Hospitality Provisions: Interrelationships, Integration, and a New Hookah Bar Concept

This report explores the intricate relationship between the hospitality industry and the broader travel and tourism sector. It delves into the implications of integration, analyzing its impact on the hospitality industry and examining the case of Marriott International's acquisition of Starwood Hotels & Resorts Worldwide. Furthermore, the report presents a detailed rationale for a new hookah bar concept, 'Vintage Café,' designed to expand the reach of PKF hotelexperts and cater to a wider customer base. The report outlines the target market, location, scale, funding, product and service offerings, and operational requirements, including an organizational chart and human resource allocation plan.

Hospitality Provisions
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Contents
Introduction.................................................................................................................................................2
Task 1..........................................................................................................................................................3
1.1 Discuss the interrelationships between hospitality and wider travel and tourism businesses.............3
Task 2..........................................................................................................................................................6
2.1 analyse the implications of integration to the hospitality industry.....................................................6
2.2 discuss how integration has affected a hospitality business...............................................................8
Task 3........................................................................................................................................................10
3.1 Develop a rationale for a selected project clearly justifying decisions linked to target market........10
3.2 Develop a plan for a hospitality business which includes the operational requirements of the
business’ organisational structure in relation to human resource allocation. You should include an
organisational chart...............................................................................................................................13
Conclusion.................................................................................................................................................18
References.................................................................................................................................................19
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Introduction
Hospitality industry is the foundation of world’s largest industry i.e. travel and tourism industry.
The important factor behind the exponential growth of the tourism sector is the innovative and
creative approaches implemented in the hospitality industry. Hospitality industry caters to the
millions of customers every year and contributed in the growth of the tourism economy of UK.
There are different elements that are included in the hospitality sectors which are hotels for
accommodation, small motels, B&B facilities, bars, pubs, restaurants and membership clubs etc.
This wide range of facilities provided by the hospitality industry has made sure that customers
have everything they want when they go on a holiday. Along with this, there are business events
which are organised by the hospitality industry organisations that have contributed in the
development of wide travel and tourism sector. In this report, various hospitality provisions that
are relevant to the travel and tourism sector and their relationships with the wide tourism sector
would be analysed. Integration in the hospitality sector would also be discussed in detail to
understand the importance of hospitality sector in the context of wide travel and tourism sector.
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Task 1
1.1 Discuss the interrelationships between hospitality and wider travel and tourism
businesses
A detailed picture of the various elements of the hospitality sector is shown in the below image
that include all the important elements of the hospitality management:
Figure 1: Hospitality Industry Scope (Airey, Dredge & Gross, 2015)
The traditional definition of the hospitality industry refers to the accommodation services and
lodging, leisure activities, entertainment services and events management. On the other hand,
wide travel and tourism sector adds transportation, visitor attraction management and providing
innovative tour packages such as eco-tourism and enclave tourism. Both industries, Hospitality
and Tourism go hand in hand with an aim to provide excellent services to the customers and
fulfil their needs and wants.
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Accommodation and lodging are the most important factors of the hospitality industry on which
the travel and tourism industry rely heavily. Most of the tour operators have contracts with the
accommodation providers to make sure that a good night stay could be arranged for the
customers. There are different types of accommodation services such as luxury accommodation
and 4 Star and 5 Star hotels, economic accommodation in motels and B&B facilities etc.
Excellent accommodation service that suits the spending power of the customer is the backbone
of the tourism sector which is managed by the hospitality industry.
After the accommodation, food is the primary worry for the tourism organisations. People from
different backgrounds, cultures and countries go on tours and they expect that good food is
available to them as per their requirements. There are fast food joints, cafes, restaurants, catering
providers and many other elements that are the part of the hospitality industry and essential for
the tourism business (Ali & Amin, 2014).
Tourism Organisations usually offer packaged deals or tour packages to the customers that
include a bundle of services such as transportation, accommodation, food, events, tour to the
visitor attractions and conferences. Hospitality industry plays an important role in the
arrangement of all these services to the customers. Hospitality industry provides a platform on
which the tour packages are developed and marketed by the travel and tourism organisations
especially the tour operators.
The packaged holidays have become very popular these days. These packaged holidays are
customised as per the needs and wants of the customers. Tourism organisations conduct market
research and then identify a tourist destination or a combination of tourist destinations that has to
be included in the package depending on the target market segmentation (Ariffin & Maghzi,
2016). Some of these packaged holidays target high income group customers who want to go on
a luxury holiday abroad while some of the holiday packages are developed to cater to the needs
of the customers in lower income group who just want to spend some time on a holiday with
reasonable expenses as per their capacity.
