Management Strategy is the craft of conducting and executing business operations with a certain goal, objective and vision to achieve competitive advantage. The strategy ranges in all the hierarchies of the organizational structure to maintain a course of action in the global business environment (Deresky 2017). The historical origin of strategy is derived from the military of ancient time which resulted in winning or losing wars. But in the current management strategy has taken the place of older versions of strategy which is implemented in the global business environment.
Hospitality and tourism industry is one of the biggest business industries in the world involving many big players and business tycoons. This industry caters to the needs of accommodation, transport, fooding and even luxury of its consumers. As the size of the industry is huge, its stakeholders list is also quite long (Durand, Grant and Madsen 2017). Since this industry appeals to the luxurious and lavish lifestyles of people all around the world it is the major source of income for many countries.
The following essay is about the holistic analysis of strategy management modules in hospitality and tourism industry. Since service sector has become the vital part of global economy, GDPs and other economic indicators are getting influenced by it. There are many contemporary issues in the H&T world which are discussed below.
Formulating a strategy for the hospitality and tourism industry and that too at the global level is a daunting task. To understand the key objectives and services which are to be provided according to the market demands is vital (Schaltegger and Wagner 2017). Strategies which are to be made are constructed on environment scanning so that a link exists between the level of business and strategy formulation.
There has been growth in the competition in the hospitality and tourism industry. Many new players have joined this industry and have posed threat to the pre-existing hotel chains and hospitality ventures. There is a war of rate negotiations and services in the hospitality market as new hotel chains are providing much ore lavish facilities at cheaper rates. This has hampered the hospitality and tourism industry in economic aspect as the profit margin has reduced significantly (Roy and Srivastava 2017). Opening up of new restaurants and resorts in remote places are drawing more customers which has given rise to new trends of traveling and holidaying. There are number of offers and plans for holiday trips all over the world and all the companies are trying to crush their opponents even if they have to do business at very low margins and profits.
Firms operating in the hospitality and tourism industry face different problems in domestic and international business domains. There are many market-related factors which influence the flow of business (Okumus, Köseoglu and Altin 2017). It is known that internationalization is considered as acontingency in the hospitality and tourism industry for formulating management strategies.If the factors of impact in the industry are calculated then variables like, competitiveness, marketing differentiation, and modernizationare considered to be the key. Other factors such as brand identification, distribution, promotion and advertising are very important.
There is a differentiation in the mind of consumers which is based on the market value of the firm and the brand name which is used to attract more customers in the short term and long term. This market differentiation creates confusion in the minds of foreign travelers which is seen very commonly in the developed and developing countries (Pérez-Pineda, Alcaraz and Colón 2017). This confusion needs to be clear in thecontext of the products and services availed in the hospitality and tourism industry. Companies operating in the international market needs to reduce the difference of services and products which are being offered to keep the competitive advantage at par. Another important aspect is aninnovation which comes in the form of offers on products and services keeping in mind the nature of customers and time of year in respective countries when the tourist flow is at its peak.
Strategy formulation for thelocal market is very different from that of theglobal market in the hospitality and tourism industry as the quality and range of customers varies a lot. To provide them with best services a firm should adopt the basic generic strategy which involves leadership differentiation and focuses (Wheelen and Hunger 2017). This industry has a lifecycle which starts from introductory, goes to growth, then experiences a shakeout, reaches maturity and then finally faces decline. A firm should make business strategies as per this lifecycle to derive maximum advantage.
The problem with this customer relationship is that it has grown very fragile in the recent years. With the advent of globalization and technological inducement, tourists have become aware of numerous websites and portals where they can easily get discounts and negotiate better offers for their stay. That is why it has become tough for the hotels and tourism agencies to retain their valued customers (Morozova, Morozov and Arifulin 2017). When the customers try to negotiate with the hotel management the latter gets caught up in business dilemma as they have to comply with the rates and services which the customers are asking for either they will lose them and the business and profit will go to their competitors. This is a major reason why it is becoming difficult for the hotel management to retain their premium customers.
