Strategic Management Processes in the Hospitality Industry

This report delves into the realm of strategic management within the hospitality sector, examining the crucial elements of corporate strategy formulation, implementation, and evaluation. It explores various models of strategy management applicable to the industry, including PEST, Gap Planning, Porter’s Five Forces, and Value Chain Analysis, providing a comprehensive understanding of the analytical tools used. The report presents detailed case studies of Hilton and Marriott, showcasing their strategic approaches, including their responses to competitive pressures, customer needs, and technological advancements. It further discusses the challenges associated with strategy implementation and the measures for assessing the effectiveness of corporate strategies. The report aims to provide valuable insights into the competitive landscape of the hospitality industry and the crucial role of strategic management in achieving organizational goals and maintaining a competitive edge.

Tourism and Hospitality
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Corporate Strategic Formulation.................................................................................................3
Models of strategy management in hospitality industry..............................................................4
Analytical tools of strategic management....................................................................................4
Corporate strategy formulation in hospitality organisations.......................................................5
Implementation of corporate strategy and strategic management process..................................7
Issues and challenges of corporate strategies in implementation................................................8
Effectiveness of the corporate strategies...................................................................................10
CONCLUSION..............................................................................................................................10
Findings and inclusion...............................................................................................................10
Reflection and consolidation.....................................................................................................11
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic Management is a mix of decisions and actions which lead to the development of
effective plans to achieve the organisational goal and objectives.
This is an on-going process that assess and controls the business. Strategic management also
assesses the competitors and the industry in which organisation is involved. The top management
of an organisation set goals and make strategies annually or quarterly to achieve it through long
term planning (Sigala and et.al., 2021). They also determine whether it has succeeded or it needs
replacement by some new plan, new technology, and new political, economical or social
environment or by new competitors.
Hospitality Industry is required to create and implement strategies to achieve the goal which are
determined to the hospitality industry to improve the growth of an organisation. In hospitality
industry strategic management is to implement the different ways in which company can
utilising the resources it has in such a way that it can reduce the cost. It can also enhance the
production process of the organisation. According to Sobaih and et.al., (2021) Business model
of a company is the key factor to decide which strategic management will be followed to gain
competitive advancement.
The report will focus on the different aspects and theories of hospitality management.
Light will be thrown on the different principle and practice of strategic management in
hospitality industry. Different process, effectiveness and challenges in the global hospitality
industry will be discussed. This report will figure out the scope of improvement.
Corporate Strategic Formulation
Strategy Managements is a big term which includes the entire strategic decision making
structure of that company. It combines the management processes and decisions related to the
activities executes in different functional areas of that organisation. The strategic management
process includes Strategy Formulation, Strategy Implementation, and Strategy Evaluation and
Control (Davis and Bendickson, 2021). The Rising need of strategic management in hospitality
industry is rooted by numerous ongoing processes like rises in the latest technology,
communication and inexpensive transportation. Let’s discuss the different aspects of strategy
formation and strategy management in hospitality industry. An organisation can create and
recognise its Goals, short term and long term objectives and the mission by strategy formulation.
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It also helps an organisation in choosing the best course of action amongst available substitute
strategies.
Models of strategy management in hospitality industry
Strategy models are devices to help an organisation to develop an action plan. There are
many model of strategy management. Strategic management can be a very broad subject. The
report is based on strategic management from hospitality industry’s point of view. The different
tools can be used by a company to know how a strategic analysis is made (Mustafa, Mansilla and
Gibson, 2021). The management can identify the various challenges while formulating strategy
planning. The company can also know the environmental impacts on the business. The
organisation can apply the model according to the internal and external environment of that
industry. Some of them which can be used in hospitality industry are-
 PEST Model-
Politics, economy, social and technology of a country are the external factors which
influence an organisation’s actions and performance.
 Gap Planning
The gap (5 gaps) model of service quality says about the gap between customers and
organisations expectations (Chaulagain, Pizam and Wang, 2021).
 Porter’s Five Forces –
Porter's Five Forces (Competitors, new entrance in the industry, suppliers, customers,
threats of substitutes) is a framework for analyzing an organisation's competitive
environment)
 Schematic Model
 Value Chain Analysis
Hotel companies operate in a highly competitive environment, targeting much clientele from the
international market with many specialties. Hotel industry is too demanding and to compete with
these challenges the management has to apply different and modern strategies to survive
(Ozdemir, Han and Dalbor, 2021). This analysis can assist to know the global developments and
can support the decision-making process by limiting the uncertainty created by the external
environment.
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Analytical tools of strategic management
The analytical tools help in learning the conditions of the business in which the company
is going to operate in. according to Wen and et.al., (2021) The Managers should learn and
understand the opportunities and threats of the environment in order to develop an action plan
that will lead a success. Outcome of the analysis help managers to develop appropriate strategies
for their organisation. A good strategy is that has a plan to use resources and capabilities of the
organisation. That can position the company strongly in the market and also can set it apart from
competitors.
