Delivery in day(s): 5
Unit 12 Hospitality Provision in Travel Tourism industry Assignment
The Unit 12 Hospitality Provision Travel Tourism industry Assignment presented herewith, consists of the relationship between the hospitality and travel and tourism. It explains the impact of the horizontal and vertical integration with the industries of the hospitality and the effects of these implications. Apart from this, the report comprises of how market target are determined and why it is important to determine before selecting the marketing mix. The report mainly explains all these in context with the two selected organizations that are into hospitality.
1.1 Interrelationships between hospitality and travel and tourism industry
Hospitality functions to basically set up a relationship or to promote the goods and services that are exchanged between the hosts and the guests who give while the other receives respectively. The relationship between hospitality and the organizations of travel and tourism is that the industries of the tourism be a focus for the customers to distinct destinations all over the world. On the other hand, the aspect of the hospitality is that make availability of leisure and comfort for the customers in the hotels, restaurants as well as the transport. While the aspect of tourism is demand, at contrary, need is the aspect of hospitality. This relationship of demand and need is the building block that links both hospitality and tourism.
Many of the Travel and Tourism Organizations are globally connected with the services provided at hospitality so as to propose those services to its customers who have travelled to those destinations. The travel industry many at times, promotes the hospitality services at their own organization so as to offer their best service to their customers. Therefore, this built of relationship of the travel industry with the hospitality thereby builds the professional relationship of the travel industry with its customers as well (Lashley & Morrison, 2001).
For the purpose of attracting the travellers at the holiday destinations, the travel industry employs many outlets of the hospitality such as that of hotels, restaurants and casinos. This promotes the tourist destinations as well. These are done mostly in the tourist destinations where the hotel and casinos is centre of attraction for the tourists. Thereby it makes more room for the development in these destinations. Thus, the outlets of the services of hospitality have attracted more and more travellers which thereby engender more income for the organizations dealing in tourism sector and hence, there has been an expansion in the tourist income.
Thomas Cook Group is a worldwide famous travel company started in 1841 by Thomas Cook. It operates from 15 countries and employees more than 22000 employees. It serves more than 22million customer across the globe. It is one of the world’s best leisure travel group. It has airlines, cruise, tour operator firm etc under his name.
Brands of Thomas Group PLC:
- Thomas cook Airlines
- Thomas Cook cruise
- Thomas Cook tour operator/travel agency
- Thomas Cook Stores (TCG, n.d.).
Intercontinental hotels group (IHG)
Intercontinental Hotels Group (IHG) is a Public Limited Company having its head quarters at Denham, Buckinghamshire, United Kingdom that provides hospitality. IHG knows hospitality, with 4700 hotels and 64000 rooms available in 100 territories and countries. It aims to create Great Hotels Guests Love which they will be delivering through their portfolio having their talented staff and the best class (IHG, 2014).
The following are some of its brands-
Out of this, Hualuxe is the newest hotel and resort designed especially for their Chinese consumers. Hualuxe has the essence of world class Chinese hospitality underpinned by internationally renowned consistency.
IHG, is the first international brand worldwide in hotel and resorts and each of its property offers its own distinct style based on the heritage chic and urban chic and resorts on the tropical coast. This makes an ideal brand for travellers with discriminating tastes (IHG, 2014).
The Travel and Tourism sector is one of the biggest industries in the UK. It plays a huge role in the world economy. Hence tourism is an important source of wealth in many countries. The economic impact of hospitality is far reaching. The supply chain has incidental impact that creates business activities in almost all the economic sectors. The hotel guests or the travellers that come spend money on money many sectors such as, restaurants, hotel rooms, transportation etc. IHG provides medium for all the business meetings, trade shows and conventions. All these arrangements by the IHG generate the economic growth. The money spent in an IHG contributes seven times to the economy. IHG is a member of the International Tourism Partnership (ITP). ITP promotes tourism through its leadership. It is also the member of World Travel & Tourism Council (WTTC). It took the lead role in the ITP/WTTC. IHG is also the member of the International Tourism Partnership’s Human Trafficking Working Group. This group brings the representatives of major hotels together for awareness on the issues (IHG, 2014).
