Hospitality Provision Report: Industry Overview and Integration

This report delves into the multifaceted world of the hospitality industry, exploring its scope, scale, and the crucial role it plays within the travel and tourism sector. It examines the significance of integration, both vertical and horizontal, in enhancing business operations and generating revenue. The report analyzes the impact of these integration strategies on the hospitality industry, discussing both their positive and negative consequences. Furthermore, it includes a project proposal for a new hospitality business, outlining the product-service concept and assessing its financial feasibility through cash flow analysis. The report uses Marriott Hotels as a case study to illustrate hospitality services and business integration strategies.

Hospitality Provision

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A. Scope and scale of hospitality industry -................................................................................1
B. Role of hospitality provisions in travel and tourism operations-............................................2
TASK 2............................................................................................................................................3
A. Importance of Integration in hospitality and travel and tourism business-.............................3
B. Impact of integration on hospitality industry-.........................................................................5
TASK 3............................................................................................................................................6
A. Project proposal for new hospitality business outlining the product-service concept............6
B. Financial feasibility proposed project based on cash flow analysis.......................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Hospitality is a broader concept of service industry. It is amongst the most diversified and
exciting sectors with an equal level of professionalism in the area of customer service. Basically,
the term hospitality is referred to a strong relationship between the host and a guest. Therefore, it
is essential for the host to possess a deep sense of enthusiasm to serve the guest with goodwill.
Nowadays, the hospitality sector has acquired a lot more importance in this cultivating
environment. It is a persistent title which is significantly used in almost all service sectors of
hotels, etc. Businesses of hotel, accommodation and entertainment activities services providers
are highly indulged in the sector of hospitality (Chapman and Lovell, 2006). However, in the
latest fashion of tour and travel industry, there is a worldwide development of hospitality. In
which, meeting the satisfaction level of customers is a foremost responsibility with an utmost
importance to it.
The present report depicts the hospitality services of Marriott Hotels and how effectively
it too needs to deal with random tour and travel industries in order to meet the expectation of its
customer's and fulfil their various demands. Marriott International is a leading American lodging
company that handles a huge portfolio of hotels. It has over 4200 properties in around 79
countries.
TASK 1
A. Scope and scale of hospitality industry -
Hospitality industry is one of the world's largest and fastest growing multibillion-dollar
industry. It is a service industry, categorized into various segments which broadly include hotels,
restaurants, transportation, lodging, cruise line along with some additional services in the line of
tourism industry. After the period of global recession in 2007-08, there exists a rapid growth in
this industry as the people were now powered with more disposable income in their hands. There
was a great demand to avail leisure time in order to get rid of their frustration. As a result,
hospitality industry was seen as a great source to achieve all such satisfactions. And this was the
phase where the industry started to widen its scope in almost all segments including amusement
parks, theme parks, event planning, food and beverages, accommodation and the like products.
The statistics of hospitality industry in travel and tourism sector shows that it has around
6.5trillion U. S. dollars impact on the economy (Lashley and Morrison, 2013). With addition to
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it, this industry is one of the leading sector in terms of generating employment in Europe. The
recent study shows that the employment sector increases over from 7.4 million to 9.3 million in
2008 (Som and Al-Kassem, 2013).
The management structure of the hospitality industry is categorized into the mentioned
segments. These are as follows-
1. Lodging segment
2. Food and beverages
3. Entertainment and recreation
4. Travel and tourism
The lodging segment allocates accommodation to the visitors by providing them hotels, guest
rooms, tent house and the same. These facilities are served in such a manner that provides
efficiency and comfort to the customers thereby increasing the overall market share of the said
industry. Another segment which constitutes the hospitality industry is the food and beverage
segment. This is one of the supreme and finest segment in the form of catering establishments,
high-end restaurants, fast-food eateries and many other apparent services. Another segment
constituting this industry is the entertainment and recreation segment (Jang and Mattila, 2015). It
serves leisure time to its customers by providing them entertainment, tourism, sports, recreation
and the related services. Lastly, travel and tourism is the chief segment of hospitality industry. It
encompasses the facilities like trains, airlines, cruise ships and the related services for its
customers. It also focuses on employing a knowledgeable individual from the IT background to
cater his services in the benefit of customer satisfaction (Fullagar, Markwell and Wilson, 2012).
