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External Factors And Influences On The Hotel Industry Tourism Essay

A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.

Main Factors

The main factor that affects most business is the degree of competition – how fiercely other businesses compete with the products that another business makes.

The other factors that can affect the business are:

Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.

Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on working hours.

Economic – how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.

Political – how changes in government policy might affect the business e.g. a decision to subsidies building new houses in an area could be good for a local brick works.

Technological – how the rapid pace of change in production processes and product innovation affect a business.

Ethical – what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.


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Task 1- Mission, Objectives and Responsibilities of an Organisation

1a) Mission, Values and key objectives of the hotel group 1

And interests of the stakeholders

1b). stakeholder’s objectives and extent to which 2

The hotel achieves these objectives

1c). key responsibilities of the hotel group and the strategies 2

Employed for achieving them

Task 2 – Economic, Social and Global Environment (LO2)

2. A) the fundamental features of planned and mixed economic 4

Systems n impact on the operations of the hotel group

2. B) social welfare policy and industrial policy measures in the UK 5

2. c) Impact of two macroeconomic policy measures in the UK 6

And the US since the year 2011 on the hotel group

Task 3 -Behaviour of Organisations and the Market Environment

3. A) shortcomings of two market models relevant to the hotel group 7

And show how they can affect the profitability of the hotel.

3b) factors of supply and demand – income, price, weather, and substitutes impact 9

On the activities of the hotel group

3c) behaviour and competitive strategies employed by organisations in the UK 10

And the rationale for regulating the behaviour strategies

Task 4 – International Trade and the European Dimension

4a) the pros and cons of trade between the UK and other countries 11

4b) the impact of two European Union policies on UK organisations and 12

The hotel group

4c) Implications of the UK becoming a member of the European economic 13

And monetary union (EMU) to the UK economy and to organisation


Task 1- Mission, Objectives and Responsibilities of an Organisation

1a) identify the Mission, Values and key objectives of the hotel group and show how they reflect the interests of the stakeholders

A Mission is the unique purpose that sets one hotel or motel company apart from others. Moreover, the mission statement gives meanings and directions to hotel policies. In fact, when faced with any problem, misunderstanding, or strategic decision to be taken, managers always, make sure that their decisions match the mission statement. In addition, the mission statement shall be general and broad. The mission statement shall reflect the interests of the agents interacting in the hotel group.

Guest: Guest(s) represent one of the most important agents in the hotel industry. For no guests mean is no accommodation sector.

Employee: A hotel with no employees’ means simply that guests would not be welcomed, registered, assisted for whatsoever specific they needs have. Employees are a primordial agent in the hotel industry

Management & Owners: A hotel with no managers resembles to an army without generals. Moreover, to have a hotel, investors shall poor some amount of money to build it, refurnish it, and operate it.

Therefore, the mission statement tells how it is going to satisfy all the above stated agents so that they continue acting in the hotel industry. (Keller, 2005)

Key Objectives

Managers shall, bearing in mind the company’s mission statement, come up with company’s global objectives,

Which are :

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Specific & numerical



If objectives are general and non-quantifiable, then, it would be unfeasible at the end of a certain period of time to see whether company actual results match with the planned objectives or not. (Grimble, 1997)

1b).Identify three groups of stakeholder’s objectives and evaluate the extent to which the hotel achieves these objectives

Property Owners

They work together with property and to find innovative solutions that satisfy their economic, environmental and social objectives.


They recognize the importance of communicating information about their business and its performance to employees. Because CR issues are central to our company values they are a prominent feature of global management conferences, informal briefings, in-house publications and our intranets. (Hahnel, 2001)

In January 2011 we held a Green Day at our Atlanta Offices to raise awareness of IHG’s approach to CR. During the coming year we will work with colleagues to ensure that we are following sound principles for Green Meetings and Green Training materials. We will also set up a dedicated section on CR in our Leaders Lounge, a virtual community of IHG leaders that provides time-effective tools, tips and articles that reinforce our strategy and help managers improve their leadership. This online tool allows users to connect with and share best practices with peers and senior IHG leaders around the globe.


Feedback from suppliers helps us to better understand how we perform against our peers and gain a clearer picture of our risks.

