Hospitality Industry Strategic Integration

This assignment delves into the concept of strategic integration within the hospitality industry. It examines both vertical integration (controlling multiple stages of production) and horizontal integration (merging with competitors). The analysis involves understanding how these integration strategies impact various aspects of the industry, such as service delivery, cost efficiency, and market competitiveness. Students are expected to research relevant examples, analyze their effectiveness, and discuss the future trends in hospitality integration.

Hospitality Provision in Travel &
Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Discuss the interrelationships between hospitality and wider travel and tourism businesses.....3
TASK 2............................................................................................................................................5
2.1 Implication of integration to hospitality industry..................................................................5
2.2 Discussion on impact of integration on hospitality business................................................6
TASK3.............................................................................................................................................7
3.1 Rationale for a selected project clearly justifying decisions linked to target Market...........7
3.2 development of plan for hospitality business including operational requirements of the
business ......................................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The word hospitality means friendly behaviour towards the guests and visitors. Thus
Hospitality industry includes all the companies that provide lodging & suits facility, food and
drink services to guests and visitors, which is the major source of income in present era. On the
other hand, tours and travelling industry provide airline and cruise line services to the
passengers. In this report, a brief discussion is done on interrelationship between hospitality and
tour and travel businesses. Apart from that there are major implication of integration and mergers
within the hospitality industry that is analysed in detail. In addition to this, the present study also
contain various steps to develop a plan that includes operational requirement of the business
organisation.
TASK 1
Discuss the interrelationships between hospitality and wider travel and tourism businesses
Hospitality industry: It is the wider sector which not only provide lodging and food
services in hotels , but also provide these services in entertainment industry , travel and tourism
industry , airline industry etc. Hospitality industry provide quality of service as per the rating that
start from 1 star to 5 star generally (Bartlett, Johnson and Schneider, 2016). The ratings depends
on the quality of food , maintenance of hygiene etc. Apart from food and lodging it also provide
pub facility , nightclub facility etc.
The main service provided by hotel is accommodation facility which includes Lodging,
suites and resorts. Lodging means a shelter for people who travel from one place to another , for
this people book lodges and rooms. Apart from lodges there are luxury suites for stay, which are
suitable for formal sorts of staying that are expensive from normal lodging services. In addition
to this, resorts can be another type of accommodation that particularly focus on bringing guests
close to the nature and gives break from their normal routine. On the other hand, food and
beverage is another type of main services provided by the hospitality industry that includes
restaurants, catering business, industrial catering etc. (Cornelissen, 2017).
Tours and Travel: It covers major part in hospitality industry which includes airline,
trains, cruise. Travel and tourism has become largest civilian industry in the World and the major
source of income for most of the people who likes to travel from one place to another. There are
three forms of tourism inbound tourism, outbound tourism and domestic tourism. Domestic
tourism refers to travelling of people within the same country, where Outbound tourism refers to

travelling of residents in another country. In addition to this, inbound tourism involves travelling
of non residents within the given country (Law and et.al., 2015).
Apart from this there can be mass tourism which means travel by groups on scheduled
tours then there can be niche tourism that include travelling for particular destination like
wedding destination.
Interrelationship between travel and tourism sector
Tourism sector is the base of hospitality industry and without hospitality industry the
tourism industry will not able to sustain and there are chance of occurring various gaps because
if there will be no lodging accommodation to stay then travelling to that destination or location
will decrease that will increase the profit generation capacity by hospitality industry in the
particular area (Leung, Xue and Bai, 2015). Apart from that, the main aim of the hospitality
industry is to provide happy and safe environment while travelling. In airlines, air staff is hired
by hospitality industry to provide professional service to guests.
Apart from that, hospitality includes lodging and staying facility so tourism companies
have to consult hospitality services to satisfy the requirement of the customers (Manhas and
Tukamushaba, 2015). In addition to this, profit making also relates tourism and hospitality,
because there are sometimes contract between tour industry and hospitality industry to provide
conveyance facility to the guest of hotels by the particular travel agency. It is the responsibility
of both the industries to maintain proper communication and to satisfy the need of the passengers
and guests.
Hospitality industry supply the services that are committed by tour operators to its
consumers. Travel companies have to provide safer travel packages to its consumers thus, they
make connection with hotels and other hospitality firms that support travel firms in offering
satisfactory services to consumers. On other hand if hotels fail to serve consumers well then
travel firms will not be able to perform well and satisfy its consumers significantly.
Visitors are attracted by the beautiful location of the hotels which attracts them towards
the particular destination, that ultimately helps in boosting tourism business (Mansour and
Ariffin, 2017). In addition to that, tourism is the important component of hospitality industry for
its sustainable growth and development.
Hospitality industry includes commercial support tourism activities like airline staff an
travel agencies. In addition to this, Hospitality industry helps in increasing no. of tourists because

