hospitality business strategy assignment

• Hospitality Industry

What is the hospitality industry? All your questions answered

March 28, 2024 •

20 min reading

The hospitality industry is a large subsection within the service industry and is comprised of four main areas : Food & beverage, travel & tourism, lodging, and recreation. As examples, the F&B category includes restaurants, bars, and food trucks; travel & tourism covers different forms of transportation and travel agencies; lodging varies from hotel resorts to hostels; recreation refers to leisure activities such as sports, wellness, and entertainment. While all sectors are interconnected and reliant on each other, many of these hospitality sectors are quickly evolving due to new technologies and changing customer mindsets.

Known for being one of the main industries that is easily impacted by external forces, many questions have recently come up regarding the state of hospitality today. What trends are shaping its future? What makes it still one of the world's fastest-growing industries? How can it remain competitive? How to deal with the post-Covid staff shortages?

Read on to find out the experts' guide on what is happening in this exciting, evolving, and resilient sector.

A brief history of hospitality

How fast is the hospitality industry growing, hospitality industry overview: key statistics, hospitality industry growth: what trends are driving it, what major challenges is the hospitality industry facing, travel and hospitality industry: top trends, what the top ceos are saying about the future of the hospitality and tourism industry, what leaders can do to ensure hospitality businesses remain competitive, the hospitality management careers of tomorrow, future of hospitality: what's on the horizon for hospitality & tourism professionals, how has the hospitality industry evolved since its origins.

Derived from the latin word “hospes”, meaning host (one who provides lodging or entertainment for a guest or visitor), hospitality has its roots in ancient history. The ancient Greeks used the word "xenia" to define the sacred rule of hospitality: the generosity and courtesy shown to those who are far from home or associates of the person bestowing guest-friendship. Away from home, surrounded by strangers and yet feeling welcome.

Although the original concept of hospitality has remained largely unchanged since its origins (meeting travelers’ basic needs such as providing food and accommodation), the idea of building hotels for the sole purpose of hosting guests emerged alongside technological advances and better means of transportation towards the end of the 18th century. Since then, the sector been in constant expansion due to the very concept of hospitality being applicable to any sector that deals with customer service and satisfaction.

Along with the overall economy, the global hospitality industry has enjoyed a spurt of massive growth over the last decade since the end of the financial crisis. According to the World Bank , the global economy has grown at a pace of more than three percent per year up until the global pandemic hit in 2019/20. Due to pent up demand during the beginning of the COVID-19 pandemic there was an acceleration of the global economy in 2021 of 5.5 percent growth, however it is set to decelerate to 4.1 percent in 2022 and 3.2 percent in 2023, arriving back at pre-pandemic levels.

This unprecedented expansion over the last decade has benefited the hospitality and tourism industry by stimulating the world population’s travel activity, adding countless room nights in both leisure and business travel .

1. International arrivals have increased from 900 million to more than 1.3 billion over a span of just ten years.

Not only has this boosted the number of rooms on offer, but has also led to a major contribution of global employment opportunities. Covid-19 had a severe impact and international tourist arrivals according to figures from UNTWO , which after years of steady annual growth saw a staggering -73% drop in arrivals in 2020 and -71% in 2021 due to travel restrictions in response to Covid-19.

All in all 2020 is recognized as the worst year in tourism history with 1 billion fewer international arrivals and US $ 1.1 trillion in international tourism receipts. Around -74% drop according to the latest data from World Tourism Organization (UNWTO) a level of 30 years ago.

However, so far the travel industry has seen an extremely positive bounce back. New data from UNTWO found that, overall, international arrivals reached 80% of pre-pandemic levels; in the first quarter of 2023.

Tourism figures are heading in the right direction as an estimated 235 million tourists traveled internationally in the first three months, more than double the same period of 2022.

2. The World Travel and Tourism Council ( WTTC ) names the hospitality industry’s importance as a main driver in global value creation.

Recent figures published by the WTTC found that in 2022 the Travel & Tourism sector made a contribution of 7.trillion USD to the global economy, 7.6% of the global GDP and 23% below pre-pandemic levels.

3. The hospitality and travel industry accounts for one out of every ten employment opportunities.

Bringing the number of people earning their living in the sector to a remarkable 330 million in 2022.

In 2022, there were 22 million new jobs, representing a 7.9% increase on 2021, and only 11.4% below 2019.

The rise in revenue does not only benefit international companies and hotel owners, but also acts as a major factor in job creation for local populations and destinations. As of the latest data, around 173 million people were employed in the hotel and motel industry before the Covid-19 pandemic hit.

The WTTC forecast that there will be an additional 126 million jobs created between now and 2032.

4. The overall growth in the travel and tourism industry stands at +5.8% Vs. Overall GDP +2.7%.

According to the Hospitality Global Market Report 2023 the global hospitality marketgrew from $4,390.59 billion in 2022 to $4,699.57 billion in 2023 at a compound annual growth rate (CAGR) of 7.0%.

This large growth rate is in part the bounce back from global restrictions on travel. The market is expected to continue growing but at a slower rate due to the global economic situation with a Compound Annual Growth Rate (GAGR) of +5,8% forecasted between 2022 and 2032.

Image source: World Travel & Tourism Council, Travel & Tourism Economic Impact 2022

1. The global economy growth has created positive momentum in the sector by contributing to the overall income per capita.

Since 2009, the global GDP has constantly increased at an average pace of almost two percent per annum, leading to a growing demand for both international and domestic travel spending. Whilst the Covid-19 pandemic led to a shock -2.81% decline in GDP in 2020 according to Statista , 2022 figures and subsequent projections for 2023 show year-on-year growth.

2. Airfares have consistently become more affordable over the last three decades, but will this last?

Thanks to lower fuel prices, carrier competition and the rise of low-cost airlines . While these are not happy news for the airline industry, which is using ancillary fees to increase profit margins, it benefits travelers who can get more from their purchasing power. However the emerging global energy crisis could put a halt to such a trend and airlines could pass on the price hikes to the consumer, which will in turn impact consumer travel behaviour.

3. Corporate travel is yet another contributor to the healthy outlook and is projected to keep growing.

In China and India, the growth of business travel is particularly steep due to the relentless pace of economic expansion in this part of the world.

