Analyzing Integration's Impact on Hospitality Businesses

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Hospitality provision in the hospitality
industry
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Table of Contents
Introduction................................................................................................................................3
Task 1-LO1................................................................................................................................4
1.1 Discuss the interrelationships between hospitality and more extensive travel and tourism
businesses...................................................................................................................................4
LO2............................................................................................................................................6
2.1 Analyse the implications of integration to the hospitality industry.....................................6
2.2 Discuss how integration has affected a hospitality business................................................9
Conclusion................................................................................................................................11
Reference list............................................................................................................................12
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Introduction
The hospitality industry is considered as a broad field in the service sector including lodging,
food, event planning, theme parks, cruise line, transportation, travelling and other additional
fields within this sector (Lashley, 2015). The study has the purpose of discussing the
implications of integration to the hospitality industry. In essence, hospitality consists of the
provision of overnight accommodation for service users and requirements of sustenance to
people eating. Primary hospitality providers are hotels, campsites, guesthouses, holiday
centres and others. Secondary hospitality providers are conference providers, leisure outlets,
visitor attractions, transport providers including ferries and airlines. The hospitality industry
provides the intangible and perishable products including user-friendly time with providing
no fixed business hours (Bowie et al., 2016).
Hospitality sector can be structured and characterised that is composed of different
identification with a widespread and dispersed form of service. The study will shed light on
the interrelationship between the hospitality industry with travel and tourism business. The
technological factors, elimination of political barriers, growing economic advancements are
considered as factors affecting the hospitality industry in the broader range. The study will
focus on the implication of integration and hospitality provisions in order to provide the
different service choices and certain integration factors affecting the hospitality business.
Vertical and horizontal integration method will be discussed in order to ensure the active
target market along with the active market as per the case study of PKF hotel.
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Task 1-LO1
1.1 Discuss the interrelationships between hospitality and more extensive travel and
tourism businesses
The hospitality industry includes the business of travel services and tourism services,
conferences, visitor attractions, passenger transport and accommodation services. Hospitality
is defined to take care of the customers regularly. There are significant factors that have
different service suppliers (Lashley, 2015). The hospitality industry is considered as
providing comfortable service towards the customers. As per the case study of PKF hotel, the
junior consultant has the role in writing the article to publish about the forthcoming issue
with leading industry addressing the problem in the travel and tourism sector. In today's
scenario, the travellers should be satisfied to enhance and expand the travel destination to
compare with other industries. It is needed to focus on developing the current scenario in the
PKF hotel. Due to increased globalisation, the hospitality sector needs to focus on the tourism
and travel industry (Nachmias and Walmsley, 2015).
It is important to focus and provide the best service and comparison with other sectors like
tourism. The hotels sometimes provide the packaged and offer with food and lodging
together. Both services lie under hostility sectors. It is effective to ensure the growth as well s
satisfying the customers. The hospitality industry includes several travel and tourism
including aviation, business travel, conferences and exhibitions, theme parks, visitor
attractions, Leisure travel or recreation and others. The hospitality sector has a wide range to
link with the travel and tourism sector. From the links of airports to package holiday
programs, there is a link between two sectors (Kao et al., 2016). Both areas are an intrinsic
component that can be made up to develop the tourism industry.
Features of the hospitality industry:
Hospitality sector includes interest in monotonous kind of industry. It provides better
employment and customer satisfaction providences. Customer orientation is the key feature
of the hospitality sector as it helps the individual sector to establish the entertainment in order
to ensure success within the sector. PKF hotel focuses on various features to attract more
customers. It helps an individual to develop the important sector as establishing the sources,
employment and developing profit and customer base within the hospitality sector.
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Hospitality sector provides several approaches and factors to attract the customers and
creating employment and tourism development (Airey et al., 2015). Hospitality runs in
several small and large-scale tourist destinations with multinational companies. It is effective
to establish tangible services that separate payment can be done to customers for food and
lodging and packages.
Customer relationship:
Customers are a vital part of the hospitality industry that ensures or provides the proper and
accurate service to the consumers in order to develop the customer base. PKF provides
excellent services and food to its customers. They often deal with other travel companies
while providing excellent services to set the premier inn to general normal rooms to their
customers. The customer is focused on developing and establishing the growth and accurate
service provisions to set unbeatable performance in this market (Law et al., 2015). Hotel and
similar accommodations are required to develop the benefits from domestic business travel
and expenditure from overseas residents in recent years. Customers are considered as
experiencing the upturn in recent years.
