Business Operations within the Hospitality Industry

Hospitality Contemporary Assignment

 

1. Introduction

The hospitality industry is extremely broad and it is not easy to define the industry as a specific business (Ainscough, 2018). It can be defined as the movement of activities and relations that a business as a host offers to their customers with goodwill, including providing a friendly service or deliver an accommodation outside of the home. The industry covers more than 170,000 commercial business throughout the UK with a further 90,000 outlets in such areas as healthcare and education catering (Foskett et al, 2016: 4). It has contributed to UK economy more than £40,6 billion in term of Gross Value Added in 2011 (People 1st, 2013). Hence, it can be said that that the hospitality industry is relatively important to the UK economy and it also plays a significant role in the social and culture life of communities (Foskett et al, 2016: 4). Within this assignment, the industry will be divided into four different sectors that are city centre hotels, leisure and spa hotels, restaurants and contract catering. By comparing different businesses within each sector, the structure, scope, sizes, services and products are expected to be described in deep.

2. City Centre Hotels

 

According to BDO (2015), the UK hotel market helped the UK economy grew at a faster rate than any other major advanced economy and recorded its best performance in 2014. Within Manchester, there are 4 stars’ hotel such as Novotel and the Townhouse but they provide different services and products to consumers.

 

Novotel

cr: Novotel

Townhouse

cr: TripAdvisor

Similarities

– 4 stars’ hotel

– Located in the central of Manchester

– Informal, formal dining and afternoon tea available

– Can be booked for events such as weeding, private dining or meeting

– Guaranteed comfort, high quality furnished rooms

Differences

– Belong to Accor, a French multinational hospitality

– Modern, international hotel

– Room prices depend on high or low seasons. 

– International cuisines are served

– Focuses on corporate social responsibility (CSR)

– Belong to Bespoke hotel group, an UK’s independent hotel group

– Traditional hotel

– Most of facilities such as gym is needed to be paid to use

– Award winner of Open Table Diner’s choice in 2016

– Focuses on traditional cuisines

Firstly, both the Novotel and the Townhouse hotels are 4 stars’ hotel, according to the international standard AA rating system. Therefore, they are described high-quality services and premium pricing strategy is used. The premium pricing strategy is likely to be used to target high-income consumers, therefore, it is likely to suggest that customers of the Novotel and Townhouse hotels are high socio-economic classes. However, as they target consumers who do not stay overnight at the hotel by open their restaurants and bars to the public can attract different segments of customers as consumers can have a formal or informal dining with reasonable to high prices. So, this suggested that their customers are likely to be middle social classes to upper socio-economic.

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Besides the similarities between Novotel and Townhouse, they have differences that can become their unique selling point to gain competitive advantages. The Novotel hotel joined the Planet 21 programme with their key achievements are to “plan for the planet”, “fight against the sexual exploitation of children” and provide “healthy and sustainable food” (Accorhotel, Online). According to Carroll’s CSR Pyramid (1991), the hotel has achieved “Philanthropic responsibility” (tutor2u, Online), this suggested that the hotel behave ethically which likely to attract consumers who consider ethical behaviour factor when choosing a hotel. Therefore, the Novotel hotel is likely to attract consumers from generation X and Y as they are described as “high awareness of ethics”. On the other hand, the Townhouse hotel is more traditional which suggested that they might attract consumers who want to have a ‘classic’ service and product such as Baby Boomers generation. According to Bartlett and Ghoshal’s Model of International Strategy (1980), Novotel is likely to focus on the international strategy to maintain the brand of Accor hotel which suggested that they tend to be more international operations. Diversely, Townhouse is more focusing on their domestic market means their main target still domestic customers and classic British traditions. So, the city centre hotel sector seems to be very diversified because different operators are likely to have different perspectives in targeting their customers and their ideal market.

 

3. Spa and Leisure Hotels

 

Within the Hospitality industry, Spa has become the factor that can determine customer’s choice in the hotel and most hotels around the world use Spa as a tactic to promote their hotel and services. For example, Mottram Hall and Waterside Hotel and Leisure has been using their services and products as a tactic to promote their brands.

Mottram Hall

credit: Mottram Hall

Waterside Hotel & Leisure

credit: waterside

Similarities

– Spa and fitness are available

– Accommodation is provided

– They can be classified as Day Spa, Club Spa and Designated Spa

– Operating model is Hotel Operated

– Themed events and offers such as Christmas, etc.

– Can be booked for events such as birthday party, wedding, etc.

