Foreign Market Entry - Four Season Hotel in Brazil

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Four Seasons Hotels and Resorts
Strategic Marketing Plan for Entry into Rio de Janeiro, Brazil

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EXECUTIVE SUMMARY

Four Seasons Hotels and Resort is the world’s premier luxury hotel management company. It is currently operating 83 hotels in 35 countries and has built an unrivalled reputation for reliability, trust and connection with its guests (Four Seasons, 2010). As the hotel mogul prepares to enter Brazil, this paper narrates in detail the marketing plan Four Seasons will implement in the local geopolitical environment. Brazil’s present political, legal, social and economic state draws the conclusion that acquiring a local luxury hotelier while utilizing its business resources like a partner, is the best mode of entry for Four Seasons. Fasano’s grandiose local brand recognition as a world-class hotelier and partnership with Brazilian real-estate developer, JHSF, makes it an ideal candidate for Four Seasons’ market entry strategy.

Exceptional personalized customer service, an integral part of Four Seasons’ brand image and strategy, is standardized and will be directly transferred when entering Rio de Janeiro. Acquiring Fasano’s hotel in Rio de Janeiro, while simultaneously retraining all of its existing staff members will accomplish Four Seasons’ main objectives when entering Brazil which include:

1. Providing a standardized service Four Seasons’ target market has come to receive and expect, while showcasing an authentic Brazilian experience for its guests.
2. Establishing a genuine connection with the local community and understanding Brazilian culture to ensure a sustainable business relationship for future expansion.
3. Utilizing the most effective and efficient market strategy to expedite Four Seasons’ entrance into Brazil.

To guarantee a successful entry into this new growth market, two Integrated Communications Campaign strategies will be put into place to reach out to the local community and international consumer base.

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY 1

II. TABLE OF CONTENTS 2

III. COMPANY AND SERVICE OVERVIEW 3

A. FOUR SEASONS HISTORY 3
B. RECENT DEVELOPMENTS 3

IV. MARKET ATTRACTIVENESS ASSESSMENT 5

A. ENVIRONMENT OVERVIEW 5
1. CULTURAL ENVIRONMENT 5
2. POLITICAL ENVIRONMENT 8
3. ECONOMIC ENVIRONMENT 10
4. LEGAL ENVIRONMENT 12
B. COMPETITIVE ANALYSIS 14
1. MAJOR COMPETITORS 14
2. SWOT ANALYSIS FOR FOUR SEASONS 21
C. POTENTIAL TARGET MARKET ASSESSMENT 22
1. FOUR SEASONS’ GUEST DEMOGRAPHICS 22
2. TARGET SEGMENTS 23

V. MARKET ENTRY STRATEGY 25

VI. MARKETING MIX PLAN 28

A. BRAND STRATEGY 28
B. PRODUCT/SERVICE 29
C. PRICE 34
D. PLACE 35
E. ADVERTISING AND OTHER PROMOTION 35
1. Integrated Communications Campaign for Brazilians 35
2. Integrated Communicates Campaign for International Travelers 37
3. FIFA World Cup 2014 & Summer Olympic Games 2016 40

VII. CONCLUSION & RECOMMENDED RESEARCH 40

A. SECONDARY RESEARCH 41
B. PRIMARY RESEARCH 41
1. SURVEYS 41
2. FOCUS GROUP 42
3. IN-DEPTH INTERVIEWS 43
4. OBSERVATION STUDIES 43

VIII. REFERENCES 44

COMPANY AND SERVICE OVERVIEW

1 FOUR SEASONS HISTORY

Isadore Sharp, founder of The Four Seasons Hotels and Resorts, opened his first hotel in Toronto, Canada in 1961. A modest hotel with 125 affordable rooms, The Four Seasons Motor Hotel marked the beginning of a new kind of hotel in which every customer would be treated as a special guest. Within ten years, three hotels had been opened in Canada, leading to the opening of the company’s first hotel abroad in London, England in 1970.

Over time, Four Seasons made four strategic decisions that formed the pillars of the company. The first pillar, quality, was chosen during the initial expansion abroad in the 1970s, to continuously meet guest expectations from one hotel to the next. Four Seasons as a brand would represent exceptional quality with a focus on being the best hotel in each location. The second strategic decision was to build Four Season’s competitive advantage in service. Four Seasons was recognized for its superior service with the opening of its first branded U.S. hotel in Washington, DC in 1979. During the 1980s, Four Seasons continued to expand and introduce flagship hotels throughout the US. The brand name began to develop and a distinct brand image was created. The third pillar, culture, would play a significant role in the growth of a strong brand name. The corporate culture became based on the Golden Rule, which Mr. Sharp defines as "to deal with others—partners, customers, coworkers, everyone—as we would want them to deal with us" (Martin, 2008). In 1985, Four Seasons added branded private residences to their hotels and began to transition from a hotel owner to solely a hotel management company. With the change, the fourth pillar evolved: “to grow as a management company and build a brand name synonymous with quality” ("Four Seasons Hotels and Resorts- About Us: Four Seasons History," 2010). Since, Four Seasons has created a brand name worth much more than its real estate by offering the best service to luxury travelers around the world. Four Seasons has consistently innovated the services offered at its hotels over the years, becoming the first to offer shampoo in the shower, 24-hour room service, bathrobes, cleaning and pressing services, a two-line phone in each guest room, a well-lit desk, a full-service spa and 24-hour secretarial services (Martin, 2008).

In 1986, the company went public and was listed on the Toronto Stock Exchange. A strong brand name allowed the Four Seasons to engage in a series of successful hotel openings across the world in the 1990s and into the new millennium. The company has gradually expanded its portfolio of resorts to include 83 hotels and resorts in 35 countries and continues to grow in both size and recognition today. Every hotel, from Cairo to Chiang Mai to Milan, demonstrates the four pillars that Mr. Sharp has built the Four Seasons brand upon.

2 RECENT DEVELOPMENTS

Headquartered in Toronto, Canada, Four Seasons Hotel and Resorts became the first large hotel company to manage hotels through real estate owners and developers. In 2007, Four Seasons Hotels returned to private ownership, with Bill Gates and Saudi Prince Alwaleed Bin Talal each owning 47.5% of the company, and Mr. Sharp owning the remaining 5% (Segal, 2009). The purchase was based on the decision to expand more aggressively, specifically into regions not conducive to public companies (O'Brien, 2008). With operations in 35 countries, it has been extremely successful abroad and will continue to expand into new markets in the future; the Chinese and Indian markets are predicted to play a vital role in the future of the company ("Four Seasons CEO Sees Luxury Trajectory," 2009).

As a hotel management company, Four Seasons has complete control over all hotel operations, participates in the designing of new hotels, and earns approximately 3% of revenue from hotel owners in addition to collecting fees to cover global sales, marketing, and reservations (O’Brien, 2008). The major decision makers in the company headquarters currently are:

▪ Isadore Sharp: Founder, chairman, and CEO
▪ Kathleen Taylor: President and COO
▪ Jim FitzGibbon: President Worldwide Hotel Operations
▪ Nick Mutton: Executive Vice President Human Resources and Administration
▪ Scott Woroch: Executive Vice President Worldwide Development
▪ John Davison: CFO and Executive Vice President Residential
▪ Antoine Corinthios: President Europe/Middle East/Africa
▪ Susan Helstab: Exective Vice President Marketing
(Four Seasons Hotels and Resorts- About Us: Corporate Bios, 2010).

Four Seasons is continuously recognized as an outstanding company winning awards year after year. Four Seasons has remained on Fortune’s 100 Best Companies to Work For every year since 1998, for a total of twelve consecutive years ("Four Seasons Hotels and Resorts- About Us: Four Seasons History," 2010). Twenty-two of the Four Seasons properties have also been recognized for excellence in the hospitality industry with the AAA Five Diamond award in 2010 (2010 AAA/CAA Five Diamond Lodgings). This is a very prestigious award, presented only to "0.27% of the 60,000 Diamond Rated lodgings and restaurants throughout the United States, Canada, Mexico, and the Caribbean," truly setting Four Seasons Hotels apart from its competitors ("Five Diamond Award Winning Hotels and Restaurants," 2010). The thirtieth anniversary issue of the Robb Report, published in 2006, included the Four Seasons on its list of "the most exclusive brands of all time" alongside other luxury brands such as Rolls Royce, Tiffany’s and Louis Vuitton ("Four Seasons Hotels and Resorts- About Us: Four Seasons History," 2010). Condé Nast Traveler also consistently recognizes the Four Seasons as a leader in the hospitality industry. On Condé Nast Traveler’s Global Top 100 List, eighteen Four Seasons’ hotels have been included, which is triple the amount of the next most-listed hotel chain (Martin, 2008).

By incorporating the four pillars into its business strategy, the Four Seasons has developed into one of the most-recognized prestigious brands within the hospitality industry. Through its constant focus on excellent customer service in all markets, Four Seasons creates a brand that is immediately associated with exceeding customer needs and expectations in every location. Mr. Sharp summarized the idea by saying “If you don’t meet it every time, you don’t have a brand" ("Four Seasons CEO Sees Luxury Trajectory," 2009). The architecture of a hotel is irrelevant because any competitor can replicate it, however the employees of the Four Seasons differentiate the company by constantly delivering the premier service promised to the guests, hence, creating the strong brand image travelers associate with Four Seasons. In addition to providing timely and sophisticated service, employees are trained to personalize the service delivery through customer name recognition and offering unique services to match guest preferences. Training employees to deliver customized service has been a greater challenge, because "personal service is not something you can dictate as a policy. It comes from the culture" (O'Brien, 2008). Mr. Sharp explains the effect of a strong corporate culture on the guests: "how you treat your employees is how you expect them to treat the customer" (O'Brien, 2008). Brand integrity, coupled with the corporate pride instilled in 30,000 employees worldwide, is what allows Four Seasons to charge a premium price. The company has become legendary for its unmovable standards, despite economic recessions, believing that altering room prices will diminish the brand. Four Seasons loyal guests continually pay premium prices because they are confident the superior service that is expected will be delivered.

Each Four Seasons Hotel and Resort strives to achieve the ideal balance of adaptation to the local environment and standardization of the service. Four Seasons Hotels are built after comprehensive research of the market and country to adapt to the local style and create an authentic experience for guests. The company does not have a uniform style that is common in many competitors such as The Ritz Carlton. While the hotel is built to reflect the local culture, service is standardized across all Four Seasons properties. This is a key factor to the adaptation/standardization balance as service is considered the company's sustainable competitive advantage. Guests expect to receive the same high-quality service at every Four Seasons hotel, despite being in a different country. Room rates also vary at different properties, taking into account seasonality, economic factors of the host country, and exchange rates. However, each hotel offers a fairly large price range to reflect the different types of rooms and suites available in the property.

MARKET ATTRACTIVENESS ASSESSMENT

1 ENVIRONMENT OVERVIEW

1 CULTURAL ENVIRONMENT

1 HOFSTEDE CULTURAL DIMENSIONS

|Country |PDI |IDV |MAS |UAI |LTO |
|CANADA |39 |80 |52 |48 |23 |
|BRAZIL |69 |38 |49 |76 |65 |
|URUGUAY |61 |36 |38 |100 | |

("Geert Hofstede Cultural Dimensions," 2009)

Although three main target segments for Four Seasons in Brazil are non-Brazilian nationals, the company must acknowledge cultural differences to be properly prepared to select, train, and compensate local employees and positively interact with local businesses. Local firms are vital to Four Seasons’ business model since they have significant control over word-of-mouth promotion for the hotel. In order to receive customers for conferences, catering or special events, a lasting relationship needs to be built with firms in the local environment. Additionally, it is important to understand cultural dimensions to be successful in acquiring the tangible aspects of the business that are locally sourced.

According to Hofstede measures, Canada and Brazil vary drastically on all cultural dimensions excluding masculinity. Compared to Canada, Brazil has a very high Power Distance index ("Geert Hofstede Cultural Dimensions," 2009). As a result, the Four Seasons Introductory Training Program (FSITP) may need to be modified. Currently, all new employees representing different levels of the organization, including housekeepers, department managers, non-paid interns, etc., are placed into one large group for FSITP. Since local Brazilians expect a sharp division between subordinates and supervisors (Gillespie, Jeannet, & Hennessey, 2007), separate training schedules may be instituted to account for differences in responsibilities. This could pose a difficult challenge because the training program is very standardized and is one of the components that provide the service competitive advantage. On account of strict boundaries between subordinates and supervisors, lower-level employees are not as comfortable with empowerment than those in low power distance cultures (Gillespie, Jeannet, & Hennessey, 2007). The Four Seasons managers may want to consider providing narrow and clear job descriptions. If narrow job descriptions are constructed, managers must establish monitoring systems to avoid bureaucratic inefficiencies.

The greatest difference between Canada and Brazil is on the Individualism ranking. Compared to Canada, Brazil is a highly collectivist culture. ("Geert Hofstede Cultural Dimensions," 2009) This facet creates a significant challenge in dealing with local businesses, whether clients or suppliers. Building and maintaining a relationship demands a substantial amount of time and effort devoted to face-to-face meetings. It is not an easy task to form a business contract with Brazilians without creating a relationship. This task is increasingly difficult because Brazil is also a high uncertainty avoidance culture ("Geert Hofstede Cultural Dimensions," 2009). In these circumstances, it would be extremely wise to partner with a Brazilian representative. By capitalizing on a local representative's already established personal and business contacts, Four Seasons can conserve a great amount of resources. As it would be almost impossible for a local representative to provide every contact, a significant amount of time needs to be allocated for lengthy negotiations and contact building.

Although Brazil and Canada drastically differ in Hofstede cultural dimensions, it is important to recognize Four Seasons as a profitable multinational company. It has successful experience conducting its business model across various geographic areas, including Latin America. While the Four Seasons should not replicate their strategy entirely, it would be unwise to not utilize prior knowledge gains from countries, such as Uruguay, that are culturally very similar to Brazil.

