Hospitality Business Strategy

HOSPITALITY BUSINESS
STARTEGY
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Table of Contents
INTRODUCTION...........................................................................................................................2
PART A...........................................................................................................................................2
Pestle and SWOT analysis of chosen hotel and an analysis of its capabilities.........2
Competitive environment analysis by using Porter’s five forces model......................6
PART B...........................................................................................................................................8
Different kinds of strategic directions accessible to hotel..............................................8
Strategic management plan with objectives, tactics and methods............................10
Suggestions and justification of the most suitable growth strategies and platform.12
CONCLUSION.............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
A business tactic refers to decisions and actions that an organization and its
management take to reach their set objectives and aims and to be competitive in
specific sector. It defines what a venture needs to do to achieve goals, which can aid
guide decision making procedure for resource allocation and recruiting. The strategy of
business is especially developed in order to gain competitive benefits within target
market place while managing functions and operations effectively. Within hospitality
industry, organizations create and develop the best business strategies which are quite
beneficial and helpful for them in context of increasing productivity and profit margin.
The current assignment will base on London Hilton on Park Lane, which falls under list
of leading and one of the biggest hotels in London. This study will explain external and
internal environment analysis by utilizing SWOT and PESTEL framework. Furthermore,
this report will evaluate varied types of strategic directions, justify and suggest the best
growth platforms & tactics and at last clarify strategic management plan.
PART A
Pestle and SWOT analysis of chosen hotel and an analysis of its capabilities
PESTLE analysis-
It is a strategic management framework especially utilized to determine, analyse,
monitor and manage key external factors that can have a major affect on current
business strategies and London Hilton on Park lane capabilities in negative or may be
positive manner.
Political factor-
It relates to how government intervenes in UK economy, specially political
elements have areas including trade restrictions, tax policy, political stability and traffic.
Tax policy is one of the factors that affect on London Hilton on Park Lane capabilities in
positive manner, because government reform taxation policy in which hotel owner pay
lower taxes, it allow hotel to work effectively and improve their business activities as a
whole (Leutwiler-Lee, 2018). High grade and Luxury hotels in London like Hilton can put
saved towards providing more accommodations services for visitors. With positive
impact of factor, organization can perform much than its capability.
Economic factor-
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It is set of fundamental data that impact a company or an investment value. Key
economic components include interest rate, unemployment rate, changes in labour
market, income rate and economic growth. It can be said that unemployment rate in one
of the economic factors that put positive impact on capabilities and abilities of London
Hilton on park lane in term of increasing productivity level even better (Zhang, 2018).
For instance, government put a lot of pressure on hospitality industry companies to hire
local people; it gives HRM the best chance to select the most talent and skilled
applicants who can enhance abilities of business by performing much harder.
Social factor-
It represents another essential set of influences on guest behaviour. Especially,
these are the influences of groups and people influencing one another through
subculture and culture, reference groups, consumer’s preferences, family and social
class. London Hilton on Park Lane is famous for food and accommodation services,
F&B department are able to provide tasty food items to customers. Due to lifestyle
changes, in recent time visitors like to stay in hotel where food products cooked by
using organic things, it may affect organization capability in negative manner because
food and beverage section feel pressure to purchase and prepare meal in urgent
requirements which is not possible some time.
Technological factor-
Advancement of technologies and development of digital marketing platforms put
influence on hotel abilities positively as it strengthen brand image in marketplace or all
over the world. With digital marketing tools, marketing department in hotel can promote
business services, interior and inclusive culture at global level that help to gain attention
of new guest towards visiting hotel and enjoy holidays with family members and friends.
They can advertise services and accommodations via using Facebook, Twitter,
YouTube, etc. Hubspot, Yoast and other tools are accessible in the business world
including above that marketing manager can use for commercial purpose.
Legal factor-
Changes in United Kingdom regulations and rules related to health & safety
affect business capabilities of London Hilton on park lane in positive manner. It drives
hotel management, leaders and managers to improve their existing health and safety
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policies that allow applicants to feel safe while working hotel. It can develop inclusive
culture at workplace and retain skilled workers for longer period of time. It can be said
that practices related to workers safety and health concern outcome in reduced
absenteeism, reduced insurance premiums, reducing lost production time, reduced
liabilities and sick leave.
