The Current Scenario Of Uk Hotel Industry Tourism Essay

According hospitality association of Britain The hotel sector is in the centre of its imperative period of construction in the history, As of 2002, a sum of figure transcending 74,000 fresh hotel accommodations had emerged in stream with an additional 15,000 were approximately constructed in 2009, and 31,000 rooms are still in planning or in the stage of construction for 2010 and ahead. The Trends and Developments report of British hospitality association2008 proposed, that the current cycle of construction would be one of the most massive in the history of hotel industry, overwhelming the influential period of the early 1960 boom. The CEO of BHA, Bob Cotton has expressed that there is no suspicion that UK hotel sector is in the midst of an “massively significant era of fresh construction”.”If these plans becomes true ,then more than 120,000 fresh rooms will be constructed by the finish of the phase .The British hospitality association estimates ventures, which includes renovation of present properties, exceeding £5bn in one year at the current level – in spite of the credit crunch.”Till now, the economic crisis hasn’t greatly affected all these estimates, partially for the reason of the lengthy lead-time required for the construction of hotel , but it may decrease the speed of plans in future,” Cotton expressed “that, the 2012Olympic Games are expending pressure on hotels that are new and are expected to be done in time.”Also the budget properties are till now the chief gainers of this up rise in UK hospitality sector, with its amount of rooms increasing from 50,000 in the year 2001 nearing 97,000 in 2008 and more in future years. But a broad choice of highly-priced, complete-service providing properties has also emerged, as of 2002 indicating near about 32,000 fresh rooms in a period where boom is building up. This has resulted all through the UK, with Wales ,Northern Ireland and Scotland also gaining from this.

Hospitality in middle of boom articlehttp://www.caterersearch.com/Articles/2008/10/10/323978/Hospitality-is-in-the-middle-of-a-building-boom-says.htm adapted from article by Gemma Sharkey, 10th October 2008

Important facets of demand (a review of the literature)

Definition of demand

What the law says?

Rest of the factors staying as it is (ceteris paribus) there’s an opposite result between the demand and cost of goods.

Fall in price will result in increase in demand

Rise in price, will result in  decrease in demand

What is ceteris paribus?

Understanding ceteris paribus is the way to understand microeconomics. There are many factors that affect demand, but the Economists presume all these factors to be constant (i.e. does not change) apart from one thing – the cost of the product. Change in the factor which is held as it is, nullify the assumption of ceteris paribus

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Criteria on which demand is based

Demand in economics must be effective that means, when a customer desire to purchase a good, then it shows his/her capacity to pay for that good. This demand in fact puts an effect over the marketplace. Customers should have adequate buying power to put any effect on scarce resource allocation.

The market Demand

Market demand means  total of the every person’s demand for the good from a single customer in the marketplace .If extra customer enters the market place who have the capability to pay for goods on sale, then at each level of price ,the demand will go up.

http://tutor2u.net/economics/revision-notes/as-markets-demand.html adapted from site author: Geoff riley, Elton College, September 2006

Demand curve of UK hotels showing upward trend

(A general representation of demand curve)

Shifts in the Demand Curve Caused by Changes in the Conditions of Demand

http://tutor2u.net/economics/revision-notes/as-markets-demand.html adapted from site author :Geoff riley, Elton college, September 2006

The above diagram shows two possibilities of the demand curve .The first possibility shows a shift from d1 to d2, which is an outward shift showing increase in demand .In this, at each price more amount of service or product is demanded. On the other hand the second possibility shows an inward movement in demand curve i.e.d1 to d2, which is an inward movement of demand curve, showing decrease in demand. In this case, at each price fewer amounts is demanded.

