Understanding Tourism as a Business - Assignment Example

?Understanding Tourism Business Travel agencies and Hotel chains are an integral as well as significant part of the tourism industry; neither can stand function and suffice without each other. Thomas Cook Group Travel Agencies are exclusive caterers who provide services embodied to tourism for suppliers like airlines, car rentals, cruise lines, railways, hotels and package tours. Some travel agencies are distinguished in business and commercial tourism only. Historic Background Thomas Cook, one of the best comprehended name in the history of travel birthed his company in 1841.His first rove jaunt was a rail travel from Leicester to Loughborough on five July 1841.From the beginning of this excursion Thomas Cook made his label in the travel archive. Thomas was a cabinet-maker in Leicester. He was a folk reformer and he thought that People’s life could be improved to a great extent if people drank less and become more educated. While walking one day he was struck by an idea to use the power of railway to employee people. In the abstinence meeting, he evinced his idea. His idea was condoned happily to take the reformer people to Loughborough which was scheduled on train and that too only for one shilling. The meeting was a great success and this became the key idea for his excursions thereafter. Nowadays, Thomas cook is a leading company having 16,000 staff with an operating network of 1050 in UK and overseas (Thomas Cook Group, 2013). Ownership of Thomas Cook Group Thomas Cook group has 3 lead share holders as on August-2011.The share percentages are as follow (Thomas Cook Group, 2013): Lloyd’s Banking group has a share of 9%. Blackrock Inc. has a share of 4.99% AXA SA has a share of 4.8% The remaining of the stock floats freely Mission Statement of Thomas Cook “To Perfect the Personnel Leisure Experience”. Thomas cook’s vision is to go make dreams come true. To make sure this is the case they make their values the DNA of their business.  Staffing in Thomas Group Recruitment composition of Thomas Cook group of companies includes Board of directors. The chairperson of this board is Non-Executive. The Board has two executive directors and four Non-Executive directors. The Group Executive Board is chaired by Group Chief Executive Officer who is responsible to the operational management and tactical development of the businesses of the company (Thomascookgroup, 2013). Thomas Cook Group is diversified with its workforce from cabin crew, Administration, Resorts, Product Marketing and Health and Safety. Every action of this group is focused on customer. Thomas Cook Strategy Thomas Cook has empowered and is serving over 25 million customers. Their main purpose is to inspire their customers to go and see the world. They aspire their customers with the delivery customized holiday experience to individual clients. Their goal is to exceed the expectations of the customers on wherever, whenever and however basis (Holloway & Taylor, 2006). The values of Thomas Cook are: Succeed as one team Deliver for the customers Engage one another Drive for results Act with integrity Organizational Structure of Thomas Group The organizational Structure of Thomas Cook is very alterable which is organized by Geographical and Functional Departmentalization. The Geographical Departmentalization has grouped the jobs on the basis of the geography and canton. Similarly the customers are also grouped on the basis of their geographical dispersion (Daugherty, Croft, Marguart, Balzor & Sheldon, 2013). Functional Departmentalization has been grouped by the functions being performed (Daugherty, et.al, 2013. The activities and jobs being performed are normally grouped according to work which is performed and to carry on the economies of scale by hiring employees with shared skills and erudition in different departments. Products, Services and Vertical Integration by Thomas Cook The core business of Thomas Group is the provision of Charter Packages in which flights, Hotels, Resorts and Rep services are vertically integrated (Maharani, 2009), and are sold to customers with the help of different brochures and online stores. The packages provided by the company are very popular as they provide the ease to the choice of selection on the packages and the safety and security promised by the company (Clawson & Knetsch, 1966). The main Products and Services provided by Thomas Cook are: Holiday Plans are made for customers for different locations of the world like Spain, Orlando etc City Breaks for different cities like 4 nights stay in Las Vegas, Dubai 4 nights, Rome 3 Night etc. Ski Deals in Austria, Canada, and Italy France etc Financial Information of Thomas Cook Group of Companies Thomas cook group is one of the largest leisure travel group with sales of ?9.5 billion. They are serving 23 million customers by the year ended on 30 September 2012.Their total revenue is ?9,491.2 (Bloomberg Business Week, 2013). Supply chain for Travel Industry The supply chain for travel industry can be summarized as (Mayer, 2007): Marriott Hotel History J. Willard Marriott