Hospitality Management

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Table of Contents
Introduction......................................................................................................................................1
Company overview..........................................................................................................................1
Learning outcome 1.........................................................................................................................1
P1.1 Scope and scale of the hospitality industry within the travel and tourism with
interrelationships and functions...................................................................................................1
M1 The role of hospitality industry in the travel and tourism sector..............................3
Learning outcome 2.........................................................................................................................4
P2.1 Integration in hospitality sector organizations and impact of vertical and horizontal
integration....................................................................................................................................4
M2 The effects of integration in the hospitality sector................................................................5
D1 Analysis of both vertical and horizontal integration in the hospitality organisations and
conclusion on the impact.............................................................................................................6
Learning outcome 3.........................................................................................................................6
P3.1 Rational for a new hospitality business/project with the product-service concept.............6
M3 Coherent and logical principles in developing the new concept...........................................7
P 3.2 The project proposal and design based on market potential analysis with suitability and
acceptability criteria.....................................................................................................................8
D2 Substantial activities for the development of the business plan..........................................11
D3 Assessment of the financial feasibility of the proposed hospitality project........................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
Tourism is one of the major contributing sector for every economy in the world. This sector has
grown multiple folds last few decades. Innovation, transportation facilities, cheap air travel,
different ways of tourism marketing and improved hospitality services are turning into increasing
number of visitors in a country which brings benefit to the country by increased income receipts
and new brand image addition to the country (Berge and Eliassen,2010). This report
comprehensively discuss and sheds its light on the global tourism and hospitality sector, its
growth in UK, described the role of hospitality following an effective model, the impact of
integration from the perspective of Thomas Cook. At last, we developed a tourism project based
on new destinations for the young learners and leisure spenders and estimated the financial
feasibility of the project for Thomas Cook (Hudson, 2010).

Company overview
Thomas Cook is one of the most prominent and top tier Tourism Company of Britain. It was
formed through merger of Thomas Cook AG and My Travel group in 2007 and providing
premium and quality service in 4 countries-United Kingdom, Germany, Scandinavia and
Balearics and outside European continental belt. It has a number of touring service including an
airlines. From 2008, the started their operation in Middle East Asia. They provide tourist
excursion at different resorts at an affordable cost. Thomas Cook owns a number of large resorts
and hotels where tourists can travel safely and enjoy high quality service with their facilities of
air bus and hotels. They persistently follow way of innovation and seek to provide highest value
towards customer. The vision of Thomas Cook is to transform their business that can deliver
customers more than just their holiday dreams.

Learning outcome 1
P1.1 Scope and scale of the hospitality industry within the travel and tourism with
interrelationships and functions
The source ‘Tourism’ has become a major source economic contribution and encompasses a
wide range of other services such as, food, accommodation and other related services. The
tourism industry is now a billion dollar industry for most countries and tourists are more eager to
go abroad than staying at home in their holiday trip (Walker, 2017). Each sectors are working as
a whole to provide most value for the customers and retain them for growth and with the rapid
growth of tourism, they got to feel the synergic outcome. One of the growing sector with tourism
is hotel industry. Hotel industry has come up with opportunities to work for diverse range of
people at different areas of tourist attraction (Berge and Eliassen,2010). They are following
several approach to total quality management for the customers and making their marketing tools
to reach customer more effective. Hotel companies constantly work with innovation and research
to enrich their core service and provide additional service mix. Nearly 127000 business are
involved with more revenue of £70,000 million and they account for employment of 8% of total
economy. It contributes 11% of total GDP of UK and estimated size of hospitality industry in
UK has grown up to 6.5 trillion dollar market around world. In recent years, it has grown by 6%
and total revenue from hospitality sector is around £110 billion. The other major income sector

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is food and beverage (Hudson, 2010). To provide food and accommodation, these hotels are
becoming more careful and sophisticated. Besides, they are providing other relevant services
such as, providing travel service with bus, cosy accommodation place and parking lots. Some
other related services are also receiving emerging positive trend in their growth with booming
tourism sector, which are-

