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BTEC Higher National Diploma in Travel and Tourism
Unit Number and Title
Unit 12 Hospitality Provision in the Travel and Tourism Sector
Hospitality industry includes providing lodging, accommodation, recreation facilities etc. and it has seen tremendous growth in past decade. It comes under service industry and it is a part of tourism sector. Two major organizations which come under hospitality industry are hotels and catering industries. This brings a lot of revenue in the country. Country’s GDP grows with the growth of hospitality industry and hospitality industry contributes a bigger chunk in country’s economic growth and GDP (Powers, 1999). Sector also helps in providing employment to the youth of the country. Every country wishes to improve this sector as people from other countries come to host country and margins are also higher. Globalization and opening of the economy are some of the other factors which lead to growth in this sector. People are not just limited to satisfy their basic needs i.e. food, shelter and clothing but they are getting rich and disposable income in increasing. People are focusing on travelling and recreational activities and spending money in using hospitality services. Various services offered by hospitality sector are lodging, Restaurants, Food and beverages, Accommodation, Theme parks, Cuisine lines, Event and marriage planning etc.
Travel and tourism sector is another one of the fastest growing sectors in service industry. Aviation industry is leading in this sector which takes tourists from one place to another. Travel and tourism sector can shake the entire economy or GDP of the country if it does not perform better. Incoming of the money is very important in the country and travel and tourism sector is major source of foreign currency. Travel and tourism sector contributes around 10% of the world’s GDP. Around 9% of the world’s employment is generated by travel and tourism sector. Because of economic slowdown in n2009 there was decline in this sector and hence there was fall of around 125 in the investment in travel and tourism sector. Number of international tourists started decreasing. Exchange rate, availability of credit etc. are some of the other factors which impact this sector.
Hospitality is nothing but relationship between the guest and the host. And when guest takes some money in return it becomes business and sector becomes hospitality sector. Better the service more will be the customers in your hotel or restaurant. Reception is not the only thing which comes under this sector but entertainment and leisure of the customer is also a very important part of this sector. There are lots of organization doing business and making good money in this sector. In this report two sectors and its two organizations will be discussed.
Travelling from one place to another from lesser that one year of period comes under tourism sector. People travel for various reasons such as business trips, honeymoon trips, holidays, historical trips etc. All these people are users of travel and tourism organizations. People travel within their own country and also to other countries. This divides these tourists into two categories i.e. domestic tourists and international tourists. International tourists are major contributor towards any country’s GDP growth (Lavery, 1996). To attract foreign tourists there should be some USPs such as historical benefits, cultural benefits, weather, man-made artifacts etc. to attract foreigners to your country. Other factor is type of hospitality provides to these foreigners. Citizens should welcome foreigners with kind heart so that they come back again. World Tourism Organization is an entity to make rules and regulations and to look after travel and tourism sector in the entire world. Treaties between two countries are also made with the help of this organization. Economies of both host and source country gets impacted because of incoming and outgoing of tourists.
Both the sectors introduced above are interrelated to each other and in fact both of them are dependent on each other. Both the sectors grow proportionally and decline in one sector also gets reflected in another sector. People travel from one place to another using travel and tourism sector and hospitality sector maker their stay awesome by providing basic to luxury facilities such as food, accommodation, fun activities, restaurants etc. More are the customers in travel and tourism sector more will be in hospitality sector (Baum, 1997). Travel and tourism organizations also collaborate with hospitality sector organizations to have better stay of its customers. Some travel and tourism organizations acquire hospitality organizations and provides complete package to the customers. It becomes easier and beneficial for both the organization and the customers. Transportation in the host country is another important factor which attracts tourists. Infrastructure of the host country needs to be attractive.
Better are the hospitality facilities more will the number of tourists coming in the country and more will be the growth in travel and tourism sector. Hospitality sector make the customers feel like they are in their homes. It gives them opportunity to relax and enjoy by providing facilities like recreational activities, SPA, cinema, entertainment etc. Water sport activities, beverages, various types of food, SPA, Yoga etc. are some pf the other services covered in hospitality sector.
Hotels are in different range to suit the customers from various backgrounds. There are luxury 5 and 7 star hotels for rich customers and there are also 3 star or average hotels which are easily afforded by the middle class families. Both the sectors as mentioned before are growing rapidly and there is also huge opportunity for further growth because of improvement in economy and increase in disposable income of tourists.
