Strategic Management in Hospitality

This document discusses strategic management in the hospitality industry, focusing on the case of Sage Hotel in Adelaide, Australia. It covers internal and external analysis, current strategies, and the approach to strategic management. The hotel has adopted cost leadership and differentiation strategies to achieve competitive advantage.

Running head: STRATEGIC MANAGEMENT IN HOSPITALITY
Strategic management in hospitality
Name of student
Name of University
Author note

1
STRATEGIC MANAGEMENT IN HOSPITALITY
Executive summary
The topic was presented to provide an idea about managing business competencies,
skills and capabilities required to deal with the strategic issues and bring change management
to attain competitive advantage in business. The internal and external analysis helped in
understanding the strengths, weaknesses, opportunities and threats as well as the political,
social, economic, cultural, legal and environmental factors that were contributing to the
business functioning. The company managed to implement strategies to deal with the barriers
of entry into the global marketplace, furthermore helped in remaining competitive within the
business environment. Sage Hotel also managed to implement cost leadership and
differentiation strategies for providing the hotel services at reasonable prices, which favoured
the management of greater economies of scale along with achieving cost benefits too. The
differentiation strategies further helped in distinguishing the services from other hotels, which
also favoured the management of good strategic planning required to sustain in the
competitive marketplace with ease and efficiency.

2
STRATEGIC MANAGEMENT IN HOSPITALITY
Table of Contents
Introduction................................................................................................................................3
Body...........................................................................................................................................3
Internal and external strategic analysis...................................................................................3
Approach to strategic management........................................................................................8
Current strategies adopted by the hotel..................................................................................9
Approach to execution of strategies.....................................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14

3
STRATEGIC MANAGEMENT IN HOSPITALITY
Introduction
The report is prepared to discuss about the present business strategies chosen by the
hospitality business to become successful in the competitive business considering the
business organisation named Sage Hotel, Adelaide, Australia. The core competencies and
strategic capabilities of the organisation will be identified, which can help in managing the
dynamic capabilities, furthermore ensure enhancement of competitive positioning and attain
competitive advantage in business as well. The strategic issue here can be the changing needs
and preferences of the customers constantly, which often affect the business functioning and
creates issues in delivering services properly (Kotler et al. 2017). The report will also
demonstrate about the internal and external strategic tools along with the refinement of
existing business strategies for the purpose of gaining competitive advantage in business.
Body
Internal and external strategic analysis
The internal and external strategic analysis tools and techniques are used in this
situation to make assessment of the various situations and determine the core strengths, skills
and competencies required to attain a competitive edge over its competitors. This can be
beneficial not only for the purpose of examining the various factors associated with the
influencing of business performance and also for the development of an effective strategic
marketing plan. The various components that have contributed to the business functioning are
identified such as the strengths, weaknesses, opportunities and threats (Mok, Sparks and
Kadampully 2013). The SWOT analysis can be used for both internal and external analysis of
factors such as the internal strengths and weaknesses whereas the external factors include
opportunities and threats.

4
STRATEGIC MANAGEMENT IN HOSPITALITY
The core competencies and strategic capabilities are assessed for the organisation
within the hospitality industry with the help of SWOT analysis, which can assist in evaluating
the evaluating the strengths and weaknesses, most of which are based on internal factors.
Strengths
 Sage Hotel Adelaide is a major 4
star hotel in the concerned location
that has delivered hospitality
services to the customers at
reasonable prices, due to which, it is
quite suitable for the visitors
considering their visit for work
purpose of simple getaway.
 The Sage hotel experience is
effective and includes providing
complimentary Wi-Fi services of
high speed, newspapers on demand,
immediate room service, onsite
parking, etc.
 The categorisation of
accommodation facilities at Sage
Hotel is done to suit the needs of
people of different market segments
and it includes Standard room,
executive suite, family room as well
as luxury suite (J. Harrington et al.
Weaknesses
 Constant changing needs and
preferences of the customers and
lack of innovation
 Limited share of market in the
concerned sector due to the
emergence of competitors, both
domestic as well as international
hotels in Adelaide, Australia
 The services are though available at
reasonable prices, still it is mediocre
and not up to the standards
maintained at other luxury and
premium hospitality businesses
 Poor marketing techniques and lack
of brand exposure in the hospitality
industry
 Lack of management of human
resources properly, which further
contributes to the poor services
delivery and increasing level of
dissatisfaction among the clients

