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Lecture 2_Strategic Management

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12 views19 pages

Lecture 2_Strategic Management

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looomamyname11
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© © All Rights Reserved
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Strategic Management in

Hospitality & Tourism

Lecture 2
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• Primary services

• Small, medium, and large

• Profit motive

• Geographical coverage: local, regional, and global


TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• In terms of their primary services, organizations can be categorized as


follows:
1. Travel and transport
2. Accommodations (lodging)
3. Food and beverages
4. Entertainment and recreation
5. Tourism offices or destination management organizations
6. Nongovernmental tourism organizations
• Each of these is often identified as a subsector under the H&T industry.
In addition, each can be further broken into several sub-groupings.
– For example, under accommodations, there are hotels, motels, guest houses,
hostels, villas, and time-shares.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• A further grouping of the H&T organizations can be made based


on their size such as small, medium, and large.

• Independent and small and medium-sized enterprises (SMEs)


dominate the tourism market worldwide.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• Managing SMEs is different from managing larger enterprises.


– Smaller hotels are not simply smaller versions of large hotel groups.
– They have distinct organizational structures and cultures that are
often influenced by their owners.
– The business objectives of smaller hotels may have a different
emphases compared to large hotel groups.
– Profitability, and productivity are less important to small businesses.
– In addition, they may have less desire to expand and achieve high
profitability and productivity ratios.
– Their views on the external environment, long-term strategies,
generic positions, competitive advantages, and allocations of
financial and human resources may not be similar to those of large
organizations.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• Another classification of H&T organizations can be made


according to profit motive.

• A high majority of H&T organizations aim to make a profit and


achieve some financial objectives in order to satisfy their owners
and shareholders.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• On the other hand, nongovernmental tourism organizations,


associations, tourism destination management, and marketing
organizations can be placed under nonprofit tourism organizations.
– Their primary aim is often not to make profit but to achieve other nonfinancial
objectives, such as serving society, protecting the environment, and achieving
sustainable tourism development in their regions over the long term.

• The United Nations World Tourism Organization (WTO) and Visitor and
Convention Bureaus (CVBs) are examples of nonprofit tourism
organizations.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• Finally, H&T organizations can be further grouped based on their


geographical coverage.
• These include local, regional, and global firms.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• These include local, regional, and global firms.


• Local organizations operate in only one city or country.
• Regional organizations operate in only a geographical region such
as Europe, the Middle East, or North America.
– For example, the Hong Kong–based Shangri La Hotel chain is a good
example of a regional hospitality firm that is found only in the Pacific-Asia
rim.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• Global hospitality and tourism firms such as Intercontinental


Hotels, Marriott Hotels, Hilton, McDonald’s, and KFC are examples
of those that operate in many countries and almost all continents
worldwide.
• Compared to national organizations, regional and global H&T
organizations face more complex, dynamic, and challenging
external and internal environments.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

Global hospitality and tourism


• Consequently, they must accommodate the impact of an
international context when tackling strategic analysis, strategic
choice, implementation, strategic control, and global competitive
advantage.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• What is important, however, is that, depending on their functional


area, size, profit, and nonprofit motives and geographical coverage,
– the internal and operational environments, level of competition, barriers to
entry and exit, and substitutes and resource requirements may vary.
– organizational culture, structure, cost structure, competitive strategies,
resource levels, and entry and exit barriers can be different for each company.

• Certainly, these differences require their managers to better


understand the unique features of these organizations.
TYPES OF HOSPITALITY AND TOURISM ORGANIZATIONS

• These differences can have important implications on the application of


strategic management theories and models that are in practice.
• In addition, one may further claim that because of these differences, we
should be cautious about making generalizations about hospitality and
tourism organizations.
• On the other hand, it is often claimed that although different services are
offered in H&T organizations, each organization has its own unique
characteristics that demand closer inspection when managing H&T
organizations.
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS
• The following are some closely related, unique characteristics of H&T
organizations:

1. Inseparability—customer participation in the service process

2. Simultaneity

3. Perishability

4. Intangibility (the tangible–intangible continuum)

5. Heterogeneity

6. Cost structure

7. Labor intensive
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS

1. Inseparability—customer participation in the service process

• H&T organizations must communicate with and motivate their


customers to actively participate in the service delivery
process.
• They require careful attention to their location, brand image,
and ongoing marketing and promotional activities.
• In addition, the presence of customers and the requirement for
them to play an active role in the service delivery process
necessitate ongoing careful attention to behavior, the physical
appearance of employees, the interior design and decoration of
facilities, furnishings, layout, and noise.
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS

2. Simultaneity
Goods can be inspected before the delivery to customers.
H&T organizations should rely on other measures such as investing
in human resources, use of technology, building desired physical
facilities, and decoration to ensure the quality of services delivered.
This has implications on decision-making practices, resource
allocations, operations, marketing, and human resource
management practices.
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS
3. Heterogeneity
• Services provided by H&T organizations may vary considerably.
• One hotel unit in a chain hotel, one unit in a restaurant chain, or
one holiday experience of a traveler to the same destination is
unlikely to be identical to another.
• In service delivery due to the human element
• Customer to customer
• Time to time
• Interaction between customer employee and customer -
customer.
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS
. Cost structure
The cost structure of H&T firms influences their managerial and
resource allocation decisions.
For example, luxury H&T organizations are;
- Capital, labor, and energy intensive.
- high property costs
- large numbers of full-time employees.
CHARACTERISTICS OF HOSPITALITY AND
TOURISM ORGANIZATIONS
. Cost structure
It can be difficult for them to reduce such cost items even if the
demand is low.
They may need to renovate their facilities every five to ten years to
stay competitive in their field.
Given the vast amount of investment made in these organizations,
investors and owners often look at very carefully at their return on
investment.
Therefore, these companies need to maintain a steady flow of
customers to maintain the profitability of their businesses.
This often leads to creative marketing and product development
strategies as well as pricing strategies.

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