The Main Aspects of a Hospitality Venture - Case Study Example

Feasibility Study Student’s Name: Instructor’s Name: Course Code: Date of Submission: Table of Contents 1.Industry description 3 2.Description of the tour business 5 3.Operations plan 6 Operation objectives 6 Location of the tour business 6 Acquisition of the premises 7 Stages of service production 7 Stage 2: Assessment of the need is the next step 8 Stage 3: Allocation of the facility according to the customer specification 8 Stage 4: The next step is to provide the services to the customers 8 Stage 5: Follow up 8 Facilities required 9 Facility maintenance 9 Materials and suppliers required 10 Inventory management system 10 Strategies for managing seasonal variation 10 Regulatory and legal issues 11 Human resource requirements 11 Recruitment process 12 Remuneration package 13 Employee legal requirements 13 Conclusion 13 References 14 Introduction There is increasing demand for the hospitality services since people have changed their lifestyles. Many people globally have opted to hospitality products and services and this has led to increased demand for hospitality services. Tourism is also increasing globally and the impact is that many people are travelling from one place to another and as a result there is high demand for hospitality services such tours and travel (Altinay & Paraskevas 2008, p. 3). In this regard, this report will discuss the main aspects which are covered in developing an appropriate plan for a hospitality venture. The most important aspects to be covered include the location of the venture and the description of the products and services the venture will embark on and the operations of the venture. 1. Industry description The business venture I will venture in is the tour business. This is the business which will offer transport services to tourists and other local customers who will be interested to access the transport services (Altinay & Paraskevas 2008, p. 10). I chose to venture into this business because there are increased opportunities for the business as a result of the increase in the tourism sector. The tour business will operate under tourism industry (Altinay & Paraskevas 2008, p. 28). This is because the industry helps the tourists to access services such as transport and accommodation as well as food to both local and international tourists. The tourism industry globally has been experiencing an increase because many people have changed their lifestyles and due to availability of financial resources which have inspired people to seek external services to improve their wellbeing. The tourism industry globally has been recording an increase in terms of customers. Initially people used to operate within their own territories and they depended on the local features for tourism. But in the current trends, many tourists have turned to external tourism due to globalization and this has improved the performance of the global tourism (Borchgrevink 1999, p. 1). In this regard, it is clearly indicated that the tourism trends will continue to improve and that is why I chose to venture into the tourism industry. This is because the tourism industry can prove to have great opportunities hence I will be able to achieve my desired goals and objectives. There are various driving forces which have impacted on the performance of the tourism industry. The first driving force is the increase in the household income (Borchgrevink 1999, p. 9). The global financial stability has proved to be stable and as a result the household income has also increased. Increase in income has led to improved desire for tourism activities. Household income therefore has improved the performance of the global tourism. Another factor impacting on the tourism industry is the rising number of retired employees with plenty of time and financial resources to spend (Borchgrevink 1999, p. 36). There are many people who have retired and this implies they have money to spend on tourism since they are not committed to their work hence they have adequate time to travel all over as tourists. This factor has also increased the performance of the tourism industry globally. Desire to see the world has also affected positively the tourism industry (Brotherton 2000, p. 16). Many people have the desire to explore the world and this has led to improved number of travelling people. This has increased the number of people who are traveling as tourists. The impact on tourism industry is that it has led to growth of the tourism services. Reduced cost of air travel further has affected the tourism industry. Many people are able to afford the air tickets and this implies that there are many tourists who are travelling (Brotherton 2000, p. 17). This factor has therefore influenced tourism industry has it has increased the desire to travel and tour the world due to affordable air tickets. 