Strategic Planning for the Hospitality Industry

This document discusses strategic planning in the hospitality industry, focusing on factors for implementing a chosen strategy and researching creative business strategies for future competitiveness. It also explores different performance metrics and their evaluation. The subject is strategic planning for the hospitality industry.

Strategic Planning for
the Hospitality
Industry

Table of Contents
INTRODUCTION...........................................................................................................................3
Critically analyse the most appropriate factors to implement a chosen strategy. .................3
Research about creative business strategies for your chosen organisation’s future strategy
selection to be competitive in the hospitality industry...........................................................5
Different performance metrics:..............................................................................................7
CONCLUSION..............................................................................................................................12
References......................................................................................................................................13

INTRODUCTION
Business strategies are developed to work towards improvement of efficiency of business
operations. In present report there is discussion of different strategic options that are available
with hospitality organisations. In case of park plaza there is used of corporate strategies for
purpose of achievement of higher market share (Ahlstrand and Rydell, 2017). There is selection
of strategies based on overall mission and vision statements and values that are being highlighted
in a organisation.
Critically analyse the most appropriate factors to implement a chosen strategy.
Park Plaza can successfully use merger and acquisition in order to expand their business.
The organisation have been using this strategy from beginning. A number of times the hospitality
business have been acquired by huge chains like Raddisson, Park Plaza international and is now
currently running under Olympus hospitality group and Park hospitality. Merger and acquisition
refers to consolidation of companies and assets through various financial transactions namely
mergers, acquisitions, consolidations, tender offers, purchasing of assets and so on. This is
basically a process in which two companies are combining with one another.
With the help of merger and acquisition organisations can successfully attain competitive
position in market (Köseoglu and et. al., 2019). It also helps in generating a critical success
factor for organisation. There are a number of such factors which will help organisation to
successfully implement the strategy of merger and acquisition. These factors are divided into two
parts. First part contains of concerns that arise at the time when negotiations start between
companies commonly known as pre-transaction process. On the other hand, second part is when
the execution of transactions is implemented which is known as the post transaction process.
Below mentioned is a detailed discussion on all these factors:
Pre-transaction Factors
The right partner: It is necessary for Park Plaza to make sure that they are choosing right
partner to merge or acquire. If organisation fails in choosing right partner for them it might lead
to various difficulties for negotiation in future. It is often seen that most of information is also
lost in communication while carrying out negotiation from wrong partners. It has a major impact

on the organisations future growth and development. For instance in case of Marriott and star-
wood the legacy of a organisation can be used in future to move forward. This ,etghre is
benefical for bothe the brands becauise trher legacy can go forwards vy refininbg of theior
offerrings for both the brands.
Due diligence in evaluation: It is also important for organisations to make sure that they are
successfully carrying out valuation with quality. Due diligence is a deep analysis in mergers and
acquisitions which includes history, mission, values, culture as well as financial reports for a
business. All these are important to carry out valuation correctly. Such as other competitors of
Park plaza like Radisson hotel, lodging hotel and hotel hotels are having advantages of proper
due diligence. The due diligence is a factor that leads to enhancement in the present brand image
of Park plaza for their external stakeholders.
Trust in between parties: It is essential that there is mutual trust in between managements. It is
important as trust ensures negotiations to run smoothly which leads to high chances of
favourable deal between parties. When there is trust between all associated stakeholders then it
leads to effective functioning of a hospitality organisations like Park plaza. Such as customers
trust for Park plaza will lead to building up of loyal customer base.
Experiences from previous mergers and acquisitions: Park Plaza have been through a number
of different mergers and acquisitions throughout its existent life (Okumus and et. al., 2019). This
will successfully help business to deal with any further expansion strategy they adopt in future.
They can learn from their mistakes and also carry out tasks that have proved to be beneficial
earlier. Park plaza can deal with their weakness by using strategy of mergers and acquisitions.
For instance competitor brands of Park plaza Marietta and star wood have been merged in
November 2015 where Marriott international agreed to buy star-wood hotels. This has benefited
the organisation as Marriott has folded star woods respected loyalty programs and sources have
revealed that the real legacy is giving forward that ill be expanded in future.
Communication before the execution of merger and acquisition: The quality of management
team and consultants play huge role in communication before merger and acquisitions. They are
critically guiding the expansion process and also ensure that communication in organisation is
honest and open. For park plaza there can be public announcements before entering into any
future mergers that may lead to hike in the present brand values. For example NH hotels is aloes