Some of the big players have operations in both the sectors as they understand the interdependence of both the sectors on each other. Organizations want to provide end-to-end service to their customers. It helps in gaining customer loyalty and builds a strong and long term relationship with the clients. Customer satisfaction is the most important factor in any service industry. Employees in both the organizations have to interact directly with the customers. So organizations have to focus on employees’ training to improve their communication or interpersonal skills. Employees should be taught to be amicable to the customers to gain customer satisfaction and loyalty. One smile or small act of kindness towards the customer can get you a lifetime customer and one small act of rudeness or undesired service can lead to loss of lots of customers in both the sectors. Brand name of the organization gets destroyed. Having business in both the industries can give you a control and you can give your 100 % effort to impress the customer. This is the reason behind integration between hospitality and travel and tourism sector. There are various examples of best service provided by some organizations to its customers. Let us suppose by mistake flight attendant spills the coffee glass on any of his customers and when the flight reaches destination if the customer gets the same shirt with same color and size it gives immense pleasure to the customer. It was a real incident performed by one of the airline organization. It was shown and published in various websites and news channels and it was like free and good promotion to the organization. Being on time is the factor which attracts and satisfies the customers in service industry.
Two organizations from the hospitality and travel and tourism sector which will be discussed in this task are Thomas Cook Group and Four Seasons Hotels and Resorts. Services and products offered by the organizations will be discussed
It is UK based organization it has huge name in travel and tourism sector. It is London Stock Exchange Listed Company. Thomas cook got merged with My Travel group in 2007 and it was turning point for Thomas cook’s financial performance. Thomas cook have operations in around 22 countries in the entire world. After merger there was great improvement in market share and revenue of the organization (Seaton, 19960. Organization was able to build new brand image. There are around 32000 employees working for the organization and it has around 22 million customers as per the latest data.
This task will discuss various services provided by Thomas cook. The most important and biggest business is airline industry. It has presence in all the major countries in UK. It also has presence in some of the countries in USA such as Scandinavia. The first Airline started by Thomas cook was condor. Holiday packages are provided by the organization in the country. Holiday packages are not just domestic but it also provides international domestic packages. Foreign exchange of currency is also provided by the organization. It is one of the services which provide competitor advantage to the organization because there are very few organizations which provide this foreign exchange service. Customer can easily get any currency of any country and can go anywhere he wants to go. It has its own website where customers can book the hotels and plan their travel. It has become very easy for the customers to book their stay and travel by just sitting at their homes. It saves lots of time, money and effort of both customers and the organization. Website also allows booking the flight with the help of website. Online booking also offers discounts to the clients. Visas and passports can also be made by taking help from Thomas cook’s specialist consultants. Insurance of all the customers can also be done while booking the tickets. Thomas Cook also provides various types of food in the travel to its customers.
Let us discuss about another organization which has presence in hospitality industry. The organization is four seasons and resorts. It is based out of Canada and has presence in all the major countries in the entire world. It is 5-star hotel. The services offered by the organization come under a class category and it has been given many awards by various organizations. Employee satisfaction is much higher so it was ranked in top 100 companies by fortune Magazine. The company has faced minimum attrition rate (Nash, 2005). It is considered as one of the dream companies for the students of hospitality industry. There are around 13000 employees working for the organization. Innovation is the way followed by the employees and the managers of the organization. Organization was started in 1861.
There are various services and products offered by the organization to its employees. As it is known for its hotel business accommodation is the basis facility provided by the organization. It has various types of hotels from 3-star to 7-star. It has facilities for middle class families. Food from various backgrounds is also provided by the organization. All types of food and beverages are provided by Four Seasons Hotels. It also provides SPA and recreation facilities to all of its employees. Cinema halls, swimming pools etc. are some of the facilities for entertainment of its employees. Marriage events, business meeting events etc. are also organized by four Seasons in its premise. Yoga and health benefit facilities are also provided by the organization. Customers are very much satisfied by all the above mentioned facilities provided by Four Season hotels and restaurants.
There is huge competition in each and every sector and all the organization are searching for new strategies to increase their market share and especially in case of service industry as organization cannot make any changes in its products for the customers. Organization has to improve its service or it has to reduce the cost. One of the major ways to reduce the cost is to acquire the supplier and for travel and tourism and hospitality sector is its suppliers. Strategy of acquiring the suppliers is called integration. It helps in achieving economies of scale and economies of scope.
Vertical and Horizontal integrations are the two major types of integration. Vertical integration is the strategy to reduce the cost by acquiring the suppliers (Treasure, 2009). For example Thomas Cook acquires Four Season hotels. Creating monopoly in the market and to abstain from hold-up problem are some other major reasons behind vertical integration strategy. Vertical integration is further divided into two parts i.e. Forward vertical integration and backward vertical integration. Horizontal integration is the strategy to increase the market share and revenue and this is done by acquiring the competitors. For example if Thomas Cook acquires a low cost airline. Mergers of two organizations also come under horizontal integration strategy. Merger of TAJ Hotels with four Season hotels will be another example of horizontal integration.
