Hospitality & Tourism Integration: Analysis and Development Plan

This report examines the interrelationships between the hospitality and travel & tourism sectors, focusing on the implications and effects of integration within the hospitality industry. It analyzes both vertical and horizontal integration strategies, highlighting their advantages and disadvantages, and provides examples of companies like Hilton, Marriott, and Whitbread Plc. The report also presents a rationale and development plan for a hospitality business, detailing organizational requirements, structures, and the allocation of human resources, including an organizational chart. The plan addresses key aspects of the business, from initial setup to ongoing operational considerations, concluding with a summary of the business's potential impact and success factors.

CONTENTS
INTRODUCTION.....................................................................................................................................2
TASK 1....................................................................................................................................................3
1.1 INTERRELATIONSHIPS BETWEEN HOSPITALITY AND TRAVEL AND TOURISM SECTOR.................3
TASK 2....................................................................................................................................................4
EXECUTIVE SUMMARY.......................................................................................................................4
INTRODUCTION.................................................................................................................................4
DISCUSSION.......................................................................................................................................4
2.1 IMPLICATIONS OF INTEGRATION FOR THE HOSPITALITY INDUSTRY............................................4
2.2 EFFECT OF INTEGRATION ON HOSPITALITY BUSINESS.................................................................8
CONCLUSION...................................................................................................................................10
TASK 3..................................................................................................................................................11
3.1 RATIONALE FOR SELECTED PROJECT..........................................................................................11
3.2 HOSPITALITY BUSINESS PLAN COVERING ORGANIZATIONAL REQUIREMENTS, STRUCTURES AND
ALLOCATION OF HUMAN RESOURCES.............................................................................................14
CONCLUSION.......................................................................................................................................18
REFERENCES........................................................................................................................................19

INTRODUCTION
Hospitality is an important part of travel and tourism industry and when we refer the term
hospitality people define it as a business of helping others and making them feel relaxed and
to enjoy themselves. In simple words hospitality in the travel and tourism industry is the
combination of food, accommodation and beverage groups which collectively makes it as
the largest segment of the industry.
In this assignment, the readers will get an understanding of the diversity of the hospitality
industry and its relation to the travel and tourism industry. In the later sections of the
assignment, the impact of integration of the hospitality industry and various future
implications will be explained briefly. In this assignment, a development plan for the
hospitality business will be described covering the structure of the organization, allocation of
the workforce and other resources with a proper description of an organizational chart.

TASK 1
1.1 INTERRELATIONSHIPS BETWEEN HOSPITALITY AND TRAVEL AND
TOURISM SECTOR
There is no existence of the tourism
industry without the integration of
hospitality. Both the industries that are
hospitality and tourism are
interdependent on each other for their
business (Mensah and Dei, 2013). It is
quite obvious that without the hospitality
industry the tourism industry would have
a large gap the reason being there would
be no mainstream places for tourists to
stay which would decrease the popularity
of that tourist destination with the
passage of time. The hospitality industry
basically includes food and
accommodation services and if these
services are not available then tours
activities such as tours, excursions and
tourists attractions would decline among
the users thereby decreasing the revenue
of local area and its people.
The tourism industry works side by side
with the lodging and attraction segments
for example various tour operator
companies provide specific lodging
facilities and exclusive arrangements such
as eateries, refreshments and would also
escort tourists to places as part of their
tour fees (Law, et al. 2014). Some of the
main hospitality organizations in the world
include Whitbread Plc, Hilton and Marriott
hotels etc., these organizations work in
consonance with the tour operator
companies for facilitating the tourists
from across the globe. Tourism is basically
an activity that mainly includes
accommodation, accessibility and visiting
various popular attractions whereas the
hospitality industry provides the tourist
with the facility of accommodation.
Due to the rapid increase in globalization
the hospitality industry has itself emerged
as one of the most developed industries
when compared with other industries
(Mok, et al. 2013). As per the statistical
reports, tourism industry contributes to
approximately 33% of the nation's GDP in
which there is a wider contribution of the
hospitality segments too. The hospitality
industry consists of various elements and
tourism industry is one major of those
elements. The tourism industry in itself

