Located in the heart of Eurasia, Kazakhstan’s booming economy and business opportunities have promoted significant business travel and tourism over the last decade. While the number of hotels in Kazakhstan has grown intensively over the past few years as part of the country’s integrated tourism development programme, it has led to fierce competition among all categories of hotels. In 2005, 385 hotels operated in the country and by the beginning of 2012 that number had increased to 692, an increase of 56 per cent in just six years. Visitors to the country grew from 11 million in 2004 to nearly 17 million in 2012, with Almaty, the largest city in Kazakhstan, being the most visited tourist attraction for foreign tourists.
Formerly known as Alma-Ata, Almaty was once the country’s capital until the government relocated its capital to Astana. Nevertheless the city continues to be the major commercial and cultural centre of Kazakhstan and is its major financial hub. As of 2017, Almaty had a fairly mature hotel market. When it comes to luxury and business hotels, Almaty offers a plethora of choices that range from Rixos Hotel, the InterContinental and Hotel Dostyk to many others. There is also an abundance of mid-range hotels that include the Almaty Business Hotel and the Hotel Almaty. In 2014, there were over 6,500 rooms in Almaty, with 20 per cent of these comprising branded hotels. However the focus remains on more mid-scale hotels. In recent years, many renowned brands including Ritz-Carlton and Holiday Inn have emerged, with others scheduled to open in the near future. While there is a significant development pipeline for new hotels in this sector that is planned through to 2018, decent budget hotels remain difficult to find in Almaty as most of the demand comes from business travellers. A recent study of the competitiveness of Almaty hotels, which took both qualitative and cost parameters into consideration, revealed that hotels should ideally focus on quality control parameters of competitive assessment based on consumer feedback, rather than waste resources on irrelevant parameters.
One notable issue in the current hotel industry is the imbalance in prices for hotel accommodation in the city. Although there are many hotels in the luxury sector, budget travellers are left with few options, as most non-luxury hotels are also pricey when compared on service quality. Various factors are responsible for this price imbalance. One factor is the cost incurred by the hotels in running their business. The basic cost of running a hotel, including staff salaries and the cost of utilities has increased considerably over the years. This has forced the lower-priced budget hotels to reduce their staff, thus affecting quality of service. Many hotels also borrowed heavily to expand and sustain their businesses, and with the interest rate hikes that followed the global financial crisis, profitability became a key concern. Others took note of quality issues and paid special attention to improving their service by providing staff with better training to equip them with the skills needed to render premium service to guests.
However the factors that define competitiveness in the hotel industry in Almaty are considerably varied. It is thus impossible to offer a consistent system of data collection that is able to reflect these factors, their processing and subsequent identification, as part of a full analysis of the level of intensity of competitiveness in this market. Each hotel is unique. It is important for them to retain the most attractive elements of their uniqueness and originality. A hotel business is also capable of positively influencing a nation’s economy by creating new jobs and attracting foreign investment.
In recent years the country’s hotel industry has undergone many changes. Nowadays it is more profitable to run big hotel chains, in which economies of scale are known to help hotel businesses cope with the challenges of rising staff salaries and utility costs. To survive the competition and grow their business, Almaty’s hotels need to analyse the market and then make the strategic decisions that will enable them to increase their competitiveness. Estimating the competitiveness of hotels assumes carrying out a systematic analysis of hotel activity and then defining its competitive situation and advantages.
A comparative analysis of hotels in Almaty reveals the use of various marketing strategies to position them in the market as well as create an identity that can withstand this competitive environment. From a study conducted to evaluate methodological approaches that can be used to assess the competitiveness of hotels, it was found that qualitative characteristics and price were the two most important factors influencing a hotel’s competitiveness in the market. Although the price indices in the luxury hotel segment were not as important as consumers in this segment were less sensitive to price, service quality was an extremely important index for this category. In the study it was also observed that luxury hotels in Almaty mostly conformed to modern requirements and the use of international standards in terms of facilities, since they made use of acquired experience and competencies. However, since most of these hotels had foreign experts as members of top management, with the local cohort working as contact personnel; it was observed that there were inherent conflicts and a lack of synergy among hotel staff.
In the non-luxury sector, both the price and food quality were important determining factors of competitiveness in Almaty. The study also revealed that among the complex indices, hotel food was the most significant factor for the budget sector. It was important that the food quality of the hotels met the expectations of consumers. The ergonomic parameters of consumers, that is, convenience and comfort, were of secondary importance in this sector. At the same time it was noted that ergonomics had to include sound isolation, lighting, comfort of furniture in a hotel room.
The third factor that determined the competitiveness of hotels in this category was the quality of the service provided at the hotel. Basic hotel room facilities such as electrical items, ventilation systems, taps, switches, hair dryers and other equipment were sometimes not of expected quality or standard in budget hotels. The readiness of hotel rooms for guests upon arrival was also important, which meant that the equipment provided in hotel rooms had to be in constantly good working condition. Even an insignificant problem in a hotel room could lead to a gap between customer expectations and service quality.