Environmental factor-
Customers and government in recent time are more concern about
environmental safety, they seek to connect with those companies or products who
contribute in CSR and apply its principles in current business practices. It put positive
impact on hotel capabilities and strengthens their brand image in all over the world.
Value chain analysis-
Primary activities-
 Inbound Logistics- It can be said that London Hilton on Park lane, in order to
keep business at high position on premium hotels chains build strong bond with
their suppliers in each location where it’s have a branch (Braun, 2018). Food,
interior design and drink are the most essential areas where management pay
more attention. In food and beverage department, once items are delivered, food
department must keep them in right period and in right temperature to save
quality of products.
 Operations- It includes operations of hotel with converting products into offering
for target consumers. For instance, to serve the people, all accessible rooms will
be cleaned once after earlier guest check out. Front desk staff before visiting
customers in hotel reconsiders all the arrangements according to list.
 Outbound logistics- this phase is about presentation service to guests, it can be
as intangible and tangible items. London Hilton on park Lane is able to promote
their hotel rooms and F&B services that effectively met expectations by clients
who have been promoted. Furthermore, it can be said that in food infrastructure,
all meals are cooked in professional manner.
 Marketing- organization in order to build strong consumers base, create effective
marketing content and communication tactics that effectively meet expectations
and needs of target market. Marketing department provide information to its
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guests related to services which hotel wants to offer in effective manner
(Goryushkina and et.al., 2016).
 Service- this phase includes all kinds of services such as consumers support,
room reservation, customer’s complaints, etc. Within hotel front office department
and its workers provide after and before reservation services by considering their
concerns.
Secondary activities-
 Firm infrastructure- London Hilton on Park lane is an international hotel with
many accommodations around the world. They have wide organizational
structure that has been managed with the help of different departments such as
financial, marketing, HRM etc.
 Human resource management- Hotel is able to provide quality services to
guests because they have talented and knowledgeable applicants. HRM by
developing effective recruitment and selection strategies hire people who are
able to cater the best services to international visitors.
 Technology development- it can be said that IT department by using web
technology and developing technology improve consumers satisfaction level in
effective manner as it help them to make instant and fast gusts service.
 Procurement- when individual talk about chosen hotel, they immediately can say
that their position in market as international premium hotel chain needs quite
intense requirements for their suppliers. Organization effectively managing their
supply chain, marketing, HRM and other procurement activities which make them
more stronger than before.
SWOT analysis-
Strengths-
Effective consumers retention schemes is one of the biggest strengths of hotel as
they offer the best discounts and under budget services to people, who seek to enjoy
their holiday within reputed hotels in London. Furthermore, it can be said that strong and
experienced workforce is another strength of hotel which make them capable to satisfy
target guests and other as well.
Weaknesses-
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Lack of flexibility due to their wide size and few international market shares,
despite large portfolio of brand are two different weak points of hotel that affect its
business management activities in negative manner.
Opportunities-
It can be said that by grabbing existing market opportunities Hotel can reach at
top level and drive more international tourist towards them. For example, by using
advanced technologies company can generate brand awareness at global level which
allow firm to gain attention of new visitors in ethical manner. Another chance hotel can
grab is business expansion, management due to competitive environment develop
further international market expansion plan which is quite beneficial for them in term of
increasing profit margin.
Threats-
Intense competitive in hospitality industry posses the biggest threat for London
Hilton on Park lane. It affects current marketing, management, consumer services and
other operations in negative manner. Along with this threat, political instability is another
threat that also impact in same way just live above one.
Competitive environment analysis by using Porter’s five forces model
This framework is an essential tool a company can use to comprehend forces
that shape competition within hospitality industry. It is also useful for helping
understanding competitiveness of business environment. It is helpful, because when
management comprehend elements in their industry that can impact profitability and
productivity.
Bargaining power of suppliers-
The power of suppliers in context of bargaining is low because London Hilton
hotel on park lane has several suppliers who seek to work with them for longer period
(Arif and Hossin, 2016). It can be said that available number of suppliers lower power of
existing once as it do not allow them to increase and make change in current supply or
delivery services. It analysed that number of distributors in industry in which hotel
operates is a lot as compare to customers that means that each supplier have less
control over product or service prices and it makes their power a low force.
