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Unit 12 Hospitality Provision in Travel and Tourism Sector Assignment
Hospitality industry is fastest growing industry People are travelling to enjoy holiday, attend business meetings, events and sports. Hospitality industry is providing transportation, accommodation, food, other facility to relax their customers. TUI Group is also maintaining quality of packages to gain competitive advantage. TUI Group is integration between travel agency, hotel, airlines, retail stores and ships. It controls over 1800 travel agency and 300 hotels and resort. TUI is one of the leading travel organisations with presence over 180 countries. They commit to provide perfect travel experience with world class hotels, resort, airlines etc. The present study will explain relationship between hospitality and travel &tourism business. In the next session, report will elaborate implication of integration and affect on hospitality business. The last session, will develop a plan of hospitality based project.
1.1 Role and interrelationships between Hospitality and Tours and travel industry
In the growth of Hospitality industry, tourism plays a vital role in it. The hospitality industry comes under the service industry. The hospitality industry is a broad category of fields. It includes event planning, theme parks, transportation, and much more within the tourism industry. Accommodations in the 3-5 star hotels with the facilities such as bar, pub, night parties, etc are been provided by these hospitality industries. These facilities help them to retain their customers (Chen.et.al.2013). The hospitality industry is a multibillion-dollar industry which also provides employment to mass people. The organisation has different form of culture and values which help them to retain their employees.
Hotel, restaurant, or an amusement park forms the hospitality unit. Various services such as pub, parks, theme parties, dinner, disco, etc are being provided at a valuable price which helps them in attracting their potential customers and also they please their customers to visit again. The tourism industry also offers different reasonable travel packages according to the budget of the customers. Travel industry and the hotel industry both these sectors are interlinked with each other. Like for an example, the group wants to have a tour at various geographical areas. For this they contact the particular tours and travel company of UK organisation which serves them the best package with all proper facilities such as of accommodation, food, and all quality services. These accommodation and food is provided with the help of hotels (Law.et.al.2015). Thus, without hotel the tour cannot be possible and it is concluded that the travel industry and hotel industry are interlinked.
TUI Travel Plc is among the leading organisation in the tourism business. It was formed in 3rd September 2007 by the merger of First Choice Holidays PLC and the Tourism Divisions of TUI AG. Its headquarters is situated in Crawley, West Sussex, UK. The business of TUI group is leading with 1800 travel agencies and online portals, six airlines, 3000 hotels and in all major holiday destinations around the globe. It is a public limited company with 76000 employees working around in 180 countries. It has given its service to approx 30 million customers, served with all quality based services and at a finest budget.
TUI is a leading company in the international platform with the revenue of £15,051 million as on 2013. In 2008, TUI Plc merged with the airline companies and the new business was carried out with the new name as the “First choice Airlines” to enhance its services. It also carried out a joint venture with the hospitality company (TUI Group, 2016). The plan of the company is designed according to the timetable of the customers which leads to high quality services. TUI offers variety of services and offers like for example on food, transport, travel packages, accommodation, etc which helps in attracting more and more customers to it which facilitates in increasing the growth of the company.
Intercontinental Hotel Group is one of the biggest accommodation service provider organizations in UK. The organization operates business in various countries by satisfying the demand of the customers. Business has more than 7000 employees and yearly revenue is more than $1,803 in the year 2015. IHG belongs to hospitality industry which provides various services to its clients like accommodation, food and beverages, bars, night clubs etc.
IHG provides catering facilities to the clients by taking contracts and provide quality food to the customers. Intercontinental Hotel Group operates business in more than 80 countries with 4602 hotels in which 700 hotels are managed by the IHG itself and rest of hotels are franchise owned. In order to increase the customers base IHG create the contract with various travel company in different country in order to fulfil the demand of the customers at reasonable rates (IHG Group, 2016). Business wants to achieve more revenue organization provides various additional services to the customers like rental car facilities, transportation, airline facilities etc.
