Strategic Planning for the Hospitality Industry

This report discusses strategic planning in the context of the hospitality industry, focusing on Hilton Hyde Park in central London. It explores factors affecting the chosen strategy, creative business strategies, and performance matrices. The report provides insights into the importance of strategic planning for gaining a competitive advantage in the hotel business.

Strategic Planning for the
Hospitality Industry
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Table of Contents
Introduction .....................................................................................................................................3
Main body........................................................................................................................................3
1 Factors affecting chosen strategy........................................................................................3
2 Creative business strategies.................................................................................................3
3 Performance matrices..........................................................................................................3
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
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Introduction
Strategic planning is an important part of every successful organisation. It is a process of
planning a road map of directing moves of a business towards achieving its goals. It is a plan of
recording mission, vision and values for organisation and also formulating long term goals and
suitable action plans in order to attain these formulated objectives. In this report, strategic
planning has been discussed in context of Hilton Hyde Park, situated in central London. It was
founded in July, 1999. Strategic planning forms a vital part of management of hotel, as there is a
cut throat competition in hotel business in London, due to its being a attractive tourist point
around the globe. To gain competitive advantage, it becomes essential, that management are
working on formulating effective and efficient strategies for hotel.
In this report, various concepts like factors affecting implementation of strategies,
impacts of chosen strategy on competitive capability of hotel in market and related performance
matrices has been discussed to develop a good understanding.
Main body
1 Factors affecting chosen strategy
Franchising is a process of granting permission to another individual or a group of
individuals in which rights are delegated to run a selling a product or service using the brand
name of franchisor's business. There are two parties that are involved in this setup, viz.,
franchisor and franchisee. Former is the one granting permission and latter is one who is
receiving the rights. This strategy is adopted by Hilton Hyde Park, which is used by management
to gain competitive advantage and to generate increased profits and revenues. Following are
some of the main factors that chosen hotel will have to take care during implementation process
of this strategy. It is helping the organisations in Minimizing operating costs because Hilton is
reducing the costs and Marriott is working on the cost cutting. To be successful in the new
venture it is important to apply control on operating cost. This can be made possible by focusing
on minimisation of wastage and reducing inventory costs (Filimonau and Naumova, 2020). In
case of Hilton Hyde park, it becomes mandatory that they operate on concept of minimum
wastage as they are a part of hospitality industry, where wastage are a prominent expense (Baker
and Magnini, 2016). To be successful and generate good profit margins, it become essential to
focus on above points.
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 Loyal customer base: One of the every important factor that needs to be considered
before giving out franchising for the brand. If the business is not having a loyal customer
base, than it means customers may switch frequently from business. In this case, the
business will not be able to generate desired profits and revenues. To attract customers is
the ultimate objective of any business. If Hilton Hyde Park gives franchising but the hotel
itself is not enjoying loyal customer base, than it will lead to failure of whole strategy.
 Appropriate market positioning: According to norms of franchising, franchisee needs
to follow the same business structure as set by the franchisor. In accordance with this
condition, it means that the franchisor will also target the same set of market as the
franchisor is targeting. To follow this situation, it is essential to have a clear knowledge
of market position. Franchisee of the hotel needs to know that the target market of hotel
so that they can serve accordingly.
 Business expertise: In system of franchising, franchisee needs to follow the footsteps of
franchisor. As franchisor has already established the business so well that if franchisee
take his opinions than he will be able to establish business well in the market. Guidance
and leadership is the continuous process that is being taken to establish business model in
market. In case Hilton Hyde Park, if the franchisee is not following the guidance of
franchisor than, it will lead to failure of business model as he is not aware about the
strategies that were adopted by the latter.
 Established Brand Value: It is a known fact that franchises are given only for the
brands that have a well established value in the market. Therefore, it becomes the
responsibility of franchisee to take care of that brand name and follow the same serving
standard in that venture also. If the standardised norms are not followed than it may lead
to serious harm to the brand name. This will not only result in shut down of new venture
but also a harm in original organisation. Hilton Hyde Park is an established brand name
in hospitality industry, therefore it is mandatory for franchisee to follow the norms and
brand value of former in order to succeed in new venture. Franchisee can also generate
benefits huge benefits from the established brand value as it is already enjoying loyal
customer base advantage.
 Workforce: To maintain the standardised norms set up by franchisor, it is important that
franchisee appoints such compatible employees who are capable of meeting those
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standards. Franchisee of Hilton Hyde Park should ensure that employees that are being
hired for this position they have sufficient and required knowledge that they will be able
to provide required contribution. For a hospitality business like above organisation, it is
mandatory that they have the best possible employees as their motive is to serve with best
possible satisfaction to their customers which is only possible with a good set of
employees.
