A Tourism Venture Operations - Essay Example

A Tourism Venture Operations Technical Feasibility Report Name: University: Instructor: Course Title: Date: Introduction Setting up a new venture is not an easy task. There are many requirements and challenges to be overcame. In any single instance, as fresh entrant who has to acquire services from scratch need to inject capital and foot initial operations cost, meet licences & registration requirements, tax obligation, acquire capital equipments, employ people, engage professional consultants and market the new firm. These become strenuous when the ownership is sole proprietorship and the owner is expected to shoulder all the requirements while also ensuring the business survives the earlier stages of its existence. Tourism and hospitality industry is a highly differentiated sector with numerous players and with multiple clients with different requirements. This report presents a technical feasibility study of setting up a new hotel and tour business with the owner as the sole financer. 1.0 Environmental Scan 1.1 The Global Level In the tourism perspective, globally, the past and present trends portray a viable industry which is also vulnerable to economic fluctuations. Thus as new entrant, the firm is prepared to encounter these challenges. For instance, in 2007 it was estimated that the sector would generate 234 million jobs and contribute to world GDP by 10.3% (Economy Watch, 2010).in that same year there were 900 million tourists and revenue increase per available room. In 2008/2008, the hotel and tourism sector was highly affected by the global recession. People reduced their spending and some cancelled their travelling plans all together (Global Crisis News, 2009). In the hotel perspective, Hotel Marketing (2011) notes that all regions in the world reported improved performance in the 3 key performance metrics. In a nutshell, at a global perspective, the tourism and hospitality sector is lucrative industry with even more potential for growth even though it gets hit hard with any economic downturn. Thus, this sector is worth investing in. 1.2 National Level Switzerland is ranked as the country that has the most competitive travel and tourism sector. Hospitality industry is one of the dominant sectors in Switzerland economy as it ranks fourth in terms of export revenue and contributes 3% to GDP. As a result of this favourable rating it means it is also likely to receive favourable treatment from government in terms of resource allocation. Switzerland is ranked 19th and 27th respectively in terms of world destination for world tourism and international visitors which was 8.4 million by then. The positive bit is that the Swiss themselves creates an existing demand since they like to travel (Federal Department of Foreign Affairs, n.d). This means that the hotel will not rely of international tourists alone. With this massive numbers, the hotel and accommodation sector is sure of clients. Thus, the market attractiveness level in this economy is sustainable. 1.3 The Specific Industry The new business will be operating within the hospitality industry in the foot of alpine ranges in Switzerland. The tourism and hospitality industry in Switzerland is a highly diversified sector with different service providers who are targeting different market segments. There are those which are exclusively high class, those which are inclusive with varying premiums and economy class. Moreover, there are those that only deal with accommodation, others with travel, other in food service and others in broaden scope like spa, executive cottages among others(Deloitte, 2008:8). The new venture to be established will be known as Sun and Wind Marble Ark Hotel. 1.4 Opportunities and Driving forces Switzerland is one of the known tourist destination globally as a result of its alpine mountains. Moreover, in World Economic Forum 2011 it was rated as one of the most attractive destination for developing tourism and travel industry (Blanke and Chiesa, 2011). This is likely to attract clients from all corners of the globe who seek hospitality services like accommodation and traditional delicacies. This global appeal that Switzerland as country and as tourism sector has created is likely to act in favour of Sun and Wind Marble Ark Hotel. Moreover, the multicultural mix in the country and historical factors are likely to work for the new venture. Apart from the global perspective, domestically there is a strong demand for hospitality services due to improved living standards and more disposable income. This means there is strong local demand which is able to sustain the business. Apart from the above, the firm will seek to occupy economy niche by offering services at affordable price that is not beyond many people’s reach. 