Wherever possible we encourage our hotels to source goods and services locally. In addition to IHG supporting local suppliers, we also need to promote responsible business practices by those same suppliers. One area we are working on with suppliers is procurement – find out more in our Supply Chain section. (Myers, 2004)

1c). Explain three key responsibilities of the hotel group and the strategies employed for achieving them.

Hotel Manager

A hotel manager who is responsible for the day-to-day management of a hotel and its staff, They have commercial accountability for budgeting and financial management, planning, organising and directing all hotel services, including front-of-house (reception, concierge, and reservations), food and beverage operations and housekeeping. In larger hotels, managers often have a specific responsibility (guest services, accounting, and marketing) and make up a general management team. While taking a strategic overview and planning ahead to maximise profits, the manager must also pay attention to the details, setting the example for staff to deliver a standard of service and presentation that meets guests’ needs and expectations. Business and people management are equally important elements. (Keller, 2005)

The manager of a large hotel may have less make contact with guests but will have regular meetings with heads of department to coordinate and monitor the progress of business strategies. In a smaller establishment, the manager is much more involved in the hands-on day-to-day running of the hotel, which may include carrying out reception duties or serving meals if the need arises.

Sales coordinator

Often seen as a dynamic and social working environment, hotels offer an attractive career path for many people. For those interested in the business side of hotels, a career in sales may be suitable vocation for them. Hotel group sales coordinators are commonly the link between the guests and the hotel company. Their roles involve a mixture of customer service, team management and brand building for their hotel group.

Group sales coordinator has many responsibilities. Among them is the preparation of correspondence such as customer appreciation letters, helping to facilitate promotions such as half-price rooms and scheduling staff rotas to make sure the sales department is operating sufficiently. Other responsibilities include ensuring that the sales team meets its targets, liaising with individual customers and groups for detailed feedback on the hotel’s facilities and analyzing sales statistics to provide an accurate report for the sales director.

Hotel marketing manager

A hotel marketing manager works with the hotel’s advertising and sales managers to promote the hotel’s services and facilities. Lower-level managers, like market research managers, work together with hotel marketing managers to come up with ideas for creating new clientele such as offering hotel deals and incentives like free welcome drinks, a approving massage at the hotel or complimentary use of a business center. Marketing managers and researchers learn what travelers want and estimate the cost of including those services. (Hahnel, 2001)

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Task 2 – Economic, Social and Global Environment

2. A) Discuss the fundamental features of planned and mixed economic systems and explain how each system can impact on the operations of the hotel group. Use examples of the hotel activities to support your answer.

Planned Economy:

A planned economy is an economic system in which the government or workers’ councils manage the economy. In such economies, the state or government controls all major sectors of the economy and decide all decisions about their use and about the distribution of income, much like a communist state. The planners decide what should be produced and direct enterprises to produce those goods. Planned economies are in contrast to unplanned economies, such as a market economy, where production, distribution, pricing, and investment decisions are made by the private owners of the factors of production based upon their own and their customers’ interests rather than upon furthering some overarching macroeconomic plan. (Anthony, 2007)

Mixed Economy:

A mixed economy is an economic system that incorporates aspects of more than one economic system. This is typically means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy. (Myers, 2004)

Impact on planned and mixed economy

The centrally planned economy operates under the rules whereby the means of production, such as the hotels, are deemed to be owned by the public and all forms of economic activity are controlled by the government. This means that the central planning authorities are responsible for assigning production goals of the tourism industry as well as the allocation of factors of production. Within such a system, the proportion of total output absorbed as investment as opposed to private consumption, together with the distribution of income and the range of tourism activities produced, becomes a problem of social control rather than market forces. Therefore, in centrally planned economies the decision to produce particular levels of output of tourism products is a social and political rather than an economic decision. The mixed economy is helpful in increasing national production in the country. Both public and private sector work hard to bring about more production. The problem created by free enterprise and too much public control are solved through mixed economy. It provides freedom of enterprise ownership profit earning as well as social welfare and political freedom .However Mixed economy is is not helpful in achieving optimal use of national resources .The mixed economy suffer from the drawbacks of both the capitalism and the socialism. Mixed economy seldom achieved progress. It suffers from continues backwardness. (Alec, 1997)

2. B) Identify and explain two social welfare policy and industrial policy measures in the UK that impact on the activities of the hotel and similar organisations

Social Policy means the study of social services and the welfare state. Social Policy and Administration is an academic subject concerned with the study of social services and the welfare state. It developed in the early part of the 20th century as a complement to social work studies, aimed at people who would be professionally involved in the administration of welfare. In the course of the last forty years, the range and breadth of the subject has developed. The principal areas relate to

policy and administrative practice in social services, including health administration, social security, education, employment services, community care and housing management;

social problems, including crime, disability, unemployment, mental health, learning disability, and old age;

issues relating to social disadvantage, including race, gender and poverty; and

the range of collective social responses to these conditions.