2 EDUCATIONAL SYSTEM

The average number of years of education for the population entering the workforce is five (Fraga & Bowler, eds., 2008). Lack of a properly trained workforce could negatively impact the internal operations of the Four Seasons. Strangely, Brazil's public universities are excellent in contrast to the country's under-resourced primary and secondary schools (Fraga & Bowler, eds., 2008). Accordingly, Four Seasons should consider partnering with local universities to provide internships, job opportunities, or management training programs. Apart from managers, Brazil's poor education standards may not adversely affect Four Seasons because the company heavily emphasizes personality, rather than work experience, in recruiting and selection. Instead, Four Seasons relies on its comprehensive training program to provide the skills necessary to perform required tasks and meet the company’s core standards.

3 GENDER ISSUES

Common among several Latin American countries is the notion of machismo, the belief that males are superior to females ("Doing Business in Brazil," 2007). Machismo is perpetuated through society with the assignment of traditional roles to men and women. While this view has recently been challenged due to the influx of Brazilian women into both higher education and the workforce ("Doing Business in Brazil," 2007), managers should be aware that it exists. Furthermore, many customers of Four Seasons will be from foreign countries where the same gender norms are not present.

4 NORMATIVE BUSINESS PRACTICES

Recognizing that normative business practices vary across borders will be pivotal in succeeding in the Brazilian market, as Brazilian local businesses comprise one of Four Seasons’ target markets. In addition, familiarity with the business culture can affect the outcome with essential local suppliers. Foreign managers can earn the respect of local associates and illustrate the importance of their relationship by engaging in the local business customs.

Upon meeting an associate for the first time, men should shake hands accompanied by a pat on the shoulder or arm and women should give a kiss on each cheek ("Doing Business in Brazil," 2007). While Brazilians are very informal and prefer to be addressed by their first name, some sort of title such as Doctor or Professor usually accustoms it ("Brazil: First Name or Title?," 2008). Brazilians tend to be extremely extroverted and friendly and close physical contact while conversing is considered normal ("Brazil: Conversation," 2008); also, be prepared for personal questions. Gifts are not necessary at a first meeting ("Brazil: Gift Giving," 2010).

Since the majority of employees will be Brazilian nationals, normative business practices affect the Four Seasons internal operations in addition to outside relationships. Due to the country's collectivist nature, Brazilians do not work at private desks, but instead, share a large space with several coworkers ("Doing Business in Brazil," 2007). If the Four Seasons structures the work environment accordingly, managers must realize that shared workspace results in a constant mix of personal and work-related conversations and plan deadlines accordingly. Besides workspace, Brazil's collectivist culture also impacts break schedule. Brazilians usually take their lunch breaks simultaneously ("Doing Business in Brazil," 2007). If the Four Seasons agrees to this practice, scheduling will need to account for huge shift changes.

A Canadian business manager will be horrified if unaware of the routine aspects of a business meeting. Meetings do not begin on time; a meeting normally begins twenty to thirty minutes past the agreed upon time. Once a meeting commences, the setting is very informal. A large portion of time at the onset is dedicated to personal conversations. Throughout the meeting, it is not unusual for attendees to take phone calls or leave the room. ("Doing Business in Brazil," 2007) Hence, meetings do not serve as an efficient avenue to establish an immediate outcome. Negotiations require time, as Brazilian managers prefer to discuss agreements or disputes among themselves privately; this stems from the collectivist and feminine nature of the culture (Gillespie, Jeannet, & Hennessey, 2007). These differences can be curtailed with the help of a local representative, however, each non-Brazilian manager must acknowledge the lengthy time required to close a deal in order to provide realistic schedule projections and deadlines.

2 POLITICAL ENVIRONMENT

1 POLTICAL SYSTEM

Brazil instituted a federal republic system of government in 1985 following the end of military rule. The structure grants a substantial power to the elected president who holds office for four years with the opportunity for one additional term if reelected. The president reserves the right to elect his/her cabinet, while the people elect members of Congress. Congress represents Brazil’s twenty-six states and sole federal district of Brasilia through two groups: an 81-seat Senate and a 513-member Chamber of Duties. Within Congress, majority power constantly transitions as representatives switch political parties often. (Background Note: Brazil, 2010)

2 POLTICAL SITUATION

Currently, Luiz Inacio da Silva is nearing the end of his second term of presidency. The upcoming election is scheduled for October 3, 2010 for a new president. President Luiz Inacio da Silva is using his popularity among Brazilian citizens to support candidate Dilma Rousseff. Rousseff's main opponent, Jose Serra, currently holds an early poll advantage. Regardless of the winner of the October election, the Four Seasons will not be significantly affected as both candidates are expected to continue economic reform and the privatization of industries. (The Economic Intelligence Unit Group, 2010)

3 DOING BUSINESS IN RANKINGS

| |Canada |Brazil |
|Rank |Doing Business 2010 |Doing Business 2010 |
|Ease of Doing Business |8 |129 |
|Starting a Business |2 |126 |
|Dealing with Construction Permits |29 |113 |
|Employing Workers |17 |138 |
|Registering Property |35 |120 |
|Getting Credit |30 |87 |
|Protecting Investors |5 |73 |
|Paying Taxes |28 |150 |
|Trading Across Borders |38 |100 |
|Enforcing Contracts |58 |100 |
|Closing a Business |4 |131 |

(The World Bank Group, 2010)

While conducting business in its home country is much easier than it is in Brazil, Four Seasons operates in more than thirty-five countries, two of which, India and Syria, rank below Brazil in “Ease of Doing Business” (The World Bank Group, 2010). Seeing as the Four Seasons is a successful multinational enterprise with deep pockets, the struggle to receive credit in Brazil does present a considerable hurdle for the company. To avoid difficulties related to trading across borders, Four Seasons should obtain necessary tangible components of its operations from local suppliers. In addition, local products will facilitate a good relationship with the local environment as well as provide a more authentic experience for guests. Areas that would be of trouble to Four Seasons include enforcing contracts, dealing with construction permits and registering property within Brazil. Fortunately, because the company specializes solely in management, much of the responsibilities associated to troublesome aspects will be shifted to their partner. A local Brazilian partner would be optimal since strong networking and contacts can help alleviate the burdens related to obtaining contracts and permits.

Although Brazil is characterized as a new growth market, the World Bank Group’s Doing Business Rankings demonstrate Brazil’s institutional weaknesses that are more align with a developing market. For instance, employing workers is extremely difficult within Brazil compared to the rest of the world. A lack of transaction facilitators, such as executive headhunters, makes it extremely burdensome to locate and recruit employees that possess the necessary skills to be successful at Four Seasons. This absence especially poses a challenge to Four Seasons because its sustainable competitive advantage of superior customer service is facilitated through its employees.

Although not as difficult as employing workers, enforcing contracts presents a significant threat to businesses operating within Brazil. Due to a lack of adjudicators, firms will find it arduous to verify payment or reliability of contractual partners. This problem is further exacerbated by the nonexistence of credibility enhancers and informational analyzers that assist with partner selection.

4 POLITICAL RISK

According to The Coface Group, Brazil received an A4 in both Country Rating Risk and Business Climate Risk (2010). An A4 rating indicates an unstable political and economic environment (The Coface Group, 2010). Volatile conditions pose an enormous threat to Four Seasons due to the amount of direct investment needed to offer its service. Unlike a product offering, the Four Seasons does not have the ability to immediately exit, or temporarily leave, the market. In an effort to curtail the effects of drastic changes, Four Seasons should create a managerial position solely dedicated to environmental scanning. This person should be aware of the significant changes and how they will affect company forecasts.

An unstable environment can greatly deter customers from visiting the Four Seasons, particularly the primary target segment of brand loyal guests. If a brand loyal guest is interested in visiting Latin America, they have the option of staying in a Four Seasons located in Costa Rica, Mexico, Argentina, or Uruguay if Brazil appears dangerous and/or unsafe.

5 CORRUPTION

Transparency International ranked Brazil 75 out of 180 countries with a score of 3.7 out of 10; 0 represents high corruption (2009). Despite the Four Seasons’ experience in highly corrupt countries such as China, Argentina, Egypt, India, Mexico and Syria (Transparency International, 2009), Four Seasons must adequately prepare for the effects of corruption in Brazil. It should incorporate the knowledge gained from the past by consulting senior managers involved in highly corrupt countries to produce contingency plans. However, it is important that the company recognizes differences between countries. For this, Four Seasons should consider using a Brazilian partner. A local partner possesses knowledge of the local community and business environment and can offer an insider perspective on solving obstacles that arise out of corruption. Furthermore, a local partner holds local contacts that may be utilized to sidestep corrupt organizations or dealings.

6 FOREIGN RELATIONS

Brazil remains open and friendly toward the majority of countries, especially its South American neighbors. Recently, Brazil has focused on expanding relations with its neighbors through associations such as the Latin American Integration Association (ALADI), the Union of South American Nations (UNASUL), and Mercosur, a customs union between Argentina, Uruguay, Paraguay, and Brazil, with Chile, Bolivia, Peru, Colombia, and Ecuador as associate members. (Background Note: Brazil, 2010)

Openness toward foreign nations ensures embargoes, or other forms of impediments, will not disrupt imports. While Four Seasons should procure components from local suppliers to enhance its relationship with the environment, the company does not need to spend time concerned over delivery of its imported supplies. For imported aspects, Four Seasons should examine countries that are involved in the Mercosur customs union to take advantage of less costly tariffs and/or taxes. Apart from products, Brazil’s openness ensures that travelers will not confront burdensome procedures to enter the country or hostility from Brazilian citizens when visiting.

3 ECONOMIC ENVIRONMENT

1 OVERVIEW

Due to a shift toward market liberalization, Brazil has more than doubled its trade flows in the past four years. While portfolio investment has increased, foreign direct investment inflows hit record levels in 2007 and 2008. However, in 2008, Brazil registered its first current-account deficit in five years as a result of a sudden increase in imports. President Luiz Inacio da Silva has focused on a floating exchange rate, inflation targeting, and primary fiscal surpluses to enhance macroeconomic policies, and therefore, increase Brazil’s global competitiveness. These factors have lead Brazil’s economy to shift toward a more service-oriented market. Nevertheless, the agricultural sector and diverse industrial base continue to function as enormous drivers of growth. (Fraga & Bowler, eds., 2008)

2 CURRENCY

The modern real was introduced on July 1, 1994 to stabilize the broader Brazilian economy. When introduced, the real was set equivalent to 1 unidade real de valor, a non-circulating currency which ultimately set the real equivalent to 1 US dollar.

Initially, the real climbed against many major currencies. Strong capital in-flows supported a strong real through late 1995. By 1996, the Central Bank of Brazil instituted tight controls over the real to bring the currency’s value down. The currency depreciated slowly through 1998, but the Central Bank relaxed controls in 1999 and the real experienced a sudden devaluation.

From 1999 to 2002, the currency remained relatively volatile vis-à-vis major world currencies. By mid-2002, the real reached an all-time low against the Canadian dollar, along with many major currencies, including the US dollar. The presidential election in late 2002 brought long needed stability to the Brazilian currency. From late 2002 to October 2008, the real slowly appreciated against the Canadian dollar and other major currencies. When the financial crisis hit in late 2008, the currency bounced from rates not seen since 2001 to around R$2:C$1. Since the crisis, the currency has again been slowly appreciating against the Canadian dollar. In recent months, the real has been slightly depreciating against the Canadian dollar.

Overall, the Brazilian real remains a relatively stable currency, especially among Latin American currencies. This will benefit the Four Seasons, as it repatriates profits to headquarters and pays local suppliers. However, as with any foreign currency -- especially those in new growth markets -- immunity from fluctuation isn’t a rule. New regimes can negatively affect currency, as well as Brazil’s significant current account deficit, significant government spending on the World Cup and Olympics and susceptibility to inflation. Four Seasons plans on pricing in US dollars, which appeals to many of its target markets and is consistent with Four Seasons across the globe.

3 INFLATION

Since 2003, Brazil has been successful in easing inflation pressures on account of strict monetary policy and an appreciation of the Real (Fraga & Bowler, eds., 2008). Yet recently, inflation has rose in recent months owing mainly to the global recession as well as increased wages and inertial pressures within the country. The Central Bank of Brazil has set a target of 4.5% for 2010. The Economic Intelligence Unit is optimistic, predicting that inflation will fall 4.8% to 2.5% between 2010 and 2011. (The Economic Intelligence Unit Group, 2010)

Four Seasons must constantly monitor the inflation rate once within Brazil. If the EIU is correct, a 2.3% change in the inflation rate will have an enormous impact on the operations (The Economic Intelligence Unit Group, 2010). Brazil will need to constantly change their prices in order to keep up with large-scale changes. Fortunately, the majority of price postings occur through the company’s website allowing the company to avoid immense costs required to reprint materials.

Higher inflation translates into higher prices not only for Four Seasons guests, but also for components the hotel buys from local suppliers or imports from other countries. Additionally, Four Seasons may consider using employee contracts that adjust for inflation to curb anger associated with loss of purchasing power. Luckily, the EIU predicts inflation to decrease and remain relatively stable in the future at 2.5% (The Economic Intelligence Unit Group, 2010), limiting negative consequences incurred by operations.

4 LABOR CODES

The Brazilian government requires all companies, foreign and domestic, to provide specific elements to its employees including thirty days of annual leave, an annual bonus equal to one month’s salary, and severance pay if dismissed without a cause. Additionally, if a firm employs more than three employees, Brazilian nationals must account for two-thirds of the total employees and payroll. Brazil has instituted a system of labor courts to handle workplace disputes involving working conditions, wages, dismissal, etc. (The Department of Commerce, 2009)

It would be ill advised to ignore government employment requirements. Not only would the company risk being forced out of the market, Four Seasons would incur a tarnished reputation within the global arena. When hiring and scheduling future employees, Four Seasons must account for each individual’s thirty days of leave; the firm must decide whether it will assign vacation time or negotiate with employees for specific requests. If two-thirds of payroll must be distributed to Brazilian nationals, Four Seasons should scan the local environment for senior management positions, as these executives tend to comprise a large portion of pay. As Four Seasons offers a service requiring an array of different workers, the company must find a way to cooperate with highly unionized Brazilian workforce; currently, over 16,000 unions exist who are very well organized and are not hesitant to use aggressive methods (The Department of Commerce, 2009). A local partner may possess pertinent information to help alleviate any contentions that may arise.

