This is a ABI College Hospitality Provision Travel Tourism Sector Assignment in which we discuss Hospitality industry and Development methods for Hospitality Businesses.
It is well known fact that tourism sector is highly dependent on the hospitality sector as this sector is an integral part of the travel and tourism sector. Hospitality services play an important and crucial role in the success of travel & tourism sector in domestic and international tourism. This sector is able to sustain itself due to the services of hospitality service mainly. Travel and tourism sector requires various kinds of services like travelling, logistics, accommodation, pantry services etc. So, on the one side where tourism sector arranges for the logistics and travelling of the tourists, hospitality sector arranges for the accommodation and the food and other services to them. In other terms, it can be easily said that hospitality industry adds the flavor to the travelling and touring experience of the tourists. In fact, with the changing time, tourists are more focusing on the comfortable stay, quality of food and the support of staff as the main parameter for selecting any tour and travel operators for their tour plans.
TASK 1 Role of Hospitality Industry
P 1.1 Interrelationships between hospitality and travel and tourism businesses
With the time, the term “hospitality” is becoming more and more popular and different people interpret it in different context by relating it to the industrial, commercial or public services. Basically, hospitality can be defined in a relation where there are two individuals or parties. In these two individuals or parties, one is host and another is guest. Considering an example of a hotel, all the customers visiting to the hotel are the guests to the hotel and the hotel is the host and is getting paid for hosting the services for the customers. These kinds of relationship between the guest and host can be either private or public depending on the arrangements.
Hospitality can also be defined as hospitable action of one towards someone else. Hospitable means the actions like welcoming another and offering own services to him. Tourism sector is one of the fastest developing businesses all over the world. One of the fasted developing economies, China contributed around $102 billion in 2012 towards the international tourism. These figures show the kind of growth this sector is having these days. One can define tourism as travelling to some place by an individual or group for the purpose of leisure, recreational or the business meets etc for a limited duration. With the changing time this sector has gone far beyond the travelling concept only. Now experience has become the most important part of this sector. This is the experience which all tourists expect out of any tour and hospitality sector is main part which can provide the required experience (Garcia, 2005).
Hospitality and tourism are closely linked to each other and are supplementing to each other for their survival. It is already being discussed that tourism is an activity which enables the tourists to visit the places they want to visit. This visit by tourists can have recreational, business or leisure purpose. Irrespective of their purpose, they require various basic services like beverages, foods, accommodation and travelling mode for their visit to their destinations. Hospitality industry is the main industry which provided all these required services to the tourists or to the travel and tourism sector so that tourists can add experience to their visit. Hospitality industry can be understood as a supplier to all these services and supplement the services provided by the travel and tourism sector. So providing a place for comfortable stay, food with good quality etc are the main services that are provided by the hospitality industry. Tourism sector has helped too much in the existence of hospitality sector. Example of Scotland in UK can be taken to understand the sector. First people visited this place and with the time, they found it to be a great destination. There were very less number of lodges and hotels in the starting to accommodate tourists. With the increasing demand for the accommodation in Scotland due to increased awareness among the tourists about the place, hospitality industry started growing there for accommodating the tourists. Tourists from all over the globe visited the place which resulted in the increasing demand for the state as a tourist destination. With the changing time and increasing demand of the hospitality business in Scotland, it has become a favorite destination and has high demand for the properties in the area. This has helped in the growth of the local economy and it can be easily seen that how travel and tourism sector has helped the hospitality industry for their growth (Makens, 2006).
The integration in both these sectors is so much that the growth or slack in both of the sector goes parallel. If there is any kind of positive or negative impact on the travel and tourism sector, the same impact can be observed in the hospitality sector. Global recession of 2000 can be taken as an example to show the integration of these two sectors. During the recession, people avoided all kind of activities related to the tourism sector. So, with the less inflow of the tourists to tourism destinations, lodges and hotels suffered a lot due to no customers at the tourist destinations. Hospitality services mainly give a personal touch to the services provided to the tourists and encourage more tourists to visit the destinations by their better services and also encourages for spending more and more money during their tours.