Figure 1: Scope of Hospitality and Tourism sector

Hospitality field is composed of a broad range of services like, foods, accommodation, event
planning, and transportation within tourism industry. All these services have some basic
functional characteristics. Different types of services have included in tourism and the role and
function of hospitality has also change in modern days. The major functions and characteristics
of hospitality industry can be-
Product service mix: The core service of hospitality is mix of product and service. Consumers
want foods, well designed room and cooperative staffs, which are tangible products. On the other
hand, comfortable features of hotel, such as, nice behaviour of staffs are intangible service. The
success of a hotel doesn’t depend on its product and services, but the way they are delivered
which is more important (Walker, 2017).
Two way communication: To deliver excellent service, both service staff and customer have to
participate in a two way communication, which is always a critical factor of service delivery
process.
Relationship building: Hotel need to develop a long-term relationship with customer for
survival and build a reputed brand image with them through the service. That will make them
repeated customer and hotel will receive stable regardless of the seasonal factor.

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Diversity and Labour intensity: Unlike the old day culture, modern tourism requires a great
deal of cultural understanding and effective communication skill for employees and provide
customers with specialised service. This sophisticated nature of service has made tourism a
labour intensive industry (Puri and Chand, 2009).

Figure 2: Characteristics of hospitality industry

M1 The role of hospitality industry in the travel and tourism sector

Hospitality is a fast growing sector in tourism sector. Hospitality and Tourism are correlated and
both have important contribution. According to the researchers, the contribution of both
industries cannot be separated and hospitality is a key factor of success for tourism. Hospitality
have four attributes which are keenly related to any individual receiving service- relationship,
knowledge, service and experience(Berge and Eliassen,2010). We will describe the role of
hospitality with these for factor model and how they have impact on tourism below-
Knowledge of employees- Hotel managers should have knowledge of good customer service
and know how to present their package of service to customer considering his needs. The
pleasure of customer with the service of hotel is the reason customer keep pursuing them
repeatedly and it has a long term impact on the survival.
Relationship- There are a few components in the tourism industry, for example, food and
beverages, lodging, place of attractions, and transportation. These components are intensely
related to the tourism and each of them has a connection to each other. So, in order to make sure
customer feel satisfied with the tourism services, each of these components should be present.
With a combination of these facilities, tourists gets the best experience.

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Service and Experience- Tourism is an intangible service and so is hospitality. Customers will
feel the experience of how they are treated and what they get in exchange of their money. A
hotel ensures that they get the best possible service within their affordable price. Again, these
experience comes from their judgement of the components mentioned above(Puri and Chand,
2009).
So, it can be said hospitality is not a separated industry from tourism, rather the success of
hospitality highly determines the growth of tourism.

Learning outcome 2
P2.1 Integration in hospitality sector organizations and impact of vertical and
horizontal integration
The aim of hotel companies is to build profitable relationship with customer and to promote their
brand name. Integration is the process by which they expand their market reach. Two types of
integration are-
Horizontal integration: Through this process, two companies merge together. Being a part of
same supply chain and offering one product to another, they ensure growth and increase their
service. Such as, Thomas cook have their own airbus for the tourists using their service
packages, which is possible by staying on the same service chain. They acquired this airbus by
purchasing from NetFlights in 2008.
Vertical integration: A company expands their service into different areas. Although they
remain on the same service line, different services areas are responsible for their own
performance. Thomas Cook has its resorts and hotels in a number of tourist spots. Tourists get
their service in the same name of Thomas Cook, but they take over each other sometimes and
find ways to promote their name.
We will describe their link to Thomas Cook more comprehensively below-
Thomas Cook is travel business found by Mr Thomas in 1841. They merged with My Travel in
2007 and owned a number of tour operators in different cities of Europe. Here they followed
horizontal integration model to approach the large tourism market in Europe. The company went
to strengthen their position in market in Asia. They brought their license to open their business in
Dubai. Again, they bought Elegant Resort from its investors and added Netflights to its service.
Within 2010 and 2011, they added renowned tourist company, Orgus Tours and The Travel
Network to its service chain. All these addition was to promote their brand name and offer
different service to different location, which was vertical integration to their service model(Puri
and Chand, 2009).
These integration has obviously some importance to the hospitality industry. Their implications
are-
Increased globalisation: Companies need to enter into new market for their growth and
expansion of business. Integration enables them to enter into the markets of different countries
and find new strategies to reach customers.

