Exploring the Interplay Between Hospitality and Travel and Tourism

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HOSPITALITY PROVISION IN TRAVEL
AND TOURISM SECTOR
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Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
LO1 UNDERSTAND THE ROLE OF THE HOSPITALITY INDUSTRY WITHIN THE TRAVEL AND TOURISM
SECTOR........................................................................................................................................................3
1.1 DISCUSS THE INTERRELATIONSHIPS BETWEEN HOSPITALITY AND WIDER TRAVEL AND TOURISM
BUSINESSES.............................................................................................................................................3
TASK 2..........................................................................................................................................................8
LO2 UNDERSTAND THE IMPACT OF INTEGRATION WITHIN THE HOSPITALITY INDUSTRY...........................8
2.1. ANALYZE THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY INDUSTRY............................8
2.2. DISCUSS HOW INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS........................................11
CONCLUSION.............................................................................................................................................12
REFERENCE LIST.........................................................................................................................................13
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INTRODUCTION
In recent years, hospitality is one of the fastest growing sectors. The economies at the local and
global level depend on the hospitality sector for the growth of the country's economy.
Hospitality companies add various services and concepts for the growth of the hospitality
sector. Hospitality sector provides several services to customers. The activities of the hospitality
sector focused on providing satisfaction to customer by giving specific services (Radzi, 2015).
The primary services provided by the hospitality companies is an accommodation which
includes hotels, bed, breakfast and the secondary services are food and beverages.
The hospitality sector is the part of the tour and travel industry and their common goal is to
provide the necessary and desired quality of products or services to travellers. The travel and
tourism industry is divided into four categories which include lodging operations, transportation
services, retail stores, activities. The report includes the interrelationship between hospitality
and travel and tourism sector (Kim et al., 2015).
TASK 1
LO1 UNDERSTAND THE ROLE OF THE HOSPITALITY INDUSTRY WITHIN
THE TRAVEL AND TOURISM SECTOR
1.1 DISCUSS THE INTERRELATIONSHIPS BETWEEN HOSPITALITY AND WIDER
TRAVEL AND TOURISM BUSINESSES
Travel and tourism industry has gained lots of importance due to increase interest of customers
in recreational activities. The customers search for the entertainment, leisure, fun activities and
also expect satisfaction from the service providers. Today, customer research different travel
destination and then selects any one according to their interest and spending power.
Due to the concept of globalization, the hospitality industry becomes one of the fastest
emerging developing industries as compared to other industry (Radojevic et al., 2015). The
customer of the hospitality industry includes the businessmen, rich people, entrepreneurs and
professionals contributing to the growth of the travel and tourism industry. The growth and
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development of hospitality and travel and tourism industry are interrelated with each other. As
a junior consultant at PKF Hotelexperts, the article shows the interrelationship between
hospitality and travel and tour industry.
Article
To understand the interrelationship between the hospitality and travel and tourism industry
firstly it is necessary to understand the concept of hospitality and travel and tourism industry.
Hospitality industry
Hospitality industry truly depends on customer satisfaction. However, the success of every
business depends on customer satisfaction. But in the hospitality industry, companies focused
to keep the customer satisfied and they should be able to meet the leisure activities rather than
focusing on basic services. And such services help the companies in differentiating them from
their competitors. Hospitality services include the services of accommodation such as food and
beverages, leisure, fun and recreation activities (Lopes, 2016). The hospitality industry is of
multibillion-dollar industry depending on the interest, leisure time and spending power of
customers. The units of hospitality are hotels, restaurants, pubs, bars, nightclubs, membership
clubs, events, contract food service providers and many others.
Travel and tourism industry
This industry is the fastest growing industry in the UK. The industry provides travelling services
to the tourist and companies tried to fulfil the expectations of the travellers. The tourist
services are the activities where the travellers engage in travelling to a destination for
recreational and leisure activities. Hospitality services act as a supplier of tourism services. The
travel and tourism industry consists of five elements lodging-accommodation, food and
beverages, hospitality services, the entertainment industry and timeshare (Boniface et al.,
2016). The services of the travel and tourism industry are travel services, tourism services,
passenger transport, accommodation services, visitors attraction etc. The main purpose of this
industry is to encourage people to travel because when they spend on recreational activities it
generates revenue for the hospitality industry.
