Hospitality Business Strategy

This study material provides an in-depth analysis of the hospitality business strategy. It covers PESTLE and SWOT analysis, analysis of the competitive environment using Porter's Five Forces model, and different types of strategic directions available to the organization. It also includes a strategic management plan for achieving business goals and objectives.

Hospitality Business
Strategy

Contents
INTRODUCTION...........................................................................................................................3
Part A...............................................................................................................................................3
PESTLE and SWOT analysis of the organisation and an analysis of the organisation’s
capabilities..............................................................................................................................3
Analysis of the competitive environment using Porter’s Five Forces model.........................7
Part B...............................................................................................................................................8
Different types of strategic directions available to the organisation......................................8
Justification and recommendation to the most appropriate growth platform and strategies..9
Strategic management plan...................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy can be defined as a concept with the help of which an organisation
identified various set of action that can facilitate them in achieving their business objectives. For
determining such action the businesses undertake analysis of both the internal and external
business environment along with the capabilities of the organisation so that they can analyse the
impact of various such factors on the operations of the business (Murthy, 2012). With the help of
efficient business strategy an organisation can ensure competitive advantage over others as these
strategies enables them in satisfying the needs of the customers. In this report the organisation
that is taken into consideration is Sheraton hotel and resort, it is an chain of hotel which is owned
by Marriot International. They have their hotel and resorts in the North America, Africa, Asia
Pacific, Central and South America, Europe, the Middle East and the Caribbean. In this report
the internal and external market of the hotel is analysed with the help of various strategic models
along with their resources and capabilities. Apart from this the strategies are disused and a
strategic plan is formulated with the help of which they can achieve their goals and objectives.
Part A
PESTLE and SWOT analysis of the organisation and an analysis of the organisation’s
capabilities
PESTLE
For the organisation it is important to analyse external factor so that they can manage its
impact on the operations of the organisation. Sheraton Hotel and Resort has been operating on a
large scale and in different countries due to which the faces various challenges. To minimise the
impact they have to formulate specific strategies so that they can grab the opportunity in the
market with the help of their strength and competence by reducing the impact of various threats
(Pramanik, Maiti and Maiti, 2018). The PESTLE framework is used for analysis UK market for
Sheraton hotel and resort so that they can identify the opportunities to expand their business by
reducing the impact of adverse factor.
 Political factor: The political condition of UK is quite stable and the administration
system of the country is considered to be an effective system along with various
associations and alliance with other nations. This will provide opportunity to Sheraton
hotels and resorts to expand their business in UK is there will not be change in any policy

due to stability and further it will not affect the tourism which implies that they can easily
attract customers to their hotel.
 Economic factors: The economy of UK is considered to be diverse due to which
investors can easily be attracted for making investment. Also the corporate tax rate is
expected to reduce and the expectation of increasing GDP is high which this implies that
Sheraton Hotel and Resort have an opportunity to ensure better growth and profitability
by expansion in UK (Johnson, 2017).
 Social factors: With the increasing level of education the taste and preference of the
people are changing due to which they are becoming more conscious of better quality of
the services in comparison to the prices that are charged by the service provider. In
addition to this the rate of unemployment is reduces due to which income of the people is
increasing and this is an opportunity for Sheraton hotel and resort as they have hotels for
different segments with which they can satisfy the needs of all their customers.
 Technological factors: UK is considered to be a country where significant research and
development is focused due to which the expectation level of the people from the
organisation is high. This can have an adverse impact on Sheraton Hotel and resorts in
long run as they have to keep on innovating customer services in order to satisfy the
needs of the people which will increase their cost as well as can affect their strategic plan
(Chang and Tsai, 2016).
 Legal factors: For the organisation operating in UK it is necessary to incorporate the
implication of employment act 1996 as well as equality acts 2010 so that the interest of
the employees can be ensured. This will have positive impact on Sheraton hotels and
resorts as with this they can develop satisfied and competent workforce which can
contribute in satisfying the customer efficiently.
 Environmental factors: The government of UK has been considering environmental
issues seriously due to which they have imposed various regulations for use of resources.
This is an opportunity for they have better waste management plans as well as they have
incorporated various techniques for recycling the use of various products an effective
management of resources such as water, electricity etc.
SWOT

