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Hospitality Management 1 Park Inn Hotel Name of the student Name of the course Name of the instructor

Park Inn Hotel TP-103993

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This report provides an inside into how the business can transform easily to produce better results.

Text of Park Inn Hotel TP-103993

Hospitality Management 1

Park Inn Hotel Name of the student Name of the course Name of the instructor

Hospitality Management 2

ContentsContents..................................................................................................................... 2 Introduction................................................................................................................. 4 PEST Analysis.............................................................................................................. 4 Political Influence..................................................................................................... 5 Economic Influence..................................................................................................5 Social Influences...................................................................................................... 5 Technology Factor....................................................................................................6 SWOT Analysis............................................................................................................ 6 Strengths................................................................................................................. 6 Weaknesses............................................................................................................. 7 Opportunities........................................................................................................... 7 Threats.................................................................................................................... 8 Porters Five Forces Analysis.......................................................................................8 Buyers Bargaining Power........................................................................................8 Suppliers Bargaining Power.....................................................................................9 Competitive Rivalry..................................................................................................9 Threat of Substitutes..............................................................................................10 Threat of New Entrants..........................................................................................11 Opportunities in UKs Hospitality Industry..................................................................12 Comparative Advantage............................................................................................12 Start-up Costs for the Planned Change Process.........................................................13 Assumptions.......................................................................................................... 14 Start-Up Funding.......................................................................................................14

Hospitality Management 3 Assumptions.......................................................................................................... 15 Action Plan................................................................................................................ 15 Segmentation and Targeting.....................................................................................16 Demographic Segmentation...................................................................................16 Behavioral Segmentation.......................................................................................16 Conclusion................................................................................................................. 17 List of References......................................................................................................18

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IntroductionPark Inn is a mid-market hospitality brand in UK, having its operations and businesses expanded in more than 32 other countries of the world. The hotel is famous for its friendly and cozy hospitality services provided to the customers at the most competitive prices in the hospitality industry. The hotel space provides comfortable accommodation, hygienic rooms, facilitating services and a tussle free hotel experience. Having around 140 hotels at more than 100 destinations across Europe, Asia and America, Park Inn hotel and restaurants focus on providing a colorful and attractive environment to the customers, and at the same time, serves customers with delicious continental and local food (Park Inn 2011). Park Inn hotel is now considering the option of expanding its UKs business by renovating and expanding the space in its Park Inn Heathrow London location. For this reason, a detailed strategic report containing PEST analysis of UKs hospitality industry along with Porters five forces analysis and SWOT analysis of UKs hospitality industry are presented so that the management can decide about the possible hurdles that might arise during the change process. In addition, the strategic analysis would also help the management to identify the financial and human resource requirements of the project and design the activities according to these requirements.

PEST AnalysisPest analysis will assist in determining the political, economical, social and technological environment in UKs hospitality industry (Bensoussan and Fleisher 2008, Henry 2008).

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Political InfluenceBeing a democratic country, people enjoy the power of electing their favorite personals and creating an environment, where they are free to practice their social values and fulfill the basic necessities of life. The elected PM of the country strives to make business environment friendly and facilitating for organizations and design a framework that helps the government to provide incentives to the businesses in the country (Centeral Intelligence Agency 2011).

Economic InfluenceThe economy of UK has flourished over the years due to the abundance of natural resources and internationally established businesses that cater customer bases around the globe. UKs GDP is considered to be one of the five largest economies in the world and the increasing per capita income of citizens indicates that the country will continue to be an investor friendly destination where the purchasing power of people allows businesses to flourish and offer innovative and unique products and services (Centeral Intelligence Agency 2011).

Social InfluencesUKs hospitality industry is at maturity level as acquiring hotel accommodation has become an integral part of tourists, business personals and ordinary citizens life. UKs hospitality consumers are willing to pay any amount to acquire a room space and enjoy state of the art hotel services. The entrance of foreign HOTEL CHAINS has escalated this desire in UKs hospitality consumers to buy quality hotel services and products. The increasing competition in the hospitality industry has lead to a situation, where the UKs hospitality consumers become more brand conscious now (Barrows and Bosselman 1999).

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Technology FactorUKs business environment is supportive for research and development which results in unique and innovative products and services presented to the customers. In hospitality industry, the use of technologically driven products and services has increased to reduce the time gap and the hassle in delivering the products and services. Use of technology has also helped hotels to raise the service standards and quality of the products offered to customers.