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The definition provided by World Tourism Organization says that" Tourism is related to the
travelling activities of an individual which keeps the individual away from the usual
environment for not more than one consecutive year but for the leisure, fun, recreational and
other purposes.”
The interrelationship between hospitality and travel and tourism industry
The relationship between the hospitality and travel and tour industry are not separable and go
hand-in-hand. The revenue, growth and development of both industries are interdependent on
each other. Hence we can say, hospitality services are the supplier of tourism services. The
traveller needs tourism services for moving from one place to another while at the same time
needs accommodation, food and travel services after travelling (So et al., 2016).
For instance, suppose a professional have to attend the conference in another country, he
needs an aeroplane, bus or car to reach the destination place. The services provided come
under the travel and tourism industry. After reaching the destination place, he requires room to
stay and relax, food and beverages for getting energy etc. This comes under the hospitality
industry. Therefore, it is clear from the above example that whether he is a professional,
businessmen or a family, they all require the services of both industries. Hence, these industries
are dependent on each other.
Figure 1: Interrelationship between hospitality, travel and tourism industry
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[Source: Pairach, 2019]
Importance of hospitality and travel and tourism industry in the countries’ economies
These two industries play a significant role in the growth of countries’ economies. Following are
the importance of hospitality and travel and tourism industry.
 Creates employment
With the growth of hospitality and travel and tourism industries, the number of job
employment also increases which directly contribute to the growth of countries
economy. Different job opportunities such as tour guide, tour operator, different staff
members of restaurants, hotels, travel consultants and other related job opportunities.
 Contribute to the growth of the different local industry
The hospitality and travel and tourism industry contribute to the growth of other local
industries such as agricultural, food production sector, retail industry and so forth. The
service industries are also increasing due to growth in the travel and tourism industry.
 Generates income
Direct and indirect incomes are generated through hospitality and travel and tourism
industry. The income generated through these sectors is directly or indirectly distributed
to governments, employees, stakeholders, retail stores, drug stores and other industry.
Travellers spend lots of money to plan the trips and the businesses that are involved in
these sectors earn a lot from travellers.
 Foreign exchange earning
All the earnings from foreign tourists make an important contribution to the economy of
the country. Different countries make it compulsory to the tourist to carry foreign
currency with them for their entire journey.
 Preservation of traditional industry
Another important contribution that these sectors made is the preservation of
traditional and handicraft industries of the UK. Tourists take great interest in the
speciality and indigenous products of the places they visit. Thus, the communities take
all efforts to maintain their specialization.
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PKF hotelexperts
PKF hotelexperts is one of the members of the PKF international organization. The major
services of the company are hospitality, leisure consultancy and tourism services. The
organization has its operation in more than 300 locations in over 100 countries. The article
provides true information about the relationship between hospitality and tour and the travel
industry (PKF Hotelexperts, 2019).
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TASK 2
LO2 UNDERSTAND THE IMPACT OF INTEGRATION WITHIN THE
HOSPITALITY INDUSTRY
2.1. ANALYZE THE IMPLICATIONS OF INTEGRATION TO THE HOSPITALITY
INDUSTRY
Integration is an economic concept which is a link between two departments or even
organization. In other words, integration is the process of combining different departments or
organization with the aim of increasing productivity and profitability and to reduce the cost of
operation.
There has been a lot of integration in hospitality services. In the hospitality industry, the chain
of distribution is divided into three levels:
 Principal
 Wholesale division
 Retail division
(And then to the final customer)
Figure 2: Process of integration
[Source: Travel and tourism weebly, 2019]
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Basically, integration is classified into two categories:
 VERTICAL INTEGRATION
Vertical integration is the link between the two companies at a different level of
production such as the hospitality industry is linked with its own tour operating industry.
