Analysis of Growth Options for a Hospitality Business: Report

This report examines growth options for a hospitality business, focusing on internationalization strategies within the sector. It provides an overview of various sectors in the hospitality industry and identifies opportunities for market development, particularly in Turkey, supported by PESTLE analysis of the UK and Spain. The report explores management issues, including human resource management and corporate social responsibility, and assesses future trends. It applies strategic frameworks such as Porter's Five Forces and the Ansoff matrix to evaluate market penetration, product development, and market development tactics. The analysis includes market screening, segmentation, and marketing strategies, concluding with recommendations for business expansion and enhanced profitability. The report emphasizes the importance of understanding consumer preferences and adapting to technological advancements within the competitive hospitality landscape.

Growth Options for the
Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Overview of various sector within hospitality industry..............................................................1
LO 2.................................................................................................................................................5
Opportunities for Internalisation ................................................................................................5
Management issues in Hospitality industry................................................................................6
Human resource management and operations.............................................................................8
Corporate social responsibility and sustainability issues ...........................................................9
Future Trends as well as development within hospitality market ..........................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In the present highly competitive environment, expanding business is considered to be a
difficult as well as complex procedure. Expanding business operations require specialised
planning which is to be done by the manager in an organisation. Growth of business involves
high risk which can have negative impact on the business performance. In addition to this,
formulation as well as implementation of suitable strategy can assist the firm in achieving
stability and help enterprise in earning long term profitability (Zalengera and et.al, 2014). There
are different options available such as export, market development as well as penetration which
can be utilised by companies for expanding the business internationally. Before expanding the
business, it is very important for manager in an enterprise to conduct internal assessment and
analyse business position in market. The purpose of present report is to identify opportunities for
internationalisation in hospitality sector. It emphasizes on developing the understanding about
management issues within hospitality sector in context of etc. venue (Aslan, 2017)
LO1
Overview of various sector within hospitality industry
Suitable country for market development
Company has to expand its business in Turkey because it is considered as fastest growing nation.
Many tourists come to Turkey every year and spend high amount here. Thus, if entity enter
into this country then it will be beneficial for the firm to raise its profitability. This would be
suitable country for market development of the company.
Pestle analysis of three countries (Zalengera and et.al, 2014)
PESTLE analysis of UK
Political factors: This factors have direct as well as significant influence on the business
operations of company. Change in government norms have impact on industry. Brexit was a
significant political event and it had a noticeable impact on tourism and the hospitality
industry (Aslan, 2017)
Economic factor: This variable has direct as well as significant effect on the profitability sector
of hospitality industry. The situation of demand is healthy and the hotel brands would be
able to benefit from the current situation (Khan, Alam and Alam, 2015)
1

Social factor: social factors too that affect the global hospitality industry. Consumer preference
is an important factor. If consumer sentiment is favorable both airlines and the hotel brands
stand to gain (Parra-Lopez, Sayadi and Duran-Zuzáo, 2015)
Technological factor: Technology is shaping the travel experience at many other points too
including on the ground and in the air. This factor has supported hospitality sector in
providing additional facilities to customers (Zalengera and et.al, 2014)
Legal factors: public safety and labour law are two important norms which have great influence
on human resources policies and practices in hospitality sector. The legal authority in UK
has focus on ensuring that enterprises can rely on a business-friendly environment and make
the most out of growth markets outside the EU (Aslan, 2017)
Environmental factors: Sustainability is a key concern in tourism and hospitality sector in
Europe. Even the hotel industry is impacted directly by changing weather conditions (Khan,
Alam and Alam, 2015)
PESTLE analysis of Spain
2

Political
 Alterations of various government
regimes terrorism or worldwide, it
would directly impact hospitality
industry of Spain.
Economical
 Huge demand of tourism sector
 Growth of labour market along with
consumer spending
Social
 Preference had been shifted not in
against various private
accommodations.
Technological
 From the perspective of airline till its
bookings along with marketing,
technology is considered as huge
influencer.
Environmental
 Sustainability
 Special focus on ecotourism
 Managing its ecological impact towards
waste management
Legal
 Major important concern on both
labour and public security.
 Staff training is very important.
Political
 there is no proper government in Spain
since 20015
 Scheme agreements has given tourist a
chance easier to money in other
country.
 No visa facility helps in saving time
and money.
Economical
 Spain is fourth largest Euro zone
economy.
 Financial position of the country will
be strengthen with the increase in
number of tourism
The labour market is growing stronger with
consumer spending.
Social
 Consumer preferences are changing in
favour of private accommodation.
 Consumer sentiments are favourable
Technological
For attaining success companies which are
operating in hospitality sector need to make
3

