Hospitality Business Strategy

This report focuses on the business strategy of Travelodge hotels, analyzing the impact of macro environment, internal capabilities, competitive forces, and strategic planning. It includes a PESTLE analysis, SWOT analysis, Porter's five forces analysis, and the application of the Ansoff Matrix.

Hospitality Business Strategy

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Analyse the impact & influence of macro environment over business firm..............................2
Domination of the internal environment & capabilities of organisation.....................................4
Evaluation of the competitive forces of Travelodge hotels.........................................................6
Application of range of concepts and models, interpret and frame strategic planning...............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
1

INTRODUCTION
Business strategy is define as a set of actions that include mission, vision and objectives of
company. It is determine that it help in attaining objectives and desired goals of company along
with this, business strategy is used by companies in order to attain competitive advantage and
strengthen its market position as well. It is consider as a master plan that help an entity to secure
leading position in market as compare to its rivals (Horng, 2018). For the present report,
Travelodge hotels is taken into consideration. It is one of the largest hotel brand that is situated in
England, United Kingdom. It was founded in the year 1985 and at present, it has more than 500
hotels worldwide. The present covers environmental analysis that help an entity to gain an
insight regarding factors that has high influence on business activities and operations as well. In
addition to this, there is analysis of internal capabilities and environment by the assistance of
different frameworks. Moreover, Porters five forces model is applied in order to know the level
of competition. Moreover, Various models and theories are devise in order to develop a strategic
plan in an effective manner.
MAIN BODY
Analyse the impact & influence of macro environment over business firm
It is essential for an entity to determine impact on macro environment factors on business
activities and performance as well. It help an organisation to develop effective strategies and
decline the level threats related with external factors. For this, the higher authorities of
Travelodge adopt PESTLE analysis, which is given below:
PESTEL analysis
It is define as a framework that assist an entity to analyse impact of uncontrollable factors
on business organisation. PESTLE analysis include six major factors that is explained below in
relation to Travelodge hotels:
Political Factors- This factor involve elements such as political stability, tax rates,
monetary policy, fiscal policy and many more. If it is talking about Travelodge hotels, its main
market is present in United Kingdom and it is determine that political condition of UK is quiet
well that has positive impact on implementation of activities. This factor has negative influence
also for instance, Due to Brexit, the overall growth and development of country is stop and
impact on business performance as well.
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Economical factor- It include components such as currency rate, economic growth,
inflation rate, interest rate, deflation and so on. In relation to Travelodge, its UK market slope is
going down due to Brexit as it is analysed that inflation rate of country is decline. This has
negative effect on buying capacity of people that leads to reduce in profits and revenue level of
organisation.
Social Factor- This factors plays vital role in the overall development as well as growth of
an organisation. Social factors are values, opinions, ides, norms, culture, lining standard of
people living in country. In context to Travelodge, its managers ensure that requirement of
people is fulfilled that help in engaging users for long time frame. It help company to develop a
positive mind set of customer towards brand and enhance its future sales in an effective manner.
The organisation ensure clean and quality room is given to customers in order to provide them
high experience that has positive influence on future sales.
Technological- This factor has high influence on the overall performance and activities of
company. Technology is changing rapidly and in order to sustain in market and to offer
something innovative as well as unique in market, it is important for a company to make use of
advanced technology (Boella and Goss-Turner, 2019). With reference to Travelodge hotels, it
offer online reservation system and card check-in and checkout that help in attracting large
number of people towards brand. Adoption of new technology occur high cost to company and
decline overall level of revenue of the organisation.
Environmental factor- It is important for an entity to offer products as well as service,
which dose not harm environment. Increase in awareness in people change the buying behaviour
of customer as they like to prefer using eco friendly products. In relation to Travelodge hotel, it
offer customer herbal made products at the time of their room booking as it help them to develop
a positive impression in mind set of customers. In addition to this, it will help company to sustain
in market for longer time as well. It involve laws such as health and safety, consumer protection
and so on. with reference to Travelodge hotels, its higher authorities develop a sourcing policy
that explain principles and standards to employees so that it is followed by staff members in an
effective manner. In addition to this, the company ensure safety and security of people prevailing
at workplace in an effective manner.
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Domination of the internal environment & capabilities of organisation
In order to determine internal environment and capabilities, it is essential for companies to
make use of effective tools and frameworks. The managers of Travelodge hotels is adopt SWOT
analysis tool in order to gain knowledge about its strength and weaknesses as well.
SWOT Analysis
It is consider as a strategic tool that help company to identify its strength and weaknesses
along with the opportunities and threats associated with the organisation. The SWOT analysis is
given below in context to respective organisation:
Strengths
 One of the major strength of Travelodge hotels is its market presence. It has around 600
hotels globally and most of them is situated in United Kingdom.