Bargaining power of buyers-
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The extent of this force is high, because there are many hotels operating in same
sector where London Hilton on park lane operates who provides services in cheaper
price (Mullan and Timan, 2018). Consumers always want to buy pocket friendly
products and search for same in market, when they consider hotels who serve their
services without making high charges, each person drive towards it that negatively
impact on Hilton business. Guest has power to change current room prices and services
standards which means they can affect organizational capabilities in negative manner
and put a lot of pressure on manager’s strategies.
Threat of new entrance-
Degree of this force is low because it is quite difficult to enter in hospitality
industry for any company or hotel. Overall process requires a lot of investments and
efforts which is not possible for each business. The production differentiation is strong
within sector where Hilton sells their differentiation items more than a standardised
thing. Economies scale is fairly complex to achieve in industry in which company
operates that makes it easier for those who produce wider capacitates to have a cost
benefit. If a company want to enter into this market they had to be financially stronger.
Threat of substitute products or services-
The degree of this factor is low because very few substitutes accessible are of
high quality but are way more costly. Comparatively, hotels serving within hospitality
industry in which London Hilton on park lane operates sell at affordable prices than
substitutes with better quality food services. It means that people are less likely to
switch to other hotel brand services. in recent time, buyers like to purchase inexpensive
products or things but they never compromise on quality and hotel serve their guest
quality items without making any kind of mistakes that is valuable.
Competitive rivalry between existing players-
It can be said that extent of this force is always high because major players in
hospitality industry always ready to give tough competition to its competitors in order to
make their business more powerful and strong than others, which is really very
important for each of them (Sánchez-Pérez, Illescas-Manzano and Martínez-Puertas,
2019). The number of competitors in sector which chosen hotel operates is more such
as Marriott, Holiday Inn, Hyatt, Loews Hotels etc. Many rivals have a wide market share,
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which means that they can engage in competitive actions to become market leader and
to gain high position.
PART B
Different kinds of strategic directions accessible to hotel
Ansoff matrix is one of the best strategic direction models, it consist with four
different types of tactics that London Hilton on park lane can consider and use in order
to gain competitive benefits available in hospitality industry. There are following
strategies of this concept-
Market penetration-
With this strategy hotel can concentrate on offering of existing services for
current set of guests only (Alkasim and et.al., 2018). This tactic focuses on increasing
sales of current room and F&B services to existing target consumers by making things
perfectly and serving according to the needs of individual which in return increase
profitability even better, by considering this strategy hotel gain several benefits.
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Figure 1Ansoff Matrix
(Source: Ansoff Matrix Strategies, 2015)
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Product development-
This strategy focuses on producing or offering new services to existing guests.
London Hilton on park lane can use this tactic and provide new services to current
consumers which make them able to retain potential visitors for longer and allow
management to gain attention of new international tourist (Eckert and Pechlaner, 2019).
This strategy always works effectively and increase consumer base.
Market development-
This term concentrate and planning on entering into new market place by using
existing service or product quality. For example, when Hilton hotel on park lane plan to
enter into new area or location across boundaries they can drive profitable visitors
towards visiting hotel and take decision to stay within it for last 3 to 6 days or more than
it.
Diversification-
All tactics are beneficial and useful in context of London Hilton on park lane. It
can also benefits chosen hotel in term of building strong brand image in market and
setting image in mind of guests who can promote business outside after obtaining
appropriate satisfaction. With this tactic company can focus on entering into new place
with offering new service or item.
Strategic management plan with objectives, tactics and methods
Vision-
Vision statement of London Hilton on park lane strategic management plan is to
manage recognition of its business as leading firm in highly competitive industry which
caters accommodation and food & beverage services to guest either local or
international.
Mission-
Organization mission it be the most hospitable hotel in the whole world by
creating heartfelt experiences for their guests, high value for owners, meaningful
chances for team members and a positive impact in communities.
Objectives-
 To improve business practices.
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 To provide appropriate consumers satisfaction.
 To increase customers base.
 To increase profitability and financial position.
Strategies-
London Hilton on park lane can consider varied different types of strategies in
order to achieve their set business objectives in effective manner. For example, they
can use diversification strategy of Ansoff matrix model to satisfy their guests and attract
new ones. By entering into new market hotel can increase profit margin and attract new
guest via using marketing strategies and tools.
Bowman strategy clock-
Low price and low value added-
Here in this position hotel can offer services which are not of good value and
because of this their cost are also very low.
Low price-
Organization with this strategy can offer discounts and room services within less
expensive pricing structure by using the best pricing strategy.
