Hospitality Industry's Role in Travel and Tourism: A Report

This report provides a comprehensive overview of the hospitality industry's role within the travel and tourism sector. It explores the interrelationship between hospitality and wider travel and tourism services, highlighting how the hospitality industry enhances the value of the tourism industry through a wide range of services. The report discusses the implications of integration into the hospitality industry and its effects, including the development of hospitality businesses, with a specific focus on a business plan for a hotel named Lucian De Chiriac. The report analyzes the UK's tourism sector, emphasizing the industry's growth, revenue generation, and employment benefits. Furthermore, the report delves into the interrelationship between hospitality and travel and tourism activities, emphasizing the importance of business travel, events, and cultural tourism. It also covers market research, business offerings, resources, funding, and licensing considerations for a new hotel venture, providing a detailed understanding of the hospitality industry's contribution to the tourism sector.

HOSPITALITY PROVISION IN TRAVEL
AND TOURISM
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Table of Contents
Introduction ........................................................................................................................................3
Role of hospitality industry within travel and tourism sector..............................................................3
1.1 Interrelationship between hospitality and wider travel and tourism services ...........................4
2.1 The implications of integration into the hospitality industry.....................................................5
2.2 Effects of integration on the hospitality industry.......................................................................6
3.1 Development of hospitality business.........................................................................................7
3.2 Business plan for hotel Lucian De Chiriac................................................................................9
References..........................................................................................................................................12
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INTRODUCTION
Travel and Tourism industry is considered as one of the most fastest growing industry and
this also generates huge opportunities for economic development. Hospitality sector has been one of
the most prominent area that enhances the value of tourism industry because it integrates wide
range of services. The present study has been emphasizing on role of hospitality industry in travel
and tourism sector and along with that researcher has also discussed interrelationship of travel and
tourism services with hospitality sector (Clow and Kurtz, 2003). Further, researcher has also
discussed integration of hospitality and tourism services and how it influences the purchasing power
of customers. Horizontal and vertical integration helps the tourism sector to involve different
service provisions and the concept has been stated in the subsequent research study. Hospitality
sector of UK has been developing on wider extent because of involvement of different and
innovative services in the same area.
ROLE OF HOSPITALITY INDUSTRY WITHIN TRAVEL AND TOURISM SECTOR
Hospitality within the travel and tourism sector is a huge field which includes various
elements such as hotels, restaurants, transport, leisure centres and parks and many others. “Usage
rate, is very important for the hospitality industry (Spilsbury, 2011). Just as a factory owner would
wish a productive asset to be in use as much as possible (as opposed to having to pay fixed costs
while the factory is not producing), so do restaurants, hotels, and theme parks seek to maximize the
number of customers they "process" in all sectors. This led to formation of services with the aim to
increase usage rate provided by hotel consolidators. The authenticity, professionalism, and actual
concern for the happiness and well-being of the customers that is communicated by successful
organizations is a clear competitive advantage (Hospitality and Tourism services in the UK. 2013).
Tourism has been one of the UK’s great achievements over the last years. While the UK
economy as a whole suffered since the start of the global financial crisis, the UK tourism industry
till grew. Revenue from inbound tourism has increased by almost 30% since 2008 – meaning that
the tourism industry is now the UK’s fifth largest export earner, generating £24bn per annum for the
UK economy (Costa and et. al, 2010). Domestic tourism has also grown significantly, with revenue
increasing by 11% to £78bn over the last three years alone. This compares favourably with
manufacturing, which grew by only 0.3%, and the service sector as a whole, which achieved growth
of 6% over the same period. The exceptional performance of the UK tourism industry has been
highlighted by the ONS recently reporting that tourism businesses had provided almost a third of all
additional jobs created in the UK economy between 2010 and 2013. The growth created by the
tourism industry has provided the UK economy with other employment related benefits. Firstly, the
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growth and employment that has been generated by tourism has been spread widely across all
regions. There is now only one region in the UK where tourism-related employment provides less
than 100,000 jobs, while almost half the regions have over 200,000 people working in the industry
(Overview of the leisure, sport and tourism sector in the UK. 2014).
Tourism-related employment is evidently better than other industries at providing work for
groups that have been the most affected by the recession. Another problem area for employment is
in black and minority ethnic (BME) communities where unemployment rates are twice the national
average (Dale and Oliver, 2005). Here again, tourism is extremely good at providing employment,
with 14% of staff in tourism businesses being from ethnic communities compared to just 9% for UK
businesses as a whole.
