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.
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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 businesses.
Maintain long term corporate relationship:
The integration should be aimed at maintaining long term corporate relationship between the businesses. The businesses may operate independently but they need to take concern of each other’s needs and values for facilitating coordination empathy among corporate leaders and building of a strong long term relationship (Law, Leung and Wong, 2004).
Affect of integration over actual hospitality business:
Marina Bay Sands integrated resort has enhanced the tourist attraction. The tourists visit Singapore for an exclusive stay at this hotel. The integration of a number of features into the operations has increased its popularity across the world. Further, it was first hotel to integrate with Casinos which gave it first mover’s advantage (Smith and Siguaw, 2011).
Added value to the service:
Integration of similar businesses increases the value of the core product of a firm. Value has been added to the core service of luxury accommodation of the hotel by its integrated businesses of casinos, retail stores and the roof top restaurant and park.
Increased customer satisfaction:
Customer satisfaction increases because customers are able to obtain full value of their money. Though, the value added services increase the cost for customer but people seeking luxury accommodation are willing to pay little extra for greater experience.
Increase customer spending:
Customer spending is increased due to expenditure made in several businesses that have been integrated into the hotel.
Added to the leisure offered:
Despite of increased room rates, Marina Bay Sands runs at 100% occupancy rate. Sheldon Adelson said that on a bad day the occupancy rate is 98%. This demonstrates the affect of integration on the revenue of the hotel (Nickson, 2013). It has peeked due to integration of different businesses into the hotel.
In long term, integration leads to smooth operation of both the businesses. The major interference in each other’s operation occurs in the beginning which is to be eradicated through cooperation and communication (Thakur, 2014). The coordination among the operations of Casinos, Restaurants, retail stores and accommodation at the hotel has become efficient over time of three years.
The competitiveness of both the businesses raises after integration. There services and product gain value from each other’s business. The hotel does not have any efficient competitor in Singapore. All of its integrated businesses account for its competitiveness.
Planning Human Resource Allocation for new project:
Recently The Dorchester has made a declaration about its planning to expand its business in New York and Asia (Vallecillo, 2013). In this section of the report an elaborated plan for its expansion in New York is presented. The rationale behind this decision is that the tourism has been exceeding in New York in the past few years. Further the market for luxury accommodation is developing in the city. The company has a saturated market in its parent country. It has to expand its operation globally for accelerating its growth rate.
The company can enter the market through acquisition as it has done in some sections of UK and US. The major issue of in the project is not the capital since the company has enough capital resources. The main concern in the project of expanding business in Ney York is the acquiring and allocation of human resource. The limitations are needed to be analyzed before proposing the plan. These are:
Unwillingness of the parent country nationals to move to New York- As the company decide to move their business to New York, they might some of their employees to shift from UK to New York so that they can help the company to establish the hotel there (Prideaux, Mascardo, and Laws, 2006). Decision of the company is accurate because the staff that is already familiar with the rules, policies and services of the company can easily handles the customers in the new location and can help them to create a brand identity. However, employees who are working in UK might resist moving to another place because they are already comfortable in their familiar environment and moving to other place will completely change the scenario in front of them as they will have to face many challenges and pressure which can increase their stress. Also they will have to leave their families and friends which will de-motivate them.
Compatibility of American employees- As the company will start the business in New York, they will employ the local people to work in the hotel because they cannot bring all the people from their host nation and also it will be cheap from them to employee from the same location. But the working environment of UK and US are very different and all the rules and regulations of the company are established according to their native environment. Company might face many problems in adjusting with the new employees as they are not familiar with the working habit of these people and same problem will occur with the new employee because they will also take time to adjust according to new environment and services (Ball, Horner and Nield, 2009). This process can slow down the establishment of the hotel.
Extensive training requirements- As the employee are new and they are not familiar with the working of the company so company will have to spend a lot of money on providing training to these employees so that they can understand the working of the company easily and can serve the customers according to the standards of the company (Littlejohn and Watson, 2004). Also the company will have to call experts from both the nations so that both the parties can understand each other with proper training. This will increase the operating cost of the company and company might face break even profits in the starting months.
Maintaining a proportion of home country nationals and host country nationals- When company moves to another nation, it is very important to understand all the rules and regulations of that country. As the company is moving in New York they have to understand the employment policies of the nation because a country only permits the other company to work in its nation when the company agrees that they will also contribute towards the growth of the local community. According to US law, it is necessary for every foreign company to give employment to the local people so the company will have to maintain the proper proportion of both the home country national and the host country nationals to maintain the efficiency of the business as well as rules of the country (Andrews, Roberts and Selwyn, 2007).
The above described issues can be handled through effective planning of allocation of human resource. Following plan incorporates various activities to be undertaken in order to effectively execute the project with proper arrangement of human resource and distribution of responsibilities:
The main goal of the company is to capture the market of luxury accommodation in New York City. For accomplishment of this goal the company develops a list of objectives regarding the allocation of human resource. These include:
- Develop effective organization structure of the new business.
- Determine the exact need of human resource.
- Making decisions over efficient recruitment process to be followed.
- Determine selection criteria that would serve best for a post.
- Maintaining the ambiance of The Dorchester in UK at its subsidiary in New York
Analysis of business environment:
The market for Luxury accommodation is growing is New York due to increasing tourist visits in the city. There is significant competition in the market. However Dorchester has competent brand image and demand New York market (Sigala, Christou and Gretzel, 2012). The availability of skilled workers is high due to globalization.
Skills and potentials needed:
For the leadership positions, the candidates would require to posses certain level of experience in the industry. Decision making skills, and planning skills will be required by these individuals. For the lower level workers, the skills needed would be the required academic qualification along with positive attitude, willingness to work hard and communications skills (Medlik, 2012). The company has an inventory of people with such skills at its home country. However, since the relocation is expected to be high, limited individuals will be available for relocating to New York.
The key posts at the new hotel would be of the Managing director, under whom various managers of different departments will operate. Under these the lower level working staff of the company will work.
The allocation is determined according to the key posts required. Further the previously mentioned limitations and issues have been considered in making the decisions regarding allocation of human resource:
Managing director, human resource manager and manager of accommodation:
The managing director would be an experienced employee of administration who has worked for the company. Same will be done for assigning posts of human resource manager and accommodation manager. The reason behind this is that these individuals will be required to monitor the standard of operations, skills and service in accordance to the company’s global brand image.
Other Managers and staff:
Other managers and general staff can be employees from the global market of employees. However, the compliance with US employment law will be considered.
It will be conducted at global level to ensure that workforce has best skill level.
Compelling compensation structure would be developed to relocate such employees from London to New York. Salary structure of other employees will be determined according to company’s policies and US regulations.
To conclude the study it can be said that there is a very positive interrelationship between tourism and hospitality industry. They go hand in hand and support the business activities of each other. The benefits given to each other include increasing of sales, growth of business, building brand image of each other and supporting activities (Zehrer and Siller,2007).
The major issues in integration are related to security and synergy. Further, the human resource plan for Dorchester indicates the proportion of expatriates and host country nationals needed in new hotel at New York.
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