5 INFRASTRUCTURE

President Luiz Inacio da Silva announced the Growth Acceleration Plan in 2007, which committed a US $296 million investment in infrastructure by the end of 2010. Although the GAP is promising, Brazil’s infrastructure remains one of the largest obstacles within the economy. Poor quality and numerous deficiencies remain in roads, ports and airports; no passenger trains travel outside the suburbs of major cities and only 12.5% of the existing roads are paved. (The Department of Commerce, 2009)

While the 2016 Summer Olympics should increase incentives for private companies to improve infrastructure, Four Seasons must contemplate the effects of a poor transportation system. It may want to consider sourcing the majority of its tangible components from nearby local suppliers to ensure secure and fast delivery. Furthermore, imports are more likely to be priced higher on account of the inefficiencies within the infrastructure. A foreign direct investment is an option to increase efficiency and satisfaction; Four Seasons should investigate options near the hotel in addition to routes travelers predominately use. For example, it could form a strategic alliance with another firm to enhance the roads to and from the airport.

4 LEGAL ENVIRONMENT

1 INTELLECTUAL PROPERTY

Brazil is a signatory to various agreements—Trade Related Aspects of Intellectual Property (TRIPS) Agreement, the Bern Convention on Artistic Property, the Patent Cooperation Treaty, and the Paris Convention on Protection of Intellectual Property—committing the government to stringent protection of intellectual property rights. The decision to take part in international contracts was the country’s first realistic step toward putting an end to issues such as copyright infringement, however, piracy and counterfeiting remains a problem within Brazil. (The Department of Commerce, 2009) While Four Seasons does not possess a substantial amount of intellectual property that would threaten its existence, it does need to consider violations when procuring components for its hotel, particularly authentic furniture, decorations and artwork. It would be wise for Four Seasons to implement a system used to differentiate genuine pieces from others.

2 ENTRY MODE

Four Seasons, or any foreign or domestic private entity, may establish, own, and dispose of business entities allowing the company to chose any entry mode grounded solely in its own decision making (The Department of Commerce, 2009). Although a lack of government regulation offers the firm freedom of choice, it would be extremely useful to use a local representative to own the hotel building itself. As previously mentioned, Brazil is a highly collectivist culture that requires an extensive amount of time dedicated to relationship building to be successful in procuring supplies, building contracts, permits, etc. A local partner possesses established networks that can be utilized to sidestep regulations and corruption in addition to knowledge specific to the Brazilian environment.

3 IMPORTS

Brazil imports are subject to three separate taxes: Import Duty (II), Federal Industrialized Product tax (IPI) and the State Merchandise and Service Circulation tax (ICMS) (The Department of Commerce, 2009). Because both the IPI and ICMS are value-added taxes (The Department of Commerce, 2009), imports end up becoming very expensive for customers. Unless a specific tangible component is critical to the success of Four Seasons, it would be in the country’s best interest to purchase supplies from local businesses to avoid high prices pushed down to the customer because of high taxes. High import taxes paired with Brazil’s poor infrastructure will threaten the safe and efficient obtainment of products. If the Four Seasons depends on certain aspects from headquarters, or another Four Seasons location, it should be aware that the foreign entity must register with Foreign Trade Secretariat (SECEX) in order to conduct trade with Brazil.

4 TRADE AGREEMENTS

Brazil has established bilateral investment agreements with numerous countries including Belgium, Luxembourg, Chile, Cuba, Denmark, Finland, France, Germany, Italy, Republic of Korea, Netherlands, Portugal, Switzerland, United Kingdom and Venezuela; however, the Brazilian Congress has not yet ratified any of these. (The Department of Commerce, 2009)

Brazil has signed Mercosur, a regional trade agreement, between itself and Argentina, Uruguay, Paraguay, and Brazil, with Chile, Bolivia, Peru, Colombia, and Ecuador as associate members (The Department of Commerce, 2009). If imports are required, Brazil should heavily consider sourcing from countries involved to significantly decrease costs associated with imports. Furthermore, Brazil maintains a double taxation with Canada, making imports from its headquarters extremely expensive.

5 LABELING

Labeling requirements should not present Four Seasons with a notable barrier. Firstly, the primary focus of the company is services, not products. Besides the gift shop and food menus, Brazil will rarely encounter barriers in labeling. Secondly, The Brazilian Customer Protection Code does not call for unconventional or outlandish. Specifically, labeling must “provide the consumer with precise and easily readable information about the product’s quality, quantity, composition, price, guarantee, shelf life, origin, and risks to the consumer’s health and safety” (The Department of Commerce, 2009). The only hurdle Four Seasons may encounter relating to labeling is a Portuguese translation and metric equivalent to the requirements listed above.

6 PROMOTION

Direct mail is emerging in Brazil as a very useful method for reaching Brazilian consumers; citizens receive an average of 9.3 pieces of direct mail every month and 74% of Brazilians prefer direct mail to create awareness of a new product or service (The Department of Commerce, 2009). Four Seasons is encouraged to use direct mail to target local businesses and community members within its promotional aspect of its marketing campaign. It should especially use Veja, the most popular magazine in Brail with an average of one million copies dispersed a week, and Folha de São Paulo, the largest newspaper with an average of 317,000 copies distributed Monday through Friday and 400,00 on Sunday (The Department of Commerce, 2009).

Media in Brail is still heavily controlled through the public sector; foreign ownership is limited to 49% (The Department of Commerce, 2009). This should not affect Four Seasons greatly since the company avoids advertisements in mass media outlets. Also, the majority of Four Seasons target segments does not reside in Brazil.

2 COMPETITIVE ANALYSIS

Many multinationals, especially Four Seasons traditional competitors, have yet to enter the Brazilian market or only have a small presence in Rio de Janeiro. Additionally, there are only a small number of luxury local brands in Rio de Janeiro that are capable of competing with Four Seasons. In many regards, Brazil remains a relatively untapped market, though a number of international brands have recently begun eyeing the market, including Hilton. With the increased opportunity in Brazil, now more than ever may be a great time to enter the young market, armed with the experience learned through other brands’ ventures.

1 MAJOR COMPETITORS

1 PESTANA HOTELS AND RESORTS (PORTUGAL)

Pestana is Portugal’s largest tourism and leisure group, operating 41 hotels across 3 continents in countries with former colonial ties to Portugal (Pestana, n.d.). Pestana entered Brazil via Rio de Janeiro in 1999 with a local partner, Renato Albuquerque Group ("Grupo da Madeira investe US$25 milhoes no Brasil," 1999). Rather than building a new establishment, the company acquired the Carlton Rio Atlantica hotel, modernized the establishment, and added a new business center to attract business travelers ("Grupo Pestana lanca cartao no Rio," 2001).

Since 1999, Pestana has been heavily investing in Brazil and considers Rio de Janeiro a focal point for the company ("Grupo Pestana lanca cartao no Rio," 2001). By 2001, Brazil accounted for 20% of Pestana’s hotel business ("Grupo Pestana reforca atuacao no Pais," 2001). By 2004, the company had opened 6 hotels across Brazil with the stated goal of opening 10 more hotels within the next 10 years. The company’s significant investment in the market – $110 million by 2004 – has brought increased legitimacy and credibility to the Brazilian market as an opportunity for luxury and business travel, according to Francisco Rabelo, financing director for Bank of Northeastern Brazil. This significant growth has been fueled by the company’s success in the country: the company has achieved an average annual return of 31% on its investments and the country is already its best performing territory in Pestana’s portfolio. The Director of the Finance and Investment Promotion Department of Brazil's Tourism Ministry said the group was one of the largest hotel groups in Brazil; by 2005 the company was expected to have 400,000 room-nights in the country, more than any other hotel chain (Renata, 2006).

One of Pestana’s most palpable assets is its intimate understanding of Portuguese culture, being a Portuguese company. Brazil’s cultural and colonial ties to Portugal make the Brazilian market a particularly attractive market for Pestana, and as the company’s exceptional returns have demonstrated, Pestana is taking full advantage of its country-of-origin effects. With the company’s high knowledge of local culture and Brazil’s cultural similarity to Portugal, the company is able to keep the services within Brazil appear as very localized without adapting its standardized services much. This is a trend Pestana has demonstrated in the past, as it only enters markets with cultural ties to its home market (Pestana, n.d.). In this sense, Pestana can maintain a relatively standardized offering while appearing to be adapting to the local context. This intimate knowledge of Brazilian culture will be rewarding, as other multinationals don’t have access to or credibility with local culture.

Another unique advantage that Pestana has is its ability to build pousadas within Brazil. Pousadas are boutique, luxury hotels that encapsulate Portuguese culture. Until 2003, the Portuguese government was responsible for developing and managing the hotels. Pestana bought the sole rights to building pousadas from the Portuguese government in 2003, though the government maintains highly involved in overseeing each new pousada to ensure it meets minimum standards (Pousadas de Portugal, n.d.).

Pestana has expressed interest in bringing these unique products to Brazil and completed the construction of one in 1999. The company plans on expanding its offerings in the coming years in tandem with its commitment to building 10 hotels in the coming 10 years (Renata, 2006). These hotels automatically connect with locals and foreigners abroad who want an authentic experience in Brazil. No other hotel chain can emulate these boutique hotels – even localizing a hotel as much as possible won’t replicate a pousada as it won’t have the unique stamp by the Portuguese government. Moreover, pousadas are often located in historic buildings, making them even more of an attractive destination (Pousadas de Portugal, n.d.). Pousadas have the possibility of attracting travelers interested in an authentic experience without the risk of traveling to an unknown hotel. Travelers can experience luxurious accommodations and proven service in the local context of pure and authentic Portuguese culture, service and food. In fact, Brazil's Minister of Tourism has said that pousads will attract a higher class of tourists who are willing to pay additional money for the unique experience (Renata, 2006).
Another strength Pestana has demonstrated is its ability to connect with locals and operate efficiently within the local political and economic environment. Across Brazil, Pestana has demonstrated a tendency to enter cities by acquiring local hotels, as it did in Rio de Janeiro and Natal. This ensures that the hotels Pestana operates have a distinctly local flair and enable the company to penetrate the market quicker, avoiding lengthy construction times. The company also enters local markets with local partners, though it uses different partners in different cities. This willingness to share ownership gives the company powerful local allies and gives the company legitimacy among locals. These are important strengths, as many other multinationals are less successful at navigating Brazil’s complicated and corrupt government. Moreover, entering a market with a local partner shifts risk and offers the company invaluable local knowledge.

A possible weakness the group has is its organizational structure. The group maintains an International Division Organization structure. While Pestana only operates in markets based on the Portuguese culture, countries with similar histories still vary greatly in terms of market power, government regulation and destination type. By clumping all international destinations under one group, the company may fail to fully take advantage of each market or understand each market. The company’s lack of resources committed solely to Brazil may enable competitors to build a structure that is more flexible and responsive to trends and changes within the Brazilian market. Further, as the company begins expanding outside Brazil into other South American countries, the company may continue to dilute its attention to Brazil, thereby rendering many of its potential strengths as much less poignant.

A final weakness of the company is its intense focus on growth. Between its 10 hotels in 10 years policy in Brazil, and its overarching 30 hotels in 30 years policy, Pestana may begin to focus on quantity above quality. While the company’s unique products and intimate knowledge of Portuguese culture may attract luxury travelers at first, maintaining the high quality and service standards demanded by the business traveler and luxury leisure traveler may to be difficult amidst such an emphasis on growth. Finally, as the number of hotels owned by Pestana surges, the company may saturate the market and devalue the novelty of its brand. The hotels may become less alluring and less of a destination as they become ubiquitous and commonplace.

2 STARWOOD HOTELS & RESORTS (UNITED STATES) AND GOLDEN TULIP HOSPITALITY (SWITZERLAND)

Starwood is one of the world’s largest and most geographically diverse hotel and leisure companies. The company is primarily a hotel management corporation, responsible for luxury brands The Luxury Collection, Regis, W and Le Méridien and other midrange brands Westin, Sheraton and Element (Starwood Hotels & Resorts). Until recently, the company’s sole exposure to Rio de Janeiro was its three Sheraton hotels, two of which lacked a spa. While the hotels have meeting faculties, the hotels don’t appear in trade magazines as specifically targeting the business community. As such, these three hotels are not considered to be in direct competition to the Four Seasons because they do not focus on any of our target markets.

On June 12, 2009, Starwood acquired Golden Tulip Hospitality, a global hospitality company with a strong focus on the corporate traveler. Tulip manages three hotel chains, including the upscale Golden Tulip, which focuses on business travelers, and the luxurious Royal Tulip, which focuses on leisure travelers (Golden Tulip Hospitality). Tulip has one property in Rio de Janeiro, the Golden Tulip Ipanema Plaza. The property has a spa and complete business center. The hotel’s focus on corporate travel finally endorses Starwood as a viable competitor in the Rio de Janeiro market.

Tulip is a unique hotel insomuch as it relies on international standards of service, yet has been relatively successful at integrating local flavors into its brand. The company advertises its local touches through its advertising campaign, “International standards, local flavors.” Tulip’s worldwide presence also lends it strong appeal and acceptance worldwide, especially among the luxury and business traveler. This is, in part, due to its global standards of service that international travelers have come to know and rely on.

