Hospitality Business Strategy

This document discusses the application of business strategy in the hospitality industry, focusing on Four Seasons Hotels & Resorts. It includes a macro-environment analysis, internal environment analysis, and evaluation of Porter's five forces model. Additionally, it explores the application of various theories, concepts, and models in strategic planning for a hospitality organization.

Hospitality
Business
Strategy

Contents
INTRODUCTION...........................................................................................................................................3
PART A.........................................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1: Macro-environment analysis.............................................................................................................3
TASK 2..........................................................................................................................................................5
P2: Internal Environment Analysis...........................................................................................................5
TASK 3..........................................................................................................................................................7
P3: Porter’s five forces model..................................................................................................................7
PART B.........................................................................................................................................................8
TASK 4..........................................................................................................................................................8
P4: Application of a range of theories, concepts and models..................................................................8
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................12

INTRODUCTION
Hospitality is a service which is provided when a relation is created between a guest and
the service provider (Andringa, Poulston and Pernecky, 2016). Business strategy refers to
various competitive moves or actions which a business takes in order to attain strategic
advantage over the different competitors in the market in the future time period. These services
are in a high demand because of the facilities they provide to the customers and clients. For this
project, Four Seasons Hotels & Resorts chain is chosen which has hotels all over the world in
many countries. It is a global chain providing luxury services to its varied customers as well as
clients. Specific analysis will be made on impact of macro-environment, assessment of internal
environment and evaluation of Porter's five forces. Also, focus will be made on applying various
models, theories as well as concepts in the context of strategic planning of a hospitality
organization.
PART A
TASK 1
P1: Macro-environment analysis
There are different types of external factors which can create an influence on the macro-
environment of the organization (Barnes, Meyer and Kinard, 2016). Therefore, it becomes very
important for a firm. The analysis of these factors can be done through PESTEL analysis. This
analysis in the context of Four Seasons Hotels & Resorts is as follows-
Political factors- These are corruption, foreign trade policy and labor law. They have to
be considered from the point of view of Four Seasons Hotels & Resorts because they can
influence the profitability level of any firm.
 Positive impact- If the country where Four Seasons Hotels & Resorts is operating
business in is politically stable then it will lead towards increase in the revenues and will
therefore allows the firm to target higher profits in the future time period.
 Negative impact- If the tax policy is changed by the government then this can result in
increase in the overall expenses of the organization. Therefore, this will result in decrease
in the profits.
Economic factors- These are exchange rates, interest rates and inflation rates. They are
important from the point of view of organizations because by considering them they can make
sure that they deal with them in a highly effective manner. Thus Four Seasons Hotels & Resorts
chain is required to consider them.

 Positive impact- If the exchange rates are relatively stable in the country where Four
Seasons Hotel is operating in then this will positively boost up its business. Thus its
profits level can increase.
 Negative impact- If the inflation rate keeps on increasing in the economy then this will
result in decrease in footfall of customers and clients at the hotel and therefore its
revenues will decrease leading to a decrease in profits.
Social factors- These are safety emphasis, health consciousness and lifestyle attitudes
(Buhalis and Leung, 2018). They impact the business of hospitality organizations and
therefore the business of Four Seasons Hotels & Resorts also is affected due to their
influence.
 Positive impact- Due to change in lifestyle attitudes of the customers they now prefer to
spend extra money for staying in five-star hotels. This results in the boost-up of the
business of Four Seasons Hotels & Resorts.
 Negative impact- Due to cultural barriers there are many places where the business of
Four Seasons Hotels & Resorts is affected. This can reduce the overall profits of the
hotel.
Technological factors- These are R&D activity, technological change and technological
awareness (Erickson and Rothberg, 2017). They can impact the business of Four Seasons
Hotels & Resorts because the technological changes can take place very rapidly in a
dynamic business environment.
 Positive impact- Boost-Up to R&D activity can result in increase in the business of the
hotel as it will result in incorporation of certain changes which are required. In the
context of Four Seasons Hotels & Resorts this is necessary because this will help in
increasing the profits.
 Negative impact- If technological change is adopted slowly by the hotel then this will
result in creation of a negative impact on the profitability level.
Environmental factors- These are environmental policies, climate change and pressure
from NGOs. They can create an impact on the business of Four Seasons Hotels & Resorts
because people are now increasingly becoming eco-friendly and are now making the
same expectations from the businesses as well.