– Informal and formal dining are served

– Keep improving and innovating their facilities, customer services

Differences

– 4 stars’ hotel

– Countryside estate

– 18-hole, Par 72 championship golf course in Cheshire

– 5 stars’ bubble rating by Good Spa guide

– AA rosette for culinary excellence which mainly British heritage menu

– Provide services for businesses such as conferences, meeting.

– Indoor and outdoor pool, steam and sauna, tennis court.

– 3 stars’ hotel in Didsbury

– Provides classes for children such is Taekwondo, swimming, etc.

– Best cooking class in Manchester

– High class barista training

– Informative nutrient course for adults

– Personal training are provided

– Ranked 2nd Spa hotel in Manchester (TripAdvisor)

– Ranked 12th as best value hotel in Manchester (TripAdvisor)

Spa has been increasing usage especially for marketing and advertising purpose for hotel businesses. It can be the factor to drive customer’s booking and according to global research in 2012, half of the respondent stated that the existing of the spa Is an important factor to choose a hotel (Ainscough, 2018). Therefore, both Mottram Hall and Waterside, are likely to increase demand that can increase sales revenue for the spa and leisure activities. Moreover, by using marketing strategies such as providing Christmas theme holiday and offers, both hotels can target a wider range of customers because prices for offers are likely to be discounted. Hence, customers from lower socio-economic classes might able to purchase the offers which means Mottram Hall and Waterside can possibly receive higher sales revenue that might increase gross profit and pass onto operating profit.

On the other hand, the Mottram Hall is a 4 stars’ hotel which means they have excellent quality of facilities and services in premium price that can attract consumers from upper-middle social classes to higher of the socio-economic such as Baby Boomers and Generation X. While, Waterside is only 3 stars’ hotel means, the quality is only classified as good and accessible prices (Ainscough, 2018). So, Waterside is likely to attract consumers from lower-middle classes to higher socio-economic classes such as Generation X and Millennials. Furthermore, Mottram Hall has won awards for their quality in culinary and spa which is likely to increase their recognition among the publicity that can attract more demands from customers who have high expectation such as Generation X. Simultaneously, by providing classes for children, consumers who have children are likely to be attracted by Waterside because their children can also enjoy the activities as well as the parents. It is likely to encourage families that have young children such as Generation X and the early of Generation Y to come to Waterside. Hence, Generation X with high-income and Baby Boomers are likely to attracted by Mottram Hall because of their “classic” British heritage menu while Millennials’ demand tends to be captured by Waterside hotel and leisure. So, within the spa sector, there are diversification in classification as well as operating model which can have different influences toward consumers.

4. Restaurant sector

 

With today’s busy lifestyles, transient working days and people on the move, street food, fast-food have become much more popular in recent years (Foskett et al, 2016: 10). The fast-food chains such as McDonald’s and Burger King typically come out on top in the $651 billion fast-food industry (iBIS, Online). It suggested that the fast-food industry have grown excessively which contributes revenue to the global economy. However, in Vietnam, street food is more than a nutrient, it represents a country’s culture, which is likely to be more favoured than fast-food.

 

 

Fast food

credit: The World News

Street food

credit: The Diplomat

Similarities

– Quick and effective service

– Cheap price and convenient food with little preparation

– Set standard for products

– Limited choices in menu

– Customer management is extremely important to ensure speed of service

Differences

– Prices tend to be higher

– Well-known brands in most countries

– Operated by companies

– Open hours: tend to be closed early

–  Considered as unhealthy choices

– The food is unlikely to be shared

–  Customer targeted: Mainly Generation Y, Millennials

– Prices range are low

– Managed as a family business

– Food is likely to be shared

– Considered as healthier choices

– Open hours: nearly 24/7

– Customer targeted: Builder Generation, Baby Boomers, Generation X, Generation Y, Millennials.

Both fast-food chains and street vendors have similarities, for instance, they need to maintain their customer management to achieve quick, effective services. For example, they need to ensure they meet customer’s need and provide the products that customer wants to have more demand. Moreover, their products are likely to have a set of standards. For example, within McDonald’s, they have standards for their burgers and fries that their franchisee or branches must fulfil. Hence, customers can possibly expect the quality from products they get is unlikely to be varied.

