Hospitality Business Strategy: Analysis and Recommendations for The Tower Hotel

This report analyzes the macro and internal environment of The Tower Hotel, using PESTLE and VRIO frameworks, Porter's Five Forces model, and Ansoff's Growth Matrix. It recommends adopting a differentiation strategy to increase customer base and provides recommendations for market penetration, market development, and product development. The report also discusses the impact of macro factors on the hotel and evaluates the competitive forces in the industry.

Hospitality Business
Strategy

Table of Contents
Introduction.................................................................................................................................................3
Main body...................................................................................................................................................3
Part A..........................................................................................................................................................3
Impact of macro environment on the Tower Hotel..................................................................................3
Critically analyses the hospitality macro environment to determine strategic management decisions.....5
Analyse the internal environment by using the VRIO Framework..........................................................5
Critically evaluate the internal environment to assess strengths and weaknesses of an organization.......5
Evaluate the competitive forces by using Porter’s Five Forces model.....................................................5
Devise appropriate strategies to improve competitive edge and market position.....................................6
Part B...........................................................................................................................................................7
Evaluate the different types of strategic directions available to the organization by using Porter’s
Generic Strategies....................................................................................................................................7
Justify and recommend the most appropriate growth platform and strategies through Ansoff’s Growth
Matrix......................................................................................................................................................8
Theories, concepts and models of strategic planning for hospitality organization...................................8
Produce a strategic management plan that has tangible and tactical strategic priorities and objectives...9
Critique and interpret information and data applying environmental and competitive analysis.............10
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

Introduction
Business strategy reference to plan of action that is required by the organization in achieving the
goals of business in particular manner. The hospitality industry provides various services for
leisure to the customers by providing them good accommodation and other services. It is
important for a business concern to make business strategies so that it can create vision for the
organsaition(Uhlig, and Remané, 2022). This provides insight to the group of people to achieve
the mission of the business. It enables the decision makers to determine the trend and
opportunities the growth in future. In this report, The Tower Hotel has been taken into account
which is a well-known hotel in London, England. The report will cover the analysis of the macro
environment and also demonstrate the internal analysis. Further, it will depict competition
prevailing in the market through the porter framework. It will also discuss the strategies that is
required for the organization and explain the concept, theories and model of strategic planning.
Main body
Part A
Impact of macro environment on the Tower Hotel
PESTLE analysis
This is an analysis which is used by the marketers in order to determine the impact of the
external factors on the business and profitability of a business concern(Golitsyna, 2021). It
provides opportunities to the company for future growth with the help of this analysis. In relation
to The Tower Hotel, the pestle analysis has been described as under:
 Political: This refers to the involvement of government which may impact the business
of an organization. This may include the tax policies, trade restrictions, reforms, tariffs,
political stability and so on. With reference to The Tower Hotel, it attract the
international tourism but it can be impacted by the norms of the government as it charges
the great amount of tax on the luxury hotel.
 Economical: This factors includes the interest rates, tax rates, inflation, and wages rate
and so on which may impact the economic growth of the business(Hosseini, 2021). As
regard with The Tower Hotel, the hotel can be affected with this factor because it

capitalize the travelers from the worldwide which provide huge money to the hotel,
especially from the luxurious hotel.
 Social: This refers to the preferences and behavior of the people which profoundly
impact the organization. In relation to The Tower Hotel, it provides varieties of the
products such as single room, twin bed room etc. to its customers so that they can provide
their best services which people share with each other by using social media platform.
 Technological: It refers to the innovation, research and development that may impact the
operation of the business. The Tower Hotel has adopted technology by placing cameras
in order to provide security and other facility to make guest’s stay more comfortable.
They also use software to meet the needs of the customers and provide Wi-Fi facility.
 Environmental: This factors affect the profitability of The Tower Hotel so it follows the
environmental laws and liabilities to save the environment(Bima, and Aprianingsih,
2022). Therefore, the hotel contributes in saving the environment by ensuring minimal
carbon footprints and reducing the wastage of leftover food.
 Legal: The Tower Hotel follows the employment legislation and customers laws in order
to protect the interest of the customers and the employees as well.
SWOT analysis
The Tower Hotel has made its swot analysis in order to know the strength, weaknesses,
opportunity and threats which are as under:
Strengths Weaknesses
Brand image: The Tower Hotel is a well-
known brand in London which attract more
tourist that assist the hotel in making more
profits(Espinós, and et.al., 2021).
Services: The Tower Hotel has 801 rooms
and 19 meetings rooms that have a capacity of
600 people. It provides facility of restaurant,
gym, coffee bar and so on.
High price of the products: The Tower
Hotel provides varieties of the products but
they are very costly that are only affordable
by the rich people. Thus is a luxury hotel
which provides its services and products at
higher rates.
Opportunities Threats
Market share: The Tower Hotel can increase Competitors: There are various competitors

