Current Issues in Hospitality and Tourism Management - of Vale Hotel - Case Study Example

Name : Institution : Title : Current Issues in Hospitality and Tourism Management Tutor : Course : @2011 Introduction The tourism industry is vital to many economies in the world (Chen, 2007, pg33). Efficiency in this industry is vital to the performance of the sector and the economy in general. Performance starts with a particular organization and runs down to the rest of the sector. Good management underlines good performance in organizations. The tourism industry is a very competitive industry in the world (Chen, 2007, pg33). To have a competitive advantage over other players, management is exercised effectively. Organizations, which exercise good management, take the lead role in this industry. This paper looks at the macro and micro environment of Vale Hotel found in Wales in the United Kingdom. Organization An organization is usually a group, which has come together for a purpose. The purpose is usually a set goal. Each member works towards the goal for the ultimate success of the organization. People play different roles in an organization, each aimed at a common goal (Mullins, 2001, pg19). An organization thus is a group charged with allocating roles to achieve a goal. It achieves this through effective management of the people who make up the organization. Management Management deals with people or the employees in a business. It aims at achieving a desired outcome. The outcome is usually a goal or goals set out by the business. Organizations exist by setting objectives, which should be met in the end (Mullins, 2001, pg41). Without these, businesses will end up collapsing since it becomes hard to know the position of the business. It is also virtually impossible for businesses to plan for the future with no objectives. The key aspect in management is efficiency. People in an organization are brought together to complete certain tasks (Chen, 2007, pg53). They do this by using the resources, which they have, and if carried out effectively, the envisaged goals are met. Management has various aspects for any business or organization. It involves planning of the activities to be carried out in order for an organization to prosper. These activities must be carried out by staff, which needs to be well organized. The tasks call for control if the desired output is to be realized. All these activities combined with the resources available to an organization, make up the management. Organizations exist in a business environment, which differs from one business to another as well as geographically (Singh, 2000, pg30). Businesses exist in two types of environments namely: micro and macro environments. Microenvironment is explained through SWOT analysis whereas PESTEL explains the macro environment (Chen, 2007, pg97). For effective management, organizations need to understand the environment they are operating in. all the factors affecting the business whether direct or indirect need to be understood. A business environment is the factors that affect the business whether direct or indirect. These include such factors like competition, politics, and economy among others. SWOT Analysis SWOT analysis looks at the internal factors affecting the business. This describes the microenvironment within which the business operates (Chen, 2007, pg64). These factors have firsthand effect on the business. Each organization has its own strengths, which play in its favor in the business. Successful businesses exploit their strengths to gain a competitive advantage over the rest. These strengths vary from one organization to another. Some may be endowed with cheap labor while others may have access to cheap raw materials. Good management ensures that strengths are converted to advantages in the business (Mullins, 2001, pg67). Organizations have their weaknesses as well and they negate the gains achieved. The weaknesses also vary between organizations. Weaknesses may include such things like lack of a strong brand name (Manoher, 2009, pg92). Management helps in dealing with weaknesses. This helps reduce the effects of the weaknesses on the goals of the organization. Organizations operate in environments where, various opportunities exist. Management ensures such opportunities are transformed into advantages. Opportunities may be in form of emerging markets. This may occur due to an increase in income in some sections of the market. Another factor affecting businesses internally is threats. These are mainly from other industry players. A common type of threat in many businesses is competition. Management ensures that threats are suppressed thus reducing their effects on the business (Chen, 2007, pg33). Business environment analysis is important since it gives the standpoint of the business. This occurs through the identification of the factors affecting the business. Vale Hotel This hotel has a great reputation as one of the finest in the world. It is the best-rated four-star hotel in its homeland. It is found in Wales in the United Kingdom (Mullins, 2001, pg19). It started as a small hotel but has grown over the years because of the diversified services that it offers. It is set in the countryside giving it an appeal due to the serene settings. Its close proximity to Cardiff, which is renowned city in the world, makes it a popular with tourists (Manoher, 2009, pg40). Most of its customers come from within UK but international tourists visit the hotel as well. The hotel target is mainly sport lovers and families on recreational tours. This sets it apart from the rest since few hotels have such facilities in addition to the usual facilities. The services on offer include accommodation for clients. The room’s options vary from single to family guesthouses set to ensure guests experience the serene environment of Wales (Singh, 2000, pg49). It also has two golf courses where golfers come for golfing vacations. In addition, it offers spa services to its clients. Clients come from various parts in Europe to enjoy its spa services. The hotel also has spacious conferencing facilities for its customers (Manoher, 2009, pg40). People and organizations from various parts of the world hold meetings in its well-furnished conference halls. The hotels mission is providing quality sports oriented hotel services in unrivalled way. Its vision is to be the ultimate leader in sport oriented hotel services. Macro environment Just like any other business, Vale hotel operates in a business environment. It is thus affected by external factors that exist in its area of operation. These factors can be analyzed using the various analysis models (Mullins, 