Hospitality Business Strategy

This report analyzes the impact and influence of the macro environment on a given hospitality organization and its strategies. It includes frameworks such as stakeholder analysis, PESTLE analysis, SWOT analysis, and Porter's Five Forces model. The report also examines the internal environment and capabilities of the organization using McKinsey's 7S model and VRIO model. The competitive forces in the market sector for the hospitality organization are evaluated using Porter's Five Forces model.

Unit-41
Hospitality Business Strategy

Table of Contents
Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies........................................1
TASK 2............................................................................................................................................4
P2) Analyse the internal environment and capabilities of a given hospitality organisation
using appropriate frameworks................................................................................................4
TASK 3............................................................................................................................................7
P3) Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.......................................................................................7
TASK 4............................................................................................................................................9
P4) Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation........................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The hospitality business strategy plays the crucial role as it helps the hospitality
businesses to make more revenue by enhancing the booking capacity. The different business
strategy must get used by the businesses in terms of different tactics by which the systematic
profit will get gained by which more competitive profit will obtained from the competitive
marketplace. Business strategies will get used by the hospitality service provider by which the
continuous success and better development will get induced with more perfection and to achieve
that effectual set of strategy will get induced (Altin, 2018). It will helps to make the appropriate
improvisation in the services that get directly associated with the sales and profit. This report is
based on the TUI that is the world’s largest tourism business and have a larger family that covers
the 70,000 TUI colleague that are all across the 180 worldwide destinations. It is the
multinational travel and tourism company that was founded in 1923 and have served the different
products as like schedule and charted passenger airlines, cruise line, hotels and resort and the
package holiday as well. This report includes the impact and influence of macro environment,
internal environment and capabilities, porter’s five force model and different methods, concept
and theory to devise the strategic planning.
TASK 1
P1) Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies
Macro environmental factors are the different factors that have the direct impact on the
performance of the hospitality services profit and also get influenced the working culture as well.
It includes some of the different factors as like internal and external that get as described below
as:
Different strategic planning techniques
 Benchmarking: It is the technique in which the business must set the standardised result
that must get attained by them within the particular period of time by inducing the best
efforts (Boella, 2019). TUI perform this to manage their skills and with this try to gave
better competition to their competitors as like Thomas Cook, Marriot international etc.
 Business analysis: It is an analysis that get performed by the TUI and in this they have
analyse the different strategy that could be used by them and by their competitors by
1

which the appropriate method will get used with more perfection by which more sales
and profit will get attained.
The TUI uses some frameworks and it is as explain below as:
Stakeholder analysis: It is an analysis that get used by the TUI in which they have
analyse all the individual that are associated with their hotel and helps to make better changes in
the project and also get used to make the better relationship with the several stakeholders.
(Source: Stakeholder analysis, 2019)
STEP 1: In this step TUI will analyse all of their stakeholders as like the customers,
suppliers, employee, government, buyer etc as they have shown their interest towards the differ
projects of TUI.
STEP 2: It is a step in which the TUI will differentiate the stakeholders as per their interest
and that will be on the basis of the power-grid analyses as it is define below as: High power, high interest: TUI must get specifies the diverse stakeholder according to
their interest includes those individual in this group that has higher involvement by which
performance of TUI get developed (Bratton, 2018).
 Low power, high interest: It will include the stakeholders that have better interest but
low involvement on with this TUI provides them the required information in effective
manner. High power, low interest: These are those stakeholders that have better power but less
amount of interest thus TUI provides the needed information to them.
2

 Low power, low interest: In this the stakeholder that has less power and less amount of
interest will get specified in this and TUI provide them the information as per the
necessitate
STEP 3: It in step the TUI will make the better understanding about the stakeholders and
with this they have maintain the better connection with them and thus emphasis the market value
of the hotel by which positive effect on the sales will get measured.
PESTLE Analysis: It is an external analysis that has the direct impact on the productivity
and performance of TUI and as explained below as:
Political The UK has more stability in terms of political aspect and in this the travel
and tourism will make the better contribution in the tax policy in terms of
sales, profit, income, tax revenue and in this the TUI and other hospitality
businesses ensure that UK adopt the better strategy. TUI has made the
acquisition with the divest business thus they will be in profit while protecting
the easy accessibility of capital market (Cheah, 2018).
Economic The tourism sector will generate the better revenue as like from the restaurants,
lodging, amusements, transportation etc and have direct impact on the
economy generation of UK. Most of the travellers take the bank loan and if it
is with high interest rate then it may influence the behaviour of tourist. Thus
UK will spend on tourism with price sensitive thus more innovation will get
implement by TUI.
Social It will basically consist of the need and size of the customers thus TUI always
follows the health consciousness, age distribution and have more focus on
safety as per the increment of the lifestyle and better expectancy.
Technological In this TUI have launch the TOUROPA.COM that is the tour operator and it
will be sale out from the television, call centres or from the traveller agents as
it helps the TUI to become the leader of sales generator.
Legal The airline of TUI they only has the permission to manage the air carrier if that
get majorly owned as it will get operated by the European Economic Area
(”EEA”). TUIs manage the majority and operate the airline with route license
as it restricts the license of grant rate that cost more to TUI airlines.
3