2. Description of the tour business The tour business will provide travel services to both local and international tourists. The business will offer various means of transport which will suit the different needs of the customers. The business will have buses and vans for hire to be used by the customers. The pricing of the transport services will depend on the demand and the duration the vans will be hired as well as the carrying capacity of the vehicle (Brotherton 2000, p. 25). The benefit of providing different tourism vehicles is that the customers will be able to select the most appropriate vehicle to provide their transport services. This will improve customer satisfaction as this helps to provide affordable prices according to the demand and the carrying capacity of the vehicle (Brotherton 2000, p. 5). The customers will also benefit in that they will have access to transport services when they are needed. Tourism activity cannot be successful without transport services. In this regard, the customers will be satisfied better. The transport services will be differentiated from those of the competitors by applying competitive pricing. The prices charged for the transport services will be priced slightly lower than those of the competitors and this will help to attract and retain customers (Altinay & Paraskevas 2008, p. 29). This will enable the tour business to have competitive advantage since competitive pricing helps to attract and retain the customers. The tour business service will also be differentiated from those of the competitors by providing a tour guide. The tourists will be provided with free tour guide who will help to guide the tours. In this regard, the tour business will have advantage because it helps the tourists to have knowledge on the places they want to view (Walker 2003, p. 3). 3. Operations plan Operation objectives The first objective of the tour business is to offer quality transport services to satisfy the needs of the customers. This objective will enable the business to have competitive advantage since the customers will be satisfied with the quality of services offered (Walker 2003, p. 20). This will help the business to have competitive advantage. Another objective of the business is to provide timely and reliable transport services to the customers. Providing services which are reliable is essential in the success of the business (Walker 2003, p. 41). The customers should be able to trust the consistent services which are offered and as a result this will improve the competitive advantage of the business. In addition, providing unique transport services is another objective of the business. The tour business will be differentiated from those of the competitors by offering variety of transport options. This will help to satisfy the demand of the customers and their different preferences (Walker 2003, p. 50). In this effect the business will be unique from those of the competitors and hence creating competitive advantage. Location of the tour business The business will be located in the city of Sydney in Australia. This location is most appropriate for the business because the location experiences higher number of tourists (Powers & Borrows 2005, p. 2). This location will promote convenient to the customers since they will access the transport services when they are needed thus improving the competitive advantage of the tour business. The advantage of locating the business in the stated city is that it will help to improve the convenience of the services provided. The location will bring the services nearer to the customers and this will improve the convenience of the services to the customers (Powers & Borrows 2005, p. 5). The location also experiences large number of tourists because of the good climate and features which are located near the city. This is an advantage to the business since it will be able to access the customers which will improve its performance. However the location is not convenient for the customers who want to travel up country. Most of the tourist attraction sites are far away from Sydney. This implies that the location will be tricky for the customers who want to travel to the tourist sites (Powers & Borrows 2005, 30). It will be costly to hire the transport services from this location instead the customer could opt to hire services which are near the tourist sites. This will be a disadvantage to the business since it will lose some of the customers. Acquisition of the premises The premises for the business will be purchased. The need for purchasing the premise is that it will be cheap than leasing or building it. It will also be convenient to purchase the premise since it helps the business start operating immediately unlike building which might take some long time which implies that the business will have to wait until the premise is complete before it starts to operate (Lattin 2002, p. 4). The estimated cost of the premise is $12,000. This will be cost effective since the business will acquire ready premise to start operating the business. Stages of service production In order to provide quality services to the customers, there should be an effective process of providing the services. Stage 1: Identifying the need of the customers This is where the customer makes an inquiry about the availability of transportation vehicles. The customer requirements will then be evaluated considering the available transportation facilities (Lattin 2002, p. 21). Stage 2: Assessment of the need is the next step This is the stage where the need is evaluated by the management so that they will allocate effective facility for the function (Lattin 2002, p. 7). The assessment is done according to the carrying capacity and the duration it will take to host the tourists. Stage 3: Allocation of the facility according to the customer specification This is where the facility that is the vehicle is allocated to the function which can serve the purpose intended by the customer and communication is made back to the customer about the allocated vehicle (Lattin 2002, p. 7). Stage 4: The next step is to provide the services to the customers This is the actual provision of the transport services to the customer (Lattin 2002, p. 8). The vehicle is provided and the drivers as well as the tour guide and the transport service begins. Stage 5: Follow up The follow up will be done by evaluating the customer feedback to determine the quality of services they received and if they were satisfied or not. This will help to adjust the services offered if the customers were not satisfied. This process can be illustrated by the diagram below. Diagram 1: Flow chart showing the service production process This process will enhance the efficiency of the services provided by the employees. This is because there is systematic process of providing the service and at every stage the needs are identified and the business manager will ensure that the need has been fulfilled (Lattin 2002, p. 45, p. 1). For instance conducting the follow up will help to assess the customer satisfaction and if they are not satisfied their recommendations will be assessed and put into action so that the service quality delivery will be improved. Facilities required The main facilities which are needed to ensure that the business starts to operate effectively include the transport vans and buses. The vehicles will be acquired through purchasing since their costs are included in the business plan (Jones 2002, p. 4). The estimated cost for the four vans which are required to start the business operations is $7,000 each. The sources of finance for acquiring the capital assets include own contribution and family and friends. The drivers and the tour guides are also required to make the business operational. In order to meet the anticipated growth, the business will retain some of the profits made by the business so that more facilities will be acquired with the growth of the business (Jones 2002, p. 4). This will enable the business to make funds available for the purchase of more facilities to satisfy the demands of the anticipated growth. Facility maintenance The facilities will be maintained after two months. This is the most appropriate time for maintaining the facilities to ensure that there is convenience in providing services to the customers (Jones 2002, p. 7). The business will outsource the maintained services since the operation is carried out after three months. This will be cost effective for the business and convenient. Materials and suppliers required Since the business offers services in the tourism industry, the main sub contractor for the business are not guaranteed. This is because the process of selecting the suppliers and the sub contractors is carried out and the best supplier or contractor is selected (Jennings 2006, p. 45). The process includes identifying the need, making specifications of the needs, advertising to attract the potential applicants and selecting the most appropriate and qualified applicant. The contract is then awarded to the selected applicant. Inventory management system Minimum stock levels strategy will be applied in the business. The business will set minimum levels after which a new order is made. In order to manage the provision of effective and convenient services to the customers, the business will develop online booking for the facilities so that the business will be able to plan for the bookings effectively (Jennings 2006, p. 49). When there is high demand than the facilities, the business will outsource some of the facilities so that the customer demand can be met. Strategies for managing seasonal variation Concerning the variation of the demand of the customers, the business will keep records of customer demand to help in determining the demand of customers. Outsourcing some of the facilities and services will be done to manage the variation in demand (Jennings 2006, p. 76). This will help to manage the rising demand of the customers but when the demand is low the facilities of the organization will manage the demand. The variation in demand will also be managed by entering into strategic partnership with other tour businesses so that when the demand is high some of the facilities and services will be outsourced from the partner businesses. Regulatory and legal issues There are various regulatory issues which will affect the business if not properly managed. These regulations include federal regulations and local authority regulations. The first step to be taken to manage these legal issues is to find out what are the legal requirements in operating the business in the city. This can be done by consulting a legal expert (Buhalis 2003, p. 90). The next step to be taken is to ensure that the business has acquired all the licenses which are required to operate the business in the city. The federal and local authority licenses will be acquired and this will help to avoid any legal issues that might arise. In addition, the environmental organizations will also be consulted on the possible consequences of operating the business in the area. This is an important permit to get because it helps the business to set up strategies which will help to preserve the environment and avoid any legal conflicts with the environmental organizations. In addition, the business will develop a flexible policy which will help to acquire new licenses once there is a change in the government policy. This will help to ensure that the business is in conformity with the legal