B. Role of hospitality provisions in travel and tourism operations-
Hospitality and tourism industry have an interconnected role. Both of them have a
significant character in such a manner that hospitality serves as a key to the success for tourism
operations. Also, tourism is one of the major segment that constitutes hospitality industry. The
mentioned paragraph will reflect the role and importance of hospitality provisions within travel
and tourism operations.
There are several components of hospitality industry. Some of which are food and
beverages, lodging, transportation services etc. All these are related with the travel and tourism
operations in some or the other way. Therefore, in order to ensure whether the customer is
satisfied with each of these segments, the industry have to focus on its tourism operations to be
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well executed and provides effective services to its customers (Connolly and McGing, 2006).
Other hospitality components also require the tourism operations to execute to achieve the
success, such as tourism operations are applied on food and beverages so as to make sure that
customers feel satisfied and well treated during their breakfast, lunch and dinner times. As a
result, this shows us that how hospitality industry is cordially linked and interconnected with the
travel and tourism industry.
With addition to the aforesaid interconnection between hospitality and tourism
operations, this industry serves intangible products and services which the customers can not feel
and touch but experiences it when they buy the services. Tourism allocates the services to its
customers by providing them a good gesture of guest greeting along with serving clean and tidy
rooms to its customers (Harrington and Ottenbacher, 2011). All these services require the
provisions of hospitality. For instances, imply providing the key to the customers for their room
and not assisting them with proper care leads to the failure of the said hotel. Providing hospitality
provisions such as greeting them with polite words and be friendly and courteous to them attract
customers to the hotels and thereby helps to increase the brand image of the respective hotel.
Lastly, tourism operations are not only meant to provide services to its customers but it
also includes the provisions of hospitality to gain a worldwide exposure and increase its overall
revenue. Providing best facilities with low level services proves hazardous for the industry to
survive. The quality of services which an industry renders plays a significant role in analysing
the growth of the company (Chon, Pine and Zhang, 2013). And when the services are served
with the applicable provisions of hospitality in it, the tourism sectors gains a rapid growth in its
market share. Hospitality is identified as one of the crucial key to achieve success in the line of
travel and tourism operations. Being a service provider, it should deal with providing the best
quality services to meet and exceed the expectations of its customers. The tourism industry
should develop its main focus on hospitality provisions with a view to achieve the heights of
success.
TASK 2
A. Importance of Integration in hospitality and travel and tourism business-
Integration in general reflects the executed framework to attain coordination within
different groups, systems, departments or organizations. The business organisation develops and
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implements the integration strategy as a means of expanding its business across the nation.
Integration in hospitality helps the industry to gain a worldwide exposure thereby generating
more revenue for the company (O'Connor, 2005).
The industry implements its integration strategy broadly by adopting two major
techniques. These are Vertical integration and horizontal integration. As per vertical integration,
the industry takes over another industry either at a later stage or at an earlier stage of
manufacturing or production work. If the industry takes over the other industry at an earlier stage
of production then it is refereed as backward integration. Alternatively, if the industry takes over
another industry at an earlier stage then it is refereed as forward integration. Acquiring the other
industry at an earlier stage emphasizes on attaining a platform where the industry can directly
sell its products and services to its core customers without any intermediary and also monitors
how and when the company is going to render its services in a systematic approach. As against it
if the industry acquires the other industry at a later stage it mainly focuses on merging it with the
core suppliers of products by monitoring over the quality of services along with product design
and allocation (Lugosi, Lynch and Morrison, 2014). It emphasizes on catering quality services to
its customers. With major significance to hospitality industry, the vertical integration here plays
a crucial role. If the tour wholesaler merges with the tour and travel agency where it finds a
platform to directly sell its services and products, then it is said that the company follows
forward integration in its business. Alternatively, if the industry gets merged with its core
suppliers of products such as a hotel then it is said that the company follows backward
integration. Both these integration thus helps the overall hospitality and tourism industry to
expand its business and render quality services which crosses the customer's expectations.