2.0 The hotel and Services to be offered The hotel will offer services in accommodation, restaurants & bars, travel and tourism. In addition, the hotel will adopt concepts of having themed restaurants and exploitation of old classics. Apart from the above the hotel will offer value added services like spa and fitness exercises. The hotel will be a four star hotel. The strategy that the hotel will rely on is numbers and not on exclusiveness. The choice of the location would be in serene scenic environments within Switzerland with the main one being located at the foot of alpine ranges. The vision is to offer luxury in much affordable rate. The benefit that the probable client is likely to accrue is the value for his/ her money since the firm will not over price its service. Moreover, clients will enjoy the most scenic sites in Switzerland and personalised services according to ones requirements. The hotel will have delicacies cuisines for different people. The hotel will be large, formal with smart reception areas, front desk service and bellhop service. To enjoy economies of scale, the hotel will locate near other hotels of the same calibre. The level of service will be above average with well lit and well furnished cottages and tents. In addition, the hotel will have restaurant dining with more than one choice. Apart from the above, Sun and Wind Marble Ark Hotel will offer continental breakfast and happy hour delicacies. As an assurance to our commitment, room service will be available on a 24 hour basis. To give a holistic service, the hotel will provide Valet parking and garage service, concierge services and fitness centres. 3.0 Operations Plan 3.1Operations Objectives and Competitive Advantages to Be Pursued Laurie (2010:38) posits that the linchpin of any successful business organization is the ability of its top management to craft and boldly execute strategies. It is through well crafted and boldly executed business strategies that business organizations are able to achieve their corporate missions. Key elements of strategy in business organizations are that it provides a strategic path for the business organization’s future and steers the workforce’s energies towards a common direction (Henry, 2008:141).The firm operation objective is to be a leading market player in the segment of economy to mid-high class hotel sector. The main path of attaining this vision is by offering luxury at affordable price and by relying on numbers/ volumes instead of concentrating on exclusiveness. To attain the luxury, the firm will employ total quality management in the production process and service provision as a means of value creation through safe, quality food, affordability and convenience. One critical competitive advantage that the firm will adopt to achieve the above operation objective is being responsive to change and market trends so as to be par with customer requirements. To attain this, the hotel will engage in constant review of consumer behaviour. According to (Kotler, 2002:12 cited in Dumitrescu and Vinerean, 2010:758), for affirm to gain leadership it must constantly engage in knowing its prospective clients behaviour. The thing to be looked at will be the psychology of how consumer thinks, feels, reason and choose among options. Others will be how environmental factors like culture family media and signs influences consumers (Abdallat and El-Emam, n.d:1). Closely connected to this is ensuring consistency approach in product taste and quality. The next competitive strategy will be to offer value through safe, quality food, affordability and convenience. The hotel will be designed and planned into detail. This planning starts from the first step of entrance up to the end. In order to attain this desired positioning, the employees will be groomed to be at the spot to offer any required help. In the deep appreciation of how process matters to customer, the management will ensure behind house operations are smooth too (Gilmore, 2003:187-188). These behind the front office operations include food preparation, costume, design, employee training, layout and timing weather visible to client or not so as to ensure higher degree of success and satisfaction. From the above observation, it means that the firm will bridge the gap between front stage and back stage operation (Glushko and Tabas, 2009:1-2). In addition, the firm will adopt the approach of service brand building due to realisation of the fact that the link between suppliers and customers is not a product or service but a relationship. The last approach that will be utilised so that the operation objective can be attained is adoption of marketing strategy based on 7ps. The hotel will adopt pricing system of what customers are willing to pay for a product under certain conditions by having different pricing approaches. Distribution is an important mechanism of getting products to the intended clients. The hotel will partner with likeminded organizations like travel companies and relevant ministry to tourism. The distribution should entail having links and advertising on their sites and having presence in social media sites. The next is based on people. The firm will strive to recruit staff and management who display proficiency not only in technical qualification but also with proven ability in interpersonal skills. Process remains one of any organizations’ core concerns. In order to improve on service delivery, customer intimacy and loyalty, the hotel will ensure that their services have a wide collection of options. Lastly, anywhere in the world, one would wish for physical evidence as a means of referral and indication of service mix. The hotel will use testimonials and feedback as a means of physical evidence. The application of testimonials would mean local users and foreign tourists would likely to refer their friends to the hotels which they boarded or utilized its services during their last visit. 