Satisfied tourists provide their good reviews about the services and also encourage other tourists to visit the places they have already visited. So, a positive word of mouth is spread for that particular service provider if the tourists are satisfied with its services and in this manner it results in the growth of the business in those places and they are able to sustain themselves. Hospitality and tourism sector are so integrates that these sectors cannot work in isolation and withdrawal of one sector from support to another sector would result in a heavy loss for both the sectors. Both sectors support each other for their sustainability and for their revenue generation. Quality of service plays an important ad crucial role in the hospitality sector. Like a positive word of mouth can be spread and result in the fame of any service provider, in the same manner, a negative word of mouth can result in the complete loss of the business to the service provider. This is the main reason for the quality of service being important to this sector (Pan, 2008).
These days, hospitality sector is not limited to provide food and a place to stay to the tourists. It is far beyond that and many activities are undertaken. It is all about the kind of experience to the tourists during their visit. They look on various factors like kind of place, the way hotel staff behaves with tourists, costs of accommodation, quality of food, hygienic factors in the place of stay etc. All these factors create an opinion about any service provider of this sector. In other words, experience of tourists defines the growth or the decline of the business. Finally, it can be stated that both the sector supports each other and any kind of issue with one sector impacts another one in the similar pattern. In spite of such a close interrelation, these sectors can’t be seen as a single entity.
TASK 2 Impact of Integration
P2.1- Implications of integration
Hospitality industry face a continuous pressure from various stakeholders along with the shareholders for capital return, unlocking of cash, sale of non-core assets etc for the purpose of expansion. These pressures make the integration concept critical for the hospitality sector survival. In case, a hospitality organization is focusing on economies of scale, there is high possibility of integration of business. Integration is important for businesses as it results in the low operational costs for day to day businesses of the organizations. It is the main reason that companies prefer third party services in spite of in house development of services or products as integration reduces dependency so they prefer integration of critical businesses. Hospitality business is able to increase its business on global level with the help of integration. It helps in increasing revenues along with the brand enhancement of the hospitality business. There are two kinds of integration that can be witnessed in hospitality industry (Barrows, 1999).
Vertical integration: It is a way of management and growth control for the organizations. The organizations which are vertically integrated have a common ownership and it can be easily observed in supply chain companies. In last few years, hospitality companies have uses the strategy of asset-heavy which is one of the vertical integration and is being used by many travel ad hospitality companies over the globe. Companies under this strategy, own their hotel ownership along with the management divisions. In this strategy, companies focus on building the entire property by themselves in spite of focusing on brand presence with the help of mergers and acquisitions under strategy of asset-light.Main objective of vertical integration is to support peripheral services like registering presence in main tourist destinations, increasing control on complete business, boosting revenues of hospitality organizations. Vertical integration impacts the hospitality business in following manner:
- Expansion beyond the main expertise
- Consolidation of complete business chain
- Avoidance of any conflict in interest
Horizontal integration:Horizontal integration is a strategy when organizations acquire or create similar business from same or different sectors in order to expand their business. So, basically the organizations of hospitality sector look forward for the merger and acquisitions with the help of horizontal integration. Horizontal integration helps the organization in increasing their customer base. Example for such integration can be the opportunity seen by the popular chain of hotels for an upcoming destination apart from its presence in all famous tourist destinations across the globe. For such an opportunity, organization will look forward for building a new property at the new destination which would take plenty of time for the building a new property.This will also result in the customer loss for the organization from the particular location. So, organization needs to look forward for acquisition of an already existing business and re branding that property by the name of own organization. It would also save the organization from huge investments in the construction and other activities etc. With the help of such integration, organization can directly start its business. It would also decrease the competition and would increase the market share for the organization. Example of such integration is the Marriott international chains of hotel which has more than 3700 hotels, only 6 hotels are hold by the organization itself. With the increasing competition and the huge investments requirements organizations are adopting asset-light growth strategy and horizontal integration helps the organization in doing so (Fossen, 2001).
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P2.2- Impact of integration
Hospitality business has various impacts due to integration. Taking the example of branding, it is a crucial aspect for the growth strategy of the organizations. Brand helps the customers to associate them with the company and shows a bond with them. Basically branding helps the organization in differentiating itself from other competitors in the market. Even some customers have emotional attachments with the brands they are using. This is the main reason for brands becoming an integral part of the growth strategy of the companies. So, branding plays an important role in the hospitality and tourism sector also similar to all other business and industrial sectors. It can be easily find out that the success of hospitality and tourism sector depends on the strategy of branding to a greater extent. Tourists have started associating themselves with the various brands. (Hemmington, 2007).