In the case of UK hotels, the first possibility is more appropriate, because the uk hotels are approaching a high demand stage, as the Olympic is getting closer. According to British hospitality association, the economic downturn has not affected the plans, because of the long time required for the construction of hotels. In fact the ascertained future hotel demand for London alone is very high .Instances of high hotel demand can be understood from current constructions that are in progress, for e.g. Leicester Square will include an iconic 194 room hotel. Thistle’s former Bloomsbury Hotel has gain opened as The Kingsley incurring a £10m renovation. New Plans have been proposed for a luxury property development near Thames at Blackfriars to substitute Mermaid House. Four Seasons has declared plans for a third property in London to be situated on Bishops gate and would be a part of the Heron Plaza. The biggest Holiday Inn Express in Europe will be opened at Heathrow 5th Terminal in 2011 May. The first 125 rooms of 300 rooms will be complete one year before, as effort has already begun on turning a current 128-room property at the airport into the Holiday Inn Express London Heathrow Terminal 5. Also IHG has agreed a franchise about a hotel with the Crimson Hotels Group.

http://www.industry.visitsoutheastengland.com/xsdbimgs/UK_hotels_forecast_not_out_of_the_woods_yet.pdf pg 18

Imperative factors that influence demand of hotels in UK

Future events (Olympic 2012 and Paralympics)

To make sure that the 2012 Olympic and Paralympics Games will be an majestic event, the present reserve of accessible rooms will be required to be analysed and are expected to increase. Steps will have to be taken to recognize the current reserve and its features and analyse the planned improvement and compare this with the demand expected for accessible accommodation. As per , Bid papers, some of the UK’S most prominent 5 star hotels on Park Lane have agreed and signed on the suitable undertakings and promises that, London 2012 will fully offer accessible facilities and rooms for officials. At present only Inter-Continental and London Hilton of Mayfair area provides accessible rooms as evaluated by Holiday Care and that to only Category standard three (accessible to somebody with less mobility). Hence, additional accessible accommodation will be necessary for the hotels in London and these properties will upgrade their amenities accordingly. Apart from demand by 2012 Olympic and Paralympics Games spectators, press, coaches and volunteers, there is possibility of demand for accessible accommodation following the finishing point of the London Games, with Paralympics sportspersons and officers and their families, staying on in the capital (travelling will be difficult for disabled and anecdotally, as they get there at a destination they might spend extra time there).

http://www.london.gov.uk/archive/mayor/planning/docs/hotel-demand-study.pdf pg 50-51

International tourist destination

The last 25 years saw stable growth in the amount of international visitors to the country,

with visits by international residents rising from 12.4m in 1980 to 30.0m in the year 20055.

Visitors to London have also increased, with overseas visitors to London increasing from 9.6m in 1993 to a predicted 14.3m in the year 2005 and further more in 2009 and 2010. The capital has since long acted as a “doorway to the UK, from over 72% of international visitors entrying.through one of Capital’s airports. International tourists also spend their time in London, with near about 40% of

all nights stayed in the UK by international tourists in 2004 (also in further years) was spent in Capital. This was more than 34% in 1993 and before. It must be accepted that the success of Capital as a tourism spot is connected to the success of country as a whole as a tourist point, with many visitors visiting Capital prior to going to other parts of the country. On the other hand other big cities also have a big impact on UK tourism. The cities such as Manchester, Birmingham, and Leeds also make it a ideal choice for visitors apart from London. In addition, the UK gained ‘Approved Destination Status’ from China in the year January 2005 and the Mayor of London and the Mayor of Beijing also went on to sign an agreement to jointly encourage their cities and country in April 200613. Both the agreements are expected to further persuade Chinese travellers to Capital. Also the rising richness in India along strong cultural connections might also add to increase in visits to the country by Indian citizens surpassing the next decade and more.

http://www.london.gov.uk/archive/mayor/planning/docs/hotel-demand-study.pdf pg 18 of mayor’s report

Corporate conferences

Until lately there hasn’t been an accurate understanding between central and local government of the significance of business travellers or its role to the national and local economies. A single business traveller is at least thrice the total of one free time tourist in economic terms. The incentive and conference travel sector has grown over the last few decade into a established business division. It is gradually clearer that associations and businesses can’t operate efficiently without, in person meetings. Over the ten years to 2004, there was a 50% boost in all corporate trips (with 27% of international visitors travelling on businesses to the country in 2004 and following years) transcending the overall tourism growth rate of tourism. On an international scale, 16% of International visitors arrivals worldwide were for the purpose of business in 2004 and ahead.

