Unit 3: Strategies for Quality Service in Tourism and Hospitality 1

UNIT STRATEGIES FOR QUALITY SERVICE

3 IN TOURISM & HOSPITALITY

1. understand the concept of strategy;

2. realize the importance of designing the guest
experience; and
3. identify key factors that must be examined to ensure
best service.

Introduction
To bridge the gap between the expectations and perceptions of a guest
in a hospitality and tourism setting, it is a must to plan his/ her experience
carefully. A productive guest encounter is expected to yield optimum
experience. With these, critical planning is very much important to properly
design and ensure that the best experience is the only experience a guest will
receive.
In planning the guest experience, strategies are employed to be able to
deliver processes for each issue that is needed to be resolved by the
management. Strategies are plans that are designed to achieve a specific aim
of the company. It usually involves setting goals, planninig actions to achieve
such goals, and maximizing resources to achieve the goals. With strategies,
resources become optimized, productivity is maximized, and processes are
simplified. Now, with guests at the center, the experience would be better that
initially planned.

Hospitality, Tourism and Strategies

Strategic planning has been utilized extensively for developing tangible
products rather than used in service-related industries like hospitality and
tourism. With the marketing nature of tourism products and services, it is
evident for establishments to draw their market toward services, strategy plays

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a critical role. By utilizing strategies, a company is able to identify its competitors

while satisfying the needs and wants of its guests.
Strategic planning is the process of identifying a company’s internal and
external characteristics which will contribute to the attainment of its goal
pointing to a specific direction while formulating different policies on how best
to achieve it. A restaurant, for example, to become one of the best in a certain
area or region, should think of different strategies to be able to meet the
requirements needed in a certain area as dictated by the market and the
present situation it belongs.
With strategic planning in mind, three elements make up its components.
Firstly, the identification of long term goals and objectives concerning the
conceptualization of coherent and achievable strategic objectives. Secondly,
the adoption of different courses of action should also be in place to assure that
actions taken to arrive at objectives are already set. Lastly, the allotment of
resources is also set in place. This means that there will be costs associated
with the actions to be able to achieve the objectives.
Porter’s Generic Strategies
In order to be successful and to make a profit in the industry’s
competitive market, every organization needs a clear strategy.
But how do establishments decide the best strategy for their
businesses, may it be a spa, a restaurant, or a resort? The
decision they make will affect every aspect of their company
so it is important to get it right.
Porter’s generic strategies can help a decision maker to make
Michael Porter the best choice for his or her company.
Michael Porter identifies three strategies in achieving competitive edge in his
book, Competitive Edge. These are cost leadership strategy, differentiation
strategy, and focus strategy.
Cost leadership strategy
focuses on increasing profits by
reducing operational costs and
charging lower prices. To implement
this strategy successfully, a company
will need to invest in new technology
and to have efficient logistics. A
company must also make sure that its
spending on items such as labor,
materials, and facilities is kept low. It is
essential that a company beats its competitors on cost so it will need to
continually monitor and reduce its costs. An example would be an economy
level hotel that charges low rates but has only basic amenities for a regular
guests. Its room will typically have a standard bed, color television, air-
conditioning unit, and private bathroom. Wi-Fi connection is optional.

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The differentiation strategy focuses on making a company’s service

being attractive and unique in comparison to those of its competitors. For
example, a company might specialize in a particular feature or unique service,
be renowned for its excellent customer service, or have a highly valued brand
image. It will need to be creative and innovative and be able to provide a high
quality services for this strategy to work. Sales and marketing also play a vital
role in this strategy’s success and a company will need to make sure to stay
ahead in new trends in the industry. One best example would be a hotel utilizing
green technology in its operations. This hotel can boast of adhering to the call
on sustainability and environmental stewardship by integrating this concept in
its day-to-day operations, such as the use of reclaimed wood, metal roofing and
steel grills of another reclaimed building, passive cooling through building
orientation and insulation on metal roofing, as well as harvesting rain and
groundwater for toilet flushing, plant irrigation, and general house cleaning.
The focus strategy concentrates on developing services for niche
market. Using this strategy requires a deep understanding of the customer’s
needs of a company. Its aim will be to meet these needs by providing that
something special and extra that the customers cannot get anywhere else. A
company will also need to decide whether to adopt cost leadership or
differentiation. This is because the focus strategy is not normally enough to win
substantial market share on its own.
The first type of focus is on cost
leadership or cost leadership in a
narrow or focused market. An
example would be the study hubs
in the university belts. They have
a very focused market place. They
specifically target student guests
that are looking for cheaper
alternatives to hotel lounges
wherein they could spend their time studying. They do not provide for everyone
but only for students, which is why their price is relevantly low.
The second type of focus is
on differentiation in a narrow or
focused market. An example would
be a coffee shop which adapted
the drive-through business model.
It focuses on guests who do not
really necessarily want to sit down
and have a cup of coffee. The
guests like the brand and offering
but do not have the time to sit down
and enjoy a cup of coffee. They
have it on the move.