 The organisation has effective and talented workforce that aid company to provide on
time and quality service to customers. It help company to retain customer for longer time
period and develop its value in market .
Weaknesses
 The organisation is mainly rely on UK for its profit as it is not able to reach in more
developing countries.
 There are lot of hospitality organisations that deal in this sector and occur competition in
market that decline profit margin of Travelodge hotels
Opportunities
 The higher authorities of Travelodge hotels has the opportunity to enter into new market
and country as it help company to increase its sales and profit margin as well.
 The company can make use of social medial application and digital marketing tool as it
help company to reach large number of people and enhance its customer base level in an
effective manner.
Threats
 At present, the whole world is facing major threats because of COVID 19 that has direct
impact on productivity of company. because of this, there is decline in the tourism that
has negative influence on performance and sales of company.
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 There are lot of competitors prevailing at marketplace and is consider as a major threat
for organisation. It occur high competition in market that leads to decline in sales as well
as profit margin of Travelodge hotels.
VRIO Analysis
It is consider as a tool that assist in finding out internal assets along with venture &
capabilities, which rove competitive benefits in long-term. This analysis mainly involve four
factors that is value, rarity, inimitability & organisation as well (Gupta, 2019). The managers of
Travelodge adopt this concept in order to analyse its internal resources and to determine factors
that remain for long term in this competitive environment.
Resources Valuable Rare Inimitable Organisable
Brand image Yes No No No Competitive
disadvantage
Technical
capability
Yes No No No Unused parity
Financial
resources
Yes Yes Yes No Competitive
sustainable
Human
resource
Yes Yes Yes Yes Temporary
parity
Valuable- It is determine that brand image of Travelodge hotels is valuable as it offer
quality service that is familiar with its existing and potential client as well. Its managers focuses
on adopting innovative technology in order to provide innovative feature and to design its
commodities therefore, it is valuable for the organisation. The financial strength of Travelodge is
strong that help in implementing each and every activity without delay and in an effective
manner. One of the main reason of its success is skilled and talented employees that offer quality
service and develop effective relationship with people. It is consider as valuable as they put
efforts in order to attain objectives within stipulated time frame.
Rare- It is analyse that technical capability of Travelodge hotels is not rare as it adopt
advanced technology in order to promote brand and to offer quality and innovative service to
customers. It is determine that not every organisation is financially strong and is consider as rare
as organisation has strong financial resources. The company offer training to all the employees in
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order to enhance their skills so that they can bring out their talent that has positive influence on
productivity and is consider as a rare factor.
Inimitable- The financial resource of Travelodge hotels is high and it is hard to imitate. It
help in fighting with rivals in market and also aid in generating higher profits. its managers
ensure that there is usage of advanced technology in order to provide unique features to
customers that is imitate factor. Its employees are talented and skill that provide quality to
customer and is consider as inimitable factors.
Organisable- The organisation offer raining and development session to all the employees
in order to make them update about the trends and enhance their skills and competencies as well.
It is determine that fiscal asset of Travelodge hotels are managed in order to capture value of
firm as it develop strategy in order to gain growth and minimize the level of threats as well.
Evaluation of the competitive forces of Travelodge hotels
In order to evaluate the level of competition prevailing at marketplace, its higher
authorities uses the concept of porter’s five force model which is given below:
Porter’s five forces analysis
This model was developed in the year 1979 by Michael porter and is involved five major
competitive forces that has impact on the overall business performance. This model help an
organisation to identify the level of competition with in the particular sector in which it operates.
In addition to this, it is adopt by companies in order to gain knowledge about structure and to
identify corporate strategy. The five forces is given below in context to the chosen organisation:
Threats of new entrants- In order to start and operating a hotel in which Travelodge deals
is require higher cost that is not easy to gather and spent by a person.in addition to this, it include
various laws and policies that is required to be follow in order to make employees as well as
customer feel secure and safe within the premises. It is not as easy to develop a brand image in
market and to establish an business at large scale, Therefore, the threat of new entrants is low for
the Travelodge hotels.
Bargaining power of suppliers- It is analyse that power of suppliers is low within the
hospitality industry. One of the important element that is required by hotels is talented and skill
employees that offer on time as well as quality service to customers. Hotels such as Travelodge
is having low threat of bargaining power of suppliers. In order to sustain in market, it is
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important for company to develop a strategic group that help in fighting with rivals in an
effective manner.
Bargaining power of buyers- There are lot of hotels that offer services in market and it is
analysed that barraging power of buyers is high in this particular sector. Many hotels uses social
media application that help in reaching large number of people and enhance its customer base
level. Many companies offer discounts and make price comparison with customer in order to
make customers take decision about their services only. It is important for higher authorities of
Travelodge to offer unique services and to maintain good relation with staff members and
customers in order to gain success and retain in market for longer time.
