Strategic Hospitality Management: Industry Analysis Report

This report provides a comprehensive analysis of strategic management within the UK hospitality industry. It begins with an overview of the sector, highlighting its contribution to the UK's GDP and its growth trends, including the impact of foreign investment and Brexit. The report then delves into the core concepts of strategic management, exploring sustainable competitive advantages and the influence of current and emerging trends such as robotics, artificial intelligence, and the Internet of Things. It examines the strategic responses adopted by hospitality organizations to address these trends. Furthermore, the report identifies key competitive threats, including the rise of Airbnb, changing customer demands, seasonality, competition, and the shortage of skilled labor. The report concludes with recommendations and provides insights into the challenges and opportunities shaping the future of the hospitality sector. The report is a valuable resource for understanding the strategic landscape of the hospitality industry.

Strategic Hospitality
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Overview of hospitality industry............................................................................................3
Strategy and sustainable competitive advantage in hospitality sector...................................4
Analysis of competitive threats faced by hospitality industry...............................................7
Analysis of strategic responses adopted by hospitality sector...............................................7
Recommendations..................................................................................................................7
CONCLUSION................................................................................................................................7

INTRODUCTION
Strategic Management is characterised as an ongoing process of planning, monitoring,
evaluating and assessing all the activities and tasks that are required to mitigate the goals and
objectives of company. In context of hospitality industry, creating strategic plan is critical to
success of company (Abrate and Viglia, 2016). This essay is based on hospitality sector which
consist of various areas within service industry including food and drink, transportation, lodging,
event planning, accommodation, theme park etc. This report covers key aspects of strategic
management along with strategic environment of hospitality sector. Moreover, current and
emerging developments and sustainable competitive advantage in the sector are discussed. Apart
from this, competitive threats that are faced by organisations and strategic responses to overcome
them are included. At last, some recommendations and conclusion is provided based on the
entire report.
MAIN BODY
Overview of hospitality industry
The hospitality sector of United Kingdom is highly represented by restaurants, hotels,
pubs and leisure organisations of country and contributes around 4% in GDP of nation. It is one
of the fastest growing industry of UK and since it attracts tourist in large number, it provides
various opportunities to investors. Owing to 3.6% contribution in gross domestic product, the
government of country has provided financial resource to several bodies associated to hospitality
for promoting tourism and attracting foreign investment (Hospitality & Tourism in UK, 2016).
An unprecedented has experiences by hospitality industry in recent years due to invest of
foreign investors in sector. As per the records of British Hospitality Association, hospitality and
tourism is comprised of around 1,27,000 businesses and the sector is accountable for rendering
employment to approximately 1.6 million individuals. In United Kingdom, there are around
22,000 motels, hotels and guest houses along with over 16,000 breakfast restaurants. In coming
years, it is expected that these figures will grow with more foreign investment coming in nation.
Strategy and sustainable competitive advantage in hospitality sector
Strategic management is concerned with the administration of resources of organisation to
accomplish its predetermined goals and objectives (Brotherton, 2012). It consist of various

