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Hospitality Provision in TT Sector Assignment STA
Hospitality industry is one of the fast growing industries that offer range of services like accommodation, transportation, food etc. It also offers products and services according to expectation of target audience. The present report will define scope of travel and tourism industry and operations to expand their business. The first task will explain interrelation between hospitality and travel and tourism industries. STA is multinational organisation which has 3000 people currently work in 200 stores. In next task, the study will describe implication of integration to hospitality industries and impact of integration on STA. At the end, the research will develop a plan for establishing ABC organisation which belongs to hospitality industry.
1.1Role and interrelationships between Hospitality and Tours and travel industry
In the current scenario, the travel and tourism industry play a significant role for Hospitality industry. Hotels are offering quality of services in order to attract customers. Hotel industry provides various facilities as per desire of the customer. In UK, there are different 3 to 5 stars hotels which are providing multiple facilities in their hotel like- bars, night parties, pool parties and pubs. All such facilities are considered important for retaining consumers. Hospitality industries and tourism industries are interrelated to each other (Mok.et.al.2013). They have vast market and also provide employment to people. The companies adopt various working styles in order to grow their business and engage their workers. Hospitality industries are serving additional facility for their existing consumers so that they would like to visit again. The organisations are offering many services in hotel which can easily use by customers. They set effective prices of services which include dinner, bars, lunch, disco parties etc.
Figure 1: Components of tourism industries
The tourism industries are providing complete package with pick up facility from anywhere. The travelling packages are decided on reasonable price to attract customers. It has been analysed that both the industries are interconnected with each other in terms of services and they have mostly common customers. For example- travel and tourism industry are serving complete holiday package but for leisure of people, they need to decide a significant time to stay in hotel (Frey and George, 2010). Therefore, the luxury status of hotels is considered by tourism industry also. Guest of tourism industry also wants to stay at premium price hotels. The interconnection between hospitality and tourism industry can be seen in following area:
Package holidays: In present scenario, package holidays are very significant for hotel industries. The Milestone is providing which can be easily accommodated by customers. In their holiday package, they include travel agents in order to book airline or bus tickets. Owners of the hotels have special agreement with travel agents to offer travelling rate at low price. This complete package is become interesting for users (Law.et.al.2014). This would give reasonable rate for both travelling and staying. So hotel industries are very careful about journey of their consumers. However, if customers face any problem then they can discuss with hotel staff.
Figure 2: Logo of Milestone Hotel
Business travel: Business people mostly travel at different regions due to expand their business and deal with different people or meeting purpose. The STA travel is making their journey simple. The company is dealing with those hotels that offering business centre, Wi-Fi or cable internet access, conference area and meeting rooms. STA travel understands the need of laundry and dry cleaning for business men who travel from one region to another. Apart from this, the company set some time for leisure in between meeting rooms (Ip.et.al.2011). The business men can spend time at spa or pool. Such facilities are set by travel companies by using hotel industries.
Figure 3: Logo of STA Travel
Conferences and exhibitions: Conferences and exhibition enhance national and international travelling. Multinational companies invite business associates and their clients for meeting yearly. The companies are paying cost for journey and accommodation. They choose common accommodation for business associates who belong to common region. They stay their clients at common hotel. Conferences attendees are hosted at the hotel. Exhibitions are encouraging customers to view products and purchase them (Hjalager, 2010). The International Tourism Bourse is an international exhibition where exhibitors are coming from all around world. When such type of exhibitions are announced them most of travel and hotel companies are offer their packages at reasonable price including both facilities (Journey and stay).
Globalization: Globalization growing need is travelling at different destination. International companies are setting up their branches at different nation. The industries want to share market profitability around world. STA Travel Company is making complete plan for such people who has very small time in order to reach various destination. Agents of Travel industry analyze requirement from them and make complete plan for them. The plan include airline tickets, taxi and accommodation, check availability of prefer food etc. Such people are mainly travel from nation to another nation. It’s not so easy to find a place where they get prefer food and stay. Such task is making easy by STA Travel Company.
Travel industries understand that a journey of client without hotel is not possible. It has been identified that STA Company is one of the leading travel company and makes a link with consumer to meet desired hotels and place. They serves client to hotel industry which means that both are interlinked with each other. Both the industry plans their package by mutual understanding and communication. STA travel industry is also serving their client who wants to travel in London and prefer 5 star hotels to stay there (Andreu.et.al.2010). STA travel industry has almost 3000 people in their 200 stores around the world. They are almost helping 6 million travellers to start journey. The stores of company have globally presented in 60 countries. There turnover is exceeded in 2015 by USD$1.1 billion worldwide. STA Travel was also voted as Australia’s leading travel agency in 2007, 2009 and 2010 at the World Travel Awards. The World Travel Awards are the world’s most comprehensive travel awards ceremony, with trophies awarded in a variety of travel categories. The awards recognise excellence in all aspects of travel services including product range, customer service, company culture and technology.
