Nowadays, hospitality is related to public, industrial and commercial services. Hospitality has such attributes as relationships between hosts and guests, efficiency and success of hospitality, arrival, departure, fulfilment of guests' wishes and providing comfort. For the travel and tourism sector, hospitality is a crucial factor. Thus, one cannot separate tourism and hospitality as the latter is a key to success of the former. Hospitality consists of several components: transportation, attractions, lodging as well as food and beverage provision. All these elements are interrelated and interdependent, and one can find them in the Savoy Hotel in the UK.
The Savoy Hotel in the UK is a perfect combination of touristic mission and hospitality. The comfort of this hotel is provoked by its services, location, atmosphere and attraction. The mission of this hotel is to attract tourists, make them the guests of the Savoy and satisfy all their demands. The Savoy Hotel offers the services of restaurants and cafes, organization of weddings and festivals. Moreover, hospitality of the hotel is achieved through the true spirit of London. The Savoy Hotel was chosen as an example of an efficient and successful hospitality business (Savoy 2014).
This paper intends to explain the notion of hospitality in relation to the travel and tourism sector using the Savoy Hotel as an object for the analysis. Moreover, the essay discusses the influence of horizontal and vertical integration on the hospitality business in the travel and tourism industry. The paper reveals the peculiarities of a project proposal for a new hospitality business.
The Scope and Scale of the Hospitality Industry and its Function within the Savoy Hotel
The notion of hospitality is wider than a component of the travel and tourism sector. Friendliness, courtesy, and help are also the aspects of hospitality. The scope and scale of hospitality includes its operations at the local and international levels. When it comes to the dynamics of hospitality industry at the local level, it is necessary to say that it provokes development and innovation of the hotel. One can define a corporate strategy as a driving force behind the growth of hospitality at the local level.
The key aspects of tourism and travel sector are as follows: strategic management, creation of shareholder value, realization of potentials of the company and individuals, and strategy of diversification. At the present time, hospitality is more than taking care of guests; it is a matter of entertainment and custom. Hospitality presupposes treating guests properly, satisfying their needs and showing respect to them.
The driving forces behind the hospitality industry at the local level are growth and supply. An increased demand also plays an important role as it strengthens the local hospitality industry in the UK. It is evident that a high competition is also a good dynamic for the development of hospitality industry within the travel and tourism sector. Dynamic of the hospitality industry of the UK is defined by a comfortable location, large number of population, and availability of human resources.
The dynamic of the hospitality industry at the international level presupposes global market development. This strategy is aimed at diversifying markets, involving changes and innovations. For example, the hospitality industry should take into consideration cultural and ethnic peculiarities of guests. The possibility to satisfy the demands of foreign guests can open the opportunities for the integration into the global market. They should implement the services that will satisfy the demands of tourists. However, it does not mean that this is enough. Collaboration between the hospitality business, the chain of restaurants and airlines is a direct way to get new clients (Savoy 2014).
As to the Savoy Hotel, hospitality is a crucial factor for this business. It is aimed at satisfying different customers’ needs. For example, the collaboration of the Savoy Hotel with other international companies guarantee safety and reliability of their business. This proves the globalization of marketing and attracting customers from all over the world. Including geographic diversity is another function of the hospitality business. London is a financial city; therefore, the hospitality industry has all conditions for the development and growth. The positive market area of London creates the environment not only for business functioning but also for the attraction of guests.
Hospitality provisions within the travel and tourism sector include such operations as entertainment, housing, transportation, and food. Accommodation and food are the most important ones as they are interrelated. Accommodation concerns offering rooms, food and beverages. Moreover, one can consider the profits from camps, trailer parks, motels and hotels. Another important aspect that needs constant improvement is food and menu at the cafes and restaurants of the Savoy Hotel. As a result, it provides a broad range of dishes in the menu combining peculiarities of the different national cuisines. It is popular with consumers and satisfies their demands since the organization employs an individual approach to every consumer.
At the present time, travelling is the most popular way of spending free time. That is why the Savoy Hotel collaborates with Thomson Airways to attract tourists to the UK and guests to their hotel. For example, the flight from the UK to Dubai can cost from $181 to $208 (Savoy 2014). One can get in any part of the world using Thomson Airways. Thomson Airways also provides their clients with comfortable flights. One can book any hotel in advance and be sure that the holidays will be wonderful. The Savoy Hotel benefits from the travel and tourism operations as it proposes not only restaurants and hotels but also villas that are suitable for family holidays. It means that these two companies should continue collaborating as it will improve their operations and services. Destinations risk standardization may be helpful in satisfying tourists’ needs. It means that the Savoy Hotel should study customs and traditions of other countries in order to attract tourists from diverse countries. Food and drinks, accommodation, and even landscapes must satisfy customers’ needs (Savoy 2014).