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Choosing the right strategy for an organization is crucial in gaining a

competitive edge over its rivals. By using Porter’s generic strategies model, an
organization will be able to identify the strategy that it needs to lead the
organization to success.
Internal and External Assessments
Internal analysis is where an organization takes stock of the resources
and assets that it possesses. These include the strengths that enable an
organization to function well. Experts refer to this as the “secret sauce” of an
organization. Moreover, internal analysis also flaunts the weaknesses of an
organization. These weaknesses are identified not to dwell onto, but to be
addressed and resolved so that they do not harm an organization.
An airline company, through
internal analysis, may find out that it
needs to have a stronger passenger
relationship management with its
clients. By delving deeper, it found out
that the problem was because it is not in
the culture of the employees to establish
a relationship with their passengers.
Utilizing a strategy to develop
relationship marketing in their operations, it enabled the entire company to
combat this problem and convert the weakness into a strength.
An external analysis, meanwhile, does not rely on the “secret sauce”.
How a company positions itself in the market with respect to its rivals in its
particular space is of primary concern. Attention should be focused on what a
company is good at relative to its rivals in that industry. Doing external analysis
not only determines a company’s position in the external environment, but also
showcases its opportunities and threats. Identifying a company’s opportunities
and threats, through different tools such as the Political, Economic, Social,
Technological, Environmental and Legal (PESTEL) analysis, exhibits what it
needs to be wary about which somehow are uncontrollable to a certain level.

Source: https://business-docs.co.uk/scenario/do-pestle-and-pestel-mean-the-same-thing/

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One best example is what

happened in Boracay when it was
closed for six months because of
the environmental rehabilitation
projects of the Philippine
government. Many hotels and their
respective employees and guests
were affected by this situation. It is
said that about 400 lodgings and food services were ordered to be closed for
violating laws, three casinos were shut down, and other tourism establishments
built within the 30-meter shoreline were demolished. The government predicted
about Php 18-20 billion loss of potential gross receipts due to the six-month
closure.
Strategizing for the Future
Ford (2011) stated that the things hospitality and tourism organizations
must plan to cope with changes in the future include demographics, technology,
social expectations, economic changes, competition in the industry,
stakeholders, and other factors.
Demographics
Changes in the workforce and the market of the hospitality and tourism
sector will continue to affect the operations of the industry, and this is relevant
not only to the service providers, but also to its market. Park and Yoon (2009)
made an article on the segmenting the motivation of Korean tourist. In their
article, they noted that motivation in tourism is largely determined by a number
of factors, including demographics. Results show that with changing
demographics, themes as to their socio-economic characteristics and
behaviour in tourism also change. The findings of the research show that most
Korean tourists value family togetherness, some are passive, and some are
want-it-all tourists. In the Philippines, as reported by the Department of Tourism
in 2017, millennials proved to be the most well-travelled. The 15-24 age group
travelled across the country the most, followed by the 24-34 age group and the
45-55 age group. These only show that demographics has changed already
whereby before these activities are prolific with the baby boomers but now
millennials take the scene.

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Economic and Natural Forces

Economic forces also change the nature of the industry and how it is
managed by the key stakeholders of this fast growing sector. In 2018, the
Philippine Statistics Authority reported that the Tourism Direct Gross Value
Added (TDGVA) of the Philippines jumped to a great amount of 12.7 %. This
translates to Php 2.2 trillion, higher by 14.3 % as compared to 2017’s record of
Php 1.9 trillion. A lot people are actually benefiting from tourism, and in the
Philippines, this service-oriented sector is a source of employment and income
of a lot of Filipinos.
The Boracay tourism sector and its residents were deeply affected when
it was temporarily closed in April 2018. The six-month closure of the island was
based on the need for “rehabilitation” with the environmental problems which
were already surfacing and becoming too much for Boracay to bear.
In January 2020,
Tagaytay, one of the famous
places in the Philippines, also
suffered a tourism disaster as
one of its prized natural
destinations, the Taal
Volcano, erupted. Tourists
flock in Tagaytay because of
its cool temperature and the
magnificent Taal Volcano. In
just the first three months of 2019, Tagaytay had 6.9 million visitors – a sudden
rise as there were only 7.5 million visitors in the entire 2018. Unfortunately, as
the Taal Volcano erupted, most of the areas in Tagaytay and the nearby
municipalities in Batangas were deeply affected and had to find means on how
to cope with this economic and natural downturn.
Competitors
Competitors also shape the tourism and
hospitality industry. The presence of this
major key player brings about major
changes in the industry. Moore (1996)
utilized biological analysis in explaining
shifts in today’s business. He mentioned
in his article that businesses are a big
part of the ecosystem and business
need to co-evolve in order to thrive and survive. This is because of the fact that
the economy consists of unpredictable key players which constantly shift. Thus,
movements between competitors shift from time to time and create different
relationships which also affect other relationships that will be made in the future.