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Branding: Horizontal integration merge two companies that helps them provide service more
effectively than before and create a good brand image for customers. For example, TUI Group
merged their business with AG group. This integration has created a new brand image for both
and they are successfully creating value for customers.
Expansion of business: Integration is way through which companies expand their business
outside their boundaries. Integration helps company to identify the market segment and allocate
their resource accordingly which in turn raise their volume of service and achieve their goal.
Lack of knowledge: Thomas AG was affected with various problems and their service chain
slacked due to inefficiency. Lack of knowledge about changing tourism industry was one of the
reason for which they were suffering. After integration with My Travel Group, they could
overcome the barriers within the industry and operated the business more efficiently because
they leveraged the knowledge resource of their employees properly(Walker, 2017).
Technology: Technology plays a vital role in expanding the tourism industry. For better
communication and for running an effective service chain, technology can take a company far
ahead. Thomas Cook can monitor their operations and discuss any necessary issues with partners
through video conferencing. It makes their whole system a lot efficient and their operation gets
completed on time. They can promote their business with help of social media or website.
Customers can get their service easily and uniquely that gives them a competitive advantage.
M2 The effects of integration in the hospitality sector
With the growth in tourism, hospitality sector has become a key service sector for tourists. In the
competitive market of world tourism, a hotel cannot survive until it provides its service
effectively, conveniently and at an affordable rate. Integration make this possible and help the
company to sustain in the long run. Integrating the resources such as, technology, employees,
information system among the partners produces greater benefit for both and improves the rand
image. From the perspective of Thomas Cook these benefit can be described as follows-
Better customer experience: Unification of both companies’ data and information system
makes the customer profile complete. The employees can now customise the offer for every
guest, interact with them in a better way and create better customer experience.
Better strategy: With all information of customers, a company can analyse market thoroughly
and in a meaningful way to set out their strategy in the market. They can focus more on what
customer wants and use data to predict how they will behave.
Increase efficiency and intelligence: Travel companies, with the help of technology and skilled
human resource, provide customer service on-time and manage their chain of service effectively.
They can send the right message to right customer, prioritise the customer preferences, manage
their bookings and deliver the best service for them. Integration makes them more aware about
market movement and increase their knowledge on operating business(Chen, 2010).
Design new affordable packages: As the company becomes more aware of their market
segment, they can design travel packages for the customers that attracts them most. They can
provide service at affordable rate and use of technology makes this process faster and flexible.

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So, integration makes a company more customer centric and integrate the key facilities for
improving its service chain. A well-functioning system with seamless integration of other hotel
resources and technologies will allow hoteliers to effectively manage all of their service from
one place and take advantage of some unique market opportunities, like Thomas Cook did when
the opened up resort in Dubai to enter Asian market(Berge and Eliassen,2010).
D1 Analysis of both vertical and horizontal integration in the hospitality
organisations and conclusion on the impact
Thomas Cook is one of the most renowned tour operator in UK and outside UK. As a mass
market tour operator, they arranges all necessary tour benefits for the tourists. They design
holiday packages for tourists with transportation, food and accommodation service and sell these
packages in huge number as they get advantage in market for their brand name. Before merger
and remodelling their business, Thomas Cook was losing from its business units in different
countries. After merger with My Travel Group, they started to get advantage in the market and
could reopen their business in several different countries(Chen, 2010). How the vertical and
horizontal integration changed their business landscape is described below-
Application of vertical integration: After two consecutive year of losses, Thomas Cook
merged their business in 2007. Previously where they designed tour operators, hotels, travel
agencies and airlines in the mainframe of the tour packages, they later focused only
transportation and accommodation as the core service of their packages. Based on the strategy,
they offered a wide range of tour packages with traditional accommodation and travel service to
meet the customer needs. They distributed these product with the use of their internet and e-
commerce channels and in partnership with some other firms(Pizam,2015). In these model of
service, they reduced the level of risk, repackage the services at discount and improved the
flexibility and quickness of customer needs. The aim was to hold minimum capital investment
and to produce the maximum result. They started to get benefit from this change in vertical
integration and the yearly return was growing at 3.4% incremental rate during the next
years(Sheppardson et al.,2015).