As against it, the horizontal integration takes place when one business entity integrates
with the other at the same level of manufacturing or production work. This can be attained by
internal expansion, merger or acquisitions of the company (Hall and et.al., 2015). It helps the
company to attain monopoly across the nation if the company sustains a wide range of market
across the globe for that product or service. It helps to create work specification by bringing all
the people doing exactly the same job under one roof. The hospitality industry implements
horizontal integration with a view to achieve high cost effective results and render best quality
customer services (Evren and Kozak, 2014).
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B. Impact of integration on hospitality industry-
The impact of vertical integration on hospitality industry is of great significance. It tends
to create both negative and positive aspects on the overall industry. Starting with its positive
impact, the vertical integration helps to minimize the transportation cost of the industry only if
the common possession results in nearby geographical area. It also helps the industry to
effectively improve its supply chain management and also serves more opportunities of product
differentiation. The main objective of vertical integration lies in the fact that it predominantly
helps the industry to gain the profit margins of upstream and downstream business markets
(Barron, Leask and Fyall, 2014). Along with this objective, it helps the industry to effectively
increase its entry barriers and provides the facility of making investments in a high specialized
category of assets.
As against it, the negative impact of vertical integration in the hospitality industry goes in
the following manner. Vertical integration in the said industry results in higher cost of
production because of the reason of lack in supplier’s efficiencies and rigid competition. It
results in the overall degradation of industry's flexibility because of the investments made in
upstream and downstream business market. With addition to it, the vertical integration results in
the total downfall of the industry with regard to increase in the overall product design and
product variety (Catherine Murphy and Kielgast, 2008). With a view to develop core and rigid
competition in the market, the industry attains the major drawback of comprising its existing
competition along with a rapid increase in its official costs.
Also the impact of horizontal integration is tough on the industry. The industry is blessed
with both the positive and negative aspects of this integration. Starting with the positive aspects,
the industry tends to achieve higher economies of scale by generating cost effective products and
producing high quality customer services (Lashley, Lynch and Morrison, 2007). Along with it,
this integration helps to increase the overall market share by generating more revenue and
lowering the cost of production. It helps the industry to diversify its services and products to a
wide range of market. As a result, it allows the industry to reduce per cost of producing a unit
along with reducing the overall external competition which the industry faces (Pizam and Ellis,
2014). As against it, the industry also faces the negative consequences of such an integration.
The worst consequence of horizontal integration which an industry faces is the overall reduction
in the value of the firm. It actually tends to destroy the value of firm rather than maintaining it.
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This is because of the reason that the expected synergies never gain any results despite of its high
cost effective productivity. Along with it the industry faces the challenges of minimizing the
overall flexibility and also dealing with antitrust and legal issues governing the industry (Gibson
and Molz, 2012).
TASK 3
A. Project proposal for new hospitality business outlining the product-service concept
There are many organizations which provides tour packages and in order to increase the
profitability, it is very important for the firm to make frequent innovation in their services (Chon
and Yu, 2012). Adventure Jack, which has newly started its business in London. In order to
promote their firm they have come up with new package which will help in attracting customers
effectively. With this respect following are the outline of product-service which will be provided
in the package:
About the product: The package will be for 10 days and will include different four different
adventure sport at different parts of India. India is one of the fastest growing countries and the
government of this country is supporting hospitality industry so that they will be able to improve
tourism in India (Yang, Flynn and Anderson, 2014). Moreover, for the people of London, they
will be able to enjoy their tour at low price this is because the currency value of India is low. In
this context, they will be able to make enjoy all the place within their budget. Following are the
four places which will be included in the tour package as adventure sport in India:5. River rafting at Himachal: There many beautiful rivers in Himachal like Bhagirathi
Satluj, Chanderbhaga, etc. (Yoo and Bai, 2013). Among these rivers rafting will de done
which would thrill up people at highly dangerous rivers of Himalayas.6. Mountaineering in Uttarakhand: It is one of the best places for climbing and
mountaineering activities. Areas of Uttarakhand is mostly covered with mountains or
forest. This is one of the most challenging sport and it requires skills and techniques.7. Paragliding in Maharashtra: It is one of the most preferred place of adventure sport.