The choice of food depends on the consumer. Without doubt, the consumer chooses menu that is healthy and affordable. At to the Savoy Hotel, one can choose any dish that will satisfy one's taste. What is more, the Savoy Hotel offers food at moderate prices, making it affordable in multiple quantities. For instance, lunches cost from $5 to $10 (Savoy 2014). At the present time, marketing moves to globalization, the process that consists in overcoming the obstacles and barriers between the countries. It means that such hospitality business as the Savoy Hotel should focus on orienting towards the global market, widening its possibilities, and becoming international. As a result, this will be a direct relationship between the hotel and the travel and tourism sector (Howe 2014).
Hotel parking is another essential option offered by the Savoy Hotel. Very often tourists use their own cars; that is why it is important to provide them with hotel parking. It is necessary to indicate this option on websites and in booklets as sometimes tourists think that there will not be such service as hotel parking and use public transport for travelling. The Savoy Hotel should provide space that will be available for guests and travellers.
It is evident that the scope and scale of such hospitality business as the Savoy Hotel within the travel and tourism sector have both local and global perspectives. The aim of hospitality is to create the unity between different businesses making them collaborate and integrate. For the Savoy Hotel, hospitality is a way to make their facility more profitable and attract more guests. The interrelationship between hospitality and travel and tourism exists due to the processes of globalization and integration into the international market. Hospitality is a way of satisfying tourists' needs through the extension of services and changes of the market strategy.
Integration in Hospitality and Travel and Tourism Businesses. Impact of Horizontal and Vertical Integration on the Savoy Hotel
Integration is a transition of the business from the local market to the international one. Moreover, integration includes the unity of one industry with another to achieve better efficiency. Integration has its advantages and disadvantages. The advantages of integration include quick changes in the structure, business objectives and strategies. Moreover, integration is a way of winning new markets. As to the disadvantages, they are related to the risks and hazards that can lead to decrease of profits, revenues and damages of the reputation among customers.
For the Savoy Hotel, integration into the global market is inevitable. The location choice is defined by trade barriers and the cost of transportation. The company tries to find the profitable location for their products and services. European market was chosen by the Savoy Hotel for the operation as it is prestigious and favourable for the hospitality industry. Moreover, the cost of transportation is not high as this is a service company. “Perfectly situated in heart of the exciting city of London, The Savoy is only 5 minutes’ walk from Covent Garden, the hotel is just 20 minutes’ journey by public transport from the ultimate designer shopping destinations of Knightsbridge and Mayfair” (Savoy 2014). It means that the location of the hotel is comfortable to attract tourists.
The trade barriers are defined at the political, social and financial levels. At the political level, the Savoy Hotel can face such risks as high taxes and European laws that demand following other standards of hospitality than those in the UK. Any political changes in the government can influence the activity of the company. However, if the Savoy Hotel chooses another location, the same barriers will exist and prevent them from smooth development.
One can distinguish two ways of integration of the Savoy Hotel, namely vertical and horizontal. Vertical integration is the process including several steps but controlled by a single company. Vertical integration increases the hospitality company's power at the global market due to the growth, high profits and a large number of guests. For example, if the Savoy company has its own restaurants, cafes, places of interest and transportation, it will be its vertical integration at the market. For the company, vertical integration is a way of gaining more control.
As to the Savoy Hotel, it uses horizontal integration as it collaborates with other companies and uses their services to attract tourists. This kind of integration is simpler comparing with a vertical one. For the Savoy Hotel, horizontal integration is a way of increasing market share through other restaurants, cafes and hotels. Horizontal integration is possible at the both local and international levels. One can say that horizontal and vertical integration will be beneficial for the Savoy Hotel as it has a good reputation in the travel and tourism sector (Amato & Wilder 2004).
For example, for integrating into the German market, the Savoy Hotel should include cross-cultural management as it helps to overcome different cultural and language barriers. Moreover, it should use horizontal integration. The Savoy Hotel should work towards diversifying their markets involving changes and innovations. They should widen a circle of consumers and satisfy customers’ needs (Akkaya 2000). They should take into consideration the geographic diversity as well. The marketing strategy of the company focuses on peculiarities of climate, space and topography that influence the demand for their services. The Savoy Hotel should find new markets for increasing their profits and use globalization for defence and support. As it can be seen, the aim of the marketing department is to create, innovate, improve and attract new tourists (Barney 2012).
Both ways of integration in the travel and tourism sector presuppose taking into consideration an internationalization theory. It will make the hospitality and tourism industries closer besides encouraging free trade amongst them in a large scale. It presupposes integrating globalization through facilitation of economic growth among countries all over the world. Encouraging societal and cultural exchange of goods and services worldwide is another function of internationalization theory (Scott 2011).
As a result, integration in hospitality and travel and tourism business presupposes using horizontal and vertical strategies. A horizontal strategy is more efficient as it relies upon the collaboration with other industries and usage of their brand images. A vertical strategy is a way of winning market through the organizational development. Operating at the local market, the Savoy Hotel can take advantage of vertical integration as macro and micro environment will be beneficial in this case. On the contrary, integration into the global market will be more reliable through the horizontal strategy.