4. The health and wellness segment has boomed in recent years.

There has never been so much appetite among the public for wellness and the escapism travel can offer from life’s stresses - the pandemic taught us to slow down and not to take our health for granted.

The global consumer health and wellness market is a $1.5 trillion market growing at 5 to 10 percent a year, and, according to a recent McKinsey survey, people around the world are increasingly interested in taking care of themselves and are planning to spend more money on wellness products and services.

5. Hotel operators are seeking to expand their portfolios through targeted acquisitions of smaller regional chains.

Mergers and Acquisitions activity in hospitality has somewhat cooled over the last few years , with operators seeking to expand business in a more controlled way.

1. The threat of climate change

The threat of climate change will adversely impact many major tourist destinations. Threats resulting from climate change, safety and security issues, as well as unprecedented migration streams are tomorrow’s game changers. The main challenges for the hospitality industry are the lack of predictability and the magnitude of such events – and how fast the industry can react and adapt. Hybrid operations might be one of the hospitality 4ndustry’s possible responses to increased risks.

2. Industry consolidation

Corporate consolidation has led to increasing concentration of size and power among the top players. Hotel operators will seek to expand their portfolios through targeted acquisitions of smaller regional chains. While the ultimate goal is to create value through cross-organizational synergies, this development also comes with downsides, as the management of structures with a diverse selection of geographies and a plethora of brands generates more complexity and threatens to increase overall rigidity.

Marriott and Hilton remain the world’s most valuable hospitality brands, valued in 2023 at $53.5B and $37.99B respectively.

3. New competition from tech and digital players

Are major technology firms such as Google or Facebook threatening to replace hotel brands by offering technological solutions and creating novel markets to attract new types of customers? Thanks to their control over all types of data related to customer behavior both off- and online, tech behemoths could oust traditional incumbents into niche markets. Companies that fail to identify their niche are at risk of becoming mere revenue generators for technology companies. Some big enough brands may survive, but their business will get tougher .

4. Skilled talent shortage

As the accommodation and restaurant industry is creating jobs at the fastest rate of any sector in the economy according to the International Labor Organization, fuelling this growth with the right skilled labor is yet another concern for owners. Attracting and retaining younger generations of hospitality professionals will require a lot of flexibility and attention from hoteliers in the future.

5. Energy crisis

The global energy crisis is the perfect storm of multiple factors causing a huge surge in energy demand which the limited global resources are struggling to fulfil. Added to this is Russia’s invasion of Ukraine, one of the main suppliers to Europe. Whilst the world grapples with accelerating the development of green infrastructure, the hospitality industry has an even bigger incentive to make efforts to switch to renewable energy sources where possible, not only as our environmental social responsibility but also to reduce the reliance on particular states which fuels the weaponization of energy.

6. Supply chain issues

Supply chain issues have affected most of the world, although Europe was the hardest hit, according to data from the 2022 State of the Third-Party Logistics Industry Report by Extensiv.

These issues are ongoing and are triggered by undulating demand, price volatility and uncertainty. The hospitality industry is affected on an operational level when bottlenecks cause delays on delivering food & drink, bed linen, housekeeping products and other replenishable goods. Running out of these items means giving customers a disappointing experience and leaving a poor impression that could diminish the business’s reputation.

7. Economic downturn

According to the UNWTO Panel of Experts , the economic situation remains the main factor weighing on the effective recovery of international tourism in 2023, with high inflation and rising oil prices translating into higher transport and accommodation costs. As a result, tourists are expected to increasingly seek value for money and travel closer to home.

Is there a silver lining? Well, we know that economic downturns make way for innovation and entrepreneurship ! The public needs new solutions for new problems, so now may just be the time to start thinking of your next business venture.

Travelers' expectations have greatly evolved especially now that technology is taking center stage in every area of guest experience. As 2024 progresses, hospitality professionals are gearing up to leverage various innovations and strategies that promise to reshape customer satisfaction and industry standards. Here are hospitality trends 2024 elevating guest satisfaction and driving business growth.

1. Towards sustainable travel

The reasons we desire to travel are many and include experiencing the beautiful things the world has to offer, meeting new people, supporting local culture, etc. In fact, more than 33,000 travelers across 35 countries and territories have been surveyed in Booking.com's Sustainable Travel Report 2023 . 76% of global travelers say they want to travel sustainably over the next 12 months.

Ecotourism is all about intentionally organising travel plans in a way that doesn't harm the environment. Thankfully, sustainability is a major driving force in the hospitality industry, with hotels and restaurants welcoming eco-friendly initiatives to minimize their environmental footprint.

A growing number of hotels are rising to the challenge of running a sustainable business. Beyond plastic usage , general waste production, food waste, usage of local produce, energy and water consumption, and many other factors are to be considered for operators that are serious about their claim. Going one step further, the term sustainability is also often used not only for environmental protection but also corporations’ approach to managing their people and their finances. All across the board, resources of all kinds are being used more efficiently in the hospitality industry and while various strategies are being adopted by hotels, a paradigm shift is becoming more recognizable.

From implementing energy-efficient technologies to sourcing locally produced ingredients, businesses are prioritizing sustainability to appeal to eco-conscious travelers—which is echoed in the next point.

2. Wellness for holistic hospitality

A lot of guests today are looking for experiences that promote physical and mental well-being. Hotels that have embraced wellness travel can now cater to this demand by offering activities like yoga retreats, on-site spa treatments , fitness centers with cutting-edge equipment, and healthy dining options.

Creating a relaxing and stress-free environment through thought-out design elements can contribute to a holistic wellness encounter. Travelers return from their trip feeling refreshed, rejuvenated, and ready to take on their day-to-day life.

The wellness tourism market is projected to reach well over $1,700 billion, in accordance with Precedence Research . Even so, investing in the health niche is beneficial for guests and financially rewarding for businesses.

3. Enhanced experiences with advanced technology

The integration of artificial intelligence and other technologies is reshaping the hospitality industry. AI-powered chatbots are being employed for personalized customer service to provide instant assistance and support to guests throughout their stay. Whether it's answering inquiries, making reservations, or addressing issues, chatbots offer convenience for both guests and staff.

On the other hand, predictive analytics algorithms help with demand forecasting and pricing optimization. AI is gaining traction in the hospitality industry because of its enhanced data analytics of consumer behavior patterns and improved ability to meet client demands. Data-driven personalization enables hotels to tailor offerings and marketing messages to individual guest preferences.