Along with providing the facilities for the packaged tours offered by the tourism organisations,
hospitality industry also takes care of the event management and conference arrangements. Many
corporate organisations need services for their annual conferences where hospitality
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organisations are contracted by the tourism providers for the same. In these conferences, the
accommodation of the guests, their food and relevant services are managed by the hospitality
sector. Similarly in the event management, whole process is outsourced to a hospitality
organisation that takes cares of providing the space for the event, decoration, arrangement of
foods and beverages etc. are managed by the hospitality organisation. Outsourcing the catering
services is an important element of these events and conferences. Customised menu are
developed to make sure that the food is according to the taste and requirement of the attendees.
Catering for the outdoor events is also an essential part of the hospitality industry. Tourists who
go for local site seeing are provided snacks during these visits to make sure that they are able to
enjoy the trip without any interruption (Ariffin, Bibon & Abdullah, 2015).
Leisure activities are also an important part of the hospitality industry. Hospitality organisations
provide various kinds of leisure activities to the customers. Mostly these services include theme
parks, fun parks, sports activities, gaming events, spa services and luxury transportation. Many
of these services are provided to the tourism organisation customers in the packaged deals.
People who buy luxury tour packages could avail these services without any extra charges as
payment for these services are already included in the tour package (Bharwani, & Jauhari, 2013).
Big tour operators like Thomas Cook and TUI has collaboration with the hospitality
organisations who own theme parks, fun parks and sports complexes.
Exhibitions and Visitor Attractions also combine the wider travel and tourism industry with the
hospitality industry. There are many famous visitor attractions in UK such as British Museum,
V&A Museum, and National History Museum etc. that attract visitors from across the world.
Because of the high inflow of the tourists into these visitor attractions, a systematic management
of the attraction is essential that is an important aspect of the hospitality management. Similarly,
many exhibitions are organised in the different parts of the country where hospitality
organisations are responsible for the event management.
Business travel and aviation is an important part of the travel and tourism organisation.
Globalisation has brought significant changes in the corporate business operations. Now,
organisations have expanded to many locations and their executives travel on regular basis which
has created an opportunity to the tourism industry. Now hospitality organisations have contracts
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with corporate organisations and offer them economic travel options with reasonable
accommodation. This kind of opportunity has turned into a mass business because of the
frequent fliers from corporate organisations.
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Task 2
2.1 analyse the implications of integration to the hospitality industry
Expansion and growth are two very important aspects of the hospitality industry. To achieve
these objectives, hospitality organisations use integration. There are two types of integrations
which are mainly implemented in the hospitality sector – Horizontal Integration and Vertical
Integration. Both types of integrations use different approach and cater to the special growth
needs of the hospitality organisations.
Horizontal integration refers to the merger, acquisition or contractual agreement between two
organisations that operate on the same level of business chain (Brey et al, 2015). For example,
acquisition of a renowned hotel by another hotel organisation like falls in the category of
horizontal integration. Similarly, when a large hotel chain like Marriot acquires another hotel and
includes it in its chain of hotels by branding as one of the Marriot Hotel where ownership of the
acquired hotel is transferred to the large organisation (Marriot Hotel) is also a form of horizontal
integration.
Mostly the brand names of the organisations included in horizontal integrations are maintained
as it is even through the acquisition or merger has taken place. This allows the organisations
involved in keeping the loyal customer base intact. An example of the horizontal integration is
the acquisition of the budget airline “Go” by Easy Jet. “Go” airline was originally owned by
British Airways but after the merger in 2002, the control of the company was shifted to Easy Jet.
However, the name of the airline changed; it helped Easy Jet in increasing its revenue and
market share (Brotherton, 2013). According to some experts, if Easy Jet had not changed the
name and logo of “Go” airline, it would have been able to get more customers.
On the other hand, acquisition of a travel agency by a tour operator like Thomas Cook falls in the
category of vertical integration
In vertical integration, a firm takes over an organisation which is at a different level in the same
distribution chain. It allows the organisation to strengthen its position in the market and have
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Tourism organization
Shopping Centers
Tour Operators
Hotels
Travel Agencies
more control on the operations. The supply chain of the organisation becomes solid and wastage
is removed in the distribution chain.
