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The Great Eastern hotel, a privately owned, independent, five-star deluxe hotel located in Hong Kong’s

commercial district, is faced with a turbulent external environment owing to the current financial crisis.
Since its inception six years ago, the hotel has grown in prominence during the bustling economy from
2003 to 2007, and it has been one of the top performers in the upscale and luxury market segments over
the four years preceding the economic crises. The hotel’s main target market segment is the business
traveler (75 percent of room bookings) who has no problem with paying USD 350 per night for a
Room. During the past six months, however, the hotel has been a victim of the severe economic upheaval,
which has led to a significant reduction in room bookings from the business travel segment. This has
reduced profits significantly to the extent that the hotel is no longer able to cover fixed costs. The owner,
Jerry Kong, has called an executive committee meeting to discuss the future direction the company should
take in the immediate term and in the long term to sustain its competitive advantage.


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