2001, pg19). To understand the macro environment effectively, various approaches are employed. These aim at establishing the position of the hotel in the industry. The results of the analysis will give the direction that the hotel should take in order to maintain a competitive advantage over its rivals. Five forces of competition of Vale Hotel New competition is emerging in the hotel industry is emerging. This is mainly in the field of sport related services. This is attributed to the high earnings from these services. Hotels, which were mainly involved in accommodation and conferencing alone, are now diversifying (Mullins, 2001, pg81). A key target is the sporting services section. This is because more people are realizing the need for fitness and are enrolling in various sporting activities. This has increased the demand for such services and consequently an influx of more players in this sector. In addition, major tournaments have steadily increased over the years and this has attracted more hotels to start these services. This has increased competition for Vale hotel since clients have a wider hotel base to consider. Substitutes are also emerging for some of these sporting activities. Some clients are opting for sporting activities such as beach volleyball. This presents a big threat from hotels, which offer such beach facilities. Others have camping facilities and with the increasing adventurous nature of people, competition is increasing. This calls for a good strategic plan by the management of Vale hotel if it is to maintain a competitive advantage over its rivals (Mullins, 2001, pg19). Many of Vale hotel’s clients are from the European countries (Mullins, 2001, pg19). Due to the economic downtown, many countries such as Italy have been greatly affected. Austerity measures are being put in place to reverse the situation. Many people in these countries have been affected in one way or another. Some have lost their jobs while others are experiencing reduced incomes (Chen, 2007, pg33). These are bad news for the management of Vale hotel. With reduced incomes, people will have to rethink their priorities and some will do away with recreation activities. Governments as well will reduce their expenditure in recreation. This will effectively reduce the number of clients visiting the hotel. This is a real threat, which calls for the management to rethink its business strategy. Due to the economic hardships, suppliers have increased the prices of their products. This has resulted in an increasing operation cost for the hotel. This has effectively reduced the profitability of the hotel. The dwindling number of visitors combined with the increased operating costs, is having a devastating effect on the hotel (Manoher, 2009, pg12). An increase in the price at which services are offered by the hotel will lead to customers looking for cheaper options. This has affected the delivery of the hotel’s goals and thus calls for a fresh strategy. The supply component of the business is thus negatively affecting the hotel. Competition between businesses has increased more than ever. This is due to the prevailing economic environment. To sustain their businesses, hotels have diversified thus venturing into some of these unpopulated markets. These markets are continuously being overcrowded as players fight for the available clients (Chen, 2007, pg33). The situation has been worsened by the reduced economic power of clients and thus hotels are competing to capture the few available clients. This has eroded some of the gains that Vale hotel had made. However, the effects of competition on Vale hotel are less severe as compared to other hotels. This is due to the diversified services and the uniqueness of the services offered. PESTEL Analysis of Vale PESTEL analysis is an important tool in the determination of the factors affecting a business (Chen, 2007, pg68). It is a tool used to analyze the external factors affecting a business. Businesses exist in environments where factors such as politics and the environment play a significant role. In addition to these two, economy and the societal factors have a great bearing on the economy. Legal issues also shape up a business environment and together, these five factors make up PESTEL(Mullins, 2001, pg56). Vale hotel is not a unique business case. Its performance is subject to changes in these factors. The business hotel has been favored a calm political climate. The national politics in the country have been characterized by peaceful elections. Wrangles are rarely experienced and this gives a good political environment for such businesses. European countries also are among the most peaceful in the world (Mullins, 2001, pg88). Vale’s clients are mainly from the UK and Europe where there is political stability. This has favored Vale since violence rarely occurs and this has boosted the client’s confidence in the country. While at Vale, clients feel secure and thus the hotel has no worries of losing its customers for security reasons (Goonetilleke, 2007, pg103). However, UK has been actively involved in antiterrorism wars. This poses a threat from terrorists seeking revenge. This has some effect since some visitors feel insecure staying in popular places like Vale, which are easy targets. In addition, tight security to counter this has been put in place. This has increased the operating costs as a result of increased security expenditure (Singh, 2000, pg30). Nevertheless, this does not have much impact on the hotels performance. The economy the world over has experienced rough times in the past few years (Chen, 2007, pg73). This has not spared a majority of businesses and has even led to the dissolution of some. Vale has not been spared either. Customer’s purchasing power has been reduced. Some people are opting for cheaper services while others are doing away with leisure altogether. This has reduced the client base for the hotel and thus reducing its earnings. This has presented a big challenge for the management of Vale who are looking for ways to solve this crisis (Manoher, 2009, pg79). Vale strong performance is supported by strong social factors. Europeans have a liberal culture, which effectively bonds well with the services offered by Vale. Vale is situated in a cosmopolitan place where various cultures interact (Manoher, 2009, pg19). This has created a good market for the wide range of services offered by the hotel. This has also served the hotel in its marketing abroad. People from various parts of the world interact and learn about Vale and consequently market the hotel in their home countries. The culture here has minimum restrictions and thus people from various