2 Creative business strategies
From discussions made in above question, there are different business strategies that can
be suggested that can be formulated in order to increase profitability and productivity of
organisation are listed below:
the strategies that can be selected by Hilton Hyde Park in order to be competitive are:
Pricing strategy: The prices are the most important matter that attract the customers
most. As franchising will be a new venture, therefore, it is important to generate effective pricing
strategy. If organisation will provide its services at affordable rates that it will automatically
create a loyal customer base for company (Sotiriadis, 2015). This will also provide a
encouragement to make buying decisions from customer side. Therefore, to perform better in
future and become a cut throat competition in market, it is essential to formulate a effective
strategy. This future strategy will be adopted by Hilton Hyde Park to offer services at prices
lower than those of competitors so as to attain competitive advantage.
Product differentiation: This means that products and services that are offered by the
organisation should be different from other competitors in the market (Al Yousuf, Taylor and
Taylor, 2015). This will help them to achieve higher profits and revenues. This is another future
strategy in which management of Hilton Hyde Park will provide unique taste of food, beverages
and services that different from their rivals and will help to attain the competitive benefits.
Improvement in customer service: This is a very important strategy that can be adopted
by the franchisee hotel so that customer service can be improved and this will the hotel to gain
competitive advantage. Sometime, customers are facing many challenges and problems in
selecting and booking the products so they are demanding customers services at any time which
can solve their problems. The management of chosen Hotel analysis the situation of business
organisation and bring changes in their customer services as 24/7 hours which will help to
influence number of customers and increase the competition.
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Deep knowledge of market: This process means taking in depth knowledge of market in
which the business is operating. This will benefit the business to know what exactly they need to
serve to their customers. This will improve the customer satisfaction and ultimately will increase
profitability of business (Murphy and et.al., 2018). To know the taste and preferences of
customers, various methods can be adopted like feedbacks, questionnaires or different marketing
techniques.
Promotional methods: This means when business adopts different promotional methods
to improve their sales and revenue generation method. In other words, it can be described as
giving out some promotional offers to customers like discounts, gifts hampers, coupons, etc. This
technique will attract customers to the enterprise which will directly impact on sales volume.
Good employee base: To serve customers with the best, it is important to hire suitable
employees so that they understand what actually customer need and serve them accordingly. For
this purpose, human resource manager need to play their job efficiently and hire good candidates.
Before hiring, employer need to figure out that what actually is needed and than generate a
suitable job description. This whole process will help in hiring good employees.
Suitable infrastructure: As these are some of the creative strategies that the chosen
hotel can adopt in future to implement franchising strategy effectively, therefore, it is suggested
that they can create a good and innovative infrastructure. As in today’s world, choice of hotel has
become a status of symbol, therefore, creating a good infrastructure will position the hotel as one
of the premium place to stay. This whole process will attract more customers. Furthermore, it
will also help hotel to price its services and premium prices which will help the venture to
generate more profits (Tuan, 2018).
3 Performance matrices
This refers to tools and methods of calculating behaviour, activities and performance of
an enterprise. This is a technique to judge whether employees are operating in accordance of
expectations and to evaluate whether the set targets are being met or not. These can be in the
form of figures or data presenting position of subject matter. They form an integral part of any
business's success (Booth, 2016). There are various performance metrics methods those can be
used to evaluate performance, some of the most used methods are explained below:
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 Key Performance Indicators (KPI'S)- It is a set of quantifiable measurements that is used
to quantify an organisation's overall performance in long term. This technique of
performance metrics specifically helps in determining performance of company in
strategic, financial and operational matters. Significant feature of this method is that ir
measures company's performance by comparing it with those of other organisations in the
same industry.
Financial KPI's are basically divided into four categories:
▪ Revenue growth: Sales is one of the main sources of fund for any business,
therefore, it needs to be at good level. Otactors are need to be considered, such as,
tracking sales over different period of tiherwise, the growth of that business will
stop there only. Under this area various fme, calculating deviation of present sales
from last period sales.
▪ Income sources: After revenue, second most and reliable indicator of performance
of an organisation is profits earned. Profit refers to the amount that is obtained by
deducting expenses from total revenue. This segment will help in analysing
profitability that a particular product is generating. This indicator will assist
management in taking effective decisions for future course of action. Knowing
that a particular product is not generating enough funds, leads to its shut down
(Granqvist and Mäntysalo, 2020).
▪ Revenue concentration: This factor ensures that source of revenue is not
concentrated in one or two sources. This will help management to see that their
sources are scattered and hence, failure of one source will not create a huge fault
in whole business setup. To validate the above statement, business portfolio can
be the best example, as it involves a mix of different business products, which
means failure of one product does not mean end of whole group.