Global Market Estimates predict that between 2021 and 2026, the niche will rise at a compound annual growth rate (CAGR) of approximately 10%. Robots are also making inroads into the hospitality industry in automating housekeeping tasks, food delivery, and concierge services. While robots cannot replace humans entirely, they free up hotel staff to focus on higher-level guest relations and contribute to operational efficiency.

Why contactless technology?

Contactless technology has become essential since the COVID-19 pandemic as a way to offer guests a safer, more convenient experience. These systems allow users to network with devices or complete transactions without physical contact, often achieved through short-range wireless communication, like tapping your phone to pay at a store.

Mobile check-in/out, digital room keys, and touchless payment options are now standard in most, if not all big hotel chains. This trend is expected to persist beyond 2024 as businesses prioritize contactless solutions to not only minimize the spread of germs but also meet a growing consumer preference for minimal physical contact.

Immersive virtual reality experiences

Hotels are using Virtual Reality or VR to offer immersive virtual tours so guests can preview accommodations and amenities before booking. While virtual reality offers the ultimate virtual experience, guest relations managers appreciate accessibility concerns.

For those without VR headsets, 360° videos provide a panoramic view of hotel space with just a phone or computer. Interactive floor plans also let you virtually walk through the hotel for a solid understanding of the layout. This has completely changed the way guests explore and engage with hospitality offerings.

VR-enhanced experiences, such as virtual city tours or immersive dining experiences create memorable moments for guests, too. VR technology will become more accessible in the future; therefore, its adoption in hospitality is a no-brainer.

Make each customer feel special with personalization

The global leader in employee and customer experience, Medallia Research Inc. , reports that 61% of consumers are willing to pay more for hyper-personalized experiences. Guests crave guest-centric services that cater to their every whim. This is not just about remembering names but also using guest data to anticipate preferences and offer tailored services .

Information can include previous booking history, preferred room types, special requests, dietary restrictions, leisure activities, and feedback from past stays. With collated information, hospitality teams can customize everything from room amenities to dining recommendations to boost guest satisfaction and loyalty.

Embracing experiential tourism

If you've been bitten by the travel bug and want something extraordinary, you should definitely consider experiential travel. The idea behind this travel concept is to forge a deeper connection with a given destination than can usually be had from traditional leisure holidays so guests experience it as authentically as possible.

These often involve an element of adventure, whether cultural, culinary, or spiritual; as such, tours mainly focus on less "touristy spots." For instance, after the pandemic, family ski vacations to Japan are preferable compared traditional choices like Aspen or Canada. Add-on experiences such as samurai sword-fighting or temple tours add an extra dimension to the travel experience.

Experiential tourism is now high on nearly every traveler's wish list because trips aren't restricted to international pursuits. This trend presents an opportunity for hotels to partner with local businesses and offer unique experiences like cooking classes, cultural excursions, and outdoor adventures. Such offerings create memorable and enriching guest experiences.

Integrating storytelling marketing

As the name suggests, storytelling marketing is a powerful tool for captivating audiences and creating emotional connections with brands. Hospitality businesses are now crafting authentic narratives to showcase their unique offerings, heritage, and values to resonate with guests on a deeper level. This type of marketing can also set the stage for experiential travel by providing context and inspiration for visitors.

Through captivating narratives, travelers can visualize themselves in the destination, immersing themselves in its culture, history, and natural beauty. Storytelling paints a vivid picture of the travel experience enough to spark curiosity and ignite wanderlust among potential travelers. When utilized properly, hotels and restaurants can differentiate themselves from their competitors and boost brand loyalty.

Technology integration for advanced data security

Data breaches can be devastating. Guests entrust hotels with sensitive personal information and as the hospitality industry becomes increasingly reliant on technology, data security is crucial. Hotels must implement robust cybersecurity measures to protect guest data and maintain trust.

This is where technology integration comes in; from cloud-based property management systems to smart room automation. It can ensure data security by implementing advanced encryption protocols and access controls across all integrated systems, safeguarding guest information from unauthorized access or breaches.

Further, continuous monitoring and regular updates of integrated technology systems can help detect and mitigate potential security threats. Embracing innovative technologies and staying abreast of industry trends can future-proof hotel business operations and boost guests' trust.

Commitment to net positivity

Sustainability is no longer a niche concern; it's an expectation for many travelers. Hotels that prioritize green practices like energy efficiency, water conservation, and local sourcing reduce their environmental footprint besides appealing to eco-conscious guests. The industry is moving beyond simply being sustainable to aiming for net positivity, with regenerative tourism that gives back to the environment.

Management with a vision

None of the discussed hospitality trends 2024 are possible without effective management. Leadership in the hotel industry requires a clear vision for the future, an ability to adapt to changing trends, and a commitment to continuous improvement. Hospitality leaders must invest in their own development and the teams they lead can ensure their businesses remain competitive and thrive in the years to come.

As an industry that depends on a stable environment in order to successfully operate - societal and environmental changes are having a greater impact on hospitality businesses compared to other industries. A recent global survey among CEOs by PwC has shown that heads of hospitality and leisure companies are notably less confident about their companies’ prospects for revenue growth in the near future than their counterparts in other sectors.

With disruptors in the industry, a wave of consolidation, and many external factors impacting their operations, hotel operators must find new ways to overcome these hurdles. Solutions to future challenges that companies are currently coming up with are the result of new thinking among the world’s business leaders and CEOs.

In a crowded field of competitors, hotels must find ways to distinguish themselves and position their property as distinctive destinations for customers , to develop preferences and loyalty in order to drive direct bookings. To do so, hotels must offer more highly personalized experiences that anticipate and go beyond the needs of their target customers – and count on word of mouth and allegiance to not only retain their customer base, but also grow it with more potential customers.

We have been a super good hospitality group for the last 50 years. We are not shying away from it. We are shifting and expanding the hospitality notion to Augmented Hospitality. We are being even more audacious and going one step further by saying: Since people want to be recognized, want to have something extremely personalized, why don't we try going from Augmented Hospitality to a Lifestyle Augmented Hospitality player? Sébastien Bazin, Chairman and CEO of Accor (Source: Accor TV - New Accor Strategy).

