Hospitality Services Delivery Strategies - Coursework Example

Running head: Critique of Management Strategies and Tactics Name Course name Professors’ name Date Outline Background of the industry Strategic decisions Refurbishment and diversification process Sales and marketing Customer experiences Promotion and financing strategy Competitive advantage Five forces analysis of Superstar Hotel Rivalry Threat of substitutes Buyer power Supplier power Human beings in the firm Effectiveness of marketing plan Effectiveness of business objectives Analysis of trading results Decision making process Table of content Background of the industry 3 Strategic decisions 4 a.Refurbishment and diversification process 5 b.Sales and marketing 5 c.Customer experiences 5 d.Promotion and financing strategy 6 Competitive advantage 6 Five forces analysis of Superstar Hotel 8 a.Rivalry 8 b.Threat of substitutes 9 c.Buyer power 9 d.Supplier power 10 e.Barriers to entry 10 Impact of decisions on Human beings 11 Effectiveness of marketing plan 11 Effectiveness of business objectives 12 Analysis of trading results 12 Decision making process 13 Recommendation 14 Background of the industry To implement appropriate strategies and tactics, it is important to understand background information of the firm. The hotel is built in the coastal region where it can be accessed easily by road or railway. Visitors use neighbouring shopping centre in addition to airport and bus facilities linking various locations in the town. Growth of tourism in 1970’s attracted more competitors in the market due to supernormal profits in the industry caused by an upsurge in tourist visits. In 1980’s the city entered into diversification process that saw a rise in service and soft industry. This was an added advantage since it made it possible for the hotel industry to market commercial room nights. During 1990’s tourism declined as visitors sorted new experiences in other towns. This called for invention and innovation so as to modernize facilities and ultimately attract tourists. At the beginning of the year 2000, small and medium size companies relocated in an attempt to cut operating costs and subsequently enable the local council to furnish the seafront with modern facilities that meet customer’s expectations. The redevelopment plan has led to construction of sturdy buildings with exceptional architectural designs. This is a move towards revitalizing the coastal region and ultimate growth in the hospitality industry. After assessing the background information, we now consider strategic decisions appropriate to stimulate Superstar Hotel given the fact that new management was in place. Strategic decisions a. Refurbishment and diversification process The new management considered the possibility of developing and refurbishing the hotel to reach modern standards. This recognizes the fact that customers are always looking for new experiences which the hotel must provide if it wants to maintain and eventually attract new customers. The management is therefore focused on improving its facilities including live bands entertainment, 24 hours room service, modern conference facilities, and high level customer experiences. b. Sales and marketing To improve sales, Superstar Hotel should consider e-commerce as a modern approach to sales and marketing. This means that the company guarantees fast internet access for booking, e-mail, business services and checking procedures. Other complementary facilities like shopping centres, bars, swimming, and conference facilities must be improved in terms of outlook so as to reach customer’s satisfaction. c. Customer experiences Continuous inflow of guests is realized when all elements in the hotel are kept up to date by upgrading every aspect of the Superstar Hotel. Provision of quality and friendly services is part of management strategy to shape the hotel. Advertisement goes along to improve public awareness consequently expanding its market share and reputation level. d. Promotion and financing strategy Most of the advertisement is done through PR relations, local newspaper, and local radio which cover all occasions from tour, leisure and weddings. It is essential to recognize importance of intense advertisement done during peak season. Channels used to advertise ought to have high proximity to potential client. Financing for the business may take the form of reinvesting back profits, or reducing the number of staff and train the remaining to acquire appropriate skills. Nevertheless the plans put in place must undergo continuous appraisal to determine if objectives are met within stipulated period of time. By improving advertisement, the firms gain image as a result increasing sales which in the long run amount to more profits. Modernizing the facilities play a role in making provision of services efficient. Since more income is realized from number of rooms occupied, the management should focus on improving room facilities e.g. tailored to customer’s satisfaction. This will bring about repeat business. The prices of rooms must be controlled by the forces of demand sand supply in the market. Competitive advantage Competitive advantage simply points to a firm sustaining profits that are more than half of the ones made by the industry (Kotler, 2009). This means that a firm is cable of making sustainable profits as compared to its competitors in the same industry. It is the objective of all