3.2 The Proposed Location In setting up restaurant, market analysis components such as industry trends, location and facility, area characteristics, competition, knowing your customer and projected sales should all be considered (Ryan and Chrisler, 2003: 4,5 & 8).The business will be located in the alpine ranges of Switzerland. The reason for the choice of this place is based on the political and economic stability. Moreover, the country is a cosmopolitan area. Switzerland is one of the leading tourist destinations globally and it was rated as one of the most attractive destination for developing tourism and travel industry (Blanke and Chiesa, 2011). For instance, in 2007, the country had more than 8 million visitors (Federal Department of Foreign Affairs, n.d) Being a dominant player in the tourism and hotel sector, this means the region is likely to attract more international visitors. Moreover, this country has a willing and ready to spend population at domestic level. This means there is domestic demand. In addition, the central location and geopolitical role the country plays by hosting numerous international organisation means the new hotel will be able to tap in added segments of business like sports and conference tourism. The country hosts organisations like United Nations Head quarters and FIFA. Moreover, this country has enjoyed political stability which is critical for business. Apart from the above, the country has one of the most scenic sites in the world that acts as attraction centre to visitors. Visitors to this country are sure to enjoy the alpine mountain ranges, green environment and warm people (Global Property Guide, 2011). The advantages of the above location are that businesses are sure of international customers apart from the domestic ones. Moreover, with the kind of economic and political stability that the country enjoys starting up business in this region would be easier. Further, due to its stability even during the last recession means the businesses inclusive of Sun and Wind Marble Ark Hotel are not likely to be hard hit. The last positive bit is the economies of scale that the new business will enjoy since the country has one of the established travel and hospitality industries. However, this can also act as disadvantage since the completion might be too tight for the new entrant like Sun and Wind Marble Ark Hotel. 3.3 Premise Acquisition The land that where the hotel is to be located belongs to the government and it therefore means the hotel will lease it. Most of the facilities will be semi permanent to temporary consisting of cottages and tents. The only permanent structure will be the main block that will host reception areas, front desk service and bellhop service. The Plot of land will be 4’377m2. The main house will have a global volume of 23'001 m3, hotel/restaurant/bar/multipurpose rooms: 2’032m2, residential quarters: 780m2, 4 self-contained areas/shops: 335m2. The construction cost is approximated at Swiss Francs 6,200,000. The camping tents are to be outsourced from china at a cost of 40 USD with the initial 100 units costing 4000 USD. The justification for the above approach is due to the need to provide materials that are sustainable and integrates well with the environment. Moreover, since the land does not belong to the hotel it will not be cost effective build. Further, it is Swiss government policy not to sell land to foreigners. Lastly, the hostel concept is based on experiencing wilderness through nature trail and camping within the alpine ranges and thus, there is no need for numerous permanent structures. 3.4 Service Process and its Graphical Representation Ponsignon, Smart and Maull, (n.d:7) note that understanding of the needs and expectations of customers is a prerequisite factor in service delivery design. In addition, the main purpose of the system is to ensure that both the service outcome and the process of service delivery are acknowledged as being of good quality by customers. Service process is designed to meet the goal of stakeholders and those of customers. The service process of the hotel is based on the premise of inseparability of production and consumption in service industry. Heskett (1987) cited in Ponsignon, Smart and Maull, (n.d:8) observes that a well designed service delivery system is composed of people, technology, facilities, equipments, layout and process that generate the service outcome. The process aims at bridging the gap between front office operations with back office operations. The firm will adopt service process that is pegged on creating client value through a consultative sales approach. The service delivery will be a collaborative approach that will involve roughly four steps. After collection of customer contact information and details of request, the first step is examination of the client needs. This will be at the reception or it will be done through online booking platform where the prospective client will be told of our services so that his/her request can be easily classified and supportability determined. In this section opportunity, issues and advantages of each package will be highlighted. Once supportability of