This is a solution of Contemporary Hospitality Industry Assignment is part of HND Hospitality Management Course

Introduction

Hospitality industry today has become one of the major revenue generator for economies of various countries. It is crucial element of travel and tourism sector. However hospitality sector in itself is a major independent sector as well. This can be understood by the fact that in UK alone there are approximately 180,000 hospitality and leisure establishments which employ more than 2 million people. Hospitality sector includes gamut of other small sectors in it such as hotels, pubs and restaurants etc. In terms of economy also, hospitality sector is a major contributor to UK’s economy. For example in 2006 this particular sector clocked a turnover of approximately 65 billion GBP (Hoque, 2009:419-443). This sector is completely dependent on confidence of consumers and business sentiments and since last 5-6 years especially after Eurozone crisis of Europe, there has been increasing pressure on this sector to innovate, and deliver value to the end consumer. With fragility in economy and UK government’s austerity measures this sector has been witnessing a suppressed spending impacting the overall growth of the sector. This assignment is focused on analyses of hospitality sector, its structure, staffing, recent developments and potential trends affecting this sector.

Task 1 : Structure of the hospitality industry

Scale, scope and diversity of UK’s hospitality industry

Hospitality sector in UK was ranked as 4^th largest industry in 2011-2012, which delivers more than 53 billion GBP annually to the economy in Gross Value Added. Hospitality sector has also impacted the society in a positive way, since it employs more than 10% of UK’s total workforce. In other words it can be said, that more than 2.7 million people are employed in this sector. Based on the trend and growth of the sector, British Hospitality Association (BHA) has predicted that this sector will add 300,000 new jobs by the end of 2020. UK’s hospitality sector includes various businesses such as food, beverages, accommodation, contract catering, pubs, bars, clubs etc. In terms of demographics UK’s hospitality sector’s workforce is dominated by females, as more than 58% of the workforce is female (Olsen & Roper, 2008: 111-124).Also the industry consists of young workers, as 45% of its workers are under 30 years of age. In this industry more than 54% people work full time where 20% are migrant workers in this sector, remaining 8% are majorly self-employed. There are several big players in this sector such as Whitbread PLC, Mitchells & Butlers, Compass Group, Hilton International, Intercontinental Hotel Group (IHG) and McDonald’s Restaurants. Apart from these major hospitality players, there are various small business enterprise and medium business enterprises as well. UK’s hospitality sector is currently undergoing through one of the most challenging times as the economy remains sluggish in nature. Despite of slow growth and cautious spending by consumers, potential for the industry is tremendous in future, for example in 2012 alone 149,000 tourists from China visited UK which is more than double visiting Australia. This shows that despite of slow economy, there has been gradual increase in the growth of sector contributed by both inbound as well as outbound tourism.

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Task 2: Staffing in the hospitality industry

Staffing requirements and types of qualifications in different sectors of the hospitality industry

Staffing in the hospitality sector is driven by the hiring of graduates into various management and operational role. For example considering example of a food outlet such s McDonalds, it can be said that today McDonald’s employs more than 15,000 employees in its outlets spread across various cities of UK. Staffing in McDonalds consists includes general food and service management roles, business managers, finance managers and the basic operational staff. Single outlet at any location provides jobs to these many people in varying roles and responsibilities (Baum, 2006:207-209). In general following are the key jobs which exists in the hospitality sector of UK:

• Catering Manager
• Hotel Manager
• Outlet/Restaurant Manager
• Counter boys
• Outlet cleaner
• Kitchen operation’s in charge
• Housekeeping staff

Thus above are some of the popular roles in hospitality sector with focus on McDonalds staffing. Unlike various other sectors hospitality is a busy and fast-paced sector. This means that employee has to be alert, flexible and cheerful all the time. Working in outlets such as of McDonalds means that staff has to work for more than 8-9 hours per day. In terms of compensation, an organisation such as McDonalds offers competitive compensation based on the role and responsibility assigned to a person. Starting from basic operational profile at outlet till the profile of outlet manager, there are different pay-structure. However common factor among these profiles is the amount of pressure these people have to face. In terms of demand and attrition it is important to note that an organisation such as McDonalds witnesses sharp attrition as well. Primary reason behind high attrition is the availability of the work-force at different levels. Attrition is high especially at start of operational level where compensation is relatively less as compared to other roles and responsibilities. Interesting to observe is the fact that demand for staffing in McDonalds remains strong and consistent throughout year.

