Contemporary Policy and Practice in Hospitality Management

This report evaluates the impact of third party online hotel booking websites on the hospitality and tourism industry. It also analyses critical issues with IT systems, discounting strategies, and PESTLE analysis of ABC boutique.

Contemporary policy and
practice in hospitality
management

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Popularity of 3rd party booking websites.....................................................................................1
Critical analysis of use of internal IT systems to market and promote the business...................3
Critical analysis of discounting strategies...................................................................................5
Pestle analysis of ABC boutique.................................................................................................6
Critically analyse change management issues with competing with third party players.............7
Critically discuss the client groups..............................................................................................8
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9

Introduction
At present, in the hotel industry, 3rd party booking websites have gained so much
popularity. Different types of hotels including boutique hotels are availing the service of 3rd party
companies because of several reasons. The purpose of this research report is to evaluate the
impact of third party online hotel booking websites on the hospitality and tourism industry. It
states how hotel organizations can exploit and compete with the widespread growth of these
websites. At last the report will end in analysing some of the change management issues
associated with the services.
Popularity of 3rd party booking websites
ABC is a finest 4 star boutique hotel located in Liverpool. The boutique delivers an
exciting and vibrant guest experience to the local community. The hotel also takes the service of
3rd party booking websites such as Expedia and hotel.com. These are the bodies which assists the
customers in doing reservation for them on behalf of the hotels. Customers can compare prices of
different types of hotels on these platforms (Acton, 2012). There could be many reasons why
hotels make use of these services.
More customers – One of the best advantage derived from taking the services of these websites
is the ability to gain more customers. By taking the services the boutique can reach to more
number of customers which can increase its occupancy rates. More occupancy means more
profits for the hotel (Anheiser, 2011). It can increase the reputation of the organization in the
local community. Hence in this manner ABC will be able to reach the target customers.
Ease of use – Consumers tries to make comparisons between several hotels before taking a
particular decision. The busy consumer is expected to pull up comparable hotels in one browser
window despite of searching six different hotel brands. Third party sites facilitates the ease of
price comparison for them. It will encourage loyalty in the customers who are looking for ease of
reservation process (Cazcarro, Hoekstra and Chóliz, 2014).
Price – Another reason why boutiques approach to third party services is the price. Consumers
usually get low prices on these websites. The prices are often less expensive as compared to the
listed price on the hotel website. However it is not a profit making situation for the company but
at least they are getting customers for the business.
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Promotion – Through the third party channels, these boutiques get the chance to promote their
services among the masses. The customers can see each and every information about the
boutique on the websites (Falk, 2011). They promote the name and services of the company and
it came into notice for the customers.
Quick payment – Online booking systems requires customers to make prepayment for the
activities and rentals. In this way company can put the money into its pockets quickly and there
is no need to make a request a deposit or wait for payment on the day of the transaction.
Advantages for the consumers
There could be different reasons behind the popularity of third party websites among the
customers. These can be discussed as follows:
Price - The first and the most obvious benefit is the price. The prices placed on the sites are
comparatively less expensive than the listed price on hotel websites. It is evident that price is the
biggest influencing factor for every customer (Fons, Fierro and y Patiño, 2011). They will
definitely drive towards hotels which are offering them better prices. They can also easily
compare the prices between different options and then take a sound decision
A faster booking process – These platforms also offer a faster booking process. It offers ease and
comfort to the customers. They can easily book their accommodation. The process becomes even
faster in case if the individual is a repeat customers and the website is already having all the
details about them.
Infrastructure – The infrastructure behind sites like Expedia, hotel.com etc, is rock solid. It
means booking and payment process can be seen very reliable (Future trends in the tourism
industry. 2012). These things attracts the customers and make them go towards adopting the
services.
Range of options – Another benefit derived by the customers is the availability of wide range of
products and services. On these websites, they can do various types of comparison on the basis
of price, reviews, facilities, food etc. It helps in making their decision making process more
sound and effective.
Easy availability and accessibility – The third party website services are opened for 24 hours a
day (Blanke and Chiesa, 2013). Customers can access at any point of time and it is very useful in
case of emergencies. They do not have to wait to book a tour or boutique.
