SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN Foundation of Natural & Built Environments (FNBE)

Assignment: A Tale of Two Businesses – A Comparative Analysis of 2 Businesses of Similar Industry in Different Geographical Locations

GROUP MEMBERS

NO Name STUDENT ID 1 Kiing Kiu Chun 0318727 2 Lau Chin Sheng 0317899 3 Nur Aqilah Syaza 0317731 4 Sabrina Wiora Saidi 0317776

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TABLE OF CONTENTS

NO. Title Page1 Summary 32 Brief Bio of The Business

2.1 Comfort Lodge

2.2 Time Capsule Retreat

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73 Comparative Analysis of the Businesses’ Competitive Traits

3.1 Comfort Lodge

3.2 Time Capsule Retreat

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124 Recommendation

4.1 Comfort lodge

4.2 Time capsule Retreat

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155 Appendix 176 References 27

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SUMMARY

This report is a Comparative Analysis of two businesses of the similar industry in different geographical locations. This project aims to analyze and compare two businesses on different settings and let students understand the market competition in the real world. The businesses that we chose to study are Comfort Lodge, located in Kuala Lumpur and Time capsule retreat in Kuantan. This report consists of background information and comparative analysis about the businesses. Face to face interview was used to obtain the information and compare the businesses’ competitive traits. After analyze, we had found that Comfort Lodge Is more commercially successful than Time Capsule Retreat. We also give some recommendation to both hotels.

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BRIEF BIO OF THE BUSINESSES

2.1Comfort Lodge

Comfort lodge is a backpacker hotel which provide the accommodation with a cheap price from the range of RM45~RM95. The type of rooms they provided are, Single room (with fan), Single room, double room (standard), double room (deluxe), double room (Superior, attached with bathroom) and Family room. Besides, Comfort lodge also provides online booking and price list for each types of room, which provide much more convenience for the customer.

The hotel situated 15 minutes’ walk to the KL Tower and 20 minutes’ walk to the PETRONAS Twin Tower. Their location is 5 star, situated right in the middle of CSD (Central Shopping District), the “Bukit Bintang” Area where all the major shopping

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complexes are concentrated, e.g. Suria KLCC, Sungei Wang Plaza, Starhill, Times Square and the coming Pavilion Complex. There are also electronics specialist complexes like Imbi Plaza and Low Yat Plaza that has a wide range of electronics goods.

The “Bintang Walk” has a “Paris-like” road side cafe atmosphere that is filled with energetic crowd, and a place to be seen. A short walk towards KLCC (Kuala Lumpur City Centre - PETRONAS Twin Tower) you will find the night life of KL, the happy crowd that parties until morning.

China Town is also 20 minutes’ walk away and you can shop a variety of imitation goods at a fraction of the original price. A variety of food, local, Chinese, Indian, Indo, Viet, Thai, Italian, German, Brazilian, Arabian etc. are available around the corner, about 24 hours daily. Local called it “Glutton Street”. Around CSD, are major international brand of hotels and offices of multinationals. So all you need to do, see and just relax is all within 20 minutes’ walk.

They are “CHEAP, COMFORTABLE, CONVENIENT & CLEAN!!!”

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COMFORT owns other businesses apart from COMFORT LODGE such as COMFORT INN located in No.65 Changkat Bukit Bintang50200 Kuala Lumpur; it is a budget hotel (about 2 star) has 37 rooms, all with ensuite toilet/shower facilities.

COMFORT also owns COMFORT SERVICE APARTMENT located in Angkasa lmpian 2, Condo Jalan Sahabat, Bukit Bintang 50020 Kuala Lumpur, Malaysia. It is a luxury condominium in the heart of Kuala Lumpur city, called Bukit Bintang (Star Hill). Short walk to all major sites, PETRONAS Twin Tower, KL Tower, major shopping malls and Chinatown.

The founder of the Comfort Lodge is Mr Leong Tian Hock. The reason he started this business is because 15 years ago, there was very few number of budget hotel and Mr Leong thinks that this field or business has a great potential and opportunity. Comfort Lodge established since year 1999. Over the past 15 years, the business has changed, become tougher. Comfort Lodge opened one more branch nearby but the competitors are increasing dramatically.

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2.2 Time Capsule Retreat

Time Capsule Retreat located at in the middle of the Sungai Lembing Town.(Bandar Sungai Lembing 26200 Kuantan , Pahang , Malaysia.) Time Capsule Retreat is founded at the year of 2014, April. It is a space capsule like hotel. According from Mrs Tan Siow Lan (owner’s mother): ” Mr Kelvin Young (founder of the Time Capsule Retreat) likes to travel around and he got inspired by the Capsule Hotel in Mexico. When he came back to Malaysia, he had discussed with my husband, his father, Mr Young to open a capsule theme hotel in Sungai Lembing.