of attractive location of hotels and provision of excellence services by them. On the other hand,
quality of aviation increases demand of hotels (Minazzi, 2015).
TASK 2
2.1 Implication of integration to hospitality industry
There are majorly two kinds of integration such as vertical and horizontal. Vertical
integration can be defined as process of making agreement between two companies with unique
purpose. It is kind of competitive strategy in which one firm makes control over other firm’s
production or distribution activities. The major purpose of such kind of integration is to ensure
controlling over supply chain system (Vertical integration and horizontal integration, 2019).
Forward, lateral, backward are three major types of vertical integration systems. Thomas cook is
the leading tour operator that provides outbound and inbound travel packages to consumers.
Recently it is operating many companies such as Thomas cook cruise, travel agents etc. In order
to reduce cost of business, Thomas cook has adopted forward vertical integration system that has
helped the firm in minimising operation cost and controlling over value chain system of
organisation. Vertical integration impact positively on business units, as it supports in improving
distribution system and reducing cost of products as well (Mooney, Harris and Ryan, 2016). By
this way companies that operate in hospitality industry can utilise its resources well and can offer
amazing services to its potential buyers. Furthermore, vertical integration is also beneficial in
order to gain competitive advantage and getting more development opportunities.
InterContinental hotel group (IHG) is the leading brand that operates several brands such
as Hotel Indigo, hotel Inn, Hualuxe, Crowne Plaza etc. It implements vertical integration system
that has helped the firm in improving its distribution activities and offering cost effective quality
products to different consumers (Robinson, Ruhanen and Breakey, 2016).
Horizontal integration can be defined as strategy through which two firms merge with each
other with the purpose of improving economic of scale. Merger, acquisition, take over etc. are
some strategies of horizontal integration. One of the major agenda of this type of strategy is to
reduce competition and enhance market presence of business unit to great extent. Horizontal
integration impacts positively of the organisation as it supports in increasing customer base and
accomplishing goal of economic of scale. For example, IGH group has acquired Regent hotel
and resort. Furthermore, it has acquired Kimpton hotel as well (Sari, Bulut and Pirnar, 2016).
One of the major implication of horizontal integration is higher production at lower cost. By

acquiring other firm or merging with others company, enterprise can enhance its production
ability. Horizontal integration aids in increasing range of products so that company can satisfy its
consumers effectively. This is also helpful in increasing market power and raising ability of
business to enter into new market. Thus, vertical and horizontal both kinds of integration are
beneficial for the hospitality industry and aids businesses in sustaining in the market for longer
duration.
2.2 Discussion on impact of integration on hospitality business
InterContinental hotel group has adopted both vertical and horizontal integration
strategies and both these kind of integrations have affected business strategies to great extent. As
IHG group is engaged in vertical integration system that has resulted in improving working
efficiency of business unit to great extent. Furthermore, merger and acquisition have supported
the organisation in improving economic of scale of business unit significantly. Enterprise has
acquired many small firms that supported in increasing international trade activities. For
example, IHG has acquired Kimpton hotels and restaurants in order to become largest and
leading hotel brand worldwide (Tang and Nathan Abdullah, 2018). Entity has done this
acquisition in 430 million, Kimption manages 62 hotels in most attractive cities. But when IHG
has acquired Kimption then it becomes the market leader in hospitality industry. After that entity
has opened new hotels in many other countries that has resulted in increasing profitability of
business unit to great extent. Though initial investment in acquiring that hotel has enhanced
financial burden of the company but this has given benefit to increase customer base globally.
Integration has supported in increasing sales of services and minimizing operational cost of
business. Horizontal and vertical both integration have helped IHG group in reaching to mass
audience and offering services in untouched markets (Robinson, Ruhanen and Breakey, 2016).
By this way enterprise become able to manage its operational cost effectively and unnecessary
expenses get minimised significantly.
Vertical integration has impacted positively on the organisation, backward and forward
integration have helped IHG group in making its supply chain activities more smooth. This type
of strategy has made the distribution and after sales service of InterContinental hotel group more
efficient and now company is able to offer luxurious services to global consumers. If firm plans
to enter into new country then it has to face several issues, due to these barriers many entities get
failed to establish its branch successfully in other locations. But also vertical integration allows

