Analysis of Hospitality Integration in the Travel and Tourism Industry

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Hospitality Provision in Travel and
Tourism Sector

Table of Contents
Introduction............................................................................................................................. 2
Task 1....................................................................................................................................... 3
1.1........................................................................................................................................ 3
The interrelationship between the Hospitality Industry and the Travel and Tourism
Businesses............................................................................................................................ 3
Task 2....................................................................................................................................... 7
Written Management Report...................................................................................................7
2.1 Implications of Integration.............................................................................................7
2.2 Effect of Integration on the Hospitality Industry..........................................................10
Task-3..................................................................................................................................... 12
Reference List.........................................................................................................................21

Introduction
Hospitality Industry indicates a business category of the service industry that’s associated
with providing services, specific experiences, and satisfaction to the customers (Chon and
Yu, 2012). The uniqueness of the Hospitality Industry lies in the fact that it’s reliant on the
free income and discretionary income of the customers. Hospitality Industry is considered to
be one of the fastest growing service industries. It can be categorised into two categories
accommodations and food & beverage. Accommodation includes motels, hotels, lodging
businesses, etc. Food and Beverages include the establishment that provides customers
with food and beverages such as restaurants or fast food joints (Chon and Yu, 2012). These
can be independent or a part of a hotel. For the purpose of this assignment, we will be
considering the interrelationship hospitality and travel and tourism businesses. As a second
task, we will be analysing the consequence of integration in terms of the hospitality industry
and its effect on a hospitality business (Chon and Yu, 2012). The third task will involve a
presentation of a development plan for a Mediterranean Restaurant named ‘Angel's Spices'.

Task 1
1.1
The interrelationship between the Hospitality Industry and the Travel and
Tourism Businesses
Hospitality originates from a Latin word ‘hospes’ that means host, stranger, or a guest.
Hospitality involves two parties a guest and a host, it indicates their interrelationship
wherein the host receives the guest, entertains them, and makes it worth their while. The
hospitality industry is all about receiving the guest providing them services like food, drinks,
accommodation, entertainment, and an experience worth spending money on, in return of
financial gains (Chon and Yu, 2012).
The Hospitality Industry
The hospitality industry in the UK is a major source of employment and the fastest and
consistently growing sector (Boella and Goss-Turner, 2013). The combined turnover of all
the businesses in the Hospitality industry of UK has exceeded £100 billion in 2018. The
hospitality industry accounts for over 200,000 business that employs over 3.2 million people
making the hospitality industry the fourth largest in terms of employment. The diversity of
the hospitality industry is without peer. It includes hotels, lodging, fast-food outlets, motels,
pubs, restaurant, etc. within these segments there are several varieties like hotels that
provide lodging, hotel that provides stay and food, and the Hotels that provide
accommodation, food, and recreational activities and facilities like spa, gymnasium,
internet, swimming pool, meeting rooms, conference rooms. Night clubs, etc. (Boella and
Goss-Turner, 2013).
Usually, the hotels are classified and graded on the basis of facilities and qualities of service
they provide. Most of the hotels provide food services through restaurants (Jones et al.,
2014). There can be one or more restaurant within the hotel premises that may or may not
be a speciality restaurant. Hotel The Ritz in London is a fine example of all the exemplary
characteristics of a Hotel. This 5-star hotel is based at Piccadilly in London. It was established
in 1906 by Cesar Ritz, a Swiss hotelier. The Ritz London has an illustrated history spanning

two world wars and many historic moments. Its illustrated guests include the likes of Charlie
Chaplin. It also offers a great restaurant like the Ritz Restaurant and accommodation suites
like Piccadilly.
Source: https://www.theritzlondon.com/
The travel industry offer services that involve movement from a place to another for either
business or recreational purposes. The duration of this movement is precise and includes
the use of services like railways, airlines, car rentals, tour operators, and travel agents (Jones
et al., 2014). The travel industry encompasses services associated with travelling such as car
rentals and airlines while tourism industry involves aspects of the travel industry and service
providers focused on providing services and goods to tourists. The UNWTO or the United
Nations World Tourism Organisation defines tourism as people staying in or travelling to
locations that exclude their normal environment for purposes like business, leisure, etc. The
duration and frequency of this visit should be less than one consecutive year (Buhalis and
Crotts, 2013). The travel and tourism industry offer many services that are based in the
hospitality industry such as accommodation, food, drink, spa, salon, theme park, etc.
The interrelationship between the hospitality and travel & tourism industry originates from
their purpose and objective of providing services to their customers in a manner that
accommodate their requirements and enhance customer satisfaction. Except for tourism
both travel and hospitality industries cater to the needs of both tourists and non-tourists