5
STRATEGIC MANAGEMENT IN HOSPITALITY
2014 p 780).
 The South Australian cuisine and
continental dishes available at the
hotel along with a pub have further
enriched the experiences of guests
visiting the hotel.
 Lesser investments on the
implementation of new technologies
and challenges faced due to the rise
of new entrants in the market
Opportunities
 The economic crisis and rise of
consumer spending habits may
increase the scopes and opportunities
for the company to attract new
potential customers and enhance the
market share
 The new consumer behaviours and
trends have contributed to the
formation of new opportunities for
Sage Hotel to develop new streams
of revenue generation
 The flow of cash consistently can
also facilitate investments in
implementation of new technology
and create new services for
influencing their buying behaviours
Threats
 The rise in cost of raw materials and
resources can also create major
issues and decline the production of
services
 The absence of a skilled and
knowledgeable workforce could also
pose serious threat to the Sage Hotel
Adelaide, Australia
 The laws, rules and regulations
regarding Environment protection
can also threaten the business and
create issues for the successful
management and delivery of existing
products and services (Bettis et al.
2016 p 259).
 The high competition in the market

6
STRATEGIC MANAGEMENT IN HOSPITALITY
 The green initiatives by the
Government and formation of online
marketing and distribution channels
can also enhance the scopes for hotel
booking and influence consumers to
avail the services easily.
 The technological aspects can also
facilitate differentiated pricing
strategy, furthermore manage value
propositions and draw in potential
clients all throughout
is a major threat for Sage Hotel
Adelaide to sustain in the
competitive business environment
 The increase in wages structure and
pay levels further may put pressure
to the business to achieve the desired
level of profit and for attaining
competitive advantage in business
The external strategic analysis is done with the use of PESTLE analysis framework,
which has helped in determining the various external factors associated with the business’
functioning. The external strategic analysis demonstrates the various political, economic,
social and technological factors that have influenced the business functions and processes for
Sage Hotel Adelaide, Australia.
Political factors
There are multiple political factors such as the international relations, risks of
terrorism, political climate or condition in the concerned location of Australia, which can
influence the management of hotel services and customers’ buying behaviours. The business
functioning is not much influenced by the Government and regulatory bodies’ activities
though the trade policies, tax policies can often influence the trade activities and thus close

7
STRATEGIC MANAGEMENT IN HOSPITALITY
monitoring of these policies is essential for meeting the organisational standards effectively
(Law, Buhalis and Cobanoglu 2014 p 730). The corruption level in Australia is also lower,
which can also create convenience for Sage Hotel in Adelaide Australia to make a mark
within the sector and attain competitive edge over its competitors.
Economic factors
The economic recession, rate of inflation and change in tax rates are all related to the
economic factors that contribute to the business functioning.
Social factors
The buying behaviours and lifestyles of the individuals along with the management of
cultures, values and beliefs have influenced the management of business in the specific
location for Sage Hotel, Adelaide, Australia. As the hotel has offered good quality hospitality
services at reasonable price range keeping the cultural aspects in mind along with the
management of values and beliefs, which has also influenced the management of strategic
opportunities and allowed for accomplishing the goals and objectives with ease and
efficiency (Okumus 2013 p 70).
Technological factors
The implementation of new technologies and need for investments in technology have
enhance the scopes and opportunities for the business to sustain in the competitive business
environment and at the same time, facilitated sharing or exchange of information. The
marketing strategies implemented with the use of advanced technologies have further
influenced the promotional activities and advertisements, which fostered the promotion of
brand and engaged people together, thereby, improved the brand image and identity through
greater brand exposure towards the clients.

