Managing Global Hospitality Issues - Case Study Example

Running Head: MANAGING GLOBAL HOSPITALITY ISSUES, HOSPITALITY MANAGEMENT Managing global hospitality issues, Hospitality management of Writer] [Name of Institution] Managing Global Hospitality Issues, Hospitality Management Introduction If we analyzed then we come to know that the Thistle Euston, adjacent to Euston station, is a modern, purpose-built hotel presenting guests pleasant lodging and good service. The hotel is situated inside easy reach of together the city and the shops and amusement of the West End. Having experienced the SARS, July 7th, 2005 terrorist attack, and the Bird Flu, which have slowed down the UK economy and had an adverse effect on the hotel industry, there are now clear signs of recovery. This report will first examine the UK based Thistle Euston hotel market, discuss the main industry players and show the relative significance of key issues. Moreover, it will discover the UK consumer trends, present the variety of backgrounds of investors and give a future outlook along with a forecast which has been urbanized to illustrate the industry and the factors moving its growth and future. In conclusion, it will comment on short-term and long-term investment as well as recommending an outcome for the investor. The Thistle Hotel Euston in UK Current Situation A Thistle Euston hotel, according to the EU, is defined as 'a communal accommodation enterprise, typified as being prearranged in rooms exceeding a countrywide specified minimum and as providing ordinary services, counting room service'. Usually, the UK definition is made according to the investment of a license to sell liquor. (Lawson, 1998) According to the newest beginning figures from the Hotel Thistle Euston Survey by Deloitte, the UK hotel industry has established to be the strongest entertainer in Europe in the first six months of 2004, by means of revenue per obtainable room (revPAR) rising 11 percent against the similar period in 2003, resulting from a balanced mix of rising occupancies and standard room rates. London, which is the most important performer in the UK, knowledgeable a 6% augment in standard room rate year on year (ACAS 2002). The key players The UK hotel industry has several braches of Thistle Euston which is made up of numerous key players, including: Boutique Hotels Mid-range Hotels Budget Hotels Bed and Breakfast "Boutique Hotel" distinguishes itself from better chain or recognized hotels by providing an outstanding and personalized level lodging, services and facilities. Mid-range Hotel is a average room with additional facilities, usually confidential with 3 or 4 stars. Budget Hotel is on the entire purpose-built, identified lodging unit by a smallest of 50 rooms and standard low prices. Personage units are frequently identified as lodges, inns or - less usually now - motels. Bed and Breakfast is a private house; several rooms of which are set aside for overnight guests whose paid lodging comprise breakfast. (The American Heritage Dictionary of the English Language) The competitive environment There is always tough competition amongst the key players inside the UK Hotel Industry: From the Smith Travel Research where the grand insist for the Residence Inn was at 30% and the supply was merely at 8%. The Marriott PLC has urbanized a new group called "Residence Inn" to adapt this great market insist. UK center market hotel brand, Thistle, is initiation a luxury worldwide sister - Guoman, which is set to spread internationally. In order to grow the brand Thistle intends to upgrade some existing properties in the UK and launch an "ambitious acquisition strategy" abroad. Whitbread has made the decision to decrease their experience to (and eventually exit from) the full-service hotels division where they are the UK operators of the Marriott brand, due to the low returns from this franchised commerce. The company also obtain Premier Lodge from Spirit Group for pound; 505 million, and combining Travel Inn and Premier Lodge and marketing them to the UK consumer under on brand (Ackers, P. 2002, 2-19). Thistle Euston has draw round a violent e-commerce policy since 2002 to build a series of Web sites for its main markets counting the UK, Germany, and Japan. The attempt resulted in the formation of eight contained Web Sites representing seven dissimilar languages. Human Resource Management HR managers of Thistle Euston have argued that HRM policies should be documented as a source of competitive advantage. In recent years, according to the HR managers of Thistle Euston, 2004, strategic management policy has partnered the development of strategic human resource management. This evolution has attempted to initiate a more planned approach to the management of the human resource, previously established as inherent to the success of hospitality of this organization (Adib, A. and Guerrier, 2001, 339-52). Management Information System Strategic HRM suggests that human resource management practices of Thistle Euston are most effective when coordinated with strategic goals of organisations, (Hendry, 1995). Moreover the main proposes that ready linkage among the business strategy and the policy towards employees are key, in spirit they fit HRM with the strategic objectives of the Thistle Euston. The aim of strategic HRM is to ensure that the culture, styles and structure of the Thistle Euston and the quality and commitment of its employees contribute fully to the business objectives (Allan, C., 2000, 28-45). This is demonstrate by the case study of Thistle Euston Hotels, where new objectives were written in consultation with individual employees and the monitoring of standards was strictly put into practice by the employees. Thus, the whole culture adopted the philosophy of SHRM. Here it must be noted that this paradigm shift is accepted and not prescribed by management, resulting in a more positive result (Adkins, L. 1995). Environmental Analysis The main external factors affecting the Thistle Euston's hotel industry, both now and in the future, are listed below: Strategic Factors PEST Analysis Political Disability Discrimination Act - came into force in 2004 meaning that service providers and businesses must take reasonable steps to allow for disabled access. This chiefly effects minute business and may have some severe implications for the leisure and tourism industries. Migrant workers as more countries joint the EU, workers from the new countries could help ease staff shortages. Economic Olympic - London has won the competition to host the 2012 Olympic Games, which will boost tourism