businesses strategy to operate under sustainable competitive advantage. Cost advantage and differentiation advantages fall under the category of competitive advantage. If a Superstar Hotel manages to deliver similar benefits as a competitor at a lower cost, it acquires cost advantages. A firm delivering benefits exceeding those of competing products and services realizes differentiation advantage. Cumulatively, cost and differentiation advantages permit the firm to cultivate own profits and create superior value for customers respectively (Kotler, 2009). This is what is referred to as positional advantages in the industry. Superstar Hotel can utilize its superior resources and capabilities to create competitive advantage which will lead to formulation of services. If the resources and capabilities are not superior, competitor may replicate them consequently diminishing aspects of competitive advantage. Superstar Hotel can utilize resources such as trade mark, reputation of the hotel, good customer experience, and customer security to create competitive advantage. The firm can also build capability of introducing diverse services e.g. casino, health and fitness centre at a fast pace. This is achievable through continuous research to deduce unexploited avenues in hospitality industry. Resources and capabilities of the firm can be harnessed to bring about innovation, efficiency, customer responsiveness and quality. Value can further be created through receiving customers at a fast pace, easy booking procedures and efficient customer experience centres. Five forces analysis of Superstar Hotel a. Rivalry To outwit competitors, it is important for management to understand the industry very well. Porter’s five forces provide an opportunity for a firm to know the kind of environment it is operating on and how to nurture attractiveness (Porter, 2008). Competition within an industry tends to reduce profits and strategic analyst should pay attention to differences between firms. Concentration ratio measures percentage of market share held by different firms. If the ratio is big, it means that the market is near monopoly with the largest firm taking control whilst a low ratio indicates existence of many rivals and none has a market share (Laermer, 2007). There are several moves that the hotel management can make to achieve competitive advantage over other firms in the industry. By raising or lowering prices of rooms and food products, Superstar Hotel will realize a temporary advantage. It can also invent new recreation facilities in the hotel or rather expand hotel capacity through vertical integration. Positive relationship with suppliers can be emphasized so that the hotel finds a continuous supply of inputs. Standards can be set for suppliers in an attempt to provide quality services. b. Threat of substitutes Services and products supplied by other firms in the industry are classified as substitutes. Price elasticity is affected directly by existence of close substitutes. Customers can easy shift to alternatives if a price of a substitute food product or room service changes. Adoption of value based pricing by the surviving hotel leads to reaching break-even point. As proposed by strategic team, psychological pricing may be appropriate to maintain the firm in the industry (Miles, 2003). This approach considers customer’s perception of the services offered. Competitive advantage is further enhanced by using discounts either seasonal, promotional or adjusting the rates. During peak season, visitors can be offered discounts to attract more clients. In terms of using promotional strategy, customers are given discount prices during meals. When the season is off-peak, rates adjustment functions to win more visitors as compared to competitors. c. Buyer power Ability of the consumer to determine the price in the market must be considered in the hospitality industry. In the context of Superstar Hotel, number of firms and how the services are differentiated determines whether the customer has the power or not. It is also simple for the hotel to obtain information pertaining to the customers. This gives it power to set appropriate price level. d. Supplier power Suppliers supplying unique services may gain power over the firm thus making provision of hotel services expensive to the buyer (Baker, 2008). Services such as entertainment or rare foods may be provided at a subsidized price. The hotel can contract a firm to supply it with inputs at a subsidized price. An example is contracting famous actors to be performing at the hotel during weekends and entertaining visitors with pure music during week days. This will minimize cost incurred by the firm and ultimately price paid by visitors. One of the location advantages for the hotel is viewing natural scenery given by the coastline while inside the room. This alone is an incentive for visitors to conduct repeat business. e. Barriers to entry We should recognise that even though incumbent rivals act as a source of threat to firms in an industry, possibility of fresh entrants given a profitable environment affects competition in the business. Theoretical, a competitive environment is characterised by free entry and exit that then results to normal profits (Porter, 2008). The environment surrounding Superstar Hotel is competitive since firms tend to enter the industry when profits are high. On the contrary, firms move out of the industry when losses