Unit 41 - Hospitality Business Strategy

Hospitality Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies........................................3
TASK 2............................................................................................................................................7
P2 Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks..........................................................................................................7
TASK 3............................................................................................................................................8
P3 Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.......................................................................................8
TASK 4............................................................................................................................................9
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation........................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Hospitality Business strategy is defined as the plan in which effective plan of action are
made which is helpful for the hospitality business in achieving objectives aimed towards set of
decisions. Hospitality Business strategy includes plan in which top position is obtained by the
management in order to formulate effective plan of action by undertaking external and internal
factors. This report is prepared to understand all these concepts of hospitality industry with the
background of Fairmont. The hotel was founded in the year 2001 and headquartered in Toronto,
Canada. These chains of hotel are renowned for their luxury hotel services and they are having
their presence at global level. Furthermore this report highlights effect of macro and micro
environment over the business and its overall strategies. Within this report several concepts,
theories and models are used in order to understand numerous concepts (Leonidou and et. al.,
2017).
TASK 1
P1 Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies
Vision- Major Vision of Fairmont is to provide authentic local experience to their
customer by offering luxury experiences so as to make their presence in hotel and resort sector.
Mission- The major mission of Fairmont is to turning stay moments into memories for their
guest in order to provide remarkable stay to their guests.
Objectives- In context of Fairmont the major objective of Fairmont is to provide warm and
remarkable experience to their client so as to anticipate needs of their guests and become
ambassador of hotel and resort sector.
Hospitality strategy is defined as the effective plan which is undertaken by manager,
supervisor and other authorities on top. The entire efforts of employees are directed for the
accomplishment of business objectives by managing operation in such a way that high advantage
can be received over rivals within marketplace in sales and profits.

Different techniques of strategic planning
 Benchmarking- This is defined as comparing and obtaining metrics within competitor
and whole industry so as to recognise standard of the hospitality business in that
comparison. In this context Fairmont recognises their market position by comparing their
business operation with market leader of hospital industry (Leischnig, Woelfl and Ivens,
2016).
 Business analysis- With the help of appropriate analysis of business operational and
functional efficiency can be attained by business. In case of Fairmont they are analysing
their strength and weaknesses so as to achieve desired outcomes.
Framework to understand macro environment
PESTLE Analysis
PESTLE analysis is the strategic tool which is used by businesses in order to recognise
external factors those are having high implication on business in effective manner. In the context
of Fairmont PESTLE analysis is enumerated as under:
Political factor- This factor is associated with tariff rates, regulation and rules of
government. In the context of UK the country is having high implication on its business of
Brexit. Due to this political condition is not stable over there. In the context of Fairmont they are
having high impact of political factors as in hospitality business at the time of political
movement. So for this management of Fairmont is making robust strategies in order to obtain
positive benefits from those factors (Perera, 2017).
Economical factor: This factor is associated with interest rate, buying power of
individual, currency rate and many more. In the context of UK purchasing power of the
individual is high but at the same time due to Brexit income of every individual is having
negative implications. In the background of Fairmont their financial and fiscal policy is affected
due to this factor and economic condition of the hotel is having negative implications.
Social factor: These factors are associated with attitude, beliefs, taste and preferences of
customers. In the context of UK they are having open minded society and for this businesses are
required to use advanced and modern products in order to get prominent market position. In the

light of Fairmont, their services are modern due to which they are able to earn high income and
revenue.
Technological factor: These factors are associated with enhancement in technology and
using of emerging technology in the business. As in context of UK they are highly adaptive in
using latest technology so this is creating immense opportunities for Fairmont to grow into
marketplace by updating their technology and attract more customers.
Legal factor: Within this factor legal rules and legislations are enforced by government
of UK. These laws are used so as to provide welfare to society and to safeguard interest of
employees and society as well. UK is a nation where laws are strict and businesses are forced to
imply those rules and within context of Fairmont non obligation of these rules may cause them
paying high penalties.
Environmental factor: This factor is associated with safeguards of ecosystem and our
planet. For this businesses are required to use environmental friendly method in business
operation so as to safeguard the environment. In the context of Fairmont they have adopted
several practices of environmental safeguards such as waste management system and many
more. This is helpful for them to enhance their goodwill within marketplace (Cox, Pinfield and
Rutter, 2019).
Ansoff’s Matrix
Ansoff growth matrix is a phenomenon which is used by business to as to obtain strategic
planning process in expansion of their business. This strategy is helpful for the hotel business to
obtain best strategic tool in their strategy formulation. Within context of Fairmont, framework of
organisation is mention as below:
 Product development: Within this strategy new feature or service can be introduced
by Fairmont within expansion of their business. This strategy is helpful in enhancing
customer base and capturing new service segment of hospitality industry and market.
 Market development- Within this strategy existing services are offered by Fairmont
in some new market in which they do not have operations. This can result Fairmont
on enhancing their market size and goodwill as well.
 Market penetration: Within this strategy exiting services of Fairmont are penetrated
in the existing market with the help of modifying their services and showcasing them