Holiday and travel packages:
Travel agency companies and organisations provide a massive amount of packages to all kind
of customers by targeting middle and high-income family. The organisations keep the tour
packages including class and mindset in all types of customers. The price ranges and
performance of services are different. Hotels and similar accommodation providers have
several developments and establishment in the corporate business budget. It is useful with
domestic travel expenditure and inbound business travel expenditure (Lu and Kandampully,
2016). Business travel and private meetings provide lavish ballrooms and event managements
setting by PKF hotel. In this hotel, there are several business events rooms including
Ballroom, Mirror Room, Buckingham Room, French Salon, Clarence Room and others.
Communication:
Communication refers to processing the interaction with customers. Communication is a core
subject and requirement in the hospitality sectors. It is useful to develop and establish the
condition towards the cautioner satisfaction. It is sufficient to develop proper and effecting
communication process with customers and travel and tour companies. The companies
include the requirement to establish the regular order in order to establish the various
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seminars and event management plans within the hotels (Scott, 2016). PKF provides meeting
room, event management room to attract more customers in order to ensure effective
hospitality providence. The primary and secondary hospitality providence includes the
various room standards depending upon the class and demands of the customers.
Role of hospitality provisions within the travel and tourism operations
Hospitality sectors include the offers to establish the value to a range of services and products
with their business. The revenue is gained from customer spending to develop the ranges of
products and survives to provide for travel and tourism operation. The event industry also
includes the travel and tourism industry (Ringer, 2016). The role of hospitality comprises an
integral part to achieve success. The recession has a significant impact on the travel and
hospitality sector. The growth and success within the hospitality sector depend on showing
signs and growth to develop and establish an integral part of this industry. Travel and
hospitality industry includes growth with ensuring the critical aspect to establish the income
and success policy. In the case of airlines, Different class of travel and Priority boarding are
essential aspects to develop intense customer satisfaction. Tourism sector includes the
tourism sector an important part to develop hospitality success and satisfaction towards the
customers (Tiwari, 2017). It is essential to provide an integral part to ensure relaxation to
customers.
It is seen that many customers are repeating the same tours with the same tour and travel
companies. It is effective to get help and recognition in the travel and tourism business. A
good relationship involves the tourism business and integrated part to establish a positive
tourism sector. Good hospitality involves developing and enhancing the generation after
generation to get good recommendations and publicity. It is sufficient to get effective
publicity and tourism business to attract customers. Visitor attractions and theme parks
include the own right in significant development and attractions to develop the service and
located as major tourist attractions (Kolb, 2018). PKF includes tourism and travel companies
to improve and enhance the significant business service and development. Involving the
travel and tourism business is essential.
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Task 2 - LO2
2.1 Analyse the implications of integration to the hospitality industry
Integration:
Integration in the hospitality sectors includes the key economic terms and organisational
development between the one and another (Lashley, 2015). There are three levels of the chain
of distributions including a wholesale division, principal and retail division. These are
necessary integration within the hospitality industry. Integration and implications are
important to focus on the hospitality industry. In contemporary business, it is used to focus
and provide different services as becoming fierce between increased sales and the company's
involvement. It is effective to include various ownerships to ensure focused integration.
There are two kinds of integrations including vertical and horizontal integration. Vertical
integration is merging of two businesses that involve different stages of products and service
delivery (Hsu et al., 2016). Horizontal integration includes the merging of together of
business, which is at the same stage of production.
Integration via ownership
The business has included the smaller operators, larger organisations in case of airlines, and
larger organisations with airways portfolios. Integration via ownership includes several
airways and road travel to implement in the hospitality sector. Various hotel groups include
the franchise agreement and ownership involvement to develop the separate company
establishment and business success. There are several implications of integration to develop
public development and establishment. It is important to provide service provisions to
customers (Kunwar, 2017). Within the hospitality sector, integration focuses on service to the
customer with setting and returning from the market. It is effective to develop and provide the
customer choices to establish the reputation of the hotels and tour companies. For example,
Hilton Hotel needs to focus on providing world-class services to the customers. Travel and
tourism include information regarding the reservation and booking of the services
(Hilton.com, 2019).