2.1 Implications of integration to the hospitality industry.
Integration is a process of joining different parts to make a complete thing. When different parts are joined together they become more efficient and effective. Companies adopt the integration process to expand its operations, market share and become more efficient.
In the hospitality sector, there are following two stages of integration-
- Horizontal integration and
- Vertical integration
- Horizontal integration- Horizontal integration is coming out of numerous distinct features and firms into one main management. In a horizontal integration, the organizations are owner of two or more companies on the same stage of supply chain. For instance, the First Choice Group owned First Choice Travel Agency and First Choice Hypermarket. Both of these companies are on the same stage of purchasing chain.
- An example for this- when Easy Jet purchased the airline Go from British Airways, then both the Easy Jet and Go are operated and controlled under the name of the Easy Jet.
Following are the advantages of Horizontal integration:
- Addition or expansion of market share
- Increases financial status
- Ensure availability of varieties of the product and services
- Reduces the overall cost of products
- Enhances market power
- Sharing of resources became feasible (Walker, 2012).
- Workers may achieve more fulfilment in this structure because it provides more flexibility and autonomy.
- The utilization of cross-capacity groups can prompt high amounts of participation all through the association.
- The emphasis on development can prompt thoughts that keep the association ahead of the opposition (Joseph, n.d.).
Vertical integration: Vertical integration, on contrary to Horizontal integration, refers to the supply of chain of numerous distinct goods and services that are combined with more than one management (Jonathan, 2013). In vertical integration, the organization is the owner of the companies on two or more stages of purchasing chain. For instance, all of “The Big 4” was the owners of an airline, travel agency as well as the tour operator. These companies initially used their own companies name for their respective airline, travel agency as well as the tour businesses. But, now all these companies are power branding. This is because the customers can look as to whom are they booking with. TUI UK has rebranded its companies using the name of Thomson which is the best example for the above illustration (123 help me, 2014).
Example of Vertical integration:Thomas cook has merged with My Travel which has saved 75 billion pounds in 2007 for Thomas Cook. Thomas Cook is the perfect example of vertical integration as it has Thomas Cook tour operator, Thomas Cook travel agent, Thomas Cook airlines and cruises and many more companies under their name.
Advantages of Vertical Integration:
- Vertical associations give clear lines of power and a strict control, which can prompt high working proficiency.
- Increase in the co-operation and co ordination among the various departments.
- Increase in the profitability ratios
- Exercise more control over various factors which leads to more opportunities for the companies (Hamilton and Mgasgas, 1997).
2.2 Impact of integration on hospitality business
In the hospitality sector, there are following two stages of integration-
- Horizontal integration- Horizontal integration is coming out of numerous distinct features and firms into one main management.
- Vertical integration- Vertical integration, on contrary to Horizontal integration, refers to the supply of chain of numerous distinct goods and services that are combined with more than one management (Jonathan, 2013).
Distinct organizations in the travel and tourism industry are put together in numerous distinct organizations, positioned under one management. This is how these two levels of integration are integrated to the hospitality industry by distinct organizations.
Focusing on vertical integration, the minor organizations such as the airline companies merges with the tour companies so as to make their companies bigger and hence, within hospitality they make new and fresh relationships with their customers. Similarly, it is possible that in the developing countries, the smaller organizations by merging with the bigger organizations, can together make a name and fame for themselves and can also enlarge themselves within the tourism industry.
A more often than not organisation uses horizontal integration rather than vertical integrations. They frequently take over only one kind of goods or services, and not numerous goods and services under the control of one.
With the vertical integration, there is likely to take place many problems even though that there will be one organization, yet there will be distinct fields of the organization having their own administration and management. Therefore in terms of cost, promotion and the common outlook, it is tough to make an overview of the full organization.
