Hospitality and Tourism: Interrelationships and Integration Analysis

This report delves into the hospitality provision within the travel and tourism sector, examining the interrelationships between the two industries and their significant impact on the UK economy. The chosen organization for analysis is the Thomas Cook Group, and the report analyzes the company's structure, financial performance, and the implications of horizontal and vertical integration strategies. The report explores the benefits and drawbacks of these integration methods, providing examples such as the merger with MyTravel Group and the acquisition of Sterling Holiday Resorts. Furthermore, the report includes a detailed project proposal for a new hospitality business, including the rationale, target market, location, and operational considerations. The analysis highlights the importance of understanding market dynamics and customer needs for business success in the hospitality sector.

Hospitality Provision In The Travel
And Tourism Sector

Table of Contents
INTRODUCTION............................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Interrelationships between hospitality and wider travel and tourism businesses..................4
TASK 2............................................................................................................................................6
2.1 Implications of integration to the hospitality industry..........................................................6
2.2 Impacts of integration............................................................................................................7
TASK 3............................................................................................................................................9
3.1 Rational for a new hospitality business/project.....................................................................9
3.2 Project proposal...................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES...............................................................................................................................13

INTRODUCTION
Travel and tourism is the important part of Hospitality industry and provide better support
in development of economy of the world. Both of these industries are rapidly growing in UK.
Travel and tourism sector provides travelling services to their customers who visits in other
locations for spending their holidays or business purposes. Hospitality sector provide
accommodation, food and transportation facilities to these customers so that they can enjoy their
vacations in effective manner. Hospitality sector also provide quality based services to the
customers who likes to travel across the world. Present report will discuss about the interrelation
between hospitality and tourism sector along with impact of horizontal and vertical integration
on hospitality industry. A project proposal will also created under this report which includes
target market, location, operations, designs etc. In addition to this, a rational will also developed
for the new project so as to determining the concept of it in well manner.
Introduction of company
Chosen organisation for this assignment is Thomas cook group which is a renown
company of travel and tourism sector and was formed in 2007 by merging of Thomas Cook AG.
Apart from that, owner of company is operating its functions from the year of 1841. Company's
headquarters are located in London, UK. Company has maintained a world class image among
their rivals and also providing various products and services like accommodation, cruise, airlines
etc. from UK to across the world. Company has employed more than 20000 employees who are
performing their services in various operations which are handled by the management of
company. Management have divided their operations in two parts such as Tour operator and
Thomas cook group airline so as to operating functions in a very smooth manner. By merging
Thomas cook AG now company have 105 aircrafts, 2926 travel agencies across the world. As
per the visitor's report of Company, they are serving the demands of approx 19.1 million
customers on annual basis. After merging, Thomas cook group is became second largest travel
company across the European nations (About Thomas Cook). According to the financials of
firm, company have earned a revenue of £9.6 Billion at the end of 2018, operating income of
firm was £330 million and net income was £12 million. At the time of forming, Peter
Frankhauser CEO of organisation have announced Thomas cook AG and My Travel group plc
were to merge. Thomas cook also performs various CSR activities like they are main sponsor of
Manchester city and Peterborough United Football clubs. Main shareholders of organisation are