Kamshet, Mahabaleshwar, etc. are places where paragliding is possible.8. Bungee jumping in Karnataka: It is very young sport in India (Musunuri and Bharwani,
2014). There are only few destinations in India where bungee jumping in possible among
which Karnataka is among them.
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Food and beverages: It is one of the prime factor which has to be designed and planned within
hotel. Four different hotel will be selected in which visitors will be provided with food and
beverages facilities (Buhalis and Crotts, 2013). In this context, it also important to provide
additional facilities so that customers will be satisfied effectively. Food will be provided from all
the four hotel and this will be helpful in providing effective services to the people who would use
these services.
Target market: For adventure sport, targeting will be done according to age group. This package
will be focused on targeting customers from age group of 18 to 35. In order to complete the
designed adventure sport effectively, this age group will be best.
Location: As it was discussed above, in India adventure sport will be designed (Sirakaya-Turk,
Baloglu and Mercado, 2014). Places in which will be covered are Himachal, Uttarakhand,
Karnataka and Maharashtra. In these places four different types of advantage sport will be
planned for travellers and it will be done within ten days.
Operating model: Organization will use flat structure in which all the operation will be
controlled by a leader under whom different local people will be their who would help in
conducting the adventure sport effectively (Chon and Yu, 2012). In this context, there would be
two employees who would take care of promoting the package, employee who would look after
the financial operations. Another employees who would look after the human resources of the
organization.
Market potential: This package designed has a great market potential as the craze for adventure
sport is increasing rapidly. Further, the places which are been planned is very attractive places
and the tourism rate in India is also increasing at a high rate (Yang, Flynn and Anderson, 2014).
Moreover, tourist will be able to enjoy their adventure sport at a low cost as the money value at
India is low.
Two local people will be selected who have well experienced with the adventure sport which has
been planned. There are totally four states and for each state two people will be hired who would
help in conducting their adventure sport in an effectively manner.
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B. Financial feasibility proposed project based on cash flow analysis
There are many methods which can be used by organization in order to rank the projects.
Among which NPV(Net Present Value) will be used to rank the proposed project (Chen, Li and
Reynolds, 2012). This help to determine whether the business will go in a desired way or not.
Year 2016 2017 2018 2019 2020
Cash flows future years 40000 66000 70000 52000 50000
P.V factor for 10 % discount
rate
0.909 0.826 0.751 0.683 0.621
Present Value Of cash flows 36360 54516 52570 35516 31050
Initial Investment = 100000
NPV = Present Value of cash
Inflows- P.V. of outflows
110012
For the above given evaluation it can be stated that NPV is higher than the outflow. Thus, the
business with the help of it services provided will be helpful in gaining profit of about 110012
pounds. Hence, the cited business will be feasible and this will help in gaining huge profits.
CONCLUSION
Form this report, it can be articulated that customers are very important in order to grow
and to gain profits. In this context, organization should be able to identify their customers’ needs
and wants. Accordingly, they should make improvement and changes in their services so that
customers could be satisfied effectively. Further, it is important for the firm to identify the areas
in which they need improvement so as to gain profit. Moreover, it is essential for the companies
to make market research and surveys so that customer's requirement can be easily identified.
When customers’ requirements are identified, then in order to meet them there are many
opportunities which prevail in the market. Research and survey play vital role in developing
product or services with the help of which profit can be earned.
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Online
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<http://ferysw.staff.fkip.uns.ac.id/files/2014/02/customer-satisfaction-and-its-
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