In other words, when the company integrates with its own supplier, distributor or
retailer, it is known as vertical integration (Cockburn and Cockburn-Wootten, 2017). For
instance, Marriott hotel can purchase travel agency for providing affordable and quality
of services to its customers to make them satisfied and brings loyalty in the market.
 Forward integration: Horizontal integration occurs when the hospitality
companies purchase the companies at the retail levels.
 Backward integration: Backward integration occurs when the tour company
purchases the companies that supply packages for instances, tour operator
purchase hotels, restaurants, pubs, event Management Company and other
related companies.
Advantages of vertical integration
 This helps the companies to expand their business in another location.
 Companies can easily gain a competitive advantage over their rival firms.
Disadvantages of vertical integration
 The combination of business does not generate more revenue as compared to other
businesses.
 The culture of the organization does not fit.
 The organization structure becomes complex.
 HORIZONTAL INTEGRATION
Horizontal integration occurs when two businesses of similar industry amalgamate
through acquisition, joint venture or merger. The reason for horizontal integration is to
spread the geographical spread with the aim of representing in all the regions,
diversification (Othman et al., 2015). The main aim of horizontal integration is to reduce
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the competition and generate monopoly in the industry. For instance, Marriott hotel
acquires Starwood hotels and resorts in the year 2016.
Figure 3: Horizontal integration
Horizontal expansion can be done in two ways:
Internal expansion
External expansion by merger, acquisition and joint ventures of different firms that
offer similar products or services.
Advantages of horizontal integration
 It helps the companies to expand their market share.
 The companies are able to bring economies of scale by decreasing the cost of
operations.
Disadvantages of horizontal integration
 There are chances of potential collapse due to the sector or economy downturn.
 The anti-trust issues may arise when industry concentration increases.
The implication of integration to the hospitality industry
 Integration increases the importance of pricing and branding policies.
 Integration helps the companies to compete with a large organization.
 Companies can control and manipulate the market with the help of integration.
 Integration increases the globalization of industry (Laitamaki et al., 2016).
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2.2. DISCUSS HOW INTEGRATION HAS AFFECTED A HOSPITALITY BUSINESS
Integration of any business either through vertical or horizontal affects the overall business of
an organization. The impact of integration can be positive or negative depending on the nature
of operations. Following are the factors that are affected by the integration in the hospitality
business.
The positive impact of integration on the hospitality business
 Standardization
Integration also ensures standardization of business operation. With the help of
integration the organization often choose to adopt standard operating approaches. The
standard approach ensures that the customer will get the same experience from
different branches or departments. Thus, it helps in maintaining the brand image and
loyalty of customers (Kasiri et al., 2017).
 Economies of scale
Integration helps the companies to achieve the economies of scale and also helps in
reducing the operating costs for increasing the profitability, revenue, market share,
customer base and geographical boundaries.
 Better access
The integration also enables the company to increase its services at a single point of
contact for providing convenience and satisfaction to the customers.
The negative impact of integration on the hospitality business
 Unemployment
The result of the integration is that big companies compete with each other to survive in
the industry. As a result, small players usually shut down their operations because of
incompetence to provide quality and quantity of goods and services to the customers
(Hon and Lui, 2016).
 Conflicts
There are chances of mismatch of objectives of the companies that enter into the
contract and thus leads to conflicts and delay in the decision-making process. Such
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conflicts negatively impact customer experience and negative brand image in the
hospitality industry.
CONCLUSION
Therefore, the report and essay can be concluded by defining the hospitality and travel and
tourism industry. The hospitality industry provides services for accommodation, hotel,
restaurants, pub, and event management to satisfy the leisure needs of customers. Travel and
tourism industry provides different services to tourists such as tour operator, tour guide, tour
agency etc. to help the people in their travelling. The article includes the interrelationship
between hospitality and travel and tour industry. Further, the essay includes the impact of
integration on the hospitality business and the impact of integration on the hospitality business.
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