IHG provides quality environment to the clients by which they feel like home and want to visit again. Organization provides economic budgetary services to the clients that suit their budget and motivate them to come back. Business classified the services into plans that categorized according to the budget of customers like 3 star, 5 star and 7 star hotels which is suitable for the customer to choose the hotel. The major policy of the business is to focus on the satisfaction of the customers by providing quality services to them. Organization is keen to attain the goals by satisfying the demand of the customers.
The above mentioned businesses are interrelated with each other in their services. Both of them have similar customer base which is dependent on the services of both the organization. TUI Group designs the package by considering the services of IHG whereas IHG depends on the clients of TUI Group. Both the organizations have strong connection in term of services in the absence of one organization another business will not be able to fulfil the demand of the customers (Mok.et.al.2013). Intercontinental Hotel Group and TUI Group have to draw an agreement to i which they have to merge their resources to provide quality services to their clients. The merger assists them to increase the revenue and creates the strong customer base.
TUI is offering pre booking in hotels and transportation facility to the customer on the other hand IHG is offering accommodation, food and beverages, quality services to the customers when both the business merge the services then customer will feel the quality services and enthusiastic to come back (Xiang.et.al.2015). Through this study it can be identified that both the organization are interdependent on their services and to meet the demand of customers organization should merge the services.
2.1 Analyse the implications of integration to the hospitality industry
Integration helps industry to work together by sharing their customers and resources. Hospitality industry manages integration of resources by horizontal and vertical integration. Its implication has been seen in hospitality industry like companies are closer to enhance their business and satisfy their customers. They are making their common goals. They are using latest tools and technology for proper coordination (Campos-Soria.et.al.2011).
TUI group also integrated with multiple hotels and airline organisation. It customizes architecture of TUI in order to combine existing resources. It would result business expansion and effective use of existing resources. TUI Group is integrated with other organisation in two different ways:
When an organisation buys its supplier or buys another company in distribution chain, it is known as Vertical Integration. This implication results in lowering cost and maximize profit gain. For Example- TUI group belongs to travel and tourism industry. It has complete control on distribution chain. For this purpose, they train people from inside rather than employing from outside. TUI wants to provide services at all the places and also wants to maintain standard of services same at each place. It cannot accept anything that harms its reputation. For Example- TUI Group start its services in other city (Fantazy.et.al.2010). The power of brand would attract people towards it. But the organisation makes sure people feel and experience same service in other branch of TUI.
Vertical integration of process in which TUI group enters a merger agreement with another organisation that comes in distribution chain. By doing this, both of them would get competitive advantage. Integration enables TUI to differentiate its services from competitors. Proper integration would result improvement in market shares and profitability (Campos-Soria.et.al.2011). Vertical integration is also lowering down the cost of activities that need to perform by TUI. It merges with Hotel Magic life also. It would enhance quality of services after vertical integration.
TUI and Magic Life are bind to generate high quality of services to customer. It would attract more and more people towards it. Therefore, it also improve brand image of both the organisation. Now Magic Life is also known as TUI Magic Life after vertical integration. After this type of integration, both the organisations are considered as single unit and they set their objectives by considering both of them. The integration cannot be successful without development and use of latest technical tools at work place (Kim and Jogaratnam, 2010). Technology up gradation improves supply chain management.
TUI management is responsible to monitor and control activities and coordination of services. According to market research TUI is entering in new market segment due to vertical integration. Here different barriers are present that can affect its image. Such barriers are developing new market strategy, customer expectation, competition and analyse market. Proper control on operations is the only solutions to make successful integration.
Horizontal integration means two organisations integrate to make bigger organisation. Then they are identical in products and services. Output of horizontal integration is to develop a new organisation which is a combination of two organisations. For Example- TUI group was merged with First Choice Airways to make bigger organisation. It is a way to expand business and increase revenue. The main objective is to raise productivity and gain competitive advantage. For example, TUI can horizontally integrate with Edward House Hotel, UK. It would improve accommodation and service function (Hertog.et.al.2012). It is beneficial for both TUI and Edward House Hotel. TUI will enable to provide accommodation services in Edward also due to horizontal integration.