Learning outcome 3
P3.1 Rational for a new hospitality business/project with the product-service
concept
Rationale is the process of explaining the basic idea of a project. It is important for a project
because it describes the purpose of project and most of the decisions of the project will be based
on the rationale. At the time of preparing the project, considering the strategic marketing plan is
important. Selecting a target market is important in this part. When the target market is selected,
marketing mix tools can be applied with the demand of targeted customer base. The key of
strategic marketing plan is to find the right audience or target customer and selecting and
applying the best tool of marketing mix. The strategic plan will foil out if the proper target
market is not chosen. So, developing marketing mix tool as well as choosing right audience is
important is essential.

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 Figure 3: Rationale of project
Thomas Cook is planning to organise tour in UK and the plan has been designed considering the
economy, target market, emerging destinations in UK. UK is a well-established country in
economic and demographic growth rate. The culture and environment of UK is rich and attracts
tourist from different corners of the world. The economy of UK has grown vastly and facilities
are available so that the cost of arranging a tourist program will be minimal. On the basis of the
affordability of cost and demand, the company will segment the market and the budget of the
tour will 2500-4000 pounds(Pizam,2015). The potential cities of tourists will be Liverpool,
Manchester, Bradford and Sheffield and the group of target is 20-25 year youths who are keen to
learn cultural enrichment and emerging tourist destinations of UK. When the plan will be
completed according to the needs and requirements of travellers, it will be communicated with
appropriate channels to inform the travellers about the detail benefits of the project(Chen, 2010).
M3 Coherent and logical principles in developing the new concept
To develop a project, a wide range of experience, necessary information and relevant destination
places must be present. Development of a new project will be for strengthening the financial
position of the tourist company. So, following a line of logic and some key steps is important to
adapt and shape the project with travellers need. The flow of processes is-
Agreeing plan together: Before launching the project, they must develop a destination
management plan and all the necessary components have to be agreed in a coordinated way.
What should be considered are- Tourism performance in industry, structure and communication
methods, appearance of visitors and access of infrastructure, branding and promotion channel
and product mix.
Gathering evidence: The plan should be based on the knowledge and opinion from the visitors
and experts of industry. The necessary considerations will be- collecting evidence from
stakeholders, economic plans, transportation facilities, use of data about small and emerging