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Critical analysis of use of internal IT systems to market and promote the business
Apart from having many advantages from the use of IT systems, the boutique also suffers
from many drawbacks. These are as follows:
 Expensive installation – The installation of IT system can be very expensive as they tend
to be custom made. The website must contain the user friendly features which can offer
comfort and relaxation to the customers (Cuccia and Rizzo, 2011). The installation is not
easy as lot of research and development work is needed on it. For a small boutique it may
be difficult to adopt the IT systems into the business.
 Need of internet access – If the boutique is running its operations in the remote areas
where there is no availability of the internet, then it may create many disturbances. There
is a need of reliable internet access so that reservation status can be checked. Till date
there are many areas where internet is not available for the local communities. It is also
evident that without internet life is considered dead for the humans (Hall, 2011). It may
create lack of knowledge and information for the customers. Hence this may restrict the
marketing and promotion activities of the company. So constant access to the internet is
needed in case of third party booking services.
 High commission charges – The boutique can also face high commission charges on use
of third party website services. It can be a big drawback as it may affect the financial
position of the hotel. These days the websites charge different types of expenditures for
giving the services (Liu, Tzeng and Lee, 2012). It can be difficult for the hotels to meet
up those expenses. Hence hotels will have to look for websites which charges appropriate
prices and delivers quality services.
 Technical errors – Sometimes technology also comes with many flaws and errors. These
errors can negatively impact the functioning of the websites. The systems are to be highly
reliable. In case if the systems breaks down, then a lot of business can be lost for the
company (Sundbo, Orfila-Sintes and Sørensen, 2007). The technical errors can occur at
any point of time without any estimation. The consequences of the errors can be very
painful and devastating for the business. Apart from that it will also affect the reputation
of the boutique within the market. Hence the systems are to be free from errors and must
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be capable of handling the issues. In case if anything happens, appropriate measures are
to be adopted at immediate point of time.
 Skilled workforce – In order to operate the IT systems for the purpose of promotion and
marketing, there is a requirement of highly skilled and talented manpower. These people
must be skilled enough to fight with the issues which occur during the functioning of
websites (Willis, 2011). However affording such IT guys can be difficult for the boutique
because generally these people are paid high salaries. This may disturb the financial
budget of the business and also act as financial burden. Employees are the assets of the
company and adequate value should be given to them for the contribution they make
towards the business.
 Lack of consistency – Another point of concern for the users is the lack of consistency in
the services. It has been seen that due to technical errors the IT systems loses their
consistency in the delivery of the services. Due to inconsistency customers faces many
inconvenience and discomfort (Tourism today. 2014). It also damages the reputation in
the local community. Hence there is a need to have consistency in what has been offered
as this helps in promoting customer loyalty.
 Dependency – In case of third party services, the boutique will have to remain dependent
on the website for the business. This dependency may create many chaos. High
dependence may also lead to loss of clients from the other sales channels. It may also
affect the quality of the services creating lot of inconvenience for the customers (Impacts
of Tourism. 2014).
 Selection of wrong channel – It is believed that not all the online booking systems are
equal. The use of IT systems can be frustrating if it offers poor customer service or few
features. Hence in this case it is important to do the homework first and select a system
which is long lasting and effective. It must be capable enough to provide great amount of
support (Anheiser, 2011).
 No perks available – When customer book through third party sites, they are not liable to
earn points through the company’s loyalty programs. It is a loss for the consumers as well
as the boutique (Janta, 2011). It is decreasing the loyalty rate for the business. Another
perk for consumer booking direct is the online booking systems that the hotel brands
offer. Consumers are able to establish an account and save their preferences. It makes the
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reservation process easy every time. Hence the boutique is required to advertise this perk
as a method to attract more direct reservations.
 Poor customer service – It has been noticed that more third party website outsourced their
customer service departments. It is a drawback for the hotel itself. In case of third party
online booking, the website acts on the behalf of the hotel, so whatever the wrong
happens will reflect on the image of the hotel (Novelli, 2008). In case one bad service
experience, next time the customer will hesitate to use the service.
Critical analysis of discounting strategies
There can be many discounting strategies used by the companies. These are as follows:
Improving the cash flow – Giving discount is an effective approach to give the buyers an
incentive to pay the company early. For example, if the company has 60 days terms for invoices,
then it might consider offering a two percent discount for the payments received within 30 days
(Rihova, 2010). This gives customers a meaningful financial benefit and it also improves the
revenue management by accelerating the payments.