alike. At non-tourist destinations, the travel and hospitality industries provide services
exclusively to locals and non-tourists. These industries are interconnected in some aspects
while distinct in others (Buhalis and Crotts, 2013).
The hospitality industry is a critical aspect of travel and tourism businesses. The quality of
services provided by the hospitality industry may affect the business of travel and tourism
sector. If the service quality is low, the customer may cut short the trip or cancel outright
and there will not be future trips or the poor review and feedback. The relationship
between the hotel and travel industry is neither similar not interchangeable but rather
complimentary in most of the ways (Buhalis and Crotts, 2013). Certain aspects of the
Hospitality industry act as part of travel and tourism businesses. For example, if a person
comes to visit London, the mode of his transportation to London is the part of the travel
business. If his purpose of the visit is sightseeing and tour then his visit is under the tourism
category (Buhalis and Crotts, 2013).
Source: Relationship between Hospitality and Travel and Tourism Businesses
Sometimes the businesses in Hospitality industry works with the businesses in travel and
tourism to enhance the customer experience levels and in turn their own profits. Thomas
Cook Group is a Travel Company based in London, UK. It has two divisions Thomas Cook
group airline and Tour Operator division. Thomas Cook is one of the top three travel
companies in the UK. The company excels in providing tour packages and a tour package
cannot be completed without aspects of hospitality industries (Buhalis and Crotts, 2013).

The interrelationship between hospitality and travel & tourism is profitable for all the
involved parties including the customers. In return, the customers receive a consolidated
travel plan with travel arrangements predefined and precooked along with the
accommodation at the visiting area and specialised activities and experiences, if chosen by
the customers. The customers get the services of the premium hotels at a discounted price
along with discounts in travel fares as a part of the package. An increase in tourism could be
attributed to the abundance of such quality tour packages and an increasing focus of all
three segments to work together for improving the customer satisfaction levels and gain a
precious memory (Buhalis and Crotts, 2013).

Task 2
Written Management Report
Consolidation or bringing together two organisations either by a merger or through a
takeover is known as Integration. The integration is defined on the basis of the businesses
being merged, their type, their business activities, and their operational positioning in the
supply chain of their parent industry if any (Johnson et al., 2013).
2.1 Implications of Integration
There are four types of integrations; forward, backwards, horizontal, and vertical.
Figure 1: Types of Integrations
Vertical Integration
The integration can be used as a means of strengthening the positioning of companies in the
competitive market and secure their competitive advantage. The vertical integration
strategy is used by an organisation to control a stage or stages of distribution or production
of its product completely (Rothaermel, 2013). The purpose of vertical integration by an
organisation could be controlling the raw material supply or the distribution of the end
Integration
Horizontal Vertical
Forward Backwards

products. Usually, the companies opt for vertical integration to reduce the cost of
production, access newer distribution channel, capture additional profit, or strengthen the
supply chain. The benefits of vertical integration depending on the purpose of integration
include direct access to customers, increased profits, increased efficiency of the production
process, minimising delays in transportation and delivery (Rothaermel, 2013).
Types of Vertical Integration
Vertical integration can be of two types. It can be Backward Vertical integration or Forward
Vertical integration. The backward vertical integration happens when an organisation
acquires another organisation to control the raw material sourcing (Rothaermel, 2013). A
supermarket that acquires the farms to gain the supply of fresh produce can be an example
of backward integration. The forward vertical integration involves acquiring the distribution
channels. If the same supermarket acquires vehicles to distribute its products to customers
then it becomes forward integration. Another type of integration is known as a balanced
vertical integration that involves a balanced combination of backward and forward
integration (Rothaermel, 2013).
Horizontal Integration
The horizontal integration involves acquiring businesses that are at a similar level either in
the same industry or another industry (Rothaermel, 2013). The Marriott Groups acquisition of
Starwood Hotels and Resorts worldwide in 2016 is an example of horizontal integration. The
benefits of horizontal integration include increased production, reduced production costs,
increased product features, enhanced negotiating power, enhanced market control,
enhanced market positioning, and potential of entering new markets.
Implication of Integration
The biggest implication of integration in terms of the hospitality industry is that it facilitates
actualising the economies of scales. Integration allows an organisation to increase its
operational scale which in turn reduces the functional costs (Rothaermel, 2013). This leads to
an increase in the organisation's overall profit margin and productivity. Another implication
can be that integration allows organisations growth on a global scale. It means a hospitality
company such as the Marriott group can expand its global presence through integration.

