Introduction to Hospitality Provision in travel & tourism sector
Hospitality and tourism industry is booming in today’s scenario (Medlik, 2012). Hospitality includes hotels and accommodations. However, tourism includes travel agencies, airlines, cruise, etc. This report illustrates the relationship among them along with the aspects of integration and human resource allocation plan in hospitality business.
The Dorchester is a leading luxury hotel in London at the present time. It is a five star hotel which is one of the most prestigious and expensive hotels in the world. It was founded in 1931. Although it has been modernized, the company maintains the ambience and furnishing of 1930s. The company has been associated with rich and famous clients from the beginning. It is situated in London and it has around 250 rooms and 49 suites. Their price ranges from $891 USD to $12000 USD per night. The hotel has been renovated by famous designers, Oliver Messel in 1950s and Bob Lush in 1990 (Dale, 2005).
Marina Bay Sands is an integrated resort. It faces Marina bay in Singapore. The building of the hotel is one of the most expensive buildings in the world. Its iconic design has transformed the tourism in Singapore since it opened in 2010. It has hotel, conventions, exhibitions, theatres, retailers, restaurants and entertainment venues. It has a park on the roof of the hotel which extends 650 feet. It employs 7000 people. The total worth of the business is $5.5 Billion SGD (Nickson, 2013).
Both these organizations have prospered due to awareness about them which is spread globally by various tours and travel organization. The interrelationship among travel organizations and hospitality firms is defined by a number of aspects.
Link between hospitality and wider travels and tourism business:
Hospitality and tourism business go hand in hand. Services like accommodation, transportation, food, recreation, etc. are provided by hospitality industry. Tourism facilitates tourists in traveling to diverse destinations (Kusluvan, 2003). Following are the features that illustrate the interrelationship between hospitality and tourism.
Hospitality and tourism industries facilitate increasing sales for each other. With the advent of tourism activities in New York in past few years, the number of tourists rose from 52 million in 2012 to 60.8 million in 2013. Along with that the hotel occupancy raised to 87.5% in 2012 to 91.1% in 2013 (Nickson, 2013). It can be seen clearly that rise in tourism activities or promotion of tourism at a destination leads to increase in hotel occupancy. Further, development in hospitality industry leads to increase in tourism activity at a particular location. After the establishment of Marina Bay Sands in Singapore, the icon of the city transformed. The tourism got such a boost that the souvenirs of the city transformed to have Marina Bay Sands’ building design on them. Also, the sales of the hotel are mainly through reservations made by tourist that visit the city via tourism companies.
2.Increase the range of customers for hospitality industry:
The range of customers who are aware of and willing to purchase service of a hospitality business has widened due to increase in the activities of tourism businesses. Various schemes and events being conducted at The Dorchester are mainly communicated by tour agents to their clients. People are aware of the hotel as a luxury accommodation service provider (Mishra, 2009). However, tourism business identifies features that could benefit a particular customer. This increases the range of people who are willing and able to visit the hotel.
3.Increase the range of destinations for tourism:
Development in hospitality increases the number of tourist destinations that can be visited with pure comfort of accommodation, food and transport. With advent in hospitality, the range of market and products that can be offered by tourism businesses is increased. For example, The Dorchester gave a boost to the tourism businesses of Russia (Beaver, 2005). This also benefitted the hotel. At the time of financial crisis in Europe, the hotel kept running due to its wealthy and Russian tourists (Thomas, 2012).
Tourism and hospitality are mutually benefited from one another. The revenue of tourism and hospitality is dependent on one another’s development. Tourism agencies with wider links with hospitality businesses in the world lead to increase in sales of hotels and other hospitality businesses such as guest houses, etc. that are present in a particular tourist destination (Zhou, 2004). Further, development of hotels increases the sales of tour packages by tourism businesses.
5.Develop each other:
These two sectors also direct certain developments in each other’s business. For example, Marina Bay Sands receives the exact knowledge of the needs and expectations of their prospective customers from the tourism agencies around the world who directly interact with these prospects. Tourism businesses can advice hospitality firms for developments or changes they need to make. Further, the hospitality businesses give suggestions regarding improvement of services of tourism firms (Airey and et. al., 2006). For example, they generally give suggestions regarding information flow among the tourism firm, hospitality firm and the consumer in order to maintain higher satisfaction and avoid post purchase dissonance arising from any kind of ambiguity.
6.Business among each other:
Mostly, these industries conduct business among each other. They earn from each other. As the tour agencies leads to sale of the service of the hospitality firm, their profit increases. Further, the range of customer increases. It also avoids the wastage of the service due to loss of customer to the competitors. Hence, the benefits from tour agents are many for a hospitality organization. In return of this benefit the tour agencies earn commission from hotels. In The Dorchester the commission for agents is 10% of the room rate charged from the customer who came through the agent (Uzama, 2009).
In most cases, the hotels and tour agents enter into a deal for an extended period under which the agents promote the purchase of services from the hotel and receive payment in return. This payment is received on every sale facilitated by the agent.
7.Developing each other’s brand image:
.Along with leading to monetary benefit for one another, these industries also facilitate the development of each other’s brand name. When a hotel is recommended by tourism firm, customers tend to rely on them. The satisfactory service provided by the hotel builds customer loyalty for both, the hotel and the tourism firm. Purchasing service of Marina Bay Sands in Singapore increases the satisfaction level from the visit to the city (Ingram, 2003.). The tourists are likely to make repeated visits which gives boost to the tourism industry of the city. Further, they are likely to choose the same agent for facilitating their visit to another destination. Hence the brand image of one another is enhanced by these industries.