parts need not about restrictions (Mullins, 2001, pg19). They are free to enjoy the services offered without any fear. The social environment thus has helped Vale grow rapidly. Technology is a major component of businesses today. Organizations strive keep up with developments in technology (Singh, 2000, pg30). This has rendered businesses very competitive. Vale has primed itself for benefits of adopting technology by putting in place technology supported systems. These are through such systems as online booking of services (Goonetilleke, 2007, pg57). This has come at an extra cost to the hotel since these systems are expensive to put up. However, its benefits cannot be underestimated since visitors have increased due to the ease in booking through this system. The hotel has positioned itself to be among the leaders in technology in hospitality (Manoher, 2009, pg36). Some of the success being enjoyed by Vale despite the harsh economy can be attributed to technology. Environmental and legal issues have no much bearing on the performance of Vale. This is due to the nature of the hospitality industry. Environmental issues are minimal and for those, Vale has been able to cope relatively well. The management of the hotel has been able to steer clear of controversy. This has helped preserve the name of the hotel. This has helped the hotel maintain and attract even more clients. Microenvironment SWOT analysis Vale’s strength is its diversified operations. The hotel has been able to offer a wide range of services unlike most of the other hotels, which are involved in accommodation and conferencing only (Goonetilleke, 2007, pg23). The areas of golfing and spa services are virtually unexploited. Vale is an established hotel in sporting services alongside recreation. Other hotels have taken note of that and are following suit. This strength has propelled Vale to greater heights in this sector and it will take others time to catch up. It also has a large ground for expansion unlike most hotels in developed world, which have little room for expansion (Manoher, 2009, pg40). The main weakness of Vale is its weak brand name. Its brand name is not well established as compared to hotels such as Hilton. Despite the unique and quality services on offer, the hotel is not very popular. This is due to lack of rigorous campaigns to market the hotel. This renders some of the services such as golfing underutilized (Goonetilleke, 2007, pg23). Another weakness is lack of a franchise kind of business. Vale is a one-branch hotel, which makes it difficult for willing clients in far places to access its services. Opportunities exist for Vale in the sporting and conferencing services (Manoher, 2009, pg40). More people are joining sports for fitness purposes. Sporting events are increasing globally due to the huge sums of cash on offer. Vale can cash on this by investing on sporting facilities to tap on this growing market. This is possible since it has a large space for expansion. It can also expand its accommodation and conferencing facilities to host a bigger number. This is necessitated by the growing demand for such facilities due to such events. The main threat to Vale as a business is competition from other players. Though it has a competitive advantage over the others due to its diversified nature, competition is on the rise (Goonetilleke, 2007, pg56). This is because the other players are diversifying into the line of the services it offers. This poses a great threat to its dominance in the market. Another threat is the changing economy, which has degraded living standards. This poses a risk in that people will cut on their expenditure on leisure. This will have a negative effect on Vale’s earnings. Strategies to strengthen advantages Vale has an advantage in its diversification unlike most others (Goonetilleke, 2007, pg29). To improve on this, the management should ensure quality services on these unique sectors. It should also expand on these services to ensure a huge capacity for its clients. It should also utilize the vast land at its disposal to build other facilities, which will help it enhance its diversification. It should also embark on a strong marketing strategy to sell its unique services to more customers. Strategies to combat disadvantages Vale’s brand name is very weak as compared to some of the industry’s leading players (Goonetilleke, 2007, pg17). This occurs whereas the hotel offers rare services. To build it, marketing of the hotel both at home and abroad is needed. This will help more people get to know about it and appreciate the services offered by the hotel. Another disadvantage is lack of branches in other areas, which means some willing clients may be unable to access its services. To curb this, the management should open branches in other areas and replicate the services offered in Vale into those other branches. This will serve a wider client base as well as building on the brand name. Conclusion Vale hotel is a leading hotel in the UK. It is famed for offering unique diversified services to its clients. Just like any other business, various factors affect its performance. These factors affect the business of the hotel either positively or negatively (Goonetilleke, 2007, pg23). These factors were analyzed through various tools such as SWOT analysis. In this analysis, various advantages as well as disadvantages were discovered. To strengthen these advantages, strategies have been proposed. One is to improve the quality of its diversified product and secondly expand on existing facilities to cater for more clients. To curb the effects of the disadvantages, a marketing strategy should be formulated. It should also adopt a strategy to open more branches and replicate its services. To turn the opportunities into advantages, Vale should invest in sporting facilities to tap on the existing potential. This can be achieved easily since it has vast land for exploitation. To avoid the threat of competition, Vale should offer quality services. This will make sure that its clients prefer it to the other players in the industry. It should also come up with services at the middle-income earners to cushion itself from the rigors of the economy. Bibliography Chen,W., & Clarke, A., 2007, International hospitality management: concepts and cases. Butterworth-Heinemann Goonetilleke, A., & Wagen, V., 2007, Hospitality management: strategy and operations. Pearson Education Australia Manoher, G., & Negi, J., 2009, Hospitality Management. Laxmi Publications Pvt Ltd Mullins, J.L., 2001, Hospitality management and organizational behavior. Longman Singh, R., 2000, Hotel and Hospitality Management. Gyan Books Read More