Major reason behind integration strategy is to reduce the cost or to achieve competitive advantage but there are some other implications of integration in hospitality industry which will be discussed in detailed in this task. It has some benefits and some challenges also. Implementing integration strategy lots of resources such as manpower, finance, time etc. R & D is required before implementing and planning of integration strategy. One small mistake can lead to failure of the strategy and hence it might lead to monetary loss an also employees might lose the confidence in the organization. Brand image also gets destroyed. Most important challenge is to which brand name to use after merger. For example if Four Seasons and TAJ Hotels are merging and both the organizations have their own brand name and value. Each organization has its own customer base. Both the organizations have different positioning strategies. Hence this decision needs to be taken very carefully keeping customer’s emotional attachment with the organization (Ogbonna, 2002). Wrong decision will lead to loss of market share and loyal customer base to the competitors.
Integration leads to creating monopoly in the market. It becomes difficult for smaller players to survive in the market. By acquiring the suppliers cost can be reduced and hence organization will be able to provide at lesser prices. It will attract more customers from the competitors in the market and hence market share of smaller players will reduce. It is not just price even service provided by the organization also gets improved. Organization can expand to various new locations. It might lead smaller players to quit the industry. Another major challenge is to deal with the human resources. Employees from two different organizations come together. It might lead to problems like discrimination. It becomes a challenge for the employees to get adjusted in new organization structure and culture. Organization can develop more competencies. If one organization is famous for its delicacies and another one is for its service and in case of merger organization will be known for both the things and it will provide competitive advantage in the market. Employees will get better growth opportunities with the expansion of the organization. More responsibilities will lead to better salary hikes and perks. Other partners like marketing agencies etc. will also be benefitted with the integration strategy of an organization in hospitality industry.
There is huge impact of integration on any sector and especially in case of hospitality industry where complete control can be taken on customer satisfaction. It has several benefits. It reduces the cost and time of both customers and the organization. Organization can manufacture the raw material itself it does not have to give extra margin to the suppliers. Raw material can be produced at lower cost as compared to buying it. It also saves time and money of customers as customer can book his entire trip from one organization. Travel, restaurants, sight-seeing etc. will be provided by one organization under one package which will be of cheaper price as compared to buying each service differently (Garces, 2004). Core competencies of both the organizations get merged and new organization with more core competencies arise. If the organization, which will be acquired, has excellent gaming or sports facilities after integration this facility will also be added in the services provided by the organization. Economies of scale and economies of scope can be achieved by implementing integration strategy in hospitality industry. Raw materials will be produced at lesser price and hence services can be provided to the customers at cheaper price. It will help in increasing market share and revenue of the organization. Profit margins will also increase with the reduction in cost price. Organization will have an opportunity to expand its business in new countries. Products and services offered by the organization can also be increased as new organization will have more skilled employees and competencies to handle bigger responsibilities. Brand image of name can also be revived by integrating with any of the repute organizations. Synergy between the operations can also be created by implementing integration strategy in hospitality sector.
Hospitality and travel and tourism sector are major service sectors and they are interdependent. Hospitality industry is like a supplier to travel and tourism industry. There is huge potential in these businesses. Vertical and horizontal are the two main integration strategies which we discussed considering hospitality industry. Human resource department also plays a very important role in customer and employee satisfaction in service sector. Thomas Cook and Four Seasons were the two selected organizations which were discussed in the report to understand various hospitality provisions in travel and tourism sector. Business plan was also discussed in this sector.
Baum, T., Amoah, V., &Spivack, S. 1997. Policy dimensions of human resource management in the tourism and hospitality industries. International Journal of Contemporary Hospitality Management, 9(5/6), 221-229.
Garces, S. A., Gorgemans, S., Mart??nezSánchez, A., & Pérez Pérez, M. 2004. Implications of the Internet—an analysis of the Aragonese hospitality industry, 2002. Tourism Management, 25(5), 603-613.
Huselid, M. A. 1995. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of management journal, 38(3), 635-672.
Lavery, P. 1996. Travel and tourism (No. Ed. 3). Elm Publications.
Nash, E. P. 2005. Four Seasons Hotel. Manhattan Skyscrapers, 167-168.
Ogbonna, E., & Harris, L. C. 2002. Managing organisational culture: Insights from the hospitality industry. Human Resource Management Journal, 12(1), 33-53.
Powers, T., & Barrows, C. W. 1999. Introduction to the hospitality industry (No. Ed. 4). John Wiley and Sons.
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