the success of resort marketing (Morrison, Braunlich, Cai, & O’Leary 1996). Past research and evidence from the industry shows that increasing the offerings related to spas and indoor water park attractions had led to increasing resort season and fuelling development (O’Brien 2003). The customers of Central Parcs are carefully segmented depending upon their needs and provided with the requisite services. While the younger couples are pampered with facilities like restaurants, shopping malls, spas, bars, etc.; families with children are offered with other kinds of services like outdoor and indoor activities aimed at children like trekking, bicycling, water games, painting classes, etc. As a resort brand needs to be handled in a differently, most of the marketing activities of Central Parcs are not outsourced but handled by Central Parcs’ marketing team itself (Central Parcs n.d.). In order to effectively promote its brand among its key target population, middleclass UK families, Central Parcs also started promoting the Badminton England championship since 2008. Central Parcs also puts special emphasis on continually understanding the needs of the customers and provide better services to them. All the customers who visit its resorts are asked to fill up a questionnaire commenting upon their overall experience. The feedback is used to develop future development plans and enhance the brand in the eyes of the consumers. For the year 2012-13, 96 percent customers of Central Parcs 96 percent of customers gave positive (excellent or good) feedback regarding their stay in its resorts (Central Parcs Annual Review 2012).

OPERATIONAL ISSUES INVOLVED IN MAINTAINENCE OF CENTRAL PARCS

Visitors are now increasingly demanding different kinds of amenities like destination pools. Consumers have now started to stay for longer durations in resorts and hence are demanding higher quality of services from resorts (Blank 2004). For people who stay for longer durations, the variety of accommodations offered by a resort can be a big draw. Central Parcs offers its visitors a large variety of accommodation options like executive suites, treehouses, and woodland suites (Central Parcs n.d.). As all their resorts are located deep inside the forest areas, managing the bookings for the resort was a big challenge. Most of the bookings made to Central parcs used to be through manually filled applications and phone. Online bookings used to have a 20 percent share in the overall bookings. In 2012, Central Parcs partnered with an external IT source firm to augment its online booking experience. The result was that 80 percent of the total bookings to its resorts are now made online. High online booking ensured that the occupancy rate of Central Parcs was 97.2 percent for the year 2012-13. It was among one of the best occupancy rates for in the hospitality industry and was also growing steadily.  Like any other business in the hospitality sector, the maintenance health and safety of the customers plays an important role in the operational activities and long term image of a resort. Central Parcs adopted a proactive approach to its safety management. All the incidents related to the safety and well being of is guests are carefully recorded to understand the trends and come out with learning points which will be carefully integrated into its operational processes. Being located in remote forests makes it difficult for the resorts of Central Parcs to maintain their supplies of food and other requirements for running the resort. The business could be seriously affected by any significant fall in the quality of its supplies. Any sudden halt of supplies due to the failure of a partner can also impact the operations of the resorts. Risks related to the quality of Central Parcs’ supplies are kept under control through a supplier registration system which assigns grades to suppliers depending upon their past performance (Central Parcs Annual Review 2012). Any sudden variation in the cost of supplies also poses a risk to the running of a resort. Central Parcs mitigates these risks through operational strategies like forward buying, budgeting, and aggressive control of costs.

RECOMMENDATIONS

With the global economy showing signs of recovery, the hospitality industry too is picking up its growth rate. The renewal of growth in the global hospitality industry throws a lot of opportunities for a specialty resort like Central Parcs. A pickup in the global business growth numbers means a huge opportunity for Central Parcs to be tapped in the form of increased chances to host business related events like team outings and annual meetings. Eventhough business visitors form a small part of the existing customer base of Central Parcs, right sort of efforts can increase this number substantially. According to a report by the business consultancy firm Deloitte, emerging markets like India and China can potentially become big feeder markets due to the substantial increase in the disposable incomes of people in these countries. While China’s GDP is set to double between 2010 and 2015, India is forecasted to have 50 million outbound tourists (per year) in the coming decade (Hospitality 2015 n.d.) A well targeted marketing campaign targeted at this increasingly part of the world, can bring more number of visitors to the resorts of Central Parcs.

In order to promote the Central Parcs brand among the affluent foreign travelers, the firm can start using Internet advertising as the new affluent classes in the emerging markets now increasingly rely on the Internet for information. Just like in the case of the highly successful web-based reservation system which increased the occupancy rates at Central Parcs, the online advertising program can also be outsourced to an external IT or advertising source firm for better results. The same can be true even in the case of the general marketing and operating functions of the firm which are totally handled by the inhouse department. Outsourcing of some noncore marketing and operations activities like regular maintenance of the resort and handling the advertisements activities to an external firm can enable Central Parcs to focus on the core activities like customer relationship management more effectively. Even though the firm has been successfully training its employees in-house, increased recruitment from hotel management colleges and b-schools can bring more talent into the organization.

 CONCLUSION

Unlike other businesses in the hospitality sector, management of a resort required a special kind of management practices due to the special requirements of the business. Being a specialty resort offering a different kind of experience to customers, Central Parcs focuses on recruiting and training quality human resources to run its resorts. In-house training facilities provided to its employees help its employees to hone the required skills and grow within the organization. The growing importance given by consumers to amenities was recognized by the resort management making them to provide world-class amenities like outdoor sports, indoor activity centres, and special activities for children. Feedback of visitors is also collected regularly and appropriate changes made to the management of the resort. On the operations front, Central Parcs records one of the highest occupancy rates in the industry due to the online reservation system implemented by it recently. The improving economic growth rates since the global financial crisis of 2008 throws more opportunities before Central Parcs to grow further. Further improvement in the management practices in the form of better human resources and marketing practices can aid in achieving this effectively.

 

 

 

 

REFERENCES

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