Solving issues – Different types of issues can be solved by giving the customers the needed
discount. For instance if customers calls in with a complain, for refund etc, then discounting may
be an effective method to resolve the issues and retain a valuable customers
Reducing excess products - Company should focus on avoiding steep discounts. It may be more
advantageous to sell of the stock than to keep the prices high (Falk, 2011). In case if the
company is dealing with seasonal products or perishable items having limited shelf life, then
adopting discounting approach can be effective.
Breaking into new markets and creating loyalty - When boutique expands into new market,
discounting method offer ways to generate interest and encourage buyers to try out the new
product. Discounts are very useful in building the customer loyalty in the target markets.
Time sensitive discounts - Offering time sensitive discounts can also help in speeding up the
sales. For instance discounts can be offered at any point of time (Huang, 2009).
Driving volume – A very common strategy in the business to business market place is to extend
the financial opportunities across the customer various business units. Offering a large volume of
discount is useful in case if the business has a large customer segment. This approach can fill
capacity and increase the purchasing power with the suppliers.
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Addressing a competitive threat - Firms operating in the B2B space make efforts to avoid
discounting. However it creates a possible entry point for the competitors (Stronza, 2009). In
case if other companies are using the approach of lower prices in order to increase the market
share, then organization needs to consider making strategic discounts. It helps in customer
retention and keep the barriers to entry high. Hence it is also an effective discounting strategy for
the business.
Pestle analysis of ABC boutique
 Political – The business of ABC is affected by political factors. The tourism authorities
such as CTH (The Confederation of Tourism and Hospitality), Visit England etc affects
the business practices of ABC boutique. There are some standards and provisions set by
these bodies which are needed to be fulfilled by the companies operating in the industry
(Acton, 2012). It is done to make sure that no inconvenience is caused to the tourists
coming in UK.
 Economic – Factors such as interest rates, inflation, recession etc creates an impact on the
business activities of the company. At present the economic position of UK is stable and
gradually it has recovered from the 2008 recession storm (Cazcarro, Hoekstra and Chóliz,
2014). The slowdown in the economy is causing the travellers to abandon the expensive
hotels chains to save money. It sound good opportunity for boutique hotels like ABC.
 Social - The increasing role of social media also affects the business practices of the
company. The taste and preferences of the customer changes from time to time. Factors
like shifting values in society, changes in family patters etc also affects the business
activities.
 Technological – Increasing integration of internet into various aspects of life can be seen.
Presence of advance booking functionalities put an impact on the existing services. Use
of Information technology systems has become essential because customers have also
become techno-friendly (Fons, Fierro and y Patiño, 2011). The third party booking
websites creates many change management issues for the company.
 Environmental – There is an impact of changes in the weather conditions also on the
ABC boutique. Customers would not like to visit a destination where the environment is
not good. Things like natural calamities, environment pollution highly affects the
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business practices of the ABC. There is a potential damage to the reputation due to
environment pollution (Future trends in the tourism industry. 2012).
 Legal - Any changes in the UK rules and regulations related to the hotel industry can
affect the company. The Food Safety Act and Consumer Protection Act make influence
on the functioning.
Critically analyse change management issues with competing with third party players
Change management is a process of resisting and dealing with the change. There are
many issues related to the change which can be faced by the company while competing with
third party players:
Market dominance – It is evident that at present the market is filled with the presence of many
third party service companies. This has created high level of competition for the boutiques.
Players like Expedia, hotel.com and many others are showing high level of market dominance.
They are regulating the market conditions not giving too much space for the hotels (Cuccia and
Rizzo, 2011). High level of effectiveness of the third party firms are shown on the customers.
Dominance shown by one player is encouraging other players also to come forward and join the
race of competition. These things are establishing many challenges for the hotels and boutiques.
They are not been able to reflect their presence within the market.
Diversion of customers - Due to easy accessibility of services, customers are also taking the help
of third party websites. There are many advantages available to them such better price, faster
booking process, better infrastructure, range of options, user friendly features etc. Hence
customers are preferring to do reservation from the third party despite of going to the hotel
website (Liu, Tzeng and Lee, 2012). This has diverted the customer traffic for the companies. It
is costing them in form of loss of customers.
