Hospitality and Tourism Interrelationship Assignment

Introduction

Hospitality Tourism Interrelationship Assignment are interrelated business that works in parallel to meet the business and customers objectives. Both the organization develops business plan and activities according to needs of the customer that helps to promote the brand and maintain the growth in highly competitive industry. The present report will provide the information about the role of hospitality industry within travel and tourism business and analyze the interrelationship. TUI is one of the leading travel and tourism organizations that is offering the international quality services for all type of customer and is having joint venture with the hospitality organizations within UK and other international brands. In the next part, report will evaluate the impact of integration within hospitality industry and analyze the implications for branding, pricing and joining the association for controlling business outcome. At the end, report will develop the plan for establishing the hospitality business for TUI that will include the information about the objective, location, funds, interior and exterior design as well the human resources planning and implementation to achieve business goals. Additionally, report will develop the promotional activities to enter into the market of hospitality business.

Task 1

1.1 Interrelationship between Hospitality and Tourism sector

Hospitality industry is the fastest growing industry in UK and earning more revenue by providing quality services to the customer. Tourism sector is increasing their market day by day by satisfying the customer demand in best and effective way. Company provides quality services to the customer according to their budget and locations. Tourism sector provide employment to large number of people and giving their best for the development of their respective organization (Wu and Lu, 2012). Both the industry follows the different cultures and structure as per the business environment of the country.
The organization which exist in the business of hospitality and travel and tourism sector are functioning their business by providing quality services to the customer at reasonable prices to capture the market. Both the industries function in different sector but both are interlinked with each for the services. The growth of hospitality industry is depending on tourism sector whereas growth of Tourism sector depends on Hospitality industry. Hospitality industry offering different services to the customers like accommodation facilities, transportation, food and beverages etc. In that context tourism industry includes this all facilities in their designed packages which the companies offer to their customers. It can be assumed that the activities of both the industry are inter-related in the context of product offered to the customers (Murphy, 2013).  The hospitality industry offer quality services to the customer which can be achieved with the help of Tourism industry services like pre-booking of desired location, high quality rented cars, satisfactory visit etc. According to the collected information it can be analyzed that Travel and Hospitality industry are inter-connected with each other and have strong customer base with their quality services.
TUI Travel Plc is the Public owned company that was introduced in the year 2007. The company deals in passenger transport, travel agency, accommodation to the customer. Company serves excellent services to the customers by which company can retain the customers for longer time. TUI group operates business around 180 destinations by providing services like Airlines, accommodation facility etc. Company designs airline package, holiday package for the customer to provide them quality services. The main of the company is to provide tourism and hospitality services in the whole parts of the world. TUI group is the leading tourist and travel brand in UK which provides high quality services to the customer in different segments. The key services of TUI group are accommodation, food and beverages, high quality rented cars etc to the customer in their designed packages (TUI Group, 2016). Organization provides desired services to the customer which assists company to create the good brand image in the market.

Company executes the merger with the airlines company to provide premium transportation services to the customer. By increasing the number of customer with satisfactory services company gained £15,091 million in the year 2013 which reflects positive attitude of the customer towards the company.  Company facilitates quality services in their packages  like different range of hotels, breakfast, fast food, cafes, travel services, conferences, passenger transport etc by which company  can attract the customers. Organization provides high quality hotels to the customers with premium services in the packages at reasonable prices. TUI group target the customers in way which helps company to analyze the demands of the customers. Company offers discount to the customers at different occasion or by organizing events and distributing free passes to the existing customers.

Figure 1: TUI logo

Inter Continental Hotel Group is one of the leading organization hotel industries. Company has 7,311 employees and earns revenue of $1,803 million in the year 2015. Company belongs to hospitality industry which deals in accommodation facilities, food and beverages etc. Company offers budget hotels, coffee shops, pubs and bars to attract the customers. Company provide catering services to the customers in which company take the contracts and provide services to the customers (IHG Group, 2016). Company is operating business across 100 countries with 4,602 hotels in which 3,934 are owned under franchise agreements and 658 are managed by company. Company has made a partnership with the travel company to provide rental cars, transportation etc to fulfil the demand of the customers. Company wants to develop strong customer base and want to expand business by which more revenue can be generated.

IHG design the packages in a way which attract more and more customers and fulfil their requirement. Company facilitates customer by providing budgetary services like minimum charge for transportation, 1star to 5star hotels, food and beverages facility which attract the customers and increase the brand value in the market.

