Contemporary Hospitality Industry: Types of Business, Operational Departments, and Impact on Economies

This document provides an overview of the contemporary hospitality industry, including the different types of businesses and operational departments. It explores the industry's contribution to local, national, and international economies and analyzes the PESTLE factors affecting the development of companies within the hospitality sector.

Contemporary
Hospitality Industry

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1:Different types of business within hospitality industry in order to diversify product and
services........................................................................................................................................3
2: Range of operational and functional department....................................................................4
TASK 2............................................................................................................................................5
The contribution of the hospitality industry to local, national and international economies......5
Global growth, franchising and licensing developments have contributed to the economic
worth of the hospitality industry.................................................................................................7
A range of different operational roles within the hospitality industry .......................................7
Skills gaps within the hospitality industry in relation to a range of different operational roles. 9
TASK 3..........................................................................................................................................11
P6: Analyse PESTLE factors affecting the development of company within hospitality sector
...................................................................................................................................................11
P7: SWOT analyse for hospitality business that helps in decision making..............................13
TASK 4..........................................................................................................................................14
P8: Existing and potential trend in hospitality industry............................................................14
CONCLUSION..............................................................................................................................14

INTRODUCTION
Hospitality industry emphasize on meeting the requirement of traveller by providing
them quality services and making their stay worthy. Such industry basically emphasize on three
areas such as accommodation which include hotel and motels facility, food and beverages as
well as travel and tourism. It simply satisfy the requirement of customer by providing them
various amenities based on their preferences and purchasing power. For the better understanding
of report InterContinental Hotels has been selected which is multinational hospitality company
whose headquarter is in England. There are several division of the hotel such as Holiday Inn and
Staybridge Suites that look after the travelling and accommodation of their guest to make their
stay worthy. This report cover following topic such as current structure, scope as well as size of
hospitality industry. Examine the existing and anticipated requirement of hospitality industry.
Moreover, determine the internal as well as external factor that impact the hospitality industry.
Furthermore, analyse current and potential trend that affect hospitality industry are covered in
this report.
TASK 1
1:Different types of business within hospitality industry in order to diversify product and
services
INTRODUCTION
Hospitality helps in the growth and development of business by providing diverse
business to the customer. It helps in increases the GDP rate and per capital income of an
economy. This help the country to generate business as well as product and services to the
worldwide traveller.
Hotels and accommodation facility: Hotels and accommodation are the base of
hospitality industry that provide peace and satisfaction to the consumer. In reference to
InterContinental Hotel Group offer various facility to the guest like full room services, lodging,
entertainment area, food services and so on. Additionally, as the hotel has vast division due to
which it cater the demand of various audience based on the interest area and purchasing power of
customer.
Night club: Along with the similar type of services respective hotels also provide the
services related to recreational and entertainment where large pool of audience come to dance

and enjoy the stage shows in order to make their trip memorable. Thus, it an unique practice
basically design to refresh and relax the customer.
Restaurant and cafe: Other than hotel and resorts IHG hotel have the restaurant facility
which basically include dining area, buffet system and provide food and beverages services to
fulfil the expectation of customer.
CONCLUSION
Hence, hospitality industry provide various range of services such as entertainment, hotel
and dining area to satisfy the existing customer as well as attract the potential guest. Thus, it
generate huge revenue for the hospitality sector by converting potential customer into the end
consumer.
2: Range of operational and functional department
INTRODUCTION
The essential department of hospitality industry are operational as well as functional
department. These two department plays a vital role to identify and analyse the services which
are being delivered to the ultimate consumer. As hospitality industry is purely based on services
so the company needs to effectively as well as efficient deliver the service to the customer.
Within IHG hotel the services are further classified into two division that is front house and back
house department.
Front house department: Within IHG front house deals with the customer they are
basically the face of company which represent the services delivered by company. It include the
role of front desk that makes the booking and handle the queries of customer. Along with that it
include house keeping department that involve in cleaning activity and help in fulfilling the
needs of customer. Other than this it include marketing department that are involved in group,
catering and transient sales. Moreover, restaurant department is also the part of functional
department that include room services, banquet hall and lounges.
Back house department: Their role is not to deal with customer unlike front office so it
include heads like HR and finance department. They basically strengthen the operations of
business like the HR manager is responsible to hire and train the employee. This helps them to
keep motivated and significantly handle the customer grievances. Further, engineering
department design the infrastructure of company by providing adequate space to the hotel
representative and customer. Thus, accounting department is responsible to maintain all the

business transaction and helps the business to look for various sources in order to expand the
business investment.
CONCLUSION
Therefore, within hospitality department functional and operation department includes
two division that is front house and back house department. These department helps the business
to mange the interest of their guest and make effective plan in order to flourish the business.
TASK 2
The contribution of the hospitality industry to local, national and international economies
Hospitality industry include wide range of traveller which operate in all types of market
whether it is local, national and international. It enhances the GDP rate that directly impact in the
growth of overall economy. Thus, it make significant contribution to the local, national and
international economies which is stated below:
Local Economy: As IHG hotel operate in multiple country due to which it provide
employment opportunity to the local resident. Along with that it makes essential effort to
preserve the culture and tradition of local market. This attract the interest of tourism which helps
in generating revenue and enhance the infrastructure of local economy.
National economy: Within national economy hospitality sector offer multiple services
like hotel, restaurant and travelling facility within different places of national boundary. It makes
contribution to enrich overall economy by increasing the national income of country.
International economy: Here hospitality sector diversify their business across their
national boundaries in order to expand the market share of company. Thus, it include
transportation as well as accommodation services where hospitality sector takes care of the need
of an individual.