According to the latest trend, all the companies operating in hospitality and tourism industry offer more than one products to different groups of customers. This is one of the best strategies as relying too much on only one product and expecting that product to do well is not acceptable (Marco-Lajara, Úbeda-García and García-Lillo 2017). It can expose the firm towards potential risks and downturn in the context of global operations. Having different products needs proper management strategy to manage the operations and implementation of the respective services to increase their output and the management should take the responsibility of handling these multiple products.
Different types of pressures are felt by large companies of the hospitality and tourism industry (Madera, Belarmino and Belarmino 2017). Some of these pressure points are:
Large organizations of hospitality and tourism industry use the low-cost strategy at proper locations to benefit from the economy. These firms also need to adapt the local market demands to keep the revenue of the firm in good shape.
The strategic management in the hospitality and tourism industry is facing the problem of market superiority in which being at the top on the list of most famous and desired companies of hospitality has become a key issue (Brodbeck, Ponzi and Fisch 2017). With emergence of new players who have deep pocketed economic structures are posing a threat to the previously well-established firms. New lucrative offers and services provided by the new comes, challenges the strategic management approach of the older companies which forces them to modify their business structure to compete with new trends.
In the business world of hospitality and tourism industry networking is known to be the most important factor for making profits and for sustainability of the firm. The cost cutting can be done through many ways one of which is saving the wastage of products on a regular basis which adds up to become a significant chunk of revenue loss (Lederer, Kurz and Lazarov 2017). Big five star and seven star hotels bring groceries and other food items and ingredients on a massive scale to provide their customers quick and quality food items and dishes. It is a matter of pride for them to provide fast room and restaurant services to their customers. To be particular in this matter they prepare food items which are popular in their hotel as they know the common choice of order of their customers.
There are many exotic dishes which require proper preparation which takes time and large amount of ingredients. Since it is a matter of reputation for the famous hotels to provide all the dishes in their menu they have to prepare them, assuming that all their dishes will be sold and consumed by their customers (Kourula Pisani and Kolk 2017). If it does not happen according to the estimate of the chefs then the entire preparation gets wasted.
Another factor in which the food items gets wasted is that if a customer orders a dish which is very expensive and its preparation requires precision in putting ingredients when the dish is cooked. If there is any mistake by the chef or the helping staff the entire dish gets wasted. This adds to the wastage of products and ingredients of the hotel (Larionova, Dzhandzhugazova and Balitskaya 2015). This causes loss of revenue for the hotel which may sound very small but if it is considered to happen on a regular basis then there is a huge amount of food wastage which hampers the profit share of the hospitality and tourism industry.
One of the biggest issues in the hospitality and tourism industry in recent days has been the quality of staff which the hotels and tourism agencies hire. Since the entire hospitality industry is based on the quality of products and services offered to their customers the quality and integrity of staff plays a major role (Khudododov and Kim 2017). Since there have been an evolution in the hospitality and tourism industry, many young students have got inclined to pursue their career in the industry. They join hotel management institutes where they learn everything about the hospitality and tourism industry and the types of services they have to do and offer for profit of their company. These management graduates dream for their jobs in famous hotel chains.
But in recent years there have been a decline in the quality of staff in the hospitality and tourism industry all around the world. Hospitality companies to cut down their staff expenses hire cheap staff who know nothing about the courtesy and etiquettes which are followed in the industry (Königová, Urbancova and Fejfar 2012). Due to this lack of knowledge and experience they lack in providing quality services to the customers and get negative feedback from them. This creates a negative impact on the reputation on the hotel brand name due to which the revenue of the company suffers.
The strategic management in the hospitality and tourism industry is facing the current issue of technological advancement which has helped the consumers to be aware of the numerous options of hospitality companies which are available in the market. Development of new websites and portals and even android applications of tourism companies has provided the customers and tourists with innumerable options to book hotels and get great deals on holiday packages (Kasemsap 2017). They book and cancel rooms and deals at their will which has declined the surety of customer appearances and footfalls which were previously more concrete. The strategic approach for these hospitality companies have changed to stay on the same page as customers.
