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Service Development in Hospitality - Holiday Inn

University: The University of Sunderland

  • Unit No: 12
  • Level: Undergraduate/College
  • Pages: 13 / Words 3331
  • Paper Type: Assignment
  • Course Code: TLH314
  • Downloads: 506
Organization Selected : Holiday Inn


Hospitality operation management refers to the activities that are carried out in various fields of hotel industry. Jobs available in hospitality sector includes working in hotels, catering, casinos, resorts and restaurants along with jobs that deals with visitors and tourist. One of the important aspect in hospitality is the facilities and services they provide to their guests needs to be perishable(Alexakis, 2011). This will helps that organisation to differentiate itself from rival competitors. This present assignment is based on Holiday Inn which is a Britain owned American hotel, situated in Denham, Buckinghamshire. This hotel has successfully maintained its presence in approx 1150 locations worldwide. This report includes nature of products and services which are offered in hospitality industry along with factors that affects pattern of demand. Also, customer profiles are compared in respect with their demands. This report also involve stages of  new product or service development in hospitality. At last, constraints and opportunities associated with hospitality are mentioned along with aspects like profit, revenue generation, performance measures and appraisal techniques.

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1.1 Nature of hospitality products and service areas.

A product is either a service or a commodity. It can be in virtual, physical, tangible or cyber form. Each product is produced at some cost and sold at a particular price. Range of a product usually depends upon quality and affording capability of targeted customers. To expand their customer base, it is must for Holiday Inn to provide unique services and products to their guests(Bartram and Dowling 2013). In reference with hospitality industry products can be eatables, drinks and beverages. Nature associated with products and services of Holiday Inn is mentioned beneath:

Nature of hospitality products and services is determined by various factors such as:

Inseparability: As per its meaning, products and services that are produced on site cannot be separated and have to be consumed there itself.

Intangibility: Intangibility is a quality where goods and services cannot be touched physically, they can only be felt. For example, meals after consumption and paid for guests do not carry any tangible product with them.

Perishability: It is an important concept which says that services provided by hospitality sector cannot be stored and kept by clients for future use. For example, an unused room cannot be stored at present date and sold at any future date.

1.2 Different influences affecting pattern of demand in hospitality industry

Hospitality industry is playing most important part in making contribution in economy of country(Bharwani and Butt 2012).  It is one of world fastest growing industry with a ultimate goal to keep their guest happy. There are some major factors mentioned below which affect patterns of demand that have to taken care by Holiday inn management:

Seasonality: This factor plays very important role in determining behaviour of consumers. Seasonality is characterised in Low, Green and High or peak period. Peak period usually occur during festive period. Therefore it is very essential for Holiday inn owners to understand the seasonality in every region to operate their services in best way and provide high quality services.

Healthy living: This is one of the major tend which  is rapidly increasing. Consumers and tourist are more focused in having real quality food, positive nutrition, fresh and lees processed food and beverages. Hence, it is necessary for Holiday inn to adopt new healthy structure and includes healthy meals in their menu.

Economic factors: Economic factors include tax reform and other economic segments like income level of consumers. If tax rates are high then it will automatically affects pricing policy of industry(Causin and Ayoun 2011). Hence, holiday inn must ensure and take respective measure in relation to this factor to ensure their growth.

1.3 Compare customer profiles and their differing expectations and requirements in respect of hospitality provision.

A person spends money to gain services in accordance with its spending power. It differs from person to person in according to their income groups. There are three types of income groups.i.e. high, elite and medium. In this context, the target customers of Holiday Inn hotel are generally elite class and high class because their services are very costly for peoples of medium class. The only need of a moderate class people is a basic hotel which have a comfortable location, healthy and safe environment. On the other hand, Holiday Inn hotel provides private swimming pool, premium bathrooms, gym facilities, special meal item to their customers. These services are affordable for elite and high class people because they are willing to pay any price for these luxuries facilities. The expectation of elite class is always higher but medium or moderate class only wants basic facilities with a reasonable price. According to this, Holiday Inn hotel is suitable only for high and elite class as they are providing luxurious facilities that is difficult for an medium class people to afford.

1.4 Factors affecting average spending power of customer.

Average spending power of a customer is determined by his income sources. Average spending power is the ability to spend money after paying taxes(Crawford, 2013). It is determined and affected by numerous factors such as

Size of income:  This factor is very important as any consumer will be able to spend only what is earned. For example, if somebody earns 50000 a month his spending power will also be 50000.

Socio-cultural influences: Culture plays a very important role in determining spending power. Different people have different set of beliefs, values, traditions etc.  They are also based upon lifestyle of consumers.

Economic situation: Economic situation refers to monetary status of consumers availing service of hospitality sector. Consumers who have medium earning capacity like only basic services whereas high class customers like excellent features like personal swimming pools, 5 star facilities, ambience of hotel etc.