a competitive brand of Park plaza where they have made public announcements before entering
into deals.
Post-transaction factor
Quality of the plan: Everything in merger and acquisition will begin from a well detailed and
structured plan. It is necessary for organisation to look for ways through which various targets
will be implemented and this is required to happen with a plan backed up with logics. With
instance to competitor of park plaza the mergers that took place between Marriott was pre
planned there is pre valuation so that there are no discrepancies in future. In relation to park
plaza it is very crucial for the brand to focus on per valuation of deal that has to be formed with
the anticipated organisation.
Execution:It is one of the most crucial factor that is to be followed by organisation in post
transaction phase. There are a number of factors such as change management, sound estimation
of cost which will enable organisation to critically follow the steps regarding execution of plan.
Swiftness of the integration:
Strategic fit: It is also an important factor that all the targets are aligning themselves with the
initiator. Both the parties have to negotiate together and come to a similar conclusion. Visible
changes are to be seen in both of these separate parties which are integrating together to form a
single entity.
Organisational fit:It is also necessary to make sure that the structure of both organisations are
parallel. When there are two different companies which are operating similar industry it becomes
easy for them to work together in future. In case of hospitality organisations like Park plaza there
has to be focus on the similarity between the two organisation who are willing to come together
and form a merged new venture. For instance NH hotels and Minor are tow organisations that are
part of the European hotel industry and have together signed a deal with the French real estate
investment trust to operate their eight hotels in all the European cities. But both these hotels
have a very high similarity index that is the base of merger that have been formed by these two
hospitality brands.
Calculation and realization of strategies: It is often seen that synergies are basic motivation
behind various acquisitions. Organisations gain operational benefits when they are successfully

merging which leads to depletion in competition. It is necessary to ensue feasibility of synergies
by carefully analysing the theory.
There are also few Macroeconomic factors such as Legislation enabling merger and acquisition.
Mergers and acquisitions also involve organisations with market share that is maintained by
different legislative powers (Ahmad and Scott, 2019). Mergers are also affecting economic
climate. When there is favourable legislation and healthy economic climate it enables
organisations to successfully merge and succeed.
Research about creative business strategies for your chosen organisation’s future strategy
selection to be competitive in the hospitality industry
There are a number of other strategies which can be used by Park Plaza in future to be
competitive enough in hospitality industry. Below discussed are those strategies:
Franchising: Franchising is a great way for Park Plaza to stay in competitive environment. It
will successfully enable organisation to reduce the investment risks that is attached with
internationalization of hotel. The relationship between a franchised hotel and hotel franchisors is
of a partnerships-relationships which is benefiting both the parties. Franchising is also the
quickest way through which organisations can own their own businesses. Franchising is
successfully allowing businessmen throughout the world to serve as an apprenticeship. Smaller
restaurant chains can also successfully use franchising method to retain their brand name and
products in this highly competitive environment (Kim and Lee, 2020). There are other benefits
provided by franchising such as specialized designs for products as well as marketing. There are
also limited commitment made of finance along with easy entry in target market or nations.
However there are some of the disadvantages of franchising are that it becomes difficult to
maintain and motivate franchisees. There are a number of disputes and conflicts taking place in
between organisations. This also many a times leads to inconsistent quality and control of
relationship with the customers. It is often seen that those who are entrepreneurial by nature
prefer to select franchisee because they want total control over their business (Rosado-Serrano, ,
Paul and Dikova, , 2018).
Joint Ventures:Joint Ventures refers to an arrangements of business in which there are two or
more parties coming together in order to pool their resources in order to accomplish a task. It can
either be a new project or a different business activity. Park Plaza can successfully use this

