1.1 Different types of hospitality products and services
As an industry, hospitality industry can be considered as a major employer in modern globalized world. It may include services such as foods and tourism. Therefore, it can be considered that the industry may more susceptible for economic fluctuations when compare to the other industries.
The industry may consist of two major areas such as lodging and the entertainment. Lodging can be identified commonly in hotels, motels resorts and the places like inns. Clubs together with bars can be considered under entertainment.
When considering the customer support as a service, it may include the traveling facilities such as airline ticket booking. Involvement of the information technology is identified as a developing trend in the industry. It may act with travel technology.
Because of the trends of demanding are frequently changing, the on- time changes may highly effective. For an example, for the developing countries like Sri Lanka with a unique aesthetic value it may be highly effective for the industry to run based on that. It is known as the concept of eco-hotels. To implement that, the cultural values also can be in cooperated. For an example, instead of DJ dancing and night club parties cultural dancing and folk songs can be introduced together with cultural foods.
1.2 Different patterns of demand
When considering the different patterns of demand in the industry, three major patterns can be identified depending on the different sources.
Demand based on institutional sources
Demand based on recreational sources
Demand based on transit sources
Institutional source based demand pattern may rise from commercial enterprises, educational institutes and other government and non government bodies who incorporated with the economic sector (Medik and Ingram 2001).
Historical, aesthetic beauty, cultural and extraordinary attractions can be considered under the demand pattern based on recreation. For an example, Taj mahal in India may attract thousands of tourists and five star hotel Deedar- E – taj plaza may providing facilities for them.
Small individual groups who are expecting a break during their long journey can be considered as the demand based on transit sources (Medik and Ingram 2001).
1.3 Different characteristics of the tourists
Depending on the customer preferences and their requirement, tourists can be identified as four segments such as, leisure travelers, business travelers, group meeting travelers and other travelers. People engaged in commercial, NGOs as well as in government institutions may include in this group. Their requirements may be based on the availability of space in relation to advanced conference rooms with multimedia rather than lodging. Leisure travelers may include the people engaged in vacations or sporting events or other personal visits. Most of the time, their major need may be comfortable lodging facility at an affordable price. But, the group meeting traveler group may include both business and leisure travelers. Therefore, their requirement may be in between the lodging and the other value added facilities. The people who may not include under the above three groups may include in the group of other travelers.
1.4 Factors affecting average spending power in hospitality businesses
The price in relation to food and beverage may be more critical and complex in the hospitality industry compare to the other industries. Therefore, it is important to consider the concept of the average spending power which is known as ASP. It is more related to the pricing concept. ASP may have the potential to influence during the whole process in relation to food and beverage. It can be affected by different factors such as menu design, type of the outlet.
For an example, for the hospitality services possessing long hour work may tend to have higher ASP than others unlike snack bars like services with shorter opening hours.
The product development within hospitality environments
2.1 Stages of Hospitality product development
Product development can be identified as the assessment of product and services to recognize the chances of improvement, profit as well as the customer satisfaction. This process is important in modification of existing products to cope with identified opportunities and the modern marketing trends. It may provide the improved quality for the product and the customer satisfaction. Product development process should be consisting of knowledge on the product weaknesses and strengths, modern marketing trend which is facilitated by the advanced technology.
According to the Kotler’s principal of product development, three stages of product such as core product, augmented product and tangible product. Basic level of the every selling product is known as the core product. For an example, Hilton hotel resort may provide well appointed rooms, excellent dining and the other services for their customers.
Augmented product may include the extra services and value added services which may provide for their customers. For an example, gym facilities, spa facilities and the other packages relevant to the different sports such as Golf and Tennis (Kotler, 1996).
Tangible products can be identified as the products that can be physically feel by the customer. For an example, restaurant of Intercontinental Sea Bq provides sea foods for the customers.
According to the novel product development process five major steps can be identified.
Generation of Idea
Evaluation of Idea / Development of Concept
Product development / Business Analysis
Idea generation process may be a result of a market research. It would be the confirmation of a requirement of a product based on existing consumer need. In the screening process, ideas may be collected from media, potential customers and employees. By, using those ideas, the expected competition for the product may justify according to the market trends. Revenue, cost and also the expected profit may identified in the idea evaluation step. Market research may be important in relation to this step. In this step, the expected first customers may describe theoretically. In the product development step, physical production and manufacturing process may do and the selling price may also determine. Not only will that, testing of the product also be done. As the last step, the production campaign process may be done in the commercialization process.