A Project Proposal for the Congress Hotel in Lithuania
The marketing decisions of the Congress Hotel are influenced by macro and micro environmental factors. Macro environment of the hotel consists of political, economic, social, technological, environmental and legal factors. Political factors are connected with the international operations and tax obligations. Economic factors of the Congress Hotel in Lithuania are connected with buying power of guests as it can cause decrease in profits and demand for their services. Sociocultural factors refer to the locations of hospitality business. As a result, Vilnius is a perfect place for managing the Congress Hotel. It is evident that this hotel deals with a variety of guests; that is why they should respect their religion and culture through eating habits, respect and tolerance.
Technological factors of the Congress Hotel are connected with rapid changes in technology and improving hospitality services. Legal factors are related to paying taxes that do not violate the law. Environmental issues are connected with pollution of the environment because of hospitality operations (Ferrel & Hartline 2010).
The target segment of the hotel includes solo travellers, couples, families, and business travellers. However, solo travellers spend much time exploring the city and doing sightseeing rather than staying at the hotel and attending restaurants. Solo travellers and backpackers prefer paying low prices for services and amenities. Therefore, such travellers are not very profitable for the hospitality business. Couples are another target group of the Congress Hotel. They prefer luxury hotel rooms, high-quality bedding and candlelit restaurants. Without doubt, couples can go out, but they pay close attention to hotel conditions and room interior for the organization of weddings and romantic meetings (Gertner 2001).
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Families belong to the main target group of the Congress Hotel. It is necessary to say that families always demand inexpensive restaurants that are kid-friendly, provide entertainment, and have indoor play areas. The employee staff should ensure additional amenities to couples with babies. The Congress Hotel also accepts business travellers. They are the most prized consumer group. They are ready to pay higher room prices in order to live in comfortable conditions. Business travellers have access to the fast Internet, printers, scanners, fax machines as well as lounges (Hotel Planner 2014).
- Direct selling strategy. The Congress Hotel has many distribution channels that ensure the attraction of new guests.
- Broad offerings. The range of services varies from accommodation and food to entertainment and transportation.
- Strong brand name. Vertical integration is the best way for the development of a strong brand name of the hotel.
- Strong balance sheet. A strong balance sheet allows the Congress Hotel to be flexible about any changes at the market. They can undertake the initiatives and compete with other brand companies.
- Declining cash flows.
- Sluggish performance.
- Lack of guests and tourists.
- Expansion. The Congress Hotel can operate not only in Europe but also in the USA and Asia.
- Increasing online sales. The Congress Hotel has a website with online catalogues that increase their sales. At the present time, people frequently make online booking of different services.
- New business venture. New venture will help to diversify services and increase the number of guests.
- Counterfeit services.
- Increasing rental rates.
- High competition.
According to Porter, one can analyse the activity of the Congress Hotel taking into consideration its outbound logistics, inbound logistics, operations, marketing and sales, service, firm infrastructure, human resource management, technology development, and procurement.
Cafes, restaurants, travel agencies, and transportation companies are primary outsourcing partners of the Congress Hotel. The partners ensure food provision, entertainment and transport.
The direct and indirect distribution channels should be used by the hospitality industry. These are retail stores, direct sales force, cellular network carriers, wholesalers, and resellers. In spite of the well-developed distribution system, the company should continue to develop it.
Ensuring comfortable arriving at the hotel, proving qualitative food and hotel parking services are the main sides of the hospitality business that need improvement. One should not forget that all services and products of the hotel are characterized by seasonality. It means that in high season the company is profitable and has a lot of clients; in low season, business may suffer from regression. It is necessary to take it into consideration and find some ways to attract many tourists and guests (Jeannet & Hennessey 2001).
Marketing and Sales
Marketing strategy of the hospitality business should be characterized by a global strategy and actions, management vision, strategic intent, economic integration and satisfying market needs.
One can divide all services at the Congress Hotel into those that concern physical evidence, onstage contact, backstage contact and support processes. Physical evidence consists of advertisement, creating websites, providing places for parking near the hotel, offering carts for bags, desks for paperwork, and elevators, providing menu, delivery tray, and food, and providing shower or bath. These services are a must for the Congress Hotel as they promote comfortable staying at the hotel. As to customers, they should have possibilities to make reservation in advance (Hotel Planner 2014).
Having analysed the peculiarities of the Savoy Hotel, one can come to conclusion that this hospitality company is successful because of its marketing and management strategies as well as its collaboration with other organizations in the travel and tourism sector. The aim of hospitality is to create the unity between different businesses making them collaborate and integrate. For the Savoy Hotel, hospitality is a way of making their industry more profitable and attracting more guests within the travel and tourism sector. A horizontal strategy is more efficient as it relies upon the collaboration with other industries and using their brand images. A vertical strategy is a way of integrating into the market through the organizational development. The Congress Hotel is another example of successful implementation of hospitality within the travel and tourism sector.
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