Other ways that are often discussed when dealing with the impending changes are the implementation of new technologies, training employees to move away from standard SOPs to become true high-touch experience providers and modernizing the service offering towards individualization and “lifestyle” to create true differentiation.

Fully take advantage of technology and personalization to create experiences

A generational shift towards how travelers are consuming hospitality services is making hotels evolve from being mere suppliers of accommodation to experience providers, leading to a need for outstanding customer relationships across all stages of their customer booking journeys .

Focus on talent acquisition and retention

From targeted recruitment efforts to a meaningful interview process and to the actual hiring and onboarding, organizations that are well-equipped to recruit in the era of millennials think holistically about the overall experience delivered to potential hires .

Embrace sustainability as part of your business model

As a result, a growing number of international hotel companies have developed sustainability and corporate social responsibility strategies . These initiatives can be perceived as the beginning of a paradigm shift toward a more positive and conscious form of hospitality which is highly valued among consumers today.

Reshaping the future of hospitality jobs

Over the past two decades, the hospitality industry has experienced significant growth, with international arrivals doubling from 600 million to over 1.4 billion in 2016 .

In 2023 however, in the wake of the global pandemic and facing increasing economic uncertainty hospitality has shown that it is resilient and a sector that consumers are just not willing forego entirely. Travel and tourism is an integral part of our lives therefore even as the global economy retracts the industry will always bounce back. This ability to withstand difficult times makes it a viable sector to launch a career for anyone with a hospitality mindset and appreciation for top-level service, culture, and leisure experiences.

It's clear that the industry is evolving and adapting all the time, making it a fantastic career opportunity for the problem solvers and innovators of tomorrow. Hospitality Management will provide a career rich in experiences, human connection, personal development and comes with many perks.

Employers across the board are looking for professionals with a combination of both hard and soft skills . In hospitality, developing skills such as cultural awareness, multitasking, customer service and communications is paramount to effectively deliver outstanding customer experiences.

The increasing complexity of the hospitality sector and evolution of its modus operandi - due to the expanded use of technology and data, the evolution of business models with the separation of management from operations or the ever-increasing trend of brands becoming publishers - is leading to the creation of new job profiles , such as asset managers, data scientists or content marketing specialists.

The Covid-19 crisis has underlined the global importance of the travel and tourism industry economically as well as its interconnection with other industries. From small tour operators to multinational hotel chains and major airlines, everyone in the industry has been impacted and continue to reset and recover.

To every negative repercussions of a crisis there is also some positive change that could be foreseen for the future. The World Economic Forum’s recent “Rebuilding Travel and Tourism panel” at the “Sustainable Development Impact Summit” explored the intersection of consumer consciousness, acceleration of technology and destination management and found some solutions that could have the potential to reshape the way we market, manage and plan our travel:

• Travelers are becoming more impact-conscious
• Tourists are looking for experiences in nature
• Digital solutions are improving sustainability
• Long-term progress requires cooperation

The end result is in an industry that will recover as it is an essential part of modern human lives that derive much pleasure and discovery from it. It is simultaneously undergoing huge digital transformation and other shifts to adapt to consumer sentiment, therefore a career in hospitality won't necessarily be a quiet one, but it will be an exciting adventure with a multitude of possible career paths to explore.

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The best step-up for a successful career in hospitality

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How to write a business plan for your hospitality venue (that works)

The ultimate guide on how to write a successful business plan for your hospitality venue. Includes tips and insights from real businesses!

At the start of any business venture, there needs to be a plan for how it will move forward. A business plan is necessary for you to determine whether the investment will be successful or not, and it serves as a road map for developing your hospitality business.

It helps you focus on the goals you set forth while establishing your business. If you are looking for investors, a business plan proves to them that you have done your homework and have a realistic idea of how to make your business successful. 

It’s also one of the first steps to the growth. But what exactly should a business plan include? Here are some of the areas it needs to cover.

Pinpoint your business identity

There are several types of hospitality businesses out there, so establishing the identity of your business is really important. It also sets the scene and will help with your plan and goals moving forward.

Are you a popup food truck? A quick service restaurant? An upscale hotel? A cafe? A bar? All of these hospitality businesses are different and will all have different identities. Keep the concept simple, think about how you would introduce your business to a stranger and if they would understand it. Once you know this, building on the rest of your business plan becomes easier. 

Know your vision and mission 

Your business plan needs to contain the vision that you have for your hospitality venture. This will help with structuring your goals and business purpose, it's your big picture outcome. It's ok if this changes because at the start it can be challenging to predict what your business will look like ten years from now.  In your vision statement, you need to hype your ambitions such as “Our vision is to run the best fine dining restaurant in Washington D.C.” The mission comes next, stating what you intend to do with your business, i.e., “Our mission is to offer excellent and reliable service to all our customers. We shall strive to always be ahead of our competitors by offering high-quality food and beverages while ensuring a high level of customer service and professionalism." 

Identify your business structure

Here, you need to explain the business structure that you’ll use and why you chose this particular model. The success of the business largely depends on this. Get a specialist to advise you on which structure best suits your business .

There are various models, so it’s crucial to get this part right. An experienced adviser has seen numerous business structures and may offer a perspective that you didn't think of - it could set you apart from your competitors. You’ll also need to explain the positions in your business and the role that each plays. Some of the positions you should include are:

• Chief executive officer
• Business partners/investors
• Human resources manager
• Bartenders/Waiters
• Front desk operators
• Security guards

Depending on your business structure, some of these roles may not suit, so you’ll need to research which ones best work for your business.

Have a clear budget and finance plan

You will need an accountant or business adviser to guide you through this step. It includes coming up with a financial plan and budget that will start the business, for example where you expect to raise funds from and the allocation to each sector of the company. It’s also important to know the number of employees that you’ll need and their salaries. Other key costs will include the property (is it new/existing? what are the lease costs?), equipment/tools, your suppliers, and utilities.

Writing a plan helps you to determine whether your hospitality business is financially viable . You will need to include projections of how much money you will make - this is crucial, especially if you’re showing it to potential investors. In the end,  there should be a total figure of how much it will cost you to start and maintain the business.