Different techniques of strategy formulation are as follows-
 Establishment of the organisational objectives, vision and mission -
This is the first thing to do in strategy formulation process as there is a need to
develop a strategy that will give idea on how the whole plan will be undertaken.
This step includes long term and short term goals.
 Analysis of external and internal environment-
It’s must to know of the environment under which plan will be carried out. The
environmental factors (internal and external) are necessary to determine if the
strategies are going to be successful or not. There are few internal factors for
example level of innovation, costs of labour, company size etc. External factors
for hotel industry can be the productivity level of the hotel in that area, location of
businesses, competitors' price, demand of tourist, etc.
 Formation of quantitative goals-
This is a target based approach to meet with the short term and long term goal.
For example if the organisation decide to increase its clientele from 30 to 40%.
 Divisional plans-
This is about defining the plans in micro level that includes the entire department
(Rath, 2021).
 Performance analysis-
Performance analysis is done to approximate the degree of variation between the
actual and the standard performance of the organization.
 Application of best suit strategy-
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This is the final process of strategy formulation. This evaluates the alternatives
strategies and gives the best strategy amongst them which is considers to be the
strategy of that organisation.
Corporate strategy formulation in hospitality organisations
Hilton is a luxurious hotel in service industry with a global existence. It has the highest
no. of customers in UK hotel industry. The company is leader in hotel industry since its
beginning. In terms of innovation in its services and amenitiesit is still the best in hotel industry
(Hilton, 2021)). Hilton focuses on individuals and corporate both. Hilton provides numerous
services such as banquet hall for medical groups, labour unions and educational parties. It also
gives space to political clubs, private individuals, and religious groups and also to government
bodies. The hotel has a different price rates for different customers segments. It depends upon
the needs of the customers. The company also take care of the value the customer can afford.
Hilton has its most of the hotels subsidiaries at the heart of the cities, or near to airports. Hilton
uses the promotional strategy of incentives trips to the customers along with it they also offers
discount programmes on weekends.
According to Porter’s Five Force Analysis company has different kinds of issues like
threat of entry of new competitors but the threat is low due to level of the establishments of
Hilton in hotel industry. This thing allows them to apply the best strategy implementation that
ensures the maximum profit with cost cutting. Threat of substitute products is also less as it’s
difficult for an organisation to offer a hospitality service that does not belongs to the hotel
industry. Competitive rivalry intensity is so high for Hilton as in UK the hotel industry is very
competitive. Customers have a high barraging power in hotel industry as there are no of hotels in
UK. Bargaining power of suppliers is less for Hilton. According to pest analysis. Hilton enjoys a
stable political environment and legal framework of UK. The developed economy supports
development and investments in the industry. Stable economic also gives scope to expand and
growth.
Marriott is the world's biggest hotel chain. It has merged with Starwood Hotels and
Resorts in 2016. Marriott is one of the leading firms in the Lodging. In last few years Marriott
has redefined the ways of doing business in Services. Here are some the strategic formulations
models of Marriott which the managers follow according to situation (Marriot,2021).
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GAP Model–
The GAP analysis is one method which says about the gap between an ideal outcome and the
real one. Marriott also identified the same GAP and working on it. Let’s understand the analysis.
The gap can be of 5 types-
1. Between customers expectation and management perception of Marriott hotel
2. Between service quality specification and management perception of Marriott
3. Between services quality and service delivery of Marriott
4. Between service delivery and external communication of Marriott
5. Between the expected services and experienced services of Marriott
Gap between customer’s expectation and management perception –
The gap arises when managers misunderstood the customer requirement. It can be due to poor
service design. For example Marriott is known for its services. If restaurant manager who tell the
waiters to provide the order “quick” but does not specify how quick (Dao, Dávila and Greulich,
2021). It can be a GAP between order and execution.
Gap between service quality specification and management perception of Marriott-
This gap occur when the staff is not well trained and he or she is not meeting with the standards
of services. The failure between supply and demand can form this gap. For example everyone
knows the services standards of Marriott but if a staff who’s not well instructed can harm the
image of the hotel.
Gap between service delivery and external communication of Marriott-
This gap occurs when consumer does not find the delivery of services appropriate. It happened
when customer has a high expectation because of advertisement or any statement from managers
but when he could not find it worth. The customer’s faith breaks down. Marriot does a great R &
D on this point and never let the customer’s expectation down (Blanco and Golik, 2021).
Gap between the expected services and experienced services of Marriott-
This gap tells the misunderstanding about the services. For example as per the service guidelines
if manager in one of Marriott hotel keep visiting to check customer satisfaction and quality
check. The customer can interpret it wrong and can lose its faith in the hotel.