SWOT Analysis Park Inn Hotel does possess strengths that will help them to succeed in the lucrative UKs hospitality sector. A SWOT analysis will help us to highlight they key strengths, weaknesses, opportunities and threats to Park Inn Hotel in UK (Griffin 2007).

Strengths

The financials and the brand image all over the world will help Park Inn to successfully enter and flourish in the hospitality market of UK.

The wide variety of products and services available at Park Inn Hotel will catch the eyes of UKs mature hospitality market.

Park Inn Hotels strong and powerful social image and customer oriented social marketing strategies will help it to survive in the strict business environment of UK.

Use of environment friendly ingredients and service attributes will be an additional plus point for Park Inn Hotel to establish itself as peoples brand in the country.

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The awareness level among the target market about the eco friendly products and the benefits of acquiring Park Inns services and products will also help the hotel to uplift its market image in the UK hospitality market (Athiyaman and Robertson 1995).

Weaknesses

Imitations of Park Inns services and products are widely available in the UK hospitality market, which damage the companys image and the standards of quality it has maintained.

There are number of other major players, local and international, in UKs hospitality industry offering same products and services as the Park Inn Hotel, so the organization will have to bring differentiated products in the market (Athiyaman and Robertson 1995).

Opportunities

As the large portion of UKs population is middle aged and belong to a business and working class, they use hospitality services heavily. This fact will be an opportunity for Park Inn Hotel to enter the market and grab the attraction of the target population of UK.

As the usage of hospitality services and products is increasing among local citizens, Park Inn will have a chance to capture market share of local customers, because the hotel offers a wide range of products that are especially produced for local customers.

Day by day changing consumer trends and the exposure of customers to media has escalated the desire in consumers to acquire hotel services in the target market to enjoy luxury, cozy environment, parties, festivals and delicious food.

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Due to the increasing demand of hospitality products and services in UK, it is expected that the purchasing of these products is going to get doubled in coming years (Athiyaman and Robertson 1995).

Threats The availability of sub standard substitutes of Park Inns services and products also affects

original products image.

Porters Five Forces AnalysisPorters five forces analysis is a framework which helps a business or individual to assess the macro environment surrounding an organization or an industry (Hill and Jones 2009, Grant 2005).

Buyers Bargaining Power

There are number of hospitality brands offering same products and services which imply that the switching costs are lower and the hospitality organizations have to set a competitive price in order to retain customers.

There is huge demand for hospitality services and products presently and expected to increase in future, which requires producers to provide discounts and incentives to the customers.

Due to the customers expectations to maintain their status symbol and their increasing purchasing power, increasing demand for hospitality services requires manufacturers to be flexible in pricing.

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There are number of other organizations involved in providing hotel services and products to customers, therefore; the bargaining power of buyers is stronger in this segment of luxury goods industry.

Suppliers Bargaining Power

Organizations involved in hospitality business produces large number of services and products due to the ever increasing demand which requires them to acquire mass quantities of raw material for the production of such services and products.

There are large numbers of suppliers in the market who can provide raw material which imply that sellers switching costs to other suppliers are lower.

Suppliers total sales depend heavily upon the purchases made by the organizations in hospitality business, which weakens their pricing and bargaining ability.

In addition, there is a constant threat from the manufacturers side that they might integrate backward and start producing raw material themselves which requires suppliers to be flexible in their pricing.

Competitive Rivalry

Different organizations involved in providing quality hospitality services in different regions of UK are facing wild competition.

The hospitality industry of UK caters the needs of seasonal customers who tend to buy these products and services for special events.

Although, the demand is growing steadily which requires the manufacturers to market their products ahead of their competitors.

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Biggest problem is the size of business that rivals possess. Almost all the hospitality organizations are of equal size and capable of competing their rivals on higher grounds.

The increasing number of producers of the hospitality services and product leaves customers with little choice and hence, the customers buy anything cheaper and standardized.

Few of the low scale hospitality organizations has formed alliance with large scale producers of such commodities in other industries in order to acquire financial and functional assistance which has helped them to compete with the leading hotel and restaurant chains in UK.