constitutes the progress of farmhouses,
motels, guesthouses, villas, parks etc.
COMPOSITION OF HOSPITALITY
INDUSTRY
In the travel and tourism industry tourists
from around the world make use of
variables from the hospitality industry and
these variables are briefly described below
(Barrows, et al. 2012).
Hotels
The type of a hotel is determined by its
size and location. A hotel is also classified
by its function and target market,
amenities, standards and service level. A
hotel is classified into various types of
variables such as the number of guest
rooms, sizes of rooms like a small
boutique or a large hall with thousands of
rooms (Farrou, et al. 2012). The services
provided by the hotel are also a key such
as inexpensive, costly or budget friendly.
There can be some extra facilities within
the hotel such as a place for vehicle
parking, spas, gym, golf courses etc. The
type of ownership is also an important
variable as there are many independent
owners, third party owners or franchised
hotels. For example, there are 19 different
hotel brands of Hilton and Marriott having
a separate name for each brand and
offering different prices and services to
the customers. Moreover, there are many
industry organizations like the Trip advisor
or AAA who provide consumer ratings for
individual hotels.
Restaurants and Night Clubs
A restaurant is a part of the hospitality
industry for the tourists or guests where
people visit the restaurants for sitting and
eating meals being cooked or served at
the premises (Zomerdijk and Voss, 2010).
A nightclub is a place of entertainment
and fun but it should not be misjudged as
being a bar as nightclubs have an inclusion
of music and dance where a DJ plays
recorded music.
Pubs and Bars
Pubs or a bar is a place where people
come for consuming beer or other drinks
and sometimes food as a part of leisure
and a fun activity (Brotherton, 2012).
Contract food service providers
The food service providers have an
agreement with their clients and the meal
providers. The clients of the food service
providers could be anyone for example
school, private individuals or public
entities.
Hospitality Services

In the hospitality industry, there are
numerous services such as food and
beverages which include restaurants, bars,
catering, banquet and events. The next
services include the hotel service in which
revenue management, front office, room
divisions etc. services are included.
Membership Clubs and Events
The events services basically include
meeting and conferences, entertainment,
leisure and sports events (Brotherton,
2012). There are many benefits of taking
the membership of hospitality and tourist
organization as they provide various
monetary benefits to the people.
Becoming a member of these
organizations tourists from around the
world can have access to their
development programs, Webinars, access
to company tools and much more.
Travel and Tourism services and Visitor
Attractions
The services are linked with hospitality
services such as cruise ships, airlines, tour
operators, agencies etc. The travel
services is a complex relationship between
a group of suppliers, tourism products,
tour operators, travel agents, destination
marketing organizations and many others.
The travel services are the reserved
components for tourist experiences and it
is a part of a business function. Some
additional hospitality services include
housekeeping services, Cleaning Services,
maintenance services etc.
Accommodation Service and Passenger
Transport
Hotels, beds, lunch, breakfast etc. and
lodging facilities represent a wide segment
of the hospitality industry and hospitality
industry integrates comfort with these
services for providing comfort to its
customers or tourists. Passenger transport
is another segment that hospitality
industry encompasses (Swarbrooke and
Horner, 2012).The transportation services
may include train, airline, bus, cruise ships
etc.

TASK 2
EXECUTIVE SUMMARY
The main purpose of this report is to highlight advantages and disadvantages of integration of
two or more companies in the hospitality segment. Various types of integration processes and
its impact on business will be critically analysed and explained.
INTRODUCTION
Integration is the process when two or more company merge and become a single entity.
Integration give company’s competitive advantages as company use shared services moreover,
it helps companies to reduce cost and create a brand value (Rodríguez, et al. 2012). This report
will describe how various hospitality industries like Hilton, Marriott, Whitbread Plc integrated
for gaining competitive advantage. The report will also give a detailed description about the
implication of integration within the business covering various pros and cons.
DISCUSSION
2.1 IMPLICATIONS OF INTEGRATION FOR THE HOSPITALITY INDUSTRY
There are many positive advantages of integration of one company with another. In fact, all big
organizations have integrations with different other companies in order to provide better
customer service to its customers. For example, Whitbread Plc one of the biggest hospitality
giants has integrated with CSC and Fujitsu which are IT services providers in order to connect its
Premier Lodge sites to the IT systems (Neuhofer, et al. 2015). Major hospitality industries like
Hilton, Marriott etc., set up a shared services function within their organization in order to
provide IT services to all its brands. This integration helped Whitbread Plc to boost its cross-
selling of products because the supply chain applications, financial applications and HR
functions are being handled and managed by the servers and databases of these IT companies.
Hence it is a clear indication can big organizations cannot do business without integrating with
other business giants. There are basically two types of integration as explained below.