TUI is focussing on global expansion of their business. For this reason, horizontal integration is best to improve capability and resources. Several outcomes are found by horizontal integration like work efficiency at different places is improved. In case of TUI, horizontal integration is developing brand name and image across different countries. Due to Globalization, it would generate more revenue as International tourism brings more revenue. Further, it has been noticed that integration also conflict interest of organisation. As each organisation has its own vision and mission (Hertog.et.al.2012). Therefore, conflicts may occur at the time decision making.
2.2 Discuss how integration has affected a hospitality business
It combine the core competency of two organisation would highly attract customers. Integration makes competitive advantage for organisation. It focuses on utilization of resources, set competitive prices and technology factors. The following points elaborate the impact of integration on TUI Group:
- Cost integration: Horizontal and vertical integration are allowing organisation to spend high volume of money for their business. It expands investment of technologies in order to provide better quality of services. The organisations are mutually set prices of packages mainly include holiday package (Tsai.et.al.2010). For Example- TUI purchases Magic Life which causes high investment on business. It has been cleared that cost integration affect hospitality business.
- Technology: Technology integration also affects hospitality industries. It support organisation to adopt new technology according to market changes. Latest technical tools are helpful to speed up the operations of TUI. It provides easy way to contact with end users. The most important impact is better coordination between organisations. Integrated organisations are located at different locations. Therefore, technical tools are the best way to coordinate activity and improve speed of decision making. It improves efficiency and innovative ideas take place rapidly.
- Lack of knowledge: TUI travel is integrated horizontally and vertically. After integration, TUI is entering in new market segment. Therefore, many changes took place like new market strategies were developed. The employees of TUI were facing complication in handling new consumers. They have to find target customers that were interested in packages. Management of TUI also provide training for better communication with consumer in order to influence them to buy packages (CG Davidson.et.al.2011). But lack of knowledge would make unsuccessful integration and fail the merging process.
- Globalization: TUI integrate with different organisations but due to lack to knowledge of globalization factors like culture, rules and regulation, terms and condition, it may face operational difficulties. It may also happen that TUI faces difficulties to make global policies. It is big challenge to make accommodation package for people who come from different culture and country (McCarthy.et.al.2010). Their expectation should be fulfil like food.
- Quality: Integration also affects the quality of services either in negative or positive way. There is no guarantee about improvement of quality after merger. Quality depends on human resources of both the organisation. Mutual relationship and coordination on work are the most important key concept to enhance quality.
In vertical integrity, it has been analysed that workers are not able to understand new strategies. It could lead to operational difficulties and dissatisfaction among employees. For Example- human resources may not accept culture and working style of another organisation. It would result unbalancing and improper communication. Therefore, all such thing would lower down the standard of qualities offer by organisation after integration (Law.et.al.2014).
3.1 Rationale for project
Taste King is planning to enter into the food and beverages business as organization analysed the opportunities of growth and benefits with this industry. Management evaluated that increasing income and economic potential is encouraging people to spend more on foods and beverages. Thus, Taste King is planning to set a standard in food and beverage restaurant to fulfil the requirements of customers seeking for different and unique tastes in food products. Customers are looking for quality products rather than to focus only on price. By considering that, Taste King Restaurant decided to set primary focus on upper-middle class people those are spending their capital towards luxury life style. Taste King is considering upper-middle class to acquire more benefits and market values with the up growing phase of industry (Walker, 2007).