Environmental To manage the environment protection as from the global warming and with
this the carbon emission in some of the areas restricted the TUI airlines and
that will decrease the profit share (D’Annunzio-Green, 2018).
SWOT Analysis: It is an internal analysis that affects the recital of the TUI and it
explains below as:
Strength TUI has the most established distribution channel and the most well acquired
by the better players with support to this they have improvise the customer
services on continuous basis with diversifying the range of products and
services.
Weaknesses TUI doesn’t offer the cheap accommodation and to manage that they have has
the loan of amount £900 million as from their share holders.
Opportunities As the demand and need of the customer will get changes and in support TUI
have provide the wider range of services with flexibility experience while
travelling. TUI makes more acquisition in order to expand their services by
which more values will get transmitted (González-Rodríguez, 2018).
Threat The economic condition of UK is biggest challenge as it restricts the capacity
management of TUI by which the employee has the lesser job security.
These are the internal and external factor that get influenced the working behaviour and
performance of TUI and also help to make better strategy by which the better advantage will get
attained.
TASK 2
P2) Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks
The capabilities and an internal environment will has reflect the strength of the
hospitality organisation and in this the aim, vision, mission, goals, action plan of TUI will get
affect the working nuances of the business. TUI will developed the various strategies and in
support gain the better competitive benefits and affect the values and image of the business.
4

McKinsey's 7S model: It is a model which define the several factors by which TUI measure
better growth and development too that is as describe below as:
Strategy TUI must have uses the cost leadership strategy and in support of it they are capable
to attract the larger number of customers as with this have worked with the
acquisition as like First Choice by which their market values and image will get
developed (Konovalova, 2018).
Structure TUI is the larger hospitality organisation and own the retail stores, hotels, airlines,
cruise ships and the travel agency and with this have uses the hierarchical structure
with this adequate information get circulated from higher to lower level authority.
Systems TUI has manages the performance of the employee by providing them rewards and
benefits as it helps to keep motivating them by which their working ability and
attitude will get improvised.
Skills It is related to the employee ability as with their performance they raise the
productivity of TUI and for this they provide the training by which continuous
development will get experienced.
Style TUI uses the steering wheel cycle that helps to make better changes and innovation
by which they could achieve their target and objectives in timely manner.
Staff TUI has worked with the 70,000 numbers of employees as of 180 worldwide
destinations.
Shared
values
TUI tries to provide the better experience to the customers by which they always get
more satisfied by which more values will get generated (Melissen, 2018).
VRIO Model: It is the model that shows the resources and capabilities of TUI that get
help to get achieve the target in timely manner and as explain below as: Valuable: It will defines the better strengths of the TUI as their financial resources are
being more vital and they get achieve that by gaining better advantage in terms of sales.
The valuable resources provide TUI more powerful impact by which they could easily
get over from the marker threat. In this TUI provides the effectual training and
development to their employee by which they could further attain the better profit with
5

more perfection and on timely basis as well (Njoroge, 2019). The patent of TUI is also be
more valuable as they have the effective brand value and their services will get lead in
market and they provide the access to other business on lease by which more revenue will
get developed. Rareness: The financial resources be more valuable for TUI as with support of it they get
achieved all their task within the assigned period of time by which have accomplished the
target with more efficiency. The hospitality services are not much valuable as there are
other hotels and leisure travel as well that provide similar services but their employee are
rare as TUI provide special training by which have uses the effectual working approach.
Their patent is rare by which their service accessibility will get safe their brand name and
service only get used with the license approval. Imitable: The financial resources are imitable as they get developed this by inducing the
continuous efforts and in this support their patent also be more imitable by which the
authority will get transferred by TUI as per legal basis (Okumus, 2019).
 Organisation: The financial resources of TUI are more organised and get produced and
developed by making more effort on incessant manner.
Resource/
Capability
Valuable Rare Difficult to
imitate
Is it organised
Hospitality
services
Yes
Employees Yes Yes No
Patent Yes Yes Yes No
Financial
resources
Yes Yes Yes Yes
As from the analysis it is measured that financial resources of TUI will help to maintain
long term sustainability and equilibrium in the selling.
6