Tulip’s ability to incorporate local culture into a standardized brand is a powerful competitive advantage. Maintaining standard levels of service is important to the international traveler, as it assures him/her what to expect when traveling and builds brand equity. However, by maintaining these standards and adding local culture into each property, Tulip finds a middle ground between standardization and adaptation. This is a strategy that enables the company to remain flexible to local demands and local clients, but also cater to international travelers.

One strength of the Starwood’s acquisition of Tulip is Tulip’s acceptance among the international elite. Until the acquisition, Starwood’s two luxury brands – St. Regis and the Luxury Collection – did not have properties in Brazil. This acquisition gives Starwood immediate penetration into Rio with a familiar and proven portfolio of properties. With Starwood’s and Tulip’s combined international experience, the group can effectively begin targeting the elite traveler more vigorously. Co-branding opportunities and brand extension opportunities also exist, as both hotel companies have more luxurious brands they could deploy in Rio de Janeiro if the Golden Tulip proves successful. Moreover, Starwood’s large reserve of loyal guests gives the combined company an automatic target market from which to draw.

A final strength of the merger is Starwood’s and Tulip’s global footprint and established luxury brands lend it credence among the international elite. The company’s brand equity is an important strategic asset that can be used to connect with world travelers and attract them to their properties in Brazil. Starwood’s skill at managing a portfolio of multiple brands is important, as Tulip becomes another brand that Starwood can leverage, advertise and use to attract travelers.

One potential weakness of the merger is the possibility that incongruous corporate cultures may stymie the companies’ ability to synergize strengths and build a comprehensive network. As with any merger, it takes time to fully integrate a new company into an existing company, and Starwood must be able to keep Tulip’s corporate culture in tact if it hopes to reap the benefits of the company’s strengths. If Starwood tries to change or adapt Tulip too much, it will lose Tulip’s connections with the business traveler and the company’s unique ability to combine international standards with local adaptation. Starwood must focus on maintaining Tulip’s brand identity and equity, while simultaneously merging the company into its portfolio to fully realize a competitive advantage.

Another possible weakness is Starwood’s limited exposure to the Brazilian market, especially Rio de Janeiro’s luxury market. While Tulip has been in Brazil for some time, and both companies have experience in the luxury segment, Starwood is less familiar with the luxury hotel segment in Brazil than some of its existing competitors. This lack of experience could prove to be harmful if Starwood is not careful in executing operations, especially since the Brazilian market has proven to be difficult for international brands to tap. Starwood and Tulip both lack a positive country-of-origin effect, as the Brazilian market has proven to be fiercely loyal to local and Portuguese brands. Assuming that the namesake of its hotels will make the company successful could prove to be an unsuccessful route for the company to head.

3 MARRIOTT INTERNATIONAL (UNITED STATES)

Marriott is one of the world’s largest lodging companies with over 3,000 hotels spread across 67 countries. Marriott primarily franchises under an array of brands, including the luxurious J.W. Marriott and Ritz Carlton and other full-service and other mid-tier hotels (Marriott).
Marriott entered Rio de Janeiro in 2001, focusing its efforts on attracting luxury business travelers to respond to the country’s bourgeoning market ("Hotels check into Brazil"). The opening of the J.W. Marriott in 2001 marked the city’s first new five-star resort in over 12 years ("A new Rio de Janeiro Marriott Hotel," 2001). The J.W. Marriott is one of Brazil’s two multinational hotels on Travel + Leisure’s “World’s Best Hotels 2010” list, a comprehensive listing on the world’s 500 best hotels ("T+L 500: World's Best Hotels 2010," n.d.). The hotel offers a full-service spa, executive floor, complete business facilities and banquet halls and on-site restaurants.

Before opening the hotel, Marriott sold off its stake in the hotel with the help of a local consulting firm. However, the acquisition of land along with the initial costs and design were all sponsored by Marriott without the specific help of locals. Marriott retained control over management of the hotel ("Rede Marriott e Odebrecht colocam hotel carioca a venda").

Marriott is the largest and most recognized multinational brand currently in Brazil. The J.W. Marriott brand, in particular, has resonance with our target markets, especially luxury travelers, as demonstrated by its placement on the Travel + Leisure rankings. This is a powerful asset, as the combination of brand equity, name recognition and recognized quality may connect with luxury world travelers. Moreover, the company’s worldwide presence and name recognition may also resonate with business travelers who are already familiar with the brand and trust the hotel to be a quality establishment.

A major weakness the hotel faces also stems from its name. Like other multinational chains discussed, Brazilians prefer local hotels. The negative country-of-origin effects have hurt Marriott, as US flags are not necessarily familiar locally since Brazilians’ exposure to these brands is significantly more limited and Brazilians tend to be attracted to local brands. This is a weakness the company faces when targeting local visitors and businesses, another target market that the Four Seasons is hoping to target.

Another weakness Marriott faces is its lack of local partnerships. When entering the market, Marriott did not search for a partner. This is in stark contrast to other successful chains, especially since Marriott lacks experience in the Brazilian market overall. According to the CEO:

In order to move forward, we will need to find common ground with the Brazilian business model and probably take some equity positions in some of the developments to gain market knowledge and brand acknowledgement. A second option is to enter with our existing relationships through local partners to implement our manage-franchise business model (O'Neill & Chao, 2008).

Coming from a country with significantly different normative business practices and limited exposure to Brazilian culture – despite its significant international presence – has proven a difficult obstacle for Marriott. This is an important weakness to consider for all multinational companies, especially those unfamiliar with the Brazilian marketplace.

A final weakness Marriott faces is its pricing structure, which is higher than many of its competitors. While the hotel has higher rankings than other multinationals, if the benefits of the brand are not properly communicated, the hotel may seem overpriced. Moreover, if the hotel does not distinguish itself as luxurious, the company may face problems persuading international travelers to choose an American hotel chain over a more localized chain.

4 COPACABANA PALACE BY ORIENT-EXPRESS HOTELS (BERMUDA)

The Copacabana Palace is a historic, luxury hotel built in 1923. It is considered by many around the world as the place to stay in Rio (Doyle, 2009). The Copacabana Palace is one of three hotels on Travel + Leisure’s “World’s Best Hotels 2010” list located in Brazil ("T+L 500: World's Best Hotels 2010," n.d.). Additionally, the hotel is a member of the 5 Star Alliance, an online travel agency that partners with the world’s most luxurious hotels. Owned by the Guinle family of Rio de Janiero until 1989, the hotel is now owned by Orient-Express (Five Star Alliance, n.d.).

Orient-Express purchases individual luxury hotels across the globe. The company does not advertise itself as a chain, rather positioning each property individually. Properties are managed locally: “every hotel…has its own name and personality” (Orient-Express, n.d.).
Following its purchase, Orient-Express renovated the hotel, outfitting the fifth floor as an executive business center to focus on business travelers. The hotel includes meeting facilities and banquet facilities, all aimed at business travelers’ needs (Five Star Alliance, n.d.). The hotel also focuses significantly on elite travelers, as its reputation for service and quality attract politicians, royalty and actors. The hotel has a complete spa and two restaurants, neither of which serves Brazilian cuisine (Five Star Alliance, n.d.).

An important advantage the Copacabana Palace has is its legacy and long-term association with Brazil. From its beginnings, the company has been intertwined into local culture. The owners were local and today, Orient-Express continues to manage the hotel as an independent property. Many view the hotel as the nation’s preeminent local option, and foreigners who want an authentic experience may opt to stay at the Copacabana Palace over other multinational chains. The hotel’s brand equity is particularly strong, as it is a clear favorite among elite travelers. The company’s increased focus on business travelers further expands the hotel’s brand equity and product scope.

Another strength the Copacabana Palace is its long history in Rio de Janeiro. The company’s experiences in Rio de Janeiro give it a level of knowledge foreign multinationals can’t match. Moreover, the company’s success in Rio de Janeiro reflects its ability to work within the country’s legal and political structure. As investment increases in Rio de Janeiro and new multinational chains enter the market, Copacabana’s deep understanding of local cultures and the regulatory environment will be exponentially more valuable.

While the company is known to Brazilians and the well-traveled elite, a lack of a true multinational brand name may stymie some elite travelers. Not only does the company lack a network of brand loyal patrons, the lack of an internationally recognized brand name may make some travelers hesitant. Additionally, the hotel’s high price may make other, more familiar options more appealing to travelers, who are sure of the level of quality to expect.

5 FASANO HOTELS (BRAZIL)

Fasano is one of the few remaining local competitors yet to be acquired. The company was established in 1982 as a world-class restaurant; the company remains recognized for its culinary achievements. The restaurant pioneered the gastronomic movement in Brazil and continues to uphold its elegant blend of contemporary and traditional Brazilian cuisine. In 2003, Fasano opened its first hotel in São Paulo. In the same year, Fasano became a member of the Leading Small Hotels of the World (Five-Star Alliance) and was ranked as one of the world’s 50 best hotels in Travel + Leisure (Fasano, 2010). Fasano opened a hotel in Rio de Janeiro in 2007 amid great hype and reviews, “eclipsing the fabled Copacabana Palace as the top play den for Brazil’s rich and famous” (Beehner).

From its foundation to the finishing touches, Fasano is a local competitor. This is a significant strength the hotel has, as its numerous restaurants all share the spirit of Fasano’s famed culinary expertise. The hotel is designed in Bossa Nova-chic style and Brazilian touches compliment every aspect of the hotel. More than any competitor, Fasano remains a localized and focused hotelier, and has limited experience outside the growing Brazilian market. Fasano is a traveler’s only real option, when he/she wants to stay at a local, luxury resort. Every other luxury boutique hotel has been acquired or is at a different tier of service than Four Seasons.

Another strength Fasano has is its long-term, strategic partnership with real-estate developer JHSF. This has given Fasano access to the Brazilian market and enabled the company to take less risky positions in its hotels as JHSF has a 50.1% stake in the hotel. This also frees up capital for other ventures, as the company is currently building additional properties in Brazil and Uruguay.

A possible weakness of Fasano is its lack of experience managing hotels and meeting the expectations of guests, especially foreigners. As Brazil’s most expensive hotel, the elite guests who frequent Fasano have incredibly high expectations. While multinationals have experiences with such clientele, Fasano does not have the same expertise in dealing with this segment and may be overextending its existing resources in an attempt to compete with world-class contenders. Indeed, excitement over the hotel has faded since its opening in 2007 and the company continues to charge a significant premium over every other Brazilian hotel.

Another weakness is the company’s intense focus on growth. Not only is the company seeking to double its current size, but is doing so without proven success. The company has not given itself time to reap success or long-term rewards and could be restrained on capital. While its partnership with JHSF will help alleviate its capital needs, the company can still be caught off guard. In addition to the fact that Brazil’s market is still growing and developing (which makes the company more susceptible to fluctuations), Fasano may not have the resources to focus simultaneously on growth and operations. In such a niche market, meeting guests’ expectations is highly important.

A final weakness is the hotel’s small size, at only 91 rooms. Of the Four Season’s competitors, the Fasano is significantly smaller than any competitor. As Brazil’s market expands and tourism increases, especially with the upcoming Olympics and World Cup, Fasano does not have the capacity to serve these large groups. The hotel’s size limits the company’s future growth and revenue.

2 SWOT ANALYSIS FOR FOUR SEASONS

Rio de Janeiro is an increasingly desirable market according to industry insiders. However, limited infrastructure development and corrupt government practices have forced many businesses to adopt new models for entering the market (O'Neill & Chao, 2008). With this in mind, it is increasingly important that Four Seasons understands the various opportunities and threats in the Rio de Janeiro marketplace.

1 STRENGTHS

The Four Seasons has a strategic competency in luxury travel and the corporate business segment. In this regard, the company does not need to cultivate or build a need in this market – the company’s primary target markets already exist in Rio de Janeiro. Moreover, Four Season’s strong rapport with elite travelers and their persuasive brand equity will enable the Four Seasons to position themselves as an über-elite option for travelers. Four Seasons is unconstrained by the conditions that existed during slower economic expansion. It can redefine the luxury segment in Rio de Janeiro, by offering a spectacularly ornate hotel that combines the company’s famed service with local charm.

2 WEAKNESSES

It is imperative that Four Seasons understands the local competition and maintains an adequate level of adaptation. Some of the best hotels, like Copacabana Palace and Fasano have a much more positive country-of-origin effects than the Four Seasons will have. It is also important that the company considers the number of multinational chains looking to enter the Brazilian market in the short-term, along with the number of existing hotels that are looking to expand. While the market is not currently saturated, Rio de Janeiro stands to gain a significant number of new luxury hotels in the coming years. Four Seasons must work to differentiate itself from these competitors, by remaining standardized with its signature blend of service, working with local partners and redefining the luxury segment in Rio de Janeiro.

3 OPPORTUNITIES

A major opportunity that the market offers is an emphasis on luxury leisure and business travel. Many multinational chains are entering Brazil’s luxury hotel market and sub-consequently diversifying their presence with lower-end brands. Both Tulip and Marriott have made corporate travel their target demographic and other hotel chains have renovated their hotels to include necessary infrastructure for businessmen to increase their competitive advantage.

Another trend in the Rio de Janeiro market is the evolution of eco-tourism and other non-traditional requests for five-star hotels. While growth has been concentrated in the luxury segment, it has not reflected traditional corporate models in other countries. Depending on how companies respond to this trend will determine whether this is a threat or an opportunity. Four Seasons should strongly consider entering the market in an environmentally friendly way, incorporating Brazil’s beaucoup scenery into the hotel. By capitalizing on this growing trend, the company will not be left behind as tourism continues to evolve in Brazil.

4 THREATS

Other companies, specifically Marriott, have demonstrated problems working under Brazil’s government and political system. However, companies that entered Brazil’s market with local partners have avoided such problems. A potential threat to any foreign company is misunderstanding local business practices. It is important that Four Seasons understands preceding companies’ mistakes and cooperate with local businesses before entering Brazil. This could be a strategic advantage over other multinationals, as local partners will give Four Seasons additional market information and increased legitimacy.