Taste King has taken London as the city for inauguration of new restaurant because upper-class people and visitors from different countries come here to spend leisure and quality time. Taste King Restaurant is offering products enrich of taste and quality to add more fun in foods and beverages. For that, management of restaurant is promoting the business using advertisements on social places and websites. Marketing strategy of Taste King to reach more customers is simple to apply as restaurant is making use of sponsorship programs and offering discount on products (Chathoth and Olsen, 2007). This is necessary to acquire the attention of customers and to make them aware with services provided by Taste King Restaurant.
Marketing strategy of Taste King Organization will play an important role to establish reputation and position in food industry. In order to acquire the high position, Taste King is using all kind of approaches that can lead to more inflow of customers and their satisfactions. Organization is looking to offer more values and benefits in comparison of opponents to draw the interest of customers and influencing the decision power of customers. Excellent and attractive services of Taste King will help to transform one time customer into regular or loyal ones. Organization will try leaving the footprints of impression in its customised and featured food and beverage services.
Apart from all that, management at Taste King is considering the needs of all type of customers and thus providing vast varieties in Asian, Chinese and continental foods. Restaurant will use modern approaches in design and facilitates as well the additional services to attract the customers (Ryu and Han, 2011). Besides the customer’s satisfaction, Taste King is also considering the organizational opportunities in food and beverage industry. Hence, stable economic conditions and high demands of product are at core to start with new restaurant in London.
3.2 Plan for operational and human resource allocation
Taste King considers human resources as the most valuable asset behind the growth and development. Organization needs the human resource to manage the business and quality in products. For that, management will make a robust strategy to recruit skilled and experience candidates those are required to allocate work properly and serve the good quality products to customers with minimum response time.
Stage 1: Development
Taste King’s management will follow a well planned approach to recruit and allocate human resources in business. Customers’ satisfaction as well as organizational growth is at major focus behind the entry in food and beverage restaurants. Taste King is recruiting the skilled and experienced candidate to offer the unique and excellent taste in products. Responsible staff is built to serve the customers quickly and easily. Organization is thinking to expand a large chain of food restaurants in London and international market.
These objectives are not so easy to achieve without the help of highly skilled and experienced employees in developing and delivery of hygienic and healthy food and beverages. Moreover, effort is being directed to reduce the cost of products without compromising quality standards which is required to take competitive advantages (Hyun, 2009). For that, management is including the practises suggested by experts to make the processing simple and less effort demanding. Management is analysing the expectations and demands of customers to make the products and services more acceptable at the end.
Organization is also focusing on the trends in market to promote the business and customer relations. Taste King is using internet and social websites as the platform to introduce products and services, to book and review orders and to know customers’ expectation with organization. This is necessary to draw the attention of online customers as a simple and effective manner to purchase things. Taste King is also focusing on the presentation of products. Rather than good quality, a product may not gain the attention of customers due to the lack of impressive presentation.
Management of Taste King analyses the market trends and customer experience with their products to improve the packaging and delivery of products. Taste King planned to use paper as the packaging material to make the packaging economic and eco-friendly. This will be effective to gain customers’ attention towards the new idea of packaging. Presentation plays an important role to divert the decisions of customers (O’neill and Mattila, 2006). Initially, organization is offering the best quality with less profit to make the space in market. Organization is making strategies to simplify the cost and approach to reach customers.
London is taken as the initial market where Taste King will offer services and products to local or visitor people. Also the online promotions are in practice to make the brand internal. Organization is collecting secondary data from the customers from the local market and international visitors to increase the acceptance of products. Addition to it, organization is making the functionality of organization legal. Governmental laws and agreements are determined to implement in restaurant services and productions. High featured infra structure and interior services are used to attract the customers. Organization is planning to provide extra benefits and discount for the returning customers (Namkung and Jang, 2008). This is helpful to create good brand image and market impression.
Stage 2: Design
Design defines the outlook of an organization. Thus, impressive design of interior and exterior side of restaurants and pubs is helpful to attract customers. Several factors affect the development of food business which needs to be considered to eliminate the risk of failures or downtime. Some of them are discussed below.