TASK 3
P3) Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation
Porter's five force model: It is a model that get used by TUI to make the various strategy to
make their services different from competitor by which better competitive benefits will get
attained and as described further as:
(Source: Porter's five force analysis, 2019)
Bargaining power of buyers: The tourism sector has been gone through with more
competition thus the customer will have the high bargain power thus in this TUI must get create
the loyal customer with the inelastic prices by which more profit will get gained by the brand and
that all created by using the attractive marketing strategy (Papaioannou, 2018).
Bargaining power of suppliers: In this the bargain power of supplier is very less as TUI has
enjoys the advantage of diffident assimilation that get associated with them from many of the
years.
Threat of substitute: The new entry in the tourism industry brings the less threat and with
this TUI has doesn’t affected and their market share remain same and on the same hand the new
business will not get easily accepted by the customers thus TUI makes more profit as per this
norm.
7

Threat of new entrant: There are some airline companies that compete with the TUI while
making the successful routes at minimum prices. In this in 2004 TUI will reduces the cost from
airline Thomsonfly in UK and in this it is not possible to make the competitive cost structure as it
decreases the cost and benefits.
Rivalry among the existing competitors: TUI faced the high competition in the market and
has fierce marketplace by which have reduces the cost by inducing cost cutting programmes and
target the large number of customers.
It is used to make the suitable strategy by compared it with the competitors and with their
own previous strategy as well by which the profitability will get increases on repetitive basis
(Reilly, 2018).
Ansoff growth vector matrix: It is a matrix that is used by TUI to measure the market
impact on the business and that is as defined below as:
(Source: Ansoff matrix, 2020)
Market penetration It is a strategy that is less risky as it controls the different resources of
TUI as the market will get developed on continuous basis and in this to
maintain the market share is more important. In this TUI uses the
different strategy as one after the other to maintain the balance within the
business.
Product
development
In this TUI has maintain the focus on the current market products and
services thus TUI makes the acquisition as per the requirement of the
demographic impacts by which they get protect their market share and
8

values from the downsizing (Aldea, 2018).
Market development TUIs must uses this to get develop the offered services by which their
core competency will get developed by which the specified market will
get segmented and act as the better strategy. It will also develop higher
risk while expanding the business in new market as TUI major strength is
to strengthen the customer rather than the product.
Diversification It is even more risky strategy for growth as it includes the market and
product development and it is only be measurable when risk will get
compensate with the high return.
The TUI will uses market penetration strategy throughout by which their productivity and
profitability will keep on increasing.
TASK 4
P4) Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation
Porter's generic strategies: It is the strategy which is used by TUI to analyse the different
factors that has the better contribution in the success and development and as defined below as:
Cost leadership: It is a strategy which is used by TUI by which they operate their business
to enlarge the economy of scale as TUI is the largest travel agency and has worked on larger
range by which set the prices of different services and have offer the special discount and offer
by which more customer will get attracted (Dubey, 2018).
Differentiation: In this TUI have targeted the better range of customer by which have
provide the diverse range of services as like family trips, picnics, business tours, honeymoon
packages, cruise stay solutions and also offers booking facilities.
Focus: It this TUI uses both cost and differentiation focus both by which have offered the
products and services at minimum project by which larger market will get attracted that helps to
maintain more stability.
Bowman's strategic clock
It is the clock that shows the cycle of the different strategy that is used by the TUI to gave
tough competition in the marketplace and as defined briefly below as:
9

