The Current Scenario Of Uk Hotel Industry Tourism Essay Example

by Gemma Sharkey, 10th October 2008).

Important aspects of demand (a literature review)

• Definition of demand
• Insights from the law
• All other factors (ceteris paribus) show an inverse correlation between demand and cost of goods.
• A decrease in price leads to an increase in demand.
• An increase in price results in a decrease in demand.

What is ceteris paribus?

Understanding ceteris paribus helps comprehend microeconomics. There are numerous factors influencing demand, but economists assume that all these factors remain constant except for one thing - the cost of the product.

Change in a constant factor contradicts the assumption of ceteris paribus.

Standards for demand

In economics, demand must be effective, meaning that it indicates a customer's ability to pay for a desired good. This demand has an impact on the market as customers should have enough purchasing power to influence resource allocation.

Market demand

Market demand refers to the combined individual demands for a good from all customers in the marketplace. If new customers with sufficient funds enter the market, then the demand curve for UK hotels shows an upward trend at each price level (a general representation of a demand curve). Changes in demand conditions can cause shifts in the demand curve, as depicted above with two possibilities.

The first possibility depicts a shift from d1 to d2, indicating an outward displacement demonstrating an increase in demand. In this scenario, a greater quantity of service or merchandise is demanded at each price. Conversely, the second possibility illustrates an inward movement in the demand curve, from d1 to d2, showing a decrease in demand. In this case, fewer quantities are demanded at each price. In the context of UK hotels, the first possibility is more relevant as they are

experiencing a high demand phase due to the approaching Olympic event.

According to the British hospitality association, the economic downturn has not impacted hotel construction plans due to the lengthy time required for building. The demand for hotels in London is actually very high, as seen from ongoing construction projects such as the development of Leicester Square, which will feature a 194-room iconic hotel. Additionally, Thistle's former Bloomsbury Hotel has recently reopened as The Kingsley after undergoing a ?10m redevelopment.

New plans have been proposed for a luxury development near the Thames at Blackfriars to replace Mermaid House. Four Seasons has declared plans for a third property in London, to be located on Bishops gate and part of the Heron Plaza. The largest Holiday Inn Express in Europe will be opened at Heathrow Terminal 5 in May 2011. The first 125 suites of the total 300 suites will be completed one year earlier, as work has already begun on converting a current 128-room property at the airport into the Holiday Inn Express London Heathrow Terminal. Certain factors, such as future events like the Olympic Games in 2012, will significantly impact hotel demand in the UK. To ensure that the 2012 Olympic and Paralympic Games are a success, an analysis of the current supply of accessible rooms will need to be conducted and is expected to increase. Steps will need to be taken to assess the current supply and its features and evaluate the planned improvements in comparison to the expected demand for accessible accommodation.

According to the Bid documents, several prestigious 5-star hotels on Park Lane in the UK have agreed and signed on to provide accessible facilities

and rooms for officials during London 2012. Currently, only Inter-Continental and London Hilton in Mayfair offer accessible rooms, but only at a Category three standard (suitable for individuals with limited mobility). Therefore, additional accessible accommodation will be necessary for the hotels in London, and these properties will upgrade their facilities accordingly.

In addition to the demand from officials, press, managers, and volunteers during the 2012 Olympic and Paralympics Games, there is also a possibility of a need for accessible accommodation after the conclusion of the London Games. This could be due to Paralympics athletes and officials as well as their families staying in the capital. It can be challenging for individuals with disabilities to travel easily. They might even spend extra time there once they arrive at their destination.

International tourist destination

Over the past 25 years, there has been steady growth in international visitors to the country. Visits by international residents increased from 12.4 million in 1980 to 30.0 million in 2005.The number of visitors rose significantly from overseas visitors rising from 9.6 million in 1993 to an estimated14.3 millionin2005and further increasingin subsequent years such as2009and2010.

Over 72% of international visitors to the UK enter through London's airports. In addition, in 2004 and subsequent years, almost 40% of all nights spent by international tourists in the UK were spent in London, an increase from the previous rate of 34%. It is important to note that the success of London as a tourist destination is closely linked to the overall success of the country since many visitors choose to explore other parts of the UK after visiting London. However, other major cities like Manchester, Birmingham, and Leeds also contribute

significantly to UK tourism and are attractive options for visitors alongside London.