revenues owing to increased visitor numbers. London hoteliers have agreed to provide 40,000 affordable rooms for London 2012. Euro - Following the government indecision on the Euro, hotels are split on their opinions or joining the single currency, 52% of hoteliers were against adopting Euro. Interest Rates - were at a 40-year low during 2003; however, the Bank of England has slowly increased the rates in order to curb high levels of consumer debt. In May 2004 interest rates rose to 4.25%, the third rise over the last seven months. Social The Domestic Holiday Market - The rate has increased in 2003 and 2004, due to apprehensions about traveling abroad during the Iraq War and the natural disasters. Growth in total expenditure has continued to rise by 16% between 2000 and 2004 but basically only in nominal (not adjusted for inflation) terms. Significant Growth In Key Socio-Economic Groups - There has been a significant shift over the last few years towards the higher socio-economic groups, suggesting a better-educated and more affluent population, already backed up by rising levels of disposable income which is an advantage to the hotel industry. Technology The development of various technologies over the last decade has had a significant effect on the way Thistle Euston hotels are booked, as well as the facilities that are provided within hotels, such as broadband Internet and digital TV. According to the Mintel Report, internet penetration appears to be far from slowing, reaching 57% of the UK population in April 2004, with broadband and interactive digital TV having both reached 19%. Many of the larger hotel groups are thus investing heavily in their online booking systems as well as providing Internet access within their hotels. Thus, customers have the opportunity to retain their home-from-home comforts, or in the case of business guests, office-from-office facilities and amenities. SWOT Analysis Strength Networks between corporations encourages travel Increase in budget airlines Comprehensive rating system across England, Scotland and Wales Diversifying service into other income streams. Weakness Profit has been minimised resulting from 9/11, July 7th terrorist attacks No control on external factors e.g., FMD, SARS, Bird Flu Unpredictable British weather Opportunities Growth in domestic travel due to weakening pound against the euro Increase room rates to prior of 9/11, July 7th terrorist attacks More business from people with higher disposable incomes Expected increase in inbound tourism Visas within 24 hours for Chinese travellers and increase in flights Threats Always the chance of terrorist attacks ,such as July 7th 2005 London Bombing FMD, SARS , Bird Flu, etc Iraq war pulled down 2003 profits due to uncertainty of war The Five Forces Framework The Barriers Entry to the market is High The Buyers Power are strong The Suppliers Power are low The Substitutes Threat are low Therefore, the UK hotels are in low competitive market. Porter's 5 Forces Model For Global Steel Industry (Francis, 2004) Future Development Profitability gains from rising rates rather than occupancy While hoteliers have held occupancy relatively steady during the downturn by cutting rates in the past, the recently strengthening demand indicates that rates can now be raised. Thus, while hotel revenue figures are likely to see a period of continued growth over the short to medium term, is it likely that this growth will stem from rising room rates while occupancy levels will remain fairly constant. According to the TRI Hospitality Consulting's forecast of UK chain hotel performance that London is going to continue to lead the growth of the hotel industry with revPAR increasing by a forecast 22% until 2006 compared to a 9% increase in the provinces. Finance According to Mintel's Budget of Thistle Euston Hotels - UK, Leisure cleverness, April 2003, the budget hotel is forecast to show 40% enlargement among 2002 and 2007, and will be value just over pound;1.1 billion in 2007. This translates into real growth of 23%, after the effects of inflation over the next five years have been taken into account. However, at the other end of the market strong growth is forecast to continue within the upscale hotel of the hotel industry. The domestic market is crucial with consumer confidence rebuilding in the UK, growth within the hotel industry will be sustained by the domestic market, driven by the growth of domestic short breaks. The weakening Pound against the euro, as well as ongoing fears of global terrorism will help maintain the market. Statement and Evaluation of Strategic Alternatives Do Nothing It means that thistle hotel euston does not add any free amenities for attracting customers. Pro: Reduces cost Con: Reduces occupancy rate A first alternative is to take no action.This is always a viable alternative short of a crisis. But no company wants to suddenly find themself in a crisis, either. However, most of the data shows they are far from this. A second alternatinve is to continue to make modeste improvements to their business-class of rooms. These will also be of use on weekends. It will allow for better monitering of changes in customer desires. The third alternative is to resume their growth although not of necessity at 15 new sites per year. This will take benefit of their wealth of capital. Recommended Solution and Justification I would recommend continuing to make improvements to offer slrghtly better quality of rooms to business and tourist travellers. This can be things like an improved bed, decorating, maybe small coffee machines in rooms, or even free morning muffins in the lobby. None of this is a full-service expense or obligation. It is further justified by the fact it can serve both makets. Conclusion and Recommendation By analyzing the UK hotel sector, its market future development and customer trend, a conclusion can be draw which is as follows: The market's polarization into the financial plan sector and upmarket sector for particular occasions is predictable. There is fast enlargement and gains in market share of the budget hotel sector and this can be give details by the fact that budget hotels give the client what he/she really wants and wants and nothing more, thus saving on operating cost, which permit the operator to accuse a sensible, spirited price. However, the popularity of Thistle Euston hotels highlights the demand for the top end of the market, consequences from the response from people towards being ready to pay extra for senior quality, chiefly for a special time. 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