Identify your services and amenities

The services and amenities that you provide will determine your clientele and customers. Their quality will justify the amount you charge the customers. All those that visit should experience exceptional customer service. If a customer has a memorable experience at your place, they will, in turn, recommend it to friends and family adding to the growth of the business. Depending on your hospitality business, here are some services and amenities to consider:

• Quality food and beverage menu that caters to your customers
• Fitness center/swimming pool
• Conference room
• Transport service
• Outdoor/indoor dining area
• Wifi access

Determine price points and payment options

The price you set should be competitive and match your rivals. If you offer customized or premium services, identify firstly if it’s feasible as guests will pay more, and this will need to be justified. Setting your price points will require significant research from you, especially if the product or services you’re offering are uncommon for consumers.  Offers and discounts to customers can also be used, so long as research is done prior to its effect on your profitability and finance plan. Overall, knowing your price points will help you not to overcharge or undercharge your clients and customers.

Once you’ve identified this, you’ll need to indicate the payment options acceptable in your venue. Some people prefer to pay cash, others via check, cards, mobile money transfer, or bank transfer. Your payment options should cater to all of them.

Research your target market

Who do you intend to target with your hospitality business? Whether it is for specific clients or the general public, your services need to be inclusive. You will need to conduct a feasibility study and some research to determine the type of customers best suited for your business.

Knowing your audience, for example, what they do for a living, and their age will help you in setting up a business that will appeal to them. The neighborhood and location will also play a significant role in the type of customers that you’ll attract. Space, human traffic, parking, and security also need to be considered when identifying your target audience and the location of your business.

Create a marketing strategy

Your marketing strategy will depend on your target audience. The type of strategies that you employ will be useful if they attract the right people. Here are some marketing strategies to consider:

• Advertising online through social media channels
• Advertising on television, radio and/or print
• Employing competent people
• Improving performance and services to warrant referrals
• Creating partnerships with relevant stakeholders
• Having a loyalty program to reward clients

Research the economic conditions of the area that you intend to start your hospitality venture in and the general industry. Identify what marketing strategies have historically been successful and resonate with your target audience. Know who your competitors are, get feedback from your customers and industry experts - all of this information will help in executing the right marketing strategy.

Your business plan will determine your success. The location, pricing, amenities, and services that you offer should be impeccable if you wish to create a community of loyal customers. A large part of this will entail the level of customer service that your clients experience. You will need to come up with a strategy that will put you above your competitors making your hospitality venue the go-to place for every person.

Learn more about business management and start your Typsy hospitality training now on   Improving hospitality business operations   with Eden Sunshine.  

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Business Strategy in hospitality industry

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Table of Content

Introduction to Business Strategy in Hospitality Industry

In this report, it is considered that business strategy of an hospitality organization reflects the success and failure in achieving business objectives. The business strategy is a planning or concept on which basis the multiple operational functions and practices are dependent. This report is based on the leading hospitality organization of UK which is named as Thomas Cook. The business environment of Thomas Cook is discussed along with strategic practices in this travel and tourism business firm (Bitzenis and Nito, 2005). The competitive advantages and various business strategic options are discussed in reference to current business conditions in Thomas Cook along with recommendations for a strategic plan to be implemented. In the report, it is discussed that what is the impact of operational plan in business strategy of Thomas Cook. The use of budgeting and targeting is understood along with a communication plan of strategic plan implementation.

Critical analysis of internal business environment in Thomas cook

Internal business analysis is also known as micro business environment which represents the organizational behavior, culture and structure of business functions and operations in a firm. It is observed that there are various business operations which can reduce the challenges and issues in achieving planned business objectives along with efficiency of business system (Klapper and Parker, 2011). The critical analysis of internal business environment of Thomas Cook is discussed as following.

• It is observed that planning and control system of Thomas Cook is well managed for all the business operations.
• The marketing techniques and campaigns are attractive to grab more market share.
• The decision making process is influenced from democratic leadership style which has greater impact on brand value.
• Leading the market in all products and services from traveling, tourism and hospitality.

Weaknesses:

• The staffing is an issues for  Thomas Cook to be managed in all the business locations.
• Strategic planning is infected from the ineffective business environment of the organization.
• There is loop holes in managing multiple business branches and managing customers of different segments.
• Optimum resource allocation and access is missing in strategic operations of Thomas Cook.

Opportunities:

• The business E-commerce strategy can be better than current operational practices.
• Effective strategic development plan is required for overcoming business issues.
• Staffing policies requires suitable planning and implementation through human resource management
• The competitors are always a threat for Thomas Cook due to complexity in business operations.
• The internal environment is influenced from various ineffective strategic plan which can reduce the business consistency.
• Customers satisfaction in all the business conditions is a threat for  Thomas Cook.
• Critical analysis of external business environment in Thomas cook

Through PESTLE analysis of Thomas Cook, the external environment can be understand as followings.

Political: Thomas Cook are imposed that they get charged in different countries for hospitality, restaurant services, food processing and serving, accommodation etc. In the same way, Different countries where Thomas Cook have business uses different pricing strategies. The government policies & guidelines for air traffic also affect the overall operations of Thomas Cook (Lewis and Gates, 2005). Along with that political parties of target market also affects strategic decision making in various hospitality services and products like holiday packages and hotel tariffs.

Economic: Economic factors in form of interest rate affect long-term program of Thomas Cook. If the economic performance of Thomas Cook is compared to the market sector then it can be concluded that UK economy has crucial role in financial planning. The cost of resources like oil prices, food ingredients, infrastructure, human work force etc. are reflects from the business economy system of different countries. The pricing policy adopted by government is to make hospitality services affordable to all kind of people which could be able to access such services (Palmer and Hartley, 2008). Along with these aspects, the income of customers and people affects the service rate of Thomas Cook.

Social: The health and safety measures of Thomas Cook are related to employee and customers who provide or access these services. The growth of potential customers and rate of population has greater impact on market share and profitability in hospitality business of Thomas Cook. The other social issues are changing trends, caliber of society, cultures and changing level of people expectations from hospitality firms like Thomas Cook.

Technological : As things improve technology becomes stronger to stringent business operations and practices. Thomas Cook needs to implementing such activities and mechanisms which can increase the efficiency of business operations (Yu and Ramanathan, 2012). Thomas Cook  has already started to adapt technological changes in their business operations. It is understood that adoption of a technology makes things more comfortable and economical for Thomas Cook which can increase their working capacities and productivity.