Social Policy is a subject area, not a discipline it borrows from other social science disciplines for develop study in the area. The contributing disciplines include sociology, social work, psychology, economics, political science, management, history, philosophy and law. (Nyheim, 2004)

‘Industrial policy’ means in essence an activist approach by the state towards support for and development of the economy. In the UK, state activism in this area was discredited in the 1970s because extensive state financial support for the defunct UK car industry failed at

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2. c) Evaluate the impact of two macroeconomic policy measures in the UK and the US since the year 2011 on the hotel group

The main policies of economic management that are impact on the hotel group in UK.

Fiscal Policy

Fiscal policy involves the use of government spending, taxation and borrowing to influence both the pattern of economic activity and also the level and growth of aggregate demand, output and employment.

Monetary Policy

Monetary policy involves the use of interest rates to control the level and rate of growth of aggregate demand in the economy.

Here are some differences in the economic effects of monetary and fiscal policy, on the composition of output, the effectiveness of the two kinds of policy in meeting the government’s macroeconomic objectives, and also the time lags involved for fiscal and monetary policy changes to take effect. We will consider each of these in turn:

Effects of Policy on the Composition of National Output from the hotels

Monetary policy is often seen as something of a blunt policy instrument – affecting all sectors of the economy although in different ways and with a variable impact.

In contrast, fiscal policy can be targeted to affect certain groups (e.g. increases in means-tested benefits for low income households, reductions in the rate of corporation tax for small-medium sized enterprises, investment allowances for businesses in certain regions)

Consider as an example the effects of using either monetary or fiscal policy to achieve a given increase in national income because actual GDP lies below potential GDP (i.e. there is a negative output gap) (Buchanan, 1996)

Task 3 -Behaviour of Organisations and the Market Environment

3. A) Explain the shortcomings of two market models relevant to the hotel group and show how they can affect the profitability of the hotel.

SWOT Analysis of Hilton Hotels

All major hotel corporations, is continuing to recover from the events of September 11th. This tragic human event also delivered a financially devastating blow to the travel industry as a whole and to the hotel industry in particular. In order to fully recover and thrive in the coming years, HHC must assess its overall all strengths and weaknesses as it moves forward through the new millennium. The following SWOT Analysis sheds some light on some of the pitfalls and opportunities that await the Hilton Hotels Corporation. (Porter, 2001)


Hilton Hotel Corporation (HHC) is a well established organization and industry leader in the hotel, hospitality and gaming industry

HHC is well diversified across the industry with hotels in the high end, business and mid-priced classes in their product mix

HHC also possesses solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises


HHC may be two narrowly focused making it vulnerable to a downturn in the global economy and other world-wide catastrophes that could limit global travel such as the bird-flu and a significant terrorist strike

HHC may be vulnerable to workers’ strikes and crack down on undocumented workers in the U.S. Most of its holdings are in the U.S.


HHC should offer an array of distinctive and specialized services to the high end guests and high rollers such as

Wedding planning & hosting

Spas that specialize in personal services

Personal trainers

HHC should look to expand into or acquire a cruise line

A cruise ship is little more than a hotel that floats this would essentially match what it currently does with its leased properties

Gaming activities would escape regulation, etc.

Take advantage of emerging markets, especially with business class and mid-priced markets


HHC must be careful not overextend its efforts to mix entertainment and gaming

Also the extension of credit and other side effects of gaming can slowly but surely nibble away profits

September 11th was a major blow to the hotel industry. A similar event could result in another down turn.

