External Business 1.1: UK Economy Structure and Operations Report

This report provides an overview of the structure and operation of the UK economy, focusing on its globalized nature, key sectors, and economic policies. It examines the influence of government policies, such as monetary and fiscal measures, on the service and hospitality industries, using Hilton Hotels and Resorts as a case study. The report further analyzes income, wealth, employment, and occupational distribution within the hospitality sector, highlighting the importance of high net worth individuals and the impact of demographic trends, particularly age, on employment patterns. It also explores the social structures of employees in major UK hotel groups, detailing job roles and their contributions to the industry. The report references key sources to support its findings.

EXTERNAL BUSINESS

1.1 STRUCTURE AND OPERATION OF THE UK ECONOMY
 The economy of UK is the most globalized economy of the globe. It is
considered as the fifth largest national economy in terms of GDP and is the
second largest in EU.
 The UK economy is composed of economies of England, Wales, Scotland
and Northern Ireland.
 The economy is expected to grow at a rapid pace than its G7 peer nations as
per the recent studies of International Monetary Fund (IMF).
 According to the data of the year 2014, UK was the fifth largest importer
and ninth largest exporter in the world. Besides this, it has the second largest
inward as well as outward foreign direct investment.
 It has been observed that the service industry dominates UK economy which
contributes nearly 78 percent of GDP. Among service sector, financial
services play very vital role in the economic growth

CONTD…
 British Economy is exercised by HM Treasury and the Department for
Business, Innovation and Skills.
 The Bank of England is the central bank of UK and is responsible for
controlling the flow of money in UK economy by using tools like monetary and
fiscal policies.
 Taxation policies include payments at two levels of government; one is at local
and other is at central government.
 The central government earns revenues mainly from income tax, corporation
tax; val
 ue added tax, fuel duty and national insurance

1.2 CURRENT GOVERNMENT ECONOMIC POLICY AND ITS
EFFECT ON BUSINESS AND SERVICES INDUSTRIES
 The economic policies in UK are formulated by national governments, Bank of
England and its Monetary Policy Committee in order to regulate the operations
and services of services sectors that also include hospitality industry.
 It can be analyzed that after the devastating economic crisis of 2008, leading
economists of UK lay emphasis on incorporation of stringent corrective
measures in order to combat the adverse effects of global financial recession.
 The Bank of England has reduced the interest rate to 1 percent in order to
facilitate lending and making finances rapidly available to hospitality
organizations

CONTD…
 This will help Hilton Hotels and Resorts to lend money from bank at
lower interest rates which will be very useful for the hotel group to
expand its business in potential markets in UK.
 The national government in UK has formulated economic policy to
promote growth of service sector including hospitality industry.
 According to the new policy, the rate of value added tax has been
reduced to facilitate consumers to spend more money and help service
sector to flourish.

1.3 INCOME, WEALTH, EMPLOYMENT AND OCCUPATIONAL DISTRIBUTION IN
RELATION TO THE PROVISION OF BUSINESS AND SERVICES OPERATIONS
 Income of customers significantly affects the operations of Hilton Hotels and
Resorts.
 The client base of the organization consists of High Net worth Individuals
(HNI) clients who belong to upper socioeconomic class.
 Individuals of this class are usually businessmen and professionals at very high
designations.
 Thus, in order to enhance their experience, Hilton Hotels and Resorts have to
invest generously in improving the quality of hospitality services of the firm.
 It can be observed that Hilton Hotels spend huge sums of money in building
attractive infrastructure and facilities to attract customers and increase sales to
earn huge profits.

CONTD…
 Talking about the occupational distribution in Hilton Hotels and Resorts
in UK, it has been estimated that 10 percent of workforce consists of
Managers, directors and senior staff.
 14 percent of occupations comprise of administrative, secretarial and
clerical jobs.
 Sales and customer service occupations contribute to 6 percent of the
workforce in the hotel company.
 Apart from this, it has been observed that caring and leisure occupations
contribute to 3 percent of the total workforce in Hilton Hotels and
Resorts

1.4 DEMOGRAPHIC TRENDS INFLUENCE TO EMPLOYMENT PATTERNS IN THE HOSPITALITY INDUSTRY
 Age is the demographic trend that significantly affects the
employment patterns in the hospitality sector in UK.
 According to the report of Hospitality Sector in UK, 48 percent of
hospitality staff is below the age of 29 years as compared to 18
percent of rest of the UK economy.
 The hospitality organizations in UK mainly recruit young people who
belong to age group of 20-39 years.
 Statistical figures of the year 2011 indicate that average age of
employees in hospitality and tourism industry in UK is 39 years.
 young individuals who are dynamic, educated, energetic, and
attractive and have good communication skills are given preference
over uneducated counterparts.

CONTD…
 Hilton Hotels and Resorts select and recruits young people who are well
qualified and have excellent communication skills.
 It has been observed that effective communication skills and pleasing
personality play very important role in building of sound relationship
with customers.
 Young people are also enthusiastic and easily grasp the nutty gritties of
the hospitality business.
 The Hilton Hotels and Resorts have a client base that comprises of high
net worth individuals.
 Therefore, it is very important for the hotel company to recruit highly
skilled staff in order to service HNI clients and enhance their satisfaction
levels through high quality of hospitality services.

1.5 SOCIAL STRUCTURES OF PEOPLE EMPLOYED IN A
MAJOR UK HOTEL GROUP
 It can be observed that the hospitality sector in UK is very broad and consists
of single person firms to global corporations.
 Thus, the jobs in the sector are also numerous and diverse. People working in
this sector do different types of jobs.
 According to Office of National Statistics, the hospitality sector of UK was the
second largest industry sector that contributes to 21.5 percent of workforce.
 It can be analyzed that majority of employees work in hotels. Majority of staff
of the Hilton Hotels and Resorts are involved in elementary occupations

CONTD…
 In addition to this, 16 percent of managers and senior officials
take managerial decisions.
 In addition to this, the hotel hires nearly 14 percent of skilled
staff to take care of daily hospitality operations.
 The staff consists of housekeeping, marketing executives, room
service and front office staff.
 The housekeeping staff is responsible for maintenance of
rooms and other services.
 The front office employees attend visitors and help them with
their queries.They are also responsible for allocating rooms and
resolve complaints of customers. The marketing and sales staff
sells rooms and services to potential customers.

REFERENCES
 Solnet, D., Kralj, A. and Baum, T., 2015. 360 Degrees of Pressure The
Changing Role of the HR Professional in the Hospitality Industry. Journal of
Hospitality & Tourism Research. 39(2). pp.271-292
 Myung, E., McClaren, A. and Li, L., 2012. Environmentally related research
in scholarly hospitality journals: Current status and future opportunities.
International Journal of Hospitality Management. 31(4). pp.1264-1275
 Hospitality Sector, 2011. The case for recruiting and retaining older workers:
a business imperative for the Hospitality sector. [Pdf] Available through:
<https://www.instituteofhospitality.org/Knowledge_Pack_HOSPITALITY_De
c2011_v2>. [Accessed on 15th February 2016].
 UK Economic Policy, 2016. [Online] Available through:
<http://www.economywatch.com/economic-policy/uk.html>. [Accessed on
15th February 2016].