1.1 Interrelationship between hospitality and wider travel and tourism services
The travel and tourism industry in UK has generated nearly £ 1.5 trillion economic output in
the year 2014 and this activity has supported 5 million jobs all around the country. In the year 2014,
travel and tourism output represented 3% of gross domestic product. Major number of activities in
the sector is domestic; thus it assists the industry to deliver proper services to the clients. Hospitality
and travel and tourism activities are interrelated to each other because both are concerned in
delivering similar services to the clients (Swarbrooke and Horner, 2012). Hospitality industry is the
composition of several hotels, restaurants and pubs and it delivers all type of services to the
travelers. There are several food service providers that gives the best amenities to the clients as per
the contract basis. Hospitality services typically underpins travel and tourism sector. Business travel
is one of the reasons for which people travel from one place to another and this gives an opportunity
to hospitality entity as well to deliver services to the business class customers.
People also travel to different places to attend meetings, seminars and events and this
increases the demand for hospitality services (Statistics and facts on the global tourism industry.
2015). Further, UK has been organizing several events and occasions for which people travel to
different places and this increases scope of profit for hospitality sector. Aviation industry is also
related to air services and such sector is also related to travel and tourism industry because that also
provides different types of services to the passengers. In flight services lies under this category
(Manente, 2000). UK is also populous because of the events and exhibitions and people even prefer
to visit different countries for such events and purposes. Hence, when people come for these
purpose, hotel industry get the opportunity to serve these clients. UK is such a place that is famous
for attraction and other places; hence when people visit the country, they demand for hospitality
services as well. Cultural and heritage tourism also increases demand for hospitality services and at
the same time, it underpins the value of travel and tourism.
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UK's hospitality industry has been promoting the value of travel and tourism through
cultural and social aspects and this aids the customers to get information about the heritage aspects
of the country (Fazenda, Silva and Costa, 2010). People prefer to acquire knowledge about the
social and cultural aspects and as a result, it augments the demand for heritage tourism. Hence,
when people come for such purpose, they prefer to visit other places as well and this increases the
overall demand for hospitality services. UK is popular because of the attractive views and sight
scenes; thus this increases the demand for tourism and entire hospitality industry also get benefits
from the same aspect. There are several museums that entice customers towards tourism and every
year around US$17.2 billion amount is invested by people in the same sector. The number of
travelers originating from Europe is larger than those traveling from North America. Because of
London, the degree of tourism is accelerating because it is the principal tourist destination which is
highly visited by the customers every year (Sykes and Thomas, 2006). Therefore, it is evident that
tourism industry and hospitality industry both are directly related to each other because both are
entitled in delivering same sort of services to the clients. Any single service that is beneficial for
tourism industry should be integrated with hospitality services as well overall economy may get
developed (The Emerging Market in China. 2015). This is essential in promoting tourism standard
of the country. For instance – the cultural and heritage society of UK is integrated with small scale
hotels and different pubs because people prefer to stay the place for limited time period. Further,
several travel agencies also work with Marriott International hotel as they suggest clients to stay at
the hotel while visiting the country (Weaver and Lawton, 2006). In order to clearly distinguish
between travel & tourism industry and hospitably sector, the examples of businesses from both are
taken into consideration. Thomas cook is an example of the organization within travel and tourism
sector. On other hand, hotel groups such as Intercontinental hotel group and Marriott International
hotel fall in the category of hospitality industry.
Examples
Developing the business plan it is important for the owners to understand each and every
aspect appropriately. However, initiating for the new venture it becomes more crucial for the
entrepreneurs to make sure that they develop suitable concept, aim and objectives, resources so that
investors can be encouraged and influenced for raising the capital (Gardner, 2012).
Concept:
Hotel Lucian de Chiriac-"a traditionally Transylvanian accommodation provider" unlike a
typical hotel, will provide an exclusive combination of luxury accommodation, mouth-watering
Transylvanian cuisine at value pricing with a fun and entertaining atmosphere. Hotel Lucian de
Chiriac is the answer to an increasing demand. The customers nowadays want more value for
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everything that they purchases and therefore they are not willing to invest in anything that does not
meet its expectations, and they require entertainment with their accommodation as well as dining
experience.