Invesco, Stardard life investment ltd. and Guo Guangchang. Firm has also faced various
controversies like in the month of August and year of 2018, a British couple were died during
their holidays in red sea resort of Hurghada but according to post-partum report the male was
died due to cardiac attack whereas, female was died due to shocked. Couple's daughter who was
also present in resort had blamed the management system and filed a complained against the
worst services of organisation. Due to this controversies, management have take proper
measurements and rescued their 300 customers from the same resort so that other controversies
can be prevented in easy manner. Managers of firm have also built some effective strategies so as
to gaining new opportunities for growth and efficiencies like, management have decided to
purchase 20 new hotels for this they have make decision for investing the amount of £35 million.
TASK 1
1.1 Interrelationships between hospitality and wider travel and tourism businesses
Scope can be defined as combination of objectives and requirements which are necessary
for carrying out a project in effective manner. Through using scope, managers can easily
determine various aspects like availability of funds or time so that preset objectives can be
achieved in a systematic manner. Apart from that, size of business can be defined as the area or
location in which organisation is operating its functions. Scope and Size of Thomas Cook group
is very huge because it is operating its business operations across the world. Group have also
divided their operations in two parts like Tour operators and Airlines so as to functioning of these
in smooth manner. There are various customers are exist across the world who likes to travel and
for fulfilling this purpose they visits different locations. Due to these factor, travel and tourism
sector is rapidly growing in the world and there are around 100 tour operator firms exist in UK
who always prepare for providing best services so that desired needs of customers will be
fulfilled in easy manner (Testa, 2012). Most of the customers books those operators who are
providing accommodation and meal facilities in their packages due to which it can be said that
hospitality and travel and tourism industry are interrelated and scope of both of these sectors are
very high in nature. Large number of travel operators are collaborating with hospitality firms so
that better services can be given to the visitors for ensuring their satisfaction. By making
collaboration with hospitality industries, travel and tourism operators can easily fulfil the needs

and wants of customers which will be helpful for them in gaining loyalty and trust from the
customers.
Relationship between hospitality industry and tourism sector
There is a very strong interrelation between tourism and hospitality firms. Travel and
tourism sector is a main part of hospitality sector because hospitality sector provides better
quality of accommodation and food facilities to the visitors so that they can spend their quality
time during their journey. They also perform their functions with better coordination so that high
growth and success can be achieved in market place. Hospitality industry consists of Hotels,
villas, Resorts who gave various services like transportation, beverages, food etc. to the
customers for their relaxation during the journey. Travellers mainly seeks those local restaurants
and resorts which are located nearby the visiting places and provided by hospitality sector. These
both sector are providing their efforts in the development of economy of UK. Interrelation
between these sector are given as below:
Package Holidays: In it, tour operators have to make partnerships with the hotels and
restaurants so as to providing combined facilities to the customers in their selected tour package.
In return, tour operators have to provide a fix amount of share in profit to the hospitality owners.
For e.g. A group of travellers have chosen a package as per their economic requirements and they
clearly defined that they have no need of five star accommodation facility. So that, travel
operators have duty to provide accommodation as per their budgetary requirements so as to
making good image of them in mindset of customers.
Business travel: Large number of hotels of UK are providing specific facilities to those
customers who are travelling for their business purpose like Wi-Fi, Good Connectivity, Big suits
etc. so that needs of these customers would be fulfilled in desired manner. In addition, These
business persons have no issue of budget at the time of journey so that they can take services on
high prices for gaining ultimate experience during their stay (Smith, 2014).
Aviation: Airline industry highly depends on hospitality services so as to gaining better
success and development in marketplace. If Hotel doesn't have space for new visitors then it will
leads organisation towards failure. Business organisations of aviation industry like Thomas cook
and Group have to make better tie-ups with the hotels or restaurants so that proper food and
accommodation facilities can be provided to the visitors. For e.g. a group of visitors have booked
a package which includes accommodation and food facility therefore, tour operators have