The height of integration has grown up in the hospitality sector. The destinations are gaining more and more popularity. People desire more for these destinations. The huge and well-established companies have started supporting this. An organization is free to merge or take over the chains of hotels and restaurants under one brand name organization, yet the management is for each is different. In the same way, one organization controls the distinct brand names under it. An instance of horizontal integration is that an airline taking ownership of a chain of restaurants in distinct destinations can also make a contract with other airline companies and provide maintenance for them too.
When two distinct fields of the travel and tourism industry are integrated the, integration is more effectual to work. An instance of such is that an airline company integrating with the company that is into travelling industry. Thus the company attracts new customers by branching out into distinct fields. Thereby, it is a better way for these companies to encourage and promote their brand names with the other fields as well. This will bring upon new customer by reaching them and the promotion will not be limited to the existing customers. Many distinct companies under the control of that one hospitality sector will be the actual implication of integration (Holloway, 2009).
With vertical integration, these companies are under one organization, but yet distinct channel controls them. In case of any big issue affecting only one of the companies will create a problem for whole of the organizations. The whole of the channel will have to undergo the problem aroused so as smudge the reputation of that affected company as well as whole of the organization.
Integration affects the hospitality sector. If more than one company is merged with one organization, then all these companies are credited to be the main organization under which it is merged and controlled. Easy Jet and Ryan air are well known an airline that provides flights all across Europe which are affordable to all type of customers. Now for instance, they merge with each other and another airline company starts to decline them. Then it is obvious that the reputation of both Easy Jet and Ryan air will be affected.
Irrespective of the fact that integration is efficient and effective and has many positive aspects, this is also true that on the other hand, there are negative aspects as well. This is because of the one management which is positioned for two distinct companies (123 help me, 2014).
3.1 Develop a rationale for a selected project linked to target market
Rationale refers to the process of explaining basic information about something. It is very important to develop a rationale for every project because it will justify the purpose of the project and most of the decisions will be based on it.
While preparing the strategic marketing planning process, selection of a target market is the most important decision for any company. The target market is selected so that the marketing mix tools can be applied according to the taste and preference of the targeted customers. The key to success of strategic planning is deciding the target audience/market and deciding and selecting the best marketing mix strategy. The company also chose the target market while keeping in mind the companies’ objectives. The company’s strategic planning will miserably failed if the target market is not properly chosen. Therefore, the selection of correct target market is essential and accordingly developing the marketing strategies as well(William & O, 2014).
Rationale design for a project
A company is organizing a tour to India; for which the plan has been designed keeping in mind the economy, target market, positioning, etc. of the country. Company has done the proper research about India before finalizing the plan. India is a developing country. It has 29 states and 7 union territories. India is developing at a good rate. Its economy is growing. From the last decade India has achieved vast growth in the tourism & hospitality sector and in other sectors as well. It has a wide scope for tourism as its culture is very rich & colourful, has diversity, natural and manmade tourist destinations, friendly people, different festivals etc., and it’s much cheaper and economical than other countries in terms of money.
The organizers of the tour have to segment the target audience on the basis of the willingness of the people to pay for the trip to India. The organizers have to identify the person who are interested in the trip and will pay for it as the budget for the tour will be between 4000-5000 pounds; this process is known as the market segmentation. They have added the place like Delhi, Agra, Rajasthan, Gujarat, Banaras, Kerala etc. for the tour as these places have lots of cultural diversities and interesting tourist destinations. The target people for this trip are above 40 years of age as they are most settled in their lives and interested in knowing and exploring different countries along with spending time with their loved ones. The plan must be made according to the needs and requirements of the travellers. Once the plan is finalised, it must be communicated to all the travellers as they must know where they are going, where they will stay and how many days will be needed to explore all the destinations in India (Jacques, 2000).