for both airlines and hotel brands to
gain.
focus on the adoption of social media
marketing and other technological aspects.
Environmental
Hotel companies need to perform their
activities in an eco-friendly manner.
Legal
In Spain, hospitality firms need to follow
health and safety as well as protective
equipment Act, taxation rules etc.
Market screening
Entity has to develop its business in High street location in UK. Hotel has to concentrate on
commercial areas where it can attract more visitors of travellers towards the hotel in Turkey.
It has to concentrate on geographical areas for establishing the band successfully in Turkey
Economic size and standard of living of people (Lundgren, 2017)
Turkey has stable economic condition and people have adequate income sources. They live
standard life. They spend adequate amount to live better life. There are many growth
opportunities for the hotels to grow well in this nation population have sufficient income
sources and they like to go to hotels and restaurants. It is the location where many visitors
come thus, enmity can grow well in this destination (Pałka, 2017)
Environmental factor, , Import restriction, legal frame, political stability
There are many factors that can impact on overall business unit operational efficiency. There
are political, social, legal, environmental factors etc. Political condition of Turkey is stable
and there is no legal restriction for the company those which wants to enter in this market.
Social and cultural factors
Turkey is the location where society likes to spend money on luxurious products and
services. They always prefer to go in hotels where they can get luxurious services. Night life
of Turkey is very famous, hotels provides hard drink facility and entertainment facilities s to
the consumers that attract them towards the brand (Lundgren, 2017)
Segment of the markets
4

Hospitality industry takes support of geographical segmentation method because it helps
them in offering services as per the geographical location so that consumers can get
satisfactory services (Pałka, 2017)
Marketing system
Company can take support of social media promotional strategies in order to communicate
well with the consumers of Turkey. It can enhance communication with the people so that
their needs can be identified and company can offer them product and services accordingly.
There is high competition in this market because big size organizations are running their
business here successfully (Lundgren, 2017)
Objectives
The main objective of entity is to raise its profit in the new market by 15% till the end of 2019.
Purpose of the hotel is to enhance number of consumers of the firm by 25% till the end of 2019.
Strategy (Pałka, 2017)
Porters five force model
Threat of new entry: Threat of new entrants are determined by barriers to entry which include
economies of scale. The Hotel Industry on a global basis is characterized by high capital
costs and a high proportion of fixed costs to total costs. As the high capital is required for
entering into hospitality sector, there are less chances of entry of new firm in an industry.
(Carraher, 2018)
Threat to substitute product :Substitute products can be existing or potential products and
services which are able to perform the same function. As hospitality sector is very big, there are
many giants companies , These organisations have high potential to create as well as
substitute product in the market (Man, 2016)
Bargaining power of suppliers: There is a great demand for enhanced global information and
booking capabilities in the hospitality. The only supplier which might exercise power over
any company would be labour and experienced trained personnel, which is in great demand
in the Hotel Industry all over the world. So bargaining power of supplier is low.
Bargaining power of buyer: The bargaining power of buyer in hospitality sector in Europe is
generally high. (Carraher, 2018)
Ansoff matrix
Product development
5

Hotel has to develop its products in the new location so that it can gain attention of the
consumers.
Market development
Market development is the best strategy for the company because this will help in raising its
profit.
Market penetration
This would not be appropriate strategy for business.
Differentiation (Gurcaylilar-Yenidogan and Aksoy,2018)
This would not be adequate strategy for the business
Tactics
Company has to take support of social media sites in order to make effective communication
with the Turkey population so that it can offer them goods and services as per the
requirement of consumers.
Action
It has to closely monitor the activities so that it can get positive results
Control
It order to control over operational activities company has to closely monitor all activities
(Gurcaylilar-Yenidogan and Aksoy,2018)
The hospitality industry is very big and consists of broad category of fields. It is basically
recognised as the service sector. Hospitality sector includes restaurants, themes parks, lodging
transportation, etc. This industry is the part of tourism sector. Hospitality sector is nowadays
growing at a rapid rate. There is high scope of earning high revenue and profits. Hospitality
sector mainly depends on the availability of leisure time and disposable income (Lima, Robinson
and Edwards, 2014). The different segments in hospitality sector like hotel, restaurant and
amusement park are comprised of various business operations such as marketing, facility
maintenance, management, human resources, etc. Hospitality industry in Europe has grown
approx. 3.4 percent in 2010. This sector in Europe contributes to 85 percent of tourism in Europe
(Lafley and Martin, 2013). Hospitality industry is contributing a lot towards economic growth as
well as generation of employment in nation. The hospitality industry in Europe covers a wide
market share.
6