Threats of substitutes- It is determine that Travelodge hotels make use of low pricing
strategy in order to attract large number of people towards the brand. Many of the people are
looking and prefer to stay in hotels that offer affordable pricing and threat of substitute is
medium towards Travelodge hotels. In order to target right audiences. It is important for
organisation to make use of effective marketing strategy that help in attaining leading position
within the marketplace.
Rivalry among existing competitors- It is analysed that completion is high within the
hospitality sector as it is easy for customers to shift to other brand because of low switching cost.
In addition to this, it is important for an entity to ensure quality service is given to customers as it
help in engage then for longer time (Li and Singal, 2019). In relation to Travelodge hotels, there
are various competitors prevailing at marketplace such as Intercontinental hotels, Holiday Inn
and so on. It has high influence on the overall sales as well as profitability of an organisation.
Application of range of concepts and models, interpret and frame strategic planning
In order to sustain in market, it is essential for an organisation to conduct environmental
analysis sin order to operate activities in right direction and to desired goals in an effective
manner. Ansoff matrix is used by the higher authorities of Travelodge hotels in order to take
strategic directions and attain higher growth in market.
Ansoff Matrix
This matrix consist of four strategies that help in developing an effective plan and to
attain higher growth and success. The four strategies is given below in relation to Travelodge
hotels.
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Market penetration- This strategy is mainly adopt in order to increase sales and maximize
profitability of an organisation. With reference to Travelodge hotels, its higher authorities can
adopt this strategy as it consist of low risk because the existing commodities as well as service is
offering in the existing market only. The organisation can make use of promotional tools and
change its price strategy in order to grab attention of people towards brand.
Product development- The another growth strategy that can be adopt by Travelodge hotels
in order to increase productivity and develop brand image in market. Herein, new and innovative
service is develop and offer in the existing market and this can be implemented by conducting
market research in order to gain knowledge about taste and preferences as well.
Market development- In this growth strategy, an organisation can expand its operations by
entering into new market with existing product. If it is talked about Travelodge hotels, it can
expand its business in countries such as Asia, Africa and many more. For this, it is important for
management of Travelodge hotels to have knowledge about new market in order to sustain and
gain success in an effective manner.
Diversification- This strategy is consider as highly risky as compare to other growth
strategy. Herein, an entity develop a new service as well as product and offer it in new market. It
is not essential that services of Travelodge hotels is like by the new market. This strategy is
adopt by organisation in order to strengthen its market position and to earn higher profits as well.
From the above discussion, it is determine that one of the suitable and beneficial strategy
that can be adopt by Travelodge hotels is market development. By the assistance of this, it can
expand operations in other countries and strengthen its market position in an effective manner.
Strategic management plan
It is a written document that include strategies, objectives that is required to be
communicate in order to gain growth and success at marketplace. The strategic plan is given
below in context to Travelodge hotels:
Strategies
In order to expand its activities in the new market that is to adopt market development
growth strategy, it is important for management of Travelodge to consider factors, which are as
follows:
STP- It is consider as a tool that help an entity to divide whole market and target the right people
in an effective manner. It include three factors that is given below:
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Segmentation- It is define as categorising the whole market on the basis of
demographics, geographic, psychographic and so on. In relation to Travelodge hotels, it can do
segmentation of market as per the cost conscious group in order to expand in new market.
Targeting- The management team of Travelodge hotels can target people of all the
income groups by using its pricing strategy effectively.
Positioning- In order to develop positive mind set of people of new market, it can make
use of promotional tools and other strategies that help in increasing customer base level in an
effective manner.
Objective- The SMART objective of Travelodge hotels are as follows:
 To increase sales by 10% in coming 8 months by providing quality service to customers.
 To enhance profit margin by 5% in coming 10 months by entering into new market
effectively.
Tactics- The higher authorities of Travelodge hotels can make use of cash management tactics,
which help in developing effective budget and ensure availability of funds for marketing
activities (Metaxas, Chatzoglou and Koulouriotis, 2019). It is important for managers to monitor
and evaluate performance of staff members on continuous basis in order to make improvements
that has positive impact on its productivity and profitability as well.
CONCLUSION
From the above study, it has been conclude that business strategy aid an entity to gain higher
growth and achieve objectives within stipulated time frame. It is important for an organisation to
make use of PESTLE analysis and SWOT analysis in order to gain knowledge about the factors
that impact on its performance and activities as well. By using the concept of VRIO analysis, an
entity gain to know about its internal capabilities and environment as well. In order to know
about the competition level in the particular industry, Porters five forces model is used by
organisation. Ansoff matrix is adopt by companies in order to gain an insight about growth
strategy that leads to better planning and attainment of objectives effectively.
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