2.1 Evaluate the key stages in product and service development applied within a hospitality operation

In this context, Holiday Inn is providing additional facilities to its customers in order to attract their customers and to increase their sustainability in a business environment. They are providing many additional facilities like pick and drop facility and organising cultural and music events for their customers in order to bring sustainability(Ferdinand and Kitchin, 2012). Some of the key stages in product and service development are:

(a) Idea generation

It is a stage which involves generating an idea for development of new products and services in addition to the existing products and services. In this context, this stage will helps Holiday Inn in understanding additional requirements of its potential customers.

(b) Idea screening

It involves analysing and evaluating suitability of an idea in different types of situations,  so that it helps Holiday Inn in gaining a competitive advantages. In this context, it also helps Holiday Inn hotel in monitoring the objectives that they wants to achieve through the development of their new products and services.

(c)  Concept development and testing

This stage involves basic requirement for setting a idea of introducing new products and services(Sigala, 2013). For instance Holiday Inn is introducing a pick and drop facilities for its customers so there should be an availability of a car and a driver that is necessary to achieve their specific objectives.

(d) Business analysis

In this stages involves brief analysis of an idea in context to its suitability and in according to the customer's needs and requirement. In this context, this stage will help Holiday Inn hotel in knowing benefit factor in a context with their customers.

(e) Product development

This stage is a part of research & development process in which they gives a shape to the new products and services. In this context, it will help Holiday Inn hotel in enhancing quality of their products and services.

(f) Test marketing

This stages is used to identify the capability of new product and services in order to get customer attention(Lashley, 2012). In this context it will helps Holiday Inn in knowing the effectiveness of a product and services.

(g) Commercialisation

This stage comes just before the launch of new product and services to identify target customers of that product and services. In this context, it will help Holiday Inn in knowing worthiness of its new products and services.

(h) Launch

This is the last stage of product and services development in which official announcement is made about the product in a potential market(Sunder, 2013). In this stage Holiday Inn promotes its particular services at a global level in order to generate awareness among its target customers.

2.2Analyse feature which contribute towards customers perception of products and services

Consumer perception plays an very significant role in company ability to gain attraction of new consumers and retain their existing customers(Tsang, 2011). Holiday inn make sure that perception of consumer is mainly affected by services they offer and consumer reviews. There are some major factors mentioned below that can help company to make changes in their consumer prescription and critically win their heart :-

Brand image: It is especially important in relation to service industry to increase and develop competitive advantages. It is very essential for Holiday inn to develop long term relationship with their consumers by creating strong image of their brand. This factors affect consumer minds in very first place.

Availability of resources: Having all necessary resources which are required by consumers to create a strong sense of satisfaction among consumer. Therefore, Holiday inn must ensure that they implement all resource staring from basic to luxury.

 Style of services: Services that are offered by business organisation in order to satisfy their consumers are defined as style of services(Tsang, 2011). Holiday inn make sure that they serve various style of food services, beverages services, quick response services, proper reception service, buffet services, family style services to satisfy their guest in best way. This will help them to create long term relationship and enhance growth of their business with high profitability.

2.3 Opportunities and constraints affecting products and services in hospitality sector.

Hospitality industry has numerous variables that affect growth of products and services. Every organisation in this sector works on principle of providing services to its customers and so requires to follow and maintain few standards while addressing needs of customers. Opportunities affecting products and services are:

Brand Image-  It refers to view point of customers about a brand or a product. It is also a way in which customers perceive a product or any brand at any given time.

Nutrition and dietary requirements: Both these requirements need to be essentially addressed by hospitality industry as it deals in foods and hotels. It is very important that food provided by Holiday Inn should be full of nutrients and fulfill all basic dietary requirements.

Accommodation facilities: Accommodation facilities are basic area of services in this sector. It should always be taken care of that these facilities are maintained in a neat and clean, hygienic environment and area of accommodation is well lit and ventilated and sanitised.

These are few opportunities and constraints that need attention of managers of Holiday Inn as it is most sensitive area and when taken care of can work wonders. 

2.4 Evaluation of different merchandising opportunities for hospitality production and services

Merchandising is a process which includes various other feature that come along with a product which is offered at a store. Holiday inn must ensure that they offer different types of features that can attract and please consumers and make them buy their services.

Digital merchandising: This method involves promotional activities that are require to sell any product or service online. This service can enable to display product digitally in digital marketing. Holiday inn can use this service to attract their customers. It will surely help company to perform their business in very effective manner and ensure high profitability. It is one of a secret element that can help a company to engage their customer and guide them towards make a purchase.

Visual merchandising: It is a marketing process to create a product in more advanced level with the help of various elements like displays, decorations, layout of particular space, colour, lightning, technology and other various elements to attract consumer attention. Holiday inn can use these various techniques to attain customer attraction.

