Exploring the Interplay Between Hospitality and Travel & Tourism

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HOSPITALITY PROVISION IN TRAVEL &
TOURISM SECTOR
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Contents
INTRODUCTION...........................................................................................................................................3
LO1 UNDERSTAND THE ROLE OF THE HOSPITALITY INDUSTRY WITHIN THE TRAVEL AND TOURISM
SECTOR........................................................................................................................................................3
1.1. THE INTERRELATIONSHIPS BETWEEN HOSPITALITY AND WIDER TRAVEL AND TOURISM
BUSINESSES.............................................................................................................................................3
LO2 UNDERSTAND THE IMPACT OF INTEGRATION WITHIN THE HOSPITALITY INDUSTRY...........................8
2.1. THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY INDUSTRY............................................8
2.2. INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS................................................................11
CONCLUSION.............................................................................................................................................12
REFERENCE LIST.........................................................................................................................................14
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INTRODUCTION
The hospitality industry is a broad field that provides services to customers. The main aim of
the hospitality industry is to satisfy customers by providing specific experiences to them. The
nature of the hospitality industry is unique because it totally depends on the leisure and
discretionary income of travellers. The companies and businesses of this industry believe to
provide luxury services to its customers. There are very few businesses which provide basic
services such as food or shelter to the people. The income of this industry totally depends upon
the disposable income and leisure time of the customer (Lopes, 2016). If the disposable income
of people decreases due to recession then it is the first industry that is affected due to the
economic slowdown. Travel and tourism industry is one of the biggest and fastest growing
industry in the world. The travel and tourism industry includes the facilities of accommodation,
entertainment, transportation, recreational services and cultural services. Travel and tourism
industry includes lodging operations, transportation services, retail services and other activities
such as recreation activities, amusement parks, sporting activities and many more (Boniface et
al., 2016).
LO1 UNDERSTAND THE ROLE OF THE HOSPITALITY INDUSTRY WITHIN
THE TRAVEL AND TOURISM SECTOR
1.1. THE INTERRELATIONSHIPS BETWEEN HOSPITALITY AND WIDER
TRAVEL AND TOURISM BUSINESSES
It is a well-known fact that the hospitality and travel and tourism industry are interdependent
and interrelated with other and the income and revenue of the business dependent on each
other. The income of these industries is dependent on the disposable income of travellers as
well as their leisure time, trends and interest of the people. As a Junior Consultant with PKF
hotelexperts, the latest information helps in identifying the changes and interrelationship
between hospitality and travel and tourism industry. To understand the interrelationship
between the hospitality industry and the travel and tourism industry it is necessary to
understand the concept of these both industries individually.
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Hospitality industry
The hospitality industry includes a broad category of activities such as event planning, lodging,
transportation, cruise line and related activities. In other words, hospitality means providing
care to people who have the need. The hospitality industry is the biggest and fastest growing
industry in the world because the income is generated by the disposable income left with the
travellers and the leisure time that customers want to spend in travelling to other places
(Dzhandzhugazova et al., 2016). Hospitality industry generates job opportunities to the people
based on different backgrounds, skills, knowledge and personalities in a different location with
the main purpose to serve the food and beverages to the guest (Barrows et al., 2012).
Hospitality industry consists of different businesses such as hotels, nightclubs, hostels,
accommodation, membership clubs, restaurants, bars, coffee shop, canteen etc. where people
can stay and have some food to get the energy.
The main aim of the hospitality business is to make its customer satisfied by providing the
quality of services at an affordable price. During hospitality and travel and tourism industry, the
main aim of the customer is to get satisfaction with the excellent services and not the presence
of basic services.
Travel and tourism industry
Travel and tourism industry is the biggest and fastest growing industry in the UK. Travel and
tourism industry is the activities of the people related to travelling where the travellers need
the accommodation and food and beverages either for the purpose of businesses or for their
leisure time (Fang et al., 2016). The time period should not exceed the duration of one year.
The nature of the travel and tourism industry is dynamic and requires constant change
according to the need of the customers to survive in the competition. The main purpose of this
industry is customer satisfaction, enjoyment along with safety are the main area of focus of the
travel and tourism industry (Cook and Marqua, 2013). The goal or purpose of the businesses in
the travel and tourism industry is to provide basic and desired products and services to the
people who came to visit nearby places. According to Pearson Schools and Colleges (2019),
World Tourism Organization gives the definition of the tourism industry:
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“Tourism industry includes the activities of the customers who travel and reside outside their
usual home environment for the purpose of leisure, businesses or for some purpose but not
more than one year.”