 Positive impact- If the environmental policies of the government are in company’s favor
then it will create a positive impact on the business of Four Seasons Hotels & Resorts
because in this way it can create a right impression on the mind of people.
 Negative impact- If the environmental policies of the government are not in company’s
favor then this will result in creation of a negative impact on the overall business of Four
Seasons Hotels & Resorts as the people will think that the chain is not in favor of eco-
friendly policies.
Legal factors- Discrimination laws, Employment Laws and Consumer Protection Laws
are some of the important laws which are present in an organization's business
environment. An impact is created by them on the profits of Four Seasons Hotels &
Resorts because laws, rules & regulations are required to be followed by the business
enterprises.
 Positive impact- Having the rules and regulations in the favor of the company can help
its business a lot leading towards enhancement of profits.
 Negative impact- If the company does not have the rules and regulations in its favor then
a negative impact can be created on its business.
TASK 2
P2: Internal Environment Analysis
It refers to the analysis of internal capabilities of an organization to make sure that they
are sufficient enough for acquiring a strategic edge in the market (Folakemi, 2017). The
techniques which can be used for its analysis are as follows-
SWOT analysis-
It refers to an analysis which is done in order to find out about the strengths, weaknesses,
opportunities and threats (Jansson and et.al., 2017). In Four Seasons Hotels & Resorts it is
analyzed as follows-
Strengths Weaknesses
 Good Facilities- Four Seasons Hotels
& Resorts provides good facilities for
its guests. This leads to increase in their
satisfaction level.
 Contribution to the economy- It
 Higher Rates- Four Seasons Hotels &
Resorts charges a very high rate. This
therefore deters some of the customers
from visiting the hotel.
 Unfavorable Tax Rates- The tax rates

contributes to the economy of the
countries where it operates in.
of the government are very high and
this results in creation of an impact on
the profitability of the hotel. Thus this
creates a weakness for the hotel.
Opportunities Threats
 Expansion- Four Seasons Hotels &
Resorts can expand to those countries
where it is not present and thus ensure
that it uses the opportunity available
there in an effective manner.
 Tourism- The growth of tourism in
various countries offers Four Seasons
Hotels & Resorts an opportunity of
increasing the profits.
 Alternatives- There is various types of
alternatives which are available for
Four Seasons Hotels & Resorts which
can result in creation of threat for the
business of the organizations operating
in it.
 Economic conditions- The economic
conditions in many countries are not
good. This acts as a threat for the hotel
as this can result in decrease in its
profitability level. Therefore, its long-
term prospects can be affected due to
the prevailing economic conditions
which have been created due to the
slowdown.
VRIO analysis-
It is a tool which helps in determining the organization’s strategic capabilities which
provide it a distinct strategic edge over its rivals in the market (VRIO Analysis, 2019). The
analysis in the context of the hotel is as follows-
Resources Valuable Rare Inimitable Organized
Goodwill    
Human
Resources
  
Customer Base  
Financial
Resources

Valuable resources- For the company Goodwill is valuable because a lot of time is taken
to create it. Human Resources are valuable because their contribution is important in taking a
business forward on the route of success. Customer Base is valuable because customers are the
king in the hospitality industry. Financial Resources are valuable because a firm needs to be
financially strong so as to ensure that a strategic advantage is obtained.
Rare resources- In the firm Goodwill is rare because not every company has it. Human
Resources are rare because it is essential to get talented people for the work of the organization.