8
STRATEGIC MANAGEMENT IN HOSPITALITY
Environmental factors
The environmental factors are also considered as major external factors that include
rise in pollution level along with extensive need for management of environment friendly
practices to deal with the issues of global warming (Bromiley and Rau 2014). Though the
visitors of the hotel are not aware or cautious about the protection of environment, still the
organisational policies and environmental laws must be aligned with the business goals and
corporate social responsibilities to ensuring that the environment is protected and a positive
impact is created as well.
Legal factors
The Government and regulatory bodies have implemented various laws, rules and
regulations related to the wages structure, environmental protection and other aspects. The
laws, rules and regulations are considered to ensure that ethical business practices are
conducted and a positive impact is created on the environment as well as on the working
conditions and culture of the organisation (Durand, Grant and Madsen, 2017 p 1252).
Approach to strategic management
The approaches to strategic management within the hospitality sector also include the
Porter’s five forces approach that represent the various forces influencing the functioning of
Sage Hotel, Adelaide, Australia such as the threat of new entrants into the market, threats of
substitutes, bargaining power of suppliers, buying power of consumers and competitive
rivalry in business. Within the hospitality industry, the barriers to entry can be high because
of the requirement for huge amounts of investments (Köseoglu et al. 2013 p 86). For Sage
Hotel in Adelaide, Australia, the threat of new entrants can be moderate because the hotel
already holds a good position within the industry and thus the new entrants into the market
cannot affect the business much. The threat of substitute products and services by other hotels

9
STRATEGIC MANAGEMENT IN HOSPITALITY
is high as well. For example, many guests stay at recreational vehicles and even with friends
and families staying in the place, which can also affect the lodging facilities and availing of
services from the hotel, thus may affect the business functioning (D. Banker, Mashruwala and
Tripathy 2014 p 880). The bargaining power of the suppliers is low as well, considering the
fact that there are multiple suppliers present, due to which, the business is not much
dependent upon them. The buying power of the consumers refers to the purchasing of hotel
services by the guests visiting the hotel in Australia. The threat of competitive rivalry in
business is though high, because there are multiple competitors and well known hotels that
might draw in enough clients and influence them to make purchases from those rather than
from Sage Hotel, Adelaide, Australia. Therefore, this approach to strategic management
within the hospitality sector can enable the hotel to assess the various forces, furthermore
ensure undertaking actions responsibly for generating higher revenue and attain competitive
advantage in business as well (Ray Gehani 2013 p 152).
Current strategies adopted by the hotel
To combat these forces, Sage Hotel, Australia must possess functional resources such
as human resources, physical, technological, organisational and financial resources. The cost
leadership strategy adopted by Sage hotel has helped in becoming one of the major low cost
producers within the hospitality industry and influenced the buying behaviours of the
consumers. By setting low prices though without comprising on the quality of
accommodation and lodging facility at the hotel, the customers have been influenced to make
purchases, which has strengthened the financial condition through generation of higher
revenue in business along with competitive advantage in business too (Zehir, Can and
Karaboga 2015 p 363). Not only the cost leadership strategy is followed, but also the
differentiation strategy that has helped the hotel to bring some uniqueness to the services
provided at the hotel for ensuring satisfaction among the clients. There are many guests who

10
STRATEGIC MANAGEMENT IN HOSPITALITY
have certain perceptions about the hotel brand and its services and thus creating some
uniqueness to the brand and its services has helped in making customers inclined to the
services provided by Sage Hotel rather than shifting to some other company services
(Kaliappen and Hilman 2013 p 1414). Due to this, cost advantage has been achieved by the
hotel, which can also assist the manager of the hotel to acquire benefits from their learning
experience, thus allowing him to make perfect decisions related to reduction of production
cost, without compromising on the management of quality and managing policy of product
standardisation. This can also facilitate the production and contribute to the successful
implementation of strategies required to gain higher economies of scale and attain cost
advantage in terms of production of services and distribution of those too. As it was already
found that the strategies issue had been the constant changing needs and requirements of
customers, thus differentiation of services and cost leadership strategy could be viable
options for keeping prices lowered and at the same time, differentiate the services from the
competitors (Williams 2014). These are the current strategies adopted by the company for the
purpose of gaining competitive advantage in business. These strategies have been working
for the hotel as of now and it seems to be quite effective for becoming successful in the future
too.
These strategies are currently working and the hotel can look for some other options
as well for bringing change to the business functions and processes, furthermore enhance the
level of competitiveness within the hospitality industry. The management of change in
strategies would be possible by market segmentation and price optimisation strategies. Sage
Hotel in Adelaide, Australia needs to sell the right accommodation facility to the customers at
the right prices that they expect, which require implementation of market segmentation
strategy. The market segmentation strategy should enable evaluate the different market
segments comprising of the customers and gain understanding about the needs and

