Hotel du Vin, Corporate Strategic Management, The innovative nature of its initial development and expansion, Entrepreneurial Life Cycle Strategic choices Diffusion S-Curve Differentiation Strategic customer’s needs Focus Strategy Product and Process Income from diversification

1. CASE STUDY: HOTEL DU VIN
SUBJECT: CORPORATE STRATEGIC MANAGEMENT
PRESENTED BY: MOHIT GANDHI, 21809

2. INTRODUCTION
 Hotel Du Vin Chain is pioneering, award-winning boutique hotel group in UK.
 Established in 1994, by Gerard Basset; Robin Hutson
 Company Name: Alternative Hotel Group, with 13 bed hotel in Winchester
 Both the Director were employee of the Hotel Industry as Managing Director and Head of Sommelier
(Waiter)
 Intention: Fill the market gap in England: by providing quality driven, affordable provincial hotels
 Initial Proceedings: More Focus on Brand Building by quality and affordable in-house Bistro
 Achieved Remarks: 90% occupancy rate within few months of opening
 Within 3 years, open another branch with 34 beds in Tunbridge Wells

3. OTHER MILESTONES
2001, By
raising fund
form new
investors,
expanded
chain by 4
more hotels.
2002, ‘Hotel of
the Year’
2003 the
Guardian’s
and the
Observer’s
‘Best UK
Hotel’
2004, added 2
more hotels and
covered 6 sites
throughout the
country,
Further development of a former
brewery in Henley-on-Thames,
and had purchased the rights to
develop a highly attractive 41-
bed site in Cambridge.
2004
Acquihired by
Malmaison
(MWB)
Upto, 2011, new 8
hotels got started
and turnover
reached to £160
million .

4. THE INNOVATIVE NATURE OF ITS INITIAL DEVELOPMENT AND
EXPANSION
 HduV was an iconic pioneer of the UK boutique hotel market.
 HduV sought a blend of quality design and service which was able to respond to changing consumer cultures.
(affordable and better quality)
 ‘Restaurants with rooms’
 For Finance: They included two important venture capital investors, Ashley Levett and Charlie Vincent, who had
guided them through their business expertise and also provide small fund.
 Tying Hospitality and wine, to get more competitive advantage of growing wine market in UK.
 Business partner and co-founder Gerard Basset, a former World Champion holder of ‘Sommelier of the Year’,
pro- vided the core capability for the HduV wine branding and was commended by Hutson for his knowledge,
which brought ‘credibility’ to the business concept.
 With increasing price of wine all-over the UK, introduced brand-building events such as wine classes and
tastings.
 Many of the hotels are neglecting the food, beverages with Rooms, whereas HduV had chosen that Innovative
Idea, which business model is called ‘Lunch, din- ner, hotel, week, weekend, weekday – 365 days a year.’

5. BUILDING THE BRAND AND APPRECIATING ITS PROPERTY ELEMENT
 Highlighted by Finance Director Peter Chittick in Business South Magazine in June 2003: ‘The HduV
brand is all about beautiful buildings, fabulous food and wine, a relaxed, informal atmosphere and
sensible prices.’
 For further expansion: Huston had selected the quirky property and restore them with classical and
contemporary designs with the help of his wife.
 ‘distressed assets, in the middle of good towns’: Intuitively: based on the types of cars parked at the
railway station, or the presence of ‘brass plaques’
 Each new HduV site was sophisticated but relaxed cosmopolitan-style hotels Owing to Huston’s Intrinsic
sense of demand.
 Taking advantage of First mover by placing sites at Tunbridge Wells, Bristol, Birmingham, Harrogate
Cambridge and Henley and get advantage of ‘ahead of the curve’.

6. THE CHALLENGE: BALANCE INNOVATIVE ENTREPRENEURSHIP AND BRAND
MANAGEMENT
 As HduV began to reach that target and its 10-year milestone, the co-founders began to voice concern
that the company was becoming too large and unyielding for them to control, to the detriment of the
service offer.
 Go for ‘incubation’ strategy, which was helpful for ‘keep the culture going’.
 Solution: Each new hotel that opened was run by a manager who had previous experience of running the
Winchester HduV. In this way managers were initiated in Winchester and the directors had the
opportunity to over-see their proficiency before promoting them to the responsibility of running a newly
opened part of the chain.

7. ENTREPRENEURIAL LIFE CYCLE
 Start up: Sources of Capital
 Growth: Transitioning from manager to
Entrepreneur
 Maturity: Retaining Enthusiasm and
commitment and generating new growth
 Exit: Seeking to release capital as a reward
for input and risk-taking

8. STRATEGIC CHOICES: FOR EXPANSIONS OF HDUV
Choices about
business
positioning
relative to
competitor
Choices of
products,
industries and
market to
pursue
How to pursue
strategies:
Organic,
acquisition or
alliance

9. KEY ISSUES
 Diffusion S-Curve
 Differentiation
 Strategic customer’s needs
 Focus Strategy
 Product and Process
 Income from diversification

10. INNOVATION DIFFUSION
 Diffusion is the process by which innovations
spread among users.
 The diffusion S-curve
 Taking advantages of first
mover

11. DIFFERENTIATION
 A firm following a differentiation
strategy attempts to convince
customers to pay a premium price
for good or services by providing
unique and desirable features.
Pioneer of hotels with
bistro facility, with classic
and contemporary
Interior for cosmopolitan

12. INCOME FROM DIVERSIFICATION
 Company focused to generate the income from various sources like:
 Rooms
 Restaurant
 Wine
 Party and Event organization

13. S W
O T Threats
 Increasing debt of MWB (Parent
Company) might affect the
merged companies
 After merger, centralized
organization may get affect to feel
the local staff and cultural value of
visitors
Opportunities
 Satisfy new customer needs: There is demand
for traditional French wine
 Passion and desire succeed
 Fresh marketing ideas competing with
traditional
 Opening new branches with better hospitality
and facilities and more capacity
 Due to centralized organization,
procurement and management decisions
may be favorable for new development and
further expansion
Weaknesses
 Lake of control over hotel staff due to
multiple branches
 Diverse culture and values at the time
of acquisition of both the hotels:
Malmaison and HduV
 Managing significant growth of 16
hotels and 1500 new employees
 In 2012, Poor Governance, 24% stock
was hold by Hong-Kong based
company and director had resigned.
Strengths
 Leading Innovator
 Unique Wine and Winemaker
story
 Prestigious wine school training
 Distressed assets, in the middle of
all the good towns of UK
 Affordable prices of room
 Fine dining Restaurant with room
 Multiple Income Stream
 Before merger, decentralized
organization succeed, by Huston’s
Strategy

14. THANK YOU…

15. KEY FINANCIAL AND PERFORMANCE DATA OF HDUV AND MALMAISON
year Total revenue (£000) Operating EBITDA (£000)
Occupancy
Rate(%)
HduV Malmaison HduV Malmaison HduV Malmaison
2004 – 32,628 – 8,568 82 78
2007 37,074 58,198 9,143 14,761 83 78
2008 45,314 62,322 9,927 16,526 81 79
2009 50,763 60,271 11,221 15,366 81 78
2010 50,385 60,815 11,507 16,268 78 77