Founded Marriott in 1927 when he along with his wife opened a root beer stand in Washington DC. Due to hot and humid summers in D.C, it gave Marriott an idea to open a place where the residents of the city could get cold drinks (travelwyse, 2012). The beer stand was named as, ‘The Hot Shoppe’ (Abadani, 2006). In 1932 the business was expanded from the root beer stand into a chain of family restaurants and hotels; which went public in 1953 (travelwyse 2012). Now the brand can boast above 3,000 hotels around the world (Julia, 2013). Although Marriott has a number of brands yet the more widely recognized are the resorts, Renaissance Hotels and resorts, and the Ritz-Carlton courtyards and residence Inn’s (Julia, 2013); Ritz-Carlton was acquired in the 1995 by Marriott for external expansion of the business, and it is now rated among the best (Abadani, 2006). Willard’s son Bill Marriott is now the chairman and chief executive officer of the chain of restaurants and has led it to the worldwide growth of having 73 properties worldwide and only in the USA has a grand number of 3,718 hotels (Travelwyse, 2012). Ownership of Marriott Hotels The Marriott chain of restaurants is a family business with public stocks. The chain is currently headed chaired by the chief executive Bill Marriott, who is the son of Willard Marriott (Travelwyse, 2012). The company has 333,866,753, A Class common stocks listed on the NYSE (New York Stock Exchange) and CSE (Chicago Stock Exchange); and are held by 42, 086 share holders as of January 2012 (Marriott, 2012). The Major Share holders are (Morningstar, 2012): 1. T. Rowe Price Associates (23,373,489 shares) 2. Capital World Investors (11,731,727 shares ) 3. Vanguard Group, Inc. (11, 635, 137 shares) Marriott Hotel Staff and Organizational Structure The company is headed by the chairman of the board and the chief executive officer, followed by the president and the chief operating officer (Daugherty, et.al, 2013). The one general Manager is followed by the several department managers which head their respective departments (Daugherty, et. al, 2013). Supervisors and associates are also incorporated into the structure; unity of command can be seen as one employee reports to only one manager at a time and not many (Daugherty, et. al, 2013). Functional departmentalization can be seen in the Marriott Inc.; the departments are organized and known by the functions they perform; with the design of working to be mechanistic (Daugherty, et. al, 2013). There are around 300,000 people currently employed by the Marriott Inc. and is regarded as and known for being a top employer (Shareholder, 2013). Mission Statement Marriott Inc. have based their business on what is known by them the ‘Vision statement’, which they regard as aspiring ‘To be the #1 hospitality company in the world’ (Marriot, 2013). They have a vision to be the world’s leading provider when it comes to hospitality services (Daugherty, et. al, 2013). Core Business Values and Philosophy The Marriott Inc. follows these core business values to provide the best experience to their customer, while taking care of their employees and increasing shareholder value (Marriott, 2013): 1. Following principles of Responsible Business 2. Human Rights Commitment 3. Follow Ethical and Legal Standards 4. Contribution to Conservation of Environment 5. Commitment to Social well-being Financial Information The EBITDA for Marriott in the year 2012 equaled $1,146 million, which was an increase of 16% over the year 2011; Marriott also repurchased 31.2 million shares of the common stock of the company for $1.2 billion (Marriott, 2012). Horizontal integration and Product diversification Horizontal integration means to enhance business and services by acquisitions and mergers of competitor business (Maharani, 2009). In Marriott Inc.’s case it would refer to the acquisition of and merger with other hotels, resorts or chains of hotels t enhance and diversify the travelling and services experience for their customers. One of the most known and significant acquisitions by Marriott Inc. occurred in 1995 when it acquired the Ritz-Carlton Hotel Company, LLC; by 1998 the company had 98% shares of Ritz-Carlton (Abadani, 2006). The chain had been struggling to keep up its name and services but the acquisition allowed Marriott to expand its business and now the Ritz-Carlton is known to be the most luxurious experience for customers (Travelwyse, 2012). By acquiring the Renaissance Hotel Group the Inc. introduces new brands like Town Place Suites, Fairfield Suites and Marriott Executive Residences for its customers (Abadani, 2006). Economy of scale Purchasing economy of scale is demonstrated as the size and expansion of the chain increases. e.g. the number of Marriott hotels has changed significantly from 2009 to 2011, yet the operating costs and expenses have had no significant change that is from $11,060 million to $11,791 million (Marriott, 2013). Supply Chain The supply chain for Marriott Hotel industry, encompassing both the initial raw materials and resulting products and services can be represented as follows (Joyce, 