its market share by segmenting its customers
in group and also reduce the price of their
products so that the people who cannot afford,
are able to get their products. This assist in
increasing the market share and profitability
of the hotel.
of The Tower Hotel such as Central Park
Hotel, Thistle London Marble Arch and so on
which provide higher competition to the
organization that may impact the
profitability(Hergüner, 2021). It also
encourage the customers to switch for the
other hotels by providing best services.
Critically analyses the hospitality macro environment to determine strategic management
decisions
The macro analysis has been done of The Tower Hotel in order to identify the external
factors such as political, economic, social, technological, legal and environmental that may
impact the operations of the business and profitability as well. Therefore, the hotel should make
cooperation with the government to successfully run their business and provide innovative
products to the customers in order to attract them. The internal analysis has been done of the
company to know its strength which assist the hotel in gaining the competitive advantage. It also
help in converting the weakness into opportunities to enhance the market share.
Analyse the internal environment by using the VRIO Framework.
This is an internal analysis which contribution in identifying the benefits and incomes of
the business from the effective competition. The framework has been depicted as below in
relation to The Tower Hotel:
 Valuable: The Tower Hotel has valuable physical and human resources that are well
trained and skilled and provide effective services to the organization which provide great
experience to the customers(Madsen, 2022). This help in making the relation strong with
the suppliers and enhance the brand image.
 Rare: The Tower Hotel has rare resources which their competitor do not have so it is the
benefit for the hotel to increase their profits and effective position in the competition.

 Imitable: The Tower Hotel have the resources that are loyal to the hotel so the
competitors cannot imitate and provide unique offerings to encourage customers to avail
their services.
 Organized: The Tower Hotel have the organized structure and management system
where all the activities are done in an effective manner which help the hotel in achieving
the ultimate goals.
Critically evaluate the internal environment to assess strengths and weaknesses of an
organization
The internal environment has been done by The Tower Hotel in order to examine their
resources which are valuable, rare, imitable and organized which the competitors cannot
duplicate its products. It can remain stay in the competition and encourage customers to switch
for their services. Thus with this model the organization is able to know their strength so that it
can increase their brand awareness and increase the profitability.
Evaluate the competitive forces by using Porter’s Five Forces model
The market analysis has been done in order to know the competition prevailing in the
market so that effective strategy can be made to overcome the competition. The porter’s five
forces has been described as below:
 Competition in the industry: With reference to The Tower Hotel, it can be affected by
the competitors as there are many competitors in the hotel industry such as Central Park
Hotel, Thistle London Marble Arch etc. which create intense competition to the
hotel(Wen, and et.al., 2021). Thus, the hotel should adopt the differentiation strategy in
order to gain the market and become a leader.
 Power of suppliers: This refers to the cost of the products and servicers which are
charged by the suppliers. So, the bargaining power of the supplier is low as The Tower
Hotel can buy the raw material from various supplier in order to save cost and prevent
negative impact and increase the revenue.
 Power of buyers: This refers to the negotiation power of the buyers for lower process
and better deal. So the bargaining power of the customers is high as they can affect the
profitability of The Tower Hotel by switching for the other hotels products and service.

Therefore, the hotel can handle the customers by providing them products and services at
discount prices.
 Threat of substitute: There are various hotels that provides various products and
services to the customers and encourage them to avail their services(Singh, Chhetri and
Padhye, 2022). But there is moderate risk of the substitute products because The Tower
Hotel provides unique and better services to their customers which enable it to
differentiate from other hotels.
 Threat of new entrant: The power of The Tower Hotel can be affected by the new
entrant but as it is a luxurious hotel so there is low risk of the new entrant because the
new entrant has to make huge investment in the hotel industry. The Tower Hotel is a
luxurious brand so the new entrant cannot provide competition to this.
Devise appropriate strategies to improve competitive edge and market position
The Tower Hotel has made the analysis of them to know the competitors which are
providing competition to the hotel. By making this analysis the hotel get to know the completion
in the industry, bargaining power of the suppliers and buyers which may impact the profitability
and market share of the hotel. The hotel examine the threat of the new entrant and the substitute
products of the competitors which can encourage customers to get their services. Thus, The
Tower Hotel is rewired to adopt the differentiation strategy so that it can provide effective
services to the customers and gain competition in the market.
Part B
Evaluate the different types of strategic directions available to the organization by using
Porter’s Generic Strategies
The Tower Hotel can determine the directions or strategies for the organization by using
the porters generic which are depicted as under:
 Cost leadership strategy: This is a strategy which is adopted by the organization in
order to gain the competition(Liu, 2022). In this strategy, the business mainly focuses on
reducing the cost of the products and services that are delivered to the customers. This
assist the organization to earn more profits and add value to the shareholders.