Another potential downfall is Brazilians’ affinity for local brands and their unfamiliarity with multinational brands. The Four Seasons is less affected by this problem, however, because their primary markets are international travelers. These travelers, unlike local Brazilians, are intimately familiar with brand names. Once again, the company’s brand equity will be an important asset the company should leverage. Even though Marriott and Tulip have luxury products in Brazil, intimate familiarity with Four Seasons will enable the company to position itself as the luxury resort of choice. However, the company must still work to connect with local businesses. Ignoring this segment would be harmful to the company, so Four Seasons must work to overcome the country’s hesitance when dealing with multinational brands.

3 POTENTIAL TARGET MARKET ASSESSMENT

1 FOUR SEASONS’ GUEST DEMOGRAPHICS

Four Seasons guests are wealthy, well-traveled and influential individuals. Their average net worth is around $4 million and average income is about $479,000. This represents the upper class who can afford to spend more on travel and leisure than regular travelers can afford to spend. The average guest is 41, 67% of guests are male and 33% of guests are female. Approximately 61% of Four Seasons guests have a graduate degree. These demographics show that Four Seasons guests are usually well educated and often have experience in their professional careers. On average, single individuals account for 23% of guests, 60% are married, and 17% are other. Forty-five percent of guests are families with children under the age of 18 and living at home. About 60% of these travelers are business travelers and 40% are leisure travelers. The average guest is a frequent traveler, who travels about 13 times per year. Interests of these guests, also referred to as “passion points” in Four Seasons, include fine dining (87%), live theatre (73%), concerts and other music events (72%), sports events (65%), art galleries (48%), and antique shops (37%). These interests reflect a cultured market. Many in this market have investments in money market funds (85%), stocks (74%), IRA’s (70%), jewelry (48%), diamonds (37%), art (36%), and 60% own real estate other than their primary residence (The Four Seasons).

These guests can be divided into four different target market segments, which Four Seasons has standardized for all of its locations. Strategies to connect with and advertise to each segment may vary slightly per destination, but the specific segments are relatively standardized worldwide. The primary segment focuses on brand loyal guests, those who only visit Four Seasons locations when traveling. The secondary segment consists of elite business travelers on company-sponsored trips or while attending conventions. The tertiary segment includes elite leisure travelers, including those vacation and those attending events, such as weddings or birthdays, which are often hosted at the hotel. The quaternary segment contains local community members and local businesses.

2 TARGET SEGMENTS

1 BRAND LOYAL GUESTS

The Four Seasons primary segment is its brand loyal guests. Brand loyal guests constitute a large portion of leisure travelers, who account for 40% of total travelers (The Four Seasons). This target market consists of affluent global travelers who often consider traveling as a hobby and prefer to stay at Four Seasons hotels wherever they travel. Due to regular visits at Four Seasons hotels, these individuals feel a sense of membership to the elite community and want to connect with others who have similar profiles to feel a sense of belonging.

These travelers expect a lavish and standardized experience of quality and service with personalized attention. Promptness of check-in and check-out, reliability of reservation, friendliness of all employees, ease of obtaining information, and smooth handling of complaints is essential. In addition, room and bath size and décor are important features to this market. The quality of fitness facilities and sports programs is significantly important as is the food and beverage variety available to them. Location of the hotel is also an important factor, including the convenience of finding shopping centers and the ease of access to tourist activities. Security of the hotel is also vital ("ScienceDirect - Tourism Management: Three representative market segmentation methodologies for hotel guest room customers," n.d.). Many high-profile guests trust the Four Seasons in guaranteeing their security and privacy in addition to their own security detail.

2 ELITE BUSINESS TRAVELERS

The Four Seasons secondary segment consists of elite business travelers. Business travelers account for 60% of Four Seasons business (The Four Seasons). Many companies sponsor business-related trips and meetings abroad and choose to stay at Four Seasons for its elegance, comfort, and reputation. Business conventions are also an important component of this market, bringing in a mass quantity of guests simultaneously who use rooms, banquet facilities an catering services.

Four Seasons’ brand image is the appeal for this target audience. Business travelers expect a large room and bathroom, convenient and ample business facilities and quality sports and fitness facilities. In addition, the atmosphere of the hotel and the surrounding area’s activities are considered important to business travelers. Proximity of local activities allows business travelers to venture out into the city during their infrequent and short breaks while connection with the local city ensures they will be able to attend meeting ("ScienceDirect - Tourism Management : Three representative market segmentation methodologies for hotel guest room customers," n.d.). Sufficient conference space and associated services for conferences, such as catering or concierge services, are significant components to this marketing segment. Many business groups expect to have the possibility to hold meetings in a conference room if necessary. For companies that consistently book rooms at Four Seasons, a standard rate offered to each company is given and is also available to the business traveler for recreational visits such as a family vacation. This is an appealing benefit to business travelers who have a family at home, value time with their family, and would like to share their experience with them.

3 ELITE LEISURE TRAVELERS

The Four Seasons tertiary segment consists of elite leisure travelers who enjoy staying at luxury hotels but aren’t necessarily loyal to a specific brand. This segment also includes international guests who host or attend special events, such as a wedding reception or a birthday, at the hotel due to the availability of a large space, elegant décor, and catering services. The tertiary segment also consists of travelers visiting for local events, such as Rio de Janeiro cultural festivals.

Consumers in this segment take on the mentality that “life is precious and you’re worth it,” believing that spending a little extra money is worth the return ("ScienceDirect - Tourism Management: Three representative market segmentation methodologies for hotel guest room customers," n.d.). For these individuals, a stay at the Four Seasons can count as a reward to oneself or a leisurely activity. Room and bath cleanliness, comfortable beds, room rates, sports and fitness facilities are important to this segment.

4 LOCAL COMMUNITY MEMBERS AND BUSINESSMEN

The Four Seasons quaternary segment consists of local community members and businessmen. Wealthy citizens in Rio de Janeiro and surrounding communities are a large portion of this market. Also, local businesses that host conferences, trainings or management meetings compose a portion of this segment. Members of this segment range from families to couples to local businessmen, all who may be interested in hosting large dinner parties, weddings, birthday celebrations, or other celebratory events.

This market is the most diverse and dissimilar segment. Unlike the primary, secondary and tertiary segments, these guests are not international, not exclusively exposed to luxury brands and may be unfamiliar with Four Seasons and its brand image. Moreover, unlike the other segments, these guests don’t usually seek the Fours Seasons as a place to stay; many in this segment are specifically interested in Four Seasons’ amenities, such as the spa and restaurants. The spa offers an opportunity for this segment to pamper themselves without leaving their city while dining at the hotel restaurant may be considered a special night out. Quinceaneras are a commonly celebrated event in Brazilian culture that usually includes a large family gathering at a local banquet hall. Profitable local businesses are another significant portion of this segment. These businesses will conduct meetings in the Four Seasons conference space or visit the restaurant for business lunches and dinners. To attract local business to host events and meetings in the conference space, special price programs and discounted rates will be offered. The legitimacy and localization of the resort is specifically important to this segment. Unlike Four Seasons’ other target markets, these guests are not a homogenous segment and expect the local hotel to reflect their local culture.

MARKET ENTRY STRATEGY

Four Seasons has been through a number of different market entry modes and boasts expertise when it comes to foreign markets. In an effort to maintain its status as the world's leading high-end hotelier, Four Seasons continues to expand abroad and provide its superior service in over 35 countries. Four Seasons has successfully implemented acquisition, management contract and development strategies when entering a foreign market. Such was true when Four Seasons entered into Hong Kong, where the firm purchased a substantial stake in a local-based hotel company, Regent International Hotels Ltd. (Onkvisit et al., 2004). This agreement gave Four Seasons rights to manage over forty luxury hotels dispersed among seventeen countries throughout Asia. In Onkvisit et al.'s (2004) International Marketing: Analysis and Strategy, it is observed that this acquisition strategy based on contractual agreements between management teams, allowed Four Seasons to gain immediate exposure in Asia without long-term development investments.

Greenfield operations in Brazil prove to be a long-term investment that will present a number of challenges with the regulatory system that Brazil currently has in place. As mentioned in the environmental analysis, Brazil’s collectivist culture requires any foreign company to build a relationship with its nationals in order to be successful in receiving supplies, development contracts, permits and national approval (both socially and legally). After a comprehensive assessment of Brazil’s environment, a partnership is the best mode of entry for Four Seasons.

In the case of entering Brazil, based on the country's new growth economy and the decision to hold the 2014 World Cup and 2016 Summer Olympic Games in Rio de Janeiro, it will purchase a local hotel and indirectly partner with a local Brazilian representative: Fasano Hotels. Before considering Fasano as an option for this integrated mode of entry, Four Seasons researched a number of options for acquisition and partnership. Other foreign entrants who sought to tap into the booming Brazilian market have already acquired some of the viable options that coincide with the Four Seasons brand. For example, in 1989, the Orient Express acquired Copacabana Palace Hotel, a local hotelier whose brand image is adequately aligned with the Four Seasons.

Although as a company, Fasano will not be a direct partner in Rio de Janeiro, their employees will act as local representatives. More specifically, Fasano’s Brazilian top managers, who have well-established ties and relationships with the local environment, will be valuable assets to local operations for Four Seasons. These managers have an intricate understanding of Brazilian culture, which will help with hosting business conferences, events, and local guests, as well as with any cultural differences that may arise. Additional advantages of this acquisition include an expedient mode of entry for Four Seasons as a foreign company in Brazil that requires no extravagant construction, furnishing, or intensive recruitment strategy. The latter is especially important because it allows Four Seasons to bypass the fact that no recruitment agencies exist in Brazil’s still developing economy.

Fasano’s history in Brazil (as mentioned in the competition analysis) and its current brand recognition among international and local consumers, make it an ideal company for Four Seasons. This background is significant in that it directly correlates the Four Seasons brand to the Fasano name. Such similarities will allow for a consistency in local brand awareness and recognition.

Currently, Fasano is a partner with real-estate developer JHSF, which would make Four Seasons a direct partner to JHSF’s acquisition, which took place in 2007 (Fasano, 2010). Since Fasano is relatively new to hotel operations and management, Four Seasons can offer its internationally renowned expertise to the negotiating table. Four Seasons history in excellent service and jet-setting consumer base will introduce Fasano to an entirely new market.

Four Seasons will begin its business relationship with Fasano by purchasing its boutique hotel in Rio de Janeiro located in Ipanema. This acquisition will give Four Seasons a 49.9% stake in Fasano’s Rio de Janeiro hotel and indirectly establish a partnership with JHSF, who holds the remaining 50.1% stake. However, due to Fasano’s expertise and success in the restaurant industry, Fasano will maintain full control over this hotel’s restaurants and food services. The acquisition will give Four Seasons access to the established networks Fasano has built with suppliers as well to JHSF construction management services in the event that the Four Seasons decides to expand its presence in Brazil. Four Seasons will continue to operate with all of Fasano’s staff and employee lineup but will retrain the group over the span of 12 months under the company’s comprehensive training program to obtain Four Seasons high-quality service. Upon the completion of the training program, the Four Seasons name will be incorporated to the hotel as: “Fasano, Four Seasons Hotel” (henceforth to be referred to as “FFS”). With the exception of a few training directors, Fasano’s work staff will remain unchanged if the current employees willingly agree to continue working for Four Seasons company.

While developing a standard process of hiring and training, Four Seasons will have to conform to local labor codes and regulations. According to the US Country Commercial Guide to Brazil, workers must have 30 days of annual leave, annual bonus equal to one month’s salary and severance pay if dismissed without cause (United States, 2010). Another labor law Four Seasons will have to be mindful of is that the government requires that two-thirds of a company’s payroll must consist of Brazilian nationals. Keeping all of Fasano’s Rio hotel staff and employees will accomplish just that, and subsequently foster a smooth transition during Four Seasons’ entry into Brazil.

To ensure that both parties receive equal benefits in this purchase, contractual agreements will be drawn with the following details:

1. As a continued incentive for this hotels acquisition, 20% of net profit will be allowanced to the Fasano family on a quarterly basis throughout the duration of this contract.
2. Four Seasons will not build a hotel in Brazil and Fasano will not be able to build a hotel in Rio de Janeiro for the next ten years, after which time it will reevaluate the terms of agreement together.
3. In the case that Four Seasons decides to expand in Brazil, it will be prohibited from using the Fasano name.
4. Terms of agreement will be reevaluated at the end of the contract duration of ten years, in accordance to changes in Brazil’s business environment and other conditions that may invoke a need for modification.
Four Seasons will be sharing valuable service standards with Fasano, who has the potential to be a worthy adversary in the Brazilian market. To ensure that intellectual property, mainly Four Seasons’ knowledge of training employees using their established programs and technological assistance, does not switch hands, contractual agreements like the one above will map out conditions after much scrutiny.
This placement will allow Four Seasons to acclimate itself with Brazil’s local business environment and gain exposure as a brand. Fasano and JHSF’s experience, contacts, and business resources in the Brazilian market will enable Four Seasons to enter Rio de Janeiro similarly to how it did in the Asian market. As stated previously in our analysis, the nature of Brazil’s cultural, political and legal environment poses challenges to Four Seasons’ entry into the foreign market as a wholly owned subsidiary. Due to Brazil’s weak regulatory system, there are difficulties in properly identifying international business-to-business relationships. This may lead to complications when addressing tax laws. For example, as a Canadian-based company, the Four Seasons may face intricate tax regulations that could pose unnecessary losses on the firm’s balance sheet. Thus, Fasano and JHSF would be competent local partners in Brazil who will provide valuable insight on how to overcome barriers such as corruption and regulatory restrictions. In addition to this, Fasano and JHSF’s previous interaction with Brazilian consumers will prove to be instrumental in targeting local consumers. This acquisition and indirect partnership with JHSF permits Four Seasons’ participation in the development, marketing and growth of the brand. This will maximize chances of a sustainable presence in the new growth market.