2010): Comparing Marriott and Thomas Cook When it comes to comparing the two services the first thing that is evident is that the travel industry falls in the middle of the tourism industry supply chain while the Hotel business is at the end of the supply chain (Rodriguez-Diaz & Espino-Rodriguez, 2006). The Two are an integral part of the chain. Thomas Cook was founded in 1841, whereas Marriott Inc. has been in business only since 1927. Marriott Inc. is a family business with private ownership and shares in the market. The Thomas Group is a Plc, not in the Thomas Cook family anymore. It has five major share holders with rest f the stock freely available to the public. The corporate decisions at Marriot are Bureaucratic while at Thomas cook they are autocratic. In Marriott Hotel the policies are devised by the higher management and trickle down; whereas the policies in Thomas Group Plc are governed by the interests of the company by the stakeholders and the middle and lower management play a significant part in it. Thomas cook utilizes geographical and functional departmentalization where as Marriott relies on functional departmentalization to manage the departments. People employed by the Marriott Inc exceed the Thomas Cook Group by a huge margin. Marriott group utilizes horizontal, vertical and backward integration as well as economy of scale to provide its customers with services; while the Thomas cook group utilizes vertical as well horizontal integration. Marriott is a family based organization due to which HR recruitment norms are not strictly adhered to, sometime affecting the quality of workforce. On the other hand the quality of work force is stronger in Thomas cook Group as employment is strictly merit and qualification based; thus minimizing various operational, procedural and management losses, inturn increasing the profits are credibility of the company. Marriott Hotels pay significant attention to their environmental policy where as the Thomas Cook Group d not incline themselves towards any such measures, on the contrary promoting unnecessary travel only adds to carbon emissions. Both Thomas cook and Marriott Inc. excel at providing services to their customers and are utilizing various strategies to better the travelling and staying experience of their customers. Luxury with affordability is significant in their ventures. They are constantly expanding their businesses introducing new and diverse products into the industry; with joint ventures, mergers and acquisitions aimed at providing more and more options when it comes to services and locations. References Abadani. (2006). History of Marriott Hotel. http://www.azaval.com/showthread.php?4972-History-of-Marriott-Hotel Date accessed 18 March 2013 Bloomberg Business Week (2013). Thomas Cook Group Plc (TCG:London). Investing Business week. Date accessed 18 March 2013 Clawson, M., & Knetsch, J. (1966). Economics of Outdoor Recreation Johns Hopkins University Press. Baltimore, MD. Daugherty, B., Croft, E., Marquart, K., Balzer, K. & Sheldon, N. (2013). Marriott Hotels. http://www.google.com.pk/url?sa=t&rct=j&q=marriott%20inc.%20corporate%20mission%20statement&source=web&cd=7&cad=rja&ved=0CGIQFjAG&url=http%3A%2F%2Feeacroft.awardspace.com%2FMarriott.ppt&ei=2cxGUeu2IcLk4QTzy4HYAw&usg=AFQjCNFuzDom_OUeCabdX2v-iEsz12lOcg Date accessed 18 March 2013 Rodriguez-Diaz, M. & Espino-Rodriguez, T. F. (2006) "Developing Relational Capabilities in Hotels", International Journal of Contemporary Hospitality Management, Vol. 18 / 1, pp.25 - 40 Holloway, J. C., & Taylor, N. (2006). The business of tourism 7th ed. Joyce, S. (2010). Marketing vs. Distribution – A place for both strategies. Tourism Technology. http://tourismtechnology.rezgo.com/2010/06/marketing-vs-distribution-a-place-for-both-strategies.html. Date accessed 18 March 2013 Julia, C. (2013). History of the Marriott Hotel. http://traveltips.usatoday.com/history-marriott-hotel-21444.html Date accessed 18 March 2013. Maharani, E. (2009). Ten Examples of Strategies. http://www.scribd.com/doc/22395710/Ten-Examples-of-Strategies Date accessed 18 March 2013. Marder, T. (2012). Marriott International Reports on Fourth Quarter and Full Year 2012. http://files.shareholder.com/downloads/MAR/2373395689x0x636727/e518a758-9465-4e82-b191-b107f86d9e73/MAR_Q4_2012_Press_Release_FINAL.pdf Date accessed 18 March 2013. Marriott. (2012). Corporate Overview. http://investor.shareholder.com/mar/overview.cfm Date accessed 18 March 2013. Mayer, S. (2007). Airbus vs. Boeing. http://www.grin.com/en/e-book/87814/airbus-versus-boeing-strategic-management-report Date accessed 18 March 2013. Morningstar. (2012). Marriott International, Inc. Class A: Major Share Holders. http://investors.morningstar.com/ownership/shareholders major.html?t=MAR®ion=USA&culture=en-us Date accessed 18 March 2013. Thomas Cook Group Inc. (2013). Welcome to Thomas Cook Group plc. Thomas Cook. http://www.thomascookgroup.com Date accessed 18 March 2013. Travelwyse. (2012). A brief History of Marriott Hotels. http://travelwyse.wordpress.com/2012/11/28/a-brief-history-of-marriott-hotels/ Date accessed 18 March 2013. Read More