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Implementation of corporate strategy and strategic management process
This could be view that, decision making in the company must be important and having the
techniques for which the organization can easily make their goals and objective. Digital
platforms can be used for making the high level of customer satisfaction.
Hilton Hotels Corporation uses the differentiation strategy. The decision makes them the
most leading company in the industry. It provides them competitive influence over the
competitor companies. Hilton Hotels Corporation serves the quality based product in a classic
form. This technique is combined with higher levels of information advancements. Comprising
digital platforms in their various service options gave the Hilton strong position in the tough
competition.
Hilton is working on its digital aspects too by including mobile services, data base
personalization, reservation outlets, and loyalty programs. According to Griffin, (2021) The
company has recognized the business opportunities in the foreign country too. Hilton has hotels
for both luxurious relaxation and for business class. The company is not only the leader in
hospitality industry in UK but also it is innovation leader of the industry in the world. Hilton has
reached to this place because of its effective implementation of service differentiation strategy.
The human resources department also its policies help in achieving its goal. Hilton pursues
aggressive business expansion strategies. It also follows the market entry plans based on their
service differentiation.
This could be also seems that hospitality managements should be also important in taking
benefits and organization can also successfully make their strategies.
The Marriott Hotels approaches the differentiation Strategy to serve its products in the
highly competitive hospitality industry. Marriot is a successful organisation that has successfully
employs the different generic strategies. Marriot is in various countries with the global franchise.
The services display that Marriott is one of the top leader in the accommodation sector (Tokue,
2021). Marriot uses a mix of strategies to handle the entrepreneurial structure.
Marriot focuses on the development of services and products in a unique way that meet
the need of customers.GAP analysis help in a lot to understand the demand of customer. The
model is influenced by the terms of several options of accommodation that are from bottom to
top priced packages. The managers have added the uniqueness by offering the range of the
services.
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Marriott Hotels is using its strategy of differentiation. The hotel chain also uses the market
segmentation strategies to its every operation. Top managements also understand that one brand
of the whole hotel company is not enough to meet with the requirements of every customer. Thus
the hotel has decided to use mix of strategies of differentiation by making many hotel brands.
The company has a products range from the low-end to high-end services. As per Sernovitz
(2021) For high class customers Marriot offers Marriott JW Resorts, Ritz Carlton and Spas that
are for customers who want lavish and high-end rooms. Here they get a package of luxury life
style.
For tourist and travellers Marriott has huge room space with courtyard. For low income
group Marriot has The Fairfield Inn products. This mix of products ensures that the Marriott
meets every desire of customers with different purchasing power. Marriott is also planning
strategies for those customers by giving Marriot courtyard segment that are willing to pay for
luxury. Largely, one can say that the company has several products for different form of
occasions. As demonstrated, through this segmentation approach Marriott Hotels has applied its
strategy of differentiation in an exclusive method
Issues and challenges of corporate strategies in implementation
Studies have shown that around 67% of companies fall short in achieve their strategic
objectives. Let’s discuses what are the main reason in hospitality industry.
The five most common challenges in implementing a strategic plan are:
1. Poor goal setting-
Corporate strategies are often large and complex that sometime mislead the objective and
plans. The plans always require many resources and engagement of many departments to
accomplish it (Peng, 2021). Setting a clear goal can make the employees understand
about the priorities and responsibilities. For example if the hotel want to increase its rates,
the strategies should be around how they can make it effectively. The same message
should be conveyed to the team.
Lack of coordination-
Even with proper goal-setting, teams and managers can be faced with a lack of
coordination in hotel industry too. The biggest cause of lack of coordination is the
nonstrategic work that employee are so used to doing.
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2. Tracking inability of growth-
There should be a transparency between managers and employees about the strategic
plans and their proper tracking. At what extant the plans are achieved, what kind of new
thing should be added to it (Shams and et.al., 2021). These are the few questions which
can be answered by tracking of growth.
3. Lack of resources
The most common problem with the corporate strategy in hotel industry is lacking of
resources. Although Marriot and Hilton are big players in hotel industry but sometime
they also face it when the plan is new and employees does not have proper training.
4. No connection to the strategy-
The best way is to connect employee more closely to plan by aligning specialized goals
with individual interests. Managers should also focus on employee’s personal
responsibility, their experience working in other departments.
There are many issues which corporate strategy formulating team faces in hotel industry. Some
of them are-
 Every hotel company wants to delight their customers but many struggle to hear
their voices. This lead to a gap between customers need and services providers’
expectations.
 Best practice benchmarking is also a problem for the company as sometime it
leads to non profitability (Kaal, 2021). As managers starts to compare with the
competitors in each and every aspect.