activities including setting objectives, assessing competitive surroundings, analysing internal
environment of company, assessing strategies and assuring that administration rolls out strategies
all across the firm. Strategic management refers to the procedure of evaluating best policies for
administrators of business to carry out so that priorities and goals are achieved. There are some
key aspects of strategic management including strategic choice, strategy execution, internal
analysis of company etc. (del Mar Alonso-Almeida and Bremser, 2013).
In UK, hospitality industry has experienced stronger trading performance than anticipated
which driving a high growth in visitor rates and occupancy. The hotels operating in United
Kingdom have benefited from weaker British pound following influx of foreign travel and Brexit
poll. High performance is enjoying by hospitality industry in year 2018. For London, the annual
occupancy growth is expected at 2.3%. The growth in revenue per available room reached to 9%
in London. The average daily rates increases of 6.3% and 2.6% increase in occupancy rate. Since
2011, the rates have been steadily up by 70% and it is expected to grow to 76% this year (How
has the Leisure and Hospitality Sector changed in recent years?, 2018). Currently, the hospitality
sector represents around 10% GDP of UK. The main reason for development and growth of
hospitality industry is increase in budget sector. In hotels sector of UK, the options of budget
hotel are more that provides a boost to it. For example: Hampton by Hilton Hotels is one of the
leading brand that provides good accommodation to people in their budget. The another reason is
Brexit as it cause pound to take serious dip and potentially maximise the cost of import. This
makes the hotels cheaper which has present opportunities to businesses operated in hospitality
industry (Evans, 2015). Apart from this, economic recovery brings positive change in hotel
sector of United Kingdom. Despite of political uncertainty due to Brexit and global economic
slowdown, the hotel sector has continued to grow and remained vibrant. For instance: In London,
there were around 8500 hotel rooms opened in year 2017. In UK, many projects are underway
and could assist in ensuring that the outlook for sector remains sunny. For instance, around 13
new properties are scheduled to open currently in London market.

Illustration 1: UK hotel performance occupancy rate
(Source: UK hospitality industry growth analysis, 2019)
The total revenue of Hospitality industry of UK is £20bn and there are around 12,998
businesses operating in country. The annual growth from year 2014 to 2019 is 2.6% and it
provides employment to around 372,413 people (How is the Industry Trending in the UK?,
2019).
There are some current and emerging trends in hospitality industry that boosting up the
growth of sector. Some of the trends includes emergence of Robots, artificial intelligence, big
data, internet of things etc. Many hospitality organisations are started to using Robots for serving
food to customers and resolving their queries (Gannon, Roper and Doherty, 2015). One of the
best example of hotel which use Robots is Hilton robot concierge ‘Connie’. It utilizes artificial
intelligence and speech recognition to intelligently learn from interactions and resolve queries
from customers. The another trend is Internet of things which consist of extending connectivity
of internet to appliances, devices and objects use everyday. These devices gather data or
information and communicate over internet, transforming unintelligent objects into smart

appliances. For instance: Internet enabled thermostats. In hospitality sector, these devices are
utilized in adjusting room temperatures automatically at the time of check in and out. The same
is also being used improving energy efficiency and lighting. The organisations like Wynn, Best
Western and Marriott have adopted Voice-Controlled Customer Service (The Latest Technology
Trends in the Hospitality Industry, 2019). Apart from this, the trend of artificial intelligence and
chatbots is very popular in hospitality industry. In current era, people are expect to be enable to
interact with organisations dealing in hospitality sector across different digital channels and get
quick responses. Chatbots are capable to understand questions and give answers instantaneously.
This helps in improving the experience of customers and reducing the burden of customer
service staff. On the other hand, artificial intelligence is utilize to go into other crucial areas
involving data analysis.
In recent years, virtual reality is utilize endless in hospitality industry, because of its
ability to place guests in virtual settings (Okumus, 2013). It could be utilized anywhere from
customer journey from booking stage to hotel stay itself. 360 degree imaging technology is
using in hotel websites to enable virtual reality to take a look of room before booking.
Moreover, recognition technology is the emerging trend in sector. Hospitality organisations are
being used technologies like biometrics and face recognition for unlocking rooms and check in,
check out purpose. For example, Marriott is use facial recognition check in in its hotel. In future,
this technology is likely to use for making seamless purchases and payments are being made by
recognition and touch.
One of the emerging trend in hospitality sector in UK is emphasize on health and well
being. In order to stay relevant, hotels are required to keep reinventing themselves when it comes
to offerings (Gibson and Parkman, 2018). As the people are now becoming more conscious
towards health, it is necessary of organisation to make changes in their offerings in order to meet
the needs of customers. Firms could offer new products and services like hot yoga sessions,
vegan food etc. Integration of cloud solutions is the another trend that integrates operations of
hotel and improves profits. Implementation of cloud technology helps in improving efficiency of
operations specially when if the hotel owns various properties. It automates the tasks and the
staff can emphasize on enhancing customer experience. For example: InterContinental Hotels
Group plc can use cloud solution technology as this will provides benefit to it in terms of