responsibility to already identify hotels or resorts with good capacity so that better
accommodation or food facility as per the mentioned package can be provided to the group of
visitors.
TASK 2
2.1 Implications of integration to the hospitality industry
Integration with other organisations are very essential for hospitality firms so as to
sharing the customers and resources for enhancing productivity or profitability. Goals of both
integrated firms can be easily achieved by adopting updated tools and techniques which also
assist in better coordination. Chosen firm i.e. Thomas Cook and Group has also make integration
with several hospitality organisations for utilising their capability and resources for increasing
productivity and performance. Integration provides too much support to these organisations in
expansion of business and for achieving their shared goals. Company mainly uses Vertical and
Horizontal integration that is used by the organisation like Thomas Cook group which is given
under along with specific examples:
Horizontal integration: It is an effective kind of integration between two kind of
organisations in order to develop a bigger organisation. After this integration, products and
services are provided by both organisations so as to enhancing their customer base and
profitability. For e.g. Thomas Cook has integrated with MyTravel Group plc in order to
enhancing the quality of travel services and preventing the transportation issues from the
workplace so that better transportation services can be provided to their customers. Through
making this kind of integration, company can easily expand their operations for enhancing
revenue and profitability. Thomas Cook group can also make integration with some more good
hotels so that better accommodation facilities can be provided to the visitors. This kind of
integration is very useful for the organisation in improving their brand image. Effect of these
integrations is that economy scale of these firms can be enhanced by providing same kind of
services in maximum quantity (Morrison, 2013). But there are several negative influence of this
integration like dependency of single firm on another has been increased, lack of control, less
authentication for making proper decisions etc.
Vertical integration: It is also an effective method of integration in which an organisation
purchases another which also operating in same sector. Main purpose behind this integration is to

lowering the cost of services so that better profitability would be gained in easy manner.
Organisations can use this integrations for gaining competitive advantage, large market share and
customer base. For e.g. Thomas Cook Group has taken over on Sterling Holiday Resorts so as to
providing high quality of accommodation services to their customers. It will also improve
customer base and profitability of organisation. This integration needs updated technology that
should be implemented in Thomas Cook group so that sales figures and revenue can be
enhanced. Effect of such kind of integration is that Thomas cook group can control or end their
supply chain for remaining competitive in market and gaining satisfaction from the customers.
Through these integration, Thomas Cook group can improve their product and services so
as to gaining better satisfaction and loyalty from their customers. By providing effective services,
Managers of Thomas Cook group will be able in retaining their customers for a long time period
which will also helpful for them in gaining sustainability in market. Apart from that, main
negative aspect of these integration is that employees have to understand new working structure
and culture which leads dissatisfaction among them (Han, 2015).
2.2 Impacts of integration
Horizontal and vertical both kind of integration has impacted on the business operations
of Thomas Cook group in positive or negative manner. These impacts are given as below:
Impact of horizontal integration
Impact of such integration is that the working efficiency, economic scale, benefits of
global trade has increased. For e.g. Merger of Thomas Cook and MyTravel group Plc. Is very
beneficial for Thomas Cook group in providing better travelling and accommodation services to
their customers. Due to this integration, productivity and profitability of organisation is enhanced
which has also provide positive support in enhancing sales figures of firm. Through Merger,
Thomas cook can expand their operations in those market where travel services are not provided
by anyone. When sources of merged firms will be utilised in optimal manner then it leads the
firm towards reducing wastage of natural resources. Whereas, negative influence of integration
are, Dependency of merged firms like MyTravel Group plc have been increased on Thomas
Cook group due to which they can't make decisions without taking support from the managers of
Thomas Cook group. The main negative impact of integration is that, it increases dissatisfaction
level among the employees because due to integration the working structure is modified and
most of employees of firm are habitual in working old working structure which can also