companies to establish its branch in new country and managing supply chain activities
effectively. That is why IHG group has become able to enhance its relationship with suppliers
and minimising cost of production as well (Bartlett, Johnson and Schneider, 2016).
But horizontal integration has negative impact as well, as some times it cut the actual
profit of business because enterprise has to share its profit with other business partners. This
sometime results in reduction of market share value and brand value. In addition, this type
integration helps IHG in raising investment and expanding the brand across the world.
TASK3
3.1 Rationale for a selected project clearly justifying decisions linked to target Market
The idea of opening of a XYZ coffee shop is to increase sales and demand among young
generation as teens nowadays are more addicted to coffee to escape from the stress of life. One
of the major reason of opening coffee shop is that demand of this product is very high,
companies such as Starbucks is rising its ales day by day. Thus, if the firm enter into this market
then it would be better for business to get high revenues. Furthermore, it requires less investment
as compare to any other business thus, it is viable business idea. In addition to this, the aim of
XYZ coffee shop is to provide comfortable environment where customer can receive quality
food & beverage and entertainment in bundle at reasonable price. The coffee shop aims to
provide variety of coffee and non alcoholic drinks. Along with this, objective of the coffee shop
is to satisfy customers by offering high quality coffee and good environment (Cornelissen,
2017).
It is very important to do Market research, next step is to collect data that can be collected
through questionnaire and schedule that will help in identifying the core need of customers that
will ultimately find sustainability of the coffee shop in long run (Cornelissen, 2017).
Target Market – Here the target customer will be students, as college going or high class
students like to spend time with friends and they prefer to go to any coffee shop. As it is
affordable for them and they can spend quality time with them. Thus, by targeting this group of
people company can raise its sales to great extent. The majority of the customer will be those
who loves to enjoy a relaxing atmosphere and games.
The location is decided on the top of the tower, the tower has substantial parking and garden
area around it which will bring customer close to the nature .
Scale: The total size of coffee shop covers 2400 sq. ft. of the 3rd floor of the tower .

Funding: Apart from that, XYZ coffee shop needed £80000 that is funded by 3 members, in
which owner is contributing £20000 and rest money will be arranged by investors. Furthermore,
bank loan will be taken so that long term development need of company can be fulfilled (Leung,
Xueand Bai, 2015).
Product& service: It will offer all types of coffee products to consumers and will provide them
home delivery option as well.
3.2 development of plan for hospitality business including operational requirements of the
business
XYZ coffee shop aims to establish in the market successfully by offering high quality
products to consumers.
 It will design is interior and exterior in such manner so that it gains attention of buyers.
there will be adequate parking space, proper space between all consumers, facility for
disable person etc. Furthermore, music will be played all the time so that consumers feel
so great.
 As students are the major target market but it will provide coffee products for old age
people and other consumers as well. Professional meeting can be held in the place that
will help in attracting more people towards the location.
Operational requirement to operate XYZ coffee shop includes
Recruitment and selection policy – It is the process of differentiating between applicants
in order to identify those with the greater likelihood of success in the job . The role of selection is
important for two reason first is hiring best candidate and second is fulfilling the vacancy so
XYZ should hire candidate having good personality. communication skill and influential skill
so that staff person can influence customer and make good coordination with customer. The
initial stage of recruitment will include filling up of the blank forms that is available online , then
the candidates will be called for the preliminary interview in which their communication skill,
creative skills , influential skills are asked by the interviewer, apart from that subject related
knowledge is also examined then the final selection will be made (Mansour and Ariffin, 2016).
Pricing policy- For XYZ co. Penetration pricing will be best which is the pricing strategy
of the company where companies sets low price for the product or services . This pricing strategy
will help XYZ coffee shop to attract new customer based on low cost and will increase the
market share of the coffee shop that will result in increasing profit of XYZ. Thus penetration