Time Capsule Retreat aimed to provide every guest a pleasure experience with the natural, a getaway from the concrete jungle. Time Capsule Retreat not only provided accommodation, they also provided Local tour and arrange some outdoor activities, such as, Hiking the Panorama Hill, Jungle trekking, visit the Rainbow water fall.

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Time Capsule Retreat is currently fully booked until the next two months. Other than that Time Capsule Retreat has a weekday promotion which the visitor can enjoy a special rate on the weekday. This promotion is cooperate with Groupon and Agoda. Besides, Time Capsule Retreat also decides to expand their business in Johor and Selangor in the upcoming future.

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COMPARATIVE ANALYSIS OF BUSINESS’ COMPARATIVE TRAITS

Comfort Lodge

1. Numbers of competitors of businesses in their respective markets. According Mr. Aaron, the reception of Comfort Lodge, the number

of competitors in its respective geographical markets is a lot, especially since last 5 years. It is about 10 to 50 in Tengkat Tong Shin area, and around 50 to 150 in Bukit Bintang area. Comfort Lodge shares around 10% in the market in Tengkat Tong Shin area. (Mr. Aaron, Personal communication, 29/11/2014). Its top three competitors are Tropical Guess House, Anggun Hotel and Alpha Genesis Hotel. However, since the past 5 years, they were facing a lot challenges from the competitors. Comfort Lodge has top three competitors which are Tropical Guest House, Anggun Hotel and Alpha Genesis Hotel, they are located in the same area. Tropical Guess House is a bamboo Tropical guest house located beside Comfort Lodge. Tropical Guess House is famous with its bamboo tropical build style and great hospitality. On the other hand, Anggun Hotel is a four-star deluxe boutique hotel with luxury interior and exterior design. While Alpha Genesis is a bigger hotel compare to other hotels at that area, and it provides breakfast for guests.

2. Strategies used to compete with its competitorsComfort Lodge is able to survive and compete with its competitors because it provides clean and comfortable rooms

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with reasonable price. The price of Comfort Lodge is around RM 45 – RM90 per night, which are reasonable. The staff of Comfort Lodge will make sure the room is cleaned by the cleaner after the customer checked out from the room to ensure the clean and comfy environment of the hotel. Besides, they will provide proper training for staff every one year. This can help them to provide a better customer services compare to other hotels. Moreover, Comfort Lodge has good review and high reputation from backpackers, people will choose to trust and stay in that hotel since a lot of people recommended and satisfied with its rooms and services.

The pricing power of Comfort Lodge is weak, it is following the market prices, but under certain condition, eg, during peak season, numbers of tourists will more than rooms that hotels can

provide, hence this cause its pricing power won’t be affected by other competitors. Comfort Lodge has one more branch, Comfort Inn at Changkat, Bukit Bintang. According to Mr Aaron, the profit of hotel is still growing from year to year although number of competitors became more.

In order to enter the hotel market at Bukit Bintang, Mr Aaron said that it is hard, not as easy as 15 years ago. The barrier to enter the hotel market is weak since it does not require a lot of specialized field of knowledge (Mr Aaron, Personal communication, 29/11/2014). It is hard for a new hotel to survive because it needs to compete with huge amount of competitors. The existed hotels around Bukit Bintang area have good reviews and high reputation that gain by its good services and experienced staff.

According to Comfort Lodge's characteristics, the nature of hotel market at Bukit Bintang, Kuala Lumpur is monopolistic

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competition. In my opinion, the hotel in Bukit Bintang need to face a lot of challenges from their competitors, the new comer is really hard to survive unless they provide better services and facilities that can attract tourists and also need to advertise more to increase their reputation.

Time Capsule Retreat

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1. Numbers of competitors of businesses in their respective markets.Time Capsule Retreat is located at the centre of Sungai Lembing Town Kuantan, Pahang. It is situated near the famous Rainbow waterfall. The hotel is located near to a tourist spot. According Miss Tan Siow Lan, the owner of Time Capsule Retreat, currently they have no competitors at that area, but she thinks that there will be some potential competitors in the upcoming years (Miss Tan Siow Lan, Personal communication, 29/11/2014).

2. Strategies used to compete with its competitorsAlthough Time Capsule Retreat has no competitors now, but the owner thinks that there will be some potential competitors in the upcoming years. Hence, the owner of Time Capsule Retreat did applied some strategies to compete with its potential competitors. First of all, Time Capsule Retreat is cooperating with Groupon and Agoda by providing special rate during weekday. Besides that, Time Capsule Retreat did advertised through social media such as Facebook and Instagram to improve its popularity. In addition, by using social media, they also provide a platform to their previous customer to share their thought and experience with others. Moreover, Time Capsule Retreat provides a lot of services such as arrange outdoor activities and local tour. Time Capsule Retreat will provide these services for their customers with reasonable prices if they requested for it. On the other hand, Time Capsule Retreat acquired inspiration from the capsule hotel from Mexico which used concrete pipe cylinder to replace the normal room.