Types of Vertical Integrations
There are two types of Vertical Integrations in the hospitality industry– Forward Integration and
Backward Integration. In case of Forward Integration, an organisation which is at the higher
level of the chain acquires an organisation at the lower level. For example, a tour operator like
Thomas Cook acquiring a travel agency falls in the category of forward integration. On the other
hand, a Travel Agency acquiring a Hotel is called backward integration.
Figure 2: Vertical Integration in Hospitality Industry (Buhalis, & Crotts, 2013)
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According to a survey conducted in 2012 by British Hospitality Association (BHA) it has been
identified that almost all big hospitality and the travel and tourism organizations based in UK has
merged with many companies so as to establish a dominate place in the international markets.
Positive of integration
One of the most important benefits of the integration is economy of scale as it helps the
organisations in increasing the market share and net revenue (Crick & Spencer, 2016). The
competition in the market decreases with horizontal integration and organisations are able to
develop a loyal customer base. Standardisation is another benefit of the integration especially in
case of vertical integration. It results in organisations having a steady supply of services with
good quality to the customers.
Negatives of integration
Control and manipulation of the market increases with horizontal integration because customers
are left with fewer options and organisations could hike the price of the services. To handle this
situation, government of UK has implemented many legal regulations on mergers and
acquisitions in the hospitality sector.
2.2 discuss how integration has affected a hospitality business
Integration has happened in many sectors in the last decade but acquisition of the Starwood
Hotels & Resorts Worldwide by Marriot International is the biggest merger in the history of
hospitality sector. Marriot International was started in 1927 by John Willard Marriot when he
opened a small root beer stand in Washington, USA. Since then, the hotel has established itself
as a luxury accommodation provider. The growth and expansion of the Marriot International
depended mainly on the horizontal and vertical integration. While it has acquired many small
hotels during the long process of expansion, the acquisition of Starwood Hotels & Resorts
Worldwide helped the company in establishing itself as the market leader in the accommodation
industry (Duncan, Scott & Baum, 2017). The hospitalist industry has seen many different types
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of acquisitions and mergers but the deal of Marriot International and Starwood Hotels & Resorts
Worldwide created history which saw an investment of $12.2 billion, biggest in the history.
After the acquisition of Starwood Hotels & Resorts Worldwide, Marriot International now has
5,500 hotels which make it the largest accommodation provider. The merger has resulted in
Marriot International having more than 1 mission rooms to provide to the customers worldwide.
After the completion of the deal there will be following organisations working together to
provide services to the customers in USA, UK, China, India and many other EU countries -
Marriott’s flagship brand and Sheraton; Edition Hotels and W Hotels; Ritz-Carlton and St. Regis;
Moxy Hotels and Aloft Hotels (Janicic & Jankovic, 2017).
After the integration, approximately 1.2 billion customers would be retained by the group which
is a huge figure in the hospitality industry. The merger would help Marriot International in
standardisation of the services in all its hotels to make sure that it would be able to provide better
services to its customers. However, a big question arises when mergers at this level happen –
would the customers be able to receive the same benefits they were receiving before the mergers.
Starwood Hotels & Resorts Worldwide already has many loyalty programs for its customers
which are different than Marriot International. Hence, it would be a big challenge for the Marriot
International to make sure that it is able to provide the same benefits and discounts to the
existing customers of Starwood Hotels & Resorts Worldwide.
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Task 3
3.1 Develop a rationale for a selected project clearly justifying decisions linked to
target market.
In this section of the report, I as a Junior Consultant with PKF hotelexperts would device a plan
for developing a new Hookah Bar in London. The new Hookah Bar with the name of Vintage
Café would help PKF hotelexperts in expanding its presence in the market and acquire new
customers. The Vintage Café would serve Hookahs to adult customers along with fast food. In
future, the Vintage Café could also expand by providing economic accommodation to the foregin
tourists in the form of Bed & Breakfast.
Concept
Currently, PKF hotelexperts only provides accommodation services to the foreign tourists who
belong to high income group and the food is also served with premium pricing. Because of the
premium pricing and catering to the foreign tourists only, there is not much scope for the
expansion in this area. There are already many international accommodation chains in London
such as Marriot International and Hilton Hotel. Hence, it is essential that a new type of
hospitality business is added to the organisation (Kim, Vogt & Knutson, 2013). The Vintage
Café would help the PKF hotelexperts in getting the local customers especially the millennial
who always look for something new when they go out. The Vintage Café would not only serve
Hookah but also the fast food and drinks. Hence, it would be a place that would fulfil most of the
needs of the millennial.