As per above mentioned points, Digital merchandising can prove very beneficial for holiday inn to perform their business in effective way. In the world of digitalization where technology is playing very important role in every aspects and every sector, this method  will help  company to attract consumers from very wide range by displaying them their finest services and products.

Pricing methods is a name given to numerous ways in which price of any goods or services is calculated taking into account all other factors such as product, service, competition, target audience etc. Various pricing strategies include:

Task 3

3.1 Different methods of pricing.

Cost oriented pricingIt is a method of pricing which includes profits of a company and also covers its basic costs of production. It works on principle of cost of production and profit objectives of a business concern.

Market oriented pricing strategy- It is a competitive pricing strategy in which managers of different business concerns compare prices of similar products present in market and then assign prices after comparison.

Service charge: An amount which is usually taken after a customer avails a service. It is added to the bill amount and often levied after human interaction between consumer and service providing company. Service charge has different names such as booking fess(hotels), security fees(travel) etc.

Out of all three pricing methods, service charge is a method that is used by Holiday Inn hotel as service charge is normally charged for extra services provided by housekeeping department of hotel. Other two methods cannot be used by Holiday Inn as it is a service providing concern and other two methods are based upon price of goods and hotels works for providing services and not goods.

3.2 Assess the factors which affect revenue generation and profitability in hospitality operations

The chosen organisation Holiday Inn is providing services mainly to elite class which will helps them in retaining their productivity for a longer run. There are some factors which affects revenue generation of Holiday Inn:

(a) Labour intensity

In order to generate revenue it is essential for managers of Holiday Inn to motivate their staff members to work effectively and efficiently. In this context, it is essential for employees of Holiday Inn to deliver services more efficiently which will leads in generating high level of profits in an organisation.

(b) Price

The pricing strategy plays a crucial role in overall development of an organisation. In this context, the chosen organisation Holiday Inn has to make efficient pricing strategy in order to generate high profits.

(c) Procurement

The cost of procurement also affects revenue of an organization. In this context, there are number of products and services offered by Holiday Inn. These products are essential to procured by hotel from a market to achieve their goals and objectives.


4.1 Applying performance measures and appraisal techniques to aspects of hospitality operations.

Performance appraisal is a method that helps to analyse and evaluate each and every employee's job performance and productivity taking organisational objectives into consideration. It is used by Holiday Inn hotel to analyse growth and development of its employees. Various appraisal techniques include the following:

Quality management- Activities and functions of management which help in evaluating quality policies implemented by any business concern by process of quality planning and quality assurance.

Data analysis and evaluation- It is a term which refers to process of inspecting data using analytical and logical reasoning as its basic techniques or methods. Data is collected from various sources reviewed and then analysed.

External comparison- Comparison of a company's financial statements with another business concern almost similar and functioning in same industry.

Holiday Inn hotel uses above explained two techniques external comparison and quality management for measuring performance of its employees and providing them timely appraisal.

4.2 Qualitative and quantitative appraisal techniques and their uses and limitations.

Qualitative appraisal techniques refer to method which uses qualities like description of situations, events, human behaviour approach etc. to assess a company's position in hospitality sector. It is inductive in nature. Also, it has narrower scope and applies only to a particular situations or experiences whereas quantitative methods use numerical figures and data for evaluating a company's performance.  These methods are distinguished on basis of numbers, measurement, experimental design and statistical analysis(Vlachos and Bogdanovic, 2013). Limitations of qualitative methods is that it does not pay attention to numerical data and has a narrower concept.

Both these techniques should be used in proper balance in Holiday Inn hotel so that appraisal can be done efficiently and no measures are left untouched. A combined balance of both measures helps managers of Holiday INN to function smoothly and efficiently.

You May Like This: Hospitality Operations Management - Hotel Hilton

AC4.3 Apply approaches to business analysis, evaluation and planning appropriate to hospitality operation

Business analysis is a process of identifying business needs and provide an appropriate solution for its requirement to achieve organizational goals. In this context, managers of Holiday Inn are identifying various methods which will helps in delivering excellent quality services to their customers.

Business evaluation refers to assess overall performance of an organization in a competitive environment. This will help Holiday Inn in identifying their strength and weakness and they can use this as an opportunity to face future challenges.

Business planning refers to determine specific goals and objectives of an organization and in making an effective plan to achieve those objective. In this context, managers of Holiday Inn can guide their subordinates with a motive to increase their efficiency and effectiveness. So these approaches are crucial for overall development of an organization.

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As per the above mentioned report, it is concluded that effective pricing strategy should be adopted in a hotel after identifying intrinsic and extrinsic factors. Also the provision of services should be well planned which leads in achieving customer satisfaction. It is also necessary for managers to provide efficient training to their employees in order make their workforce efficient and effective. Along with this, it has also been analysed that there are various stages in delivery of services which needs to be undertaken efficiently in order to face future challenges.

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