maximize return on investment, improves data security, provides ability to adapt with changes
etc. (Hertzman, Moreo and Wiener, 2015).
Analysis of competitive threats faced by hospitality industry
Apart from the developments and competitive advantages, there are some threats that are
facing by hotels in hospitality sector. It includes growth of Airbnb which causing massive
disruption in hotel industry. The company has changed the expectations of people regarding
travel. It has caused people to expect a highly personalised experience. This impacts the
organisations operating in hotel sector in such a manner that if hotel wish to compete with the
experience and personalization level that Airbnb is rendering, it requires to consider the way it
can turn the stay of guests into something much better.
The rapidly changing demands of customers and increase in technologies creates
various threats for the organisations operating in hospitality industry. Constantly changing
customer demands is the threat that hotels facing. The nature of expectations of customers is
changed drastically because of technology. This is a threat for organisation like InterContinental
Hotels Group plc where customer satisfaction and reputation is crucial. Customers have grown
accustomed to streamlined and customized experiences of shopping. Their choices and
preferences regarding products and services offering by hotels are changing (Hoque, 2013). They
want to get more unique experiences when it comes to stay in hotel. Because of changing
customer demands, it becomes difficult for hospitality sector organisations to satisfy needs and
expectations of customers.
Seasonality of the sector is a threat for hospitality organisations as at the time of peak season,
the sector tends to bring more business. However, It also bring stress to its staff and
Management. Managers are responsible to keep up with the changes in pricing and booking.
Also, if staff turnover is high, then it create threat for company to ensure profitability. More
number of resources and staff required during peak season and the heavily drop percentage
during that time, it will create difficulties for administator to ensure profits On the other hand,
when the season is low, the number of customers visit the hotel will also be low which create
threat for hotel of declining profitability (Köseoglu, Parnell and Lester, 2013). So, the
seasonality factors create threat for company of declining profit ratios. Apart from this,
competition is one of the biggest threat that are facing by organisations operating in hospitality
industry. The competition the market of UK is very high as many hotels are operating in the

country and creates 3rd for each other. For example: there are various competitors
Intercontinental hotel group are operating in market such as Hilton hotel, Crowne plaza etc. All
these create threat for Intercontinental hotel group. If the competitors provides similar offerings,
then the threat of switching customers to another brand is very high for Intercontinental hotel
group which results in decline in revenues and profitability of company.
Moreover, shortage of skilled labour is the factor that creates threat for hospitality industry
and the organisations operating in it (Pechlaner and Volgger, 2012). As the expectations of
customer towards services are continuously increasing and they expect high quality services
from the hotels which creates pressure for organisations operating in hospitality industry of
providing high quality services to customers. But due to lack of skilled labour it becomes very
difficult for the organisations to ensure to offer services to customers as per their preferences and
needs which in turn creates threat for organisation of losing customers. In the today's competitive
business environment, it may be difficult for hotels to find right people who are enable to
provide high quality services to customers. For recruiting trained professionals, companies
required to pay high cost which is not possible for low budget hotels (Moro and Rita, 2018). For
example: Hilton hotel in UK is a low budget hotel chain provides accommodation services to
guests. In order to to maintain sustainability in market, hotel requires to provide high quality
services to customers at competitive prices. For this, it also requires skilled professionals to
deliver those services effectively. In this case, if hotel is not having skilled workforce, then it
may create threat for company of reduce in customer loyalty and decline profits.
All the above mentioned are the threats that are facing by organisations in hospitality industry
which requires to be considered on time and overcoming them by taking appropriate actions and
implementing strategies that helps in gaining competitive advantage in market.
Analysis of strategic responses adopted by hospitality sector
In order to overcome the threats facing by hospitality organisations in United Kingdom, there
are various strategic responses that can be adopted by hospitality sector organisations for
maintaining their position and market (Weinstein and Morritt, 2012). For overcoming the threat
of rapidly changing needs and preferences of customers regarding offerings of the hotel,
company required to keep an eye on market trends and conduct research on continuous basis in
order to get knowledge about preferences of customers and prevailing trends in market. This will