Compared to some high-end restaurant or eating joint, outlets such as McDonalds offer relatively cheaper fast food options, due to which irrespective of recession or any other issue, people prefer visiting McDonalds as it does not hampers their budget as well. This translates into consistent footfalls round the year. That is why there is consistent demand for the staff at various levels. Also with new outlets opening up at regular intervals the demand remains positive in nature. Good point about staffing in hospitality based organisation such as McDonalds is, that key attributes required to succeed as a professional in this sector are enthusiasm, flexibility, adaptability, ability to work hard and commercial awareness around the business. Unlike other sector where employment requires some or the other type of specific skill set to excel, in hospitality sector any individual with above-mentioned skills can excel (Mei et al, 1999:136-143). However in McDonalds there are certain specific roles such as managers and skilled chefs which are relatively scarce in the industry. Hence few skill set at times becomes difficult to search. Another major aspect observed in an organisation like McDonalds was that they have been increasingly hiring people on contract rather than making them direct employees. This helps the company to control its hiring costs and various other expenses associated with the entire process (Slattery, 2002: 19-28). { See here: London College Organizations and Behaviour Assignment}

Overall it can be said that staffing is a crucial function of the hospitality sector. With certain specific skill sets and zeal to excel an individual can excel and move ahead in this industry.

Task 3: Recent developments affecting hospitality

Emerging issues in UK’s hospitality industry in terms of the operational, managerial, legal as well as its overall image

Every industry has to face some or the other business challenges at several levels. Similarly hospitality industry also has to face various issues both emerging as well as existing. These issues might vary from operational, legal or related to brand image as well (Harrington & Akehurst, 2006: 283-298). Following are the emerging issues which the organisations mentioned in task 1 and 2 are facing today:

Retention of key skillsets: An organisation such as Intern continental hotel group (IHG) is famous for its variety of cuisines. However in order to prepare the specialty dishes the hotel has hired various expert chefs for this purpose. From time to time these chefs switch from one group to another or establish their own business. Such situation leads to customer dissatisfaction at times, since many times customer gets used to taste of food of a specific restaurant or an outlet. That is why retention of key skill set today has become one of the most important emerging issue being faced by organisation such as IHG etc.

Small scale establishments: An organisation such as McDonalds today has to compete with various small level fast food outlets. These days in UK there are several small scale food outlets which give stiff competition to organisations such as McDonalds in terms of customer turn out. Due to even cheaper food options, people are easily attracted towards these outlets. This has become a critical challenge for McDonalds as it has to restrain its pricing with specific focus on quality as well. Such situation leads to customer fragmentation and drop in the revenue of the bigger player. That is why it has become important to for companies such as KFC and McDonalds to launch fast food serving to local taste of the region as well. With this approach McDonalds will be able to suppress small or medium size hospitality business in UK with focus on fast food.

Emergence of Technology: This as such cannot be slotted as an emerging issue.  Technology today has played a critical role in growth of the hospitality sector. With emergence of internet and various internet-based application, organisations such as IHG and McDonald’s haven been able to expand their reach. For example McDonalds has a dedicated online portal for placing fast food orders (Cooper & Lockwood, 2013). Whereas IHG offers its customer to book accommodation in its property online. Online facility helps the end customer to complete analyses of pros and cons of the deal. Similarly McDonalds though its web portal has enabled its end consumer to place an order on the web itself. This means that an end customer need not have to come for placing an order at the store.

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Regulations: Hostility sector has to face numerous legal and policy level regulations. With quality of service being the most important aspect of the industry, it has become important for organisations to religiously follow the regulations established by the government. For example fast food produced at McDonalds has to follow a stringent check on the quality of the food being produced. This at times results in heavy penalties on the business if the organisation fails to meet the rules and regulations established by the government.

Thus it can be said that issues today exists at various level of organisations. Identification and rectification of these issues is a major task which needs to be done on the priority basis.

Task 4: Potential trends and developments in hospitality

Assess the potential trends and developments in the hospitality industry of UK. You may consider such issues as the food fashion trends, entrepreneurial opportunities, globalisation, technology and its applications and the competitive nature of the industry. Support your answer with specific examples.

Hospitality industry has been growing at a rapid pace across globe. With rapid changing business environment, travel and tourism landscape it has become interesting to observe the trends and development which are impacting the sector. Some of the trends which covers various sub-sector of hospitality sector are as follows:

Focus on renovation of old properties

In UK there are several hotels and resorts which have witnessed sharp decline in customer turnover. One major reason attributed to this fact is the poor quality of the infrastructure. Organisations such as IHG and other prominent hotel groups have been focusing on redevelopment of their old properties. Thus in coming years visitors should be ready to witness renovated hotel lobbies, room etc. of popular but old chains of hotels (Brotherton, 2012).