2.2 Features contribute towards the customers’ perception of products and services
In modern globalized economy, practically it may be hard to differentiate products and services compare to the earlier times. Therefore, generation of substitute products and services may be a problem in any industry. As a result of this many institutions focus on the price reductions to cope with their rivals in order to dominate in the market.
When considering the customers’ perception on products and services, it can be influenced by several factors. According to the results of the research done by Hellofs and Jacobson (Hellofs and Jacobson, 1999) the impact on the market share on the customer perception of a product may generate both positive and negative effects.
When considering the purchasing process, the customers’ attitude can be considered as the function of quality, level of satisfaction and the value of the product. The past experience of the customer, the information which is provided by media may facilitate the trialling process of purchasing. But, after the purchasing process the perception regarding the product or service may be affected by the quality, satisfaction and the value. Therefore the optimum level of those three factors may be always acceptable for customers. Focussing on those factors required to be at maximum level. The value of a good or service is commonly related with the price. But, the excelled quality of product or service may lead the customers to pay more for that product or service.
2.3 Opportunities and constraints affecting product and service development
When considering the opportunities affecting the product quality and service development, several factors can be considered such as, location of the industry, adequate entrepreneurship,
availability of labour force. Location can be considered as one of the important factor in the hospitality industry. When the industry is following eco- hotel concept, it is important to more focus on aesthetic beauty such as sea, forests and lakes. Entrepreneurship is most important in relation to the capital in the hospitality industry. Availability of dominating business partners may play an important role in the product and service development. Availability of labour force is important in relation to the customer service. Customer satisfaction is vital in the hospitality industry like in all the other industries.
2.4 Different merchandising opportunities for hospitality products and services
Because of the globalization process, there is a developing trend to investors to invest their money at international market. This may increase the frequency of business travels all over the world. Therefore, it may be beneficial in relation to the hospitality industry. Most of the business travelers may expect high quality of service depending on their purchasing power. Therefore, there would be an opportunity for the hospitality industry to market their products and services also with value addition. Not only that, with the improvement of country’s’ economy similar effect can be expected in relation to hospitality industry.
Pricing and profitability concepts within hospitality operations
Different methods of pricing and factors affecting the revenue and profitability
Appropriate pricing, accurate and complete quotations, selecting the terms of sale, and choosing the correct payment method can be considered as the four critical fundamentals in marketing a product or service in relation to international market. Among those four, pricing is considered as the most important one to be considered.
Different methods of pricing can be identified in the hospitality industry such as, competition based pricing, cost plus pricing, market oriented pricing, target pricing and value based pricing etc.
In the competition based method, the price may be determined relying on the similar products of competitors. Cost-plus pricing can be considered as the simplest method. The firm may estimate the production cost and pre determined percentage may add to determine the selling price. Setting up prices base on the results of market research on targeted market can be identified as market oriented pricing. In the method of target pricing, selling price may be calculated to create a specific return rate on investment in terms of pre determined specific production volume. In value based pricing, the price is relying on the perceived value for that.
Considering the domestic market, the pricing may directly associated with the revenue of the firm. Therefore, it is required to conduct market research to find the effect of different variables on price. If the pricing is too much high, there may be some issues can be occur in marketing the product. Similarly, if it is too much low, there may be a net loss for the firm.
Traditionally, the elements of proper price determination are market demand, competition and the cost. Those each element should be suit with the objective of the firm in relation to entering the international market. Probably the pricing at international market compare to the domestic market may differ accordingly.
Additional costs for the production can be considered as an important consideration in relation to international marketing. The additional costs may include, customer fees, value added taxes, cost fluctuations in production and other tariffs. Those can be final selling price determination factors which may have the potential to influence with the revenue.
Using appraisal techniques to analyze and improve operational performance
4.1 Different performance measures and appraisal techniques
Performance appraisal can be considered as a methodology which the performance of a firm or an employee will be evaluated. In relation to the hospitality industry, quality of the product and the services cost of production and matter of time would be considered. The performance appraisal can be considered as a part of managing and leading carrier development.
According to Woods the hospitality industry may use at least one approach in the surveys such as graphic rating scale – 28%, narrative essay 37%, behaviourally anchored rating scales – 42% and management by the objective – 48% (Woods et al., 1998).
In relation to the hospitality industry, the other methodologies may be including performance standards and matching the employees’ performances with their jobs.
If the appraisal fails to meet the objectives and targets, it should use training and awareness program in relation to employees. Such system would be a future oriented one that reveals the potentials of employees.
4.2 Effectiveness of different quantitative and qualitative appraisal techniques
For an example, attitudes of employees, quality of the product and services and the quality of work of employees like factors can be considered under quantitative appraisal methods. Those factors can be assessed by using different questionnaires and interviews and also by the group meetings. The main drawback of qualitative approach is the findings may not be applied for wider populations with the same degree of certainty as in the quantitative analyses.