The main part of the business visitor market is from events/corporate attendance. London leads the countries market with 60% of business organisers having an event in London (30% Birmingham, 27% Manchester).As per statistics, particularly as of 2005 ,Uk experienced a massive optimism in its meeting venues with sales rising and 65% expecting further growth ahead.

http://www.london.gov.uk/archive/mayor/planning/docs/hotel-demand-study.pdf pg 23

What is strategy in organisational contexts?

Strategy in  organizational context means a mixture of judgments, characterized by an unique feature, meant to reach the objective of the organizations. An unbeaten strategy is that, which improves the worth of the organization in the future years through the improvement of long term competitive benefit. The offshoot of any strategy is to gain competitive advantage for the company and an unbeaten competitive advantage is the strategy that can’t be copied by other organisation. .Theoretically speaking, Michael porter proposed generic strategies that can be applied to an organisation. This may be implemented to increase competitive benefit through focus, differentiation, and cost leadership.

Imperative strategies that should be focussed by Hospitality organisation to gain competitive advantage

Cost advantage strategy

The ratio of inputs to outputs is known as efficiency. Inputs is any materials, labour or overheads that is allocated to the service or product. On the other hand outputs is measured as the amount of services performed or product produced. The Hospitality organisation that achieves the maximum competence for the same delivery of service can broaden the space between price and perceptual value and might have larger revenue margins.

There are lots of ways an organisation can boost efficiency. Effectiveness is improved if, the held output is steady, inputs are decreased; or if held inputs steady, outputs are raised. Inputs can be decreased in lots of ways. The input of labour in hotel can be decreased if workers are properly trained so that amount of time used to monitor each person’s output, is decreased.

Decrease in materials needed can come from decreased amount of waste. If there is a strategy that can be developed to cut waste, then it would enhance effectiveness. Outputs can be improved by rising the capacity, a device can deliver in the specified time. Reducing downtime can also raise efficiency. For example, if bay loading lift of a hotel frequently breaks down by which linen cages are brought down every day ,would create a delay for the services to be provided by room attendants in guest rooms .Late services would tarnish the image of the work force.Then in that case, searching a method to reduce this downtime would maximize the the speed of service .

It is frequently seen that big properties are more capable since they can attain economies of scale which other organisations un able to reach. big hotels generally offer extra services in each service line, and therefore their services helps guests to fullfill many different types of requests. bigger organisatioons can supply to a bigger population,an additional amount of service, because of masive size, On the other hand smaller organisations have smaller amount of resources and should specialize or become victim to bigger and more effective organisation.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html Dena Waggoner and revised by Anthony Inman

Product differentiation strategy

Product or service differentiation is attained by presenting a valued difference of the physical service or product . The capability to distinguish a product and service differs very much along a range depending on the particular product or service. In the book Principles of Marketing(1999), authors Philip Kotler and Garry Armstrong notes out that distinguishing of a service or product can take place by manipulating a lot of features, including style,design ,reliability ,consistency, performance, reparability. Distinction lets an organisation to target particular type populations.

It’s simple to think of organisations which have utilized these features for their service or product promotion. The Mayfair hotel of the Radisson Edwardian has differentiated itself by presenting itself as a glamourous celebrity luxury hotel”Celebrities who finds home outside home.

numerous food chains distinguish themselves with style and consistency. If a customer has a much-loved platter at her local Pizza hut restaurant,he/she can be confident that it will taste and look similar at any Pizza hut food chain, everywhere in the UK. And, the fashion of theme or topic restaurants is the imperative key to various establishments. Hard Rock Cafe and Planet Hollywood gains from their topical themes.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html Dena Waggoner and revised by Anthony Inman

Service differentiation strategy

Organisations can also distinguish the services that escort the physical service or product. Any two hotel can proffer an alike service or product, but the organisation that proffers supplementary services are able to charge a bit higher for their services. The Mayfair hotel offers luxury stay which are quite similar to the services proffered by other luxury properties; but Mayfair provides extra bed ,refrigerator ,babycot free of charge,which differentiates itself from other hotels . This additional service allows Mayfair to charge a bit more for their services .