Objectives:
Hotel Lucian de Chiriac’s objectives for the first three years are:
 To get a good market share in London’s hotel industry by introducing a new type of
entertaining theme lodging
 Keeping costs lower than 45% of revenue
 Keeping employee labor cost between 18-20% of revenue Building a good reputation in business life
Market Research:
Looking at the increasing demand of hospitality firms, it is important for the entrepreneurs
to enhance or expand the concept of hotel. Degree of demand is increasing which encourages the
more and more investors to enter into the industry (Dale and Oliver, 2005).
Business offerings:
As the hospitality environment nowadays is highly competitive, it is becoming increasingly
more difficult to differentiate one accommodation concept from another. Hotel Lucian de Chiriac
does this by being the only Transylvanian hotel with a vampire and two werewolves in the area.
Hotel Lucian de Chiriac will provide its customers with the unique thrill of hunting and then
defending their food with authentic Transylvanian entertainers every week.
Resources:
The financing is mainly required to ship a coff…errrr box of equipment over from
Transylvania, health & safety policies, manuals to hunt werewolves and protection against
witchcraft, recipe books, site selection, equipment purchases, and to cover expenses in the first year
of business. The financing, in addition to the capital contributions from the unnamed owner from
the heart of Transylvania, will allow Hotel Lucian de Chiriac to successfully open and maintain
operations through year one (Sykes and Thomas, 2006). The initial capital investment will allow
Hotel Lucian de Chiriac providing its customers with a value driven, entertaining accommodation
and once-in-a-lifetime experience. Successful operation through year three will provide enough
cash flow to be independent in year four, although our master is sure Hotel Lucian de Chiriac will
be astonishingly successful after the second year.
Funding:
In order raise fund there are several methods that top level management of Hotel Lucian de
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Chiriac which can be used for acquiring the funds and execute the expansion process. Furthermore,
Hotel Lucian de Chiriac either can use equity and debt financing. However, operating in such a
competitive market debt financing is better option despite it will raise the liability but company will
generate positive results within one year of the functioning.
Licensing:
This is another aspect that is crucial for the functioning and before executing the operations
it is the duty of senior authority to complete all the legal procedures so that operations of hotel can
be carried out in ethical manner.
Facilities & Offices:
“The Tower of London is a historic castle located on the north bank of the River Thames in
central London. It lies within the London Borough of Tower Hamlets, separated from the eastern
edge of the square mile of the City of London by the open space known as Tower Hill.”
Its excellent location and extraordinary size makes it ideal for the purpose. Our unnamed
master at the heart of Transylvania strongly believes that once shipped over to London, he will be
able to convince Her Majesty the Queen to rent it to create the extraordinary Hotel Lucian de
Chiriac. The investments to refurbish the facility would be minimal as it already fits the purpose.
Hours of Operation:
Hotel Lucian de Chiriac will be open for guests/dinner 24 hours, 7 days a week. The hotel
will be open Christmas, New Year and Midsummer Day, too, with surprises and theme nights.
Employee Training & Education:
As there is a certainty that Hotel Lucian de Chiriac will welcome more employees than will
leave its premises, continuous training and head hunting will be organized by the HR. Staff will be
trained not only in their specific operational duties but in the philosophy and applications of our
concept.
Business plan for hotel Lucian De Chiriac
In order to introduce entertainment theme in lodging sector, the business unit needs to
employ varied range of human resources. The allocation of human resources is described
underneath in detail.
Role Association with project
Project manager
He/she will be responsible to plan and co-
ordinate all activities while implementation of
project.
Designers They will be responsible to design hotel
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rooms so as to provide theme lodging facility
to customers.
Room decorators
They will be employed to execute the plan
developed on part of designers.
Support staff
They will be employed so as to provide
assistance to entire activities within hotel unit.
2.1 The implications of integration into the hospitality industry
Integration plays a very important role in the strategy of the hospitality industry. It allows
businesses to have lower operating costs by cutting the funds spent on resourcing as they can
include their own products into their services. This saves them a lot of money in the long run. With
the help of proper integration, hospitality industry is able to involve different services in the existing
service line and this can assist in managing success aspects in hospitality area. Through such
integration, hotels are also able to increase their global presence and increase their market share.
Travel and tourism industry is integrated with different entities and professional bodies that helps in
managing overall functions and services. The tourism department of UK is integrated with different
bodies that generates different legislation and laws (Gursoy, Saayman and Sotiriadis, 2015).