Upgradation of technology has become must for the big and small players of the hospitality and tourism industry which adds to the recurring cost of their operations.A good part of their revenue goes in maintaining these online services and a portal which requires trained professional and IT staff which is an addition to the previous workforce (Kew and Stredwick 2017). Moreover, customer awareness has increased manifolds as they need to know each and every detail of the products and services provided by the companies and they need to be satisfied as they have many options to switch to.
Information overload has become a new problem for the companies of hospitality and tourism industry. Since the speed at which the information of customer choices searching patterns and booking data is increasing it has become tough for the management to strategically handle the load of data in their organization (Johnson 2017). Internet has allowed the fast exchange of data in real time and strategic management of this issue is becoming tough for the companies of hospitality and tourism industry as they have to keep up with the pace of changing trends. All the big five star hotels that deploy sophisticated gadgets like sensors and other simulation provide large amount of data on a daily basis which needs to be stored for analysis. Managers are bombarded with chunks of data which is continuously coming to them. This creates an information hazard for the hospitality company.
There is an ambiguous atmosphere in the context of strategic management in the hospitality and tourism industry as no one can accurately predict the performance of the company. Due to changes in the business trends there are no specific variables and roles defined which leads to a state of confusion. There is a lack of clarity in the top management of every company operating in the hospitality and tourism industry about the revenue model, customer dealing, future predictions and variety of services and products (Hill, Wickramasekera and MacKenzie 2017). Moreover, there has been the case of Brexit which has hampered the business of hospitality and tourism industry in the entire Europe. There is no concrete information about the future events and how they will shape the business of hospitality industry. Strategic management of the companies is failing to provide the managers with proper planning and framework with which a company can proceed in the business. Lack of knowledge among the managers about the relationship between the plans and reality has become a common phenomenon in the hospitality and tourism industry. Even if the management identifies the loopholes in the business framework in time, there is no proper planning to avoid and manage the problems which crops up in the hotels and tourism agencies.
The entire hospitality and tourism industry is based on the environment of the place where it is operating. If there is any uncertainty in its environment then it becomes a hazard. An uncertainly can be of any nature which is political, economic or natural. Political uncertainty affects the hospitality business as less number of tourists likes to visit places where there is a political turmoil (Chatterjee 2017). If there is any political instability then the entire nation gets disturbed which majorly hampers the business of hospitality and tourism industry. Another uncertainty may be of economic nature in which the economic status of the country and its currency depreciates.
This affects the entire revenue model of the hospitality and tourism industry as foreigners and foreign exchange of currency is the major source of income in the hotels and tourism agencies (Ferraro and Briody 2017). Lastly, environmental uncertainly can completely destroy the establishments and business of the hospitality and tourism industry as natural disasters like floods or tsunamis destroy the lavish hotels situated on beaches. All these environmental uncertainties have been witnessed in the recent past for which strategic management needs to be done.
Conclusion
From the above discussion, it can be concluded that strategic management in theglobal business environment is the key to doing business in the tourism and hospitality industry. This industry exists in both local and international market and has a great significance in the economic and social sphere of business in the world. It relates to the cultural and political scenarios as well as people from all over the world are affected by the type of strategy a tourism and Hospitality Company makes. Travel and tourism firms and large hotel chains come in the ambit of this industry which makes it huge and relevant in the working culture of thebusiness.
In recent years the hospitality and tourism industry has faced some critical issues and challenges which has charred its business and charm. In the following discussion, analysis of the contemporary issues in the hospitality and tourism industry will be done in details with each and every aspect traversed in details. Since this industry has major impact on global level its issues possess much value for the business and even for the economic front. The hospitality and tourism industry has shaped the business trends and has helped in maintaining status symbol for many companies. The following discussion will comprehensively cover all the contemporary issues in the hospitality and tourism industry.
The above mentioned contemporary issues in the hospitality and tourism industry needs to be handled with the best strategies of management. For strategy formation, some approaches such as planning, emergent, and contingency approaches are used according to the need and requirement of the hospitality and tourism firms. As it is well known from the above discussion, making one strategy to handle all situations is not possible, thescope of change must be there. To identify and select amost appropriate framework for strategy formulation, knowledge of previously used frameworks in the must.
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