Government support – In the present context, for the benefit of the customers, government is
encouraging the emergence of different types of third party websites. It is strengthening their
position and giving them high amount of support (Huang, 2009). However it can be a de-
motivating situation for the hotels as it is increasing the level of competition for them.
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Critically discuss the client groups
 Millenniums - These are the demographic cohort following generation X. It refers to the
generation having the birth years ranging from the early 1980s to the early 2000s (Falk,
2011). The third party services are likely to be less availed by this generation because the
economic prospectus for millennials have been declined largely from many authorities.
 Baby boomers - These are the people born during the demographic post world war II.
These lie between the age range of 51 and 70. The third party service are likely to be less
availed by this generation because this kind of people are more of traditional values and
beliefs.
 XY generation – This is more referred to the young generation. It is believed that third
party services are more likely to be used by this generation because they are more techno-
friendly (Rihova, 2010).
Conclusion
From the above study it can be concluded that third party website players have the
potential to show dominance in the market. Gradually their presence in establishing in the
market. Through the third party channels, the boutiques get the chance to promote their services
among the masses. The prices placed on the sites are relatively less expensive than the listed
price on hotel websites. The installation of IT system can be very expensive as they tend to be
custom made. Apart from many advantage there are many disadvantages also in the services of
third party. It is expected that mostly the services will be used by XY generation in the future.
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REFERENCES
Books and journals
Acton, Q. A., 2012. Issues in Hospitality, Travel, and Tourism: 2011 Edition. Scholarly Edition.
Anheiser, H., 2011. Cultures and Globalization: Heritage, Memory and Identity. SAGE
Blanke, J. and Chiesa, T., 2013. The Travel & Tourism Competitiveness Report 2013. In The
World Economic Forum.
Cazcarro, I., Hoekstra, A. Y. and Chóliz, J. S., 2014. The water footprint of tourism in
Spain. Tourism management. 40. pp. 90-101.
Cuccia, T. and Rizzo, I., 2011. Tourism seasonality in cultural destinations: Empirical evidence
from Sicily. Tourism Management, 32(3). pp. 589-595.
Falk, J. 2011. Visitors’ learning for environmental sustainability: Testing short-and long-term
impacts of wildlife tourism experiences using structural equation modeling. Tourism
Management. 32(6).pp. 1243-1252.
Fons, M. V. S., Fierro, J. A. M. and y Patiño, M. G., 2011. Rural tourism: A sustainable
alternative. Applied Energy. 88(2). pp. 551-557.
Hall, C. M., 2011. Consumerism, tourism and voluntary simplicity: We all have to consume, but
do we really have to travel so much to be happy?. Tourism Recreation Research. 36(3).
pp. 298-303.
Huang, G., 2009. Tourism supply chain management: A new research agenda. Tourism
Management, 30(3), 345-358.
Janta, H., 2011. Polish migrant workers in the UK hospitality industry: Profiles, work experience
and methods for accessing employment. International Journal of Contemporary
Hospitality Management. 23( 6). pp.803 – 819.
Liu, C. H., Tzeng, G. H. and Lee, M. H., 2012. Improving tourism policy implementation–The
use of hybrid MCDM models. Tourism Management. 33(2). pp. 413-426.
Novelli, M., 2008. Tourism Development: Growth, Myths, and Inequalities. CABI.
Rihova, I., 2010. The role of heritage tourism in the Shetland Islands. International Journal of
Culture, Tourism and Hospitality Research. 4(2). pp.118 – 129.
Stronza, A., 2009. Collaboration theory and tourism practice in protected areas: stakeholders,
structuring and sustainability. Journal of Sustainable Tourism, 17(2), 169-189.
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Sundbo, J., Orfila-Sintes, F. and Sørensen, F., 2007. The innovative behaviour of tourism firms
—Comparative studies of Denmark and Spain. Research policy. 36(1). pp. 88-106.
Willis, K., 2011. Theories and practices of development. Taylor and Francis.
Online
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<http://www.ttgmena.com/Future-trends-in-the-tourism-industry/> [Accessed on 7th
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Impacts of Tourism. 2014. [Online]. Available through: <
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FactsandFiguresaboutTourism/ImpactsofTourism/tabid/78774/Default.aspx > [Accessed on
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2/tourism-history/>. [Accessed on 7th January 2016].
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