strategy in order to grow and expand their business in the present competitive environment.
There are a number of risks as well as rewards attached to joint ventures for Park Plaza. When
coming in a Joint Venture an organisation gets ready-made fund available for their future
expansion and growth (Elizaveta, , 2017). It is one of the best alternative for business expansion.
Also when a hotel is hoping to seize soon the best option they have available is to find a way to
finance cost of acquisition. However there are also a number of risks attached to joint venture. It
is necessary for parties those are entering into joint venture to make sure that they are addressing
these risks as they come rather than waiting for them to develop. A joint venture at times is also
created to effectively form a new entity. This is done through a general partnership, limited
partnership or even a limited liability company. It is necessary for joint venture to decides on
various ways through which they need to use the investment available to them (Zajko and
Bradač Hojnik, 2018). The major disadvantage that Park Plaza may face due to a joint venture
stands to be disagreements between various partners.
Management Contracts: Contractor management refers to an independent contract where
contractors are hired for their skills and experiences. Contractors are successfully helping
companies to upscale and also reduce number of employees they required to manage. This will
be a contract between Park Plaza and a management company and also a property owner where
hotel can successfully operate its business. The contract of negotiation between hotels can be a
complex and long process. It is necessary that this negotiation is successfully satisfying both the
parties. Often clashes between management and operator occurs as both of them require different
things from the contract. The main objective of organisation at the time of negotiation must be to
make sure that they are successfully avoiding any uncertainty at time of contract. It is also very
critical to ensure that responsibilities as well as best practices are met by the business and the
management contract is running successfully (Porter, 2020). There are some disadvantages that
Park Plaza will have to face if they go for management contracts. The management usually feel
lack of control over their own business. This may also lead to damage of reputation for the
organisation if they do not maintain proper transparency in this new contract. There may often
arise conflicts of interests between management companies and the owners. It is necessary that if
in future Park Plaza goes for management contract they are looking for all these advantages and
disadvantages and only after critically analysing these factor they develop the strategy further.

Different performance metrics:
Performance metrics are defined as data, representative and figures that are indicating the ability,
actions and quality of organisation performance level. There are different types of performance
metrics that can be used by organisation to evaluate the success or failure of a particular strategy
that is being used in a organisation. In present hospitality brand Park plaza there are several
performance metrics that are used for purpose of evaluation of performance according to the
present corporate strategy of Acquisition:
Critical success factors: there are certain features that are critically used for developing a detail
overview of the success or failure of a organisation. There are some factors in case of Park plaza
that will be used for developing insights of their level of performance according to
implementation of suitable strategy of mergers and acquisition.
Financial metrics:
There are certain financial measurement that are indicating the success it includes higher return
on investment, better returns on capital employed. There can be achievement of higher market
share, earnings growth and stock prices.
Non financial measurement are used for making a assessment and driving success of a
organisation.
Higher customer satisfaction: It can be noticed by a repeated customer behaviour in form of
positive ratings by customers. In case of acquisition customers get attracted because of effective
brand image that has been established There is high prices of excellence. Apart from this another
set of matrices that can indicate the success are fast responsive to market and building up of a
loyal customer base. There is a outstanding process of timeliness and quality. In Park plaza in
case of successful acquisition there will be mechanism for growth, learning and scope of
continuous improvements.
Interpretation: Non financial metrics can be used by Park plaza for the purpose of reaching to
the required conclusions of the level of customer satisfaction. Such as by use of questionnaire as
a means there can be valuation of small sample of customers of their responses towards the
brand. Digital marketing as a tool is used by many competitive brands of Park plaza for the
purpose of making a valuation of the customer response for the brand. For instance Marriott one
of the leading competitor brands is making using of advertising strategy that is focussed on

digital promotions in order to evaluate the responses of the target segment of customers. It is a
very effective tool that is assisting them in analysing the response of their customers.
(Source: WHAT ARE PERFORMANCE METRICS?, 2020 [online], Available
through<https://asq.org/quality-resources/metrics>)
Key performance indicators:
KPI are used by organisation to value the success and particular effort of individuals.
Success is defined in terms of progress towards expected objectives that have to be accomplished
to achieve its intended purpose (Baumgartner and Rauter, 2017). It becomes necessary for
hospitality organisations like Park plaza to evaluate their performance based on these matrices.
The concept of key performance indicators is used frequently in business organisations as it acts
as a guide to understand the drivers of hospitality business that is food and beverages,
accommodation, liquidity and profitability. Accommodation is one of the costly product that is
generating maximum revenue for hotels. Key performance indicator in present situation of park
plaza after adoption of their corporate Strategy for expanding their existing market share will be
focussed on average rate of a room, cost per occupied room, bed occupancy percentage rate,
labour cost ratio. All these are indicators of actual performance level which is going to further
assist in development of insights whether the strategy has been successful or not.
Interpretation:

