Expansion strategy under the asset-light strategy

: the case of international expansion of Pestana Group

Abstract

With globalization, technological advances and economic distresses, companies need to constantly adapt to the market challenges. The hospitality industry undertakes high levels of business risk and companies found in international expansion a powerful source of revenue. However, companies needed a strategic approach that would allow them to expand without having to compromise large capital sums. The asset-light strategy emerged from this necessity, challenging companies to shift their portfolios from owned-assets to fee-contracts. Pestana Group is the largest and most successful Portuguese hotel company. It started as a single-hotel, family owned enterprise, in Funchal, and in the short timeframe of 40 years expanded to 16 countries, currently operating over 80 business units. This dissertation aims to provide a clear understanding of expansion strategies in the hotel business, overlooking the benefits and limitations they generate. Focusing on the Pestana Group case study, an analysis of the company´s performance under the asset-light strategy was conducted. With the result analysis it was possible to understand the effect of adopting the asset-light strategy and if value was generated to the company. Also, it was imperative to compare these results with other players in the same market, creating a benchmark in order to understand the company´s competitive advantage and adaptation capacity. This study was developed in a sequential process: problem definition, company and business environment study and framework, expansion strategies definition, data collection and result analysis under the asset-light strategy.

Date of Award	11 May 2016
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Rute Sofia Barbosa Xavier Lino (Supervisor)