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Bengtsson (1999) explained and identified these relationships existing

in competition. She mentioned that in analysing the relationship between
competitors, four types can be distinguished.
Coexistence exists on social exchanges between competitors. As
economic exchange and bonds are not present, each competitor knows about
each other but does not interact with them. Usually, power is identified
dependent on the competitor’s position and strength. Somehow, dependence
is present and smaller
companies are at the mercy
of larger players. There is
also a distance between the
competitors, although
psychologically. Trust is also
regarded high, although
informal, as one player is also
dependent on another
competitor but does not
interfere with him or her.
Another relationship is cooperation, which also exists in this scenario. As
this concept is present, there are frequent exchanges between the players
which comprise of business, information, and social exchange. All competitors
are cooperating but it does not mean
that they are not competing. Formal
agreements exist if the competitors
have formed strategic alliances.
Independent hotels usually do this,
such as in the case of referral groups
or marketing consortiums. Although
informal agreements also exist, they
are built on social norms and trust.
These norms adjust the distribution of power and dependence among
themselves, which means that conflicts rarely arise.
As expected, competition is another relationship that is based on an
action-reaction pattern, which means that if a player launches a product or
service, the other competitors will definitely launch a similar, if not the same,
product with some developments. Because of this, interaction is usually simple
and direct. Dependence and power are also equally distributed but are also
based on their position in the ecosystem.
Lastly, a new relationship has existed. It is called co-opetition. Simply, it
means cooperation between competing players. This relationship includes
economic and other forms of exchanges. Usually, power is in the cooperative
side of the relationship which is based on how it functions in the ecosystem.
The competitive side, meanwhile, highlights that power is dependent on the
player’s position and strength. Dependence usually arises in two ways. When

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there is cooperation, dependence usually takes the form of formal agreements

or trust. However, when there is competition, dependence is again related to
the player’s strength and position in the network. With goal setting, competitors
cooperate as it is stipulated in their formal agreement that this will be done
jointly.
This is why key players in the industry need to have an assortment of
different relationships which depends on how they are set in the present
environment. Because of this, the content of a relationship can vary from time
to time. Also, relationships can grow stronger, eliminating weaker relationships.
Usually, this has no clear pattern or cycle and is highly dependent on the
players.
Other Stakeholders and Relevant Groups
Aside from the factors previously mentioned, several other groups also
affect how the future of the tourism and hospitality industry will be shaped.
1. Resource Suppliers. A company cannot continue its operation without raw
materials, equipment, and other supplies. This is actually not limited to the
manufacturing sector, but is also an important requirement in service
operations, as we established already the concept of service product. The
availability of the resource supplier can also affect the smooth operations of
the company. This is also why there is seasonality in some service
operations, as well as the offering of some products, especially food items.
Somehow, a disruption in the operation of the resource supplier will
ultimately affect the company. Thus, companies in the tourism and
hospitality industry usually identify a selection of existing backup suppliers,
which somehow subjects companies to increased costs due to price
overcharging. Aside from the common reasons, this situation usually arises
because of a natural hazard.

2. Capital Suppliers. Another player that we need to consider is the suppliers

of capital. Now that the capital market is international and electronic
transfers are now available, suppliers can now move in a faster pace, which
makes a company vulnerable. A company may need to spend more time to
forecast the availability of this valued resource. Because capital availability
is crucial, a company’s decision-making should be exact so as not to
dampen the entire operations. The stock market now has a great impact on
how certain industries, including tourism and hospitality, go around.

3. Labor Supply. As the pool of skilled employees is also of utmost

importance, as they also shape the market, Chapter 4 discusses issues on
staffing and employee concerns. Without a stable labor supply, the tourism
and hospitality operations will be greatly affected as they drive the operation
itself. There will be no one to man the operations and will fill the empty slots
of the retired employees.

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Learning References:

Books:
Cornell, D. A., Manzano R., and Cruz R. (2020). Quality Service Management in
Tourism and Hospitality, First Edition. Rex Book Store. Retrieved August 28, 2020
Robert, F., Michael S., and Cherrill, H. (2012). Managing Quality Service in Hospitality:
How Organizations Achieve Excellence in Guest Experience. Delmar Cengage
Learning. Retrieved August 28, 2020

Internet Sources:
Do PESTLE and PESTEL mean the same thing?. (n.d.). Retrieved October 4, 2021,
from https://business-docs.co.uk/scenario/do-pestle-and-pestel-mean-the-
same-thing/
Cooperation Is Key to an Agile Workplace. (n.d.). Retrieved October 4, 2021, (n.d.).
Retrieved October 4, 2021, from https://business-docs.co.uk/scenario/do-
pestle-and-pestel-mean-the-same-thing/

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