Despite Four Seasons’ previous successes with acquisition strategies in foreign markets, Brazil’s sensitive environment has been the motivation to take a more conservative entry approach. Competitors who have previously ventured into Brazil have demonstrated that traditional modes of entry may be ineffective. Marriott’s unsuccessful attempt to enter this market without the help of a knowledgeable partner stands as a cautionary tale to overconfident foreign hotel companies that assume domestic business models will serendipitously align with that of Brazil’s.

Theoretically, Four Seasons’ long-term commitment to establishing itself as a luxury brand in Brazil would be effectively achieved through development strategies. However, with the World Cup and Olympics looming near, this mode would not be the most time-efficient strategy for Four Seasons. Participating in a partnership now, and increasing the firm’s involvement in the future, once the brand has sufficiently been established will be a more conducive alternative.

MARKETING MIX PLAN

1 BRAND STRATEGY

Four Seasons will employ a top-down global brand strategy approach in Rio de Janeiro to ensure brand standardization across markets. Four Seasons primarily concentrates on a niche market of affluent world travelers. Among this group, expectations are nearly identical, which makes it critical that the Four Seasons’ brand identity is consistent at each location. As a result, Four Seasons has positioned itself as a global ultra-luxury brand that is synonymous with exceptional facilities and excellent, individualized customer service.

The Four Seasons’ global brand, which denotes superior customer service, creates a sustainable competitive advantage for the company beyond providing immediate recognition to customers and international credibility. Unique customer service allows Four Seasons to differentiate itself from competitors because any hotelier can build a luxury hotel with extravagant amenities. However, excellent personal service is facilitated through intangible processes such as recruitment, selection, hiring and training, which are considerably more difficult for rivals to replicate. In addition, the corporate culture instills the importance of service standards that do not just meet customer needs, but greatly exceed them.

Through its brand strategy, FFS provides guests with a sense of comfort, convenience and control. By providing twenty-four hour personalized service, FFS eliminates the inevitable stresses involved with travel. For example, an elite business traveler may require a tie for a last-minute meeting that was scheduled. Rather than the guest participating in the time-consuming task of searching the unknown surroundings for an appropriate tie, the guest can simply make one phone call to the front desk and have a tie delivered within an hour. This allows the executive to remain calm and prepare for the meeting. This type of service exemplifies the Four Seasons’ brand identity that guests have come to know and expect.

This global brand strategy was built by first identifying the common needs of its customers and target markets. The most important factors involved in choosing a luxury hotel among the company’s niche market include: impeccable and truly personal service that leaves a customer feeling understood, pampered or rejuvenated; a welcoming environment; consistency in providing an experience that meets or exceeds needs; and an overall enjoyable experience (Talbott, 2006). Additional needs of our customers include: security; superior hygiene; luxury amenities such as beds, bathrooms, gyms, restaurants, spas, pools, bars, et cetera; and twenty-four hour timely service. More than other hotels, Four Seasons understands the importance of its customers’ time (Talbott, 2006). Through comprehensive twenty-four hour service that coincides with customers’ twenty-four hour lifestyles, Four Seasons communicated its dedication to exceeding the needs and wants of guests. These services include: “around-the-clock in-room dining; one-hour pressing and four-hour dry cleaning; and after-hours access to retail shops and other services nearby” (Talbott, 2006; 9).

While each of FFS’s target segments possess the above needs, Four Seasons identified specific requirements of each segment. First, brand loyal guests expect indistinguishable service across each resort. The information systems database used by Four Seasons, OPERA, allows each location to access the preferences and past requests of repeat customers, enabling employees to provide personal service. Second, elite business travelers expect a modern, efficient business center containing copiers, fax machines, computers, printers, videoconference areas, and private areas for meetings. In addition, some in this group may prefer access to a printer, a facsimile or wireless Internet in their room upon request. FFS’s fourth target segment is dissimilar to the others because it is comprised of local businesses and people who will be utilizing the hotel for special events, such as conferences, weddings, and quinceaneras. Therefore, these customers will expect large banquet facilities, event planners and catering capabilities.

Understanding these needs enables the company to create a brand image of luxury and superior service worldwide that meets the expectations and needs of target segments. Four Seasons has built an international brand personality that remains relatively standardized across the world. However, pressures for localization – especially among FFS’s quaternary segment – do exist. Acquiring Fasano immediately provides this level of localization to FFS. Moreover, preserving the Fasano brand name increases brand recognition and legitimacy between FFS and local community members that are less familiar with Four Seasons’ brand image. As Fasano has a similar brand image of luxury, its brand name will complement the Four Seasons’ international brand image.

Because brand identity and service quality are so important to Four Seasons’ continued success and competitive advantage, Four Seasons must monitor the success of implementing training at FFS to guarantee consistency between FFS and other Four Seasons. To ensure the proper brand image is being communicated to customers, a transition team will be responsible for training employees. To monitor success, the Regional Vice President will continually visit and inspect hotel standards and operations. Furthermore, managers will utilize guest comment cards, guest e-mails and social networking sites to track and monitor customer feedback.

2 PRODUCT/SERVICE

Each Four Seasons hotel strives to achieve the ideal balance of standardization and adaptation. Political, economic, cultural and legal factors of each country are taken into consideration to make each hotel unique, while maintaining the standardized service that serves as Four Seasons’ competitive advantage. When entering this new market, various aspects of the product will be unique to the Brazil. The acquisition of Fasano Hotel will facilitate the incorporation of Brazilian style since the original hotel’s infrastructure and interior décor will remain the same. The Fasano in Rio de Janeiro currently combines contemporary design with its stylistic décor, reminiscent of the Bossa Nova Era, the time period during which Ipanema was developing into one of Rio’s most charming neighborhoods. Designed by Phillipe Starck and recognized by Rogerio Fasano, the hotel itself is considered to be an architectural masterpiece. With materials brought from various regions of the world for the construction of the hotel, the Fasano Rio de Janeiro has cutting-edge design with warm natural colors to complement the beach on which it resides. The hotels chic sophistication is incorporated in each of its eighty-one rooms and ten suites. All rooms feature hardwood floor terraces, beachfront or courtyard views, marble bathrooms, and deluxe amenities. Haviana flip-flops, a Brazilian staple, are included in each room for the guests’ comfort. Wi-Fi high-speed Internet connection and LCD TV screens are also provided in all rooms (“Hotel Fasano Rio de Janeiro”).

Following the acquisition of the Fasano Rio de Janeiro by Four Seasons, the tangible aspect of the hotel will remain unchanged, providing a basis for expansion. Retaining its original design, FFS incorporates the Four Seasons’ luxurious ambience with Brazilian local culture, which is demonstrated through Fasano’s design style. This achieves Four Seasons’ objective of combining extravagance with an authentic Brazilian feel while eliminating costs associated with remodeling. In addition, the acquisition provides Four Seasons with local brand recognition and established ties with the Brazilian community that were previously built through the Fasano family, the original founders of Fasano (Adriano, 2004).

Upon acquiring Fasano, FFS will participate in an extensive expansion project that will replicate the existing Fasano style and décor. Compared to the average size of a Four Seasons’ hotel of 225 rooms, the existing hotel structure only contains 91 rooms. Expanding to a medium-sized hotel allows FFS to take advantage of profits derived from large groups. In particular, an expansion will capitalize on travelers arriving for the 2014 FIFA World Cup and 2016 Rio de Janeiro Summer Olympics. JHSF and the previous Fasano Rio de Janeiro interior designers will be used to expand and decorate the additional ninety-one rooms, resulting in a total of 182 rooms. The new section of the hotel will be decorated with local artists’ work and Brazilian style to further create a localized environment for guests. Decorating the hotel with locally produced furniture and artwork will support the local economy while placing an authentic and unique touch on each room. As previously done by the interior designer, the Brazilian décor will be combined with sophisticated style to simultaneously contribute to the elegant and luxurious atmosphere known to regular guests at the Four Seasons. Assuring the comfort of our guests is critical to develop the sentiment of staying at a “home away from home.”

Although Four Seasons will acquire all management aspects of hotel operations, Fasano will continue to own and operate the restaurant located in the hotel due to their expertise in the industry. Fasano restaurants are known to exemplify quality, modernity, and tradition. With the opening of his first restaurant in Sao Paolo in 1902, Vittorio Fasano created an elite dining experience that would begin the gastronomic legacy of the family. Known as “the family that revolutionized gastronomy in Brazil,” Fasano has distinguished itself by offering cuisine with a “classical basis constantly seasoned with imagination.” (“Cuisine”) After opening various award-winning restaurants in Sao Paolo, Al Mare restaurant was opened in the Fasano Rio de Janeiro hotel. Recognized as one of the best dining experiences in Rio de Janeiro, the dining room, which accommodates seventy-one people, serves breakfast, lunch, and dinner to hotel guests and outside customers. Managed by Rogerio Fasano and Loca Gozzani (former chef of 3-star Michelin eatery Enoteca Pinchiorri), the restaurant is well known in the Brazilian restaurant industry and has strong name recognition. Fasano’s expertise and experience in the restaurant industry is a strong competitive advantage of the company. In the acquisition agreement with Fasano Rio de Janeiro, Fasano will maintain complete control over the restaurant. Due to the 100% ownership, nothing will be changed in the restaurant. The Al Mare kitchen will also continue to provide the food for the hotel’s 24-hour room service and receptions held in the banquet halls.

While the Fasano Hotel relies heavily on design to convey its message, Four Seasons emphasizes a greater focus on personalized customer service. Applying the Four Seasons standardized service standards in the adapted Fasano infrastructure and décor will create the ideal balance of standardization and adaptation for a world-class hotel. Replacing Fasano’s management with Four Seasons to become FFS, the service of the hotel will be upgraded to meet Four Seasons standards. Global elite travelers and loyal guests expect the same high quality service that is known to differentiate Four Seasons from its competitors. For this reason, special initiatives need to be taken to verify that service is standardized from one hotel to the next but customized to each guest. Four Seasons believes service is what allows a hotel to create an atmosphere that feels like home. Twenty-four hour service, seven days a week, such as four-hour dry cleaning, one-hour pressing, complimentary shoe shines, round-the-clock in room dining and concierge services, are key to the Four Seasons experience and are expected at every location. However, the definition of service is extended to include a personalized and intuitive experience. Service should not be the same for every guest, but should be tailored to their specific needs and preferences instead. This requires additional training for employees to predict customer needs and successfully respond to guest inquiries.

Upon entering the Brazilian market, a transition team relocated from another existing Four Seasons property will be in charge of retraining all employees to develop a highly qualified staff in delivering premier service. This will be done through a combination of recruiting and training techniques, and reinforcement of the company's core standards. Hotel employees will be recruited locally through standard recruiting processes and reflect a wide variety of education and experience levels to fulfill the different operation and administrative positions. Governmental regulations obligate any foreign company to a two-third rule. This is where two-thirds of total payroll and two-thirds of employees need to be Brazilian nationals. With the acquisition of Fasano Rio de Janeiro, all Fasano employees will be offered the opportunity to work the same position for Four Seasons and undergo a transitional training program. Retaining current Fasano employees will be beneficial to the Four Seasons due to their knowledge of the location and experience in the Brazilian hospitality industry. If a position opens that requires hiring, FFS is equipped with the previous Fasano Department of Human Resources that possess recruiting, selection and hiring within the local Brazilian environment. During the hiring process, a strong emphasis will be placed upon personality rather than prior experience or specific skills. This echoes the Four Seasons’ belief that a person’s personality is the most significant factor in creating and perpetuating a corporate culture of excellent individualized customer service. For this reason, the Four Seasons’ utilizes a comprehensive training program aimed at equipping employees with necessary skills.

In order to train Fasano hotel employees to meet Four Seasons’ service requirements, a detailed and comprehensive training program will be implemented over the span of one year with the goal of instilling Four Seasons’ service standards to all employees. First, all hotel employees will be required to attend the four-day Four Seasons Introductory Training Program (FSITP). FSITP includes a two-day classroom orientation, a complete tour of the hotel, and personal meetings with each of the department heads in order to familiarize employees with Four Seasons philosophy, values and mission. Each employee will also receive the Four Seasons Manual, a detailed outline of the company's standard operating procedures and core values. Providing a standardized training to all employees will allow a better understanding of the type of service that defines the Four Seasons brand. Employees will be expected to respect the standards, which include but is not limited to: answering all phone calls before the third ring, name recognition at check-in, using each guest’s name at least twice when conversing with them, opening all doors for guests, cleaning a guest room within one hour of requested service, making any possible accommodations necessary to satisfy the guest, etc. Each department is required to fulfill various tasks within a given time frame to provide timely service. It is necessary to adapt these standards at FFS since our main target segment is repeat guests. Guests who are familiar with Four Seasons service will have higher expectations and perhaps be more demanding than new guests.

Since hotel operations will remain open during this transitional phase, employees will be divided into groups into which they will undergo the training program at different times. Groups of approximately thirty individuals from various departments will attend FSITP together during different weeks, as to not interrupt the service to the guests staying at the hotel. Groups will rotate, one after the other, through the FSITP program until all employees have finished the initial training. A more specific and detailed training will then be provided to all employees to learn about specific service standards required for each position. This will be done within each department and facilitated by the Director of Training. Similar to the groups created for FSITP, smaller groups will be formed within each department for training one day per week. The training will consist of the Standards Training Program, a list of the department’s core standards, a sequence of service or tasks, and a comprehensive job breakdown. The training will be set up so that each group trains on a different day of the week. For example, Group A will train on Monday, Group B on Tuesday, and so on. This is to minimize the interference with hotel operations, while providing a weekly training session for employees. Depending on their respective position, employees will need to have different amounts of training. Front desk employees, responsible for a variety of tasks that interact with the IT system, will require longer training than housekeepers responsible for cleaning the hotel rooms. The training schedule and requirements will be decided and implemented by the Director of Training.