Target Market
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Currently, most of the customers of the PKF hotelexperts are foreign tourists as mentioned
before in the report. These people look for luxury accommodation and food services. Maintain
this level of services while competing with the big organisations in London is becoming a
tougher task.
Vintage Café would be able to meet the needs of domestic as well as foreign customers because
of the innovative product range. Multiple products and services would increase the customer
segment and PKF hotelexperts would be able to attract people in the age group of 18 to 35 who
still find it hard to get Hookah, food and drinks at one place. The customers with high as well as
average disposable income will be appropriate for it.
Location
The chosen location for the new Hookah Bar and Restaurant “Vintage Café” is Greater London.
However, there are already some Shisha Bars in the area but not many provides quality food and
services are also not very high quality (Riley, 2014). Because of the existing Shisha Bars and
Hookah Joints, it would be easy to have an existing customer base in the area and proper
marketing and quality services would be able to attract these customers.
Scale
The Vintage Café would start initially with the Hookah and Shisha Services with fast food but in
future the place could be developed as a Bed & Breakfast facility. If café is able to develop a
loyal customer base with Hookah, fast food and drinks, it would be easy for the café to convert
some of these customers into accommodation seeker. Greater London sees many tourists coming
in the holiday season and economic accommodation would give these tourists an option to enjoy
Hookah with stay.
Funding
The PKF hotelexperts would initially arrange the funding from its revenue that it is getting from
existing hotels and restaurants. Angel investors could also be associated with the Vintage Café in
the initial phase by offering them reasonable stake in the café. The PKF hotelexperts is looking
for the initial investment of £250,000 for starting the Vintage café. Out of these starting
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investments, approximately £150,000 would be arranged by the PKF hotelexperts. Rest of the
amount could be generated by offering the stakes to the investors.
The aim of the PKF hotelexperts is to make sure that it is able to sustain the future investment on
its own and not requiring funds from the external sources for expansion stage as it is already
offering some stakes for the initial start-up phase
Product and Services
The main product of the Vintage Café would be Shisha and Hookah which would be
complemented with fast food and drinks. A list of the detailed products and services is provided
below:
 Traditional shisha and herbal shisha
 cigars
 Tobacco-related accessories
 All kind of fast foods
 Premium cigars
 Providing a cigar-friendly smoking environment
 Assorted red and white wines
 Beer and liquor with all the premium brands
 Martinis
 Tobacco
 Sale of E – Cigars
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3.2 Develop a plan for a hospitality business which includes the operational
requirements of the business’ organisational structure in relation to human resource
allocation. You should include an organisational chart.
The operational aspects of the new Hookah and Fast Food Joint by PKF hotelexperts is provided
below in the detailed manner:
Design of the Vintage Café
For starting a new Hookah and bar joint, it is necessary that an attractive design is prepared with
focus on the ambiance, interior and exterior. There are many different themes that could be used
in the designing of a Hookah and Bar Joint such as Bohemian and Egyptian. These two themes
provide great options for the lucrative ambiance and interior design.
Dim lights, comfortable chairs and pillows create a relaxed atmosphere, encouraging customers
to sit and chill for longer--and the longer they stay, the more food and drinks they're likely to
order would be the main part of the theme (Teng & Chang, 2013).
The Outdoor Patio is another important aspect of designing a Hookah and Shisha offering joint.
It would allow the customers to enjoy the fresh air while they smoke high quality cigars and
other types of products offered by Vintage Café.
Human Resources Management (Functional Areas, Responsibilities)
In order to start and run a successful hospitality business, it is essential that the functional
operations of the facility are handled by a responsible, qualified and dedicated workforce. Hence,
as a junior consultant with PKF hotelexperts, I have developed the organisational structure of the
proposed Hookah Bar and Restaurant – Vintage Café which is provided below:
Board of Directors
The Board of Director would consist of the major stakeholders in the Vintage Café. These would
include people from PKF hotelexperts and Directors from other investment organisations. The
Board of Director of the Vintage Café would be responsible for setting the mission and vision of
the company and give directions to the General Manager and Chief Executive Officer.