▪ Profitability over time: This is a method of analysing the cost incurred in
business. This will lead top identification of unnecessary costs that is being
incurred in business. Important decisions like cost cutting strategy, investment of
more cost, pricing decisions can be taken through this key performance indicator.
▪ Working capital: It is that part of financial fund of a business which is utilised to
take care of day to day expenses. This fund should be in optimised situation in a
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business, otherwise over expenditure or under expenditure can lead to failure of
whole financial management of an organisation. Ratios related to working capital
plays an important role as KPI.
 Balanced Scorecard- It is a performance metrics that is used to determine and improve
internal operations of a business and their impacts on outside results. They basically take
the responsibility of providing feedback to company about its performance (Oktafiga,
2015). Feedbacks are an essential element that provides quantified information to
managers so that they can interpret these result in accordance of their requirement and
use this data in formulating strategies for an organisation. There are some significant
characteristics of balance scorecard model in which information that is collected is
analysed from four different aspects of a business:
▪ Learning and growth: This aspect investigates into the capability of employees
that how well are employees able to convert information into competitive
advantage over the rest of industry. This can be completed by investigating into
training and knowledge set up of employees.
▪ Business processes: This can be evaluated by inspecting that how well the
products and services are manufactured by the business. It will help in identifying
gaps, delays, shortage or any wastage in business operation.
▪ Customer perspective: This is a look into process of customer satisfaction.
Measuring tools can be quality, price or availability of products or services. This
is judged by feedbacks that are received from customer's side. This technique
helps management in deciding what strategies can be implemented in relation to
product mix so as to achieve desired objectives.
▪ Financial data: This is in relation to financial transactions of a company. For
example: sales, expenses, incomes, etc. Other examples can be financial ratios,
budget variances, etc.
Interpretation
The important areas which the team is need to rake care. These factors ensures that
company is able to focus only on those matters, which are of utmost importance in the pathway
of achieving ultimate goals and objectives of company. It is mandatory to first identify these
success factors in order to work upon them. There are several issues that needs to be addressed
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when organisation is striving to identify related critical success factor, these are listed as below.
Factors affecting desired outcome, Results of statistical analysis on past data, What changes are
required in order to implement above strategy, What skills are needed to be acquired to meet
desired objectives (Flynn and Citarella, 2019)
To give a practical view, few examples of critical success factors are: capable technical
personnel, effective risk management, effective communication, capable managers, effective
planning, effective quality control, effective cost estimation, effective change management, etc.
Conclusion
This report discusses important aspects related to strategic planning of an organisation.
After this whole study, it can be elucidated that, it is the most vital factor in success of an
organisation. Ineffective strategies can lead to serious downfall or even shut down of an
organisation. For the purpose of effective strategy formulation, it is necessary to identify those
areas which needs to considered, due to this reason, performance metrics came in force. They
determine key success factors and also ways with which the ultimate objective can be achieved.
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References
Books and Journals
Booth, D., 2016. Strategy journeys: A guide to effective strategic planning. Taylor & Francis.
Flynn, M. and Citarella, V., 2019. 13 Connecting people’s lives with strategic planning,
commissioning and market shaping. The Care Act 2014: Wellbeing in Practice. p.173.
Granqvist, K. and Mäntysalo, R., 2020. Strategic Turn in Planning and the Role of Institutional
Innovation. In Innovation in Public Planning (pp. 73-90). Palgrave Macmillan, Cham.
Oktafiga, D., 2015. Effects of leadership roles and management information system on strategic
planning formulation. Available at SSRN 2687392.
Sotiriadis, M.D., 2015. Culinary tourism assets and events: suggesting a strategic planning tool.
International Journal of Contemporary Hospitality Management.
Al Yousuf, M., Taylor, E. and Taylor, J., 2015. Developing a government strategy to meet
international standards of food safety across the hospitality industry. Worldwide
Hospitality and Tourism Themes.
Murphy, K. and et.al., 2018. A review of high performance work practices (HPWPs) literature
and recommendations for future research in the hospitality industry. International
Journal of Contemporary Hospitality Management.
Tuan, L.T., 2018. Driving employees to serve customers beyond their roles in the Vietnamese
hospitality industry: The roles of paternalistic leadership and discretionary HR practices.
Tourism Management. 69. pp.132-144.
Baker, M.A. and Magnini, V.P., 2016. The evolution of services marketing, hospitality
marketing and building the constituency model for hospitality marketing. International
Journal of Contemporary Hospitality Management.
Filimonau, V. and Naumova, E., 2020. The blockchain technology and the scope of its
application in hospitality operations. International Journal of Hospitality Management.
87. p.102383.
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