Vertical integration:
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Vertical integration involves the linking between the production and tour operation acquiring
the hotels, restaurants, and another chain of distribution (Lashley, 2015). It is vital to
establish the hospitality development and other forms of services. Vertical integration
includes the factors of hospitality sector between hotels, restaurants, brewery and pubs.
Vertical integration within the hotel's industry owns the upstream and expansion to keep the
right track and scope of business development.
The expansion includes the upstream suppliers in referring the vertical integration. Increased
transportation consists of the barriers that affect the distribution channel within the
organisation. It establishes the potential competitors to develop and schedule the competitor
base. Functional integration helps to improve the strategic impact and development to attract
customers. As per the view of Sheresheva (2016), vertical integration helps the organisations
to focus and develop the leading and booking fancily to establish and enhance the
competition analysis in the hotel industry. Hilton Hotel creates the vertical integration
process to focus on outsourcing and transportation development. Hilton Hotels Corporation
involves the vertical integration to develop and analyse the branding development and
strategic establishment as establishing the expansion and transportation as establishing the
partnership and profit based development with its customers (Hilton.com, 2019).
Advantages:
The business with vertical integration spreads across the different sectors to give the chance
of survival. It is effective to analyse and expand certain contracts to expand efficient and
greater efficiency with survivals. Vertical integration involves a competitive advantage with
energetic certainty of contracts (Mejia et al., 2018). The benefits of vertical integration
involve generating a better chance with greater confidence of contracts. It reduces
transportation costs to develop ownership in closer geographic proximity. It helps to establish
a profit margin by setting the downstream profit margin in the hospitality sector. It gains
access to downstream distribution channels in the market. It helps the hotels to plan better
and considerable to access the service plan. Coordination and scheduling are essential to
establish the distribution and other channel distribution (Boniface et al., 2016).
Disadvantage:
Vertical integration has several problems including low capacity balancing issue, potential
higher costs, increased bureaucratic costs, decreased flexibility and others. It has a chance to
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the company changing with its suppliers to inhibit. The combined business may not generate
the profit as compared with other business. It is not adequate to other business including tour
and travel companies to establish the cultural impact for the customers (Liu et al., 2016). In
the case of a general case, it is seen that competitive advantage may create complex service
integration within the organisation. It has another drawback that it might not generate the lack
of cultural fit.
Horizontal integration in hotel industry
According to Cockburn and Cockburn-Wootten (2017) horizontal integration is when two
hospitality organizations or operators merge through either merger or acquisition procedure.
The key reason for the horizontal integration in the hospitality industry is to increase the
geographical spread of the organization for ensuring its existence in all the regions. Another
key reason for the horizontal integration is to include diversification within the industry. The
key goal for a hospitality organization undergoing horizontal integration is to “consolidate
like organizations and monopolize the industry”. Growth of the organization from such type
of integration could be achieved through internal expansion as well as external expansion, via
merger and acquisition of organizations, which are offering similar services and products.
In this context, it is noteworthy that Hilton Hotel in UK hospitality market is a key example,
which has mediated its growth through horizontal integration. The organization has expanded
in the UK, through the key entry strategy including acquisition. The organization has
acquired the competitor hotel chains including Stakis. It helped the company to increase
market share and reduce threat from competitors, thereby facilitating free flow growth in the
market. Later, the organization has also expanded in the international market. The
international expansion of the organization has included the acquisition of Scandinavian hotel
chain in Scandic (Bucci and Matveenko, 2017). Later, the hotel chain has carefully evaluated
the resources and assets of the acquired hotels through their property profile, for
understanding whether these organizations are fitting into the standard requirement of the
Hilton Hotel brand. It ensures that the expansion is helping the organization to increase
market share and earn more profit, while not compromising the quality of services. Later,
based on the outcomes of evaluation, the acquired hotels, which met the brand standard of
Hilton Hotel, have been rebranded as the Hilton Hotel; whereas, the hotels, which are unable
to meet the standard, are sold off, to ensure quality.
Advantage:
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The horizontal integration in the hospitality industry has several advantages. For instance, it
can enhance the market share of the organization, which has been noted in case of Hilton
hotel. In addition, such integration and related growth of the hospitality industry also
increased the “economies of scale” (Cockburn and Cockburn-Wootten, 2017). It is done by
the horizontal integration through reducing costs, especially, when the merger or acquired
firms have been rationalized or centralized administratively.