pricing is suitable for increasing demand for new product which will discourage competitor to
enter into new market . It is also an appropriate strategy to become the market standard but
before the implementation of penetration pricing XYZ should be sure that it has sufficient
production and distribution at its place to meet the demand. On the other hand it can choose
competitors parity pricing which is the policy of the company to set price of the product equal to
competitor (Law, and et.al., 2015).
Promotional activities- there are many promotional activities that can be done by XYZ to
promote its coffee shop for ex. Decorating the shop with a particular theme , providing loyalty
cards for instance offering every 10th coffee for free that will actually help XYZ to earn higher
revenue and increase customer loyalty. Apart from this XYZ can provide discounts .Along with
this it can provide time based offers like offering coffee at low price in the morning and offering
discounts on food items at the time of lunch. XYZ can also hang attractive boards and signs at
the door or outside the coffee shop that will attract the consumers. In addition to that coffee
feedback cards can be provided to the customer to take feedback which will make customer
feeling valued. (Law, and et.al., 2015)
Cultural diversity and conflict- XYZ should recruit employees who comes from different
region, that would help in understanding the behaviour of customer with different culture which
will help them in making a good rapport with the guests and will reduce the language and
culture related barrier. Sometimes it is very difficult to understand the need of customer it may
be due to language barrier, so hiring of employees from different region is must (Bartlett,
Johnson, and Schneider, 2016).
CONCLUSION
From the above study it can be found that there is a deep relationship between hospitality
and tours & travel industry. Travel industry is the core reason of sustainability of hospitality
industry. Attractive location plays important role in interrelation of hospitality and tourism
industries. It can be found that integration and mergers have major impact on hospitality
industry. The horizontal integration have major impact as it includes merger and acquisition of
two companies which increases scale, size and competition of the business on contrary to that
vertical integration have less impact on the hospitality industry as it only includes integration of
supply chain of two companies. Along with this, from the above study it can be concluded that
for opening any new restaurant market research and target customer should be pre planned.

REFERENCES
Books & Journal
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development approaches for tourism and hospitality workforce planning. Journal of
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Cornelissen, S., 2017. The global tourism system: Governance, development and lessons from
South Africa. Routledge.
Law, R. and et.al., 2015. Distribution channel in hospitality and tourism: revisiting
disintermediation from the perspectives of hotels and travel agencies. International
Journal of Contemporary Hospitality Management. 27(3). pp.431-452.
Leung, X. Y., Xue, L. and Bai, B., 2015. Internet marketing research in hospitality and tourism: a
review and journal preferences. International Journal of Contemporary Hospitality
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Manhas, P. S. and Tukamushaba, E. K., 2015. Understanding service experience and its impact
on brand image in hospitality sector. International Journal of Hospitality Management. 45.
pp.77-87.
Mansour, J. S. and Ariffin, A. A. M., 2017. The effects of local hospitality, commercial
hospitality and experience quality on behavioral intention in cultural heritage
tourism. Journal of Quality Assurance in Hospitality & Tourism,. 18(2). pp.149-172.
Minazzi, R., 2015. Social media marketing in tourism and hospitality.
Mooney, S. K., Harris, C. and Ryan, I., 2016. Long hospitality careers–a contradiction in
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Robinson, R. N., Ruhanen, L. and Breakey, N. M., 2016. Tourism and hospitality internships:
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Sari, F. O., Bulut, C. and Pirnar, I., 2016. Adaptation of hospitality service quality scales for
marina services. International Journal of Hospitality Management. 54. pp.95-103.
Tang, C. F. and Nathan Abdullah, A. S., 2018. Can inbound medical tourism boost Malaysia’s
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Online

Vertical integration and horizontal integration. 2019. [Online].Available through
<https://www.mbacrystalball.com/blog/strategy/vertical-horizontal-integration-strategy/>