STA organisation executes a joint venture with Hospitality Company which shows interrelationship between tourism and hospitality industry. It offers accommodation, travel package, food, events, and transport facility in order to attract visitors which would to increase customers. According to the study, STA is become first choice of travellers. The company is taking care about comfortable journey of customers. This would increases brand image compare to other brands. The company has different quality package in which they include 3 to 5 star hotels located at different regions (Hjalager, 2010).. The company pre-book rooms in hotel and make pre plan before start travelling. The comfortable activities for customer would attract them in future. The company prefer Milestone hotel for those people who can afford 5 star hotels. Milestone provides luxurious living environment, quality good, night clubs etc. It has been identified that both the industry are interdependent to each other for better growth.
2.1 Implications of Integration in hospitality industry
Integration helps the industry to work together and share customers. They manage integration by resources and services horizontally and vertically. Industries come closer to improve their business and satisfy their customer. Integration makes common goals which is attain by proper coordination. Their customized architecture combines existing resources for growth and business expansion of integrated company (Haugland.et.al.2011). For example- STA Company interlink with Milestone hotel for effective allocation of resources. STA Company consider following type of integration:
Vertical Integration: Vertical integration is a process in which a company enters a merger agreement with another company or a company buy another company in distribution chain. This would lower the operating cost and provide high benefits to underlying organisation. This would improve competitiveness of company. Integration enables a company to invest in highly specialised assets. By doing this, integrated organisation is able to differentiate their services from competitors (Atalay.et.al.2014). The company improve their market shares and profitability. Another benefit is considered that it would lower down transaction cost between STA and Milestone. Both of companies enhance quality of services after integration. They are bind to produce high standard services for customer satisfaction. The result of integration is improvement of brand image of STA and Milestone.In present scenario, vertical integration is developed by most of the organisation in order to provide technology up gradation and improve supply chain management. It makes a relationship between two companies. After merging, both the company act as single unit and decision making or goals are set by considers both of them. The manager monitors control activities and make coordination between services. This would helps to make a quality of service in their complete package (Diez-Vial and Alvarez-Suescun, 2010). For example- STA Company provide details about occupancy of room to Milestone.
According to research, STA is entering in new segment where different barriers are present that can affect image of brand. Such barriers are identification of customer needs, competition, lack of information about market, customer expectation etc. Therefore, firms develop control over suppliers of accommodation and transportation providers to limit potential competition (Alfaro.et.al.2016). As per the study, products of organisations are related to each other after integration. The integration is adopted by multiple companies in order to make new strategies for business development.
Horizontal Integration means to join two organizations that are identical in products and services provided by them at a stage. Horizontal Integration can be performed either by creating a new company with combination of two organizations or adopting a company as a part of other. Using this approach, a company can develop the business and increase the revenue. Main objective behind integration is to raise the productivity and development of brand as a name and size. In case, STA can obtain the ownership of hotel Milestone to function of accommodation and other services (Gu.et.al.2012). This is profit making decision for STA to acquire Milestone because STA can use hotel services with its tour and travel business.
Horizontal integration is helpful to increase the efficiency in organisation and to increase the customers’ withholdings. Integration also assists more capabilities and resources to stand up in front of competitor. Several points are clear from this study that company can increase the work efficiency using integration with other company. This integration is profit making for STA to develop brand name and size across the countries. Organization can gain potential against the suppliers and distributors to reduce the competition in market. In case, it is known that acquiring of another companies may lead into difficulties to handle own and adopted company and company may go towards wind up (Lapeyre, 2011). Another drawback is that STA can promote the monopolies that may be banned by government.
2.2 Impact of Integration in STA Company
Integration assists the company to make compete utilization of resource, focus on prices, technological factors which float the company on positive path. The following points depict the impact of integration in STA Company:
- Cost integration: Due to integration, the companies are able to spend high volume of money in order to expand their business. The company is also able to set prices and product of other company. For example- STA purchases Milestone Company which causes amount of spending on purchasing of business. Cost integration depicts that costing is also merge for business (Tsai.et.al.2010).
- Technology integration support company to adopt new technology and make changes according to market. Latest technical tools will helps out STA Company to improve speed of operations and rapidly connect with end users. Both the Organisations will get competitive advantage and increase efficiency in services. New technology also gives innovative idea for faster services.