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However, according to Chef Andrea Nguyen (CNBC News, 2018: Online), Vietnamese banh mi are sold on the streets at rock-bottom prices compared to McDonald’s or Burger King which means the prices for Vietnamese street food, in general, is significantly cheaper than any fast food chains. Therefore, the price for a burger from fast-food chains is considered as premium which is unlikely to be attractive for low income consumers in Vietnam. So, fast-food chains in Vietnam are likely to target middle to high social classes. Furthermore, when McDonald’s opened the first branch in Vietnam in 2014, it drew crowds of locals who wait hours to get their hands on a Big Mac (CNBC News, 2018: Online), especially Generation Y and Millennials which suggest they are likely to be xenophile. By successfully exploring the xenophiles among Vietnamese teenagers, McDonald’s started to target Millennials and Generation Y in Vietnam as their main consumers. Otherwise, Vietnamese street foods have been a part of the native’s culture and traditions, therefore, its target customers are likely to be wider, from the Builder Generation to the Millennials. However, fast-food chains can use Bartlett & Ghosal’s International Strategy (1980) to adapt multi-domestic strategy to raise concern for local responsiveness (tutor2u, Online) which can possibly help them to target local consumer’s need better. Hence, it can lead to an increase in demand that can raise sales revenue for the firms then increase their gross profit margin. Therefore, fast-food is likely to have opportunities to grow in Asia markets such as Vietnam.

5. Contract Catering

 

In recent times, there has been a wide expansion of the contract catering sector of the UK hospitality industry because of an increasing number of business clients and public organisations contracting out their ancillary services (Wilson et al, 1997). Nowadays, contract catering is not only used for events or conferences, but it is also used for airline, healthcare and schools. For example, Do&Co provides catering for British Airways (London Air Travel, 2018) and Compass Group who provides catering for events, conferences, etc.

Inflight Contract Catering

credit: London Air Travel

Event Contract Catering

credit: The Healthy Snacks Blog

Similarities

– Out-sourcing from other businesses and organisations

– Plenty of choices in menu

– Sustainability is important to avoid waste

– Religion, vegetarian, dietary, etc. are carefully considered

– Foods can be served hot and cold

– Follow food safety; health and safety mindfully

– Ingredients have FAIRTRADE mark

– Hazard Analysis and Critical Control Point (HACCP) is crucially needed to avoid problems such as food poisoning or allergies

Differences

– Economy class, Business class and First class have different menu.

– Flying chefs are available as a part of the airline crew to provide products and services for Business & First classes.

– Quality control tends to be stricter.

– Cook-chilled system is in used.

– Ensure that pilot and co-pilot do not eat the same food to prevent hazard for the flight.

– Can provide other services such as cleaning, supply chain and guest services (example: Compass Group UK).

– Location is an important factor to consider.

– Food are usually freshly cooked and served hot.

– No packaging is required.

Inflight and Event contract catering tend to have a lot of guests and they have different dietary which can be vegan or due to medication, they can only use certain products. Therefore, inflight and event catering firms need to ensure the menu is varied in choices which include consideration for religion, vegetarian. It is likely to attract customers who have awareness for healthy choices such as Generation X. Any contract catering firms need to follow food safety, health and safety include using the HACCP system because it is a legal requirement and to avoid problems such as consumers get food poisoning or allergies (Foskett et al, 2016: 65). Therefore, both inflight and event contract catering businesses are mindfully considering the quality of their product by following the food safety and health safety rules which can secure their reputations.

However, for in-flight catering, different classes have different selections on the menu; for instance, business and first classes always have more premium products and services than economy classes. According to Do&Co, they provide British Airways with flying chef as a part of the airline crew who is responsible for the product in the Business class. On the other hand, event catering businesses provide the same products and services for customers, despite the differences in socio-economic classes. It suggested that inflight contract catering tend to have a more complicated system to produce different products to fulfil customers’ need. Moreover, for events, packaging or container for foods are not required, unlike inflight catering, containers are strictly required to guarantee that foods are not affected by external factors that can cause hazards for food safety such as insects (McCool, 1995:257). This might cause customer dissatisfaction and resulting in bad reputation for the catering firm. Consequently, for generation X and Y, who have access to internet, they can write bad review on websites such as TripAdvisor or Booking which can be harmful for the contract catering business’ reputation and image. Overall, inflight and event contract catering resemble their requirements for food and health safety; but, they deliver different services and products with a different purpose for consumers. Therefore, it is said that the contract catering sector has expanded to make a connection with different sectors such as airlines or events.

6. Conclusion

 

The hospitality industry is exceedingly broad. Within each sector, there are different types of businesses are operating and providing different services and products to become more attractive towards consumers. Businesses can use their services or products as a method for marketing purposes such as promote the brand or promote their seasonal offers. Therefore, services and products can become a unique selling point for businesses to achieve competitive advantage to compete with other firms and organisation in this dynamic industry. By comparing and contrasting businesses within the sector, the structure and the scope of the hospitality industry are discussed as well as different features of organisations.