Legal: The different legalities of different countries affects the business firms to act upon the guidelines. Every country had their own polices and legislative rules through which they can monitor and control business system. It is understood that Thomas Cook need to negotiate with all the legal policies (Lewis and Gates, 2005), Acts and regulations of hospitality business in the target market. All the ethical and moral duties must be followed by Thomas Cook to serve its employees and customers.

Environment: There are number of roles and responsibilities of hospitality firms like Thomas Cook in managing different pollution like air & noise which affects the environment and value of business. It is the corporate social responsibility of different business environments and organizations like air, water & noise etc. to manage all issues related to environment. It is required to fulfill duties regarding making a Eco-system for human beings from all the hospitality business firms.

Critical evaluation of options for strategic growth in Thomas cook

Through the research and study of strategic operational decisions and policies of Thomas Cook, it is observed that this business organization is emphasized to innovative and creative planning of products and service in hospitality services to target customers (Lewis and Gates, 2005). The various products are designed and served on the basis of evaluation of customers demands and expectations. It includes the holiday packages, effective and lucrative implementation of infrastructure developments and other facilities to customer. The other creation are done in product quality, pricing, advanced technology etc.

To entertain the online customers, Thomas Cook affects the customers management through single gateway option. It is a customers attention strategy which can manage different customers of Thomas Cook in a single customers relationship management system with effective attention on every client (Stackelberg, 2010). It is focused to give better solutions to all the customers through effective online services and advertisements for marketing their products and services. Through this strategic option,  Thomas Cook can increase the efficiency of all its marketing functions and operations through adequate planning and developments. It includes corporate websites, associate business partners websites and internet for making a stringent customers service system for hospitality services.

It is understood that strategic planning of Thomas Cook is reflected from advancement of technology and increasing brand equity of its business assets. The hospitality business firms are focusing in improvements of existing and lacking business operations through organizational change management through effective digital and information technology. Different groups of management and stakeholders services are attained through effective communication channel which requires advance technology.

There are multiple marketing strategies of Thomas Cook which are focused to give attention on target customers. It includes effective targeting, segmentation and positioning strategy of Thomas Cook to develop satisfactory marketing portfolio. The social media marketing resources, different communication resources and information technology mediums are accessed for making a better products and service management. Customers segmentation and targeting is accessed on the basis of marketing research and development work through effective planning and control operations. So on whole these are the business strategic options of Thomas Cook has great impact on its business development process.

Identification and evaluation of competitive advantages strategies of Thomas cook

The competitive advantages of a hospitality business firm like Thomas Cook is accessed from the management efficiency and effectiveness of business operations through which firm can compete or lead the market. There are multiple business rivalries of Thomas Cook which are keen to grab the market share from Thomas Cook. It is understood that the skills, experience and  other capabilities of employees of Thomas Cook has increased potential to attain all the set targets within deadlines while maintaining the service quality (Sohal and Perry, 2006). The competitive advantage of  Thomas Cook is market share and profitability rate which has increased level of business efficiency. It is operating in various countries through effective business operations management. There are multiple resources and functions which are directed through optimal technologies and methods of business economy. It is considered that all the business functions of Thomas Cook are managed by the operational departments in different countries which are govern through central business hub or headquarter. Thomas Cook is a big group which is providing hospitality services along with airlines, restaurants, cruise, exchange and traveling services to its customers. It also provide the tourism services to the all customers segments through effective holiday packages and offers (Tours and Travels | Holiday Packages from Thomas Cook India, 2014). It consists of management decisions which are taken from contribution of all the stakeholders of its business group for attainment of business objectives. During the strategic decision making, all the relevant employees and management executives are involved for discussion on issues and solutions. The business diversification and expansion is dependent on various management tactics and policies which are designed and implemented by top management of Thomas Cook. It is responsible for strategic policy formation and controlling through monitoring and supporting orations system of hospitality and other services of Thomas Cook. All the changes and improvements are processed through effective research and development work of marketing and management team in Thomas Cook. The assessment of all associated risks are taken care from analysis of the customers behaviors and marketing conditions. The supply chain of Thomas Cook is well managed by meeting the expectation of customers and suppliers for managing all the activities. It is considered that all the procedures and functions are followed by an effective channel of working system. It is understood that business activities will have positive and negative impact on business strategies. All the positive imp0acts makes a better communication system and all the negative aspects of its business reduces the profitability and productivity. Thomas Cook has managed the competitive advantages through effective planning and controlling system. The new product development and launch is managed by various business tactics. There are business organizations which are supporting the society and economy of a country through hospitality services and Thomas Cook is one of the leading one among them (Lewis and Gates, 2005). The one place complete service mechanism of Thomas Cook is affecting the business worth of country and whole business industry of hospitality. On whole the competitive advantages are managed through a business strategy which is including employees, competitors, customers etc. for planning and controlling hospitality business. 

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Recommendations to strategic direction for Thomas cook

In case of hospitality business strategy, the strategic plan on the basis of strategic options and environment in Thomas cook should be planned and developed according to the demand and expectations of employees and customers. It is understood that business of all the branches and locations should be well managed by Thomas Cook. There should be equal coordination of all the stakeholders which has positive impact of managing business services and implementation of assigned roles (Lihitkar, 2013).  It is concluded that there should  be effective planning and controlling over new product designing and developing a;ll the phases of a product or service with effective monitoring and control system. As per the identified issues and problems in Thomas cook, it should be focus on the staffing management for the various business locations. The training and development programs should be conducted for all the employees get better services and providing effective quality to business organizations. The training and development program should be focused to specific requirements of all the individual employees which can assess better improvement through effective performance. It is asked to manage all the business services and practices according to the service lengths and responsibilities of employees through which an efficient human resource management system can be implement. It is suggested to use the positive response from all the stakeholders to manage the challenges and issues related to hospitality services from Thomas cook (Tours and Travels | Holiday Packages from Thomas Cook India, 2014). There are information technology services and electronics systems which are making efficient management of customers and employees in hospitality firms. It is suggested that there should be effective control over the customers relationship management through which all the business stakeholder can be connected and managed to use quality services and solutions to problems. Along with the customers satisfaction systems, Thomas cook should focus to strategic developments of business operations through effective designing and control over resource management. The optimal use of resources and all available technology can retain service quality as consistent as before. For the development time of business processes and system in Thomas cook, it is suggested that all the decisions maker should provide their best for strategic decision making (Blyton and Turnbull, 2004). It is observed that effective planning and control over business activities can provide positive outcomes as per the expectations of costumers and management. The internal business environment of  Thomas cook can be improved through effective leadership and motivational practices which will encourage employees to act according the assignments of their job. The business environment is consists of the organizational culture and stricture. The groups of different individuals makes culture to be followed by business organization. There are multiple business services which are promoting and affecting all the business operations in either rights or inappropriate direction. It can be made through effective control and monitoring of on going business processes. It is suggested that customers should  be treated according to the best possible services which can improve service quality and management of business functions.