Vertical Integration
It refers to a business strategy in which firms expand its business operations into the number of
different steps with production, manufacturing, distributors or suppliers. A company vertically
integrates when it has a control on its supply chain processes such as manufacturing,
distribution, retail and commodities (Joskow, 2012). In vertical integration, companies are able
to reduce costs by improving the efficiency and decreasing the logistic expenses and reducing
the turnaround time in the business. The companies who are vertically integrated are united
through a common owner. An example of Vertical integration is when Ritz carbon Hotel
Company integrated with hertz which is a car rental company. Ritz carbon hotel also vertically
integrated with several other companies such as 360 tours which is a tour company and Etihad
Airways. These companies integrated in order to use gain huge profits and reduce costs in their
operational processes.
Implications
The implications of vertical integration are the firm's competitive advantage in the future,
moreover, consumers are more likely to buy company's products and services in the future. Due
to vertical integration company's can lower down the prices of its goods and services despite
compromising on the quality of the product (Lahiri and Narayanan, 2013). Another implication
includes avoiding frequent strikes and labour disputes from those companies which are in
socialist countries.
Horizontal Integration
It is also known as lateral integration in which two or more companies merge together in the
production processes for sharing resources. The prime goal of horizontal integration is to
monopolize and consolidate an industry (Droge, et al. 2012). For example, Hilton took over its
competitor companies like Stakes; the company took its 53 hotels and 4-star hotels in the year
2001. In similar fashion, Hilton took over Scandic Hotels but later company switched its owners
to a Swedish private equity firm. The acquired hotels are being tested and their services are

matched against the requirements if everything goes well as per the brand standards company
re-labels it as Hilton Hotels.

Implications
There are many implications of using horizontal integration for example company can achieve
economic success in the future by increasing its market share through mergers and acquisitions
(Torres and Adler, 2010). While there are many disadvantages of horizontal integration such as
antitrust and legal issues. When the company merges with another company and if that
company was under loss then the company will have to face negative consequences of the
merger such as loss of revenue, cost of redevelopment, reduction in brand value, legal
repercussions etc.

2.2 EFFECT OF INTEGRATION ON HOSPITALITY BUSINESS
The hospitality industries like Hilton, Marriott, Whitbread Plc etc. have integrated with many
tour operator companies for running their businesses. Without integration, companies cannot
gain huge profit margins as customers have changing demands which need to be fulfilled
(Damanpour, 2010). The tourist from around the world travel different nations and require
hospitality services like accommodation, lodging facilities, recreational facilitates etc. that can
only be provided by premium hotels which are the part of the hospitality business. It not only
helps companies to expand its business but also create a brand value among consumers.
Let’s consider the case of Marriott hotels which integrated with Starwood hotels and resorts
which have many advantages and disadvantages for both the businesses as described below.
Figure 1: Integration Effects on Hospitality Business
Cost Integration
CostIntegratiGlobalizatioTechnologyQualityStandardizatio

When two companies merge then there is increased pressure to minimize the expenses which
include labour costs, consulting fees, travelling costs etc. It becomes the responsibility of the
firms to manage the integration costs such as moving and relocation costs, training costs,
expenses for file and equipment etc (Damanpour, 2010).
Globalization
When companies like Marriott and Starwood merge than there are many challenges such as
globalization issues, for instance, there is no sharing of ideas among the staff members, culture
of organization gets mixed with different people from diverse backgrounds, implementation of
rules and regulation becomes complex and many other factors that hinder the growth of the
company at the global level. The company consumes enormous time in streamlining the
activities due to merger and acquisition thereby lacking ideas of globalization and meeting
customer expectations (Hitt, et al. 2012).
Technology
When companies from two different sectors like IT and hospitality merge then both the firms
gain a competitive advantage by improving the efficiency and reducing the cost (Prajogo and
Olhager, 2012). For example, Whitbread Plc merged with Fujitsu and CSC both is IT services
providers; it had helped in managing the IT services for the Whitbread Plc for its customers.
Whitbread Plc maintains the database of tourist’s arrivals in its hotels, website management,
employee data security and many other benefits of integration with the IT companies.
Quality
When companies merge there is a possibility that quality of service may decline as there is
sharing of resources among the member of the staff from both the companies (Gorla, et al.
2010). It is also possible that perception, ideas and opinions do not match among the
employees, senior managers and members of the staff. Hence it may create disturbance in the
overall operational activities thereby reducing the quality of service for the customers.
Standardization