Figure 2 IHG logo

The above mentioned organizations are of different sector but both the organization have same customer base which show the interrelation between them. TUI group is providing food and beverages services in their packages by mentioning services of Inter Continental Hotels in their packages. Both the companies have strong connection in their respective services. TUI Plc and IHG Plc can merge their resources to provide quality services to the customer this kind of activity assists both the companies to increase the brand image. The merging facilitates both the companies to have increased revenue and large customer base.

TUI Plc is offering transportation and accommodation facilities to the customers and IHG is offering food and beverages, events, bars and restaurants to the customers if both the company merges their services and design the trip then it will be easy for the customers to choose the desired plan. For example TUI Plc is offering best accommodation facilities in the packages then company directly refer the customer to the IHG by which customer can get the quality services. Through this study it can be identified that hospitality industry and tourist industry are interlinked with each other and directly meet the expectation of the customers in efficient ways (Jones.et.al.2016). For better development organizations are working together by improving the quality of services and better customer satisfaction.

Task 2

2.1Impact of integration in Hospitality Industry

Business are using the integration from older times and this not a new concept in the current scenario. Mainly business use this tool to reach the economics of scale by which company can lower down the operating cost. Integration assists the companies to merge the resources and get the better output from that. It helps the company to allocate the resources vertically and horizontally. Through integration companies come closer to meet the demand of customer more effectively and efficiently. Companies design plan to satisfy the desire of the customers. Integration facilitates companies to achieve the goals with appropriate coordination between the departments of two different companies (Prud’homme and Raymond, 2013). For example TUI group combine the services with IHG for efficient use of available resources like accommodation, transportation services, food and beverages to the customer. In integration companies merge their services and form a new legal entity to govern the operations.

Vertical Integration

It is the process by which company can merge the services with another company. Through this process company can raise the profitability and lower down the operating cost. Vertical integration can be done in two ways forward and backward integration. TUI Plc may gain the control over the suppliers like accommodation, transportation, food and beverages etc. Vertical integration assists TUI to govern all the operations of IHG. The integration helps company to increase the market share and satisfy the demand of the customers. Vertical integration assists company to assist the companies to differentiate the services from the competitors (Kosová.et.al.2013). Vertical integration decreases the cost of transaction between the TUI Plc and IHG group. Vertical Integration creates the good relation between two companies and provides technical assistance to the companies to improve the supply chain management.
In vertical integration two companies creates one company so it will be easy for the organization to operate the transactions. For example TUI Plc and IHG group work together to form new legal entity so it will be for the companies to operate the new legal entity. Companies can easily allocate the resources and identify the loop holes in the organization (Sudibyo and Patria, 2013). Vertical integration assists company to merge two different organizations with different culture and environment. As per the study TUI Plc is entering into new segment than vertical integration assists company to remove the barriers like technological advancement, lack of knowledge etc.

Horizontal Integration

Horizontal integration is most effective method for the companies. Organization that want strong customer base, expand the business, maximize profitability etc. Horizontal Integration takes place when company purchase or merge with another company at the equal level. For example TUI Plc purchases the resort to expand the business in the hotel industry. Horizontal integration is the technique for expansion of the business and profitability both. This integration directly impacts on the profit ratio of the companies which helps the companies to grow in the hospitality sector (de la.et.al.2016). Horizontal integration raises the efficiency of the companies by merging the two companies together. The company can increase the customer base by applying the horizontal integration between the companies. Horizontal integration may provide global platform to the companies by merging the companies of two different nations.
Hospitality industry can grow at the larger extent with the help of Horizontal integration. A large number of companies can be merged to do the operation easily and effectively. This integration helps the companies to reduce the competition and provide quality services to the customers at the reasonable prices. After the study it can be analyzed that due merger of huge number of companies that leads to rigid to control the operations and it may be the cause of wind up (Van.et.al.2015). Another negative aspect of Horizontal Integration is that it leads to the monopoly in the market which may be the cause of negative brand image in front of the customers.

2.2 Implications of integration within hospitality industry

Integration diverts company to give emphasis on various factors like globalization, branding, price etc that provide drawbacks to the company. Following points depict the implications of integration in hospitality industry:

• Increased Globalization: Companies are moving to cover the new market for expansion of business or to find the new customer base in different parts of the world which leads to globalization. Integration leads to big change in trade barriers and provide companies to enter into different segments with overseas business. Integration provide global platform to the companies with different culture and traditions. Many times company may not be able to identify the different strategies of the competitor because of entrant in the global market and it may be the cause of big failure.
• Branding: Integration merge the two organizations which create good brand image in front of the customers. For example TUI Plc is merging the business with IHG group the company can own the brand image of the organizations.  Brand image help the company to set clear image in front of the customer (Neirotti.et.al.2016). Brand creates good perception in the mind of the customers which can only be possible with the help of Integration.
• Expansion of business: Integration assists the companies to expand their business from the outside boundaries of the country. Integration facilitates companies to set the market and allocate the resources by which company can raise the profit margin and increase the customer base (Šeri?.et.al.2014). Allocation of resources is the most efficient part for the organization by which company can achieve the goals. Integration merges two companies and assists them to meet the objective of business expansion.
• Lack of Knowledge: TUI Plc is new in hospitality industry so company do not have much knowledge about the barriers of hospitality industry in that case integration assist company to overcome the barriers in hospitality industry. Company do not know the factors of integration due to which it may face many difficulty while entering in new business. The company may integrate successfully but face the problem while operating the business this kind of problem may face by the company in integration.
• Technology: Companies can easily monitor the operations through technology by which better control can be achieved. Technology plays a vital role in the integration it provide effective communication system to the companies for example TUI Plc wants to communicate with IHG for some issues related to operation than company can communicate with video conferencing, social media etc. This type of facility makes the communication system more effective and efficient. The technology assists company to complete the operation on time and promote the company through online portals or social media (Leonidou.et.al.2013). Technology expands the business of the hospitality industry and companies can cover the customers easily. Company may gain the competitive advantage by providing unique products to their customers.

Figure 3 Video Conferencing

• Green policy: In integration companies may face the difficulty to meet the environmental standards like different country has different environmental standards which every company has to follow. For example TUI Plc is integrating with Indian company then company has to follow the Indian standards set by the government of India to decrease the environment pollution (Jasper and Waldhart, 2013). It is the responsibility of company to get the whole detail of the green policy set by the government of the different countries.

Task 3

3.1 and 3.2 planning of operational and business activities for TUI

Rational of plan

The growth of hospitality business is attracting the leading travel and tourism organizations to introduce their brand. TUI is having reorganization across the globe as organization is developing and offering attractive plans for tourism at different location including accommodation, food and transportation services. However organization has joint venture with leading hospitality chains like Marriott, Hilton and IHG that are providing the services according to demand of TUI and considering the package quality but it is affecting the margin of profit. The current economic and business condition of UK region are strong and management is looking to establish own hospitality venture to gain more profit as well offer the customized services according to demand of people who buy the travel and tourism package for UK (Brotherton, 2013). The objective of TUI management through entering into hospitality business is to expand the area of business and utilize the opportunity of business in this sector. In addition to this, it will be good chance for travel and tourism organization to establish the hospitality business that will help to increase the volume of customers.

Following are the key steps that will help management to establish the hospitality venture as well set the positive appeal for customers to spend some quality time at new location.

Step 1 Development

The general idea for entering into hospitality business is to utilize the opportunity and have own accommodation and food services that will increase the margin of profits. TUI is having good response from the customer in travel and tourism sector as company is offering quality services and attractive packages in high and economic class segments (Teng, 2011). Apart from that for accommodation and food services, organization has to relay on other brands that influence the planning as lack of availability of beds and proper food facilities affects the brand value. By considering these facts organization is looking to establish own hospitality venture.  For that business objective of TUI is to provide customized services in housekeeping, timely delivery and maintain standard in all type of products and services.  The vision of TUI management for hospitality business is to expand inn the areas of services by selling the franchise and having merger with the large hotel groups.
The initial concept of hospitality business of TUI is to provide the full-service facilities for customers and visitors as per the travel and tourism packages as well as gain the competitive advantage through having the control over the operational and management activities. The organization will also offer food and beverages according to plan and taste of groups that are visiting United Kingdom. This type of customized services and facilities will help to set positive brand value in hospitality industry of UK.
For developing the better services and product to sustain the position in market, TUI management needs to conduct market research about the competitor services, prices, quality and additional benefits provided in hospitality sector (Stephenson, 2014). For marketing research project, management will use online media, market research survey and customer feedback that will aid TUI to develop the plan to set out the resources and process of offering the services in hospitality. This kind of approach will help to gain the knowledge about the trends, customer needs and benchmarking standard in different category of hospitality provision. Apart from that, management can use differentiate targeting strategy for different segmentation like demographic and geographic. According to this targeting strategy, TUI management will set the services and products for accommodation and food focusing on the needs of customer. Company will target the customers through providing the customized services package that suits to their needs. For segmentation, TUI will consider the income and culture of target audience that will improve the effectiveness of marketing as well as development of services.
            For establishing the business, TUI will target the location like London as millions of visitors come to this city for different purpose.TUI is also providing the travel packages covering the tourist destinations. The competition is very high however the brand value of TUI has helped to attract the customers (Field and Studer, 2010). The organization will start the hotel with 76 rooms and one resultant where TUI will offer different type of food and beverages. Organization will have local and international menu for food and beverages that will vary according to seasons and trends. Now, the important part of development plan is funding for establishing infrastructure, inventory, maintenance and salary of staff. For that TUI will contact with investors, banking organization and use own funds. Apart from that, the organisation will follow ethical and legal process in business of hospitality provision TUI will follow the licensing for land, procurement of services and products that they are going to offer. Company will follow the copyrights for marketing and follow the quality standard for in delivering the products and services. Moreover, TUI will offer membership card for retaining the customer that will also help to develop and quality brand image.