Here, the role of intermediaries cannot be neglected, as one or two manufacturers of hospitality services are supplying their goods to the same distributor and acquiring raw material from the same supplier. In this scenario, organizations provide incentives and commit wild strategies to acquire the best suppliers and distributors in the industry.

Threat of Substitutes

In the hospitality industry of UK, substitutes of higher quality are readily available. New products and services are emerging as well which creates a constant threat for the hospitality organizations in UK.

Price wise, these substitutes are gaining significant attention of the market place. The switching costs are also nominal which compel customers to use these substitutes instead of high priced and traditional hotel services.

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Sales of substitute are increasing at a rapid pace which is resulting in heavy investments from high street hotels and restaurants to keep customers intact with the purchase of their products and services.

Beside the emergence of substitutes, fake copies are also introduced in the market. These fake copies of branded hospitality services provide customers with cheaper goods of same standards but lower quality.

Those who cannot afford to buy a branded hotel accommodation may rely on buying a fake copy of that hospitality service.

Threat of New Entrants

A number of organizations engaged in other business are diversifying their businesses and entering the hospitality industry by offering their differentiated products that cater the needs of customers looking for quality and luxurious hospitality services.

Entry barriers, on the other hand are also low. This is due to the reason most of the entrants are already established in their respective fields and they can bear the costs involved in producing hospitality services and products.

In addition, there are hotels and restaurants that are expanding the scope of their businesses and has started producing other luxury services within the same industry.

Due to the high profits potential, new entrants see this industry as a resort where they can make fortune.

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Government in UK is supporting small scale hospitality organizations to establish their businesses and integrate forward by entering into businesses in which they have expertise. It is evident that large number of small and medium size manufacturers of hospitality products and services is entering into the industry.

Opportunities in UKs Hospitality IndustryThis is a general perception that people in UK love and enjoy hospitality services and products. The hospitality sector of UK has been growing at a phenomenal rate and considered to be one of the most lucrative industry in the country due to the increasing number of incoming tourists and business professionals. The purchasing power of people in UK is increasing day by day because of the economic reforms by the government. Due to this, people spend open heartedly on acquiring luxurious hotel accommodations (Boella 2003).

Comparative AdvantageUK is considered to be one of the richest countries of the world in the production of raw material needed by almost any industry. The quality raw material available in the UK market would make it less costly for Park Inn to produce and deliver the products and services within the country. Secondly, importing the raw material from outside UK will be costly, so availability of raw material will cut down that cost as well. The abundance of raw material helps UK to earn valuable foreign reserves by exporting goods. Another comparative advantage, that businesses in UK enjoys, is the availability of skilled and qualified labor. UK has enough man power to supply to businesses and the abundance of man

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power is highest in UK, due to the reason that a large n umber of Asian and African immigrants comes to UK for earning money, than those countries with which UK have trade terms. Despite of the fact that UKs market is labor intensive, as discussed in above lines, trade experts call UKs hospitality market as capital intensive one. The reason is that the items, in which UK earn most of the foreign reserve by exporting, are capital intensive manufactured items. UK, for last decade, has been a resort for sporting activities and tourism. It was estimated in 2009, that nearly 900,000 tourists visit UK every month. The boost in tourism industry will also be fruitful for the Park Inn, as the tourists love to stay in a hotel that offers cozy and colorful environment. UKs reach to other markets in its neighbor, U.S and major European markets makes it a lucrative destination to conduct business in. After getting established in UK, Park Inn will have a chance to enter the markets of other African nations like Uganda, Nigeria, Costa Rica and Kenya, who are considered as other major economies in African continent and emerging economies in Asia.

Start-up Costs for the Planned Change ProcessFor renovation and expansion of the Park Inn Hotel at Heathrow London, the following expenditures are expected to incur: Start-up Requirements Renovation costs Fulfilling the legal requirements Developing the expansion plan Insurance of the change process and activities Hiring of Architecture and Engineers Acquiring Raw Material 400,000* 120,000 20,000 7,000,000 10,000 1,500,000

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Miscellaneous Rent of Machinery hired Payments made to workers Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements

500,000 120,000 75,000 9,745,000 3,000,000 7,500,000* 500,000 2,000,000 13,000,000 22,745,000

Assumptions1. Renovation costs are one off payment. 2. Inventory level is required by Park Inn Hotel. 3. Miscellaneous expenses are based on the marketing researchers estimations.