The tourism industry encompasses different types of tourism such as inbound, outbound and
domestic tourism. The major activities included in the travel and tourism industry are travel
agent, transport, attraction, tour operators, accommodation as well as ancillary services.
The interrelationship between hospitality and travel and tourism industry
As already mentioned, the hospitality industry includes hotels, pubs, restaurants, night clubs,
canteen and other shops for food and beverages. On the other hand, the travel and tourism
industry includes the activities to visit the places for enjoyment, business or any other purpose.
Due to increasing disposable income, it changes the lifestyle and attitude of the people. Now
people have sufficient fund for their survival and thus it improves the living of standard and
people are spending more on recreational and spiritual enjoyment by travelling to another
place by taking a break from the daily lifestyle, relieving stress from the workload and to learn
the culture of different country (Bilgihan et al., 2016). As a result, activities of travelling and
hospitality industry become a part of their life.
There exist a close relationship between the hospitality and travel and tourism industry and the
success of both the industry depends on each other. Thus we can say they are incomplete
without each other. In other words, the success of the hospitality industry depends on the
management and marketing of the travel and tourism industry. Successful management and
marketing of tourism and travel industry attract more customers for the hospitality businesses.
Tourism and travel industry brings opportunity for the hospitality business to expand their
business, increase profitability and market share (Law et al., 2015).
Both these industry creates employment opportunity for the local resident and the government
initiatives also help in the relative growth of the market. Hospitality industry acts as a supplier
or supporter of the travel and tourism industry. The activities of the travel and tourism industry
are related to the services that business provide to customers to travel from one place to
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another place. Moreover, the hospitality industry provides accommodation and food and
beverages to the guests. For instance, suppose a businessman has to attend a business
conference in another country. For the travelling purpose, he has to take the services of the
travelling and tourism industry such as the services of an aeroplane or local transit vehicle to
reach the destination place. After reaching the destination place, the businessman he needs to
stay and relax, the need of the businessman can only be fulfilled by the hospitality industry such
as hotel, pubs, night clubs, spa, canteen or restaurant for food and beverages.
Figure 1: Interrelationship between hospitality and travel and tourism industry
[Source: Research gate, 2019]
Role of the hospitality industry within the travel and tourism sector
 Holiday and travel package
Travel agent and similar companies provide several offers to customers keeping in mind
the nature, financial capability and interest of the target market. They give huge
discounts and different packages to attract more customers. Customers are easily
trapped by these huge discounts as they think that they get more benefits by spending
less on these packages. Travel agencies also give discounts to those travellers who book
their ticket on a regular basis. The travel and tourism companies do tie up with the
hospitality industry and thus also increases their income. The companies of hospitality
industry play a significant role in the travel and tourism industry (Hasan, 2017). Through
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the tie-ups, it becomes easy for the travel companies to explain the benefits they get in
the hospitality services.
 Communication
Communication means a process of interaction between two members of an
organization. The effective and strong communication process is the primary need of
the hospitality industry. It can be only possible with the communication to know the
feedback of the customer whether they are satisfied or not. With the help of
communication, the customer can express their expectation from the hospitality
industry. The communication practice not only helps the hospitality industry but it is
also a link between travel operator and customer.
PKF Hotel experts
PKF hotelexperts is a member of the PKF international organization. PKF hotelexperts is a
market leader and provides its services in hospitality, tourism and leisure consulting. The
company has its operation in 300 locations and 400 offices in more than 150 countries. The
company is known for providing the quality services for hospitality, tourism and leisure industry
(PKF hotels, 2019). PKF hotelexperts was founded in the year 1869 and its first company offer
consulting services for the hospitality industry and relevant financial surveys. The company
provides realistic and unbiased advice to its customers. The growth of the company is due to its
dedicated and experienced consultants delivering excellent services to its customers.
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LO2 UNDERSTAND THE IMPACT OF INTEGRATION WITHIN THE
HOSPITALITY INDUSTRY
2.1. THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY INDUSTRY
Integration refers to bringing together the small organizations or department of an organization
that works as a single unit. The main purpose of this integration is to bring economies of scale
in the operations of the business and to reduce the cost of operation. This can be only possible
when the organization have the resources and thinks that the organization should save money
by having the operation in the organization itself rather than outsourcing it. Therefore,
integration increases the productivity and profitability of the organization by enhancing the
quality of the product or services (Enz, 2010).