With the time, some of the travel operators have integrated their services with the airlines and the hotels industries for various popular destinations. With the help of such a strategy, tour operations provide airlines or other transport tickets along with the accommodation to the tourists at reasonable price. In this manner, hospitality and tourism industry provides a bundle of services to the consumers at an economical price. It helps the customers in planning their vacation and other activities in more convenient and a hassle free manner. Another benefit of integration is the movement of the business in those areas which do not lie in the core expertise of the organization. So, a hotel chain can offer tickets of airline services along with the other mode of services with their partner operators. In this manner, integration gives a simple supply chain for all the activities involved in the hospitality and tourism industry (Camisón, 2000).
Integration has also helped in the reduced competition in the sector due to the consolidation. For example, if a company X has two hotels in the Miami and there is a business fragmentation due to the presence of another company B near to the property of A. It affects the business of both the brands. So, they would look forward for the horizontal integration of each other. In this manner, if A acquires B, then B would be no more in the hospitality industry and there would be only A as the service provider for the tourists visiting Miami. So, in this manner, integration helped to reduce the competition in the market by the elimination of B from the market. It can be easily stated that integration helps the organization in expanding their businesses in the famous tourist spots. The above discussed example clearly shows that such integration helped the organization in increasing not only the customer base but also the revenue of the organization. Taking another example of the vertical integration by a business group A by the acquisition of rival budget hotel chain and online travel portal along with its 4 hotels, this integration helped business group A in the expansion of its market significantly. So, this integration helped in the revenues generation from not only hotel business but also from online portal etc.
It is being observed that an immediate impact of integration can be seen of hospitality business, rather it takes time to analyse the exact impact on the business. But there are lots of cases where the exact impact of integration is being observed after a very long duration and have also seen negative results etc. Such situations are seen when a very well performing business acquire an infant or ailing business. Such strategy may also fail at times if not implemented in a planned manner with proper logic.
TASK 3 Development of Hospitality Businesses
P3.1-Developing rationale for a selected project
An establishment of budget hotel at a famous destination like Scotland in UK can be considered as a selected project for this section.
Scotland is a state of UK which has become a famous destination for the beautiful scenery and was able to witness more than 20 million tourists to it in year 2013. There is a very good opportunity for the hospitality sector in Scotland. Various luxurious and world class resorts and hotels are present in Scotland. Drover’s Inn, Moulin Hotel and The Peat Inn are some of the example of luxurious hotels in Scotland which observe 100% occupancy for their services during the peak season which is from the month of October to January. The tariff of the services from these hotels are on higher side, but still they see 100% occupancy as tourist accept these tariffs to stay there. However, looking as an expert of hospitality sector, there are no budget hotel chains in Scotland for the tourist who have budgetary constraints. Such tourists have to dependent only on the makeshift apartments and local lodges available in the area to stay during their visit to the place.
Makeshift apartments are provided by local residents and in this manner, local person earns more money using their properties. Such accommodation is cheaper for the tourists but the issues of quality food, hygiene etc come in the way of tourists. The professional way of accommodation is missed by such facilities. But due to the cheaper facility, people mostly adopt such facilities due to unavailability of budgetary facilities for tourists. It can be easily seen that there are two extreme ends for the accommodation facilities in Scotland. There are facilities which can be offered by only few tourists due to high budget and on the other hand there are facilities which are under budget but quality is not as per standards. So, there is an opportunity to fill this gap and a budget hotel can be established to provide budgetary accommodation in a professional manner. It is also necessary to understand the meaning of budget hotel before going forward. A budget hotel is where the tourists have the option to avail a particular type of service or luxury depending on their budgets. All basis services are provided to the tourists at a reasonable cost. So, in this manner, these hotels provide economic service and fulfill all basic requirements of the tourists in a professional manner. However, the standard of such a hotel ca not be matched with that of a high end hotel chain.
Above discussion about the hospitality industry in Scotland, it can be easily analysed that there is a good scope of establishing budget hotels in Scotland for attracting middle class of tourists visiting place. It is necessary to understand the requirement of a feasible location before going forward to establish a budget hotel. A perfect location for such a hotel would be the mostly visited areas by such visitors for the accommodation. There are two places in area which tourists prefer for budget accommodation i.e. South and North Scotland. South Scotland is mostly dominated by the various international groups of luxury hotels. North Scotland is mostly visited by foreign visitors like Russians (Marqua, 20130.