- Lack of knowledge: According to study STA industry face hurdles while entering into new market segment. The company is integrated both vertically and horizontally. Such integration leads to difficulty for employees. They are facing complication to handle new consumers (Law.et.al.2014). The employees need to target customers who are interested in integrated packages. Therefore, STA Company is providing proper training to their employees for better consultancy with customers. Lack of knowledge and communication lead to failure of merger and integration between organisations.
- Green policy: While integration, STA company face difficulty of environment sustainability. At beginning, company does not know about government go green policy. For Example- company s constructing a new hotel to expand their business but their management does not know pollution control policies of government. Such problems are face by STA after integration.
- Globalization: STA Company has introduced with globalization factor after integration. The company faces the problem due to lack of knowledge about globalizes factors like culture, terms and conditions, rules and regulation of another company. Such kinds of problems may find after implementation (Neuhofer.et.al.2014). Horizontal integration causes failure of merger because the company may not able to find global factors. It happens that company will not able to identify policies of competitors at global level. The lack of understanding affect merger.
- Quality:Another merger impact is quality. It is not guaranteed that quality will improve through integration. It only depends on ordination between human resources of two companies. If a firm is taken over by another firm then it is not necessary about improvement of quality. It has been seen that employees may not get new boss and difficult to understand his/her strategies. Therefore, the risk is greater for quality assurance. Impact on quality can be seen in positive way also. Proper communication and coordination would result enhancement of quality (Law.et.al.2014). If human resources of both the industry understand their culture then it would be easy to improve quality of services. Therefore, STA organisation design training program after integration so that it can successful.
3.1 And 3.2 Rationale for project and plan for operational and human resource allocation
Rationale: Up growing market of hospitality industry is the attraction for other industries to grow money. ABC is thinking to invest in hospitality industry as the conditions are in favour to establish the hospitality business. Reasons to engage in this industry are to develop business and to conquer the reliance on hospitality industry. The reflection of hospitality cost on tours and travel packages can be abridged with this approach of ABC. Idea to engage in hospitality industry will help to raise the capital as well as customers’ happiness toward ABC. Customers’ desire can be fulfilled in more easy and effective manner with own food and accommodation services. To start new business, ABC will select upper-middle class people as target market. Management of ABC can use different procedures to hit target market. Various sponsorships, promotional offers and advertisements on social places and websites can be used to draw people interest and to let them know about services. Company is giving full attention to provide good travel and tourism packages along with hospitality (Ulrich, 2013).
Figure 4: Organizational structure (Hospitality)
Offer of additional services to tourist can help to generate customers in hospitality business. This approach is also useful to plan and implement the strategies. Factors of hospitality industry like stable economic situation, high demands and high access to resources are attraction points of ABC Company to appear in hospitality business (Purce, 2014). Proper procedure can be used to recruit and distribute human power to concentrate primarily on customer facilities so that customers can be assisted within a short time.
Stage 1: Purpose behind the opening of hotel in London is to gather customers and suggest complete service package to their plan of tour and vacation. ABC’s management is eyeing to develop the business in economic category by offering the budgeted services. Company is trying to provide own food facilities at their restaurant to customers so that maximum profit can be generated as well as development of organization can be vision with the low price offers that will influence the decision of customers. ABC’s main focus is on customer desire and expectations that will help to gain the attention of target audience. Customer’s feedback is used to know more chances of improvement in strategies. Management controls the quality of service to attract the global customers toward the low price offers (Blocher, 2015). Also ABC’s uses own analysis and feedback approaches to improve the hospitality facilities. Customer’s satisfaction and expectations are being used to develop and maintain the quality of services by management to expand the development of company. Knowledge gathered from market research is also helpful for ABC hotel to understand the operational and functioning procedure of hospitality organization to start own business efficiently in this sector.
The foundation of business is to provide great hospitality facilities to aimed customers and guests that will include neat and clean living places, healthy environment, quick respond toward customer request, safety and varieties in food and beverages. Addition to this, company has superior control on transportation and tour plans. New customers can be attracted and more attractive offers can be given to existing customers to encourage hospitality business. Company considers the time and sources in which it can attract more customers and hit the target market to provide complete set of facilities to them. To start with hospitality business, ABC organizes the analysis to get the information about current trends, customers’ expectation and market scope required in hospitality industry. Online market survey approaches and face to face interaction with guests and local people can be done to explore the information about customers’ expectation regarding services and qualities (Kangasniemi, 2015). The collected data from various sources is useful for management to take decisions on quality of services and introduction of product in hospitality business. For proper decision making knowledge, online marketing research is significant to know peoples and their desires from all over the world.