Start-Up FundingDifferent possible sources of funds are available for meeting the startup requirements in the UKs financial sector. The following table surmises how these requirements could be met by the new Tesco store in UK. Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets 4,354,200 3,000,000 7,354,200 10,000,000 3,000,000 (3,000,000) 13,000,000

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Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Total Liabilities Capital Planned Investment Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding

750,000 750,000 1,490,800 1,490,800 (1,340,800) 150,000 900,000 22,745,000

Assumptions1. Loan is obtained for 15 years at an interest rate of 10.5% per year. 2. Capital planned investment is expected to be raised by the investors. 3. Additional capital is expected to be raised by the investors for expansion and renovation.

Action PlanThe proposed change plan is to renovate the interior and exterior outlook of Park Inn Hotel at Heathrow, London, and at the same time, increasing t he accommodation space by building two new floors which will help the hotel to increase the room space by around 35 double bed rooms, 15 single bed rooms and 10 Executive Suits. For this reason, a board meeting was held at the company headquarters in which, the Business Development Head was handed over the responsibility of looking after the whole change process as the head of the project. In addition to these changes, Park Inn Hotel has also decided to change its marketing tactics and formulate a marketing strategy stressing on efficient segmentation and targeting of the customer base.

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The first and foremost task that the project head performed was to communicate the planned change process to the customers and persuade them to agree with the managements decision. In this regard, to motivate and uplift the morals of the employees, special incentives and remuneration packages were offered to the employees that will be granted to them once the project is complete.

Segmentation and TargetingDemographic SegmentationPark Inn will demographically segment its target market on the bases of age, genders, size and religion. For tourists, a different hospitality and marketing mix strategy will be adopted. For locals, a different hospitality experience will be developed. Park Inns target market will consist of business personals and tourists.

Behavioral SegmentationBehavioral segmentation strategies will be based on the events and festivals that are celebrated by customers in London. As we know that London is a tourist destination and the financial hub of the country, tourists representing different nationalities and religion arrive in the city. Every nation and religion in world has different festivals and events to celebrate. So there will be a fusion of festivals that are celebrated in London. Keeping this fact in view, Park Inn Hotel will also introduce marketing mix and service attributes for customers who want to arrange events and celebrate festivals inside Park Inn Hotel (Croft 1994). Park Inn Hotels management will target the focused segment with the help of charity based promotional activities, social media advertising and by forming alliances with air lines and

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travelling agencies. Special incentives will be provided to travel agents who will be asked to recommend Park Inn Hotel to their customers during their stay in London.

ConclusionAfter a detailed analysis of UKs business environment, especially for hospitality industry, this paper provides a framework for applying the proposed changes and turning Park Inn Hotel into a profitable hospitality organization. It h as been assessed and established that the hotel is already a profitable entity and its global presence makes it a recognized name in hospitality industry, it can be foreseen, that the implementation of planned changes would increase its business value and help the company to compete successfully in the highly mature hospitality industry of UK.

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List of ReferencesAthiyaman, A. and Robertson, R., 1995. Strategic planning in large tourism firms: an empirical analysis. Tourism Management, 16(3), pp.199-205. Barrows, C. and Bosselman, R., 1999. Hospitality management education. NY: The Haworth Press. Bensoussan, B. and Fleisher, C., 2008. Analysis without paralysis: 10 tools to make better strategic decisions. NY: FT Press. Boella, J., 2003. Human resource management in the hospitality industry. Cheltenham: Nelson Thornes LTD. Centeral Intelligence Agency, 2011. United Kingdom. [Online] Available at: HYPERLINK "https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html" [Accessed 30 November 2011]. Croft, M., 1994. Market segmentation: a step-by-step guide to profitable new business. London: Routledge. Grant, R., 2005. Contemporary strategy analysis. NJ: Wiley-Blackwell. Griffin, R., 2007. Fundamentals of Management. NY: Cengage Learning. Henry, A., 2008. Understanding Strategic Management. OX: Oxford University Press.

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Hill, C. and Jones, G., 2009. Strategic Management Theory: An Integrated Approach. NY: Cengage Learning. Park Inn, 2011. About Park Inn by Radisson. [Online] Available at: HYPERLINK "http://www.parkinn.com/about" [Accessed 5 December 2011].