North Scotland attracts most of the tourists comprising of fresh employed people and the college students. Various kinds of lodge, rented apartments and hostels are available in this area for such visitors to get accommodation at a relatively low cost. It can be easily analysed that this area would be perfect for the establishment of budget hotel in Scotland. As the place is finalized, next aspect to look upon is the tariffs for the occupancy. Rooms on the basis of single and double occupancy can be built to accommodate all type of groups in the hotel. Third person can also be accommodated in double sharing room with extra cost and an extra bed in the room to lowering down the costs for tourists. As it is budget hotel, there will be no room service. However, some basis requirements like snacks, tea or water can be provided to the tourists on the order over the phone call and after the order is ready, customer will go to the counter to collect the order. However an option to avail the room service can also are provided at added cost.
P3.2- Developing plan
Human resource plan is most important requirement for any kind of hospitality business. There are mostly three aspects in hospitality business i.e. quality of service, cost of service and human resource behaviour along with their commitment. Many hotels are famous and are known worldwide just because of the supportive staff who offer customer friendly services. It is well known fact that any hotel can have any big brand association with it but if the human resource within the hotel is not as per the required standards, it is highly possible that customers will not come back to the hotels due to the of the support staff. So, recruiting right people and training them according to a defined standard to synchronize their actions according to the organization is most important for any hotel.
It is necessary to have a defined hierarchy of human resource within the organization to manage all the staffs of the hotel. The hierarchy of human resource with various levels is depicted in below mentioned figure. Organizational structure need to be multi layered according to the tasks and responsibilities defined to all the staff members. In budget hotel all the responsibilities would be defined for all the human resources according to their tasks and accountability should be there with each individual. General Manager of the hotel will overlook all the operations and allocations of human resource within the hotel. General Manager can be the main decision maker within the hotel for all kinds of operations. However, he will not be responsible for day to day operations. The responsibilities of day to day operations of the hotel can be assigned to the senior assistant manager of the hotel.He will be responsible for all the operations within the hotel and would give a weekly status report to the general Manager of the hotel so that directed decisions can be taken by the General Manager for the activities of the hotel. In this manner, senior assistant manager can be understood as a supportive role of GM within the business (Baum, 1995).
There would be five main divisions under senior AM within the hotel i.e. Food & beverages manager, personnel Manager, accountant manager, Accommodation Operations Manager, and Maintenance manager. There would be deputy assigned under all these roles. Deputy would take the responsibility of the seniors in their absence to ensure the uninterrupted services. F & B division and Operations division will be provided with the maximum level in hierarchy. Taking an example, there would be a team consisting of six people under deputy operation manager who would report him about the daily operations related to their departments. It will also include receptionist, booking office officer and housekeeper etc. All these people form main and ground level core team for the daily operations of hotel.
There would be three separate divisions under the food & beverages team i.e. hotel restraint, kitchen and banqueting. Such kind of division is necessary for ensuring clearly defined responsibilities. As it would be a restaurant cum hotel, it would also cater to the eating needs of random guests also. There would also be a banquet hall within the hotel premises for conducting various kinds of event in case of requirements from the customers. There would be a separate team for the kitchen for hall in order to ensure uninterrupted food & beverages services to the customers. There will be different people to take charge of the bare, food stores and cellars etc under F & B manager. Maintenance manager would be responsible for ensuring cleanliness and hygiene within the hotel with the help of maintenance staff reporting to him.
With the above discussion, it can be easily figure out that human resource within the organization play an important role in the success of a hotel and various lines of authorities within the hotel will ensure the proper services to the customers. It is much important for the organization to define the human resource policies which are for the benefits of the employees so that a healthy environment within the hotel in ensured (Baum, 2002)
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Hospitality sector is very important sector and has interrelations with the travel and tourism sector. Both these sectors are so much linked to each other that these can’t be separated. Any kind of positive or negative influence on one sector influences another sector in similar manner. Hospitality sector provides service and bring the businesses to the various governments. Hospitality sector play a crucial role in the travel and tourism sector and various kinds of integration are there in the market. The plan for the establishment of a budget hotel can ensure accommodation for the budgetary constraints tourists in Scotland, UK. This report helped in the implementation of all the concepts learned during the course.