the request has been determined, the next will be to tell the client of competing alternatives so that he can make the rational decision. This will be built on trusted advisor relationship. After allowing the customer to narrow on his needs and alternatives, the sales person will help him to risks and help him find alternatives of reducing them. The next step is to allow the client make a decision. The last stage is achievement of results. This stage is the implementation of the customer decision by the hotel so that he/she can receive the expected value. Figure 1 showing service process by the hotel based on creating client value methodology Adopted from: Imparta 2012 3.5 Facilities and Equipment Requirements, Materials Required and Contractual Agreements The facilities required are diverse and range from the core ones and supporting ones. All of the support and core facilities will be purchased. Equipment/facility Components Estimated cost in SwF Kitchen equipments Cutlery, Cooling machines and Heating equipments 200,000 Furniture and interior décor Tables, dressing, tables, Beds &Chairs 450, 000 Landscape facilities 100, 000 Clothing’s Bedsheets, towel, curtains 300, 000 Total 1, 050, 000 According to the initial estimate, the facilities, equipments and the buildings will not need expansion and further acquisition for the first five years. However, if the demand will exceed the capacity of the equipments, the agreement that the proprietor of the hotel had with its major financers was based on business incubation strategy whereby they are co-joint owner till the owner finishes paying the loans. Under this agreement of financing, the financers will be obliged to provide emergency non secure loans for the hotel to do more acquisitions. Based on the above requirements and premise acquisition requirements, the materials to be used will have to conform to the proprietor’s standards and environmental standards. According to the estimate and approach, the hotel will contract a class “A” main contractor who will then subcontract other suppliers so long as he meets the quality standards required by the owner and regulatory authority. As stated earlier, it is the main house that will be permanent while others will be temporary cottages made of natural materials like wood, palm leaves and reinforced mud wall. The contractual agreement will be formulated according to principles of supply chain management and within legal framework of Switzerland. It will be a written one which takes care of implied terms so as to avoid future litigations. 3.6 Inventory Management To effectively manage its equipments, tools and machine, the hotel will have an automated system with rigid vertical hierarchy control system whereby whenever one of the employees take equipment for the use by clients he/she is expected to record and report back while returning it. The store manager is then expected to counter sign that the equipment has been returned safely. Moreover, the immediate supervisor is expected to sign and authorise the need for that equipment or material. This will mostly apply to core and capital equipments. If it is for the case of consumable products like foods stuffs, the department is expected to formulate their need and forward the budget to finance office and supplies and procurement office. At the initial years the hotel will adopt collaborative supply chain management system based on soft loan where the hotel pays after consumption. Moreover, we will adopt need based purchasing rather than bulk supply. 3.7 Management of Seasonal Variation To manage variations and cushion it against low occupancy, the firm will engage in diverse services like offering camping services, nature trail walk, picnic visits, have restaurant and bar wing for non residents, offer fitness services and bid to host conferences. In addition, during low peak seasons the hotel will reduce the prices and also take that opportunity to do annual maintenance. 3.8 Legal Framework There are numerous legal requirements regulating this industry. They touch on physical planning and land use, environment and safety and health of employee & occupants among others. While at a time they might look restrictive, they aid in levelling [laying field and protection of environment through sustainable use. The hotel is willing and is in the process of adhering to and acquiring these licences from the various authority like environmental protection authority, local authority and central government. The first is the certificate of incorporation and registration as a private limited company. The next is the certificate of lease. The other that the firm has got is the spatial development plan approval licence and the environmental impact assessment approval from Environmental Protection Authority. The next is the certificate of compliance from the Hotel and Tourism board showing the hotel will be a four star. The others that the hotel will seek after completion are safety and health certificate and membership to hospitality industry association. 