or operating costs are increasing as evidenced during 1990’s. Government can act as a source of barrier when it regulates entry into specific industry. If Superstar Hotel is capable of introducing ideas and knowledge that guarantees competitive advantage then other firms may not enter the industry if such skills are patented. Another factor that contributes to barriers of entry is when an industry has high minimum efficient scale. In such a situation, new entrants will need to incur more entry cost. Strategic management of superstar hotel must reconsider ways to gain competitive advantage in order to control the hospitality industry and enjoy the profits. Impact of decisions on Human beings From graphical analysis of human resources, it is evident that the firm has not managed to stabilize number of its staff. There is need for a research to be conducted on ways of motivating staff. The management can look into the possibility meeting the needs of the customer and the organization at the same time as proposed by the needs theory. There is a requirement for a performance contract between employees and the firm such that while increasing salaries, employees are expected to deliver. Effectiveness of marketing plan Marketing plan should describe the service or product rendered, its price, promotion strategy employed and the place that the service meets potential buyer. It is essential that room service offer quality and variety of foods, drinks and customer care experience that meets customer’s expectation in real time. The idea of selling unique meals to customers tends to capture their attention and increase competitive advantage of the business. In view of the fact that many firms are moving out of the business, psychological pricing technique is appropriate for Superstar Hotel. Advertisement should exploit social network that is used by young generation. Effectiveness of business objectives The objective of Superstar Hotel is to win more customers on a continuous basis. This will ensure that business is sustainable. Furthermore, Superstar Hotel intends to increase its market share by using both traditional and modern method of advertisement. After conducting passionate research, the firm looks forward to providing friendly and quality services to clients. Analysis of trading results There is a percentage increase in market share, market image and public awareness across. Market share rose by 28 % while market image increased by 52 points. The two indicators demonstrate substantial coverage of market niche that will realize considerable profits. 45 points increment in public awareness illustrate that the advertisement criteria for Superstar hotel has been a success. Revenue and net income is steadily rising from the year 2001 to 2005. If Superstar Hotel diversifies its services and integrates the firm vertically, business opportunities will also increase. Upgrading facilities including internet access, conference facilities, and customer care facilities encourages new business with customers. Innovative and sophisticated facilities installed in the hotel realized 4 % revenue increment. The graph analyzing room occupancy and refurbishment shows a direct relationship. Revenue from rooms determines business success hence pricing have to be done with caution. Rooms registered 80% - 100% occupancy rates during hot season means that prices must be left to forces of demand and supply. Monthly Indicators Report clearly illustrates that the business is progressing in terms of refurbishment, factors and ratios. From the data customer’s comments are always appealing in the 5th year as compared to the beginning year e.g. they are contented with cleanness, customer experience service, room services and quality of foods. Decision making process This simply highlights on basic ways of choosing alternative course of action while taking note of stakeholders, goals, objectives and other variables. The process starts with identifying a problem then determining the requirements to be met when finding solutions. When this is done, the next stage is to establish wide goals which in essence comprise of wants and desires of superstar hotel. Alternatives are then enumerated before choosing a criterion to use when discriminating them. The chosen alternatives will provide solution to the problem encountered by Superstar hotel. It is important to do frequent appraisal to deduce area that needs adjustment. In terms of organizational structure, Superstar Strategic team assumed various functions. For this reason, I will recommend functional structure of the firm. Each employee performs specialised function. An example is customer care agent who receives and advices customers. The employee cannot venture into the accounting department but is responsible for the comfort of the customer. Recommendation Strategic management recommends an aspect of minimizing staff’s turn over-ration by building trust and employee relation. High turn over-ratio is associated with rising cost of training new employees. The company is therefore obliged to motivate its current employees by rewarding productive ones or promoting them to managerial positions. Employee reviews done monthly allows the management construe problems affecting employees and find amicable solutions. The reviews further cultivate the culture of participative leadership where both the management and subordinates discuss major issues together. Read More