help company like Intercontinental hotel group in offering services as per the demand of
customers and achieving high revenues.
To cope up with the seasonality factor, hotels can hire employees on contract basis at the time
of peak season in order to mitigate the demands of customers. Apart from this, hotels are
required to set competitive prices in order to attract more number of customers at the time of low
denand. Offering services at reasonable prices can help hotel in attract more customers and
ensure profitability. The threat of intense competition in market can be overcome by providing
unique and high quality innovative product and services to customers that helps in satisfying
their need. This will help company in earning high profits in market and gaining competitive
advantage (Phillips and Moutinho, 2014). Introduction of high end technology in offering
services would also be beneficial for businesses in hospitality industry in delivering effective
services to customers and satisfying their needs and demands which reflects positively on firm's
profitability ratio.
Recommendations
The growth in hospitality sector is continuously increasing which makes it crucial for
organisations in hospitality sector to execute appropriate strategiesthat helps in maintaining
sustainability in competitive market for longer term. So as per the above analysis, it is
recommended to company that it should employ adequate strategies that helps in beating
competition and gaining competitive advantage over rivals. company should set prices in such a
manner that it helps in attracting more number of customers towards hotel and attaining high
profitability. Apart from this, organisation should conduct timely market research so that needs
and preferences of customers can be identified properly and appropriate production services can
be offer to satisfy the needs of customers. Moreover, hotels should provide employees with
appropriate training program that helps in developing their skills and knowledge and enables
them to deliver high quality services to customers. All these can help organisations in hospitality
sector in gaining competitive advantage in market and ensuring sustainability for long-terrm.
Businesses should also use Technologies like robotics and artificial intelligence for offering
services to customers as these helps in resolving queries of customers and improving their
experience. Moreover, it must use recognition technology in the business which helps in
providing ease to customers in making their payments online by only face recognition and finger
touch. As the people of United Kingdom are becoming more health conscious, organisations

must consider this trend and ensure that it offers healthy food menus to customers which
contains low sugar and calories. This will help hospitality business in attracting more number of
customers and gaining advantage over rivals.
CONCLUSION
As per the above mentioned report, it has been concluded that strategic management is
the process of managing resources so that preset goals and objectives of the company can be
accomplish. The hospitality sector is the rapidly growing sector of United kindom in which there
are many developments takes place that provides advantages to organisations operating in the
sector. There are some current and emerging trends in hospitality sector including robotics
technology, chatboats and artificial intelligence, virtual reality, recognition technology etc. Use
of ehich can provides competitive advantage to hotel in market. Apart from these, there are some
issues that are facing by hospitality organisations such as shortage of skilled labour, intense
competition in market, seasonality, rapidly changing needs and tastes of customers that
ultimately effects profitability of companies. In order to overcome these threats, hospitality
organisation required to adopt appropriate strategy which helps in gaining sustainability in
market.

REFERENCES
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Online
Hospitality & Tourism in UK, 2016. [Online]. Available through:
<http://www.investinuk.net/industry/hospitality-tourism/hospitality-tourism>
How has the Leisure and Hospitality Sector changed in recent years?, 2018. [Online]. Available
through: <https://rg-group.co.uk/whitepaper-leisure-hospitality-sector-changed-recent-
years/>
How is the Industry Trending in the UK?, 2019. [Online]. Available through:
<https://www.ibisworld.com/united-kingdom/market-research-reports/hotels-industry/>
The Latest Technology Trends in the Hospitality Industry, 2019. [Online]. Available through:
<https://www.revfine.com/technology-trends-hospitality-industry/>