11
STRATEGIC MANAGEMENT IN HOSPITALITY
preferences of these segments properly. The optimisation of these prices for these different
market segments could bring a major organisational change as well as ensure that customers
remain loyal to the hotel, furthermore remain satisfied with the consistency in prices at
which, the accommodation and lodging facilities are provided (Lehmann 2016). The strategy
of forecasting should also bring transformation to the business by allowing the hotel to
anticipate the demands and revenue that could be attained in the future, through necessary
changes made. The management of accurate records about the prices of rooms, occupancy
record and revenue generated is essential for implementing the forecasting strategy, which
can not only bring major changes, but will also evaluate the major trends associated with the
performance of competitors, trends within the hospitality industry, etc. The organisational
change related to the concerned strategy should help in the assessment of various
organisational functions, furthermore ensure managing transformation and setting prices
accordingly to meet the demands and expectations of the customers (Senn, Thoma and Yip
2013 p 40). This change in strategy at Sage Hotel in Adelaide, Australia could enable
providing help and support to the guests and even raise the level of satisfaction, thereby gain
more profit and attain competitive advantage in business as well.
Approach to execution of strategies
To execute these strategies of pricing, differentiation and forecasting, proper
implementation of new technologies is required for meeting the needs and ensure perfect
delivery of good quality hotel services to the customers. There are issues that arise with the
implementation during the formulation phase, which requires proper strategic planning as
well. It is important to consider that focus on only one component might not be successful,
but also focus on the ways actions undertaken and choices available interconnect with each
other. The hotel has not been much customer centric, which can be a major issue to cater the
needs of people in the future (Kotler et al. 2017). Thus, the organisation must focus on being

12
STRATEGIC MANAGEMENT IN HOSPITALITY
customer-centric to meet the changing needs and demands of the customers, furthermore
achieve the business goals with the management of changes that can be achieved through
focused differentiation.
The approach to focused differentiation strategy should allow for providing unique
and differentiable features for meeting the needs of the different market segments and ensure
managing differentiation all throughout. To manage approach to implementation of
differentiation strategy, Sage Hotel in Adelaide, Australia must focus on putting efforts to
manage the sales channel properly and even manage online selling, i.e., with the use of
internet and involving social media to generate awareness among the clients. Another
approach to the management for executing the strategies include using the Search Engine
Optimisation and develop a robust revenue management strategy for enhancing the visibility
of the hotel and its services with the management of website and through search engine
results on the web pages (Mok, Sparks and Kadampully 2013). Due to this, the chances of
attracting customers’ would be much easier, but also for those who could search for hotel in
that particular location in Adelaide, Australia. The content marketing strategy must be robust
and accurate to cater to the requirement of the website design, furthermore ensure that the
website design remain optimised with the purposes of search engine optimisation. To execute
the cost leadership strategy, the assessment of competitors’ performances is important along
with the selection of the right pricing strategy for putting the hotel into competition and
provide something more than the other hotels are unable to offer to the clients (J. Harrington
et al. 2014). The differentiation strategy execution should also be facilitated with the
management of change at Sage Hotel with the focus on mobile optimisation, which should
enable optimisation of the website for mobile viewing by the clients, furthermore ensure that
the individuals can easily access the webpages and even manage booking process for the
purpose of accommodation, food services, etc (Bettis et al. 2016 p 259). All these approaches

13
STRATEGIC MANAGEMENT IN HOSPITALITY
should create convenience for the guests and influence their buying behaviours, furthermore
ensure management of differentiation to bring changes and become customer centric too.
Therefore, the customer centric approach managed through differentiation and cost leadership
could be the most suitable approach to the execution of strategies for Sage Hotel in Adelaide,
Australia.
Conclusion
From the report, it could be understood that the strategic management aspects within
the hospitality sector had been the focus here considering the organisation named Sage Hotel
in Adelaide, Australia. From the internal and external strategic analysis tools, the SWOT
analysis and PESTLE framework had helped in evaluating the strengths, weaknesses,
opportunities and threats. Though Sage Hotel delivered extensive hotel services, still few
major strategic issues faced include constant changes in customers’ demands and
expectations and even poor marketing techniques and high competition within the sector. The
implementation of cost leadership strategy and differentiation strategy helped the
organisation to keep the prices of hotel services reasonable while at the same time, managed
differentiation of hotel services to bring cost advantage. This further helped in fulfilling the
requirements of product standardisation policy, furthermore helped in setting the right prices
through price optimisation and forecasting the demands and expectations of customers that
might arise in the future as well. The hotel was not much customer centric, which could be
overcome with the help of managing strategic change approach and also by following the
customer centric approach to meet the needs and preferences of customers and ensure higher
revenue generation along with competitive advantage in business as well.
It is recommended for the hotel strategic leaders to implement social media marketing
to engaging more clients and enhance brand exposure and awareness to influence the
consumers’ buying behaviours. The strategic leaders of the hotel are also recommended to