By studying national and regional industry trends, HHC will be able to take advantage of opportunities that will enable growth while identifying threats that may affect profitability. Growth in the hotel and hospitality industry will include a continued focus on gaming, international expansion and using all media to promote its products to potential customers. One recommended strategy for Hilton is to emphasize the importance of family in all its hotels, including the gaming and casino locations. Las Vegas has spent millions to attract families by adding children’s attractions as well as the traditional casinos for the adults. Most of the hotels have at least a small area dedicated to arcade games. However, some hotels have elaborate arcades, game areas, and child-care centers intended for those traveling with children (Hilton Hotels Corporation, 2007). Hilton needs to ensure they are right in the middle of this demographic of parents traveling with children. While the focus can still be on the high dollars that are tossed around in the casinos by the parents, it will be critical that the hotel have the facilities available that will attract parents with children to stay at the property. Since there is a greater demand and vacation time has become one of the few times that families are able to spend quality time together, Hilton must capitalize on this market segment. (Buchanan, 1996)

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Market Segmentation

Market Segmentation means breaking down the total market into self contained and relatively standardized subgroups of customers, each possessing its own special requirements and characteristics. This enables the company to modify its output, advertising messages and promotional methods to correspond to the needs of particular segments. Accurate segmentation allows the firm to pinpoint selling opportunities and to tailors it’s marketing activities to satisfy on consumer needs. Through the process of market segmentation, there are certain variables to identify customer groups, such as needs, income geographical, location, buying habits and other characteristics . (Hahnel, 2001)

3b) Explain how these factors of supply and demand – income, price, weather, substitutes impact on the activities of the hotel group.

When negotiating a hotel contract for meeting or convention, some factors are influenced.

First, factors that influence room blocks and room rates are based on supply and demand. So, if the hotel is in their peak season, they have more clients requesting the same space and can choose who gets the space and can set their price.

Most hotels have a preferred pattern for arrivals and departures. If your pattern fits theirs, they may be willing to negotiate. However, if the pattern differs, you may have to pay higher rates.

Be prepared, check with the Convention Bureau and ask what the normal occupancies are for various months of the year. That way you will have an idea of how much the hotel needs your business. If you can hold your meeting in a month that has less occupancy, you have more room to negotiate.

Also, do not falter to ask for special items in the contract. The more the hotel needs your business, the more they are willing to give up or add to the contract in order to get your signature. (Carl, 1997)

It may be easy to get that suite you wanted on a complimentary basis or at a special rate. If the hotel is going to have a low occupancy and would not be selling that suite in the first place, they have nothing to loose by giving it to you in your contract.

So, what factors are involved that influence pricing when negotiating a sales contract for sleeping rooms, meeting space and food events?” They are availability of rooms, room patterns, your ability to be flexible and especially you being aware of what the hotel is looking for.

Therefore, do your homework before meeting with your hotel of choice and you will be better prepared to negotiate successfully.

3c) Explain three behaviour and competitive strategies employed by organisations in the UK and the rationale for regulating the behaviour strategies. Use relevant examples to support your answer.

Organizations operate within a competitive industrial environment. Analyzing its competitiveness help to identify opportunities for and threats to the organization from its industrial environment, SWOT analysis is a systematic analysis of these factors and the strategy that reflects the best match between them.

Considering the as an example, relation to the core competence of McDonalds, one of the largest food chain companies in the world. Let us first start with the strengths and the positive aspects which define the performance of this company. Strength is a distinctive competence that gives the firm a comparative advantage in the market place. For instance financial resources, image, market leadership and buyer supplier relations etc

The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonalds are the Burger King and the KFC. McDonalds marketing strategy is concerned with the internal resources, external environment and its basic competencies along with its share holders.

McDonald’s product value is also its greatest strengths. Customers know what to expect when they walk into a McDonalds store. It gives great emphasis to human resources by satisfying both the customer and the employees. Next is the innovation aspect wherein new products line up to catch up with the new trends and tastes of the people. Its diversity into other new business ventures can also be considered as its strengths.

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One major threat to any brand is its relationship between the management and the franchise dealers. Organization strength is the back bone of any concern and when that starts shaking the whole system will collapse. But slowing McDonald is recovering from all these weaknesses as its brand managers can easily communicate, compare and improve their services through the latest technological developments wherein they can use the internet to motivate, compare and improve upon other centers performances.

The overall analysis of all the external and internal strengths and weaknesses on this company should be linked in order to draft a sustainable plan for the companies’ further improvement. For any improvement or expansion the internal resources must be readily available. And thus analyzing this aspect can lead to a modified strategy to suit its vision. Keeping in mind the available resources the planner should think globally. Hence making use of all the core competencies the firm can definitely sustain in the competitive market.