Online booking of various hospitality services continues to grow at a gradual pace

Number of UK travellers who book and research online has been growing significantly. It is expected that more than 100 million people researched about the online travel in 2013, whereas more than 85 million actually concluded their booking through online portals itself. British Hospitality Association has predicted that by end of 2015, more than 80% of the travel booking will stake taking place online.

Focus on mobile based bookings of hospitality services

By the time internet on devices like laptops, iPad etc. will reach their peak, mobile based booking services have already outperformed many of its booking channels. Today smart phones are gradually becoming the mini-computing devices which has enabled organisations to leverage on this particular factor. It has also helped organisations such as Hilton, IHG and McDonalds to curtail their cost of operations.

Uneven distribution of demand in the industry

Recession witnessed a steep downfall of the entire hospitality sector and its subsector. However with recovering economy the sector has been recovering as well. But important to note is that, that rather than having an even recovery across all the subsectors of hospitality sectors. For example growth of bars, clubs and pubs etc. has seen sharp rise, whereas for hotel industry the growth still remains slow in nature.

Impact of Social media on the sector

Hospitality sector is all about quality of services offered to the end consumer. A satisfied customer is an advertisement in himself which gives a promotional boost to the company. Opposite is equally risky for the organisation. A simple negative review of the service can ruin the entire brand image of the organisation. Unlike previous time when there was not much attention paid to the reviews, today consumers are highly aware about the reviews of the organisation (Iverson & Deery, 2007: 71-82)Combined with power of social media, these reviews have become an important part of the business development strategy of organisations. For example if a consumer of McDonalds having more than 100,000 followers on Twitter decides to share a negative experience faced in one of the outlet, then this will translate into huge negative publicity as social media acts like a cascading medium. That is why it has become important today for hospitality sector to have dedicate digital medium teams to focus on these aspects

Focus on Sustainability

Businesses in hospitality sector such as hotels, resorts, pubs etc. today are more focused towards the sustainability part of their business. This is related to their concern about the environment. It is responsibility of each business organisation to make significant contribution in the development of the natural environment (Gilbert & Guerrier,2009: 115-132).For example if a resort located on a hill side, decides to remove all the trees surrounding it then it will hamper the overall growth of the resort. Also organisations today are aware about the importance of a healthy environment. That is why hospitality business/sector has been actively involved in the sustainable development practice.

Lifestyle level changes

With new lifestyle groups emerging (Generation Y, born between 1980 and 2000), hospitality products are undergoing changes to cater to different tastes of different groups of people. For example London has been witnessing establishment of more boutique hotels focused on providing unique experiences to its end customer. Today there are various groups of travellers such as budget, adventure, and luxury travellers who have different preferences and to cater them hospitality sector is coming up with innovate products and services.

In general it can be said that today there are various underlying changes, trends and developments which are taking place and impacting the growth and development of the overall hospitality sector and its sub-sector. Hence in order to ensure continued growth it is essential that these trends are visualized in initial phase itself so that first mover advantage can be taken.

Conclusion

Overall it can said that hospitality sector has been making significant contribution in the growth of UK’s economy. That is why its relevance has increased significantly in past few years. Although due to economic recession in UK there were few issues faced by the sector, but eventually the sector is warming up to new round of growth and development. Under this optimism industry leader should not forget to analyse various emerging trends as well issues which are faced by the sector from time to time.

References

Hoque, K. 2009. Human resource management and performance in the UK hotel industry. British Journal of Industrial Relations, 37(3), 419-443. Olsen, M. D., & Roper, A. 2008. Research in strategic management in the hospitality industry. International Journal of Hospitality Management, 17(2), 111-124. Wood, R. C. 2007. Working in hotels and catering. International Thomson Business Press. Baum, T. 2006. Unskilled work and the hospitality industry: myth or reality? International Journal of Hospitality Management, 15(3), 207-209. Mei, A. W. O., Dean, A. M., & White, C. J. 1999. Analysing service quality in the hospitality industry. Managing Service Quality, 9(2), 136-143. Slattery, P. 2002. Finding the hospitality industry. Journal of Hospitality, Leisure, Sport and Tourism Education, 1(1), 19-28.

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