Organization will develop strategies based on market analysis to survive with new trends, user perceptions, competition and market values. Upper-middle class people and firms are target market in hospitality industry. To reach such market, ABC needs to use demographic and geographic segmentation criteria to develop specific strategies to set up business in London. Services specific to geographical location can only be developed with proper analysis of target market and concentration on customer needs. Addition to it, organization will create a good collection of facilities and product for specific geo-location and promote them with packages given in tourism. Company will make plans that can fulfil the geographical and demographical requirements of customers (Boella and Goss-Turner, 2013). The most preferable location to start the business is London because people from all around the world come here for different reasons. Thus, London is recommended location in UK to start the hospitality business. ABC is thinking to open hotel with 40 rooms and restaurant where company’s hospitality will provide continental and Chinese food.
Capital is the first requirement to start a business. In order to set up a new business, ABC requires capital or fund sources to develop infrastructure, control operational activities, recruit and fill positions, inventory the services and products. Organization will contact to investors and banks that can offer funds according to need. Company will offer bar and pub, pool, gym, transportation, food and accommodation as its services and products. ABC will follow all the required governmental procedures to establish and run the business (Brotherton, 2012). Organization will focus on customers’ satisfaction and desires to improve and maintain the services and product quality. Company will offer membership to regular customers to use the services efficiently. Organization will offer gold and platinum membership cards to attract global customer market. This approach will help company to establish a good reputation in hospitality industry.
Stage 2: There are various factors that affect the business chances and expansion of brand in hospitality industry. Internal structure of a company has a great impact on brand marketing and decision making regarding to target market customers. To develop as a unique company and to achieve higher position in hospitality industry, ABC will concentrate on:
- It is necessary in designing of elements so that more people can be converted into customers. Decision of customers can be diverted with the help of ambiance look. As in fashion in hospitality industry, ABC hotel will be simple and trendy to reflect western-classical culture. To maintain the standards and luxury look, company will use attractive lighting and presentation in interior parts of hotel and restaurants.
Figure 5: Ambiance for accommodation
- ABC will provide the culture of London inside the hotel because people love to feel and enjoy the local culture of London. Thus, company will prefer to focus on implementation of this culture so that customers’ satisfaction and brand value can be achieved. This will be beneficial for ABC to smoke the competition by giving a chance to customers to understand and enjoy the UK culture. This approach will be helpful to attract customers to stay there (Li.et.al.2013).
- Interior and exterior: Hotel will follow the new trends in hotels like colourful fabrics, antique symbols, frames and quotes on life etc to make the interior part of company attractive and healthy. ABC will use lighting system and decoration on brand logo to make it noticeable at exterior side. Also company will use glasses and wooden furniture at outside which is cost effective.
Figure 6: Interior design of hotel
Figure 7: Interior of restaurant
- Functional areas: Hospitality industry is build around the customer satisfactions and desires. Primary focus of ABC is to maintain the functionality according to customer demands. ABC will offer services in accommodation, food and quality of products, delivery of goods and housekeeping along with variable payment options. Moreover, company will provide a nice user interface in website for booking and communication purpose.
- It is more important for new comers in hospitality industry to maintain the position along with organizational goals. ABC will offer several discount offers to promote the business and brand name.
Stage 3: mportant parts of hospitality organization are operational task and management that assist to sustain the efficiency of business procedure. Management will consider the following factors that affect the expansion and establishment of a new organization:
Figure 8: Operational objectives
- In hotel industry, staff members play a vital role in analyse of customers’ demands, management of available assets and maintenance of services and qualities. ABC will recruit skilled and experience candidate for housekeeping, front office and cooking which is main reason to divert the customers’ decision toward company. Proper training and development of employees will help to achieve organizational goal more easily.
- management will analysis the minimum need of human resources to accomplish a goal and then recruit capable candidates to perform the task with standards of quality. Management will develop job description and person specification to target the individual ability towards the goal. Company can outsource the recruitment task to focus on primary goal (Van der Wagen and Goonetilleke, 2015).
- Pricing strategy: Deep analysis on similar products in market will help ABC to maintain good quality within affordable price so that company can make brand value in market and attract customers at lower price offers.
- Promotional activities: Company will use communication medium like newspaper and internet to promote the business. Also discount offers and additional profits will be given to make company name popular. ABC will provide offers for existing customers in its tourism business (Sloan.et.al.2013). Also company will use the services of advertising agencies to develop and promote the business.
Current study concluded that hospitality industry is growing rapidly that also improve GDP of UK. The report explain role of hotel industries in travel and tourism industry. The first task has explained interrelation between STA Travel and Milestone Hotel. The study also analysed vertical and horizontal implication on STA travel due to integration. The study also defined elements that impact on integration such as Technology, Lack of knowledge, Globalization, Quality etc. At the end of study, a plan is described to establish a hotel in London including design and operational activities. Whole plan is explained in step by step format.
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