Task 4 – International Trade and the European Dimension

4a) Discuss the pros and cons of trade between the UK and other countries. Use the activities of the hotel group to support your answer


According to the U.S. State Department, the United States had implemented nine free trade agreements with a total of 14 countries and had several others awaiting final enactment as of September 2009. The agency reports that since the implementation of these economic pacts U.S. exports have increased exponentially and imports have grown considerably. Therefore, the State Department makes the claim that free trade supports economic development in poor countries as well as in the United States.


In November 2003 the Economic Policy Institute issued a report that seriously questions the benefits of free trade. According to the document, the rise in the U.S. trade deficit with its NAFTA trading partners, Canada and Mexico, caused the displacement of high-wage positions in U.S.-based manufacturing industries. Additionally, the report states that workers in all three member countries have been hurt by free trade, with many Mexicans being reduced to subsistence-level work while Canadians witness a reduction in important public spending in education, health care and other such services. The institute says that NAFTA guidelines tilt the economic situation in favor of investors while offering no environmental or worker-safety protection.


While just about everyone agrees that international trade will continue, the debate over free-trade economics demonstrates the existence of two radically disparate viewpoints; those of the businesses and investors that have benefited from the adaptation of free-trade agreements and those of blue-collar workers, who appear to be losing ground financially. Policy negotiators might do well to consider the well- being of all concerned by adopting guidelines that guarantee a living wage to all as well as environmental and worker-safety standards. (Carl, 1997)

4b) critically analyse the impact of two European Union policies on UK organisations and the hotel group, if any.

UK hoteliers are feeling quietly optimistic about the new coalition government’s tourism policy priorities for the country’s hotel industry.

Industry leaders are hoping for a new era of firm leadership supported by clear tourism policy. Many are hopeful that the new administration will place greater emphasis on tourism policy, support new investment and provide better co-ordination of Whitehall policies across the industry.

With clear policies on regulation, tax policies and interest rates, the new government is in a position to provide better stability for hotel developers, owners and operators, despite cuts in public spending. (Easterly, 2001)

At this crucial time, the UK hotel industry needs strong, unified representation to government. The strongest organization is most probably the British Hospitality Association (BHA) who has already raised five key points on behalf of the industry, as follows:

Fewer regulations and those that are introduced should be more accurately coasted and assessed for their impact on small businesses.

An understanding that the industry is a potential job creator and is the main economic driver of many regions in the country – even including London. Yet, in an industry largely made up of small businesses, past fiscal and regulatory measures have inhibited private investment to a great extent.

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Greater encouragement by the government for businesses to invest, through the introduction of appropriate tax breaks and capital allowances (eg: Hotel Building Allowance). Only through more private investment will the industry be able to meet rising international competition.

A government department (presumably the DCMS) which is stronger and more able to represent the industry with other government departments and throughout Whitehall.

Too many local, regional and national tourism bodies are fighting for limited amounts of funding to promote Britain internationally, nationally and locally. Only some Regional Development Agencies have seriously supported their tourism industry while a number of regional tourism boards have been disbanded. A more coherent approach to the country’s tourism infrastructure is required.

4c) Evaluate the implications of the UK becoming a member of the European economic and monetary union (EMU) to the UK economy and to organisations operating in the UK. Use relevant examples to support your answer

The Economic and Monetary Union or EMU is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency,. As such, it is largely synonymous with the Eurozone.

All member states of the European Union are expected to participate in the EMU. The Copenhagen criteria are the current set of conditions of entry for states wanting to join the EU. It contains the requirements that need to be fulfilled and the time framework within which this must be done in order for a country to join the monetary union. An important element of this is the European Exchange Rate Mechanism (“ERM II”), in which candidate currencies demonstrate economic convergence by maintaining limited deviation from their target rate against the euro. (Easterly, 2001)

All member states, except Denmark and the United Kingdom, have committed themselves by treaty to join EMU. Seventeen member states of the European Union, including, most recently, Estonia, have entered the third stage and have adopted the euro as their currency. Denmark, Latvia and Lithuania are the current participants in the exchange rate mechanism. Of the pre-2004 members, the United Kingdom and Sweden have not joined ERM II and Denmark remains in ERM without proceeding to the third stage. The five remaining (post-2004) states have yet to achieve sufficient convergence to participate. These ten EU members continue to use t

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