Impact of Integration on Hospitality Businesses: A Case Study Approach

Desklib provides past papers and solved assignments for students. This report analyzes hospitality's role in the travel and tourism sector.

HOSPITALITY PROVISION IN TRAVEL & TOURISM SECTOR

TABLE OF CONTENTS
INTRODUCTION............................................................................................................................. 2
TASK 1............................................................................................................................................ 2
INTRODUCTION..........................................................................................................................2
DISCUSSION ON THE INTERRELATIONSHIPS BETWEEN HOSPITALITY AND WIDER TRAVEL AND
TOURISM BUSINESSES............................................................................................................... 2
CONCLUSION............................................................................................................................. 2
TASK 2............................................................................................................................................ 2
INTRODUCTION..........................................................................................................................2
2.1 ANALYSING THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY INDUSTRY...........2
2.2 DISCUSSING HOW INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS.......................2
CONCLUSION............................................................................................................................. 2
REFERENCES...................................................................................................................................2

INTRODUCTION
Hospitality and tourism are two closely interrelated business areas which proportionally
depend on each other for their respected business growth. Many scholars in this field believe
that the beginning of hospitality as a commercial sector must have encouraged by the travel
and tourism sector. Travel and tourism is a sector which provides services like transportation to
a tourist spot, adventure and guiding facilities, food and lodging etc. in a single or separate
package to its customer. While hospitality provides similar service except they are not
necessarily for tourism and entertainment purposes.
This report is divided into two parts, an article on the interrelationship between this two
business sector and a management report on the integration of the hospitality business and its
impact on the same. Both parts have been covered in the specific business environment and a
distinct approach towards the hospitality sector to achieve the desired learning objectives.
TASK 1
INTRODUCTION
Hospitality and travel & tourism are two intertwined business sectors and are largely
dependent on each other for their respective growth. Many business aspects of both these
industries are the same and serve each other but they are still different in terms of the types of
service need to be asked by their customers (Williams, 2012). The relationship between this
two sector will help in understanding their operations separately and in more detail along with
their performance criteria in their individual case.
DISCUSSION ON THE INTERRELATIONSHIP BETWEEN HOSPITALITY AND
WIDER TRAVEL AND TOURISM BUSINESS
Hospitality sector offers a variety of services like secure accommodation, recreation and leisure,
food and drinks etc. the word hospitality itself indicates efforts to provide a safe and
pleasurable environment to its patrons (Bowie et al., 2016). The tourism sector, on the other

hand, focuses on the activities of tourists and travellers who visit different famous and natural
places for their entertainment or as an exploration activity. People involved in travel and
tourism activities also avail services like accommodation, food and beverages. In an abstract, it
can be said that the hospitality business sector is the service provider of the tourism industry.
Hospitality is an art of delivering memorable and pleasant services to its customer while
tourism provides only support to its customer for their touring and travel enjoyment that they
have all by themselves (Brotherton, 2012). However, hospitality covers a lot of tourism
activities such as when a person visits some famous place which is far from its home, let say in
some other country, there will be need of accommodation for the person in that unknown
country and there comes the role of the hospitality industry. Every year, hundreds of millions of
people go for travel and tourism activities in every part of the world and most of them use
hotels and resorts for their stay and food and drink related needs (Bærenholdt et al., 2017). It
won't' be wrong to say that the majority share of the business that the hospitality industry
gains every year is coming from the travel and tourism sector. Travel and tourism companies
act as a mediator between customer and hospitality business and earn their profit from
facilitating this interconnectivity (Boniface et al., 2016).

Figure 1: Sectors of the Hospitality industry
Source: [Author’s work]
Travel and tourism are among the fastest growing business sector in the UK and it clearly
represents the increasing standard of living in people. in today's world, almost every travel and
tourism service are being facilitated over internet platforms to ensure that everyone can have
access to it. So, these tour and travel companies come in to contact with their potential
customer through a website or one of the marketing means like sending attractive offers to
people on their mail, social media advertisement and print media etc.
Once the customer reaches to next step on the sales funnel of these companies, they provide
them information regarding their package and lucrative benefits that they are offering to them.
These tour packages usually involve every requirement and possible expectations of a person
about a touring destination and how will he enjoy it. So these packages involve transportation
facility booked for customers to reach their tourist destination, say Paris. After reaching the
destination, they provide already booked a hotel for their stay and food and beverage needs.