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destinations of UK. Applying research and use of relevant data, the process of developing
strategy can be made effective(Hudson, 2010).
Setting direction: When all evidence are collected and how the project will perform in the
present context is decided, company have to set policies about the project according to their
resources and opportunities. Through a strategic management framework, the goals and
objectives of project will be set.
Identifying action and measuring progress: Company has to set a clear plan of action. Setting
the objectives and prioritising and framing them, company has to develop a plan about how the
project will be implemented. Maintaining quality of product, raising awareness and adaptability
of the project have to be re-evaluated thoroughly on an ongoing basis. An alternative plan should
be ready for contingent situations.
P 3.2 The project proposal and design based on market potential analysis with
suitability and acceptability criteria
The project is targeted for grown up youths who need tour in various locations in UK and outside
UK to learn about cultural diversity and attractive places of historical interest (Pizam,2015).
Capitalising on the growth of new cities is the primary rationale for this project. The operational
model and market analysis for the project will be-
The essential operational requirements for the project will be-
Location-The Company have to decide the number of days to visit and destination places.
Accommodation facilities to provide comfort should be planned on the project and it should be
required for the tourists to book in advance. Sufficient security arrangements should be installed
within the destination places to ensure security of foreign travellers (Chen, 2010).
Transportation- Transportation facilities have to pre-planned. The flight tickets should be
confirmed on time and the coach or buses for site seeing have to be placed on the airport or other
disposal points of travellers. If several destinations are added in tour packages, the reservations
made are to be checked in prior(Oskam et al.,2012).
Funding- The funds are one of the basic requirements for starting any tour. Implementation of
any project without funds is not possible. With the help of experts and tour operation manger, an
estimation of budget should be calculated. For tour project, nearly 2500-4000 is required to cover
all costs of transportation, accommodation, foods, hotels and other facilities.
Product and service- Serving the best quality product and service is the pre-condition to make
any project successful. The managers should make arrangements of good foods, comfortable
hotels and transportation and these should match with industry standards. The package needs
have to be customised with the needs of travellers and make sure the travellers are satisfied with
the service provided.
Licensing- The company have to ensure that the places of business operation and other facilities
such as, Hotels, transportation, Tour operator have to be licensed. If all these are unlicensed, it
will create threat of damage of reputation. So, all of the preparation have to be made in a way

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that create best memorable experience for travellers. So, the whole service model can be
presented below-

Figure 4: Service model of project

Thomas Cook have to identify the needs of staffs during the operation of project. They will need
to make combination of full time and part time employees to maintain the seasonal needs. Its
annual budgets for staffing will rise from £80,000 per year to over $120,000 per year. The
staffing needs of several positions can be-
Position of employees Types Number
Operation manager Full time 20
Administrative assistant Part time 50
Tour guides Part time 250
Assistant technical manager Full time 35
Room staff Part time 100
Special project coordinator Part time 40
Total = 495
Table 1: Additional tour staff requirements

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The potential market for project of Thomas cook can be analysed using SWOT, which is below-
Strengths
Brand image- Thomas Cook is one of the oldest travel companies that offer different services in
which they have a good brand image.
Affordable pricing- Offers and prices are made suitable and affordable for UK residents and
other European regions.
Availability of customization- Thomas Cook provide multiple holiday packages with different
benefits customized according to the needs of UK individuals.
Weakness
Limited market share- World tourism market is competitive and limited arena for the Thomas
Cook due to some biggest tour operators.
Long term debts- Thomas Cook has already incurred some large debts that have made them
vulnerable.
Opportunities
Growing travel industry- The tourism market is growing all over the world which is an
opportunity for them to enter into different market at various regions.
Digital presence- Thomas Cook has lot of available opportunities at UK and around Europe.
They will be able to reach the markets with the help of efficient and digital technologies.
Threats
Low profitability in airline- The profitability on Thomas Cook airlines, a facility on service
chain, has always been a threat for them.
Uncertainties like Brexit- Impending Brexit always poses a threat for different businesses in
Europe including travel operators, which needs to be carefully approached with strategic basis.
Suitability and acceptability of project
To evaluate the suitability of the project, the strengths and opportunities have to be screened and
adapted into the strategy and weakness and threats have to be analysed that how it degrades its
competitive position in market. As Thomas Cook has been regarded as a renowned hospitality
business, it can gain customer base quickly and promote their products before them. They have
expert managers who can adopt marketing strategies on a regional basis. It can leverage its
synergic opportunities such as, efficiency to provide quality service to customer (Sheppardson et
al.,2015). On the other hand, this project will be launched on targeting young students, who will
need tour for study purposes or recreation which can be provided with elegant coach service that
will compensate for the lower profit from airlines. If this project gets recognition, Thomas Cook
can decide to launch it outside Europe also focusing on different customer base. All these
benefits will improve their competitive position in market.