Review the interrelationships of the operational and functional units
The operation as well as functional unit of IHG hotel are highly interdependent on one
another. Like in the back house department the function department includes human resource
department. The essential role of this department is to train and develop the staff of front house
operation department like housekeeping staff. This help the company to main the relation
between company and client. Along with that accounting function is an essential part of back
office that design the budget which need to be followed by all the staff include front office. Thus,
coordination among these department helps them to share all necessary detail that helps in
increasing the demand and maintain the coordination to function smoothly.
Use of franchising and licensing agreements has influenced the global development of the
hospitality industry
Franchising: It includes the role of franchisor and franchisee where the owner of
business or franchisor gives the right to franchisee that is affiliated dealer to distribute the
product and services in order to expand the business reach. Herein, IHG hotel can successfully
utilised this strategy to enhance and strengthen their hotel chain in both national and international
economy.
Licensing agreements: It include the deal between the owner of product who has the
patent and trade mark over the product and the licensee which is the other party that have

permission to use the product. Such agreement can help IHG company to get the advantage of
global development which flourishes the business.
Global growth, franchising and licensing developments have contributed to the economic worth
of the hospitality industry
Global growth: Global growth helps the economy to enhance the employment rate
which increases the purchasing power and disposable income of the people within an economy.
As hospitality industry itself generate huge revenue which helps to resolve the societal issue due
to which even the local authority promote this sector.
Franchising: It helps the firm to deliver similar type of services across national boundary
which generate huge revenue and productivity for company. Along with that it helps to maintain
the culture and tradition of various places by delivering high quality product to the consumer.
Licensing: Within this the rights are exchanged among the various parties that helps to
serve the society by covering the satisfaction level of people successfully. It basically helps the
business to overcome complexity.
A range of different operational roles within the hospitality industry
Front desk department: It is a part of operation function that communication with
customers regarding their reservation, identity card and resolve their queries immediately.

Human resource management: The HRD is responsible to conduct the recruitment
cycle where right person is selected for the vacant place. Along with that they motivate the staff
to perform the task with full efficiency.
The skills required for roles within the hospitality industry and current skills are shortages
Communication skills: Effective communication skill helps to conduct smooth
interaction among the internal and external department. Within hospitality sector employees who
are the part of front house department needs to have fluency and courtesy in their tone to deliver
the message successfully.
Management skills: Management skill helps to perform the business effectively due to
which front desk needs to posses certain quality like technical skill, problem solving and time
management. This helps in scheduling the task, monitor the performance and priority of an
employee and managing their task significantly.
Language skills: Hospitality industry such as IHG which operate in various country
should be familiar with the regional language. For this the hotel hire the localities as it helps in
maintaining the better interaction and understanding among various function.

Thus, hospitality sector needs to utilise this skill in order to overcome the changes that
causes because of changing trend and latest technology. Thus, utilisation of adequate skill helps
the company to gain competitive advantage over the competitor.
Skills gaps within the hospitality industry in relation to a range of different operational roles
Due to globalisation and adoption of latest technology IHG hotel can experience the gap
that arises while the time of training and preparing the employee to use advance technology.
Thus, the employee needs to enhance their capability which is time taking. Further, HRD
department may revive negative influence of people such as internal conflict or chaos for which
they influence them by explaining the negative consequence of not adoption the changes. Along
with that it may not possible for the hotel to adopt the technology because it involves huge
expenditure. Usually these gaps exist for short period of time.

Impact that skills gaps have on hospitality businesses and make valid solutions for addressing
these skills gaps
Skills refer to the knowledge or capability of an individual that helps the business to
achieve its objective. So InterContinental Hotels Group must make significant effort to avoid
these gap by providing training session to existing and new staff. This help to reduce the gap and
internal team remains competitive to accept the changes without any resistance. Along with that
positive reinforcement technique helps the staff to remain encourage and achieve the task
successfully.
Thus, business must consciously monitor the performance of employee and provide them
constructive feedback in order to minimise the chances of gap.