Word count: 2,657 words

 

 

7. References:

 

Accor Hotels (No Date) Planet 21 [Online] [Accessed on 31st October 2018] https://www.accorhotels.com/gb/sustainable-development/index.shtml

Ainscough, I. (2018) Hospitality Industry. Manchester: Manchester Metropolitan University. PowerPoint, distributed on 25th September 2018, in lecture 1 for module ‘Hospitality Contemporary’.

Ainscough, I. (2018) Trends in Hospitality. Manchester: Metropolitan University. PowerPoint, distributed on 2nd October 2018, in lecture 2 for module ‘Hospitality Contemporary’

Ainscough, I. (2018) Food and Beverage Sector. Manchester: Manchester Metropolitan University. PowerPoint, distributed on 9th October 2018, in lecture 3 for module ‘Hospitality Contemporary’

Ainscough, I. (2018) Spa and Wellness and the Cruise Industry. Manchester: Manchester Metropolitan University. PowerPoint, distributed on 23th October 2018, in lecture 4 for module ‘Hospitality Contemporary’

bespoke Hotels (No Date) Townhouse Hotel Manchester [Online] [Accessed on 31st October 2018] https://www.bespokehotels.com/townhousehotel

Cranmer, E. (2018) Generations and the impact of Technologies. Manchester: Manchester Metropolitan University. PowerPoint, distributed on 8th October 2018, in lecture 3 for module ‘Technology and Innovation’ 

Compass Group UK (No Date) Foodservice [Online] [Accessed on 11th November 2018] https://www.compass-group.co.uk/meet-the-family/foodservice/

Davis, B., Lockwood, A., Alcott, P. and Pantelidis I. (2012) Food and Beverage Management. 5th ed., United Kingdom: Routledge

Do&Co (No Date) Airline Catering [Online] [Accessed on 11th November 2018]

http://www.doco.com/welcome/airline-catering.html

Franchise Help (2018) Fast Food Industry Analysis 2018 – Cost & Trends [Online] [Accessed on 8th November 2018] https://www.franchisehelp.com/industry-reports/fast-food-industry-analysis-2018-cost-trends/

Foskett, D., Paskins, P., Pennington, A. and Rippington, N. (2016) The Theory of Hospitality & Catering. 13th ed., United Kingdom: Hodder Education.

GovUK (No Date) Chapter 17 – In-Flight Catering [Online] [Accessed on 11th November 2018]  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/757093/20171017-20_04_04-_JSP_456_DCM_Pt_2_Vol_2_-_Ch_17_In_Flight_Catering_Amndt_012.pdf

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McCool, A. C. (1995) Inflight Catering Management. Canada: John Wiley & Sons, Inc.

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Rizzo, C. (3rd August 2017) Why Pilots and Co-pilots Can’t Eat the Same Thing on a Flight. Travel and Leisure [Online] [Accessed on 11th November 2018] https://www.travelandleisure.com/airlines-airports/pilots-co-pilots-cant-eat-same-meals

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tutor2u (No Date) Carroll’s CSR Pyramid [Online] [Accessed on 31st October 2018] https://www.tutor2u.net/business/reference/carrolls-csr-pyramid

tutor2u (No Date) Bartlett & Ghosal Model of International Strategy [Online] [Accessed on 8th November 2018] https://www.tutor2u.net/business/reference/bartlett-ghoshal-model-international-strategy

Turner A. (13th September 2018) Why McDonald’s and Burger King flopped in Vietnam. CNBC News [Online] [Accessed on 8th November 2018] https://www.cnbc.com/2018/09/13/mcdonalds-burger-king-vietnam-fast-food.html

University of Worcester (No Date) Catering Specification: Specification of Requirements. [Online] [Accessed on 11th November 2018] https://www.worcester.ac.uk/documents/Catering_Specification_of_requirements_final_version.pdf

Waterside (No Date) Waterside Hotel and Leisure Club [Online] [Accessed on 4th November 2014] http://www.waterside-hotel.co.uk/

Wilson M. D. J., Murray A. E., Black M. A., McDowel D. A. (1997) The UK contract catering sector of the hospitality industry. Facilities, Vol. 15. Issue: 7/8, pp/177-186. [Online] [Accessed on 11th November 2018] https://www-emeraldinsight-com.ezproxy.mmu.ac.uk/doi/full/10.1108/02632779710168218