Average room rate: It is regarded as the average room revenue according to occupied room in
Park plaza for specified time period.
ARR=Total revenue generated/ total number of rooms sold
Bedroom occupancy rate: It is calculated by dividing the total number of rooms that are sold
according to total availability of rooms
Bedroom occupancy rate=%number of rooms sold/number of available rooms *100
KPI will help park plaza in providing the information related to performance and then understand
whether the strategy has been a failure or a success to achieve the vision and mission based on
which whole strategy was formed (Ahmadian and Khosrowpour, 2017).
Balance scorecard:
It is a strategy performance measurement tool that is part of semi standard structured report that
is adopted by managers to keep a regular record of execution of different activities that are used
for controlling & Mornington of performance to analyse the consequence of different actions.

The balance scorecard will assist managers of park plaza in evaluating the success of present
strategy from important perspectives. It will actually help in answering for basic questions that
includes financial perspective related to the quarter profits increase or decrease after adoption
of laid strategy (Christ,, Burritt and Varsei, 2017). Another perspective is customer perspective
that is how customers are observing the services as compared to its other competitors. Another
aspect is innovation and learning that is related to how can there can be continual of
improvement and creation of higher value. Last and fourth element is part of internal business
perspective that is set goals and its way of measurement to understand how can Park plaza
further excel according to their quality of services. In park plaza management has to evaluate the
performance of organisation according to use of customer review there can be some surveys and
questionnaire different social media applications that will assist in denoting the level of customer
satisfaction and their individual views as part of their reaction to services.

(Source: The Balanced Scorecard—Measures that Drive Performance, 2020 [online], Available
through<https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2>)
From above discussed different performance measurement metrics it can be summarized that
Key performance indicators are linked to ingratiation strategy to map the progress and then work
towards further improvement of performance. These are related to questioning each strategic
objectives and is reflecting individual performance in a more simpler & evaluate manner.

CONCLUSION
It can be summarised from the above discussed information that there are several
corporate strategies that are formed by hospitality organisations to achieve higher performance
level. It assist in developing insight of the way existing level of performance can be improved.
After implementation of a particular strategy further there are certain metrics that are laid down
in order to measure the post strategy level of performance.

References
Books and Journals
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closures and downsizing: A literature review. Contemporary Management Research; 1, 13.
Ahmad, R. and Scott, N., 2019. Technology innovations towards reducing hospitality human
resource costs in Langkawi, Malaysia. Tourism Review.
Ahmadian, A. and Khosrowpour, S., 2017. Corporate social responsibility: Past, present, and
success strategy for the future. Journal of Service Science (JSS), 10(1), pp.1-12.
Baumgartner, R.J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability
management to develop a sustainable organization. Journal of Cleaner Production, 140,
pp.81-92.
Christ, K.L., Burritt, R.L. and Varsei, M., 2017. Coopetition as a potential strategy for corporate
sustainability. Business strategy and the environment, 26(7), pp.1029-1040.\
Elizaveta, K., 2017. Franchising as a business strategy.
Kim, B. and Lee, S., 2020. The impact of material and immaterial sustainability on firm
performance: The moderating role of franchising strategy. Tourism Management, 77,
p.103999.
Köseoglu, M.A. and et. al., 2019. Evolution of strategic management research lines in hospitality
and tourism. Journal of Hospitality Marketing & Management, 28(6), pp.690-710.
Okumus, F. and et. Al,, 2019. Strategic management for hospitality and tourism. Routledge.
Porter, N., 2020. Strategic planning and place branding in a World Heritage cultural landscape: a
case study of the English Lake District, UK. European Planning Studies, pp.1-24.
Rosado-Serrano, A., Paul, J. and Dikova, D., 2018. International franchising: A literature review
and research agenda. Journal of Business Research, 85, pp.238-257.
Zajko, K. and Bradač Hojnik, B., 2018. Social franchising model as a scaling strategy for ICT
reuse: A case study of an international franchise. Sustainability, 10(9), p.3144.