Quantitative factors such as volume of productive output, revenue increment and market share like factors can be assessed by using the primary or secondary data. In this method, results can be applied for the wider populations.
To improve the effectiveness of the appraisal technique mix of appraisal technique should be used.
4.3 Application of approaches
When applying the different approaches with different aspects in relation to the hotel industry, it would be critical to consider the approaches such as facilities and services to be offer, accommodation marketing and catering marketing and demand generating sources.
For an example, earlier times the Indian hotels have treated their customers by providing only the lodging facilities. But later the facilities were improved by adding value added services like safari.
Every hospitality firm should expect three major types of customers such as holiday users, business users and other users. Therefore, the products and services should be oriented to fulfil the needs of that all types of customers.
Focussing on the catering market is also important. There are three major categories that may generate profit for the industries are in-house guests, non-residents and the organized groups (Medlik and Ingram, 2001).
There are three major types of sources in hospitality industry in relation to the demand. Those are institutional, recreational and transit. Those groups may facilitate the generation of good impression about the firm in terms of building market demand.
Considering the planning process, three major types can be identified such as goal dependent planning, single use and standing plans. Goal dependent planning consists of objectives, budget and performance standard. Single use plans may include temporary goals to be achieved. Ongoing application can be called as standing plans.
The analysis and the implementing new approaches should base on those planning methodologies in combination.
Sustainable tourism can be identified as the attempt to generate employment for people while creating minimal impact on the culture and environment. The main aim is to treat the people, tourists and also the firms themselves with a positive experience.
Economists may forecast that the growth of international tourism would be range from 3% to 6% annually. Tourism is considered as the one of the largest and rapid growing industry in the world. Therefore, this would create a huge stress on bio diversity and indigenous cultures which may use in mass tourism.
Sustainable tourism may cut down the impact of tourism in many ways such as aware the tourists about the culture and natural habitats, conserving the natural resources, contributing to intercultural understandings and supporting local communities to purchase local goods.
SWOT analysis for the High Valley Hotel
Aesthetic value and the cultural diversity
Since the hotel industry surrounded by the nearby villages, the environment may be rich in cultural heritage together with the aesthetic beauty. Rain forests with natural lakes and streams may be incredible in relation to customer attraction such as hikers, mount climbers and other sports lovers.
The gap between the demand and supply
Since the hotel industry is currently possessing just sixty bed rooms, they may face problem in relation to demand and supply. It may lead to of create higher room rates together with higher occupancy level. Therefore, addition of another fifty bed rooms may lead to decrease the room rates and occupancy levels. This may have the capability of rapid expansion of the industry in the future.
Increment in the market share
UK’s market share in tourism would be expected to increase in the future in long term with the globalization. Therefore, with the new value added services foreign investers may head towards the hospitality industry.
Lack of infra structure facilities
Since the hotel industry is surrounded by the villager may be slow development of infrastructure facilities when compare to the urban area. Therefore, the state government should take appropriate action to develop the infrastructure facilities.
The changes in the political status of the state and the internal security may also affect both positively and negatively on the hospitality industry.
Benefits of the open sky concept
Open sky policy may lead to improvement of the travel together with the hospitality industry. Improved airline facility will increase the customer demand in relation to both domestic and international market.
Increased income levels
Rise of the income levels of the domestic customers would lead them to purchase value added services such as spa conference and banqueting centers.
Increased rival competition
Effect of the joining the major marketers in the hospitality industry may influence negatively on the business of the High Valley Hotel. It would also affect on the market share of the hotel group.
Changes in the arrival of tourists
Sole dependency on international customers would be a risk for the hotel industry. Because, during the conditions such as changes in the civil status of the country may directly affect on the industry. Therefore the equal importance should be given to both domestic and international customers.
Advantages of the expansion plan
The expansion of lodging facilities would decrease the cost per bed room and also decrease the room rates. Those things are advantageous in relation to profitability of the industry. The expansion of value added services like conferencing and spa like facilities may lead to attract more domestic and international tourists. Not only that, incorporation of eco- tourism would also improve the customer attraction especially relation to mount climbers and sport lovers towards the hotel industry.
Expansion of the hotel industry will also improve the infrastructure facilities such telecommunication, developed transport systems. This would also beneficial for the village community surrounding.
Proposing the appropriate expansion plan may encourage the state government to incorporate with the hotel industry and offering approvals and other benefits for the industry. Those things may be important in relation to profitability of the hotel industry.