The SWOT analysis facilitates the organisation in analysing the impact of various
internal factors on the operations of the organisation as well as in determining the capability of
the organisation in managing the opportunities and threats present in the market (Youn, 2017).
SWOT analysis of Sheraton hotel and resort is done so that their strengths, weaknesses,
opportunities and threats can be identified which is given below:
Strengths Weaknesses
 Strong brand presence: Sheraton
Hotel and Resort has been operating in
different countries with more than 400
hotels and which people oriented
approach that ensure better policies for
customers as well as employees so that
service quality can be ensured by
delivering customer centred services.
In addition to this for strong brand
visibility they ensure better word of
mouth for their customised
personalised services that enables them
to easily attract new customers.
 Smart logistics, supply chain and
technology: Sheraton Hotel and resort
focuses upon shipment processing
system with the use of real time
delivery tracking, logistic planning,
order management etc. with the help of
which supply can be ensured. Along
with this better technology is used for
improving the service quality in
context of cleaning room, providing
healthy food and ambience to the
 Rapid expansion: Due to aggressive
expansion plan the organisation faces
various issues such as requirement of
the funds as well as at leads to dilution
of brand by developing business in
price conscious market.
 Disruptive innovation: The
competitors keep on adopting
innovation in the customer services
due to which faces a lot of competition.
This affects the demand of their
services among the customers with
their existing innovation.

customers etc.
Opportunities Threats
 Scope to expand in affordable
luxury: Sheraton Hotel and resort has
different type of hotels for different
segments due to which they have
significant opportunity to offer
luxurious services at affordable prices
market share can be enhanced along
with profitability.
 Managing market trends: The
organisation have the opportunity to
enter into developing market where the
hospitality industry is growing by
acquiring various existing organisation
with better innovation so that changing
customer preferences and trends can be
managed as well as better services can
be offered.
 Competition: The competition in hotel
industry is relatively high due to which
they have to keep on changing their
policies and strategies so that they can
meet up with the level of competition.
 Constant need of investing customer
service: Consistently changing taste
and preference of the customers
increases the need of consistent
investment in customer services for the
organisation with due to which they
have to face various challenges
(Verbeke, 2013).
VRIO
The VRIO framework facilitates to understand the organisation their resources and
capabilities with the help of which they can take sustainable competitive advantage over others.
In addition to this it will facilitate Sheraton Hotel and Resort to understand the importance of
improvement in some resources so that they can take greater advantage over their competitors.
The VRIO analysis of the Sheraton Hotel and Resort is given below:
Particulars Valuable Rare Inimitable Organisational
Applicable
Financial resources ✔ ✔ ✔ ✔
Distribution
network
✔ ✔ ✔ -

Employees of the
company
✔ ✔ - -
Research and
development
✔ - - -
On the basis of this VRIO analysis it can be identified that the financial resources and the
distribution network of the Sheraton Hotel and Resort can give them sustainable competitive
advantage as they are difficult to copy by the competitors and are valuable as well as rare for
them. But the employees give them temporary competitive advantage as similar turnings can be
provided to the employees by their competitors as well (González-Rodríguez and et. al., 2018).
The research and development is competitive disadvantage as the technology keep on changing
due to which it has to be changed frequently.
Analysis of the competitive environment using Porter’s Five Forces model
Porter’s five force model was proposed by Michael Porter with the help of which the
organisation can efficiently analyse the impact of various forces from the industry that affect the
profitability and the operation of the organisation. The analysis of these factors enables the
organisation in managing the competitive advantage by formulating various strategies to deal
with the change. The impact of five forces on Sheraton hotel and resort are given below:
 Threat of news entrant (Low): The requirement of capital in hotel industry is high due
to which the threat of new entrant for Sheraton Hotel and resort is low. The hotels work
on product differentiation strategy due to which the new entrant has to focus upon a
significant level of innovation in their services. This increases the requirement of
investment for them and make difficult for them to compete with the existing hotels
within the industry. As the Sheraton Hotel and resort has better strategy as well as better
differentiation the impact of new entrant is less on them (Turner and et. al., 2017).
 Threat of substitute goods (Low): The market for hotel industry is price sensitive and
the targeted group is cost conscious due to which the impact of substitute products is
relatively low. People plan for the accommodation as per their affordability due to which
they select a particular class of hotel and this reduces the impact of substitution. This
implies that Sheraton Hotel and resort has been facing competition of differentiation with
relatively lower substitution effect.

 Bargaining power of suppliers (Low): The hotel is highly affected by the availability of
labour, trained staff and personnel as the directly provides services to the guest. But the
availability of number of supplier for the hotel industry is high which implies that the
bargaining power of suppliers is low Sheraton hotel and resort as they can easily switch
to other supplier with lower switching cost.
 Bargaining Power of Buyers (High): The bargaining power of buyers in hotel industry
is high as certain group of buyers have power to influence industry as they purchase the
rooms in the hotel in bulk for which they easily come in the position to bargain. Such
group includes the tour operators, national and international airlines, corporate houses
etc. In case of the business travellers and leisure travellers also the bargaining power is
high as to them differentiation in the services is crucial along with competitive prices.
Due to this the impact of bargaining power on Sheraton Hotel and resort is intensively
high.
 Existing rivalry (High): The level of competition is high in hotel industry due to higher
cost of product differentiation and lower switching cost as the customer can easily switch
to the competitor. It implies that the business growth required for Sheraton hotels and
resort is more than their existing growth rate. This is because of high capital cost and
pressure on cutting down the prices (Kim, Lee and Fairhurst, 2017) . Due to changing
policies of the competitors the impact of this force on Sheraton Hotel and resort is high.
Part B
Different types of strategic directions available to the organisation
The Ansoff matrix is also known as product expansion grade which is considered as a tool
for analysing growth strategies that facilitate an organisation to plan their actions so that they can
accomplish their organisational objectives. The matrix proposed by Ansoff has four strategies
with the help of which an organisation can plan their along with identification of risk associated
with each strategy. The four strategies in context of Sheraton Hotel and resorts are given below:
Market penetration: This is the strategy in which the focus of the organisation is all
increasing the sales with the help of existing products within the existing market, thus the aim is
to expand the market share. It can be adopted by Sheraton hotels and resort by way of decreasing