Hospitality industry covers a number of companies which offer various facilities as well
as services such as transportation, food and accommodation to customers. There are different
segments in hospitality industry like lodging, recreational, entertainment, travel as well as
tourism, food and beverage (Carraher, 2018)
Lodging/Accommodation: It is considered to be a broad sector in hospitality industry.
Housing to food facilities is provided to guests. In addition to this, companies in hospitality
sector also provides housing or accommodation facilities such as villas, resorts, hotel, lodge, etc.
according to the budget of customer. Hotel also provides luxury suites in order to make
customers feel safe as well as comfortable. In hospitality sector, hotels provide indispensable
accommodation services to tourists. Business entity in order to expand business in this sector is
required to concentrate on improving lodging experience for people who travel around the world.
(Lundgren, 2017)
As concentration on customer needs strategy will assist etc. venue company in gaining the
competitive advantage in market as well improving brand image in domestic as well as
international market (Ruming and Davies, 2014). It is very important to fulfil customer
expectation in terms of continuous expansion or growth of business. It has been analysed from
report of travel professionals that geographical location as well as situation of Mediterranean
region has significantly contributed to increase in demand for hotels. The greater demand has
been analysed in Europe as compared to Spain and Turkey.
In Europe, it is expected that there will be approx. 50 percent growth of resorts in the
future. In the present scenario, hotel industry in Europe is facing a transformation procedure for
adapting new products, distribution trends and services.
Recreational: The hospitality industry in Europe also provides recreational services to
tourists in order to provide them with memorable experience. It is considered to be a diverse
business. Companies operating entertainment business conducts the recreational activities for
tourists visiting at specific destinations (Carraher, 2018)
Resources as well as availability of funds are the two factors which enable travel and
tourism enterprises to provide such services to customers. Economic condition of Europe is good
as compared to Turkey and Spain. People in Europe are well educated and they have
understanding about the importance of tourism. Therefore, domestic people support tourism or
hospitality business. This assistance is very much crucial in order to expand the business. In
7

Europe, resources are easily available which can be used by company’s operating entertainment
business for conducting recreational activities for tourists (Lundgren, 2017)
Travel and Tourism: It is considered to be another important segment of hospitality
sector. It is a big sector of the hospitality industry which provides services domestically as well
as internationally. Travel and Tourism sector by providing the transportation facilities allows
tourists to travel from destination to other. Travel and tourism sector contributes a lot towards
growth of hospitality sector. In other words, it can be stated that without profound levels of
travelling and tourism in an area, hospitality business would not be able to grow. Travel and
tourism sector is considered to the backbone of hospitality industry (Schuckert, Liu and Law,
2015). This segment requires appropriate strategies, innovation, etc. Travel and Tourism is a
broad segment; it is not only limited to travelling for the purpose of business or leisure.
Travelling in hospitality industry can be formal and informal.
Companies operating in travel and tourism sector need to concentrate on customer
demands, relationship management and also on integrated marketing skills which are very much
important in order to expand business globally (Carraher, 2018)
Europe has good transportation facilities as compared to Spain and Turkey. In Europe,
there has been great development in transportation in the last few decades. Leading travel and
leisure enterprise in Europe has high market value which is approximately 16.44 billion US
Dollars.
In Spain, travel and tourism segment is a fragmented sector where global brands coexist
with national brands of worldwide presence as well as localized and private label operators
whose distribution is mainly controlled by tour operators (Schuckert, Liu and Law, 2015)
8

Food and beverage: It is also recognised as the food service industry. The function of
this sector is to provide food as well as beverage services to customers. Food and beverage
segment in hospitality sector is considered to be the largest sector of hospitality industry. A
business in this industry can range from casual to fancy, large to small and expensive to
inexpensive (Llach, Martí and Rocafort, 2016). Food and beverage segment is considered to be
the crucial among different sectors within hospitality industry.
This specific segment is further categorized into niches which are:
Quick service establishments – These are recognised as the commercial food service restaurants,
fulfil demands of customers who want to have quick meal, drink, snacks, etc.
Catering business – Companies in this segment offer food and beverage catering services for any
special occasion such as for wedding, conferences, birthdays, etc. (Gurcaylilar-Yenidogan and
Aksoy, 2018)
Full service restaurants – These are simple restaurants which provide complete services to
customers.
9
Illustration 1: Leading travel and leisure companies in Europe,
2015
(Source: Travel and Hospitality Industry Outlook, 2018)

LO 2
Opportunities for Internalisation
ETC. company has big opportunity to expand business operations in Europe. This nation
has been suggested expanding business as it is considered to be as capitals of finance , trade,
culture as well as tourism among Spain and Turkey.
Russia were significant influences. ETC. Company can get various other benefits as well
as can captures various other opportunity by expanding business in Europe. Company can foster
growth by expanding business in Europe. A slower pace of growth in hospitality sector is
predicted in Turkey and Spain, due to poor economic condition (Heizer, 2016). The Europe is
the country which has been suggested to ETC. organisation for expanding business, as in Europe
10
Illustration 2: Direct contribution of travel and tourism to GDP in Europe
(Source: Travel and tourism in Europe, 2018)