Low price and low value added: It is more probably didn’t get used by the TUI because by
offering the services at lower value may reduce the image of the business.
Low price: It gets used by the TUI to offer the different services at lower prices that is so as
to attract more customers.
Hybrid: In this strategy TUI provides the served the services to the customer with low
pricing strategy to get the better return on their investments.
Differentiation: In this TUI provide the diverse range of services to the customer to fulfil
all their need and requirements.
Focused differentiation: TUI uses this by maintain the focus to offer the variety of services
by which the customer always get attracted (Lozano, 2018).
Risky high margins: In this TUI will induce the continuous development as by making
innovation and creativeness.
Monopoly pricing: In this only one business will lead the other by managing the pricing of
different services and that get followed by others.
Loss of market shares: It will induce the negative impact on the performance of TUI as the
share will get decreases.
These all will get used by TUO to manage the standardised outcomes by which they have
accomplished their targets in timely and systematic manner.
Strategies: TUI uses the market development strategy and with this induces better
development and success on repetitive basis.
Objectives: TUI work with the objective to served the best services to customer with
appropriate pricing.
Tactics: In this TUI will uses different strategy to attain their objectives in effective manner.
Product TUI served diverse services to customer by which they always get satisfied as their
demand and requirement will get fulfilled.
Price TUI use cost leadership strategy and standardised own price that is with reasonable
prices by which more customer will get attracted (Yeow, 2018).
Place TUI uses the offline and online both the medium as with this prefer the enhanced
market acceptability by which their reach towards customer gets enlarged.
Promotion The digital platforms get used by TUI promote their services more in the market
10

and that is from the agents, own websites, search engines etc.
CONCLUSION
It has been concluded from the above report that the hospitality business must get induced
the different strategy within the business by which suitable outcomes will get attained within the
timely manner. In this the internal and the external factors will get analysed that has the direct
impact and also influences the working performance of the hotel. The business strategy is even
more important in this the better competitive advantage will get attained and it has been done by
using the stakeholder analysis, PESTLE analysis, porter’s five force analysis, VRIO, McKinsey
7force model, ansoff growth matrix and some theory as well to develop the strategic planning.
11

REFERENCES
Books and Journals
Aldea, A. and et. al., 2018, October. From Business Strategy to Enterprise Architecture and Back.
In 2018 IEEE 22nd International Enterprise Distributed Object Computing Workshop
(EDOCW) (pp. 145-152). IEEE.
Altin, M. and et. al., 2018. Performance measurement and management research in the
hospitality and tourism industry. International Journal of Contemporary Hospitality
Management.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Bratton, J. and Watson, S., 2018. Talent management, emotional labour and the role of line
managers in the Scottish hospitality industry. Worldwide Hospitality and Tourism
Themes.
Cheah, S., Ho, Y.P. and Li, S., 2018. Business model innovation for sustainable performance in
retail and hospitality industries. Sustainability, 10(11), p.3952.
D’Annunzio-Green, N., 2018. Cornerstones of talent management as a strategic priority in the
hospitality. Worldwide Hospitality and Tourism Themes.
Dubey, S.S., 2018. IT Strategy and management. PHI Learning Pvt. Ltd..
González-Rodríguez, M.R. and et. al., 2018. Revisiting the link between business strategy and
performance: Evidence from hotels. International Journal of Hospitality Management,
72, pp.21-31.
Konovalova, E.E. and et. al., 2018. Forming approaches to strategic management and
development of tourism and hospitality industry in the regions. Journal of Environmental
Management & Tourism, 9(2 (26)), pp.241-247.
Lozano, R., 2018. Sustainable business models: Providing a more holistic perspective. Business
Strategy and the Environment. 27(8). pp.1159-1166.
Melissen, F. and Sauer, L., 2018. Improving sustainability in the hospitality industry. Routledge.
Njoroge, M. and et. al., 2019. Innovation strategy and economic sustainability in the hospitality
industry. The Bottom Line.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Papaioannou, A. and et. al., 2018. Customer Oriented Strategy and Business Performance in
Tourism and Hospitality Industry. In Innovative Approaches to Tourism and Leisure (pp.
417-432). Springer, Cham.
Reilly, P., 2018. Building customer centricity in the hospitality sector: the role of talent
management. Worldwide Hospitality and Tourism Themes.
Yeow, A., Soh, C. and Hansen, R., 2018. Aligning with new digital strategy: A dynamic
capabilities approach. The Journal of Strategic Information Systems, 27(1), pp.43-58.
ONLINE
Stakeholder analysis. 2019. [Online] Available through:
<https://www.productplan.com/glossary/stakeholder-analysis/>.
Porter's five force analysis. 2019. [Online] Available through: <https://medium.com/product-
gyaan/porters-five-forces-analysis-868945aa5846>.
Ansoff matrix. 2020. [Online] Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/>.
12

13