the prices of the products and services so that new customers can be attracted, ensuring
aggressive promotion and distribution effort so that awareness among the customers can be in
enhanced etc. The risk associated with this strategy is very low as investment is low and the
requirement of target market is known to the organisation (Kuo, Chen and Tseng, 2017).
Product development: This is the strategy in which organisation serves the existing
market with new product all service. For this they have to undertake a significant level of
research and development for the product range as well as of the current market. It can be done
by Sheraton Hotel and Resort through increased investment in R&D so that the need of existing
customer can be satisfied. Also with the help of strategic partnership and acquiring or merging
with competitor this strategy can be adopted. The risk of this strategy is also high as the company
has to invest a lot of funds on research and development which may accept by the customer or
not.
Market development: Market development is a strategy in which organisation enter into
new market with their existing product and services. This implies that the organisation expand
their operations into new geography, among new customer segment etc. This is strategy suitable
in case of better technology which can satisfy the need of new market, when the customers in
new market are profitable, the behaviour of the customer does not changes frequently. The
strategy of market development can be adopted by Sheraton Hotel and resort through expansion
into new domestic or foreign market as well as by catering different customer segment. This
strategy is quite risky then product development as investment required is high and customers
may not accept the product & service willingly.
Diversification: This is the strategy in which the organisation enters into new market with
new product. The diversification can be done by Sheraton Hotel and resort in two ways: related
diversification which implies that there is potential synergy existing business and new product or
services to be offered in new market; unrelated diversification, this implies that there is no
potential synergy among the two. It is considered to be the most risky strategy as it includes a lot
of investment as well as entering into new market with new product create a significant level of
uncertainty of success for the organisation (Njoroge, Anderson and Mbura, 2019).
Justification and recommendation to the most appropriate growth platform and strategies
It is recommended to Sheraton Hotel and Resort to focus on market development as with
the help of this strategy the organisation can easily ensure their profitability and increase market

share. This can be done by them by acquiring existing hotel or chain and by introducing
innovation in them so that customers can be satisfied by improving their experience. It is
comparatively less risky than other strategies as the acquired organisation will have their market
share along with various resources which can be utilised by Sheraton Hotel and resort as per their
policies for satisfying the needs of customers in the particular market.
Strategic management plan
EXECUTIVE SUMMARY: The organisation has to plan various stsrte3gies with the help
of which they can ensure their survival and growth. Sheraton Hotel and Resort has been planning
for the expansion with the help of which they can easily accomplish their overall business
objectives. For this they are focussing upon market development strategy and to support this they
have undertaken the analysis of both micro and macro factors. With the help of key performance
and benchmarking monitoring strategy they aims to ensure effective implementation of the plan.
VISION: The vision of the hotel is to connect with their customers throughout the world
and to provide them better experience with better quality of services.
MISSION: The mission statement of the hotel is to bring people together through
communal experiences by making them believe that travelling is better when it is shared.
OBJECTIVES: The objective of the hotel is to increase their sales by 20% in 18 month
and the market share by 15% in the same period with the help of expansion strategy.
STRATEGY: The strategy that the Sheraton Hotel and Resort must adopt for ensuring
the growth of the business and their accomplishing their objectives is market development as
with the help of this they can cater the needs of customers with similar pattern of their services
that they have been considering in their existing hotels.
MONITORING AND CONTROL: For monitoring the performance of the hotel while
implementing the strategy the management can use the techniques of key performance indicators
as with the help of this they can focus upon those key factors which are crucial for the
organisation such as the sales, the rate of occupancy of the rooms, increase in the revenue etc. In
addition to this for establishing the standards the benchmarking can be used as with the help of
this they can set targets to be achieved on the basis of the any organisation that is performing
better in the hospitality industry (Scholes, 2015).

CONCLUSION
It is concluded from the above report that the organisation has to formulate various
strategies for ensuring their growth by analysing the influences of various internal and external
factors. With the help of such analysis the complacence and the capabilities of the company can
be identified along with various opportunities and threats on the basis of which the strategies are
developed. It can be done with the help of PESTLE, SWOT, Porter’s five force analysis etc. so
that better planning can be done.

REFERENCES
Books and Journal
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