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html Dena Waggoner and revised by Anthony Inman

People differentiation strategy

Training and hiring skillfull employees than the rival may come out to be an invaluable competitive benefit for an organisation. An organisation’s workforce are many a times ignored, but must be given watchful thought. This HR-based benefit is hard for a rival to emulate since the basis of the benefit Might not be so clear to an Alien. According to the Moneymagazine report, Herb Kelleher, Chief executive of Southwest Airlines, says that the action,attitude,belief and culture of his workers comprise his mightiest competitive benefit: “The untouchable factor is more imperative than the touchable as organisations may everytime emulate the tangibles i.e. rivals can buy similar aeroplane, they can rent similar rate of ticket . But the toughest thing for somebody to copy is the character of your workforce.”

This type of competitive benefit can include numerous facets. Employers who focus interest in employees, assessing their commitment and performance , might see themselves in a mighty competitive benefit. A properly-trained staff will deliver an enhanced quality of service. Yet, a rival might not be intelligent enough to differentiate if the benefit is due to superior rooms, equipment or workforce. Therefore People differentiation is very imperative when customers deals openly with workforce.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html Dena Waggoner and revised by Anthony Inman

Identity Differentiation

Kotler and Arstrong marked out in the Principles of Marketing as to when rival services or products are same, purchasers may make out a distinction on the basis of brand picture and image. therefore organisations must put effort to create an identity that distinguishes them from their rivals. A positive brand identity requires a considerable quantity of period and timeto build. Sadly , a single off-putting impression may tarnish the identity in reality at once. Anything that an organisation does should support their identity and goodwill. The Mayfair hotels “Rebirth of an icon” punch line required to be backed up in every possibilities, including advertisements, oriental decor of hotel, floor presentation, and customer service.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html adapted from article Dena Waggoner and revised by Anthony Inman

Quality differentiation

The guarantee that ,the service is dependable is called quality in a logic that executes the job it has been framed to do. Considering competitive benefit, one can’t assume the quality by relating to the service. Quality of the raw material ,which goes in the product or knowledge and spontaneity of employee is very important.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html adapted from aricle by Dena Waggoner and revised by Anthony Inman

Cost Leadership strategy.

An organisation which is a leader in low cost gets competitive benefit in any type of market as they are able to produce many products at lowest price. Companies are maintained and built, worker is hired and properly trained to give out the lowest costs of the production. Therefore ‘Cost benefit is the main focus. expenses are trimmed off from every part of value chain.’But still, low price does not every times leads to a low cost. Manufacturers or service providers could charge at competitive rate, utilizing the advantage of a greater margin than rivals. Some organizations, such as McDonald and subway, are very good not only at preparing hygienically made foods, but they also have the image of brand and skills of marketing that makes them to use effective policy of pricing.

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html adapted from article by Dena Waggoner and revised by Anthony Inman

 Focus or Niche strategy. Where a company cant afford a broad scope leadership in costing nor a distinguishing strategy which is wide in scope, niche would be suitable.In this case companies focuses on effort and resource on narrow base. This strategy is generally used by smaller organisation. An organisation may either use a price focus or a distinguish based focus.

Being cost focus an organisation focuses staying the lowest price producer in the niche segment. With a focus on differentiation,the orgainisation creates the advantage of competetion through differentiating its product or services within segment or niche. Problems are there with the niche approach,as Small niches which are specialist may vanish in ascertained future or long term e.g. Indian restaurants in uk

http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html Dena Waggoner and revised by Anthony Inman

Conclusion: To conclude with ,we can say that UK Hospitality market has benefitted from major event of Olympics ahead in 2012.This has estimated the boom and demand of UK hospitality to higher level.Apart from that big cities like Birmingham, Leeds,Manchester and especially London which is also the financial capital and capital of the country has faced more demand in form of international tourist and Business meetings and also a special section of disabled tourist,which has led to more demand of accessible rooms .Apart from that strategies presented in this assignment have come out to be useful to understand Hospitality business environment.