influence the productivity of organisation. However, this kind of integration positively influence
the business organisation having adverse impact also. Through this kind of integration, company
can easily improve their market share and customer base by making coordination with other
firms. For making successful the integration, organisation has to invest more funds for improving
the services which can prove drawback for the organisation.
Impact of vertical integration
Impact of this integration on Thomas Cook Group is that the organisation can provide
better and new products to the customers which will be helpful for them in enhancing their
market share and profitability (Evans, 2012). Quality of services are enhanced which are
providing by other hotels due to proper monitoring of Thomas cook on their operations. Merger
of Thomas Cook with the Sterling Holiday Resorts is useful for the organisation in enhancing
their customer base and profitability. Negative aspect of this integration is that capacity may not
balance which will create high dependency on the management of merged hotel in achieving
goals and objectives. Flexibility can be reduced along with effectiveness in operations of Thomas
Cook group. This kind of integration is very much useful for the organisation in order to
improving their supply chain or distribution system. Whereas, market share of Thomas Cook
group can also improve by using it as with the support of Thomas Cook, Sterling Holiday
Resorts can effectively provide their services to customers by using brand name of Thomas Cook
group which will improve the brand image of resort in mindset of customers. Also management
should hire new employees so as to providing better services with the cooperation of Sterling
Holiday Resorts which is costly for company.
Action taken by TUI for eliminating the impact
Thomas Cook group has take several actions for removing negative impact of integration
on the firm. In which first is making standardisation of entire facilities in merged firms. Through
this, Thomas Cook group will easily handle the issues of MyTravel Group Plc. And Sterling
Holiday Resorts which will help them in functioning of their operations in smooth manner.
Company has also maintained their capacities and abilities so that flexibility in decision-making
can be taken by organisation. It has also reduced the dependency of Thomas Cook group on other
organisation due to which they can easily achieve their preset objectives. Respective firm has
taken several measures for strengthening the brand image which are given as below:

Control and manipulation of market: Various kind of Tour operators like Travel finder,
TUI group, Cosmos Holidays etc. are not investing so much money for purchasing the other
hotel in global markets for maximising their global presence. Due to this, Thomas Cook and
Group have to make specific tour package and provide them in more economical manner so that
better competitive advantage can be gained over their rivals.
Branding: By this tool, Thomas Cook Group can improve their brand image in
marketplace which is helpful in attracting a large number of customers. Through this, Hotel can
consider the adverse impact of integration so that these influence can be eliminated or resolved in
easy manner (Boniface, 2016).
TASK 3
3.1 Rational for a new hospitality business/project
Hospitality industry is one of the fastest growing sector who having a wide scope due to
its services. It is very beneficial for entrepreneurs to start a business in this sector because it is
very profitable. Entrepreneur can get various kind of opportunities in this sector because there
are various options which are available in Hospitality sector such as restaurant, pubs, resorts etc.
when entered in hospitality sector. Rational for development of new Royal Heritage Hotel is
discussed as below:
Phase 1: Development
1. Concept
General Idea: Idea behind starting this hotel is to establish a medium sized hotel for
providing accommodation facilities to their customers in a royal manner. This hotel can be
established at any famous location of UK. This location should be famous among the individuals
due to rich culture, marvellous nature views, exotic locations etc. where large number of people
wants to visit every year. This hotel is also beneficial for the entrepreneur because with the help
of it they not only earns profitability but also they will develop their brand image as most
successful entrepreneur in the world. This 3 star hotel will provide effective quality services to
the people for fulfilling their needs and wants so that better review points will be generated from
the customers.
Objectives: Main objective of Royal Heritage hotel is to providing a good and
unforgettable experience to the visitors by serving them best class service.

Vision: “To Become a well Known hotel across the world through creating values for
employees and guests.”
2. Market Research
Importance: Market research is very useful for Royal Heritage Hotel for determining the
existing market trends and customers so that better services can be provided accordingly.
Through this, Hotel can easily determine needs, requirements and taste of customers so that
services would be provided accordingly. When services will be provided to the customers as per
their needs and wants then there are higher chances for the hotel in getting sustainability in
market.
Stages: Market research mainly consists of 5 ongoing stages that are defining the
problem, strategic development, strategy development for resolving the issues, development of
research design, collection of data and report presentation (Abubakar, 2016).
Area of research: Area of research is to identifying the expectations of customers from
the hotel services so that strategies and plans will be made accordingly.
Research tools and methods: Data for the research will be collected through secondary
data sources like census, internet, websites etc. because hotel is newly established in market.
3. Target Market
Targetted customers of Royal Heritage Hotel in the market are middle and high class
individuals who visits in UK nation on frequently basis for their business or personal purposes.
So the main targetted customers of Royal Heritage are those who wants to get packages in
affordable prices along with high quality facilities. These customers are travellers, group of
college student, newly married couple, Business firms for meetings and seminars.
3.2 Project proposal
Stage 1: Development
Location: Chosen location for the hotel is Central London which is near London Eye and
regular visited by large number of visitors. Reason behind choosing this location is that, it is
easily accessible by the visitors due to having central location.