Extensive training will be provided for employees who use the IT system daily. Since OPERA Property Management Software is used in all Four Seasons properties worldwide, the same IT program will be installed at FFS. Hotel staffs in all departments use this software for their day-to-day jobs, such as handling reservations, checking guests in and out, handling guest requests, and accounting. While the software is standardized across all locations enabling the transfer of guest preferences and request, it allows adaptation to individual locations to recognize differences in amount and type of rooms, amenities and so on. The software fully integrates reservations, rate management, profiles, front desk, back office interface, room management, cashiering, and accounts receivable (“OPERA Property Management Software and System – MICROS”). Incorporating this software into FFS will allow for company-wide consistency and organization, and the transfer of valuable information, such as guest profiles, between all properties.

Guest profiles are a critical part of the customized guest service. Complete demographic records for guests, business accounts, contacts, groups, and agents are recorded including such information as addresses, phone numbers, stay and revenue details, guest preferences, and additional data. The organized and complete records make handling reservations simpler and managing data faster and more accurate. Any information regarding guest preferences is included in a guest profile to ensure Four Seasons can provide the most individualized experience. Preference in type of pillows, smoking/non-smoking, traveling with pets, and family members and age, are just a few examples of basic data that is recorded and shared through the OPERA system to provide better service for long-stay and repeat guests. Additionally, this transfer of knowledge allows the hotel to make special accommodations and prepare any necessary amenities in the room prior to the guest’s arrival that has previously stayed at any Four Seasons’ location.

Specific training is required to use the OPERA system for employees not familiar with the program, due to the abundance of information that can be stored, and the various actions that are performed on the software. Employees also use abbreviations to simplify use of the program, but require additional understanding. For example, JSK is the abbreviation of ‘premier suite,’ DK stands for a ‘deluxe king room,’ and SB signifies the need of a ‘sofa bed.’ It is very important that all employees are comfortable with the program, to reduce any possibility of misunderstanding and facilitate faster service.

Once the yearlong transitional training program is complete, FFS employees will be encouraged to continue to attend training workshops on a regular basis to maintain continuous learning. All Four Seasons, regardless of location, motivate their employees to regularly attend training workshops throughout their career with the company. These workshops are offered online, as well as in classroom settings by the Director of Training, and are standardized to permit acquired skills and knowledge learned in one market to be transferred between locations. Supervisors and managers will be required to attend twenty-four to thirty-six hours of training classes every year covering a large range of topics, such as ‘Handling guest complaints’ and ‘Coaching conversations’ ("Christopher Hunsberger of Four Seasons Hotel," 2005). This is standard of every Four Seasons hotel and will encourage continuous learning in the new Brazilian property as well.

While the various training programs will focus on the present employees, FFS will take initiatives to prepare prospective hospitality employees. The average number of years of education in the Brazilian workforce is five years, which may be relatively low for many of the positions. However, graduates of Brazil’s excellent public universities can fill many positions that require a higher level of education. Four Seasons will participate in the country’s excellent higher-education system by sponsoring a hospitality course at local universities. This course will encourage interest in the hospitality industry and educate future industry workers, while allowing FFS to build local ties and contribute to the education system. In addition to sponsoring a course, FFS will offer internships in hotel operations and administration, as many other hotels do worldwide. Internships further increase interest in the hospitality industry by providing an opportunity for students to explore the industry and company. For individuals who have graduated from a university and want to pursue a career in hotel management, Four Seasons Management In Training (MIT) Program will also be established in Brazil. The objective of this program is to ease the transition from the academic environment to the hospitality industry through a specialized program that develops graduates into strong operational managers. The duration of the program is twelve months, and ends when the trainee is promoted to an Assistant Manager position.

Hotel employees will be expected to be bilingual in English and Portuguese, with knowledge of Spanish as an additional advantage. For employees who are interested in improving their English language skills, all FFS employees will receive the optional benefit of reimbursement for English language classes. The classes will need to be taken during the employee’s free time, but FSS will fully reimburse all classes as a motivation for employees to improve their English to facilitate communication with hotel guests.

3 PRICE

At the core, Four Seasons is an ultra-luxury brand. One way the company reflects this is by charging a premium price. This standardized approach to price across the world communicates to Four Seasons’ target market its superior brand, reinforces its brand image and is important to ensuring consistency across the globe. These pressures for standardization significantly outweigh pressures for adaptation. Pricing in dollars will eliminate risks related to fluctuation in the exchange rate. The lack of exporting, presence of local tariffs and middlemen mitigate the possibilities of price escalation. Additional pressures for premium prices include our contractual commitments to Fasano, which has the potential to decrease our realized profit. Therefore, FFS will maintain its premium price structure for hotel rooms.

In culturally similar markets (Buenos Aires, Argentina and Guanacaste, Costa Rica) and markets of similar maturity (Hong Kong, China and Cairo, Egypt), Four Seasons consistently charges a market premium over other luxury brands. The tables in Appendix 2 demonstrate the average premiums charged in each market for each season. One important trend to note is that Four Seasons’ prices are always higher than other hotel chain. Another important note is that increased competition tends to deflate Four Seasons’ premiums, as shown in Hong Kong vis-à-vis Guanacaste.

To determine a pricing model, a set of formulas was applied for analysis. The market premiums across each market for every season were averaged and then local competitor’s prices were multiplied by the average premium. The adjusted prices of each local competitor were averaged to determine our price. This price, which varies by season, ranges from $530 in the winter to $640 in the autumn and represents a significant premium over local competitors. It also represents a slight premium over Fasano’s current prices. Fasano’s current rates were not used to calculate Four Season’s new prices because the hotel would cease being a competitor upon acquisition.

As noted before, prices for rooms will be quoted in US dollars. Each of Four Seasons’ Latin American hotels will be priced in dollars. Moreover, the US dollar remains as a widely used and preferred currency of our target markets, excluding local consumers. Finally, local competitors are also priced in US dollars. Therefore, to reflect Four Seasons’ target markets’ desire for US dollar pricing and to align itself with local competitors’ standard operating procedures, FFS will price in US dollars. Moreover, despite the Brazilian Real’s recent stability, its future remains uncertain. To better facilitate our standardized pricing strategy and mitigate the opportunity for price escalation, pricing in a stable currency not prone to government mismanagement or currency crises will enable FFS to better repatriate profits.

Prices for other services, including FFS’s spa and restaurants will be quoted in local currency. This helps connect with many of the locals who will utilize FFS’s many fine dining and spa services. Charging US dollars would be prohibited and dissuade locals from using these services. It also contradicts the marketing messages of our integrated communication campaigns that highlight the hotel’s connection with Brazilian culture. Moreover, because restaurant and spa services are not prepaid, the exposure to foreign currency risk is significantly less. Prices in these services can be adjusted with currency fluctuation and inflation, making repatriation easier and again, lessens the possibility of price escalation.

4 PLACE

Brazil’s diverse geographical attributes offer a variety of venues for Four Seasons. Aside from the well-known Amazon rainforest, the country's beaches serve as major tourist attractions. FFS is located on the Ipanema beachfront, one of the most famous beaches in South America. This ideal beachfront location is a desirable destination for all travelers, especially those in our target market. Moreover, as a cultural icon in Rio de Janeiro, the beach will connect with our local Brazilian market when they are looking for an ideal Brazilian getaway.

Ipanema is an established trade area that connects with FFS’s target markets. Ipanema is complete with five-star restaurants and luxurious shopping centers (BTI, 2010). Guests of FFS can find fine authentic leather goods, upscale mens’ and womens’ apparel and unique gifts at arts and crafts stores. Ipanema’s Diamond Row and Rua Garcia D’Avila is another site congruent with FFS’s target markets’ tastes and expectations, offering upscale jewelry with an authentic flare. Often considered to be “Brazil’s Fifth Avenue,” this location is where visitors will find one of the most expensive and sophisticated shopping areas in Rio de Janeiro. (BTI, 2010) This location places FFS at the crossroads of historical palaces, architectural marvels and other charming sites that travelers annually flock to. In almost every sense, the location represents FFS’s desire to fulfill our target markets’ expectations for Brazilian culture and heritage, beachfront access and the retreat of familiar upscale international brands.

5 ADVERTISING AND OTHER PROMOTION

1 Integrated Communications Campaign for Brazilians

The Integrated Communications Campaign for Brazilians will target local Brazilian businesses for conferences, business lunches and dinners, and business functions, including parties at the ballroom. This campaign will also target the elite local Brazilian citizens. These citizens will be targeted for FFS restaurants and bars, spa treatments, weddings, birthdays, quincenieras and other events. The tactics involved in reaching this segment involve a push strategy. To successfully reach the guest or visitor, sales promotions and advertising are vital.

FFS will also target event planners. By marketing to event planners, FFS aims to build positive relationships and work out discounted arrangements. The event planners are intermediaries who are offered incentives for providing business to the hotel and its divisions. This is a pull strategy.

The FFS mission is to educate Brazilians about Four Seasons brand image and personality. It aims to raise awareness of the service standards. In addition, Four Seasons wants Brazil to realize that FFS plans to acknowledge and celebrate the local Brazilian culture. This strategy is aimed to create local ties with the community. For example, FFS will support local artists by purchasing paintings as well as serve Brazilian food to enhance the hotel’s ambiance and demonstrate the hotel’s appreciation of Brazilian culture. The campaign’s message is to debut the blending of Brazil’s most respected hotel, Fasano, and the world’s best-in-service hotel, Four Seasons.

FFS will use various media outlets when targeting local Brazilians. FFS will place advertisements in Veja, the most popular magazine in Brazil, but utilize the Fasano name. This way, Fasano can promote the new opening of this FFS destination rather than using Four Seasons’ standardized ads, which would not reach this target segment. The advertisements will consist of attractive pictures that have symbolic meaning as well as an article informing the community of the hotel’s expansion and the new and beneficial international presence of the Four Seasons. In addition, similar advertisements will be placed in Noticiário de Equipamentos Industriais, an industry magazine as well as in Folha de São Paulo, the largest newspaper in Rio de Janeiro.

FFS measurements are based on a before and after survey addressed to local businesses and consumers. The survey will portray what the community’s perception is of the Four Seasons and how much they know about the brand. A separate survey will address event planners to obtain information on how comfortable they are recommending FFS as well as how frequent they actually do recommend FFS. Another measurement is a comparison of the amount of conferences booked annually.

Advertising geared at local elite Brazilian citizens and local businesses will incorporate various techniques. As mentioned above, various media outlets will be used for ad placement. The advertisements created for this market segment are adapted and customized to fit the collectivist culture and values of these citizens. For instance, direct mail is a useful tactic to reach out to the local community, and Fasano’s marketing division will be responsible for successfully translating the FFS message to this segment. It is important that locals are used in this process due to the collectivist nature of Brazil. The trust and reputation Fasano has retained will be very influential. Further Fasano’s intimate understanding of how Brazil operates, what affects Brazilian consumers and how to effectively advertise within the country will greatly benefit FFS and give it a sincere advantage over less-informed companies.

Local businesses in Rio de Janeiro will also be a large segment Four Seasons will target. Newsletters will be distributed informing businesses of what Four Seasons has to offer, and various price programs and other promotional incentives. Newsletters will also be distributed to event planners and travel agencies. The newsletters will emphasize that FFS has the services required to help get business done. FFS will target domestic travel agencies to increase FFS booking.

FFS will participate in promotions for the three local festivals in Rio de Janeiro. Brasil Sabor, the largest culinary festival in Brazil consists of participating restaurants that offer a special dish that represents the local cuisine, therefore FFS can have its restaurant directly participate or indirectly sponsor local chefs (Ribeiro, n.d.). The Festa de Yemanja, held on February 2nd every year, attracts over 2 million people from all over the world for Rio’s famous New Year’s celebration. FFS can host a celebratory party showing respect to the ritual of the goddess of the seas, Yemanja ("Festivals in Rio de Janeiro", n.d.). Rio Carnival is the biggest Carnival celebration, as well as the benchmark against which every other Carnival around the globe. The Rio Carnival attracts over 500,000 foreign visitors for this four-day celebration, 40 days before Easter ("The Rio Carnival 2010 Guide," n.d.). FFS can host several celebratory events and participate in the festival directly.

FFS will participate in consumer and trade promotions by offering discounted room rates. The price program will include a 10% discount on hotel guest rooms for Brazilian citizens. Public Relations include supporting the Rain Forest Conservation efforts. During the month of April, FFS will donate 2% of each guest’s room price to the World Wildlife Fund’s rainforest relief efforts. To raise awareness of this effort during April, FFS will display artwork of damaged rainforest land throughout the hotel’s lobby, along with a plaque demonstrating the importance of conservation.

FFS conducts more of a modularized theme adapted for the local Brazilians, however for its global target segment, participates in a global theme that is standardized, completely separate from the local community strategies. In addition, majority of the advertising and promotional efforts for the local elite Brazilian citizens and business will be under the Fasano name where as the campaigns for the global segment will be under the Four Seasons name.

2 Integrated Communicates Campaign for International Travelers

The Integrated Communications Campaign for the elite international traveler covers a global segment. This market consists of brand loyal guests, international elite business travelers and international elite leisure travelers, and affluent Brazilians. This campaign aims to create awareness of Four Seasons’ new location and differentiate it from its competitors. The message is that FFS is Brazil’s only hotel that combines Brazilian charm with the Four Seasons service that is known and trusted.

Four Seasons uses standardized forms of advertising for the global elite travelers and business travelers, using its own personalized outlets. Therefore its media is limited to the Four Seasons Magazine, Four Seasons Magazine website, and Four Seasons website. Although media outlets are limited, Four Seasons campaign strategy is able to reach this global segment successfully and reduce costs.

FFS measurements includes occupancy rates and exit surveys. Occupancy rates are not the best way to measure the Integrated Communication Campaigns success because it does not show whether the message is resonating with the guests and which strategies were successful. Surveys, which are placed in each room, are successful in explaining why the guest chose FFS, however not all guests participate in the survey.