3.9 Human Resource Needs and Management/Human Resource planning The top level management will consist of President and board of directors. In addition, the firm will have line managers for production and quality control, chief finance officer, human resource manager, marketing manager and public relations officer. These head of divisions will be supported by first line managers. Apart from the above, we will have employees like 20 servers, 5 porters, 15 kitchen workers, 15 housekeepers, 10 bartenders and 15 tour guides. Most of them will fall in the department of production and quality control as facility maintenance personnel or direct operations. The hotel will try to adhere to labour laws and adopt pluralistic approach to industrial relations. The employees to be recruited will be those already trained and in practice and thus, the organisation will only give orientation, vision and leadership. However, to keep them at par with changing trends, employees will be given in-house training as needs arise and also be given study leaves. All employees will be employed on a permanent pensionable basis. The employ remuneration will be based on management performance basis. In this case employees will be rewarded according to their skills, experience and contribution to the organization based on the annual appraisal. However, the hotel will adhere to the minimum wage stipulated by the Swiss government and according to prevailing economic situations. Human Resource Planning This involves identifying current and future needs of human resources needs for an organization in order to attain its goals. This requires to serve as a link between HRM and overall strategic plan of an organization. HRP ensures the best fit between jobs and employees while at the same time avoiding shortages of manpower or even surplus. The major elements that HRP will take into consideration include forecasting labor demand, analyzing labor supply, and balancing projected labor demand and supply. Some of the HRP aspects that will be undertaken in this business will include recruitment and selection, work design/classification, performance management, learning and development among others. 3.10 Viability/Conclusion From the above observation, starting anew venture is not an easy task; it requires massive investment, involvement and market research. Owing to the fact that this business is guaranteed financing for the first five years and has had written commitment with partners who will be its suppliers, the venture is worth trying and it is viable. Moreover, with the kind of physical location and marketing strategy put in place the business has high chances of recouping back the investment while offering value to the clients. In a nutshell, the viability is justified because of guaranteed financing from the scratch, willing suppliers, enabling and competitive macro environment, developed market and availability of consumers and marketing strategy being advanced. References Abdallat, M. M. A. and Emam, H. E. (n.d). Consumer behaviour models in tourism: analysis study. Retrieved on 25 April 2012 from: faculty.ksu.edu.sa/ Blanke, J and Chiesa, T. (2011). The travel and tourism competitiveness report 2011: beyond the downturm. Retrieved on 7 May 2012 from: http://www.scribd.com/doc/49473673/Travel-Tourism-Competitiveness-Report-2011 Deloitte (2008). Hospitality vision, global performance review: double celebration. Retrieved on 7 May 2012 from: http://www.deloitte.com/assets/Dcom- UnitedKingdom/Local%20Assets/Documents/UK_THL_HospitalityVisionGlobalPerfor manceReviewSpring2008%281%29!!1!!.pdf Dumitrescu, L. and Vinerean, S. (2010). International tourism market segmentation based on consumer behaviour. Review of international comparative management, Vol. 11, No. 5, pp. 757-763. Economy Watch (2010). World tourism industry. Retrieved on 7 May 2012 from: http://www.economywatch.com/world-industries/tourism/world.html Federal Department of Foreign Affairs (n.d). Tourism. Retrieved on 7 May 2012 from: http://www.swissworld.org/en/economy/key_sectors/tourism/ Gilmore, A. (2003). Service marketing and management. London: Sage. Global Crisis News (2009). Tourism predictions 2009. Retrieved on 7 May 2012 from: http://www.globalcrisisnews.com/travel/tourism-predictions-2009/id=499/ Global Property Guide (2011). Swiss property remains healthy, but strong franc threatens economic growth. Retrieved on 7 May 2012 from: http://www.globalpropertyguide.com/Europe/Switzerland Glushko, R. J. and Tabas, L. (2009). Designing service systems by bridging the ‘front stage’ and ‘back stage’, inf stsy E-Bus Mnage DOI 10. 1007/s 10257-008-0106/0 Henry, A. (2008). Understanding Strategic Management. Oxford: Oxford University Press. Hotel Marketing (2011). STR releases global hotel performance results for September 2011. Retrieved on 7 May 2012 from: http://hotelmarketing.com/index.php/content/article/str_reports_q3_2011_results Imparata (2012). Creating client value methodology. Retrieved on 8 May 2012 from: http://www.imparta.com/sales/creating_client_value_methodology Laurie, D. (2001).From Battlefield to Boardroom: Winning Management Strategies for Today's Global Business. New York: Palgrave. Ponsignon, F., Smart, P. A. and Maull, R. S. (n.d). Service delivery systems: a business process perspective. Retrieved on 8 May 2012 from: www.poms.org/conferences/cso2007/talks/44.pdf Ryan, B. and Chrisler, M. (2003). Restaurant market analysis. University of Wisconsin extension centre for community economic development and the small business development centre Read More