Step 2 Design

TUI is establishing the business in hospitality sector for that particular business segment; design and other factors have significant impact which needs to be considered by the management. In the current scenario, design of the hotel helps to influence the decision of customer and visitors. Following are the design elements that will be used for developing the infrastructure of TUI hotel:

• Ambiance: This is an important design element that plays significant role in looks of hotel, rooms and halls (Bleši?.et.al. 2011). According to current trends in this sector, the organization will use the classical ambiance with luxury approach that will help to attract the customer.

Figure 4 Ambiance of hotel           

• Culture: TUI will focus on the UK’s local culture that will be appropriate and support to engage the customers. For that management will consult the local agencies to develop the process that majorly influence with the culture of UK. Moreover, organization will appoint local people for managing the services and operation as they will have good knowledge.
• Interior and exterior: For hospitality organization it is important to have different looks in interior and exterior that set an appeal that attract the visitors and customers (Hurst, 2011). For new hotel TUI will use the traditional interior with modern touch which include the technology like auto-lighting, sensor motion and use of antique items. Apart from that, for exterior organization will use digital board and glass that is eco-friendly.

Figure 6: Interior of hotel

Figure 7: Exterior of hotel

• Functional areas and customer flow: For hospitality provision the major functional areas for TUI will be front office, housekeeping, standard quality of food and beverages. In order to maintain the customer flow the organization will analyze the process of different hotels and try to maintain the services according to needs of the target customers.
• Sustainability: In order to sustain the position in market at initial stage, management of TUI will focus on the quality of services and product (Scott, 2015). For example, organization will try to reduce the time of delivery as well as use the advance security features that will help to improve sustainability. TUI will aim to provide variety of food like Chineese, Thai, Indiann etc  in its restaurants which will attract consumers to the hotel

Step 3 operations

For managing the functions and activities of yhe hospitality organization, planning of operations is essential. TUI management will manage the operations by using the following elements:

• Staffing: This is most important element for establishing the business and managing the operations. TUI will appoint skilled and qualified staff for managing the operations as well as meetthe business objectives. For staffing company will contact to the local agencies to recruit the staff. In addition to this, company will have concern over the issues related to seasonality that will help to sustain the position in critical time (McDougal and Moore, 2012). Organization will consider the three major skills of staff such as communication, decision making and knowledge about the resources.
• Promotional activities: For establishing business and encouraging the business activities organization has to put efforts in marketing of products and services. TUI management will promote the brand and services by using the online media and promotional activities like providing discount offer and additional benefits (Chan and Guillet, 2011). Organization will also use promotional mix like public relation and advertising and promotion using the online tools such as website, mobile application and social media that will help to connect with more people. Apart from that, TUI will offer discount for existing customers that using the travel and tourism services.

Figure 8: online marketing tools

• Pricing: This is an important element that has direct impact on the branding and category of hotel. The organization is looking to attract upper-middle class people and for that reason, TUI will quote the prices according to competitor organization in London. In addition to this, penetration pricing strategy will be more beneficial for organization to meet the objectives as well as give the importance to customer needs (Paraskevas.et.al. 2011). Moreover, organization will include the prices in travel and tourism package that will help to convince the customers and meet the satisfaction level.

Conclusion                                      

From Hospitality Tourism Interrelationship Assignment, it is been considered that hospitality industry of UK is growing with significant pace that has good contribution in GDP of nation as well as developing the opportunities for employment. There are different types of organizations in hospitality industry of UK that are offering quality services and products according to needs of market. Report has analyzed the composition of hospitality industry using the wide range of services and segments. Moreover, report has compared the services and contribution of travel and tourism sector in hospitality. Report has discussed about the integration of hospitality and tourism organizations and their impact on the overall activities of hospitality. At the end, report has developed the plan for TUI organization that looking to establish business in hospitality sector. Report has provided the information about the development, design and operational stages that will aid to maintain the flow of business.