In January 2005, the UK was granted 'Approved Destination Status' by China. This was followed by the signing of an agreement in April 2006 between the Mayors of London and Beijing to jointly promote their cities and countries. Both agreements have the common goal of attracting more Chinese travelers to visit the UK. Additionally, it is expected that there will be an increase in visits to India by its citizens in the coming years due to growing wealth and strong cultural connections.

Corporate conferences

Previously, there has been a lack of understanding between central and local governments regarding the significance of business travelers and their impact on both national and local economies. From an economic perspective, one business traveler is valued at least three times higher than one leisure tourist.

The business sector for inducement and conference travel has experienced significant growth in recent decades and has become a well-established division. It is becoming increasingly clear that organizations and businesses cannot operate efficiently without conducting in-person meetings. From 1994 to 2004, there was a 50% increase in corporate trips, with 27% of international visitors traveling to the country for business purposes in 2004 and subsequent years. This growth rate surpassed the overall tourism growth rate. Globally, 16% of all international visitors in 2004 traveled for business purposes, and this trend is expected to continue.

London attracts the majority of visitors, especially for events and corporate attendance, as 60% of organizers prefer to hold their events there. In contrast, Birmingham has a 30% share and Manchester has 27%. The UK's sales in meeting venues experienced substantial growth in 2005,

with an additional expectation of further growth by 65%. In terms of an organizational context, strategy refers to a sequence of decisions made to accomplish the organization's goals. A successful strategy enhances long-term competitive advantage and adds value to the organization in future years.

The objective of any strategy is to achieve a competitive advantage for the company, and an unbeatable competitive advantage is a strategy that cannot be replicated by other organizations. In theory, Michael Porter proposed generic strategies that can be applied to an organization. These strategies can be implemented to enhance competitive benefit through focus, differentiation, and cost leadership.

Crucial strategies that Hospitality administration should focus on to gain competitive advantage

The efficiency of converting inputs into outputs is known as cost advantage. Inputs can include any materials, labor, or operating expenses that are allotted to the service or product.

On the other hand, the quantity of services performed or products produced is how productivity is measured. The Hospitality administration that achieves the highest level of competency for providing the same service can increase the gap between price and perceived value and may have greater profit margins. There are numerous methods an administration can enhance efficiency. Efficiency is improved when the produced output remains consistent while decreasing inputs or when keeping inputs constant but increasing output. Inputs can be reduced in multiple ways.

The input of labor in a hotel can be reduced by providing proper training to workers, resulting in a decrease in the time spent on supervising each person's work. The reduction of materials required can be achieved by minimizing waste. Developing a system to reduce waste would improve efficiency. Outputs can be enhanced by

increasing capacity and minimizing downtime. For example, if the hotel's bay loading lift frequently malfunctions, causing delays in delivering linen coops to guest rooms, it would negatively impact the workforce's reputation. In such cases, finding a way to minimize downtime would optimize service speed.

Large properties are often more efficient because they can take advantage of economies of scale that smaller organizations are unable to achieve. Large hotels typically offer additional services in each department, allowing guests to fulfill a variety of requests. Bigger organizations can cater to a larger population and provide a greater quantity of services due to their size. Conversely, smaller organizations have limited resources and must specialize or risk being overshadowed by larger and more effective competitors.

Product differentiation strategy

Product or service differentiation is achieved by showcasing a significant difference in the physical attributes or benefits of the service or product.

The ability to differentiate a product and service varies greatly across a range depending on the specific product or service. In the book Principles of Marketing (1999), authors Philip Kotler and Garry Armstrong point out that differentiation of a service or product can occur by manipulating a range of characteristics, including style, design, reliability, consistency, performance, and reparability. Differentiation allows an organization to target specific populations. It is easy to think of organizations that have used these characteristics for their service or product promotion.

The Mayfair hotel of the Radisson Edwardian stands out by presenting itself as a glamorous and luxurious hotel that attracts celebrities. Many restaurant chains distinguish themselves through their unique style and uniformity. If a customer has a favorite dish at their local Pizza Hut restaurant, they can be

sure that it will taste and look the same at any Pizza Hut chain across the UK. The concept and design of themed restaurants are crucial for various establishments.