FFS will continue with the advertising and promotion functions that are standardized for Four Seasons worldwide. These three channels directly target the primary, secondary and tertiary target segments, but especially the primary market, brand loyal followers, and secondary market, international business travelers. Four Seasons advertising strategy reaches the tertiary market, international elite leisure travelers, and event hosts because Four Seasons globally recognized name pulls them in. Because Four Seasons and the Fasano are both luxury resorts, we can conclude that the messaging strategies of Four Seasons will also appeal to Fasano guests.

By continuing with a standardized and personalized campaign strategy, Four Seasons saves the costs of producing television, newspaper, separate magazine, and other promotional outlets for advertisements (for its international market segments). This is a low cost, differentiated, and timesaving strategy with a global theme. Four Seasons does however use out-house advertising agencies and independent writers and photographers in order to get the best advertisements for each new destination. Four Seasons expansive market of brand loyal customers and business travelers allow the company to maintain its elite reputation and not resort to push customers. Its strong brand loyalty is the Four Seasons best form of advertising

Four Seasons maintains its standardized advertising strategy for several reasons. First, Four Seasons is a multinational corporation with a global target market. Therefore, a standardized campaign strategy is beneficial in creating a strong brand image, saving time and saving costs. Second, a standardized global strategy creates a strong branding image. With hotels in 35 different countries, its image is translatable and consistent. Third, Four Seasons is able to save time by not having to create 35 different campaigns and reach out to numerous media outlets within each country. This enables the company to focus its attention on the campaign itself. Third, because Four Seasons does not use many outside media outlets, it is saving costs. The issues Four Seasons faces with standardized advertising are differences in written and spoken languages and cultural differences. Because each culture varies, so does its values and norms, therefore some of Four Seasons advertising might not be clear or appreciated.

The newly redesigned Four Seasons Magazine is the “premier luxury lifestyle magazine, mirroring the global reach of the Four Seasons brand, the upscale, sophisticated tastes of its guests and elegant surroundings they find themselves in while part of the Four Seasons experiences”("ScienceDirect - Tourism Management : Three representative market segmentation methodologies for hotel guest room customers," n.d.). Contributions from some of the world’s best writers, photographers, and illustrators bring the magazine to life. The Four Seasons Magazine is distributed in rooms of 83 Four Seasons Hotels and Resorts in 35 countries (with more than 40 properties in development and 4 opening in 2010). The Four Seasons Magazine caters to an estimated audience of 750,000. The magazine is distributed quarterly. Nearly 9 out of 10 guests spend time reading the Four Seasons Magazine during their stay at one of Four Seasons properties. Approximately 89% of guests have read of looked through the magazine at some point and 88% read or looked at it for 20 to 30 minutes and 12% read through it for 30 to 60 minutes or more ("ScienceDirect - Tourism Management : Three representative market segmentation methodologies for hotel guest room customers," n.d.).

The Four Seasons Magazine will have a featured article with the hotel on the magazines cover. The article will include pictures of the hotels interior and exterior, the spa, and other enticing divisions. It will include descriptions of each division as well as mention a variety of price programs being offered. The article will represent Brazil as a charming and exotic destination where Brazilian culture and Four Seasons impeccable service is combined. All of this information will be available on the Four Seasons Magazine website as well. This edition of the magazine will be distributed in the last quarter of FFS construction.

Both the Four Seasons website and Four Seasons Magazine website will promote FFS, updating viewers at various stages of production and then ultimately display the finished hotel and divisions. These divisions consist of the spa and available sporting activities, the hotel restaurants and bars, shops and company news. The difference between the two is that the information and pictures provided on Four Seasons Website will be standardized providing the same information as it does for all other Four Seasons destinations. The cultural aspects of Brazil and its beauty will be exhibited in the advertisements, which aim to pull in the target markets. The Four Seasons Magazine website on the other hand is much more flexible and although standardized on a global scale, it has room for more stories and is updated much more frequently.

Direct marketing such as email and traditional mail will also be an important advertising function for these three target segments. By using both Four Seasons and Fasanos worldwide databases of guests, a standardized introduction to the hotel and invitation to its opening will be distributed. The opening will be promoted as an exotic Brazilian fiesta in an elegant and tasteful hotel. Word of mouth will follow, an imperative form of advertisement for Four Seasons.

Promotional tools used to target this global elite segment of international travelers includes event sponsorships, PR, and consumer and trade promotions. Four Seasons will sponsor golf tour because golf is such a popular Brazilian sporting event ("Golf Courses in brazil," n.d.). However event sponsorship is difficult to organize because the markets consist of individuals from around the world.

FFS will participate in the Terry Fox Run which is a corporate wide sponsorship in which every Four Seasons Hotel participates in.

FFS will use a variety consumer and trade promotions aimed at the global elite leisure travelers and the international elite business travelers. Standardized price programs will be instituted. For the leisure guests, a free night stay is awarded if the guest books four nights (fifth night free). Spa packages are also offered at the hotel. Brazilian tour packages are available which includes the hotel guest room fee and a pre-planned tour. Tours are coordinated through the concierge and include tours for lovers of golf, fine dining, exotic rainforest tours and whatever else interests the guests. Other packages are available for guests upon arrival who want to plan day trips venturing on tours such as those above

FFS will offer price promotions to business travelers, arranging a standard discounted rate for companies. There is a 5% - 10% discount for business travelers from companies who consistently book at Four Seasons and have an arranged standard rate. In addition, any employee of the companies with standard rates may use the standard rate for leisurely travels such as family vacations. For business conferences, all conference guests will receive a 5% discount on their guest room.

Four Seasons monitors its worldwide publicity posted on the Internet, such as blogs, as well as on television and in the news. It is important that people are made aware the new Four Seasons destination therefore publicity will be sought out if necessary.

3 FIFA World Cup 2014 & Summer Olympic Games 2016

“The big events to be hosted in Brazil, FIFA Football World up 2014 and the Olympiade 2016 in Rio, promise great return on investments made. Both public and private investors see this as a unique opportunity” ("Olympic Games 2016 in Rio de Janeiro," n.d.).

FIFA World Cup 2014 is a unique opportunity for FFS. Advertising and promotional sponsorships will be put in place as well as planning and hosting events. The FIFA World Cup is set to attract over 500,000 visitors from overseas, offering huge opportunities to the new location ("Brazil Property Investments," n.d.). Attracting guests in order to fill the hotel to full occupancy is priority, however, other promotions will be conducted to bring in business. FFS will offer packages that include the hotel guest room fee and tickets to particular games. This will differentiate the hotel’s services by taking care of planning the itinerary for its international guests, removing the burdensome task of researching game information or other event planning from guests. This is a huge advantage to a guest since options and alternatives are limited due to the extreme spike in tourism fueled by World Cup celebrations. Furthermore, to ensure availability, FFS will book a certain venues that are popular tourist attractions and locations, such as specific restaurants to guarantee guests have the opportunity to experience all Brazil has to offer.

The Summer Olympic Games 2016 present an enormous business opportunity for FFS. FFS will be involved in multiple marketing and promotional campaigns simultaneously. Similar to its strategy for FIFA World Cup, FFS will host events and offer packages highlighting certain Olympic events. In addition, FFS will be a main sponsor of the Olympics, which will promote brand recognition through exposure. FFS will also offer its banquet hall space to newscasters for big interview sessions with Olympian winners.

In terms of advertising for both the World Cup and Olympic games, FFS will advertise to its domestic market in Veja, Noticiário de Equipamentos Industriais, and Folha de São Paulo. To reach its global segment, the Four Seasons’ Magazine, Four Seasons’ Magazine website, and Four Seasons’ website will contain promotional ads. Furthermore, FFS will target its global segment through direct mail, inviting guests from both Four Seasons and Fasano’s international guest databases to book with the hotel, ensuring a place to stay where they can enjoy the games as well as Brazil and all its culture.

CONCLUSION & RECOMMENDED RESEARCH

To facilitate a successful entrance into a new-growth market as complex as Brazil, Four Seasons will take into meticulous consideration all environmental analyses and tap into the results of its widely successful market entry strategies implemented worldwide. Despite these resources, having foundational information about a particular market segment and customer preference will better prepare Four Seasons to make decision that can make or break its business in Brazil. The recommended primary and secondary market research will provide valuable insight that will shape our acquisition of Fasano Rio de Janeiro and prevent costly mistakes that could jeopardize the company.

1 SECONDARY RESEARCH

In order to enhance market attractiveness assessment, Four Seasons should purchase Euromonitor International’s Travel and Tourism in Brazil Report. This report presents market insight that is pertinent to the successful entry of Four Seasons into Brazil, including key trends and developments within the Tourism sector, consumer demographics, market indicators, local company profiles, transportation in Brazil, tourist attractions, and more. This report is readily available through online purchase on Euromonitor International’s website, located at URL address: http://www.euromonitor.com/, for a total price of USD $1,900.00. (Euromonitor International, 2010)

2 PRIMARY RESEARCH

Four Seasons should use various methods of primary research before entering the Brazilian market. Conducting surveys, focus groups, in-depth interviews, and observation studies would be extremely beneficial to gain a greater understanding of the local environment and target segments. Interaction with local residents of Rio de Janeiro, previous Fasano Hotel guests, and Fasano top executives will permit first-hand information about local culture, tastes, and preferences. It is recommended that Four Seasons create and send surveys to each of its four target markets to find out detailed and useful information about guest preferences, perceptions, and thoughts.

1 SURVEYS

Four distinct surveys should be created to address specific characteristics for each of Four Seasons’ target markets. Learning about consumer perceptions and knowledge of the Four Seasons brand will reveal important information about the brand’s position in Brazil. A lack of familiarity with the brand or a different consumer perception may indicate a need to reposition the brand or educate consumers about Four Seasons Hotels and Resorts. Surveys for each of the target markets should include questions such as:

1 BRAND LOYAL GUESTS

• Are you interested in traveling to Rio de Janeiro, Brazil?
• Are you planning on attending the 2014 FIFA World Cup and/or 2016 Olympic Summer Games in Rio de Janeiro?
• What aspects of Brazilian culture would you want to experience if you were to travel to Brazil?
• List hotels of Rio de Janeiro hotels you are aware of.
• Are you more inclined to visit Brazil if there is a Four Seasons Hotel present?
• Have you heard of the Fasano Hotel in Rio de Janeiro?
• How important is incorporating the local culture into your stay at a hotel?
• Would you prefer to stay at a hotel located downtown or near the beach?

2 ELITE BUSINESS TRAVELERS

• Have you ever traveled to Rio de Janeiro, Brazil for business?
• Do you plan on traveling to Brazil for business in the next two years? If so, are you currently satisfied with existing hotel offerings?
• What amenities do you look for when staying at a hotel?
• Would you prefer to stay at a hotel located downtown or near the beach?
• For each of the competitors listed in the competitive analysis, have you stayed at (hotel name) before? What would have made your stay more satisfying? Would you stay again?
• Would you prefer to stay at a local chain or at a multinational hotel chain?
• Have you ever stayed at a Four Seasons before?
• What do you associate with the Four Seasons brand name?

3 ELITE LEISURE TRAVELERS

• What do you look for in a destination?
• How do you differentiate a luxury hotel from its competitors?
• Are you planning on attending the 2014 FIFA World Cup and/or 2016 Olympic Summer Games in Rio de Janeiro?
• Have you ever traveled to Rio de Janeiro, Brazil? If so, are you currently satisfied with existent hotel offerings?
• Have you heard of Four Seasons Hotels and Resorts?
• Would you prefer to stay at a hotel located downtown or near the beach?
• For each of our competitors listed in the competitive analysis, have you stayed at (hotel name) before? What would have made your stay more satisfying? Would you stay again?
• Would you prefer to stay at a local chain or at a multinational hotel chain?
• Have you ever stayed at a Four Seasons before? What is your perception of the Four Seasons?
• How important is incorporating the local culture into your stay at a hotel?

4 LOCAL COMMUNITY MEMBERS AND BUSINESSMEN

• Have you heard of Four Seasons Hotels and Resorts? If so, what do you associate with the brand?
• What do you look for when you stay at a resort or hotel?
• How often do you have out-of office conferences, events, or meetings and where are they normally conducted?
• Do you trust international brands?
• What do you associate with Canada?
• How do you differentiate a luxury hotel from its competitors?

2 FOCUS GROUP

It is recommended that Four Seasons conduct focus groups among Brazilians to better understand the local perception of the Four Seasons brand identity, personality and positioning. Questions similar to those asked in the survey should be included, however, questions should be formulated in a way to engage deeper discussion and understanding not possible through paper surveys. The goal of the focus groups will be to determine Brazilians’ expectations of hotel amenities and what they classify as a luxury hotel as luxury is defined differently across cultures. While conducting these focus groups, Four Seasons should be mindful of the major challenge involved in translating English to Portuguese. Accurate translations guarantee that the respondents understand the question, and researchers understand the response. Back translations or parallel translations should be utilized for the most effective focus groups results.

3 IN-DEPTH INTERVIEWS

In-depth interviews should be conducted with Fasano’s CEO and top executives. With years of experience in the Brazilian hospitality industry, they can provide valuable insight to cultural differences that affect business in the local market. Knowing Fasano’s corporate goals and objectives may also reveal information regarding the company’s corporate culture and motivation behind employee behavior. Information about the most challenging aspects of operating in the local environment would also be a valuable resource.

In addition, attaining information about prior Fasano guests such as the percentage of guests that were Brazilian versus foreign, how many times have stayed at a Fasano hotel, the purpose of their visit, country of origin, and the most frequent requests of guests staying at the hotel would be beneficial in providing Four Seasons with knowledge of Fasano’s target market.

4 OBSERVATION STUDIES

Observing celebrations, such as weddings and Quinceaneras, would also be beneficial to Four Seasons. This would provide Four Seasons with common needs and themes within these events in order to be readily available to special requests. Furthermore, in order for Four Seasons to exceed customer expectations, it needs to first recognize their essential needs.
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