 The strategy planners should also considers the new entrants as a threat. They
should plan new strategies for the new game changers.
 Entry in a new market for those who are not expert of that area, it can be an issue
for the strategy makers. For example if Hilton plan to expand it in a new market
then it can be a difficult task for the same strategy planners. The company should
introduce a new team with new plans.
Effectiveness of the corporate strategies
The hotel may be its Hilton or Marriott both should adopt a goal setting methodology. By
working on the strategies which are goals specific, measurable, attainable, relevant and timely,
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the managers can make a better plan (Villena-Manzanares, García-Segura and Pellicer, 2021).
The managers should ensure about best practices of the plan.
The managers in hotel industry should establish a clear coordination on who is working
on which strategic plan.
This will lead to achieve those plans in a clear manner. For example if hotel is planning
to focus on small base customers , the whole team involved in the strategy should know their
responsibility from top to bottom. Each day should be planned.
It’s important to start little if the hotel is expanding in a new demography. The plan
should be executed further only if earlier objectives have been met.
A right training program to the team should be implemented. Managers should let
employees create their own strategic goals (Kapoutsis and Lampaki, 2021). Manager can Shift
the focus of employee from an employee working within a division to an employee working
towards an organisation’s strategic goal as part of a strategic team.
CONCLUSION
Findings and inclusion
This report illustrated how strategy formulation and implementations impact a company’s
growth. Further to understand it in hospitality sector two case studies were taken as a reference.
From the above realistic data and different analysis it can be concluded that both the hotels
Hilton and Marriott both are able to succeed in this cut throat competition due to their
outstanding plans, customer centric services, and application of new advancement in technology.
“Customer is king” both the organisation work on this quote. PEST analysis, GAP analysis and
Porter’s Five Forces highlighted that the politics, socio culture environment, technology and
economic conditions also impact the strategy formulation and implementation.
Reflection and consolidation
In my recommendation, I would suggest the companies in hospitality industry to practise
the franchising approach in its marketing plans and management mix. This will considerably
reduce the financial risk related to it. I would further recommend the companies to use
differentiation Strategy in the highly competitive market where every day is a new challenge. By
using this strategy they can offer various services to each and every customer. Technology also
plays an important role in strategy implementation and regulation. So I would recommend the
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companies to focus on digital media platform too. In my opinion every consumer need should be
properly and sufficiently provided without compromise in the different quality package practised
by the management.
REFERENCES
Books and Journals
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Chaulagain, S., Pizam, A. and Wang, Y., 2021. An integrated behavioral model for medical
tourism: An American perspective. Journal of Travel Research. 60(4). pp.761-778.
Dao, N.T., Dávila, J. and Greulich, A., 2021. The education gender gap and the demographic
transition in developing countries. Journal of Population Economics. 34(2). pp.431-474.
Davis, P.E. and Bendickson, J.S., 2021. Strategic antecedents of innovation: Variance between
small and large firms. Journal of Small Business Management. 59(1). pp.47-72.
Griffin, R., 2021. Fundamentals of management. Cengage Learning.
Kaal, W.A., 2021. Blockchain solutions for agency problems in corporate governance.
In Information for Efficient Decision Making: Big Data, Blockchain and Relevance (pp.
313-329).
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Mustafa, M.J., Mansilla, O. and Gibson, M.T., 2021. Examining when hotel middle-managers’
psychological ownership influences their commitment and job satisfaction. Journal of
Human Resources in Hospitality & Tourism. pp.1-24.
Ozdemir, O., Han, W. and Dalbor, M., 2021. Economic policy uncertainty and hotel occupancy:
the mediating effect of consumer sentiment. Journal of Hospitality and Tourism Insights.
Peng, M.W., 2021. Global strategy. Cengage learning.
Rath, M., 2021. Realization of Business Intelligence using Machine Learning. Internet of Things
in Business Transformation: Developing an Engineering and Business Strategy for
Industry 5.0. pp.169-184.
Sernovitz, D.J., 2021. Marriott will substantially reduce planned workspaces at new Bethesda
headquarters.
Shams, R. and et.al., 2021. Strategic agility in international business: A conceptual framework
for “agile” multinationals. Journal of International Management. 27(1). p.100737.
Sigala, M. and et.al., 2021. A bibliometric overview of the Journal of Hospitality and Tourism
Management: Research contributions and influence. Journal of Hospitality and Tourism
Management. 47. pp.273-288.
Sobaih, A.E.E. and et.al., 2021. Responses to COVID-19: The role of performance in the
relationship between small hospitality enterprises’ resilience and sustainable tourism
development. International Journal of Hospitality Management. 94. p.102824.
Tokue, J.I., 2021. A New Hospitality Marketing Perspective on the Emergence of “Lifestyle
Hotels”. Japanese Society and Culture. 3(1). p.5.
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