Strategic plan on the basis of strategic options and environment in Thomas cook

A strategic plan is consists of all the options and environment of business. It is understood that effective planning and controlling requires effective operational management. In this plan, it is included that all the products and services of Thomas cook should be focused in all relevant aspects of business. There should be effective control over designing and controlling functions of management (Tours and Travels | Holiday Packages from Thomas Cook India, 2014). The strategic options as discussed above are information technology advancement for making effective control over management orations and employees performance. In this plan, all the business factors will have positive impact on implementation of operational procedure for expected results. It will cover the E-commerce maintenance as best as possible for all the branch location of business in Thomas cook. The effective control over business system can provide efficiency to product and service delivery to customers as per business rules and objectives. The external forces will be managed through effective implementation of business principles and legal policies. The PESTLE can be controlled and managed by effective operational management of business practices. Economy of business can be managed through quality services and profitability through customers satisfaction in this strategic business plan. Every technology related to hospitality industry which can help in betterment of Thomas cook should be consider for effective operational plan and its implementation in well controlled way. It is considered that all the services will be reaming constant for all type of business customers (Northcraft and et.al, 2011). The business presentations are integrated according to strategic plans and objectives of Thomas cook which will affect the whole outcomes of business organization. It is concluded that a operational plan should be implemented according to demand of all stakeholders for betterment of expected results from business organization like Thomas cook. It is concluded in the strategic planning of operational plan that all the activities and environment should be integrated for attaining common goals of business organization (Blyton and Turnbull, 2004). Operation management in hospitality management always affects the planning and maintenance of products and services from Thomas cook.

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The role of integrated operational plan in business strategy of Thomas cook

The business strategy of Thomas cook has greater impact of its operational plan. It is understood that all the business practices are designed as served to its target customers according to requirements of customers and the other stakeholders. A operational plan is consists of business planning and development of implementation of various products and services offered by Thomas cook. It is asked by the management to support the lower level employees so that they can perform better as per the expectation of company (Tours and Travels | Holiday Packages from Thomas Cook India, 2014). Various business practices and operations should be managed with considerations of all the strategic options and environment of business in Thomas cook for its hospitality services.

Evaluate the factors in business strategy of Thomas cook

Strategy implementation is an important aspect for the management of business corporation. According to the selected organization, Thomas Cook, it becomes more significant to ensure appropriate implementation of strategy because of its exiting target market. Operating in such a competitive market it is essential for senior authorities to ensure that developed strategies and tactics are implemented in effective and efficient manner. There are several factors that may play significant role in implementing strategy. These are as follows:

Human resource – It is the integral part of the company and are most valuable assets to the firm. In particular to implement the strategy it is important for employees to work adequately (Kemp and Vinke,  2012). The main purpose of implement a strategy is to enhance the level of business operations. Therefore, management of Thomas Cook has to make optimum utilization of human resource in implementing the strategy and attaining desired results.

Finance – It is the responsibility of top level management to ensure that Thomas Cook have adequate amount of fund which can be used at the time of implementing the strategy (Jones and Vagliasindi, 2013). Allocation appropriate funding will ensure each of department to undertake the implications of new strategy in much better manner and minimize the risks and uncertainties associated with it.

Appropriate forecasting – This is one of the major factor because having appropriate planning will allow front line manager of each department of Thomas Cook to understand the need and want of new strategy as well as support the implementation of tactics in positive manner to generate positive results and outcomes (Iqbal and Strong, 2010).

Therefore, the above present are some of the major factors that play significant role in implementing newly framed strategy and tactics. Operating in such a competitive market it is important for senior authority of Thomas Cook to ensure that all above stated factors are working in coordination to implement the strategy in appropriate manner.

Communication plan:

Communication in an significant approach by the means of which, management can share each and every aspect of their functioning to different people associated with the firm. In the present given scenario, it is the responsibility of top level management of Thomas Cook to ensure that they communicate each aspect of the new strategy framed to its stakeholders so that they can change or modify their functioning accordingly (Grontoft, 2011). There are two types of people associated with Thomas Cook, internal and external. However for each of the type it is important to undertake appropriate communication plan so that they can clearly understand the need and wants of change in strategic approach and contribute positively in the operations of Thomas Cook.

For the external stakeholders such as: investors and lenders, management has to organize meetings in order to make them understand about the effectiveness of undertaking the new strategy. Operating in such competitive market it is important for Thomas Cook to undertake strategies as per the needs and wants and it has involve most of the people so that overall business approach can be changed effectively and efficiently. On the other hand, for internal stakeholders, top level authorities can communicate information regarding implementation of new strategy by mailing (Ruff, 2006). Further, management has to communicate on the appropriate platform so that each of the department's front line managers can understand and make modification accordingly.

Therefore, having appropriate communication plan helps in creating awareness about the steps and tactics that Thomas Cook is going to undertake in regards to achieve its desired goals and objectives.

Monitoring and control system for operational strategic plan in Thomas cook

Budgets play significant role in overall business functioning. However, budgets are considered as important aspect but often overlooked during operational excellence. The main purpose behind preparing budget is to compare actual performance from desired. In the present given scenario, Thomas Cook management is implementing a new strategy and in order to evaluate the implications of its tactics it is important to prepare appropriate budget so that feasible results and outcome can be generated (Northcraft and et.al, 2011). However, it is one of the major aspect of any business enterprise, managers has to develop appropriate platform to execute the strategy developed so that desire competitive advantage can be achieved as well as long term sustainability.