8.Support in marketing activities:
The marketing activities of hospitality and tourism are supported by each other. Tour agents worldwide promote the visits to The Dorchester by highlighting its features to the tourists. Further, the promotion of a travel agency can be enhanced by its link and association with The Dorchester. Further, the specific products offered by each other are enhanced and clearly communicated to the customers by each other’s support (Watson, 2008). For example, the need for occasional budget schemes to boost sales widen the range of customers that have higher appeal for visiting Marina Bay Sands is identified and communicated by the tourism companies to the hotel after interacting with customers and identifying their needs. Further, the implementation of these budget schemes at the hotel are communicated by tourism companies to the customers. These schemes facilitate the betterment of the packages offered by the tourism firm. Further, in some case companies of these industries aid the advertisement campaign for one another.
Integration is considered important for the growth of a business. Integration refers to combining of property management activities with other activities of improving operational efficiency of a company. Integration is the major need and challenge for hospitality companies. The major issues in system integration are the security and failure. Marina Bay Sands has undertaken integration at various levels. The hotel has integrated into casinos, restaurants, and retail stores. Following is the discussion over various aspects of integration:
Issues with integration:
It refers to the security of data and resources of the company while integrating horizontally or vertically. The accessibility to company’s data has to be monitored to avoid any kind of issues later. Marina Bay Sands uses CEM AC2000 SE for security. It is an access control system that with alarm processing and photo-badging system (Thakur, 2014). It is used to control accessibility to company’s database by any employee who does not have authority to access it. Otherwise the company wouldn’t be able to successfully integrated and manage casinos in its operation.
Due to integration the responsibility on the leaders of the company increases. Mismanagement refers to inefficient distribution of resources and workforce in the organization. Integration leads to structural changes in the company (Hudson, 2010). The leaders can get focused over acquiring certain resources and technology and overlook other aspects of the system including proper allocation.
Employees resist the changes that occur due to integration. These include technological changes and relocation of employees to different job posts (Hyde, 2008). This may creates a situation where the company has to address the needs of various operations with the issues raised by the employees. In the beginning the employees resisted to work in casinos at Marina bay Sands.
Synergy refers to the interaction and corporation among the integrating sections of the company. There are issues regarding synergies in the integration under hospitality industry. Proper cooperation and information has to be obtained before beginning a project (Williams, A., 2006). The main reason behind the success of integration of casinos and retail store into the hotel was that there was appropriate level of coordination and communication among the integrating sections.
Disruption in organization culture:
The organization culture and working environment undergoes several changes due to integration. This can interfere with the values and beliefs of the company employees. Further their working conditions, rules and regulation may modify and create disturbance in the system which may last for an extended period (Varum and et. al., 2011).
Society has become equipped with enough knowledge and rights to interfere in a corporate integration (Laing and Roberts, 2005). The integration of Casino in hotel was widely opposed due to the negative impacts these casinos could put on the society. They were opposed on the base that they will increase the gambling activity in the city. The company had to fight this opposition since these casinos targeted the tourists and not the local people. Consequently, extra charges are taken from local Singaporeans for entry into Casino at the hotel as a measure to control gambling activity in the city.
Implications of integration:
The risk and issues included in integration are regarding the security of confidential database of the company. Further, it leads to disturbance in the working conditions of the company (Saee, 2006). Also there is a failure in efficiently managing the system integration with a new feature.
Increases the growth of business:
Despite of the risk and various issues, successfully managed integration can lead to increased growth rate of a business. The operational area of the company expands and the availability resources and capital increases (Zientara and Bohdanowicz, 2010). Further the access to various markets around the world also increases leading to better progress of the business.
Beneficial in long term:
Integration leads to short term disruption in the operations. However, once the company overcomes the initial shortfalls of integration, it can gain high long term benefits. This includes gaining and retention of loyal customers of integrating businesses and facilitation of development in the integrated sections of the company by each other (Law, Cheung, and Lo, 2004). Integration of casino, retail and restaurants has made the customer experience at Marina Bay Sands exclusive. Further, the revenue generated by its roof top restaurant and park is due to the location of the hotel in the centre of the city. Further, people would buy a night stay at hotel just to be accessible to its other services of Casino and roof-top restaurants and park.
Barriers to competitive entries:
Integration acts as a barrier to the entry of the competitors. It strengthens the brand image and customer loyalty of the company. Since hospitality is a service industry, customers are less likely to switch. Further, competitors will have to make very high expenses for competing well with an integrated company (Correia and Pimpão, 2008).
Improving core competencies:
The core competencies of the company are increased due to integration as the integrating businesses share their competencies and benefit one another from them.
Enhancing the quality and value of service:
The value is added to the service after integration because; the efficiency of the core service is enhanced by integration of related businesses into the company. The availability of Casinos improves the core service the hotel which is luxury accommodation.
Few considerations for smooth operations:
There are a number of benefits of integration in hospitality industry as discussed above. However, there are a few considerations that the integrating companies have to make in order to overcome the initial unrest and to avoid any future conflict that may lead to failure of integration. These are:
Creating strategic alliance:
Strategic alliance is an agreement that the objectives and strategies of both the businesses should be agreed upon by one another while still operating as independent businesses (Voigt, Brown, and Howat, 2011). It will create cooperation from the beginning of the project.
Renegotiation over terms of contract and way of conducting business with each other, avoids monotony and ambiguity. Further, it facilitates clear knowledge about the needs and expectations of both the b