 Differentiation strategy: In this strategy business concern focuses on providing the
services and product that are different from its competitors. It provides unique features to
their products so that it can encourage the customers to get their products and provide full
diversity of the products. Thus, the company is able to provide high quality products to
their customers.
 Cost focus: This is a strategy where the organization focuses on the niche market by
segmenting the group on the bases of the industry or geography and provides services to
the particular industry to become expert of it(Dani, and Dasgupta, 2021). Therefore, the
company focuses on producing the goods and services at the low cost to take the
advantage of the competition.
 Differentiation focus: This strategy is adopted by the organization by providing unique
products that highlights the facts to enter into the niche market. This help the
organization in building their brand loyalty among the customers and ensure that the
products unique to stay in the competition.
The Tower Hotel is a luxury brand so it should adopt the differentiation strategy so that it can
increase the customer base by providing them unique features products. This enables the
organization to provide some dimensions that are valued by the customers. The hotel can
provides its services and products with the premium prices and make the customer more loyal.
Justify and recommend the most appropriate growth platform and strategies through
Ansoff’s Growth Matrix.
It is a strategic planning tool which help the managers in taking the effective decision for
the growth of the future(Qiu 2022). The four dimension of the matrix has been discussed as
under in context to The Tower Hotel:
 Market penetration: It refers to the action that is taken by the organization where the
existing products are promoted in the existing market. With reference to The Tower
Hotel, it can attract customer by providing its services at discount prices to make them
more loyal. This help the organization in increasing production capacity and market
investment as well. The organization can enhance their distribution by exploring the new
and innovative means of distribution. This enable the organization in reducing the
operational cost and gaining the competitive advantage.

 Market development: This action can be taken by the organization when the existing
products are launched in the new market. In respect to The Tower Hotel, it can open its
branches to the new location so that it can motivate the customers to stay in the hotel. it
also offers various process to the particular segment of the customers. This assist the
hotel in creating the barn awareness and get the customers educated about their services
and products.
 Product development: This refers to the activity of a business concern where the new
product is promoted in the existing market. In context to The Tower Hotel, it can provide
new services to the customers through new room layouts, additional luxury room etc.
therefore, when the hotel provide additional amenities so it will count as a product
development(Du, Zhang and Mora, 2021). The hotel by making research and
development produce the good quality products to get the more customers.
 Diversification: It refers to the growth of business by making development in the new
product in the new market. With reference to The Tower Hotel, it can diversifies its
business by providing different kinds of services which make it competent, innovative
and able to gain the competitive advantage.
Theories, concepts and models of strategic planning for hospitality organization
Concept of strategic planning
Strategic planning refers to the strategies that are made by the organization in order to
identify the goals of the business. It enables the organization to be proactive rather than reactive
and set up the direction to accomplish the goals of the business organization(Araújo, Kato, and
Del Corso, 2022). The operational efficiency can be increased by strategic planning which
provide assistance in increasing the market share and profitability of the business.
Theories of strategic planning
The theories of Strategic planning provide opinion suggestion in order to take effective
decision making which are described as under:
 Resource based theory: This is a theory that enable the organization to gain the
competitive advantage by distinguishing the strategic resources from the other resources.
In relation to The Tower Hotel, all the resources assist the organization in improving the
effectiveness of the business which help it overcoming the resources.

 Contingency theory: This is a theory which provide concentration on the personality of
the leaders and the situation in which that leaders operates. This enables the organization
in getting the best way for effective decision making. In relation to The Tower Hotel, the
manager of the hotel adopt such ways so that it can adapt with the changing environment.
Model of strategic planning
The organization use various models in order to make effective decision so that it can
accomplish the goals of the business organization. The models are demonstrated as under:
 Swot analysis: This is model which is used by the organization in order to determine the
strength which assist in getting the competitive advantage(Alwesabi, and et.al., 2022). It
assists in identifying the weaknesses so that it can convert it into opportunities in order to
gain the competitive advantage.
 Pestle analysis: This is the analysis of the external environment such as political, social,
and technological and so on which enable the organization to know their impact on the
business and profitability.
Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives
The organization can develop the strategic plan by gathering inputs and assess the current
situation so that it can establish the vision, mission and values. Then, it creates the objectives to
fulfil the vision and create measurement of the objectives. It is required to communicate the
measurement with everyone in the organization to get the goals of the business. The Tower Hotel
can adopt such strategy in order to accomplish the goals of the organization by fulfilling the
needs of the customers.
Critique and interpret information and data applying environmental and competitive
analysis
The Tower Hotel can adopt the best strategy through effective strategic planning by using
the various models such as swot analysis by analyzing the opportunities for the growth of the
business through increasing market share and profitability. By making environmental analysis in
order to know the impact of the external factors on the operation of the business, the organization
can take the corrective action to prevent the trade restrictions. The hotel has made the
competitive analysis to know the competition prevails in the market so that it can overcome the
competition by providing their best services to the customers.

Conclusion
From the above discussion, it has been concluded that the business strategy facilitates the
organization in taking the effective and appropriate decisions by minimizing the uncertainties.
This enable the organization to make coordination among the employees for effective working
and easily stay in the competition. The report has discussed the external environmental analysis
by applying Pestle model and internal analysis through swot analysis. Further, it has explained
the competitive analysis through the porter’s five forces and porters generic for adopting the
effective strategy such as cost leadership strategy, differentiation strategy etc. to win the
competition. Moreover, the report has discussed the Ansoff model in order to increase the market
share and profitability by bring innovative products in the market. Apart from this, it has
discussed the concept of the strategic planning and the theories of strategic planning such as
resource based and contingency theory. It has explained the models of the strategic planning and
produce a strategic management plan for gaining more profit.

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