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The measureable variables for this project are-
Variables Particulars and details
Structure of Governance Ownership: Thomas Cook UK
Ownership: Thomas Cook UK
Management: Executive Director
Project model and genres Line of Business: Tourist travel service
Genre: Travel benefit service
Market Urban: 10,025,673
Foreign: 6.07.875
Pricing For youths: £2500-£4000
For others: £5500-£8000 (Including insurance
and other specialised service)
Scale of operation: £100,25,670
Contribution to income 92:8
Staffing Total new employees: 495
Operation manager: 20
Assistant technical manager: 35
Room staffs: 100
Tour guides: 250
Destination Emerging destinations of heritage, natural parks
and Inverness

D2 Substantial activities for the development of the business plan

Ensuring the growth of business in form of increasing sales, growing customer base, and
promotion of tourism project is more important than operating the business. For growing the
business, company should focus equally on the product, site, marketing strategies and target
market on the project and review the business plan more comprehensively. The essential
activities for the development of project will be-
Site development: The selected locations for the project was the emerging destinations around
growing cities like Liverpool, Sheffield, Manchester and others. Thomas Cook should be
concerned about development of site and investment in site development of overall environment
of site (Sheppardson et al.,2015). They need to consider that the site should be within accessible
distance of travellers and the number of visitors who will come to visit. As the places are worth
of historical interest and holiday spending, they need to analyse whether physical environment
are ready for incoming number of visitors and the utility facilities such as, water, electricity and
the special facilities are present there. After a thorough location analysis, the company should
estimate a budget on developing the area (Oskam et al.,2012).

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Repackaging tourism product: Considering about the suitability of the product to the
customers is one of the most important tasks. Thomas Cook have to travel modes, such as, coach
are acceptable to the customers and analyse if the target customers want comfort by travelling in
specialised service, such as, air flight or they want more facilities within the exiting
transportation. Tour operator should be more cooperative and engaging with the customers and
include insurance benefits in the package if customers want (Laws, 2016). During promotional
activities, the message should be clear and specific that does not mislead customer. The whole
service chain in the package should facilitate the arrival of coaches or aircraft on time and
dispose the bags to the customers immediately after checking.
Developing marketing activities of tour packages: After developing and packaging tour
products, the company should reach customers with the appealing information of his product.
They should engage DMOs in the service chain for promoting the service to the local customers.
They should select the right medium of communication including e-commerce sites or in their
own websites. Re-evaluation of the performance of each tour promoters is necessary and select
the channel producing best results.
D3 Assessment of the financial feasibility of the proposed hospitality project
After the budget for the project is prepared, a financial feasibility need to be conducted. The aim
of the program will be to increase the pursuit of learning among youths. The presence of visitors
will generally fluctuate over the time. It is estimated that during the summer, the visitors’
attendance will increase by 40%-50%. The ground price of the package will be £2500- £4000So,
Thomas Cook have to increase its capacity and develop stronger marketing plan to increase
sales. Modern additional number of tour guides have to be employed for that particular time.
Every 5 increasing visitors will require a guide and approximately 250 new tour guides have to
be recruited who has sufficient knowledge about the locations (Oskam et al.,2012). Other
financial investment will be necessary for accommodation, food, additional coaches and in
customer relation development. This can be accomplished by partnering with local hotels and
resorts who will work as per the industry standard to ensure maximum benefit of tourists. They
must sign a feasible contract with the prominent coach providers and increase capacity of
aircrafts for the season. The total cost of staffing, renovation and expansion will be £350000
which will drop down by 30% in low visitor season. The expected return from the project will
increase by 5.2%-8.00% on average. The company has to ensure that the travellers find
maximum pleasure from the visit and turn them into repeating customer to ensure sustainability
of the business(Laws, 2016).

Conclusion
Hospitality is a flourishing sector alongside with tourism. As a management executive, I found
the merging tourist destinations on UK and the growing market of tourism. In such a position,
Thomas Cook can take advantage being a traditional tour operators using his brand name. The
project was developed based on its strengths and opportunities and to minimise the impact of
threats in near future. We used the same integration model that Thomas Cook traditionally use to
approach new market. We completely analysed the project based on some criteria, its need of

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staffs and other resources and found the prospect of the project for Thomas Cook from financial
perspective and community benefits.

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