14
STRATEGIC MANAGEMENT IN HOSPITALITY
manage effective training sessions to improve the skills and knowledge of the staffs,
furthermore raise the potential of workforce. The hotel leaders or managers must focus on
health and safety management of both workers and the guests and even focus on the CSR
initiatives to create some positive impact on the environment and ensure health and wellbeing
of the community too.

15
STRATEGIC MANAGEMENT IN HOSPITALITY
References
Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating
repeatable cumulative knowledge in strategic management: A call for a broad and deep
conversation among authors, referees, and editors. Strategic Management Journal, 37(2),
pp.257-261.
Bromiley, P. and Rau, D., 2014. Towards a practice‐based view of strategy. Strategic
Management Journal, 35(8), pp.1249-1256.
D. Banker, R., Mashruwala, R. and Tripathy, A., 2014. Does a differentiation strategy lead to
more sustainable financial performance than a cost leadership strategy?. Management
Decision, 52(5), pp.872-896.
Durand, R., Grant, R.M. and Madsen, T.L., 2017. The expanding domain of strategic
management research and the quest for integration. Strategic Management Journal, 38(1),
pp.4-16.
J. Harrington, R., K. Chathoth, P., Ottenbacher, M. and Altinay, L., 2014. Strategic
management research in hospitality and tourism: past, present and future. International
Journal of Contemporary Hospitality Management, 26(5), pp.778-808.
Kaliappen, N. and Hilman, H., 2013. Enhancing organizational performance through strategic
alignment of cost leadership strategy and competitor orientation. Middle-East Journal of
Scientific Research, 18(10), pp.1411-1416.

16
STRATEGIC MANAGEMENT IN HOSPITALITY
Köseoglu, M.A., Topaloglu, C., Parnell, J.A. and Lester, D.L., 2013. Linkages among
business strategy, uncertainty and performance in the hospitality industry: Evidence from an
emerging economy. International Journal of Hospitality Management, 34, pp.81-91.
Kotler, P., Bowen, J.T., Makens, J. and Baloglu, S., 2017. Marketing for hospitality and
tourism.
Law, R., Buhalis, D. and Cobanoglu, C., 2014. Progress on information and communication
technologies in hospitality and tourism. International Journal of Contemporary Hospitality
Management, 26(5), pp.727-750.
Lehmann, C.F., 2016. Strategy and business process management: Techniques for improving
execution, adaptability, and consistency. Auerbach Publications.
Mok, C., Sparks, B. and Kadampully, J., 2013. Service quality management in hospitality,
tourism, and leisure. Routledge.
Okumus, F., 2013. Facilitating knowledge management through information technology in
hospitality organizations. Journal of Hospitality and Tourism Technology, 4(1), pp.64-80.
Ray Gehani, R., 2013. Innovative strategic leader transforming from a low-cost strategy to
product differentiation strategy. Journal of technology management & innovation, 8(2),
pp.144-155.
Senn, C., Thoma, A. and Yip, G.S., 2013. Customer-centric leadership: how to manage
strategic customers as assets in B2B markets. California Management Review, 55(3), pp.27-
59.
Williams, D.S., 2014. Connected CRM: implementing a data-driven, customer-centric
business strategy. John Wiley & Sons.

17
STRATEGIC MANAGEMENT IN HOSPITALITY
Zehir, C., Can, E. and Karaboga, T., 2015. Linking entrepreneurial orientation to firm
performance: the role of differentiation strategy and innovation performance. Procedia-
Social and Behavioral Sciences, 210, pp.358-367.