Customer Base is rare because not every firm has a strong customer base. Financial Resources
are not rare because it is possible for other businesses also to create strong financial resources.
Inimitable resources- Company's goodwill is inimitable because it cannot be copied by
other firms. Human Resources are inimitable because they are loyal towards the organization.
Customer Base is not inimitable because other organizations can also create it. Financial
Resources are not inimitable because any company can improve its financial position.
Organized resources- For the organization Goodwill is organized because the company
has a good brand name and recognition in the market. Human Resources are not organized
because they can be inefficient sometimes. Customer Base is not organized as it can shift to other
companies. Financial Resources are not organized because there is an increase in the
expenditures of the organization sometimes.
TASK 3
P3: Porter’s five forces model
It is a framework which the organizations use which enables them to identify the different
types of forces which are present in the business environment (Kang, Lee and Yoo, 2016). For
Four Seasons Hotels & Resorts the application of this model can be done as follows-
 Competition in the industry- It is an important force which impacts the overall structure
of the market (Matviienko, 2019). This is so because due to the competition many firms
are required to bring a change in their strategies as well as tactics. For Four Seasons
Hotels & Resorts this force has a high power because in the hospitality industry there has
been a gradual increase in the level of competition which can therefore affect the level of
profits of the company. Due to high competition, the firms in this sector are now forced
to reduce their rates so that they can take on the competitors.
 Potential of new entrants- For the companies, this force is quite important to be
considered because the new entrants create an overall impact on the operations (Mendis,
Jayakody and Fonseka, 2018). This is so because the new entrants can create impact on
the businesses in the hospitality sector and therefore Four Seasons Hotels & Resorts is
affected. The new entrants can keep their prices lower which will force other companies
to follow thereby creating an impact on the profitability level. Thus for the firm this force
has a high because the hospitality industry offers a lot of potential to the new entrants
who wish to enter in this market. By providing the right services at a decent price they
can attract the customers and clients. Due to the entry of several new entrants in the
market there is a lot which has to be done by the hospitality companies for making sure
that they are able to deal quite effectively with the new competition.

 Power of suppliers- It is the power of the suppliers through which they can create a
control on the prices of different types of inputs (Prihanto and Kurniasari, 2019). Since
hospitality industry deals in services therefore this force has a low power because there is
no role of suppliers in this sector. Therefore there is a very less impact which this force
creates for Four Seasons Hotels & Resorts. Thus there is no requirement for the company
to consider this force while framing its business strategy. There is no role which the
suppliers can play in this segment.
 Power of customers- Customers in the market have a power to be able to influence the
prices of products and services. Therefore, organizations are required to ensure that they
can satisfy their customers by making the use of appropriate strategies as well as tactics
so that they give positive reviews which will lead towards boost-up in the business. Thus
for Four Seasons Hotels & Resorts this force creates a high power. Best facilities can be
provided to the customers by charging a reasonable price which is expected and should
make sure that the customers give positive reviews about its business which will help in
the future growth of the business. The customers are required to be satisfied so that their
references can help in growing business.
 Threat of substitute products- It means the power which the substitute goods have in
the market because of which they can influence the prices of the original products (Rykun
and Vermenskaya, 2017). This force has a low power for the organization because the
hospitality industry is a service industry. This is so because in a service industry these
substitute products do not play a major role.
Justification- 3 out of 5 forces has a high power. 2 put of 5 forces have a low power.
Therefore, it can be said that for Four Seasons Hotels & Resorts a careful strategy is
required to deal with the high-power forces because these are likely to put an impact on
the business of the organization in the future time period in the market.
PART B
TASK 4
P4: Application of a range of theories, concepts and models
For framing a business strategy various theories, concepts and models can be applied by
the organization (Sciukauske, 2020). One of them is Ansoff Matrix. It is a strategic tool which is
used effectively so that the organizations are able to identify a growth strategy which can help
them in acquiring of a strategic edge over the competitors in the market.