- Ambience: According to current trends, management of Taste King should provide highly decorated and luxury ambience looks in order to divert the customers’ decisions for accommodation. Management needs to apply simple decorative and multicolour lights for ambience purpose as in trends. Interior can be designed as found in western-classics- simple and luxury which will be helpful to manage standard of services offered by Taste King.
- Culture: Culture is the identification of restaurants and pubs. Management needs to put efforts toward the development of good culture. Representative of restaurants like waiters, managers and other staff can be trained to behave professionally. Also culture of restaurant can be maintained as seen in UK so that customers from outside London can enjoy the UK culture during their visits (Baraban and Durocher, 2010).
- Interior and Exteriors: Exterior design is helpful to convert the visitors into customers whereas interior is helpful to transform customers into regular customers. Interior as well as exterior design of restaurant should be furnished very well so that standard can be used to attract the customers. For this purpose, Taste King is planning to add glasses, lights and garden at outlook and innovative furniture and design pattern at inside. Also, colourful walls, fabrics and frames will be placed to make the look fantastic.
- Functional Areas: Taste King will focus on functionality to make it easy to interact with customers. Online booking and payment services are the part of modern delivery system that will be used by Taste King to enhance the functionality of restaurant. Within workplace, Taste King is making services responsible as according to the customer request (Ryu.et.al.2008). Time and communication regarding services will be considered at top to deliver more satisfaction to customers.
- Sustainability: Taste King should introduce offers for new and existing customers in order to sustain a well position in market. Sustainability is considered as the most flexible factor of food industry so that Taste King will consider the market conditions to conqueror the sustainability issues.
Stage 3: Operations
Operation phase of the restaurant is dedicated to apply the development and design part of planning. Operations of Taste King will affect the result in restaurant. With better operational strategies more productivity can be achieved. Some of the factors are discussed that have great impact on the effective and smooth working in restaurants.
- Recruitment: Recruitment process is necessary to hire skilled and experienced candidates those can deliver their best effort towards the organizational goal. Taste King Restaurant will analyse the number of candidate required to manage the restaurant functionality. Also, individual’s capability will be considered to allocate the task. For recruitment, Taste King can design own recruitment process or can outsource the objective to save time.
- Staffing: Staffing is necessary for Taste King to decide the job profile that will be carried out by selected candidates. Proper training and workshops will be organised to enhance the capabilities of employees (Espino-Rodríguez and Taylor, 2006.). Taste King will staff the members on many positions like receptionist, chiefs, cleaners, waiters, manager etc. Staffing will be considered as major part of presentation at customer side communication.
- Cultural Diversity: Taste King will provide a positive working environment to manage the diversity in culture. Employees from different cultures will be treated equally and they will get equal chances to learn and grow. Policies will be created to manage diversity at management level as well as on lower level. Management will consider the equality issues. Mentors will train the staff to work as a unit and teach them work.
- Legislation: Taste King will make the processing of restaurant legal to protect the employee’s rights and conflict with governmental issues and customers. Taste King will clarify the contents in products on packaging as well as will mention the brand registration information. New products will be registered with government agreements (Yuhong, 2008). Also, services will be processed legally so that individual’s information and rights can be protected from being misused and disclose.
Present study concluded that hospitality industry of UK is helping in enhancing the GDP. The report has explained about interrelationship between hospitality and travel & tourism industry. Organisations are sharing customers in order to expand their business. People also get standard quality and flexibility at time of travelling as they get accommodation, food etc in reasonable price. The study has analysed two type of integration i.e. horizontal and vertical with respect to TUI Group. Horizontal integration means two organisations are merger to make bigger organisation. Vertical integration means an organisation purchase other organisation that comes in between services chain. It has been concluded that technology, cost, lack of knowledge, quality are some factor that affect hospitality business. The report has also described a plan to develop a restaurant in London. The study has explained operational requirement and organisational structure related to human resource structure allocation.
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