in effective manner. This is helpful in enhancing goodwill in current market and
making loyal customers thereon.
 Diversification: This strategy is known to be the most complex strategy as a totally
diversified services or product can be offered by Fairmont to their customer within
this. This strategy is having highest probability of failures.
From the above discussion it can be concluded that in order to enhance their market
size and to attract more customers Fairmont should opt for market development. This
strategy is helpful in maintaining goodwill and customer base. In this context
Fairmont is planning to expand their business in Costa Rica in order to enhance their
market size.
SWOT framework
SWOT is a framework which is used to analyse strength and opportunities of a business
so as to eliminate its threat and weaknesses. In the context of Fairmont SWOT analysis is
elaborated as under:
Strength
 The hotel is having high brand
recognisance and global presence
which makes them a market leader.
 They are having wide ranged portfolio
of their offered services.
Weakness
 They are losing their share at online
business as they are more emphasised
on enhancing their customer base.
 They are focused on franchising due to
which they are suffering from lack of
attention.
Opportunities
 Fairmont is able to enlarge their
presence into other republics as they are
at developing stage in order to increase
client base.
 Due to emerging economy of nations
they are having high opportunities to
Threats
 With the modification in political
environment global business operations
turn as hindrance in efficiency of
establishment.
 They are having high rivalry for
Marriott, ICH and many more.

grow their business. (Dyckhoff and Negri, 2016)
TASK 2
P2 Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks
Internal environment of the business is acting as most important factor which helps the
management to lead in formulated strategies. SWOT analysis was used by Fairmont in exploring
new areas and in order to analyse internal environmental competencies 7s Model of McKinsey is
used which is elaborated as under:
McKinsey’s 7 Model
McKinsey’s framework is a tool which is used by the businesses in order to identify
seven internal components of business. This tool is used by Fairmont in aligning their task in
more effective manner so as to understand regarding their inherent factors. Some of the
components from point of Fairmont are mentioned below:
 Strategy: This is the factor under which strategies are formulated by business in order to
get competitive advantage in the market so as to deal with competitors in effective
manner. Robust strategies are developed by management of Fairmont so as to enhance
their sales and increase their working efficiency (Ariyani and Daryanto, 2018).
 Structure: This term is termed as division of the organisation in systematic manner. So
inappropriate structure of Fairmont may lead them to face difficulties in their business
operations.
 System: This aspect is defined as business activities and their completion in effective
manner which is helpful for the management of Fairmont in attaining desired goals.
 Skills: This aspect is associated with skills set possessed by employees and this is helpful
for Fairmont in matching roles as accordance to the market needs.
 Style: This is the way in which business is controlled and employees are managed. In
Fairmont participative leadership style is adopted so as to motivate employees.

 Staff: This is defined as diversified and inclusive workforce in which business operations
are managed by employees. In the context of Fairmont, the whole employee group is
divided in effective teams which are helping the business to grow.
 Shared value: The behaviour, values and culture is included in this aspect, Fairmont is
highly focused on following aspect of sharing value so as to boost morale of their
employees.
VRIO framework
VRIO framework is sum of four factors which are value, rarity, imitability and
organisation. This tool is used by hospitality businesses in order to recognise their internal
capabilities and resource availability. In the context of Fairmont this framework is explained as
under:
Valuable: This is required by the marketing manager of Fairmont that all the procured
resources are utilised by them in absolute manner. For Fairmont their valuable resources are their
employee and internal operations.
Rareness: This aspect is helpful for hospitality business in distinguishing their services
in the marketplace. Luxurious services of Fairmont are their rarity in business.
Imitable: In order to get high market coverage Fairmont is required to provide those
services which cannot be imitated by their rivals. Machinery and apps platform are imitable
resources for Fairmont.
Organisation: This is highly required by the business that they put their efforts to minimise
cost and enhance output. In the context of Fairmont they are having intense competition from
their rivals (Miethlich and Oldenburg, 2019).

TASK 3
P3 Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation
Porter five force models are defined as a frame work which is used by business to get
assistance over their strategic decisions in order to improvise brand image within marketplace. In
context of Fairmont this force is elaborated as under:
 Threat of new entrants: This force is associated with new entry in the business industry
which can be exercised by the business. In the context of Fairmont they are having strong
presence in the market and this industry is known as capital intensive so the company is
dealing with expensive staff and infrastructure. This industry is having high regulation
and intervention of government so Fairmont is having low threat of this force.
 Bargaining power of supplier: This power is associated with bargaining with power hold
by suppliers in lieu of changes in prices. Suppliers of Fairmont are huge in quantity so
this power is low in this case. The power of this force is hold by Fairmont and according
to their wish and preference they can change their suppliers.
 Bargaining power of buyers: This power is associated with power hold by buyer for any
fluctuations in prices. As hospitality industry is driven by clients so this power is high in
case of Fairmont. Customer holds immense power and this is the prominent challenge
faced by them (Varelas and Georgopoulos, 2017).
 Threat of substitutes: This force is defined as threat prevailing in the market form their
competitors. In the industry of hospitality there are so many competitors that are
providing similar services and competition is intense. In the context of Fairmont this
threat is very high.
 Rivalry among existing competitors: This threat is defined as existence of companies in
the same industry and their holding power thereon. In the context of hospitality industry
there is high rivalry inside industry as huge competitors are running their business in
order to get prominent market position.

TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given hospitality organisation
Porter’s generic strategy
Generic strategy of porter is helpful in providing numerous benefits in which competitive
advantages can be received within market. Moreover, various strategies of market in respect of
Fairmont are mention as below:
 Cost leadership- Within this strategy price sensitive customer are targeted. In this
Fairmont is offering various services in low prices so as to maintain loyal customer base.
 Differentiation- According to this strategy new and emerging services are provided to
customers. By this offerings of Fairmont can easily be differentiated in
marketplace(Okumus and et. al., 2019).
 Focus- Within this strategy cost and differentiation are formed a part of this. Within cost
focused strategy services are offered at low prices and in differentiation innovative
services are offered by Fairmont to their customer.
Bowman's strategic clock
Bowman strategic clock is referred as the model which helps the hospitality business to
explore market with high value of positioning. Aspects related with this framework are
elaborated below:
 Low price & low value: It is a low aggressive function for Fairmont as services aren't
differentiated so they are offered at fewer prices to the customers.
 Low price: With aspect of low price, Fairmont can position their business as a leader in
marketplace with the help of value minimisation method.
 Hybrid: In the context of Fairmont hybrid strategy is communicated by focusing on low
price aspect and product differentiation with the main motive to attract large number of
clients (Munyaka, 2016).

 Differentiation: Within the aspect of innovation Fairmont adopted differentiation aspect
for nourishing employee needs and requirements. This aspect is helpful for them to
modify their offering as per market demand.
 Focused differentiation: In global level prominent hospitality business organisation uses
this strategy. This helps Fairmont in enhancing their goodwill.
 Risk and moderate margins: Within these aspect prominent challenges such as
ineffective structure, less effective leadership are faced by hospitality business and which
could cause Fairmont non achievement of their goals.
 Monopoly pricing: Within monopoly market the method which can be used by business
is to render their services in all markets.
 Loss of market area: This aspect is known to be the challenge which is required to
overcome by rivalry market edge. Within this mediocre prices are set by Fairmont in
order to have market competitive edge.
Strategic management plan including strategic objective and priority
Strategic planning is helpful in recognising business activities and resources by which
major objective of hospitality business can be accomplished in effective manner. The strategic
plan in context of Fairmont is mention as follow:
Vision: Major Vision of Fairmont is to provide authentic local experience to their customer by
offering luxury experiences so as to make their presence in hotel and resort sector.
Mission: The major mission of Fairmont is to turning stay moments into memories for their
guest in order to provide remarkable stay to their guests (Vij, 2016).
Objectives: The objective of Fairmont is to enhance customer base with 20% and to enhance
company sale in a time period of three months.
Tactics: This is referred as those efforts which are executed by business in order to achieve
organisational objectives. The major tactics used by Fairmont is marketing mix which is
elucidated as under:
Product Fairmont is providing all the luxurious services to their customer so as to

get immense market opportunities to enter into new market segment. This
is helpful in moulding business operation in a way by which exiting
services can be offered in most effective way.
Price Fairmont is dealing in premium pricing as they are rendering luxurious
services by which they have acquired prominent position in the
marketplace.
Place Fairmont is having their operation at global level which proves their
worldwide presence
Promotion The major promotional channel used by Fairmont includes social media
marketing as this is the most impactful manner in current internet scenario
(Bowie and et. al., 2016).
Implementation: This is essential for the business to execute implementation of their
strategies so as to manage business function and enumerate effective control thereon.
Management of Fairmont is planning the working in order to utilise procured resources in
effective manner. There are several indices which are used by Fairmont such as KPI,
benchmarking and many more in order to enhance performance of their new project of market
development in Costa Rica.
Particular First year Second
year
Third year Fourth year Fifth year
Opening balance - 50,000 50,000 50,000 50,000
Investment 150,000 250,000 270,000 160,000 120,000
Start-up value 100,000 200,000 140,000 60,000 100,000
Total 250,000 500,000 460,000 270,000 270,000

Evaluation: This is the process under which all the formulated strategies are reviewed so as
to check efficiency of formulated efficiency. This is helpful for Fairmont to manage plan of
action so as to enhance effectiveness of the formulated project.
CONCLUSION
From the above detailed report it can be concluded that within hospitality business, with
the help of proper strategy formulation success can be achieved in prominent manner. With the
help of PESTLE and SWOT approach internal and external environment can be analysed which
are having positive implications on strategy implementation. With the help of porter five force
model market rivalries can be recognised and on the other hand porter generic strategy prices of
the offered services can be decided. At last with the help of marketing plan project can be placed
within market in effective manner and business may have high rate of success (Gursoy, 2017).

REFERENCES
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Organization (VRIO) Framework.
Munyaka, C.M., 2016. Application of Porter’s Generic Strategies in Kenya’s Hospitality
Industry (Doctoral dissertation, United States International University-Africa).
Okumus and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized
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Vij, M., 2016. The cost competitiveness, competitiveness and sustainability of the hospitality
industry in India. Worldwide Hospitality and Tourism Themes.