According to Miss Tan Siow Lan, The pricing power of Times Capsule Retreat is weak, its prices are following the market prices

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(price taker). Although, Times Capsule Retreat has no competitors at that area, but to prevent customers lost, they chooses to refer others location market price. (Miss Tan Siow Lan, Personal communication, 29/11/2014).

In order to enter the hotel market at Sungai Lembing, Kuantan, Miss Tan Siow Lan said that it is hard. The barrier to enter the hotel market at Sungai Lembing is strong because most of the customers prefer the hotel they used to stay rather than new comer. Besides, it requires specialized field of knowledge to start theme hotel business.

According to Time Capsule Retreat characteristics, the nature of hotel market at Sungai Lembing, Kuantan is oligopoly. In my opinion, the new hotel in Sungai Lembing need to face a lot of challenges from its competitors, the new comer is hard to survive unless they provide better services and facilities that can attract tourists and also need to advertise more to increase their reputation so that people will choose to stay at their hotel.

RECOMMENDATIONS4.1 Comfort Lodge

1. Undergo Renovation

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-Comfort Lodge should undergo renovation to provide a brand image to the customer. This because current building of Comfort Lodge is kind of outdated, should follow the modern trend and design to attract more customers. Redesign the ambient inside the hotel to create a new atmosphere to the customers.

2. Advertise in variety way. -Comfort Lodge should advertise more and in variety way. This is because comfort lodge located inside the deepest part of alley. Hence, they need to advertise they lodge more frequently. For example, they can create a facebook page to connect the business with the customer. Through this way, they can easily connect with the customer and potential customer and yet people can access the Lodge’s info easily.

4.2 Time Capsule Retreat

1. Provide more Capsule Room

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- Currently there are only 8 Capsule rooms in Time Capsule Retreat and it is insufficient to the high demand from the customer, to overcome this problem we strongly recommend the owner to add more capsule room to solve the insufficiency of room.

2. Provide Shutter Bus

- Time Capsule Retreat is located at the urban area, which is facing the inconvenience of public transportation. If and only if the hotel can provide the shutter bus service then the inconvenience of transportation will be solved.

3. Held more contest or event to promote the hotel

- We recommend the owner to held contest and event frequently which aim to promote the hotel. For example, selfie contest; the picture with the most liked and shared on facebook can stay in the hotel without paying any money.

Comparative Analysis Summary Table

Competitive Traits

Comfort Lodge (Klang Valley- Based)

Time Capsule Retreat(Kuantan-Based)

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Number of Competitors

10-50 0-5

Barrier to Entry

-Weak

-does not require a lot of specialized field of knowledge

-Strong

- most customers prefer the hotel they used to stay.

-Theme hotel requires specialized field of knowledge

Differentiated or Standardized

-Differentiated( many type of rooms from range of RM45 - RM95 )

-Differentiated( Capsule like room and white cottage room)

Pricing Power -Weak (Price taker)

-Due to too many competitors if their price is higher than market price, they will lose customers

-Weak (Price taker)

-Follow market price is due to prevent customers loss

Other Characteristics

-Has close product substitutes

-Mutual dependence

-Constant advertising (web page)

-Has close product substitutes

-Mutual dependence-Constant advertising (Facebok, Instagram)

VERDICT Monopolistic competition Oligopoly

Based on analysis, Comfort Lodge would be more commercially better than Time Capsule Retreat. This is because compare to Sungai Lembing, the market in Bukit Bintang is more competitive. However, Comfort Lodge is able to survive and maintain positive growth in profit. It also opened one more branches nearby. It shows that Comfort Lodge is stronger compare to Time Capsule Retreat

5. Appendix

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Video link 1: http://youtu.be/pB9FYL2Rj3o

Video link 2 and Video link 3: http://youtu.be/NNUH8iCIQ08

Comfort Lodge

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Comfort Lodge

(Website)

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Time Capsule Retreat

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Time Capsule Retreat Website

Time Capsule Retreat Facebook Page

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Comfort Lodge

52 tengkat tong shin,

off cangkat bukit bintang,

50200 kuala lumpur, Malaysia.