They also facilitate transport service from hotel to the actual destination like some fort, park,
waterfall, religious place, ancient and historical monuments etc. After their tourist activities and
enjoyment, they return to their home with included transportation facilities. These services are
mentioned as they are provided in a standard tour package (Brotherton, 2012).
Some of the world’s top tourism companies are Trivago, Thomas Cook, TUI group, Trip Advisor,
Expedia, Make my Trip etc. they provide complete details and food and lodging facilities and
comparative details on their portal for customer to either book and travel by themselves or hire
a third party services for all of the facilities. Every month there are more than a million visitors
in the UK alone from all over the world. According to the data of National Statistics, there were
2.9 million overseas visitors came to the UK in November 2018 and they spent more than £1.7
Billion during their visit. There is a significant contribution to these tourism activities in the
economy of the country.
Figure 2: Tour and travel services
Source: [Author’s work]
Travel
and
Tourism
Transportation
Travel agent
Tour operators
Guiding
services
Accomodation
& catering

The hospitality sector is considerably different from the travel and tourism sector as its aim is
completely different from that of tourism services. The hospitality industry is mostly aiming to
provide best comfortable, pleasurable and memorable services to its customer. There is a
number of paradigms in which it can provide these services. For example, the hospitality sector
also covers event management and resort management apart from its regular hotel
management services. However, the majority of hospitality operations involve lodging and food
& beverage facilities to its customers and there is tremendous scope to achieve satisfaction and
customer delight in that field.
Figure 3: Interrelationship between Hospitality and tourism industry
Source: [Author’s work]
The figure above clearly shows how travel and tourism service works in the purview of the
hospitality industry. Both these industrial sectors, in this mixed and globalised market, are
interdependent and support each other's growth and prosperity and hence their performance
also depends on each other's combined efforts to provide seamless service to their customers.

CONCLUSION
Hospitality and travel and tourism services are fairly interrelated to each other and their
combined efforts are aimed to provide the best experience to their customers with standard
service quality. As discussed, their growth is coexisting in many aspects and they provide basic
structural support to each other’s operations.
TASK 2
INTRODUCTION
In today’s global market hospitality industry has become an integration of many different
services bundled together for unified and enhanced customer experience. These numbers of
services which are proportionally contributing to the overall industrial sector are travel or
transportation services, tourism package such as adventure tourism, water tourism etc. and
guiding services, food and beverages including alcohol consumption facilities, accommodation,
leisure and club entertainment facilities etc. (Brotherton, 2012). In this part analysis of such
integration has been analysed and evaluated for its effects on the hospitality business. A
practical approach with examples of the various leading hospitality industry has been taken for
this assessment report to establish a more critical and extracted understanding on the same. In
the discussion, two types of integration vertical and horizontal integration have been discussed
in a specific industrial context.
2.1 ANALYSING THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY
INDUSTRY
In business operations, the concept of integration can be understood as collaboration and a
joint venture between two business sectors to provide combine facilities to their customers.
The concept of integration is being used by many industrial sectors in different categories such
as automobile, healthcare, grocery and food items etc. This competed is mainly aimed to
provide a variety of facilities to customers through a single platform, to save them for the
hassle of visiting different locations or web portals for related services.