Furthermore, by the means of budgeting, Thomas Cook can evaluate all the risks and uncertainties associated with the financial aspect after the implementation strategy so that finance manager can undertake potential measure to minimize the risks in order to ensure better outcomes through new implemented strategy (Blyton and Turnbull, 2004.). According to the present given scenario, management of Thomas Cook have to ensure that developed budget meet the different criteria such as: better sync between objectives and forecasting, Setting of realistic goals so that they can be achieved and monitoring each of the activity to ensure better functioning of Thomas Cook in near future (Blyton and Turnbull, 2004). Furthermore, while implementation the strategy, all the department should set different targets so that implementation can be done accordingly and results can be attain smartly. However, it is not easy to generate desired results directly from the new strategy, in this regards all the people working within firm should perform in coordination so that small targets and objectives of each department can be achieved in appropriate manner and Thomas Cook can attain future sustainability (Bhatnagar, 2007).

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It is concluded that there should be a stringent plan for managing all the business activities associated to a business firm. It is considered that  in business strategy of Thomas cook is a leading hospitality business firm which has planned and managed roles and responsibilities of all the stakeholder within all the business standards. The strategic plan is able to resolve all the issues associated to product quality and services for global growth of Thomas cook. It is observed that Thomas cook should focus on planning and development of strategic plan while initializing a new services to target customers.

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• Bhatnagar, J., 2007. Talent management strategy of employee engagement in Indian ITES employees: key to retention. Employee relations. 29(6).
• Blyton, P. R., and Turnbull, P. J., 2004.  The dynamics of employee relations. Palgrave Macmillan.
• Northcraft, B. G. and et.al, 2011. Concluding Remarks Setting the Scene: The Calculus of Agreement in Group Negotiation. Negotiation and Groups (Research on Managing Groups and Teams. Emerald Group Publishing Limited, 14(1).
• Ruff, F., 2006. Corporate foresight: integrating the future business environment into innovation and strategy. International Journal of Technology Management. 34(3).
• Grontoft, T., 2011. Climate change impact on building surfaces and façades, International Journal of Climate Change Strategies and Management. 3(4).
• Iqbal, A. and Strong, S., 2010. The effect of corporate governance on earnings management around UK rights issues. International Journal of Managerial Finance. 6(3).
• Jones, B. J. and Vagliasindi, M., 2013. Power Market Structure: Revisiting Policy Options. World Bank Publications.
• Kemp, J. L. and Vinke, J., 2012. CSR reporting: a review of the Pakistani aviation industry. South Asian Journal of Global Business Research. 1(2).

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Hotel Manager Highgate Shifts Strategy Amid Uneven Business Travel Recovery

Sean O'Neill , Skift

August 16th, 2024 at 4:50 PM EDT

The U.S. business travel recovery has been uneven. New York City? Thriving. San Francisco? Not so much. But the hotel manager giant Highgate sees signs for optimism.

Sean O'Neill

Highgate manages over 560 hotels with about 86,000 rooms, claiming to be the second-largest U.S. hotel management company after Marriott .

Most of the manager’s 86,000 rooms are select-service roadside and full-service urban properties. So Highgate can serve as something of a proxy for how the recovery in business travel is progressing, mirroring what its close rivals Marriott, Aimbridge Hospitality , and MCR Hotels are seeing.

Highgate also runs luxury properties: It bought lifestyle brand Viceroy Hotels & Resorts in late 2022, and expanded into Europe last year by acquiring a leisure portfolio of almost 3,000 rooms in Portugal.

Skift got an update on Highgate’s performance from Ankur Randev, chief commercial officer.

New York City Strength

Highgate says it’s the largest hotel operator in New York City, with about 35 hotels. Randev says the city’s business travel demand is in good shape.

“We see some gap in the volume, but it’s already at 95% of 2019 levels,” Randev said. “We expect a full recovery next year if not by the end of this year.”

San Francisco Weakness

San Francisco hotels are underperforming due to perceptions of a lack of safety, many workers in the tech industry only partly returning to offices, and convention losses to Las Vegas. But Randev said some of the “ground-level realities” that had been discouraging visitation to San Francisco are “improving on a daily basis.”

Hawaii’s Mixed Signals

Highgate has 19 hotels in Hawaii.

“The market has been impacted by the slow return of Japanese travelers, who historically made up about half of international visitors, because of the weakness of the yen to the dollar,” Randev said.

However, North American travelers have largely made up for the lack of Asian visitors in Hawaii.

Adjusting Sales Tactics

Highgate has recently been emphasizing account servicing and negotiations at the local level rather than talking at the regional level.

“We’ve realized that locally negotiated is key,” Randev said. If a company has a lot of its employees visiting a market, we definitely want to have one of our people talking to their local travel manager at all times.

“We continue to get business from the big spending corporates naturally through usual channels like travel management companies. But for all the other players, which make up a majority of business travel by company count, we’ve created a robust playbook on backyard, or local, servicing of accounts that’s really helped in conversion and penetration.”

Targeting “Lifetime Value”

Corporate travel budgets face a post-pandemic reckoning. With attendance at in-person events surging, companies must balance cost control and employee demand.

Highgate has been trying to court accounts with potentially the largest lifetime value rather than producing a series of one-off sales that may be quick wins.

Randev said the old strategy of simply negotiating lower hotel rates is outdated. Instead, firms will likely enforce stricter compliance policies to rein in spending. Highgate has been adjusting its sales tactics to respond to these shifting trends.

Corporate Interest in Sustainability

Travel managers at high-value corporate clients are increasingly interested in hunting for the lowest rates and volume discounts to ensure that employees comply with their policies.

Increased efforts to comply with sustainability targets have meant travel managers want data on the impact of carbon emissions that may be emitted from stays at particular hotels. Highgate’s vice president of sustainability works to ensure that the hotel manager can provide the necessary data so that its clients can stay in compliance with their carbon reduction goals, Randev said.

Optimism for 2025

Randev expressed confidence in Highgate’s ability to navigate potential market softening or recession due to its revenue management capabilities and commercial strategies.

The company has invested heavily in technology and in standardizing best practices across its portfolio since 2021, when Highgate appointed Arash Azarbarzin as CEO.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at?  The performance of hotels and short-term rental sector stocks within the  ST200 . The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200)  combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.

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