Integration also allows the hospitality companies increased access to customers that can
help in enhancing their customer base (Rothaermel, 2013). Integration can allow the
hospitality industry to provide customers with the same experience irrespective of the
location they are at. This is possible through the presence of a single organisation at several
places through integration. For example, The Ritz Hotels irrespective of their location will
provide customers with their trademark customer service and similar ambience (Rothaermel,
2013).

2.2 Effect of Integration on the Hospitality Industry
The integration of organisations on a global level leads to an increase in various
opportunities for the integrated organisation such as enhanced global presence, increased
profitability, access to new customers and markets, etc. Marriott International, Inc. is a
multinational hospitality company based at Maryland USA. The company Marriott
International acquired Canada based Delta Hotels in 2015 and USA based Starwood Hotel
and Resort in 2016. As a result of this integration, Marriott became the largest Hotel
Company in the world while expanding its global presence at a large scale (Phillips and
Moutinho, 2014). We can use the 4 P’s of marketing mix to explain the effects of integration
in terms of the example of Marriott
Product – The integration results in an increase in available products and services that help
in improving the customer satisfaction level. The availability of different brands within a
single portfolio helps in enhancing customer satisfaction levels. Marriott was able to bring
30 different brands together as a result of above integrations along with the different
services that were being offered by three distinct entities under one roof (Johnson et al.,
2013).
Price – Post integration, a review needs to be conducted of products and services that
should continue and that needs to be discontinued. This is because there could be services
and products that are similar and may overlap each other resulting in an extra expenditure
that can be reduced. The product and services that are a burden need to be eliminated from
the product and service mix otherwise it may result in losses for the integrating organisation
(Johnson et al., 2013).
Place – The acquisition of Starwood hotels and Resort allowed Marriot to gain a presence in
several new locations since a majority of Starwood's business was outside the USA. This
allowed Marriott to service customers at a number of new locations (Johnson et al., 2013).
Promotion – The integration process in itself is a huge promotional event that allows
customers to retain the company’s name. So, integration results in increased awareness
about the organisational brand. Although efforts should be made to guide the market

interest in a positive direction to benefit from the situation otherwise it may harm the
company. The result of above-mentioned integration that made Marriot biggest hotel
company is a major promotional statement (Johnson et al., 2013).
As a result of integration, the effects on the hospitality companies are as follows
Enhanced economies of scale and market share – The integrated company enjoys a greater
market presence and share. This allows access to greater profit potential (Phillips and
Moutinho, 2014).
Standardisation – The integration results in standardisation across the integrated entity
since the customer service standard and process are incorporated across the group allowing
the customers to experience the same quality of service everywhere (Phillips and Moutinho,
2014).
Service quality – The integrated entity will have a uniform standard of service quality at
every location. This is beneficial for the group since Marriott is known for high service
standards but training the employees of acquired businesses to in-house service standards
is a major project (Phillips and Moutinho, 2014).
Conclusion
The hospitality industry is a service-based industry that's focused on providing quality
services to the customer. The effect of integration will vary according to the integrated
entities handling of post-integration conditions. Also, another important factor will be the
speed with which it can bring about the uniformity of service across the group. Another
aspect is the customer’s inherent response to the change in the approach and appearance
of the resultant organisation. It can be concluded that integration, in general, provides the
organisation with an opportunity for gains provided the organisations are compatible in
terms of organisational culture and either compliment or enhance each other (Phillips and
Moutinho, 2014).