3.2 Plan of hospitality business including operational requirement
The operational requirements are the basic essential of a project. Here we will discuss the requirements of planned tour to India:
- Location: The organisers must decide in advance the no. of days and places they have to visit. Accommodation having also required facilities to provide comfort to the traveller must also be planned and booked in advance. Proper security arrangements must also be made as it is not easy to travel to foreign location for the first time.
- Transportation: Transportation facilities should be done in advance. The flight tickets should be confirmed, the bus or car should be there to pick the tourists from airport to the hotel and later on take them to the site-seeing place. The vehicle should be comfortable and air-conditioned. If organisation has many places in their tour then they should also make all the other reservations in prior.
- Funding: The funds are the basic requirement to start any project or to go on a trip. Without funds, the project cannot be implemented. The enquiry must be made in advance with all the important organizations to make an estimate of the budget. For this trip to India the estimated budget was 4000- 5000 pounds per person including all the facilities of transportation, food, hotels, tickets etc. budget (Lashley and Morrison, 2001).
- Product and Service: The quality of the product and service are very important to make any trip or project fruitful. Hence, the quality of the services should be very good. The organizers should make sure in prior that the quality of service provided to their customer like room service facility, quality of food, laundry facility etc. should match the standards laid by the industry. The foreign travellers have different needs and comfort level, so the services provided to them must satisfy them.
- Licensing: The organisers should also make sure that the places or services they booked like Hotels, Transportation, Tour Operator, and Tour Guide etc. are licensed. They must check the licence numbers and permit before making any bookings. The unauthorised service provider may lead to damage and danger. So, the arrangements must be made with the authorised companies to have a memorable experience for a lifetime (British Hospitality Association, 2010).
Before targeting a market, it is evident for an organization to determine the marketing mix, i.e. price, promotion and product. It is also important that an organization must analyze that the market target is not hampering or affecting the objectives of the organization in any manner. This Unit 12 Hospitality Provision Travel Tourism industry Assignment has dealt with the inter-relationship of hospitality and travel and tourism sector. It has explained that how the given two organizations, i.e. THOMAS COOK and INTERCONTINENTAL HOTELS GROUP relates with the travel and tourism sectors.
123 help me. (2014). the Meaning of Vertical and Horizontal Integration. [Online]. Available from: http://www.123helpme.com/meaning-of-vertical-and-horizontal-integration-view.asp?id=150321
British Hospitality Association, (2010). Available at http://www.caterersearch.com/Articles/2010/05/06/317292/number-of-hospitality-and-catering-outlets-industry-data.htM
Boella, M., & Turner, S. (2013). Human resource management in the hospitality industry: An introductory guide.
Hamilton, J. L., & Mgasgas, I. M. (1997). Direct vertical integration strategies. Southern Economic Journal
Holloway, J. Ch. (2009). The Business of Tourism, Fifth edition, Financial Times / Prentice Hall, Harlow
IHG. (2014). Responsible tourism. [Online]. Available from: http://www.ihgplc.com/index.asp?pageid=732
Joseph, C. (n.d.). Advantages & Disadvantages of a Vertical & Horizontal Organization. [Online]. Available from: http://smallbusiness.chron.com/advantages-disadvantages-vertical-horizontal-organization-24212.html
Jacques D. (2000). Of Hospitality. Trans. Rachel Bowlby. Stanford: Stanford University Press
Jonathan, K. (2013). Vertical integration resurfaces in resorts. [Online]. Available from: http://www.hotelnewsnow.com/Article/10866/Vertical-integration-resurfaces-in-resorts.
Lashley, C., & Morrison, j. A. (2001). In search of hospitality. UK: Butterworth–Heinemann.
Thomas Cook Group. (n.d.). History. [Online]. Available from: http://www.thomascookgroup.com/history/
Walker, J. (2012). Introduction to Hospitality. London: Prentice Hall.
William, M. P., & O, C. F. (2014). Marketing. Mason: Cengage Learning