Emphasis on such laws and amendments protects the industry from legal and ethical issues. Hence,
from the discussion, the nature of integration in hospitality sector is evident. There are two types of
integration such as vertical and horizontal integration and both are entitled to involve varied aspects
of services.
For instance- If any company buys another organization down on the supply chain of
services, then it can be termed as vertical integration. A good example of vertical integration is
when a hotel buys a transport provider such as an airline, so it could guarantee a lower overall cost
of the holiday compared to a hotel which needs to outsource the travel for its customers (Hong,
Zhonggao and Chen, 2015). Thus, it is clear that involving another entity in the service provision
can enhance the overall business aspects of hospitality sector. However, on the contrary, vertical
integration is the monopolization of the market as large companies may gain control of other
service providers (they would be able to provide services in-house, achieving low costs for
themselves, however smaller companies which needs to outsource the services will have difficulties
to compete as the price for the same products would be considerably higher). Thus, vertical
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integration has both positive and negative aspects on entire hospitality sector. Vertical integration is
the method of avoiding the hold- up problem and it produces more opportunities for monopolistic
benefits. It is highly imperative strategy; however difficult to implement because if it turns out to be
inadequately implemented, it enhances cost factor. It is the degree to which a firm owns its
upstream suppliers and its downstream buyers (Jo and et.al, 2015).
Apart from this, horizontal integration is the technique where in the business entity acquires
more production units for better outputs. Here, in this category of integration, hotel entity can
acquire competitor's business in the same industry by making several changes in the stage of
production. Emphasis can also be given towards monopolistic aspects so that business entity can
survive in competitive market place for longer span. Hence, to make horizontal integration
effective, hotel entities need to purchase or merges with another hotel within the same chain of
operation. A good example would be if Hilton merges with Marriot and if Burger King buys
McDonald’s or AirBus purchases Boeing (Amelung and et.al, 2007). This type of integration is also
called as lateral integration where in the business entity focuses on mergers and acquisitions at the
same level for bringing the opportunities of growth and success on higher extent. Further, examples
of horizontal integration include acquisition of oil company with an additional oil company for
more profit and growth. Such type of integration offers advantages like economies of scale,
increased market share and cost management.
2.2 Effects of integration on the hospitality industry
In terms of impacts, integration chiefly assists in developing the opportunities of prosperity
and it also aids the entities to enhance the controlling aspects. It has been observed that having
horizontal integration can assist the entity to acquire greater market share and through this, more
units of production can be facilitated. At the same time, it helps the entity to make use of different
policies and regulations for overall management of business practices (Vrana and Zafiropoulos,
2006). Entities can also pose controlling aspects on other firms by facilitating direct monitoring.
The business functions can be managed in proper way due to balanced processes. However, having
integration with varied entities reduces the prospects of independent businesses and it also generates
more possibilities of sharing. Moreover, quality of the services can also be encouraged because
when hotel and travel entities work in integration, they pay more attention towards quality
dimensions.
Market share of the hotel can also be encouraged through the same because it allows the
hospitality sector to involve with numerous other entities. Similarly, integrated business can assist
the hotels to manage cost factor and as a result, it can decrease the overall production cost of the
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services (Watson and Drummond, 2002). Integration allows the business entities to emphasize on
branding concepts; thus more people can be persuaded through hospitality services. Integration also
aids in manipulating the aspects of market and as a result, more control can be derived on other sub
sectors. Further, it is also beneficial in terms of acquiring numerous benefits from globalization.
This also gives platform to small business entities and they get opportunity to meet the demand
aspects prevailing for hospitality services. Having ownership with numerous entities expands hotel's
market reach and this also encourages economies of scale. Most of the business entities in
hospitality industry of UK get the opportunities to compete with larger organizations and this aids in
surviving at competitive market place. Furthermore, there are several effects of integration on the
functioning of hospitality industry are as follows: Improved quality: Operating in such a competitive market it is important for the companies
to enhance their quality of functioning so that desired results and outcomes can be
generated. By the means of vertical integration, supply chain of hotel is owned by the
company itself due to which there is great chance of enhancing the operations of business in
effective and efficient manner (Hospitality and Tourism services in the UK. 2013). Increasing market share: By the means of vertical integration, the market share of
hospitality entity can be increased effectively. However, having collaboration with numerous
entities leads the firm to attain higher market share.
 Economies of Scale: It is important aspect because following vertical integration, hospitality
firm can easily expand its business. However, ownership of several companies leads the firm
to enhance the market and encourages the economies of scale.