For Four Seasons Hotels & Resorts the application of this matrix can be done as follows-
Market Development- In it, the organizations are required to make sure that they are
able to present products and services in a new market. The hotel can make use of this strategy by
introducing services for its various types of clients in the new markets.
Market Penetration- In this strategy, the companies make sure that they introduce new
products and services within their existing market (Sehitoglu, Ross and Köseoglu, 2017). Four
Seasons Hotels & Resorts can use this strategy effectively to increase their market share.
Diversification- In this strategy, the firms can enter into new markets with new goods
and services. If used correctly using the right techniques then this can give higher returns to the
companies. Four Seasons Hotels & Resorts can use this strategy so that they can get right returns
by increasing their market share.
Product Development- In this strategy, the organizations introduce a new product or a
service in the market making the use of creative and innovative techniques (Westerman, 2018).
Four Seasons Hotels & Resorts can make use of it so that it is able to develop new services for its
market.
Justification- Four Seasons Hotels & Resorts should make use of Product Development
strategy. This is so because it will be highly effective for it to develop innovative services for its
customers and clients. Therefore this can help it a lot in enhancement of its level of profits in an
effective manner.
Strategic plan- Organizations prepare Strategic plan to be able to develop business
strategies for acquiring a competitive edge within the market (Zaitseva and et.al., 2017). This can
be used by Four Seasons Hotels & Resorts for framing their strategy for getting a strategic edge
in the market.
Porter's Generic Strategies- These refer to a set of strategic directions which are
available for the organization to be able to ensure that the company is able to achieve higher
growth in the future time period. Four Seasons Hotels & Resorts can consider the following
strategies-
Cost leadership- In it, the company focuses on reducing its costs and thus maximizing
its overall level of profits. Thus if the hotel chooses this strategy then this will lead towards
ensuring that they are able to earn more profits by targeting more customers.
Differentiation- Here, the firms ensures that it differentiates its products and services in
the market so that it is able to compete with the competitors. Thus for the hotel this is quite a
useful strategy to be able to ensure that customers prefer its services over other competitors.

Cost focus strategy- This is a strategy where the companies are able to concentrate on
specific markets where they can reduce the costs. For the hotel, application of this strategy can
be made in those markets where they can decrease costs and target more customers.
Differentiation focus strategy- In it, the firms are able to target specific segments in the
market where they can differentiate their products and services. The hotel can apply this strategy
by ensuring that they are able to make their services look different from the competitors in the
market.
Justification- Four Seasons Hotels & Resorts must make the use of Cost Leadership
Strategy so that they are able to make sure that they can reduce the costs and thus target the right
customers and clients which will allow them to be able to earn higher-level of profits in the
future time period.
Scenario- Four Seasons Hotels & Resorts is planning to increase its market share as
compared to its competitors. For this it has to prepare a strategic plan.
The plan in the context of Four Seasons Hotels & Resorts is as follows-
Particulars Details
Mission The mission of Four Seasons Hotels & Resorts
is to specialize within the hospitality industry
by providing fine services to the guests.
Vision The vision of Four Seasons Hotels & Resorts is
to become the most successful hospitality chain
in the world.
Core Values The core values of Four Seasons Hotels &
Resorts are to honor, respect and reward its
employees.
Goals  To increase the revenues by providing
the right services to the customers and
clients.
 To increase the level of profits in the
future.
 To increase the market share.
Strategies to be adopted  The chain needs to focus on adopting of
right and aggressive marketing
strategies to target the customers and
clients.
 The chain needs to concentrate on
various promotional techniques so that
it is able to increase its revenues
without any problems and issues.
 The chain is required to set its focus on
the use of right methods for gaining
competitive edge over its various rivals

who are present in the market. This will
lead towards increase in the revenue
and profits.
Summary In Summary, it can be said that the firms use a
Strategic Plan to be able to identify the
appropriate ways through which they can
achieve growth in the future time period. It is
quite useful to provide the directions to the
organizations which will help them in the
achievement of higher-level of growth in the
future time period. Thus in this manner the
company can get ahead of other competitors by
maximizing its profit. This will ensure that it
achieves sustainable success in the future time
period without facing any kind of problems and
issues. Therefore there is a requirement of
adopting the right strategies and tactics from
the point of view of the management of the
company by properly implementing this
strategic plan.
CONCLUSION
From the above report, it can be concluded that in the hospitality businesses the strategies
are required to be used effectively and efficiently to get ahead of the competition. The macro-
environment analysis helps a lot in analyzing the external factors. This can be done by using
PESTEL analysis. The internal environment can be analyzed using SWOT and VRIO analysis.
Porter’s five forces model is very useful from the point of view of the companies to analyze the
power of these forces. Also, Ansoff Matrix can be used to evaluate the growth strategies and
selecting the best one out of them. Strategic Plan can be prepared so that the firms are able to
acquire a competitive edge in the market.

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Online
VRIO Analysis. 2019. [Online]. Available through: <https://managementmania.com/en/vrio-
analysis#:~:text=VRIO%20Analysis%20is%20an%20analytical%20technique%20briliant
%20for%20the%20evaluation,%2C%20Rareness%2C%20Imitability%2C%20Organization.>