Hybrid-
With this tactic hotel can offer combination of low cost and differentiated service
that help to capture eye of visitors who visit London with family.
Differentiation-
Under this strategy firm can offer more services and different meals which they
earlier utilized.
Focused differentiation-
It is another essential tactic in which organization may concentrate on providing
luxurious and branded services to offer to guest.
Risky high margin-
With this strategy hotel can charges room price to be high but people does not
get that much value and guest do not consider it valuable.
Monopoly pricing-
With this plan company can gain benefit of individual seller and they can charge
cost in accordance to needs of target market.
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Loss market share-
It is quite risky and difficult strategy that may be provide loss to company as price
of services is not competitive.
Implementation-
After recognizing above strategies and tactics, it time to take further action in
context of implementing management plan in effective manner. With chosen strategy
management allocate roles and responsibilities to applicants who can manage
operations efficiency and increase it rather than before.
Evaluation-
There are many approaches or models have been available in world of business
that Hilton can use to evaluate success of strategic management plan. For instance,
Management within chosen company can utilize Benchmarking to compare and identify
gaps between competitors who has wide consumer base. It permit firm to determine
issues and then improve own business activities better than other. Furthermore, hotel
can measure profit margin of venture which make them able to monitor success and
growth of firm.
Suggestions and justification of the most suitable growth strategies and platform
Out of above all tactics and methods the most suggested and appropriate
strategy is diversification, it is majorly because of purpose that above objectives of hotel
is to increase guests list and for this diversification is more effective. Furthermore, it can
be said that London Hilton on park lane should utilize strategy of hybrid as Bowman
strategy clock option because of reason that it includes both price of products or
services and quality as well. As in this phase services are offered at high degree and in
better qualities then it provide benefit of economic of scale for Hilton.
CONCLUSION
From above analysis, it has been concluded that London Hilton on Park lane by
analysing external and internal environment of business considering different types of
elements or factors that affect its business progress and success. Organization by
considering and accepting diversification strategy offer their accommodation service to
customers in effective manner according to guests needs. Management by conducting
market analysis and following potential suggestions efficiently satisfy its customers.
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Furthermore, from above discussion it has been summarized that with the help of
producing strategic management plan with clear objectives and business strategies,
operations manager gaining competitive advantages, which turn into increasing
profitability, revenue and market share even better. Moreover, it has been identified that
to overcome above political and other factors that impact negatively, management by
considering each and every thing taking decision to develop an effective business
strategy.
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REFERENCES
Book and Journals
Alkasim, S.B and et.al., 2018. The mediating effect of cost leadership on the
relationship between market penetration, market development, and firm
performance. Journal of Business and Retail Management Research. 12(3).
Arif, T.M.H. and Hossin, M.Z., 2016. A comparative analysis of internal and external
environments between Hotel Hyatt, UK and Hotel The Cox Today, Cox’s Bazar,
Bangladesh. IOSR Journal of Humanities and Social Science. 21(6). pp.13-22.
Braun, R., 2018. The lobby as a living room: what interior design innovations and
products do luxury hotels implement to attract guests to their lobby?.
Eckert, C. and Pechlaner, H., 2019. Alternative product development as strategy
towards sustainability in tourism: The case of Lanzarote. Sustainability. 11(13).
p.3588.
Goryushkina, N.Y and et.al., 2016. Marketing management in the sphere of hotel and
tourist services. International Review of Management and Marketing, 6(6S).
Leutwiler-Lee, M., 2018. Sustainability in the hotel industry-how government policies are
changing the ‘culture of food waste’in the Republic of Korea and creating
opportunities for hotels. International Journal of Tourism Sciences. 18(4). pp.247-
254.
Mullan, H. and Timan, N., 2018. Strengthening buyer power as a solution to platform
market power. CPI Antitrust Chronicle.
Sánchez-Pérez, M., Illescas-Manzano, M.D. and Martínez-Puertas, S., 2019. Modeling
hotel room pricing: A multi-country analysis. International Journal of Hospitality
Management. 79. pp.89-99.
Zhang, X., 2018. The impact of financial, macroeconomic and non-economic factors on
the hospitality industry in Spain and the UK.
Online
Ansoff Matrix Strategies. 2015. [Online]. Available through: <
https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-
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%20using%20existing%20products. >
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