3.1 Development of hospitality business
Promoting its services is very important for an organization as it make its product known to
the customers and it’s widely used by businesses regardless of their profile. It draws attention to
their products and services and it’s used to attract attention of new customers as well as retain
existing ones. Promotion is be a form of advertisement in all media such as newspapers, TV and
radio, cinemas, online search engines (such as Yahoo and Google).
There is a vast market for chains of hotels like Premier Inn or Accor worldwide and due to
their extensive advertising more and more people become aware of the offers and prices. Whether
the prices are £60 per night or £400 per night there are targeted multiple groups worldwide. The
differences between these chains and the luxury hotels listed above is the tailor made service,
quality of products provided and in certain cases level of customer service provided. Whilst in
luxury hotels the client can expect to have a transfer arranged (taxi or own hotels car fleet), guide,
translator in hotels such Premier Inn there is a rather standard service offered and in certain cases
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for an extra fee services like guides, transfers could be provided. Depending on how well a hotel is
established they could have connections with local companies that can provide additional services
for their customers (Overview of the leisure, sport and tourism sector in the UK. 2014).
In regards of the human resources, hotels need to employ a large scale of staff to provide
services including room service, cleaning (washing the linens, cleaning the rooms, launderette and
dry cleaning), operate the restaurants and kitchen, receptionists to check in guests, and staff to
provide other services as per the needs of their clientele. Small providers such as B&B’s are usually
family businesses employing a smaller group of staff who engage with the guests as they were a
part of the home itself. This allows them to get closer to the customers by providing a more
personal, homelike service.
Hotels usually use in-house kitchens and hire their chefs to do the cooking which guarantees
a lower end price. This is usually uniformed; in B&B’s, the preparation of the food and the cooking
is undertaken by the owner (Statistics and facts on the global tourism industry. 2015).
One of Yorkshire's quaintest B&B's has been named the best holiday guesthouse in the
world after receiving top ratings from seasoned TripAdvisor travellers. Millgate B&B in Masham,
North Yorkshire, has beaten global competition to come out on top in the 2015 Travellers' Choice
awards. The Grade II-listed B&B, which offers just three bedrooms from £38 a night, award-
winning breakfasts and fresh scones upon arrival, scored more than 350 "Excellent" reviews on the
travel website. The beautifully restored historic coach house is situated just a short drive from the
Giant’s Causeway, the UNESCO World Heritage site and Northern Ireland's number one tourist
attraction, as well as the Causeway Coastal Route, one of the world's great road journeys.
In the World's Top 10 Bargain Hotels category, meanwhile, Lawton Court Hotel in North
Wales scooped first place, with reviews praising everything from the owners and the staff to the
food and its seafront views – the highly acclaimed establishment is located in the seaside town of
Llandudno (The Emerging Market in China. 2015).
The family-run hotel also received second place in the World's Top 10 Small Hotels category
and came fourth in the world for service. Run by husband-and-wife team Scott and Hannah Lawton-
Jones, the 11-bedroom hotel opened its doors to guests last year and offers rooms from £74 per
person per night.
Scotland's Beach Cottage B&B, in Inverness, also featured in the list of the World's Top 10
B&Bs, coming in at ninth place. The awards, which honour the world's most outstanding
establishments, were based on millions of reviews left by holidaymakers on the travel website
TripAdvisor over the past year.
People who travel by road (automobile, excursions by bus or train or motorbike) are in need
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of rest between their home and destination which makes Motels and Lodges the perfect
accommodation due to the fact that they are located near to motorways or major roads. These are
usually low cost accommodations providing basic services which are sufficient for customers
spending only a couple of nights along their journey.
“Best Western International, Inc., operator of the Best Western Hotel brand, operates about
4,000 hotels with over 1,000 employees. The chain, with its corporate headquarters in Phoenix,
Arizona, operates 2,163 hotels in North America alone. Best Western charges a rate that is based on
an initial cost plus a fee for each additional room (Gardner, 2012). Best Western also publishes a list
of standards that each hotel needs to maintain. The hotels are allowed to keep their independent
identity. Though they must use Best Western signage and identify themselves as a Best Western
hotel, the hotels are allowed the option of using their own independent name as part of their
identity.”
What consumers are seeking from a motel accommodation is that that motels are expected to
be rather close to their home and the motel experience should be similar to their home-based
comforts.
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