Scale: Hotel is medium sized with having 50 rooms in it. All rooms are air conditioned
with attached Let-Bath. Hotel is also providing numerous facilities in these rooms like Wi-Fi,
TV, Mini fridge, LED lighting systems, Door bell, Telephone, Double Bed etc. Apart from that,
Balcony view is also exist in some of their rooms from which London Eye can easily seen. Hotel
is also providing tourist guide facilities, convince of guests, Hygiene quality in food products etc.
therefore, it can be said that entrepreneurs of the hotel can earn high profitability in future.
Funding: Royal Heritage hotel is new in Hospitality sector due to which funds are
collected through external sources like creditors, Bank, financial institutions etc. and remaining
funds are arranged by entrepreneurs on their own level. Ratio of funds will be 70:30 in which
70% of money will be collected from Banks and remaining will be arranged by entrepreneurs.
Products and services: Hotel is basically providing accommodation and food facilities to
their customers and their other services includes Wi-Fi, Television, Spa, Swimming pool etc.
Stage 2: Design
Ambience: Hotel is highly decorated with unique arts and paintings and its ambience is
luxury so that customers can feel high experience during the entrance in hotel. Front office
department of hotel is highly equipped with technological equipments like computer systems,
printers etc. Fragrant environment of Dining hall, reception and conference hall also makes
positive image of firm in mindset of customers. As the ambience of hotel is classic and simple in
nature then the entrepreneurs have higher chances of gaining high profitability and customer base
within a short time period (Camisón, 2012).
Culture: Entrepreneurs should make the working environment of hotel in rich culture so
that customers will get ultimate experience while staying within the hotel premises. Management
needs to determine the culture of people who are visiting in the hotel so as to serving them in
effective manner.
Brand: Royal Heritage hotel should provide quality based services to their customers so
that brand image of firm can easily improved in Hospitality sector.
Interior and exterior: Intrinsic and extrinsic design of hotel is also an essential thing
which is always noticed by the persons during their visit. Interior and exterior should be well
furnished so that royal experience would be provided to the customers during their stay.
Sustainability: In order to gaining sustainability for a long time period management of

hotel should provide discount and offers to their customers so that good image of firm will be
build in the mindset of visitors.
Stage 3: Operation
Staffing: It is the major function of managers of organisation in which they have to select
the skilled and knowledgeable candidates as per the requirements of functions and organisation.
It is also very important for Royal Heritage hotel to provide better training and development
programmes to their employees so that capabilities and skills of employees can be improved.
Compliance with legislation: Management of Hotel should follow all the rules and
regulations in proper manner which are formed by UK government for hospitality industry such
as health and safety act, employment act etc. so that any kind of penalties will be prevented in
smooth running of business operations.
Promotional activities: Hotel is using various promotional methods like social media,
advertisements, offline marketing etc. Promotional tools are also very necessary for raising the
awareness among the customers regarding the products and services which are offered by
organisation.
Pricing strategies: Hotel has chosen economic pricing strategy so as to selling best
quality services and products to their customers at lower prices so that targetted customers which
are middle class will be fulfilled in desired manner (Page, 2014).
CONCLUSION
It has been summarised from the above report that Hospitality and Travel and tourism
sector plays a very important role in growth or development of UK economy. These two sectors
operates their functions by supporting each other so as to enhance the customer's satisfaction and
revenue figures. Horizontal and vertical integration are also very important because it helps the
hospitality organisations in enhancing their customer base and profitability. Negative influence
of integrations should be determined or considered by managers of hospitality firms so as to
preventing difficulty of any kind from the workplace.

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About Thomas Cook. 2018. [Online]. Available Through: <https://www.thomascook.com/about-
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