Disadvantage:
Besides several highlighted advantages of the horizontal integration in the industry, this type
of integration also includes some disadvantages also. For instance, such type of integration in
the hospitality industry could lead to possible collapse of the hospitality business, because of
the sector downturn (Bucci and Matveenko, 2017). On the other hand, anti – trust issues
could also be raised within the hospitality firms, which has amalgamated through merger or
acquisition, due to the reason of increased industry concentration. It could lead to huge loss
of the hospitality organization.
2.2 Discuss how integration has affected a hospitality business
Integration involves the continuation of establishing the perceived impacts of integration with
the phenomenon. There are other impacts of integration including reducing of independent
companies, new forms of operations and ownership, standardisation of services and others
(Pechlaner and Innerhofer, 2016). The hospitality industry includes the diversified impact and
operation to develop and operate the portfolios that contain the fragmented and affect content
to develop and establish the multinational enterprises in compare to locating the collections
of other small and medium-sized organizations. Hospitality is considered and promoting the
integration in order to develop and establish the increased hotel chain and management
within the hospitality chain and supply. Hilton uses integration to establish the fourth largest
world hotel chain; integration can be applied to expand and strengthen the hotel business in
the world (Hilton.com, 2019). In the case of the Hilton Hotel, it increased the world hotel
chain and development to establish and expand the management and economy of brand
expansion. It establishes hotel rooms and types so rooms in several countries.
There are several developments and crisis analysis to expand the alternative forms of travels
and tourism development in order to focus on acquisition and franchise (Kim et al., 2018).
The integration involves the acquisition and mergers in order to establish alternative forms
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with strategic development and growth. Mergers, sole acquisition, acquisitions, and franchise
are seen in the hotel industry. Large enterprises like Hilton Hotel focus on establishing the
brand names, franchise to initiate the several chain hotels within mass tourism and
international travel. It is effective to focus on direct influence the chain hotels preferred in the
hospitality sector. It is effective to influence the hotels including large resorts and dominated
market share and common trend in the sector. It has a direct influence on organizations and
suppliers. There are reasons including chain hotel preferences towards mass tourism and
international travel (Fan and Cai, 2017). Increased competitions and domination in brands are
found as reduction of independent business in the hospital industry. It is effective to focus on
small business development and providing training and development staffs in order to focus
on the globalization of service and relaxed opportunity. Vertical integration helps the hotels
to lead the potential customers in order to develop the increased competition and control of
the integrated market. It is effective to lead the potential customer development and
strengthening the base. Increased competition helps individual to control the integrated
markets. It is essential to lead the control and increase market development. It is effective to
control the market by establishing market development and integration (Pechlaner and
Innerhofer, 2016).
Management contracts:
Integration helps the organisation to develop and establish property management and legal
agreement to focus on managing the hotel business. As opined by Law et al. (2015),
management companies help an individual to develop and establish the hotel management in
order to manage the operating agreements. Management contracts help an individual to
develop and establish a hotel business. Lease agreements are considered as arranging the
property ownership and gaining revenue with profit from sales in foods, banqueting,
beverages and another area of operations. Another company pays rest to the owner as a lease
agreement is made between the hotels. A franchise agreement is known as licensing
agreements. Many lenders may acquire and construct the property-based development and
acquisition-related development for the strong brand (Pechlaner and Innerhofer, 2016). It is
important to develop financial and operational development as per the acquisition and
construction unless the property with a strong brand. Real estate investment trusts (REITs)
focuses on leading changes to facilitate development as less than real estate assets. It is
effective to establish the total estate assets and property based development as per facilitating
the investment and estate assets.
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Integration affects the function of organisational business:
Standardisation of service includes the demands and ratification to international travellers to
establish conventions and travel development. By integration, the cost is reduced, and income
is increased in the hospitality sector (Pechlaner and Innerhofer, 2016). Customer base is
included to employees to develop the process and expenses that reduce the establishment and
strategic implementation to involve the process innovation. The integration identifies the
various advantages over establishing a dynamic structure in order to establish information
technology. The technology helps the organisations to provide knowledge system
development by the managers. The integration process helps to involve the business
management system while solving the dynamic structure by the managers. It is important to
distribute among the organisational establishments and distribution towards a beneficial
situation. The customers, retailers, distributors, shareholder and others may come to know
about beneficial conditions (Law et al., 2015).
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