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Board of Directors
General Manager C E O
Event ManagerAdministrative
Manager
Food and Accommodation
Manager
Supervisors
Chefs
Staffs
Room service
Supervisors
Staff
Marketing
Manager
General Manager
The General Manager of the Vintage Café would be responsible for advising the Board of
Directors on the overall growth of the company and assist them in maintain the broad category
decisions.
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Chief Executive Officer
The CEO (Chief Executive Officer) at Vintage Café would report to the top management (Board
of Directors) and would be responsible for setting up the different departments and instructing
the lower level managers to implement the Board’s decisions. The main responsibility of the
CEO would be to control and manage the different organisational processes such as recruitment
and selection, planning, developing the strategies and setting the goals for the managers. The
CEO would also be responsible for the developing and implementing the effective means of
communications throughout the organisation.
Administrative Manager
Administrative Manager at Vintage Café would be responsible for the day to day administrative
tasks in the organisation such as handling the accounting and payroll
Event Manager
The Vintage Café would provide the facility to hold the events such as birthday parties,
anniversary celebrations, New Year celebration etc. To manage all these events, an Event
Manager would be hired who would make sure that all these events are organised as per the
customised requirements of the customers. Pre-event meetings with the customers to discuss the
requirements and finalising the deals would be handled by the Event Manager who would also
conduct subsequent meetings with the customers and café management to organise the events.
He would then help the Administrative Manager in event management.
Marketing Manager
The Marketing Manager at Vintage Café would be responsible for conducting the market
research to assess the market trends and changing conditions in the marketing strategies of the
competitors. The Marketing Manager would prepare the marketing strategy of the café by
analysing the market data and make sure that appropriate marketing techniques and promotional
strategies are used in the marketing plan.
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Food and Accommodation Manager
The Food and Accommodation Manager would be responsible for the procurement of the raw
material, production of the food items, Food Quality Assurance. In case the Vintage Café starts
accommodation service, it would also be managed by the Food and Accommodation Manager.
Supervisor and Staff
There would be supervisors to handle the separate processes at the Vintage Café and they would
work as links between the junior staff and the managers. The junior staff at Vintage Café would
report to these supervisors and they would be instructed by the supervisors for fulfilling the daily
duties.
There would be lower level staff at Vintage Café such as waiters, bartender, Hookah assistants,
cleaners and kitchen workers.
Recruitment Policies and Procedures
A recruitment panel would be established with the combined efforts of the General Manager,
CEO and other senior department managers. The HRM department would manage the process of
the establishment of the recruitment panel and conduct the recruitment and selection process.
The HR policies would be developed to implement the various government legislations
compliance such as Labour Laws, Employment Act, Equality Act, Minimum Wages Act,
Minimum Working Hours Directive etc (Verma et al, 2015).
In the initial phase, the recruitment would be done by the Vintage Café itself, however at a later
stage; the process could be outsourced to a recruitment consultancy.
Promotional Activities
Promotion plays an important role in the starting phase of any hospitality organisation and as
mentioned before, the promotional activities would be managed by the Marketing Manager of
the Vintage Café.
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Vintage Café would initially rely on the traditional as well as digital tools of marketing. Leaflets
and posters along with other marketing merchandising would be used under the traditional
marketing campaigns. Traditional marketing process would also involve sales promotion,
personal selling and advertisement. Vintage Café would use Search Engine Marketing and
Search Engine Optimisation along with social media marketing for the promotion of the newly
started Hookah and Drinks Joint.
Pricing Strategy
In the initial phase, Vintage Café would use economic pricing strategy in which the price of the
Hookah and Drinks would be kept at a lower rate as compared to the other similar facilities in the
vicinity of the café. However, once a loyal customer base is established and Vintage Café is
turned into a brand, the premium pricing strategy could be implemented.
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Conclusion
Hospitality industry has gone through some drastic changes in the past 2 decades and while
many organisations have succumbed to these changes, some have emerged as victorious and
achieved exponential growth using vertical and horizontal integration. Integration in the
hospitality sector has brought together the best of the industry and organisations like TUI,
Thomas Cook and Marriot International have expanded at the global level. However, it is
essential that the negative aspects of the integration are handled by the proper authorities and a
competitive market is maintained. The current report discussed the various aspects of the
integration in the hospitality sector using the given case studies and also provided many other
examples. The concept of a new hospitality organisation “Vintage cafe” is also described in
detail in the given report as a plan for the development, design and operations is provided with
appropriate market research.
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