TASK 3
P6: Analyse PESTLE factors affecting the development of company within hospitality sector
Political factor: Political factor include the intervention or interference of a government
in hospitality industry that leads to political stability or instability, determination of various
policy such as tax policy and so on. It is essential for IHG hotel to consider this factor as other
than develop country it has presence in an emerging economy like Asian market as well where
the market regulation keeps on changing. Moreover, company most of the profitability o0f
company is generated from western market where company has to pay low taxation and gets
benefited from stable economy.
Economic factor: It include economic cycle, interest rate as well as demand and supply
of goods and services within an economy. Thus, IHG company evaluate economic factor and
according they make the decision regarding their existence or operations of business. Within UK,
the skill level of manpower is moderate to high so it is an opportunity for the business to enhance
the skill of their workforce in order to leverage the profitability. Along with that with western
area respective hotel usually bear stable demand because of high disposable income of consumer.
This helps the firm to maintain the liquidity and this fund is basically utilised for the expansion
of business.
Social factor: Social factor include the belief, attitude and culture of the country that
plays significant role for the company to understand the customer as well as market in which
they have to run their industry. As with the change in trend people are more prone to use social
media or online platform to get their all the booking and make the comparison amongst various
hotel. So the strong presence of IHG hotel can help the hotel to enhance its profitability and
productivity. Moreover, people nowadays are more prone to go for outings and explore new

places this represent that hotel must access all the advantage successfully for the expansion of
industry.
Technology factor: Adoption of innovation and new trend helps in simplifying the ways
to perform the task. The selected hotel adopts the latest innovation that helps them to gain the
deep insight like where they have to head forward. Along with that it helps in eliminating the
waiting time of customer as everything is processed rapidly that save service cost as well.
Therefore, company not only maintain their technology but also invest in research and
development to select the updated technology that helps them to remain ahead of their
competitor.
Legal factor: Legal factor include the laws which are made by local authority and needs
to be abide by company. IHG hotel follows all the norm of different country successfully like
they provide their staff safe place to work. Along with that company provide fair remuneration
based on their roles and responsibility. This help the company to retain their staff and does not
include the interference of government.
Environment factor: It is essential for the business to retain the interest of external
factor such as climate society and employee to in order to achieve sustainable development.
Herein, IHG hotel manage their waste successfully by designing the policy which are favourable
for environment. This helps in maintain the goodwill of company in-front of public.

P7: SWOT analyse for hospitality business that helps in decision making
Strength
 The IHG hotel experience huge brand
awareness because of their wide
geographical presence like it has
presence over 90 countries such as UK,
US, India, Russia and so on. This help
the company to gain the advantage of
economies and scale and leverage their
profit successfully.
 IHG company has gained huge brand
loyalty because they offer them unique
services and helps the customer to
make best affordable plan. Along with
that hotel offer the reward card to the
traveller which helps them to build
long term relationship.
Weakness
 There were around one thousand IGH
hotels whose privacy got breached
because of weak IT security due to
which all the essential data such as
customer's address, card number were
got stolen.
 There are many customer who posted
negative review about the company
based on the reward point. As they
claimed that they didn't not get the
promised point which hampered their
bond.
Opportunity
 IHG hotel can form strategic alliance
like they did with Holiday Inn which
helps the company to expand its reach.
 With the help of advancement in
technology and digitation company can
make effort to engage the traffic via
online platform through various
sources.
Threat
 Company gets affected by the strategy
set by their tough competitor such as
Marriott, Hilton etc.
 With the huge interdependency of
company on their intermediaries can
lead to delay in delivering services.

TASK 4
P8: Existing and potential trend in hospitality industry
Existing trend within hospitality industry: In this current scenario hospitality industry is
covering huge guest or traveller which is generating effective revenue for the company. At time
company has to experience fierce competition due to which customer gets availability of
competitive substitute. Moreover, it generate huge foreign exchange for company as it has come
the trend to explore new places and go on adventure trip, these type of trip is designed for
different segment including business class, youth and family and according hospitality industry
cater the requirement of traveller. Thus, government maker favourable policy and support this
industry by maintaining the security within the country in order to get tremendous growth. This
sector is more keen to adopt innovation like use of solar panel that minimises the use of
electricity to save the natural resources. Further, it offer various amenities to the traveller like
gym area, conference room, healthy food options, room services and so on which make the
traveller fell satisfied.
Potential trend: Being one of the largest growing sector there is a huge potential for the
industry to grow and expand within national and international market. One of the foremost
leading potential trend is constant advancement of technology this helps the business to render
best quality art the fair prices that help to maintain long term relationship and loyalty of
customer. Along with that digitalisation helps the industry to act as a stimulus that helps
consumer to take quick decision. Thus, the digital trend is constantly expanding in order to offer
unique services. Therefore, these practices help the industry to successfully expand its business.
CONCLUSION
From the above report it has been determine that hospitality industry is an essential part
of the economy that helps in generating the huge revenue as it is one of the fastest growing
sectors. It include different type of services offered to the consumer like hotel and restaurant
facility that helps to maintain their stay worthy. There are various department of the industry that
play their own responsibility but function in order to achieve long term success or growth
opportunity. It provide its contribution to local as well as global economy by enhancing the skill
of people requirement to be the part of industry. Furthermore, there are various external and

internal factor that helps the business to make effective decision and assist to make potential
effort in order to anticipate the demand of traveller.