Hospitality and tourism sector is among the most common and primary examples of such
integration. There are two approaches used by these sectors to integrate their operations (Cook
et al., 2014). They are:
Figure 4: Types of Business Integration
Source: [Author’s work]
Vertical integration is the approach where a large hospitality company, for example, Marriott
International in London, outsources some tourism company such as Thomas Cook for directing
tourists who visit London to one of the Marriott hotels in the city for accommodation and food
and beverages services. Because Thomas cook has not its own hotels or similar accommodation
facilities, it will have to collaborate with one of such hotels anyways. In this way, the whole
service is distributed among these participants in integration.
Business
Integration
Vertical
Integration
Horizontal
Integration

Figure 5: Vertical Integration flow chart
Source: [Author’s work]
The above-shown flow diagram clearly shows the vertical integration approach with an example
of Marriott international and Thomas Cook in integration with other services covering different
customer segments at once.
The horizontal integration is the approach where all such services work in a joint venture,
providing their proportionate contribution in overall service while working independent and
responsible for their own services (Chon and Yu, 2012). In vertical integration, the Principal
Service provider is responsible for mismanagement and any issue related to the services by
companies working below in the hierarchy. In this model, all the services are provided in a
single package but by individual companies at their own responsibilities (Oskam and Boswijk,
2016). For example, Hotel Hilton tower can form a joint venture with Trivago, an online tour
Principals
Accomodation facilitators, eg.- Marriott International
Attraction, London Bridge, Backingham palace etc.
Transport, Transport for London (TfL)
Wholesalers
Tour operators, Thomas Cook
Tour agent and package provider, Thomas Cook or Expedia etc.
Retailers
Travel agents, Addison Lee
Restaurants
Bars,
Online service providers
Consumers
Business
Lesuire
Families and friends

service facilitator along with a transport company which facilitates booking and transport
through various medium related responsibilities. All of the integrated companies carry their
individual responsibilities and they get paid accordingly for their services.
Both of these integration approaches have their own applications and issues while in the
process but they form an effective method to provide unified platform services to customers.
2.2 DISCUSSING HOW INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS
Integration has its many aspects which are in constant synchronisation with functions of the
hospitality business. These aspects target specific functions and affect their performance in
both possible ways.
 For example, in case of a renowned hotel chain IHG, with such large operations and
number of locations worldwide, it will be more efficient and economical for IHG to
develop its own vertically integrated business with involvement of either its own
created travel and tourism company or collaborating with some established large-cap
tour and travel company like TUI group or Trivago which can handle its operations at
multiple locations with all facilities on a single window platform. The amount of
complexity will be huge but it will also increase the overall revenue of the company
significantly (Cook et al., 2014).
 In that case, the IHG may or may not have full control and responsibilities for the overall
operations conducted within the integrated environment which will create confusion
among different service providers leading to customer dissatisfaction. The bad review
on one of the services under integrated operations of IHG will reflect on its entire brand
image instead of the individual service provider (Oskam and Boswijk, 2016).
 Although in case if IHG decided to go for horizontal integration in a joint venture with
the same tourism companies and other services, it will be less hassle for the group. But
they all have their individual control over their operations and IHG may not be able to
provide service quality standards it offers to its customer as its identity. Also, the
revenue will be less, as each of the individual services provides will have their

independent cut from the whole amount paid by the customer and IHG will not have
command over it (Jung et al., 2018).
 Integration also impacts the performance of employees working within the
environment. They have a higher workload and more complicated issues from the
customer's end to deal with. However, they have more development and growth
opportunities from this integration. The management requires more abstract structure
and hierarchy to control and govern the performance of individual service sectors. Also,
the financial task becomes complicated and sometimes less efficient in terms of a large
amount of money paid in taxes and other activities which may not add positively in
company's revenue (Denizci and Mohammed, 2015).
CONCLUSION
Hospitality integration is a complicated business model yet it is also the ultimate option and an
efficient strategy to catch fast business growth. The variety of integration approaches used is
based on the size of the company and the availability of customers in the region. Although the
travel and tourism sector works with hand in hand, they also need service based support of the
hospitality sector to achieve considerable profit and business opportunities. In this competition
governed economy, new methods to resolve integration related issues will be developed and
hospitality sector will become much more efficient than it is now, but this needs constant
evaluation and assessment on such issues and complication like done in this report.