Both Hard Rock Cafe and Planet Hollywood have differentiated themselves by implementing a unique service distinction scheme. This scheme allows them to stand out not only through their physical services or merchandise, but also by offering additional services. By providing these extra services, they can charge slightly higher prices for their offerings. For instance, the Mayfair hotel offers luxurious accommodations that are comparable to other upscale properties in the area. However, what sets the Mayfair apart is its dedication to exceeding guest expectations. Along with standard amenities like an extra bed and a refrigerator, the Mayfair also offers a complimentary babycot. These added features help set the Mayfair apart from neighboring hotels.

This additional service allows Mayfair to set itself apart from its competitors by offering a unique range of services.

People's distinction scheme

Developing and engaging skilled employees can give an organization a valuable competitive edge. Often, the workforce is overlooked but it should be given careful consideration. This advantage based on human resources is difficult for competitors to imitate because they may not fully understand its underlying basis. According to Herb Kelleher, Chief Executive of Southwest Airlines, in a Money magazine survey, the actions, attitudes, beliefs, and culture of his employees are his strongest competitive advantage: "The intangible factor is more important than the tangible ones as competing organizations can always replicate the tangibles such as purchasing similar airplanes or offering similar ticket prices."

However, the most challenging aspect to transcribe is the nature of your workforce. This competitive

advantage can encompass various factors. Employers who prioritize employee engagement, assessing their dedication and performance, could find themselves with a strong competitive edge. A well-trained staff will deliver a higher standard of service. However, a competitor might not be astute enough to determine whether this advantage is due to superior rooms, equipment, or workforce. Hence, distinguishing the qualities of people is crucial when customers interact directly with employees.

Identity Differentiation

Kotler and Arstrong emphasized in the Principles of Marketing that when rival services or merchandise are identical, buyers may differentiate based on brand image and reputation. Therefore, organizations must make an effort to create an identity that sets them apart from their competitors. Building a positive brand identity takes a significant amount of time and effort. Unfortunately, a single negative impression can tarnish the identity instantly.

Anything that an administration does should support their uniqueness and goodwill. The Mayfair hotels "Rebirth of an icon" slogan needed to be supported in every aspect, including advertisements, oriental decor of the hotel, floor presentation, and customer service.

Quality distinction

The guarantee that the service is reliable is called quality in a logical sense. When it comes to competitive advantage, one cannot assume quality by just looking at the service. The quality of the raw materials used in the product or the knowledge and spontaneity of employees is very important.

Cost Leadership scheme.

An organization that excels in cost leadership achieves a competitive advantage in any market by producing goods at the lowest price. The company prioritizes minimizing expenses throughout the entire value chain, including recruiting and adequately training staff members to ensure the lowest production costs. However, it is important to note that low prices

do not always equate to low costs. Manufacturers or service providers may charge competitive rates while still maintaining a higher profit margin compared to their competitors.

Some organizations, like McDonald's and Subway, excel not only in preparing safe and healthy food, but also in their branding and marketing prowess, allowing them to implement effective pricing strategies. A Focus or Niche strategy is employed. While a company may not be able to afford a large market share with an existing or differentiation strategy that covers a wide range, a niche strategy is more suitable. In this case, companies concentrate their efforts and resources on a specific and limited target audience. This strategy is commonly used by smaller companies.

An administration can choose to focus on either cost or differentiation. A cost-focused administration aims to be the lowest-price producer in a specific market segment. On the other hand, a differentiation-focused administration gains a competitive advantage by distinguishing its goods or services within a specific market segment or niche. However, there are challenges in adopting a niche approach, as small specialized niches may disappear in the future, such as Indian restaurants in the United Kingdom.

Decision

In conclusion, it can be said that the UK Hospitality market has benefited from the major event of the Olympics in 2012.

This has raised the level of roar and demand in the UK hospitality industry. Large cities such as Birmingham, Leeds, Manchester, and especially London, which is both the financial capital and the capital of the country, have experienced increased demand from international tourists and for business meetings. There is also a special need for accessible rooms for disabled tourists, which has

further increased the demand. Additionally, the strategies presented in this assignment have proven to be helpful in understanding the business environment of the hospitality industry.