Also in the hospitality industry, the main motive of integration is to bring economies of scale in
the businesses and to reduce the operational cost such as raw material, salaries of staff by using
several technologies, methods of wastage and so forth. This integration also helps in offering
attractive packages to the travel and tourism industry for attracting more travellers. Basically,
there are two types of integration that organizations can adopt:
1. Vertical integration
2. Horizontal integration
Figure 2: Types of integration
 Vertical integration
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In the vertical integration, the company acquires the company that has its operation in
the same product line or the same industry. The reason why the company chooses to do
vertical integration because it strengthens their supply chain activities decreases
production and operating cost, assessing new distribution channel and increasing the
overall productivity of the organization (Roper, 2017). The major advantage from the
vertical integration is that it lowers the production cost and also the company does not
have to invest in acquiring their customers and it also improves the delivery and
transportation services. The vertical integration is divided into two categories.
 Forward integration
Forward integration is when the company acquires another company to control the
post-production process. This type of integration is done when the company wants to
cut down its supply chain cost. The company has complete control over its supplier,
distributors or manufacturers so that it can have complete control over the market.
 Backward integration
Backward integration is when the company acquires another company that
manufactures input product for the first company. The company adopts the backward
integration strategy when the company wants to improve its efficiency and also to save
its cost. For instance, this type of integration saves the transportation cost, increase
profitability and make the position of the company strong and more competitive in the
industry.
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Figure 3: Vertical integration
[Source: Travel and tourism Weebly, 2019]
 Horizontal integration
In the horizontal integration, the company acquires the same kind of company for
expanding its market presence in the same country or other countries. The main
purpose of horizontal integration is to increase its size, increase their product or service
portfolio, gaining economies of scale or to reduce the competition from the industry.
Now the company can produce more and is able to generate more revenue (Pavia and
Floričić, 2017). For instance, Marriott Hotel acquires Starwood Hotels & Resorts in the
year 2016 in the hospitality industry.
The growth of the hospitality industry in the world is customer satisfaction and providing
excellent services to customers. Due to integration between the hospitality and travel and
tourism industry, the operations of the business becomes advantageous and the companies can
easily compete with other international companies. The integration directly gives benefits to
the customers, they get a various attractive and cheap package from the travel and tourism
industry. Integration system is required to provide better customer services and the best quality
of services to customers. The integration can also cause conflict when the mission, vision or
objective of the companies does not match with each other. The integration system greatly
affects the small organization because they do not have much funds and resources to compete
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with these large organizations (Walker, 2012). As a result, these small companies do not
maintain their position in the industry and thus went out of the competition. The number of
unemployment also increases due to integration.
Globalization plays a major role in the process of integration. The liberal rules of the travel and
tourism industry encourage several companies to have their operation in other countries. The
globalization has encouraged different companies to think globally and have their operations
worldwide. In the current scenario, international tourists contribute more revenue than the
domestic traveller.
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2.2. INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS
The most important advantage that the companies get through integration is a competitive
advantage. By combining the core competencies of both companies, the company will be able
to attract more customers by providing excellent services. Integration also leads to a monopoly
which is not possible for a single company without integration. The dominance of the company
increases as this decreases the options available to customers (Kotler et al., 2010).
The most important impact of integration on the hospitality business is that it brings economies
of scale that reduces the operational cost and increase the productivity and profitability of the
company. Further, with the help of integration, the company can also operate in other
countries and increase its customer base and finally increases the profitability of the company.
Integration is affected by various issues and it also helps in understanding the current scenario
of the industry. The integration process should be executed in a systematic manner and it must
match with a dynamic environment. Impacts of integration on the hospitality business are as
follows:
The positive impact of integration
1. Economies of scale
Integration of business in the hospitality industry brings economies of scale in their
operation. The company can increase its productivity as well as reduce their operating cost
which can be used for expansion or diversification of services. The company can also expand
their geographical presence and can provide products or services across boundaries
(Wiengarten et al., 2016).
2. Better access
The integration enables the customers to have better access to a wide variety of products
and services at a single destination for convenience and to maximize the satisfaction level of
customers. The customers get the same quality and same experience where ever they go
that increases the loyal customers across the world.
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