Tel: +603-2145 1818

Fax: +603-2145 7686

Interview Note

1. When was the business founded?- 1999(15 years ago)

2. Who are the key founders?-Mr Leong Tian Hock

3. What prompted the founders to start this business?-back to 15 years ago there were not that many budget hotels and the founder saw the potential and opportunity of this business

4. What are your main products or services?-We provide room with reasonable prices.

5. Who are your customers? (eg. Age group,income-level,education-level, etc)-Mostly backpacker

6. How many branch offices/stores do you have?-there is one more branch nearby

7. Can you provide us a brief history of your business?

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-Can be obtained from the Comfort lodge web page

8. How was the recent development of the business?-it is depended. The more the tourists the better the business perform. Overall, it’s a positive growth.

9. Do you have many competitors? Who are they? Who are your top 3 competitors?-Yes, we do. Since past 5 years, we were facing a lot challenge from the competitors. The top 3 competitors are Tropical Guess house, Anggun Hotel and Alpha Genesis Hotel.

10.How big is your market share as well as your top competitors?-Approximately 30%

11.Is the business constantly facing strong competition from other competitors? What strategies have they used to compete you?-Normally they provide a lower rate than our hotel, and sometime they do provide a better service (customer’s experience)

12.Generally, do you feel it is easy or hard to enter this market? why?-not easy to enter the market, because of huge amount of competition, it is tough and not as easy as 15 years ago.

13.How do you compete with your competitors? What strategies do you employ to divert customers away from your competitors?-We improve our customer services, more advance facilities and enhance the hotel environment become more comfortable.

14.How often do you release a new product or promotion?

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-Not really, but like what I say before, we upgrade hotel facilities, well trained the staff to provide a better service than other hotel.

15.Are your pricing decisions strongly affected by your competitors? Why or why not?-Yes, pricing is one of the factor, but then if there is more tourists visit and stay here, I do say is doesn’t affect that much.

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Time Capsule Retreat

Sungai Lembing Town 26200 Kuantan , Pahang , Malaysia.

Interview Note

1. When was the business founded?- The year of 2014, April

2. Who are the key founders?-Mr Kevin Young Tien Seng

3. What prompted the founders to start this business?-Mr Kelvin likes to travel and stay in different type of guest house and this inspired him to start this business and he thinks this business has a great potential and opportunity at Sungai Lembing, Kuantan

4. What are your main products or services?-Other than providing accommodation, we also can arrange some outdoor activities, such as jungle tracking, visit the Rainbow water fall, climbing Panorama Hill and if they want to , we can give them a local tour around the Sungai Lembing.

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5. Who are your customers? (eg. Age group,income-level,education-level, etc)-Our customer are from all range age group, mostly local.

6. How many branch offices/stores do you have?-No, Currently we have no other branches. However, we are considering to open more branches in the future, maybe around the Johor and Selangor area.

7. Can you provide us a brief history of your business?-Can be obtained from the Time Capsule Retreat web page

8. How was the recent development of the business?-The business is doing fine now, and fully booked until the next follow 2 months

9. Do you have many competitors? Who are they? Who are your top 3 competitors?-No, currently we don’t have any competitors.

10.How big is your market share as well as your top competitors?-Approximately

11.Is the business constantly facing strong competition from other competitors? What strategies have they used to compete you?-(No competition)

12.Generally, do you feel it is easy or hard to enter this market? why?-Not easy to enter the market. At the early stage of this business, we doubt that we will have any customers because we don’t have any experience before this.

13.How do you compete with your competitors? What strategies do you employ to divert customers away from your competitors?

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-Although we don’t have any competitor now but we are still doing some promotion, for example we cooperate with Groupon and Agoda. Besides, we do alsoe advertise through Social media such as Facebook and Instagram.

14.How often do you release a new product or promotion?-Like what I mentioned above, we do cooperate with Groupon and Agoda to provide a promotion which customer can enjoy a special rate at weekday.

15.Are your pricing decisions strongly affected by your competitors? Why or why not?-Yes, although we are not facing any competition from other, but we still compare their rate with our price to provide a reasonable price to every tourist who visit Sungai Lembing.

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Reference

Fazrol Nasir(2014/10/19). Tidur dalam kapsul. Berita Harian. Retrieved from http://www.bharian.com.my /

林玉敏(2014/9/7) . 年轻输得起. 中国报. Retrieved from http://www.chinapress.com.my/

李明珠(2014/5/1). 林明太空舱民宿. 南洋商报. Retrieved from http://www.nanyang.com/nySTO.phtml

Time Capsule Retreat(n.d)In facebook[Hotel . National Park] Retrieved from https://www.facebook.com/timecapsuleretreat

Time Capsule Retreat(2014) About Us. Retrieved from http://timecapsuleretreat.wix.com/home#!blank/czr2

Comfort Lodge (2014) About us. Retrieved from http://www.hotelcomfort.biz/html/about.htm

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