requirements. Human resource requirements The number of employees required to start the tour business is 12 employees. There will be hierarchal structure for easy administration of the employees. At the topmost there will be the owner of the business followed by the general manager of the business. The general manager will be employed on full time basis since he or she will be running the business and manage any issues that can affect the business hence it is important to be close with the business (Buhalis 2003, p. 56). Then there will be the hr manager and the legal expert as well as the operations manager. These three employees will also be employed on full time terms of employment. Then there will be four drivers who will also be employed on fulltime terms of employment. Finally, there will four tour guides who will be employed on part time basis. This is because their work is not demanding in terms of time. Other services like cleaning will be outsourced. Recruitment process The recruitment process includes identifying the position to be filled, developing the specifications for the position and advertising for the positions. The applicants will be shortlisted and interviews conducted to select and provide employment to the best qualified applicant (Buhalis 2003, p. 70). This is the simple recruitment process since the business is small. Once the employment has been offered to best qualified employees, training will be done to improve their skills in tourism sector. The managers will undergo managerial training to know how they will manage the business (Brymer 1998, p. 5). The drivers will undergo some refresher courses to acquire tourism sector skills. This training is important as it helps to improve the quality of services provided by the employees. The assessment of the employees will be done based on the customer feedback. The customers will be provided with some confidential sheets where they can justify the services they received from the employees. There will be positive and negative feedback and this will help to determine the performance of the employees and where necessary recommend some further training or encouraging the low performing employees to improve their skills. Remuneration package The general manager will earn the highest salary since he is the overall manager of the business and ensures effective day to day running of the business (Brymer 1998, p. 5). The recommended package is $800. The hr manager, legal expert and the operations manager will earn $600 each. Since the business is just starting up, there the package will keep increasing depending on the success of the tour business. At the end of each financial year and the business has recorded good profits, the employees will receive a bonus of 10% of their salary just to motivate them to improve the quality of services they offer to customers. Employee legal requirements The employees will be employed according to the labor laws. The business will consider the labor laws and offer terms and conditions of employment which are conformity with the labor requirements (Brymer 1998, p. 77). The first step to take is to understand the labor requirements. This can be done by inviting an expert to expert to explain the labor requirements. The next step is to develop employment terms which are in compliance with laws and this will avoid any conflicts with the relevant trade unions. Conclusion The tourism industry globally is among the industries which are growing tremendously. Initially people never used to value tourism sector as an important sector in an economy but in the recent years various governments are advocating for tourism to improve their economies as well as opening their country to outside world. The main reasons which have led to increased tourism is availability of economic boom, desire to explore outside world and availability of tourist attraction features which have not been utilized effectively. In order to start the tour business and succeed, there should be adequate human resources skills as well as equipment required to start the business. This business will acquire the equipment and the premise through buying from the available funds which have been acquired. The location of the business is Sydney city which is the location for many tourists due to favorable climate. All these considerations will be taken into account to ensure that the tour business is successful. References Altinay, L & Paraskevas, A. 2008, Planning research in hospitality and tourism, Butterworth- Heinemann, pp. 3-57. Borchgrevink, C. 1999, Perspectives on the Hospitality Industry: An Introduction to Hospitality Management, Kendall Hunt, p. 1-57. Brotherton, B. 2000, An introduction to the UK Hospitality Industry: A Comparative Approach, Butterworth-Heinemann, pp. 16-127. Brymer, R. A. 1998, Hospitality and Tourism: An Introduction to the Industry, Kendall Hunt, pp. 5-78. Buhalis, D. 2003, Tourism: Information Technology for strategic tourism management, Pearson, pp. 56-102. Jennings, G. 2006, Tourism Research, John Wiley & Sons, Australia, pp. 45-147. Jones, P. 2002, An Introduction to Hospitality, Thomson Learning, pp. 1-29. Lattin, G. W. 2002, The Lodging and Food Service Industry, Amer Hotel and Motel Association, pp. 4-76. Powers, T & Borrows, C. W. 2005, Introduction to Management in the Hospitality Industry, John Wiley & Sons, pp. 2-40. Walker, J. R. 2003, Introduction to Hospitality Management, Prentice Hall, London, pp. 3-58. Read More